NVIDIA 2016 Annual Report Download - page 116

A-6
409A of the Code, or (iii) the Company, in connection with its legal counsel, has determined that such Stock Awards comply
with the distribution requirements of Section 409A of the Code.
(b) Ten Percent Stockholders. A Ten Percent Stockholder will 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.
(c) Consultants. A Consultant will be eligible for the grant of an Award only if, at the time of grant, a Form S-8
Registration Statement under the Securities Act or a successor or similar form under the Securities Act (“Form S-8”) is
available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, because the Consultant is a natural person, or because of any other
rule governing the use of Form S-8.
5. Provisions Relating to Options and Stock Appreciation Rights.
Each Option or SAR will be in such form and will contain such terms and conditions as the Board will deem appropriate.
All Options will 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 will be issued for shares of Common Stock purchased on
exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is
designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option
under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The provisions of
separate Options or SARs need not be identical; provided, however, that each Award Agreement will include (through
incorporation of provisions hereof by reference in the 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 will be
exercisable after the expiration of ten (10) years from the date of its grant or such shorter period specified in the Award
Agreement (the “Expiration Date”).
(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, and notwithstanding
anything in the Award Agreement to the contrary, the exercise or strike price of each Option or SAR will not be less than
the Fair Market Value subject to the Option or SAR on the date the Award is granted. Notwithstanding the foregoing, an
Option or SAR may be granted with an exercise or strike price lower than the Fair Market Value subject to the Award if
such Award is granted pursuant to an assumption or substitution for another option or stock appreciation right in a manner
consistent with the provisions of Section 409A and, if applicable, Section 424(a) of the Code. Each SAR will be denominated
in shares of Common Stock equivalents.
(c) Consideration. The purchase price of Common Stock acquired pursuant to the exercise of an Option will 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 will 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 methods of payment permitted by this Section 5(c) are:
(i) by cash, check, bank draft, money order or electronic funds transfer 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) if an option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company
will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of