Document:

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. This Plan will become effective only upon the closing of the first underwritten public offering of the Company’s Common Stock. 
  
 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.

  

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 (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. 
  

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 (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. 
  

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 (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. 
  

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 (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; 
  

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 (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 
  

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 (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.

  

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 (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 
  

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 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 

  

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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. 
  

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 (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.Form of stock option agreement by and between the registrant and James M. Walker

 Exhibit 10.17 
  
 ALPHASMART, INC. 
  
 STOCK OPTION AGREEMENT 
  
 RECITALS 
  
 A. The Board has adopted the Plan for the purpose of retaining the services of selected Key Employees and Consultants in the service of the Company or
Subsidiary. 
  
 B. Optionee is to render valuable services to the
Company or Subsidiary, and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Company’s grant of an option to Optionee. 
  
 C. All capitalized terms in this Agreement shall have the meaning assigned to
them in the attached Appendix. 
  
 NOW,
THEREFORE, it is hereby agreed as follows: 
  
 1. Grant of Option. The Company hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of shares of Common Stock specified in the Grant Notice. The Option Shares shall be purchasable from time
to time, during the option term specified in Section 2, at the Exercise Price. 
  
 2. Option Period. This option shall have a term of ten (10) years measured from the Grant Date and shall accordingly expire
at the close of business on the Expiration Date, unless sooner terminated in accordance with Section 5 or 6. 
  
 3. Limited Transferability. 
  
 (a) This option shall be neither transferable nor assignable by Optionee other than by will or the laws of descent and distribution
following Optionee’s death, and may be exercised during Optionee’s lifetime only by Optionee or by Optionee’s guardian or legal representative. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of
this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the
transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Section 5, be exercised following Optionee’s death. 
  
 (b) If this option is designated a Non-Statutory Stock
Option in the Grant Notice, then this option may be assigned in whole or in part during Optionee’s lifetime to one or more members of Optionee’s family or to a trust established for the exclusive benefit of one or more such family members
or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The 

  

 
assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment. 
  
 4. Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments as specified in
the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option
term under Section 5 or 6. 
  
 5. Cessation
of Service. The option term specified in Section 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: 
  
 (a) Should Optionee die while holding this option, then the
personal representative of Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of descent and distribution shall have the right to exercise this option. However, if Optionee
has designated one or more beneficiaries of this option, then those persons shall have the exclusive right to exercise this option following Optionee’s death. Any such right to exercise this option shall lapse, and this option shall cease to be
outstanding, upon the earlier of (i) the expiration of the six (6)-month period measured from the date of Optionee’s death, or (ii) the Expiration Date. 
  
 (b) Should Optionee cease Service by reason of Permanent Disability while holding this option, then Optionee
shall have a period of six (6) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date. 
  
 (c) Should Optionee cease Service by reason of the
retirement policies of the Company or a Subsidiary while holding this option, then Optionee shall have a period of six (6) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this
option be exercisable at any time after the Expiration Date. 
  
 (d) Should Optionee cease to remain in Service for any reason (other than death, retirement, Permanent Disability or Cause) while holding this option, then Optionee shall have a period of three (3) months (commencing
with the date of such cessation of Service), during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date. 
  
 (e) In the event of a termination of employment due to death or disability as described in Sections 5(a) or
(b) or upon retirement described in Section 5(c) if the Optionee has attained age 65 prior to retirement, any portion of the Option not then vested will nevertheless become fully vested and exercisable as of the day prior to the Optionee’s
death, disability or retirement. In the event vesting is accelerated pursuant to this Section 5(e), the shares subject to this Option shall be treated as Non-Statutory Stock Option shares, to the extent the accelerated portion of this Option exceeds
the dollar limitation in Section 19(d). 
  

 2. 

 (f) Should Optionee’s Service be terminated for Cause, then this option shall
terminate immediately and cease to remain outstanding. 
  
 (g) During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares in which Optionee is, at the time of Optionee’s cessation of Service, vested
pursuant to the Vesting Schedule specified in the Grant Notice or the special vesting acceleration provisions of Sections 5(e) and 6. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding for any vested Option Shares for which the option has not been exercised. To the extent Optionee is not vested in one or more Option Shares at the time of Optionee’s cessation of Service, this option shall
immediately terminate and cease to be outstanding with respect to those shares. 
  
 6. Accelerated Vesting. 
  
 (a) In the event of any Change in Control, the Option Shares at the time subject to this option but not otherwise vested shall
automatically vest in full so that this option shall, immediately prior to the effective date of the Change in Control, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares
as vested shares. However, the Option Shares shall not vest on such an accelerated basis if and to the extent: (i) this option is assumed by the successor corporation (or parent thereof) in the Change in Control and the Company’s
repurchase rights with respect to the unvested Option Shares are assigned to such successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the successor corporation which preserves the spread
existing on the unvested Option Shares at the time of the Change in Control (the excess of the Market Value of those Option Shares over the Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same
Vesting Schedule applicable to those unvested Option Shares as set forth in this Option Agreement. 
  
 (b) Immediately following the Change in Control, this option shall terminate and cease to be outstanding, except to the extent assumed by
the successor corporation (or parent thereof) in connection with the Change in Control. 
  
 (c) If this option is assumed in connection with a Change in Control, then this option shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Change in Control had the option been exercised immediately prior to such Change in Control, and appropriate
adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the extent the actual holders of the Company’s outstanding Common Stock receive cash consideration for their Common
Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control. 
  

 3. 

 (d) Upon an Involuntary Termination of Optionee’s Service within eighteen (18)
months following a Change in Control in which this option is assumed or replaced and the Company’s repurchase rights with respect to the unvested Option Shares are assigned, all the Option Shares at the time subject to this option but not
otherwise vested shall automatically vest and the Company’s repurchase rights with respect to those shares shall terminate so that this option shall immediately become exercisable for all such Option Shares as fully-vested shares of Common
Stock and may be exercised for any or all of those shares at any time prior to the earlier of (i) the Expiration Date, or (ii) the expiration of the three (3)-month period measured from the date of the Involuntary Termination. 
  
 7. Adjustment in Option Shares. Should any
change be made to the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination, or exchange of shares, or rights offering to purchase Common Stock at a price substantially below
Market Value, or of any similar change affecting the Common Stock, appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this option, and (ii) the Exercise Price, in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder. 
  
 8. Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and
become the record holder of the purchased shares. 
  
 9. Manner of Exercising Option. 
  
 (a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

  
 (i) Execute and deliver to the Company a
Purchase Agreement for the Option Shares for which the option is exercised. 
  
 (ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms: 
  
 (A) cash or check made payable to the Company; or 
  
 Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised,
then the Exercise Price may also be paid as follows: 
  
 (B) in shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes and valued at Market
Value on the Exercise Date; or 
  

 4. 

 (C) to the extent the option is exercised for vested Option Shares, through a special
sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (a) to a Company-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable federal, state and local income and
employment taxes required to be withheld by the Company by reason of such exercise, and (b) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. 
  
 Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price must accompany the Purchase Agreement delivered to the Company in connection with the option exercise. 
  
 (b) As soon as practical after the Exercise Date, the Company shall issue to or on behalf of Optionee (or
any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto. 
  
 (c) In no event may this option be exercised for any fractional shares. 
  
 10. REPURCHASE RIGHTS. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE
SUBJECT TO CERTAIN RIGHTS OF THE COMPANY AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT. 
  
 11. Lock-Up. 
  
 (a) Optionee hereby agrees that Optionee shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or
other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Optionee (other than those included in the registration) for a period
specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed 180 days following the effective date of any registration statement of the Company filed under the Securities Act. 
  
 (b) Optionee agrees to execute and deliver such other
agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the
underwriters of Common Stock (or other securities) of the 

  

 5. 

 
Company, Optionee shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in
connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act of 1933, as amended. The obligations described in this Section 11 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said 180-day period. Optionee agrees that any
transferee of the Option or shares acquired pursuant to the Option shall be bound by this Section 11. 
  
 12. Company’s Right of First Refusal. Before any Option Shares held by Optionee or any transferee (either being
sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Option Shares on the
terms and conditions set forth in this Section 12 (the “Right of First Refusal”). 
  
 (a) Notice of Proposed Transfer. The Holder of the Option Shares shall deliver to the Company a written notice (the
“Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Option Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Option
Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Option Shares (the “Offered Price”), and the Holder shall offer the Option Shares
at the Offered Price to the Company or its assignee(s). 
  
 (b) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not
less than all, of the Option Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below. 
  
 (c) Purchase Price. The purchase price (“Purchase Price”) for the Option Shares purchased
by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of
the Company in good faith. 
  
 (d)
Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice. 
  
 (e) Holder’s Right to Transfer. If all of the Option Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company 

  

 6. 

 
and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Option Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice, that any such sale or other transfer is effected in accordance with any applicable securities laws and that
the Proposed Transferee agrees in writing that the provisions of this Section 12 shall continue to apply to the Option Shares in the hands of such Proposed Transferee. If the Option Shares described in the Notice are not transferred to the Proposed
Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Option Shares held by the Holder may be sold or otherwise transferred.

  
 (f) Exception for Certain Family
Transfers. Anything to the contrary contained in this Section 12 notwithstanding, the transfer of any or all of the Option Shares during the Optionee’s lifetime or on the Optionee’s death by will or the laws of descent and distribution
to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section 12. “Immediate Family” as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Option Shares so transferred subject to the provisions of this Section 12, and there shall be no further transfer of such
Option Shares except in accordance with the terms of this Section. 
  
 (g) Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Option Shares upon the earlier of (i) the first sale of Common Stock of the Company to the general public, or (ii)
a Change in Control in which the successor corporation has equity securities that are publicly traded. 
  
 13. Compliance with Laws and Regulations. 
  
 (a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to
compliance by the Company and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any Stock Exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for
trading at the time of such exercise and issuance. 
  
 (b) The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Company of any
liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Company, however, shall use its best efforts to obtain all such approvals. 
  
 14. Successors and Assigns. Except to the
extent otherwise provided in Sections 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs
and legatees of Optionee’s estate. 
  

 7. 

 15. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the Secretary of the Company. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below
Optionee’s signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified. 
  
 16. Construction. This Agreement and the
option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement
shall be conclusive and binding on all persons having an interest in this option. 
  
 17. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed, construed and
administered in accordance with the laws of the State of California. 
  
 18. Stockholder Approval. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may be issued under the Plan as last approved by the
stockholders, then this option shall be void with respect to such excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the
provisions of the Plan. 
  
 19. Additional
Terms Applicable to an Incentive Stock Option. In the event this option is designated an Incentive Stock Option in the Grant Notice, the following terms and conditions shall also apply to the grant: 
  
 (a) No disposition of any shares of Common Stock received
through exercise of the Option may be made by Optionee within two (2) years of the Grant Date nor within one (1) year of the exercise of any such shares by Optionee. In the event of a disposition prior to such one (1) year period, the Option shall
not be forfeited, but the disposed shares shall be treated as if acquired pursuant to a Non-Statutory Stock Option. 
  
 (b) This option shall cease to qualify for favorable tax treatment as an Incentive Stock Option if (and to the extent) this option is
exercised for one or more Option Shares: (i) more than three (3) months after the date Optionee ceases to be a Key Employee for any reason other than death or Permanent Disability, or (ii) more than twelve (12) months after the date Optionee ceases
to be an Employee by reason of Permanent Disability. 
  
 (c) If Optionee owns more than 10% of the total combined voting power of all classes of stock of the Company or a Subsidiary, the Exercise Price of the Option must be a least 110% of the Market Value of the Common Stock (determined as of
the Grant Date) subject to the Option and the Option herein shall expire on the fifth (5th) anniversary of the Grant
Date. 
  

 8. 

 (d) To the extent that the aggregate Market Value of the shares of Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such options shall be treated as Non-Statutory
Options. For purposes of this Section 19(d), Incentive Stock Options shall be taken into account in the order in which they were granted. The Market Value of the Common Stock shall be determined as of the time the option with respect to such Common
Stock is granted. 
  

	 OPTIONEE
	 	 	 	 ALPHASMART, INC.

	  	 	 	 	  
	
	 	 	

	 Signature
	 	 	 	 By

	 	 	 	 	 
	 	 	 	 	 
	
	 	 	

	 Print Name
	 	 	 	 Title

	 	 	 	 	 
	 	 	 	 	 
	
	 	 	 	 
			
	 	 	 	 	 
	
	 	 	 	 
	 Residence Address
	 	 	 	 

  

 9. 

 APPENDIX 
  
 The following definitions shall be in effect under the Agreement: 
  
 A. Agreement shall mean this Stock Option Agreement.

  
 B. Board shall mean the Company’s Board of
Directors. 
  
 C. Cause shall include termination
for reason of (i) Optionee’s conviction for, or plea of nolo contendere to, a felony, (ii) Optionee’s commission of an act involving self-dealing, fraud or personal profit materially injurious to the Company, (iii) Optionee’s
commission of an act of willful misconduct or gross negligence in the conduct of his or her employment duties for the Company, (iv) habitual absenteeism or tardiness on the part of Optionee with respect to his or her employment with the Company, (v)
Optionee’s breach or violation of any material internal policies or rules of the Company, including those rules adopted by the Company concerning the purchase and sale of the Company’s Common Stock or other securities by employees of the
Company, and (vi) Optionee’s breach of any material provision of any written employment agreement between Optionee and the Company. The Committee in its discretion shall determine whether a termination was made for Cause. 
  
 D. Change in Control shall mean either of the following
stockholder-approved transactions to which the Company is a party: 
  
 (i) The Company is merged, consolidated or reorganized into or with another corporation, or other entity and, as a result thereof, less than 50% of the outstanding stock or other capital interests of the surviving,
resulting or acquiring corporation, person, or other entity is owned, in the aggregate, by the stockholder or stockholders of the Company immediately prior to such merger, consolidation or reorganization; or 
  
 (ii) The consummation of the sale or disposition by the
Company of all or substantially all of the Company’s assets. 
  
 E. Code shall mean the Internal Revenue Code of 1986, as amended. 
  
 F. Committee shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan. 
  
 G. Common Stock shall mean the Company’s common stock. 
  
 H. Company shall mean AlphaSmart, Inc., a California
corporation, and any successor corporation to all or substantially all of the assets or voting stock of AlphaSmart, Inc. which shall, by appropriate action, assume this option. 
  
 I. Consultant shall mean an advisor or independent consultant to the Company who, in the opinion of the
committee, is in a position to make significant contributions to the Company 

  

 A-1. 

 
or Subsidiary. A non-employee director on the Company’s Board of Directors shall be considered a Consultant eligible to receive options under the Plan.

  
 J. 1934 Act shall mean the Securities Exchange
Act of 1934, as amended. 
  
 K. Exercise Date shall
mean the date on which the option shall have been exercised in accordance with Section 9 of the Agreement. 
  
 L. Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant Notice. 
  
 M. Expiration Date shall mean the date on which the option
expires as specified in the Grant Notice. 
  
 N. Grant
Date shall mean the date of grant of the option as specified in the Grant Notice. 
  
 O. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby. 
  
 P. Incentive Stock Option shall mean an option which satisfies
the requirements of Code Section 422. 
  
 Q. Involuntary
Termination shall mean any purported termination of the Optionee by the Company which is not effected for Cause. 
  
 R. Key Employee shall mean an individual who is in the employ of the Company or any Subsidiary regularly employed on a full-time basis,
including an officer or director if he or she is such an employee who, in the opinion of the Committee, is in a position to make significant contributions to the Company or Subsidiary. 
  
 S. Market Value as applied to a specific date and unless otherwise specifically defined in the text of this
Agreement, shall mean (a) the average of the high and low sale prices of the Common Stock for such date as reported on the National Association of Securities Dealers Automated Quotation (“NASDAQ”) system (or, if no such sales were reported
for such date, on the next preceding date for which such sales were reported), or (b) if the price of Common Stock is not reported on the NASDAQ system or any other national exchange, the fair market value as determined in good faith by the
Committee. 
  
 T. Non-Statutory Stock Option shall
mean an option not intended to satisfy the requirements of Code Section 422. 
  
 U. Option Shares shall mean the number of shares of Common Stock subject to the option. 
  

 A-2. 

 V. Optionee shall mean the person to whom the option is granted as specified in the Grant
Notice. 
  
 W. Parent shall mean any corporation
(other than the Company) in an unbroken chain of corporations ending with the Company, provided each corporation in the unbroken chain (other than the Company) owns, at the time of the determination, stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain. 
  
 X. Plan shall mean the Company’s 1998 Stock Option Plan as from time to time amended. 
  
 Y. Permanent Disability shall mean Optionee is unable by reason of accident or illness (including metal illness) to perform the material
duties of this regular position with the Company and is not expected to recover from his or her disability within a period of six (6) months from the commencement of the disability. If at any time Optionee is claimed to be permanently disabled, a
physician acceptable to both Optionee and the Committee (which acceptances shall not be unreasonably withheld) shall be retained by the Committee and shall examine Optionee. Optionee shall cooperate fully with the physician. If the physician
determines that Optionee is permanently disabled, the physician shall deliver to the Committee a certificate certifying both that Optionee is permanently disabled and the date upon which the condition of permanent disability commenced. The
determination of the physician shall be conclusive. For purposes of Options that are Incentive Stock Options, Permanent Disability shall be interpreted consistent with Code Section 22(e)(3). 
  
 Z. Purchase Agreement shall mean the stock purchase agreement
in substantially the form of Exhibit B to the Grant Notice. 
  
 AA. Service shall mean the Optionee’s performance of services for the Company or any Subsidiary in the capacity of an Employee, a non-employee Board member or as a Consultant. 
  
 BB. Stock Exchange shall mean the American Stock Exchange or
the New York Stock Exchange. 
  
 CC. Subsidiary
shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
  
 DD. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which the Optionee is to vest in the Option
Shares in a series of installments over his or her period of Service. 
  

 A-3.

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