LeapFrog 2015 Annual Report Download - page 204

The provisions of separate Options or SARs need not be identical; provided, however, that each Option
Agreement or Stock Appreciation Right Agreement shall conform to (through incorporation of provisions
hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following
provisions:
(a) Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or
SAR shall be exercisable after the expiration of ten (10) years from the date of its grant or such shorter period
specified in the Award Agreement.
(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the
exercise price (or strike price) of each Option or SAR shall be not less than one hundred percent (100%) of
the Fair Market Value of the Class A Common Stock subject to the Option or SAR on the date the Option or
SAR is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise price (or
strike price) lower than one hundred percent (100%) of the Fair Market Value of the Class A Common Stock
subject to the Option or SAR if such Option or SAR is granted pursuant to an assumption of or substitution
for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent
with the provisions of Sections 409A and, if applicable, 424(a) of the Code. Each SAR will be denominated
in shares of Class A Common Stock equivalents.
(c) Purchase Price for Options. The purchase price of Class A Common Stock acquired pursuant to
the exercise of an Option shall be paid, to the extent permitted by applicable law and as determined by the
Board in its sole discretion, by any combination of the methods of payment set forth below. The Board shall
have the authority to grant Options that do not permit all of the following methods of payment (or otherwise
restrict the ability to use certain methods) and to grant Options that require the consent of the Company to
utilize a particular method of payment. The permitted methods of payment are as follows:
(i) by cash, check, bank draft or money order payable to the Company;
(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds;
(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Class A
Common Stock;
(iv) if the option is a Nonstatutory Stock Option, by a ‘‘net exercise’’ arrangement pursuant to which
the Company will reduce the number of shares of Class A Common Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise
price; provided, however, that the Company shall accept a cash or other payment from the Participant to
the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the
number of whole shares to be issued; provided, further, that shares of Class A Common Stock will no
longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable
upon exercise are reduced to pay the exercise price pursuant to the ‘‘net exercise,’’ (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
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