LeapFrog 2003 Annual Report Download - page 156

its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof that exceed such
limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of any Stock Award Agreement.
(e) Investment Assurances. The Company may require a Participant, as a condition of exercising or
acquiring Class A Common Stock under any Stock Award, (i) to give written assurances satisfactory to the
Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory
to the Company stating that the Participant is acquiring Class A Common Stock subject to the Stock Award for
the Participant’s own account and not with any present intention of selling or otherwise distributing the Class A
Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Class A Common Stock upon the exercise or acquisition of Class
ACommon Stock under the Stock Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the then applicable securities
laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Class A Common Stock.
(f) Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement, the
Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition
of Class A Common Stock under a Stock Award by any of the following means (in addition to the Company’s
right to withhold from any compensation paid to the Participant by the Company) or by a combination of such
means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Class A Common Stock
from the shares of Class A Common Stock otherwise issuable to the Participant as a result of the exercise or
acquisition of Class A Common Stock under the Stock Award; provided, however, that no shares of Class A
Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law
(or such lesser amount as may be necessary to avoid variable award accounting); or (iii) delivering to the
Company owned and unencumbered shares of Class A Common Stock.
(g) Lock-Up Period. Upon exercise of any Stock Award, a Participant may not sell, dispose of, transfer,
make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with
the same economic effect as a sale, any shares of Class A Common Stock or other securities of the Company held
by the Participant, for a period of time specified by the managing underwriter(s) (not to exceed one hundred
eighty (180) days) following the effective date of a registration statement of the Company filed under the
Securities Act, other than a Form S-8 registration statement, (the “Lock Up Period”); provided, however, that
nothing contained in this section shall prevent the exercise of a repurchase option, if any, in favor of the
Company during the Lock Up Period. A Participant may be required to execute and deliver such other
agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with
the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing, the Company
may impose stop-transfer instructions with respect to such shares of Class A Common Stock until the end of such
period. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 10(g) and
shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.
11. Adjustments upon Changes in Stock.
(a) Capitalization Adjustments. If any change is made in, or other event occurs with respect to, the Class
ACommon Stock subject to the Plan or subject to any Stock Award without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend,
dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares,
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