LeapFrog 2015 Annual Report Download - page 203

otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is
settled in cash (i.e., the Participant receives cash rather than stock), such expiration, termination or settlement
shall not reduce (or otherwise offset) the number of shares of Class A Common Stock that may be available
for issuance under the Plan.
(b) Reversion of Shares to the Share Reserve. If any shares of Class A Common Stock issued
pursuant to a Stock Award are forfeited back to the Company because of the failure to meet a contingency or
condition required to vest such shares in the Participant, then the shares that are forfeited shall revert to and
again become available for issuance under the Plan. Any shares reacquired by the Company pursuant to
Section 8(g) or as consideration for the exercise of an Option shall again become available for issuance under
the Plan.
(c) Incentive Stock Option Limit. Notwithstanding anything to the contrary in this Section 3 and,
subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate maximum
number of shares of Class A Common Stock that may be issued pursuant to the exercise of Incentive Stock
Options shall be seventeen nineteen million seven one hundred fifty-onetwo thousand five seven hundred
twenty-eightnineteen (19,102,71917,751,528) shares of Class A Common Stock.
(d) Section 162(m) Limitation on Annual Grants. Subject to the provisions of Section 9(a) relating to
Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions of
Section 162(m) of the Code, a maximum of Three Million Five Hundred Thousand (3,500,000) shares of
Class A Common Stock subject to Options, Stock Appreciation Rights and Other Stock Awards whose value is
determined by reference to an increase over an exercise or strike price of at least one hundred percent (100%)
of the Fair Market Value on the date any such Stock Award is granted may be granted to any Participant
during any calendar year. Notwithstanding the foregoing, if any additional Options, Stock Appreciation Rights
or Other Stock Awards whose value is determined by reference to an increase over an exercise or strike price
of at least one hundred percent (100%) of the Fair Market Value on the date the Stock Award are granted to
any Participant during any calendar year, compensation attributable to the exercise of such additional Stock
Awards shall not satisfy the requirements to be considered ‘‘qualified performance-based compensation’’ under
Section 162(m) of the Code unless such additional Stock Award is approved by the Company’s stockholders.
(e) Source of Shares. The stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Class A Common Stock, including shares repurchased by the Company on the open market or
otherwise.
4. ELIGIBILITY.
(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees
of the Company or a ‘‘parent corporation’’ or ‘‘subsidiary corporation’’ thereof (as such terms are defined in
Sections 424(e) and (f) of the Code). Stock Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants; provided, however, Nonstatutory Stock Options and SARs may not be
granted to Employees, Directors and Consultants who are providing Continuous Service only to any ‘‘parent’’
of the Company, as such term is defined in Rule 405 promulgated under the Securities Act, unless the stock
underlying such Stock Awards is treated as ‘‘service recipient stock’’ under Section 409A of the Code because
the Stock Awards are granted pursuant to a corporate transaction (such as a spin off transaction) or unless such
Stock Awards comply with the distribution requirements of Section 409A of the Code.
(b) Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock
Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market
Value on the date of grant and the Option is not exercisable after the expiration of five (5) years from the date
of grant.
5. PROVISIONS RELATING TO OPTIONS AND STOCK APPRECIATION RIGHTS.
Each Option or SAR shall be in such form and shall contain such terms and conditions as the Board shall
deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and, if certificates are issued, a separate certificate or certificates shall be issued
for shares of Class A Common Stock purchased on exercise of each type of Option. If an Option is not
specifically designated as an Incentive Stock Option, then the Option shall be a Nonstatutory Stock Option.
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