Employee Equity Participation Plan - LeapFrog Enterprises Inc.
AMENDED AND RESTATED
EMPLOYEE EQUITY PARTICIPATION PLAN
OF
LEAPFROG ENTERPRISES, INC.
LEAPFROG ENTERPRISES, INC. (formerly Knowledge Kids Enterprises, Inc.),
a Delaware corporation (the "Company") adopted an Employee Equity Participation
Plan effective as of March 21, 2000 (the "Original Plan"). The Company desires
to increase the maximum number of shares which may be issued under the plan and
to adopt other changes to the Original Plan. This Amended and Restated Leapfrog
Enterprises, Inc. Employee Equity Participation Plan (the "Plan") amends and
completely restates the Original Plan.
The purposes of this Plan are as follows:
(1) To further the growth, development, and financial success
of the Company by providing additional incentives to certain of its employees
and the employees of its subsidiaries.
(2) To permit such employees to benefit directly from the
Company's growth, development, and financial success.
(3) To enable the Company to attract and retain the services
of the type of managerial and administrative employees considered essential to
the long-range success of the Company.
ARTICLE 1
DEFINITIONS
Whenever the following terms are used in this Plan, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
The masculine pronoun shall include the feminine and neuter and the singular
shall include the plural, where the context so indicates.
SECTION 1.1 BOARD
"Board" shall mean the Board of Directors of the Company.
SECTION 1.2 CAUSE
"Cause" shall have the meaning assigned to it in any relevant
employment agreement between the Company and the Holder, otherwise a termination
shall be for "cause" if the Holder shall (i) commit an act of fraud,
embezzlement, or misappropriation, (ii) be convicted of, or enter a plea of
guilty or no contest to, any felony involving moral turpitude or dishonesty,
(iii) commission of an act which amounts to willful misconduct, wanton
misconduct, or gross
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negligence, or (iv) willfully fail to perform the responsibilities and duties of
his employment with the Company.
SECTION 1.3 CODE
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
SECTION 1.4 COMMITTEE
"Committee" shall mean the Compensation Committee of the Board
of Directors of the Company.
SECTION 1.5 COMPANY
"Company" shall mean Knowledge Kids Enterprises, Inc., a
Delaware corporation.
SECTION 1.6 DIRECTOR
"Director" shall mean a member of the Board.
SECTION 1.7 EMPLOYEE
"Employee" shall mean any full-time employee of the Company,
or of any entity which is then a Subsidiary, whether such employee is so
employed at the time this Plan is adopted or becomes so employed subsequent to
the adoption of this Plan.
SECTION 1.8 EXERCISE AMOUNT
The "Exercise Amount" of a Stock Appreciation Right shall mean
the product of (i) the number of Phantom Shares as to which the Stock
Appreciation Right is then being exercised and (ii) the excess, if any, of (1)
the Value of a Phantom Share as defined in Section 1.19 hereto over (2) the
Initial Price of the Phantom Share established in the applicable Employee Equity
Participation Agreement, as the same may have been adjusted subsequent to the
execution of the applicable Employee Equity Participation Agreement pursuant to
the terms thereof and of this Plan.
SECTION 1.9 HOLDER
"Holder" shall mean an Employee to whom a Stock Appreciation
Right is granted under the Plan.
SECTION 1.10 INITIAL PRICE
The "Initial Price" of a Phantom Share shall mean the Value of
a Phantom Share with respect to which a Stock Appreciation Right is granted
determined as of the date on which the Stock Appreciation Right is granted, as
determined by the Committee. The Holder may not dispute the Committee's
determination of the Initial Price.
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SECTION 1.11 OFFICER
"Officer" shall mean an officer of the Company or any
Subsidiary.
SECTION 1.12 PERMANENT DISABILITY
"Permanent Disability" shall have the meaning assigned to it
in any relevant employment agreement between the Company and the Holder,
otherwise the meaning of "permanent disability" shall be determined by the
Board.
SECTION 1.13 PHANTOM SHARES
"Phantom Shares" shall mean hypothetical, nonexistent shares
of Class A Common Stock of the Company. One Phantom Share shall be the
equivalent of one share of Class A Common Stock of the Company.
SECTION 1.14 PLAN
"Plan" shall mean this Employee Equity Participation Plan of
Knowledge Kids Enterprises, Inc.
SECTION 1.15 SECRETARY
"Secretary" shall mean the Secretary of the Company.
SECTION 1.16 STOCK APPRECIATION RIGHT
"Stock Appreciation Right" shall mean the right granted to a
Holder under this Plan and the Holder's Employee Equity Participation Agreement
to receive cash measured by the appreciation in the Value of the Phantom Shares
granted to the Holder under the Plan from the date of grant to the date of
exercise, subject to the limitations and conditions provided in this Plan and in
the Holder's Employee Equity Participation Agreement.
SECTION 1.17 SUBSIDIARY
"Subsidiary" shall mean any entity, whether a corporation,
partnership, joint venture or other organization, in an unbroken chain of
entities beginning with the Company if each of the entities other than the last
tier entity in the unbroken chain then owns stock or other equity possessing 50%
or more of the total combined voting power of all classes of stock or other
equity in the next tier entity in such chain.
SECTION 1.18 TERMINATION OF EMPLOYMENT
"Termination of Employment" shall mean the time when the
employee-employer relationship between a Holder and the Company or a Subsidiary
is terminated for any reason, with or without cause, including, but not by way
of limitation, a termination by resignation, discharge, death or retirement, but
excluding terminations where there is a simultaneous reemployment by the Company
or a Subsidiary. The Board, in its absolute discretion, shall
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determine the effect of all other matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for Cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment.
SECTION 1.19 VALUE OF A PHANTOM SHARE
The "Value of a Phantom Share" as of any date shall be the
"fair market value" of a share of the Company's Class A Common Stock (a
"Share"). The "fair market value" of a Share as of a given date shall mean: (i)
the average closing price of a Share on the principal exchange on which Shares
are then trading, if any (or as reported on any composite index which includes
such principal exchange), on the ten (10) most current trading days immediately
prior to such date, or (ii) if the Shares are not traded on an exchange but are
quoted on NASDAQ or a successor quotation system, the average mean between the
closing representative bid and asked prices for the Shares on the ten (10) most
recent trading days immediately prior to such date as reported by NASDAQ or such
successor quotation system; or (iii) in the event that clauses (i) and (ii)
above are inapplicable, the "fair market value" shall be determined in good
faith by the Committee as frequently and covering such period as the Committee
shall determine in its discretion. The good faith determination of "fair market
value" by the Committee pursuant to clause (i) or (ii) above shall be conclusive
and binding on the Holders. For so long as "fair market value" is determined
pursuant to clause (iii) above, the Committee shall, upon receipt of an exercise
notice pursuant to Section 5.3 hereof, notify the Holder in writing of its
determination (the "Valuation Notice"). If the Holder disputes the fair market
value set forth in the Committee's Valuation Notice, then the Holder shall so
notify the Committee in writing (the "Appraisal Notice") within five (5)
business days of delivery of the Valuation Notice. The Holder may not dispute
the Committee's determination of the Initial Price. Within fifteen (15) business
days of the delivery of the Appraisal Notice, the Committee and the Holder shall
each appoint a professional appraiser to determine the fair market value of the
Shares. Each appraiser shall have at least five (5) years experience in
appraising companies similar to the Company. The two appraisers shall within the
succeeding twenty (20) day period after their selection, attempt to reach
agreement on the fair market value. If the appraisers reach such agreement,
their agreement shall be final and binding on the Company and the Holder. If the
appraisers fail to agree, they shall within ten (10) days thereafter select a
third appraiser with the same qualification requirements, and the three (3)
appraisers shall establish the fair market value by majority vote within the
succeeding twenty (20) day period and such determination of the fair market
value shall be final and binding on the Company and the Holder. In all events,
the appraisers selected shall be unaffiliated with and otherwise independent of
the Company, the Holder, and their affiliates. If the fair market value as
determined by the appraisers is less than 105% of the value as determined by the
Committee, then the Holder shall pay all costs associated with the appraisers.
If the fair market value as determined by the appraisers is equal to or more
than 105% of the value as determined by the Committee, then the Company shall
pay for all costs associated with the appraisers.
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ARTICLE 2
PHANTOM SHARES SUBJECT TO PLAN
SECTION 2.1 PHANTOM SHARES SUBJECT TO PLAN
The aggregate number of Phantom Shares as to which Stock
Appreciation Rights may be granted under the Plan shall not exceed One Million
Five Hundred Thousand (1,500,000).
SECTION 2.2 UNEXERCISED STOCK APPRECIATION RIGHTS
If any Stock Appreciation Right expires or is canceled without
having been fully exercised, the number of Phantom Shares subject to such Stock
Appreciation Right but as to which such Stock Appreciation Right was not
exercised prior to its expiration or cancellation may again be granted
hereunder, subject to the limitation of Section 2.1.
SECTION 2.3 CHANGES IN COMPANY'S SHARES
In the event that the outstanding Class A Common Stock of the
Company is hereafter changed into or exchanged for a different number or kind of
shares or other securities of the Company, or of another corporation, by reason
of reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, stock dividend or combination of shares, appropriate adjustments
shall be made by the Committee in the number of Phantom Shares which may be
subject to Stock Appreciation Rights under the Plan, including adjustments to
the limitation in Section 2.1 on the maximum number of Phantom Shares which may
be subject to Stock Appreciation Rights under the Plan.
ARTICLE 3
GRANTING OF STOCK APPRECIATION RIGHTS
SECTION 3.1 ELIGIBILITY
Any Employee of the Company or of any entity which is then a
Subsidiary shall be eligible to be granted Stock Appreciation Rights.
SECTION 3.2 GRANTING OF STOCK APPRECIATION RIGHTS
(a) The Committee may from time to time, in its absolute
discretion:
(i) Select from among its Employees (including those
to whom Stock Appreciation Rights have been previously granted under the Plan)
such of them as in its opinion should be granted Stock Appreciation Rights; and
(ii) Determine the number of Phantom Shares to be
subject to such Stock Appreciation Rights granted to such selected Employees;
and
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(iii) Determine the terms and conditions of such
Stock Appreciation Rights consistent with the Plan, other than the vesting
schedule as set forth in Section 3.4 hereof.
(b) Upon the selection of an Employee to be granted a Stock
Appreciation Right, the Committee, subject to approval by the Board, shall
instruct the Secretary to prepare an Employee Equity Participation Agreement
reflecting such Stock Appreciation Right, and, except as otherwise provided in
this Plan, may impose such conditions on the grant of such Stock Appreciation
Right as it deems appropriate. Without limiting the generality of the preceding
sentence, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of a Stock Appreciation Right
to an Employee that the Employee surrender for cancellation some or all of the
unexercised Stock Appreciation Rights which have been previously granted to him.
A Stock Appreciation Right the grant of which is conditioned upon such surrender
may have an Initial Price lower (or higher) than the Initial Price of the
surrendered Stock Appreciation Right, may cover the same (or a lesser or
greater) number of Phantom Shares as the surrendered Stock Appreciation Right,
may contain such other terms as the Committee deems appropriate and shall be
exercisable in accordance with its terms, without regard to the number of
Phantom Shares, Initial Price, exercise period or any other term or condition of
the surrendered Stock Appreciation Right.
SECTION 3.3 RIGHT OF THE COMMITTEE TO CONVERT STOCK APPRECIATION RIGHTS
TO OPTIONS
Notwithstanding the provisions of this Plan, the Committee
shall have the right, but not the obligation, to convert the Stock Appreciation
Rights granted to any or all Holders pursuant to this Plan from Stock
Appreciation Rights in Phantom Shares to "options" to purchase shares of Class A
Common Stock of the Company or such other securities of the Company as the Class
A Common Stock may have been exchanged for or into. Any conversion effected
pursuant to this Section 3.3 shall adopt (i) an exercise price of the options
not more than the Initial Price as stated in the Holder's Employee Equity
Participation Agreement, (ii) an option period not less than the period of
exercisability as provided in the Holder's Employee Equity Participation
Agreement, (iii) a vesting schedule no less favorable than the vesting schedule
provided in the Holder's Employee Equity Participation Agreement, and (iv) such
other terms as determined by the Committee. Upon the Committee's determination
to effect a conversion pursuant to this Section 3.3, the Committee shall provide
prompt notice to the Holder of such determination (the "Conversion Notice"). The
Holder must surrender his Employee Equity Participation Agreement within thirty
(30) days of the delivery of the Conversion Notice. Within fifteen (15) business
days of the receipt of the Holder's Employee Equity Participation Agreement, the
Committee shall issue an Option Agreement to the Holder consistent with this
Section 3.3 and such other terms as determined by the Committee.
SECTION 3.4 SECTION 3.4 - VESTING OF STOCK APPRECIATION RIGHTS
Subject at all times to Sections 4.3, 4.4 and 4.7 hereof, the
Stock Appreciation Rights granted to a Holder shall vest and thereby become
exercisable as set forth in such Holder's Employee Equity Participation
Agreement.
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ARTICLE 4
TERMS OF STOCK APPRECIATION RIGHTS
SECTION 4.1 EMPLOYEE EQUITY PARTICIPATION AGREEMENT
Each Stock Appreciation Right shall be evidenced by a written
Employee Equity Participation Agreement, which shall be executed by the Holder
and an authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with the Plan.
SECTION 4.2 STOCK APPRECIATION RIGHT INITIAL PRICE
The Initial Price (as defined in Section 1.10 hereto) of each
Phantom Share subject to each Stock Appreciation Right shall be set by the
Committee and shall be specified in the applicable Employee Equity Participation
Agreement. By executing his Employee Equity Participation Agreement, the
Employee shall be deemed to agree with the Committee's determination of the
Initial Price.
SECTION 4.3 COMMENCEMENT OF EXERCISABILITY
(a) Subject to the provisions of Sections 4.3, 4.4 and 4.7
hereof, Stock Appreciation Rights shall become exercisable in accordance with
Section 3.4 hereof; provided, however, that the Committee may adopt a resolution
after a Stock Appreciation Right is granted which may, on such terms and
conditions as it may determine to be appropriate and subject to Sections 4.3,
4.4 and 4.7 hereof, accelerate the time at which such Stock Appreciation Right
or any portion thereof may be exercised.
(b) No portion of a Stock Appreciation Right may be exercised
until the first to occur of (i) an underwritten initial public offering of the
Company's Class A Common Stock or other securities into which the Company's
Class A Common Stock has been exchanged (an "IPO"), or (ii) five (5) years from
the date of adoption of this Plan.
(c) Notwithstanding the provisions of Section 4.3(b), upon a
Holder's Termination of Employment prior to the points in time described in
Section 4.3(b)(i) or (ii), the Holder may exercise his Stock Appreciation Right
to the extent such right has vested pursuant to this Plan and otherwise in
accordance with the Holder's Employee Equity Participation Agreement. In the
event a Stock Appreciation Right is so exercised prior to an IPO, the Holder
shall be entitled to receive, in lieu of receiving cash upon exercise of the
Stock Appreciation Right, an equal amount of cash, without interest, upon the
first to occur of (i) an IPO or (ii) five (5) years from the date of adoption of
this Plan. In the event of an IPO, the Committee may elect to pay to the Holder
who has exercised a Stock Appreciation Right the Exercise Amount (including the
Exercise Amount due under a Stock Appreciation Right that was exercised before
the IPO) in (i) cash or (ii) registered Class A Common Stock of the Company or
other registered securities into which the Company's Class A Common Stock has
been exchanged, in either case of equal value to the cash benefit of the
Exercise Amount.
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(d) No portion of a Stock Appreciation Right which has expired
pursuant to Section 4.4 shall thereafter become exercisable.
SECTION 4.4 EXPIRATION OF STOCK APPRECIATION RIGHTS
(a) No Stock Appreciation Right may be exercised to any extent
by any Holder, a Holder's personal representative in the event of the death or
legally declared incapacity of the Holder or any other individual after the
first to occur of the following events:
(i) The expiration of ten years from the date the
Stock Appreciation Right was granted; or
(ii) The expiration date stated in the applicable
Employee Equity Participation Agreement; or
(iii) Except in the case of any Holder (a) who
terminates employment with the Company on his own volition, (b) whose employment
with the Company or a Subsidiary is terminated by reason of his Permanent
Disability or death or (c) whose employment is terminated by the Company or a
Subsidiary for Cause, the expiration of 90 days from the date of the Holder's
Termination of Employment; or
(iv) In the case of any Holder whose employment with
the Company or a Subsidiary is terminated by reason of his Permanent Disability,
the expiration of 180 days from the date of the Holder's Termination of
Employment; or
(v) In the case of any Holder who terminates
employment with the Company on his own volition, or whose employment with the
Company or a Subsidiary is terminated for Cause, the expiration of 90 days from
the date of the Holder's Termination of Employment; or
(vi) If the Holder's employment with the Company or a
Subsidiary is terminated by reason of his death, the expiration of 180 days from
the date of the Holder's death.
(b) Subject to the provisions of Section 4.4(a), the Committee
shall provide, in the terms of each individual Employee Equity Participation
Agreement, when the Stock Appreciation Right provided for therein expires and
becomes unexercisable.
SECTION 4.5 CONSIDERATION
Nothing in this Plan or in any Employee Equity Participation
Agreement hereunder shall confer upon any Holder any right to continue in the
employ of the Company or any Subsidiary or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries, which are hereby
expressly reserved, to discharge any Holder at any time for any reason
whatsoever, with or without cause.
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SECTION 4.6 ADJUSTMENTS IN OUTSTANDING APPRECIATION RIGHTS
In the event that the Company's Class A Common Stock is
changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number of Phantom Shares as to which all outstanding Stock
Appreciation Rights, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Holder's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Stock Appreciation Right shall be made without change in the total
Initial Price applicable to the Stock Appreciation Right or the unexercised
portion of the Stock Appreciation Right (except for any change in the aggregate
Initial Price resulting from rounding-off of share quantities or prices) and
with any necessary corresponding adjustment in Initial Price per Phantom Share.
Any such adjustment made by the Committee shall be final and binding upon all
Holders, the Company and all other interested persons.
SECTION 4.7 MERGER, CONSOLIDATION, ACQUISITION, LIQUIDATION OR
DISSOLUTION
Upon or in connection with the merger or consolidation of the
Company with or into another corporation, the acquisition by another corporation
or person of all or substantially all of the Company's assets or 50% or more of
the Company's then outstanding voting stock or membership interest or the
liquidation or dissolution of the Company, such Stock Appreciation Right shall
either, at the discretion of the Committee, (a) be (i) assumed or (ii) replaced
by a substitute stock appreciation right granted by any successor corporation or
(b) be or become exercisable, for a minimum of 30 days prior to such event, as
to all Phantom Shares covered thereby to the extent then exercisable. Unless
assumed as provided above, no Stock Appreciation Right may be exercised to any
extent by anyone after the effective date of such merger, consolidation,
acquisition, liquidation or dissolution.
ARTICLE 5
EXERCISE OF STOCK APPRECIATION RIGHTS
SECTION 5.1 PERSON ELIGIBLE TO EXERCISE
Except as provided in the following sentence, only the Holder
may exercise a Stock Appreciation Right granted to him, or any portion thereof,
during his lifetime. After the death or legally declared incapacity of the
Holder, any exercisable portion of a Stock Appreciation Right may, prior to the
time when such portion becomes unexercisable under Section 4.4 or Section 4.7,
be exercised by his personal representative or by any person empowered to do so
under the deceased Holder's will or under then applicable law.
SECTION 5.2 PARTIAL EXERCISE
At any time and from time to time prior to the time when any
exercisable Stock Appreciation Right or exercisable portion thereof becomes
unexercisable under Section 4.4 or Section 4.7, such Stock Appreciation Right or
portion thereof may be exercised in whole or in
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part; provided, however, that the Committee may require any partial exercise to
be with respect to a specified minimum number of Phantom Shares.
SECTION 5.3 MANNER OF EXERCISE
An exercisable Stock Appreciation Right, or any exercisable
portion thereof, may be exercised solely by delivery to the Secretary or his
office of all of the following prior to the time when such Stock Appreciation
Right or such portion becomes unexercisable under Section 4.4 or Section 4.7:
(a) Notice in writing signed by the Holder or other person
then entitled to exercise such Stock Appreciation Right or portion, stating that
such Stock Appreciation Right or portion is exercised, such notice complying
with all applicable rules established by the Committee; and
(b) In the event that the Stock Appreciation Right or portion
thereof shall be exercised pursuant to Section 5.1 by any person or persons
other than the Holder, appropriate proof of the right of such person or persons
to exercise the Stock Appreciation Right or portion thereof.
SECTION 5.4 EFFECT OF EXERCISE
(a) Upon the exercise of all or part of a Stock Appreciation
Right in accordance with the provisions of the Plan and the applicable Employee
Equity Participation Agreement, the Company shall pay to the Holder or other
person properly exercising such Stock Appreciation Right an amount (the
"Exercise Amount"), as provided in Section 5.4(b), equal to the product of (i)
the number of Phantom Shares as to which the Stock Appreciation Right is then
being exercised and (ii) the excess, if any, of (1) the Value of a Phantom Share
as defined in and determined in accordance with Section 1.19 hereof over (2) the
Initial Price of a Phantom Share established in the applicable Employee Equity
Participation Agreement, as the same may have been adjusted pursuant to the
terms of this Plan and the applicable Employee Equity Participation Agreement.
(b) The Exercise Amount determined under Section 5.4(a) shall
be paid in full no later than the second company payroll date following the date
on which the Stock Appreciation Right, or any portion thereof, has been
exercised and the date of the final determination of the applicable Value of a
Phantom Share in accordance with the terms of Section 1 .19 hereof with respect
to which the Stock Appreciation Right has been exercised. If the Committee
elects pursuant to Section 4.3(c) to pay the Exercise Amount in the form of
shares the Company's Class A Common Stock or other securities into which the
Company's Class A Common Stock has been exchanged, the value of such shares or
other securities payable shall be of equal value to the cash benefit of the
Exercise Amount payable.
(c) The Company shall make appropriate deductions from the
amounts payable under Section 5.4(a) for payroll tax and other withholdings
required by federal, state or local law or requested by the Holder.
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SECTION 5.5 NO RIGHTS AS SHAREHOLDERS
The Holders of Stock Appreciation Rights shall not be, nor
have any of the rights or privileges of, shareholders of the Company by virtue
of such Stock Appreciation Rights or the exercise thereof.
ARTICLE 6
ADMINISTRATION
SECTION 6.1 DUTIES AND POWERS OF THE COMPENSATION COMMITTEE
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Employee Equity Participation
Agreements and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules.
SECTION 6.2 PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS
The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Board, the Company and
its Officers and Directors shall be entitled to rely upon the advice, opinions
or valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee and the Board in good faith shall be final
and binding upon all Holders, the Company and all other interested persons. No
Director shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Employee
Equity Participation Agreements, and all Directors shall be fully protected by
the Company in respect to any such action, determination or interpretation.
ARTICLE 7
OTHER PROVISIONS
SECTION 7.1 LIMITATIONS ON RIGHTS OF HOLDERS
Holders of Stock Appreciation Rights under the Plan shall have
no interest or claim in any fund or specific asset of the Company by reason of
any Stock Appreciation Right or the exercise of any Stock Appreciation Right. No
trust shall be created in connection with the Plan, and there shall be no
funding required to secure the payment of any amounts becoming payable under the
Plan. Holders shall constitute general unsecured creditors of the Company,
without priority or preference.
SECTION 7.2 STOCK APPRECIATION RIGHTS NOT TRANSFERABLE
No Stock Appreciation Right or interest or right therein or
part thereof shall be liable for the debts, contracts or engagements of the
Holder or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or
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any other means whether such disposition be voluntary or involuntary or by
operation of law, by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect; provided, however, that nothing
in this Section 7.2 shall prevent transfers by will or by the applicable laws of
descent and distribution.
SECTION 7.3 AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the
Committee, subject to approval by the Board. Neither the amendment, suspension
nor termination of the Plan shall, without the consent of the Holder of a Stock
Appreciation Right, impair any rights or obligations under any Stock
Appreciation Right theretofore granted. No Stock Appreciation Right may be
granted during any period of suspension nor after termination of the Plan, and
in no event may any Stock Appreciation Right be granted under this Plan after
December 31, 2006.
SECTION 7.4 EFFECT OF PLAN UPON OTHER STOCK APPRECIATION RIGHTS AND
COMPENSATION PLANS
The adoption of this Plan shall not affect any other
compensation or incentive plans in effect for the Company or any Subsidiary.
Nothing in this Plan shall be construed to limit the right of the Company or any
Subsidiary (a) to establish any other forms of incentives or compensation for
employees of the Company or any Subsidiary or (b) to grant or assume stock
appreciation rights otherwise than under this Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of stock appreciation rights in connection with the acquisition by
purchase, lease, merger, consolidation or otherwise, of the business, stock or
assets of any corporation, firm or association.
SECTION 7.5 TITLES
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.
* * * *
I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Leapfrog Enterprises, Inc. effective as at September 17, 2001.
Executed as of this 5th day of December 2001.
/s/ Stanley E. Maron
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Secretary
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