LeapFrog 2005 Annual Report Download - page 196

(vi) Payment. The appreciation distribution in respect of a Stock Appreciation Right may be paid in
Class A Common Stock, in cash, in any combination of the two or in any other form of consideration, as
determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right.
(vii) Termination of Continuous Service. In the event that a Participant’s Continuous Service
terminates, the Participant may exercise his or her Stock Appreciation Right (to the extent that the
Participant was entitled to exercise such Stock Appreciation Right as of the date of termination) but only
within such period of time ending on the earlier of (A) the date three (3) months following the termination
of the Participant’s Continuous Service (or such longer or shorter period specified in the Stock Appreciation
Right Agreement), or (B) the expiration of the term of the Stock Appreciation Right as set forth in the Stock
Appreciation Right Agreement. If, after termination, the Participant does not exercise his or her Stock
Appreciation Right within the time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.
(viii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set
forth herein, any Stock Appreciation Rights granted under the Plan that are not exempt from the
requirements of Section 409A of the Code shall contain such provisions so that such Stock Appreciation
Rights will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be
determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right. For example, such restrictions may include, without limitation, a requirement that a
Stock Appreciation Right that is to be paid wholly or partly in cash must be exercised and paid in
accordance with a fixed pre-determined schedule.
8. C OVENANTS OF THE C OMPANY .
(a) Availability of Shares. During the terms of the Stock Awards, the Company shall keep available at all
times the number of shares of Class A Common Stock required to satisfy such Stock Awards.
(b) Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue
and sell shares of Class A Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any
Class A Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of Class A Common Stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell Class A Common Stock upon exercise
of such Stock Awards unless and until such authority is obtained.
9. U SE OF P ROCEEDS FROM S TOCK .
Proceeds from the sale of Class A Common Stock pursuant to Stock Awards shall constitute general funds
of the Company.
10. M ISCELLANEOUS .
(a) Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate the time at
which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest
in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may
first be exercised or the time during which it will vest.
(b) Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of
a holder with respect to, any shares of Class A Common Stock subject to such Stock Award unless and until such
Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms.
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