LeapFrog 2011 Annual Report Download - page 178

(B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to
satisfy tax withholding obligations; or
(v) in any other form of legal consideration that may be acceptable to the Board.
(d) Exercise and Payment of a SAR. To exercise any outstanding Stock Appreciation Right, the
Participant must provide written notice of exercise to the Company in compliance with the provisions of the
Stock Appreciation Right Agreement evidencing such Stock Appreciation Right. The appreciation distribution
payable on the exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess
of (A) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right) of a
number of shares of Class A Common Stock equal to the number of Class A Common Stock equivalents in
which the Participant is vested under such Stock Appreciation Right, and with respect to which the Participant
is exercising the Stock Appreciation Right on such date, over (B) the strike price that will be determined by
the Board at the time of grant of the Stock Appreciation Right. The appreciation distribution in respect to 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.
(e) Transferability of Options and SARs. The Board may, in its sole discretion, impose such
limitations on the transferability of Options and SARs as the Board shall determine. In the absence of such a
determination by the Board to the contrary, the following restrictions on the transferability of Options and
SARs shall apply:
(i) Restrictions on Transfer. An Option or SAR shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by
the Participant; provided, however, that the Board may, in its sole discretion, permit transfer of the
Option or SAR in a manner that is not prohibited by applicable tax and securities laws upon the
Participant’s request. Except as explicitly provided herein, neither an Option nor a SAR may be
transferred for consideration.
(ii) Domestic Relations Orders. Notwithstanding the foregoing, an Option or SAR may be
transferred pursuant to a domestic relations order; provided, however, that if an Option is an Incentive
Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(iii) Beneficiary Designation. Notwithstanding the foregoing, the Participant may, by delivering
written notice to the Company, in a form provided by or otherwise satisfactory to the Company and any
broker designated by the Company to effect Option exercises, designate a third party who, in the event
of the death of the Participant, shall thereafter be entitled to exercise the Option or SAR and receive
the Class A Common Stock or other consideration resulting from such exercise. In the absence of such
a designation, the executor or administrator of the Participant’s estate shall be entitled to exercise
the Option or SAR and receive the Class A Common Stock or other consideration resulting from
such exercise.
(f) Vesting Generally. The total number of shares of Class A Common Stock subject to an Option or
SAR may vest and therefore become exercisable in periodic installments that may or may not be equal. The
Option or SAR may be subject to such other terms and conditions on the time or times when it may or may
not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board
may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this
Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of
Class A Common Stock as to which an Option or SAR may be exercised.
(g) Termination of Continuous Service. Except as otherwise provided in the applicable Award
Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service
terminates (other than for Cause or upon the Participant’s death or Disability), the Participant may exercise his
or her Option or SAR (to the extent that the Participant was entitled to exercise such Award as of the date of
termination of Continuous Service) but only within such period of time ending on the earlier of (i) the date
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