Document:

Director's Non Incentive Stock Option Agreement

 Exhibit 10.2 
 TERMS AND CONDITIONS OF 
 DIRECTOR NON-INCENTIVE STOCK OPTIONS UNDER THE 
  
 GLOBAL IMAGING SYSTEMS, INC. 
 1998 STOCK OPTION AND INCENTIVE PLAN 
  
 These Terms and Conditions, dated October 10, 2003, govern the grant of stock options under the 1998 Stock Option and Incentive Plan (the
“Plan”) of Global Imaging Systems, Inc., a Delaware corporation (the “Company”). References in these Terms and Conditions to a “Grant Letter” refer to a letter indicating that it evidences a “Non-Qualified Stock
Option” received by an individual who, at the Grant Date (as defined below), was a non-employee member of the Board of Directors of the Company (each, an “Optionee”). Each Grant Letter identifies the Optionee to whom an option is
granted opposite the words “Granted To.” 
  

	1.	GRANT OF OPTION 

  
 Subject to the terms of the Plan and pursuant to each Grant Letter, the Company has Granted to each Optionee identified in such Grant Letter the right and
option (the “Option”) to purchase from the Company, on the terms and subject to the conditions set forth in the Plan and in these Terms and Conditions, the number of shares of shares of the Company’s common stock, par value $.01 per
share (the “Stock”) set forth opposite the words “Options Granted” in the Grant Letter. 
  
 The Options shall not constitute incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”). The date of grant of each Option is the date set forth opposite the words “Grant Date” in the relevant Grant Letter (the “Grant Date”). 
  

	2.	PARACHUTE LIMITATIONS 

  
 Notwithstanding any other provision of these Terms and Conditions or of any agreement, contract, or understanding heretofore or hereafter entered into by
any Optionee and the Company or any Subsidiary, except an agreement, contract, or understanding entered into after the Grant Date that expressly modifies or excludes application of this Section (the “Other Agreements”), and notwithstanding
any formal or informal plan or other arrangement heretofore or hereafter adopted by the Company (or any Subsidiary) for the direct or indirect compensation of such Optionee (including groups or classes of participants or beneficiaries of which such
Optionee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for such Optionee (a “Benefit Arrangement”), if such Optionee is a “disqualified individual,” as defined in
Section 280G(c) of the Code, the Option and any right to receive any 

 payment or other benefit under these Terms and Conditions shall not become exercisable or vested (i) to the extent that
such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for such Optionee under the Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to such
Optionee under these Terms and Conditions to be considered a “parachute payment” within the meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and (ii) if, as a result of receiving a Parachute
Payment, the aggregate after-tax amounts received by such Optionee from the Company under these Terms and Conditions, the Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received
by such Optionee without causing any such payment or benefit to be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting, payment, or benefit under these Terms and Conditions, in conjunction with all
other rights, payments, or benefits to or for such Optionee under the Plan, any Other Agreement or any Benefit Arrangement would cause such Optionee to be considered to have received a Parachute Payment under these Terms and Conditions that would
have the effect of decreasing the after-tax amount received by such Optionee as described in clause (ii) of the preceding sentence, then such Optionee shall have the right, in such Optionee’s sole discretion, to designate those rights,
payments, or benefits under these Terms and Conditions, the Plan, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to such Optionee under these Terms and Conditions
be deemed to be a Parachute Payment. 
  

	3.	TERMS OF PLAN 

  
 The Options are granted subject to the terms and conditions set forth in the Plan. All terms and conditions of the Plan are hereby incorporated into these
Terms and Conditions by reference and shall be deemed to be part of these Terms and Conditions, without regard to whether such terms and conditions are not otherwise set forth in these Terms and Conditions. To the extent any capitalized words used
in these Terms and Conditions are not defined, they shall have the definitions stated for them in the Plan. In the event that there is any inconsistency between the provisions of these Terms and Conditions and of the Plan, the provisions of the Plan
shall govern. 
  

	4.	OPTION PRICE 

  
 The purchase price (the “Option Price”) for each share subject to an Option is the amount set forth opposite the words “Option Price per
Share” on the relevant Grant Letter. 
  

 -2- 

	5.	VESTING IN OPTION 

  
 Each Option becomes vested as to twenty percent (20%) of the shares purchasable pursuant to such Option on the date that is one year after the Grant Date
(the first “Anniversary Date”), if the Optionee has been providing services to the Company or any of its affiliates continuously from the date of grant to the Anniversary Date. Thereafter, so long as the Optionee’s service has not
been interrupted, the Option becomes vested as to an additional twenty percent (20%) of the shares subject to the Option after each of the next four Anniversary Dates. Service for this purpose includes service as an employee, director, advisor or
consultant providing bona fide services to the Company or any of its affiliates. For purposes of these Terms and Conditions, termination of service would not be deemed to occur if the Optionee, after terminating service in one capacity, continues to
provide service to the Company or any of its affiliates in another capacity. Termination of service is sometimes also referred to herein as termination of employment or other relationship with the Company or any of its affiliates. 
  

	6.	TERM AND EXERCISE OF OPTION 

  

	 	6.1.	Term 

  
 Each Option shall terminate and all rights to purchase the shares thereunder shall cease upon the expiration of ten years after the Grant
Date, unless terminated earlier pursuant to another provision of these Terms and Conditions. 
  

	 	6.2.	Option Period and Limitations on Exercise 

  
 Each Optionee may exercise an Option (subject to the limitations on exercise set forth in these Terms and Conditions and in the Plan), to
the extent the Option is vested and has not terminated. Any limitation on the exercise of an Option may be rescinded, modified or waived by the Committee, in its sole discretion, at any time and from time to time after the Grant Date of the Option,
so as to accelerate the time at which the Option may be exercised. If the Optionee terminates employment or other relationship with the Company by reason of “permanent and total disability” (within the meaning of Section 22(e)(3) of the
Code), the Option shall continue to vest, and shall be exercisable to the extent that it is vested, for a period of one year after such termination of employment or service, subject to earlier termination of the Option as provided in Section
6.1 above. 
  

	 	6.3.	Limitations on Exercise of Option 

  
 Notwithstanding the foregoing Sections, in no event may an Option be exercised: (i) in whole or in part, after ten years following the
Grant Date, as set forth in Section 1 above, (ii) following termination of Optionee’s relationship with the Company for Cause (as defined below) or (iii) following termination of 
  

 -3- 

 Optionee’s relationship due to death except as provided in Section 7.2 below. For purposes of
these Terms and Conditions, “Cause” means (i) gross negligence or willful misconduct in connection with the performance of duties; (ii) conviction of a criminal offense (other than minor traffic offenses); or (iii) material breach of any
term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements, if any, between Optionee and the Company or any of its affiliates. 
  

	 	6.4.	Method of Exercise 

  
 Each Option may be exercised, to the extent it is exercisable, by the Optionee’s delivery to the Company of written notice of
exercise on any business day, at the Company’s principal office, addressed to the attention of the Committee. Such notice shall specify the number of shares of Stock with respect to which the Option is being exercised and shall be accompanied
by payment in full of the Option Price of the shares for which the Option is being exercised. The minimum number of shares of Stock with respect to which an Option may be exercised, in whole or in part, at any time shall be the lesser of (i) 100
shares and (ii) the maximum number of shares available for purchase under the Option at the time of exercise. Payment of the Option Price for the shares purchased pursuant to the exercise of the Option shall be made in cash or in cash equivalents.
If the Stock is publicly traded, payment in full of the Option Price need not accompany the written notice of exercise provided that the notice of exercise directs that the certificate or certificates for the shares of Stock for which the Option is
exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual exercising the Option and, at the time such certificate or certificates are delivered, the broker tenders to the Company cash (or cash equivalents
acceptable to the Company) equal to the Option Price for the shares of Stock purchased pursuant to the exercise of the Option plus the amount (if any) of federal and/or other taxes which the Company may in its judgment, be required to withhold with
respect to the exercise of the Option. An attempt to exercise the Option other than as set forth above shall be invalid and of no force and effect. An individual holding or exercising an Option shall have none of the rights of a stockholder (for
example, the right to receive cash or dividend payments or distributions attributable to the subject shares of Stock or to direct the voting of the subject shares of Stock ) until the shares of Stock covered thereby are fully paid and issued to him
or her. Except as provided in Section 10 hereof, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance. Notwithstanding the foregoing, the Optionee may not
exercise the Option in a manner that violates the policy adopted by the Board of Directors of the Company regarding the cashless exercise of stock options. 
  

 -4- 

	7.	TERMINATION OF THE SERVICE RELATIONSHIP 

  

	 	7.1.	Termination of Employment or Other Relationship 

  
 Upon the termination of an Optionee’s employment or other relationship with the Company other than by reason of death or
“permanent and total disability” (within the meaning of Section 22(e)(3) of the Code), each Option granted to such Optionee or portion thereof held by such Optionee that has not vested in accordance with the provisions of Section 5
hereof shall terminate immediately, and, subject to Section 6.1 above, any Option or portion thereof that has vested in accordance with the provisions of Section 5 hereof but has not been exercised shall terminate at the
close of business on the 90th day following the Optionee’s termination of employment or other relationship (or, if such 90th day is a Saturday, Sunday or holiday, at the close of business on the next preceding day that is not a Saturday, Sunday
or holiday), unless the Board of Directors of the Company (the “Board”), in its discretion, extends the period during which the Option may be exercised (which period may not be extended beyond the original term of the Option). Upon
termination of the Option or portion thereof, the Optionee shall have no further right to purchase shares of Stock pursuant to such Option or portion thereof. Whether a leave of absence or leave on military or government service shall constitute a
termination of employment or other relationship for purposes of the Optionee shall be determined by the Board, which determination shall be final and conclusive. For purposes of the Option, a termination of employment, service or other relationship
shall not be deemed to occur if the Optionee is immediately thereafter employed with the Company or any other Service Provider, or is engaged as a Service Provider or an Outside Director of the Company. Whether a termination of a Service
Provider’s or an Outside Director’s relationship with the Company shall have occurred shall be determined by the Committee, which determination shall be final and conclusive. 
  

	 	7.2.	Rights in the Event of Death 

  
 If an Optionee dies while employed by, or in the service of, the Company or any of its affiliates, the executors or administrators or
legatees or distributees of such Optionee’s estate shall have the right at any time within one year after the date of such Optionee’s death, and prior to termination of the Option pursuant to Section 6.1 above, to exercise, in whole
or in part, any Option held by such Optionee at the date of such Optionee’s death, whether or not such Option was exercisable immediately prior to such Optionee’s death. 
  

	 	7.3.	Rights in the Event of Disability 

  
 If an Optionee’s employment or other relationship with the Company or any of its affiliates is terminated by reason of the
“permanent and total disability” (within the meaning of Section 22(e)(3) of the Code) of the Optionee, then 
  

 -5- 

 such Optionee shall have the right, at any time within one year after such termination of employment or
other relationship and prior to termination of the Option pursuant to Section 6.1 above, to exercise, in whole or in part, the Option held by such Optionee at the date of such termination of employment or other relationship, to the extent
such Option is then exercisable. Whether a termination of employment or other relationship is to be considered by reason of “permanent and total disability” for purposes of these Terms and Conditions shall be determined by the Committee,
which determination shall be final and conclusive. 
  

	8.	TRANSFERABILITY 

  

	 	8.1.	General Rule 

  
 Except as provided in Section 8.2, during the lifetime of an Optionee, only the Optionee (or, in the event of legal
incapacity or incompetency, the Optionee’s guardian or legal representative) may exercise the Option. Except as provided in Section 8.2, an Option shall not be assignable or transferable by the Optionee, other than by will or the laws of
descent and distribution. 
  

	 	8.2.	Family Transfers. 

  
 An Optionee may transfer all or part of the Option to (i) any Immediate Family Member, (ii) a trust or trusts for the exclusive benefit of
any Immediate Family Member, or (iii) a partnership in which Immediate Family Members are the only partners, provided that (x) there may be no consideration for any such transfer, and (y) subsequent transfers of the transferred Option are prohibited
except those in accordance with this Section 8.2 or by will or the laws of descent and distribution. Following transfer, the Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Section 8.2 hereof the term “Optionee” shall be deemed to refer to the transferee. The events of termination of the Optionee’s relationship in Section 6.3 hereof shall continue to
be applied with respect to the original Optionee, following which the Option shall be exercisable by the transferee only to the extent and for the periods specified in Sections 7.1, 7.2 or 7.3. “Immediate Family Members”
means the spouse, children and grandchildren of the Optionee. 
  

	9.	REQUIREMENTS OF LAW 

  
 The Company shall not be required to sell or issue any securities under the Option if the sale or issuance of such securities would constitute a violation
by the Optionee, the individual exercising the Option, or the Company of any provisions of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the
Company shall determine, in its discretion, that the listing, registration or 
  

 -6- 

 qualification of any securities subject to the Option upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of securities hereunder, the Option may not be exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Option. Specifically in connection with the 1933 Act,
upon the exercise of the Option, unless a registration statement under such act is in effect with respect to the securities covered by the Option, the Company shall not be required to sell or issue such securities unless the Committee has received
evidence satisfactory to it that the holder of such Option may acquire such securities pursuant to an exemption from registration under such act. Any determination in this connection by the Committee shall be final, binding, and conclusive. The
Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the 1933 Act. The Company shall not be obligated to take any affirmative action in order to cause the exercise of the Option or the issuance of
securities pursuant thereto to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that the Option shall not be exercisable until the securities covered by such Option are
registered or are exempt from registration, the exercise of such Option (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an
exemption. 
  

	10.	EFFECT OF CHANGES IN CAPITALIZATION 

  

	 	10.1.	Changes in Stock 

  
 If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company, occurring after the date of grant of an Option, the number and kind of shares of Stock for which the Option was granted shall be
adjusted proportionately and accordingly so that the proportionate interest of the Optionee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in the Option shall not
change the aggregate Option Price payable with respect to shares that are subject to the unexercised portion of the Option but shall include a corresponding proportionate adjustment in the Option Price per share. 
  

 -7- 

	 	10.2.	Dissolution, Liquidation, Sale of Assets, Reorganization in Which the Company Is Not the Surviving Entity, Etc. 

  
 Subject to Section 10.3 hereof, if the Company shall
be the surviving entity in any reorganization, merger, or consolidation of the Company with one or more other entities in which no Change of Control occurs, an Option shall pertain to and apply to the securities to which the Optionee would have been
entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate Option Price thereafter shall be the same as the aggregate Option Price
of the shares remaining subject to the Option immediately prior to such reorganization, merger, or consolidation. “Change of Control” means (i) the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of
the Company with one or more other entities in which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the Company to another entity, or (iii) any transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity) which results in any person or entity (other than persons who are stockholders or affiliates of the Company at the time the Plan is approved by the Company’s stockholders) owning 50%
or more of the combined voting power of all classes of stock of the Company. 
  

	 	10.3.	Reorganization, Sale of Assets or Sale of Stock Which Involves a Change of Control. 

  
 Subject to the exceptions set forth in the last sentence of this Section 10.3 (i) upon the
occurrence of a Change of Control, fifteen days prior to the scheduled consummation of a Change of Control, an Option shall become immediately exercisable to the extent not previously exercisable and shall remain exercisable for a period of fifteen
days. Any exercise of an Option during such fifteen-day period shall be conditioned upon the consummation of the event and shall be effective only immediately before the consummation of the event. Upon consummation of any Change of Control, the
Option, to the extent not exercised, shall terminate. The Board shall send written notice of an event that will result in such a termination to the Optionee not later than the time at which the Company gives notice thereof to its stockholders.
Neither Section 10.2 nor this Section 10.3 shall apply to any Change of Control to the extent that (A) provision is made in writing in connection with such Change of Control for the assumption of the Option, or the substitution for
such Option of new options covering the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kinds of shares and exercise prices, in which event the Option shall continue in the manner and
under the terms so provided or (B) a majority of the full Board determines that such Change of Control shall not trigger application of the provisions of Section 10.2 or this Section 10.3. 
  

 -8- 

	 	10.4.	Adjustments 

  
 Adjustments under this Section 10 related to stock or securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding, and conclusive. No fractional shares of Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share or unit. 
  

	 	10.5.	No Limitations on Company 

  
 The grant of an Option shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets. 
  

	11.	DISCLAIMER OF RIGHTS 

  
 No provision in the Plan or in these Terms and Conditions shall be construed to confer upon any individual the right to remain in the employ or service of
the Company or any affiliate, or to interfere in any way with any contractual or other right or authority of the Company or Service Provider either to increase or decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the Company. In addition, notwithstanding anything contained in the Plan to the contrary, no Option shall be affected by any change of duties or position of the Optionee, so
long as the Optionee continues to be a director, officer, consultant or employee of the Company. The obligation of the Company to pay any benefits pursuant to these Terms and Conditions shall be interpreted as a contractual obligation to pay only
those amounts described herein, in the manner and under the conditions prescribed herein. The Plan and these Terms and Conditions shall in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise
hold any amounts in trust or escrow for payment to any participant or beneficiary under the terms of the Plan. The Optionee shall not have any of the rights of a stockholder with respect to the shares of Stock subject to an Option except to the
extent the certificates for such shares of Stock shall have been issued upon the exercise of the Option. 
  

	12.	FORFEITURE OF RIGHTS 

  
 The Company at any time shall have the right to cause a forfeiture of the rights of an Optionee on account of the Optionee taking actions in competition
with the Company. Unless otherwise specified in an employment or other agreement between the Company and the Optionee, the Optionee takes actions in 
  

 -9- 

 competition with the Company if he or she directly or indirectly owns any interest in, operates, joins, controls or
participates as a partner, director, principal, officer, or agent of, enters into the employment of, acts as a consultant to, or performs any services for, any entity which has material operations which compete with any business in which the Company
or any of its Subsidiaries is engaged during the Optionee’s employment or other relationship with the Company or any of its affiliates or at the time of the Optionee’s termination of employment or other relationship. 
  

	13.	CAPTIONS 

  
 The use of captions in these Terms and Conditions is for the convenience of reference only and shall not affect the meaning of any provision of such Terms
and Conditions. 
  

	14.	WITHHOLDING OF TAXES 

  
 The Company or a Subsidiary, as the case may be, shall have the right to deduct from payments of any kind otherwise due to an Optionee any Federal, state,
or local taxes of any kind required by law to be withheld upon the issuance of any shares of Stock upon the exercise of an Option. At the time of such exercise, the Optionee shall pay to the Company or the Subsidiary, as the case may be, any amount
that the Company or the Subsidiary may reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company or the Subsidiary, which may be withheld by the Company or the Subsidiary, as the case
may be, in its sole discretion, the Optionee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company or the Subsidiary to withhold shares of Stock otherwise issuable to the Optionee or (ii) by delivering to the Company
or the Subsidiary shares of Stock already owned by the Optionee. The shares of Stock so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock used to
satisfy such withholding obligation shall be determined by the Company or the Subsidiary as of the date that the amount of tax to be withheld is to be determined. The Optionee who has made an election pursuant to this Section 14 may satisfy
his or her withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. 
  

	15.	SEVERABILITY 

  
 If any provision of the Plan or these Terms and Conditions shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions thereof and hereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. 
  
  

 -10- 

	16.	INTERPRETATION OF THESE TERMS AND CONDITIONS 

  
 All decisions and interpretations made by the Company or the Committee with regard to any question arising under the Plan or these Terms and Conditions
shall be final, binding and conclusive on the Company and an Optionee and any other person entitled to exercise an Option as provided for herein. 
  

	17.	GOVERNING LAW 

  
 The validity and construction of these Terms and Conditions shall be governed by the laws of the State of Delaware but not including the choice of law
rules thereof. 
  

	18.	BINDING EFFECT 

  
 Subject to all restrictions provided for in these Terms and Conditions, the Plan and by applicable law limiting assignment and transfer of these Terms and
Conditions and Options, these Terms and Conditions shall be binding upon and inure to the benefit of the Company and each Optionee and their respective heirs, executors, administrators, successors, and assigns. 
  

	19.	NOTICE 

  
 All notices or other communications which may be or are required to be given by an Optionee or the Company pursuant to these Terms and Conditions shall be
in writing and shall be mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by hand delivery or telecopier (fax), addressed as follows: 
  
 If to the Company: 
  
 Global Imaging Systems, Inc. 
 PO Box 273478 
 Tampa, Florida 33688-3478 
 Attention: Cecil McClary 
 Telecopy: (813) 264-7877 
  
 If to Optionee: 
  
 At the address in the Company’s records. 
  
 Each party may designate by notice in writing a new address to which any notice or other communication may thereafter be so given. Each notice or other communication
which shall be mailed, delivered or transmitted in the manner described above, shall be deemed sufficiently given for all purposes at such time as 
  

 -11- 

 it is delivered to the addressee with the return receipt, the delivery receipt, the affidavit of personal courier or,
with respect to a telecopy, upon acknowledgment of receipt thereof and in all cases at such time as delivery is refused by the addressee upon presentation. 
  

	20.	AGREEMENTS 

  
 These Terms and Conditions and the Plan together constitute the entire agreement between the Company and such Optionee with respect to the subject matter
hereof. Neither these Terms and Conditions nor any term hereof may be amended, waived, discharged or terminated with respect to an Optionee except by a written instrument signed by the Company and such Optionee; provided, however, that
the Company unilaterally may waive in writing any provision hereof in writing with respect to one or more Options or Optionees to the extent that such waiver does not adversely affect the interests of such Optionee or Optionees hereunder, but no
such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof. 
  

 -12-2003 stock plan

 EXHIBIT 10.2 
  
 ALPHASMART, INC. 
  
 2003 STOCK PLAN 
  
 1.    Purposes of the Plan.    The purposes of this Plan are: 
  

	 	•	 	to attract and retain the best available personnel for positions of substantial responsibility, 

  

	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and 

  

	 	•	 	to promote the success of the Company’s business. 

  
 The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Purchase Rights, Restricted Stock, Stock Appreciation Rights,
Performance Units and Performance Shares. 
  
 2.    Definitions.    As used herein, the following definitions will apply: 
  
 (a)  “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4
of the Plan. 
  
 (b)  “Affiliated SAR”
means an SAR that is granted in connection with a related Option, and which automatically will be deemed to be exercised at the same time that the related Option is exercised. 
  
 (c)  “Applicable Laws” means the requirements relating to the administration of stock-based
awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan. 
  
 (d)  “Award” means, individually or collectively, a grant under the Plan of Options, SARs, Stock Purchase Rights, Restricted Stock, Performance Units or Performance Shares. 
  
 (e)  “Award Agreement” means the written or
electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 
  
 (f)  “Beneficial Owner” means a “beneficial owner” (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing 1% or more of the total voting power represented by the Company’s outstanding voting securities on the date of any grant hereunder.

  
 (g)  “Board” means the Board of
Directors of the Company. 

 (h)  “Change in Control” means the occurrence of any of the following events:

  
 (i)    Any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company’s then outstanding voting securities; or 
  
 (ii)    The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

  
 (iii)    A change in the composition of
the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election of directors to the Company); or 
  
 (iv)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least
fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. 
  
 (i) “Code” means the Internal Revenue Code of 1986, as
amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code. 
  
 (j) “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. 
  
 (k) “Common Stock” means the common stock of the Company.

  
 (l) “Company” means AlphaSmart, Inc., a
Delaware corporation, or any successor thereto. 
  
 (m)
“Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. 
  
 (n) “Director” means a member of the Board. 
  
 (o) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards
other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

  

 -2- 

 (p) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. 
  
 (q) “Exchange Act” means the Securities Exchange Act of
1934, as amended. 
  
 (r) “Exchange Program”
means a program under which (a) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, and/or (b) the exercise
price of an outstanding Award is reduced. The terms and conditions of any Exchange Program will be determined by the Administrator in its sole discretion. 
  
 (s) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 (i)    If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (ii)    If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable; or 
  
 (iii)    In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator. 
  
 (t) “Fiscal Year” means the fiscal year of the Company.

  
 (u) “Freestanding SAR” means a SAR that is
granted independently of any Option. 
  
 (v) “Incentive
Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
  
 (w) “Inside Director” means a Director who is an Employee. 
  
 (x) “Nonstatutory Stock Option” means an Option that by its
terms does not qualify or is not intended to qualify as an Incentive Stock Option. 
  
 (y) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
  
 (z) “Option” means a stock option granted pursuant to the
Plan. 
  

 -3- 

 (aa)    “Optioned Stock” means the Common Stock subject to an Award.

  
 (bb)    “Outside
Director” means a Director who is neither an Employee nor a Beneficial Owner and who, at the time of being elected or appointed a Director, does not hold Unvested Awards. 
  
 (cc)    “Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Section 424(e) of the Code. 
  
 (dd)    “Participant” means the holder of an outstanding Award granted under the Plan. 
  
 (ee)    “Performance Share” means an Award granted to a Participant pursuant to Section 10. 
  
 (ff)    “Performance Unit” means an
Award granted to a Participant pursuant to Section 10. 
  
 (gg)    “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. 
  
 (hh)    “Plan” means this 2003 Stock Plan. 
  
 (ii)    “Registration Date” means the
effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company’s securities. 
  
 (jj)    “Restricted Stock” means shares
of Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 7 of the Plan, issued pursuant to a Restricted Stock award under Section 8 of the Plan, or issued pursuant to the early exercise of an Option. 
  
 (kk)    “Rule 16b-3” means Rule 16b-3 of
the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 
  
 (ll)    “Section 16(b) “ means Section 16(b) of the Exchange Act. 
  
 (mm)    “Service Provider” means an
Employee, Director or Consultant. 
  
 (nn)    “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan. 
  
 (oo)    “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an
Option, that pursuant to Section 9 is designated as a SAR. 
  
 (pp)    “Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 7 of the Plan. 
  

 -4- 

 (qq)    “Subsidiary” means a “subsidiary corporation”,
whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 (rr)    “Tandem SAR” means a SAR that is granted in connection with a related Option, the exercise of which will require forfeiture of the right to purchase an equal number of
Shares under the related Option (and when a Share is purchased under the Option, the SAR will be canceled to the same extent). 
  
 (ss)    “Unvested Awards” shall mean Options or Restricted Stock that (i) were granted to an individual in connection
with such individual’s position as an Employee and (ii) are still subject to vesting or lapsing of Company repurchase rights or similar restrictions. 
  
 3.    Stock Subject to the Plan. 
  
 (a) Stock Subject to the Plan.    Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares
that may be optioned and sold under the Plan is such number of Shares which have been reserved but not issued under the Company’s 1998 Stock Plan (the “1998 Plan”) as of the Registration Date, plus (a) any Shares returned to the 1998
Plan as a result of termination of options or repurchase of Shares issued under such plan, and (b) an annual increase to be added on the first day of the Company’s fiscal year beginning in 2005, equal to the lesser of (i) 800,000 Shares,
(ii) 3% of the outstanding Shares on such date or (iii) an amount determined by the Board. The Shares may be authorized, but unissued, or reacquired Common Stock. Shares shall not be deemed to have been issued pursuant to the Plan with respect to
any portion of an Award that is settled in cash. Upon payment in Shares pursuant to the exercise of an SAR, the number of Shares available for issuance under the Plan shall be reduced only by the number of Shares actually issued in such payment. If
the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of Shares owned by the Participant, the number of Shares available for issuance under the Plan shall be reduced by the gross number of Shares for
which the Option is exercised. 
  
 (b) Lapsed
Awards.    If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unpurchased Shares which were subject thereto will become available for
future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise of an Award, will not be returned to the Plan and will not become
available for future distribution under the Plan, except that if unvested Shares are forfeited or repurchased by the Company, such Shares will become available for future grant under the Plan. 
  
 (c) Share Reserve.    The Company, during the term
of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan. 
  
 4.    Administration of the Plan. 
  
 (a) Procedure. 
  
 (i)    Multiple Administrative Bodies.    Different Committees with respect to different groups of Service
Providers may administer the Plan. 
  

 -5- 

 (ii)    Section 162(m).    To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code. 
  
 (iii)    Rule 16b-3.    To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured
to satisfy the requirements for exemption under Rule 16b-3. 
  
 (iv)    Other Administration.    Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

  
 (b) Powers of the
Administrator.    Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

  
 (i)    to determine the Fair Market
Value; 
  
 (ii)    to select the Service
Providers to whom Awards may be granted hereunder; 
  
 (iii)    to determine the number of Shares to be covered by each Award granted hereunder; 
  
 (iv)    to approve forms of agreement for use under the Plan; 
  
 (v)    to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award
granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine; 
  
 (vi)    to institute an Exchange Program; 
  
 (vii)    to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

  
 (viii)    to prescribe, amend and rescind
rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws; 
  
 (ix)    to modify or amend each Award (subject to Section 18(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan; 
  

 -6- 

 (x)    to allow Participants to satisfy withholding tax obligations by electing to
have the Company withhold from the Shares to be issued upon exercise of an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld (the Fair Market Value of the Shares to be withheld will be
determined on the date that the amount of tax to be withheld is to be determined and all elections by a Participant to have Shares withheld for this purpose will be made in such form and under such conditions as the Administrator may deem necessary
or advisable); 
  
 (xi)    to authorize any
person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; 
  
 (xii)    to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant under an Award 
  
 (xiii)    to make all other determinations deemed necessary or advisable for administering the Plan. 
  
 (c) Effect of Administrator’s Decision.    The Administrator’s decisions, determinations and interpretations will be
final and binding on all Participants and any other holders of Awards. 
  
 5.    Eligibility.    Nonstatutory Stock Options, Stock Purchase Rights, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees. 
  
 6.    Stock Options. 
  
 (a)
Limitations. 
  
 (i)    Each Option
will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of
this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. 
  
 (ii)    The following limitations will apply to grants
of Options and Stock Appreciation Rights: 
  
 (1) No Service
Provider will be granted, in any Fiscal Year, Options to purchase more than 333,350 Shares. 
  
 (2) In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 1,333,400 Shares, which will not count against the limit set forth in Section 6(a)(2)(ii)(1)
above.7 
  

 -7- 

 (3) The foregoing limitations will be adjusted proportionately in connection with any change in the
Company’s capitalization as described in Section 14. 
  
 (4)
If an Option is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 14), the cancelled Option will be counted against the limits set forth in subsections (1) and (2) above. For
this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option. 
  
 (b) Term of Option.    The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option,
the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant
or such shorter term as may be provided in the Award Agreement. 
  
 (c) Option Exercise Price and Consideration. 
  
 (i)    Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:

  
 (1) In the case of an Incentive Stock Option 
  
 a)  granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share
on the date of grant. 
  
 b)  granted to any Employee
other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant. 
  
 (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be determined by the Administrator. In
the case of a Nonstatutory Stock Option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on
the date of grant. 
  
 (3) Notwithstanding the foregoing,
Incentive Stock Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction. 
  
 (ii)    Waiting Period and Exercise
Dates.    At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

  

 -8- 

 (iii)    Form of Consideration.    The Administrator will
determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of: (1) cash; (2) check; (3) promissory note; (4) other Shares, provided Shares acquired directly or indirectly from the Company, (A) have been owned by the Participant and not subject to substantial risk of
forfeiture for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised; (5) consideration received by the
Company under a cashless exercise program implemented by the Company in connection with the Plan; (6) a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participant’s participation
in any Company-sponsored deferred compensation program or arrangement; (7) any combination of the foregoing methods of payment; or (8) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable
Laws. 
  
 (d) Exercise of Option. 
  
 (i)    Procedure for Exercise; Rights as a
Stockholder.    Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An
Option may not be exercised for a fraction of a Share. 
  
 An
Option will be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to
which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name
of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of
the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly
after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan. 
  
 Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 
  
 (ii)    Termination of Relationship as a Service Provider.    If a Participant ceases to be a Service
Provider, other than upon the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the
Participant’s termination. Unless otherwise provided by the Administrator, if on the 
  

 -9- 

 date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to
the Plan. 
  
 (iii)    Disability of
Participant.    If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award
Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option
will remain exercisable for twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will
revert to the Plan. 
  
 (iv)    Death of
Participant.    If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the
Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary
has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the
Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option
will remain exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 
  
 7.    Stock Purchase Rights. 
  
 (a) Rights to Purchase.    Stock Purchase Rights
may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it will advise
the offeree in writing or electronically, by means of an Award Agreement, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree 
 will be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer. The offer will be accepted as determined by the Administrator. 
  
 (b) Repurchase Option.    Unless the Administrator
determines otherwise, the Award Agreement will grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Award Agreement will be 

  

 -10- 

 
determined by the Administrator and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option will lapse at a
rate determined by the Administrator. 
  
 (c) Other
Provisions.    The Award Agreement will contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator. 
  
 (d) Rights as a Stockholder.    Once the Stock
Purchase Right is exercised, the purchaser will have the rights equivalent to those of a stockholder, and will be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan. 
  
 8.    Restricted Stock. 
  
 (a) Grant of Restricted Stock.    Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine. 
  
 (b) Restricted Stock Agreement.    Each Award of Restricted Stock will be evidenced by an Award
Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, Shares of
Restricted Stock will be held by the Company as escrow agent until the restrictions on such Shares have lapsed. 
  
 (c) Transferability.    Except as provided in this Section 8, Shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. 
  
 (d) Other Restrictions.    The Administrator, in its sole discretion, may impose such other restrictions on Shares of
Restricted Stock as it may deem advisable or appropriate. 
  
 (e)
Removal of Restrictions.    Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. 
  
 (f) Voting Rights.    During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder
may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. 
  
 (g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to
receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 
  

 -11- 

 (h) Return of Restricted Stock to Company.    On the date set forth in the
Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. 
  
 9.    Stock Appreciation Rights. 
  
 (a) Grant of SARs.    Subject to the terms and conditions of the Plan, an SAR may be granted to
Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. The Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof. 
  
 (b) Number of Shares.    The Administrator will
have complete discretion to determine the number of SARs granted to any Service Provider. 
  
 (c) Exercise Price and Other Terms.    The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of SARs granted under the
Plan. However, the exercise price of Tandem or Affiliated SARs will equal the exercise price of the related Option. 
  
 (d) Exercise of Tandem SARs.    Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon
the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. With respect to a Tandem SAR granted in connection
with an Incentive Stock Option: (a) the Tandem SAR will expire no later than the expiration of the underlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR will be for no more than one hundred percent (100%) of
the difference between the exercise price of the underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR will be
exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option. 
  
 (e) Exercise of Affiliated SARs.    An Affiliated SAR will be deemed to be exercised upon the exercise of the related Option.
The deemed exercise of an Affiliated SAR will not necessitate a reduction in the number of Shares subject to the related Option. 
  
 (f) Exercise of Freestanding SARs.    Freestanding SARs will be exercisable on such terms and conditions as the Administrator,
in its sole discretion, will determine. 
  
 (g) SAR
Agreement.    Each SAR grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole
discretion, will determine. 
  
 (h) Expiration of
SARs.    An SAR granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(d) also
will apply to SARs. 
  
 (i) Payment of SAR
Amount.    Upon exercise of an SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: 
  

 -12- 

 (i)    The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times 
  
 (ii)    The number of Shares with respect to which the SAR is exercised. 
  
 At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

  
 10. Performance Units and Performance Shares.

  
 (a) Grant of Performance
Units/Shares.    Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have
complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant. 
  
 (b) Value of Performance Units/Shares.    Each Performance Unit will have an initial value that is established by the
Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. 
  

(c) Performance Objectives and Other Terms.    The Administrator will set performance objectives in its discretion which,
depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives must be met will be called the
“Performance Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will
determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its
discretion. 
  
 (d) Earning of Performance
Units/Shares.    After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the corresponding performance objectives have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any
performance objectives for such Performance Unit/Share. 
  
 (e)
Form and Timing of Payment of Performance Units/Shares.    Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its
sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a
combination thereof. 
  
 (f) Cancellation of Performance
Units/Shares.    On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. 
  
 11.    Formula Option Grants to Outside Directors.

  

 -13- 

 All grants of Options to Outside Directors pursuant to this Section will be automatic and
nondiscretionary and will be made in accordance with the following provisions: 
  
 (a) Type of Option.    All Options granted pursuant to this Section will be Nonstatutory Stock Options and, except as otherwise provided herein, will be subject to the other terms and
conditions of the Plan. 
  
 (b) No
Discretion.    No person will have any discretion to select which Outside Directors will be granted Options under this Section or to determine the number of Shares to be covered by such Options (except as provided in Sections
11(f) and 14). 
  
 (c) First
Option.    Each person who first becomes an Outside Director following the Registration Date will be automatically granted an Option to purchase 26,668 Shares (the “First Option”) on or about the date on which such
person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director or Beneficial Owner who ceases to be an Inside Director
or Beneficial Owner, respectively, but who remains a Director will not receive a First Option. 
  
 (d) Subsequent Option.    Each Outside Director will be automatically granted an Option to purchase 6,667 Shares (a “Subsequent Option”) on January 1 of each calendar year
beginning in 2004, if as of such date, he or she will have served on the Board for at least the preceding six (6) months. 
  
 (e) Terms.    The terms of each Option granted pursuant to this Section will be as follows: 
  
 (i)    The term of the Option will be ten (10) years.

  
 (ii)    The exercise price per Share will
be 100% of the Fair Market Value per Share on the date of grant of the Option. 
  
 (iii)    Subject to Section 14, the First Option will vest and become exercisable as to 100% of the Shares subject to such Option on the fourth anniversary of its date of grant, provided that the
Participant continues to serve as a Service Provider through such date. 
  
 (f) Subject to Section 14, the Subsequent Option will vest and become exercisable in one installment upon the Participant’s completion of the four (4)-year period of service measured from the grant date. 
  
 (g) Amendment.    The Administrator in its
discretion may change the number of Shares subject to the First Options and Subsequent Options. 
  
 12.    Leaves of Absence.    Unless the Administrator provides otherwise, vesting of Awards granted
hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If 
  

 -14- 

 reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months
following the 91st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as
an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. 
  
 13.    Transferability of Awards.    Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such
additional terms and conditions as the Administrator deems appropriate. 
  
 14     Adjustments; Dissolution or Liquidation; Merger or Change in Control. 
  
 (a) Adjustments.    In the event that any dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the
corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust
the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, the numerical Share limits in Sections 3 and 6 of the Plan and the number of Shares issuable
pursuant to Section 11. 
  
 (b) Dissolution or
Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the
extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. 
  
 (c) Change in Control.    In the event of a Change in Control, each outstanding Option, Stock Purchase Right and Stock
Appreciation Right will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the
Option, Stock Purchase Right or Stock Appreciation Right, the Participant will fully vest in and have the right to exercise the Option, Stock Purchase Right or Stock Appreciation Right as to all of the Optioned Stock, including Shares as to which it
would not otherwise be vested or exercisable (subject to consummation of the Change in Control). If an Option, Stock Purchase Right or Stock Appreciation Right becomes fully vested and exercisable in lieu of assumption or substitution in the event
of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option, Stock Purchase Right or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the
Administrator in its sole discretion, and the Option, Stock Purchase Right or Stock Appreciation Right will terminate upon the expiration of such period. 
  
 With respect to Options, SARs and/or Stock Purchase Rights granted to an Outside Director that are assumed or substituted for, if on the date of or
following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant, then the 
  

 -15- 

 Participant will fully vest in and have the right to exercise the Option, SAR and/or Stock Purchase Rights as to all of
the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. 
  
 For the purposes of this subsection (c), the Option, Stock Purchase Right or Stock Appreciation Right will be considered assumed if, following the Change
in Control, the option or right confers the right to purchase or receive, for each Share subject to the Option, Stock Purchase Right or Stock Appreciation Right immediately prior to the Change in Control, the consideration (whether stock, cash, or
other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash, the fair market value of the consideration, received in the merger or Change in Control by holders of
Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the
exercise of the Option, Stock Purchase Right or Stock Appreciation Right, for each Share subject to the Option, Stock Purchase Right or Stock Appreciation Right, to be solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock in the Change in Control. 
  
 15.    No Effect on Employment or Service.    Neither the Plan nor any Award will confer upon a Participant
any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any
time, with or without cause, to the extent permitted by Applicable Laws. 
  
 16.    Date of Grant.    The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such
other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant. 
  
 17.    Term of Plan.    Subject to Section 21 of the Plan, the Plan will
become effective upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless terminated earlier under Section 18 of the Plan. 
  

18.    Amendment and Termination of the Plan. 
  
 (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. 
  
 (b) Stockholder Approval. The Company will obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. 
  
 (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and
the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability 
  

 -16- 

 to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such
termination. 
  
 19.    Conditions Upon
Issuance of Shares. 
  
 (a) Legal
Compliance.    Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the
approval of counsel for the Company with respect to such compliance. 
  
 (b) Investment Representations.    As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 
  
 20.    Inability to Obtain Authority.    The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority will not have been obtained. 
  
 21.    Stockholder Approval.    The Plan will be subject to approval by the stockholders of the Company
within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws. 
  

 -17- 

 THE ALPHASMART, INC. 2003 STOCK PLAN 
  
 SUB-PLAN FOR UK EMPLOYEES 
  
 1.    The purpose of this Sub-Plan is to provide incentive for present and future employees of AlphaSmart Europe Limited through the grant of options
over Common Stock. 
  
 2.    This Sub-Plan is governed by the
AlphaSmart, Inc. 2003 Stock Plan and all its provisions shall be identical to those of the Plan save that the following sections shall be as stated in this Sub-Plan in order to accommodate the specific requirements of UK law. 
  

  

	1.	 	Purposes of the Sub-Plan 

  

	    	 	The purposes of this Sub-Plan are: 

  

	 	•	 	to attract and retain the best available personnel for positions of substantial responsibility; 

  

	 	•	 	to provide additional incentive to Employees; and 

  

	 	•	 	to promote the success of the Company’s business. 

  

	    	 	The Sub-Plan permits the grant of Nonstatutory Stock Options, Stock Purchase Rights, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares.

  

	2.	 	Eligibility 

  

	    	 	Nonstatutory Stock Options, Stock Purchase Rights, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares may be granted to Employees.

  

	    	 	General 

  

	    	 	References to Incentive Stock Options shall not apply to Options granted under the Sub Plan.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]