2002 Employee Stock Purchase Plan Offering - LeapFrog Enterprises Inc.
LEAPFROG ENTERPRISES, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
OFFERING
ADOPTED BY THE BOARD OF DIRECTORS: MAY 24, 2002
In this document, capitalized terms not otherwise defined shall have the
same definitions of such terms as in the LeapFrog Enterprises, Inc., 2002
Employee Stock Purchase Plan.
1. GRANT; OFFERING DATE.
(a) The Board hereby authorizes a series of Offerings pursuant to the
terms of this Offering document.
(b) The first Offering hereunder (the "Initial Offering") shall begin on
the date the Company's Class A Common Stock is first offered to the public under
a registration statement declared effective under the Securities Act (the "IPO
Date") and shall end on February 28, 2003, provided that February 28, 2003 is at
least six (6) months after the IPO Date, unless terminated earlier as provided
below. If February 28, 2003 is not at least six (6) months after the IPO Date,
then the Initial Offering shall end on April 30, 2003, unless terminated earlier
as provided below. After the Initial Offering, an Offering shall begin on the
day after the last Purchase Date of the immediately preceding Offering. The
first day of an Offering is that Offering's "Offering Date." Except as provided
below, each Offering shall be approximately six (6) months in duration, with one
(1) Purchase Period which (except for the Initial Offering) shall be
approximately six (6) months in length. Except as provided below, a Purchase
Date is the last day of a Purchase Period or of an Offering, as the case may be.
The Initial Offering shall consist of one (1) Purchase Period ending on February
28, 2003 or April 30, 2003, as applicable.
(c) Notwithstanding the foregoing: (i) if any Offering Date falls on a
day that is not a Trading Day, then such Offering Date shall instead fall on the
next subsequent Trading Day, and (ii) if any Purchase Date falls on a day that
is not a Trading Day, then such Purchase Date shall instead fall on the
immediately preceding Trading Day.
(d) Prior to the commencement of any Offering, the Board may change any
or all terms of such Offering and any subsequent Offerings. The granting of
Purchase Rights pursuant to each Offering hereunder shall occur on each
respective Offering Date unless prior to such date (i) the Board determines that
such Offering shall not occur, or (ii) no shares of Class A Common Stock remain
available for issuance under the Plan in connection with the Offering.
(e) If the Company's accountants advise the Company that the accounting
treatment of purchases under the Plan has changed in a manner that the Company
determines is detrimental to its best interests, then each Offering hereunder
that is then ongoing shall terminate as of the next Purchase Date (after the
purchase of stock on such Purchase Date) under such Offering.
2. ELIGIBLE EMPLOYEES.
1.
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(a) Each Eligible Employee who, on the Offering Date of an Offering
hereunder, is (i) an employee of the Company; (ii) an employee of a Subsidiary
incorporated in the United States; or (iii) an employee of a Subsidiary that is
not incorporated in the United States, provided that the Board or Committee has
designated the employees of such Subsidiary as eligible to participate in the
Offering, shall be granted a Purchase Right on the Offering Date of such
Offering.
(b) Notwithstanding the foregoing, the following Employees shall not be
Eligible Employees or be granted Purchase Rights under an Offering:
(i) part-time or seasonal Employees whose customary employment is
twenty (20) hours per week or less or five (5) months per calendar year or less;
(ii) five percent (5%) stockholders (including ownership through
unexercised and/or unvested stock options) as described in Section 6(c) of the
Plan; or
(iii) Employees in jurisdictions outside of the United States if, as
of the Offering Date of the Offering, the grant of such Purchase Rights would
not be in compliance with the applicable laws of any jurisdiction in which the
Employee resides or is employed.
(c) Notwithstanding the foregoing, each person who first becomes an
Eligible Employee during an Offering shall not be able to participate in such
Offering.
3. PURCHASE RIGHTS.
(a) Subject to the limitations herein and in the Plan, a Participant's
Purchase Right shall permit the purchase of the number of shares of Class A
Common Stock purchasable with up to twenty percent (20%) of such Participant's
Earnings paid during the period of such Offering beginning immediately after
such Participant first commences participation; provided, however, that no
Participant may have more than twenty percent (20%) of such Participant's
Earnings applied to purchase shares of Class A Common Stock under all ongoing
Offerings under the Plan and all other plans of the Company and Related
Corporations that are intended to qualify as Employee Stock Purchase Plans.
(b) For Offerings hereunder, "Earnings" means the base compensation paid
to a Participant, including all salary, wages (including amounts elected to be
deferred by the Participant, that would otherwise have been paid, under any cash
or deferred arrangement or other deferred compensation program established by
the Company or a Related Corporation), but excluding all overtime pay,
commissions, bonuses, and other remuneration paid directly to such Participant,
profit sharing, the cost of employee benefits paid for by the Company or a
Related Corporation, education or tuition reimbursements, imputed income arising
under any Company or Related Corporation group insurance or benefit program,
traveling expenses, business and moving expense reimbursements, income received
in connection with stock options, contributions made by the Company or a Related
Corporation under any employee benefit plan, and similar items of compensation.
(c) Notwithstanding the foregoing, the maximum number of shares of Class
A Common Stock that a Participant may purchase on any Purchase Date in an
Offering shall be
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such number of shares as has a Fair Market Value (determined as of the Offering
Date for such Offering) equal to (x) $25,000 multiplied by the number of
calendar years in which the Purchase Right under such Offering has been
outstanding at any time, minus (y) the Fair Market Value of any other shares of
Class A Common Stock (determined as of the relevant Offering Date with respect
to such shares) that, for purposes of the limitation of Section 423(b)(8) of the
Code, are attributed to any of such calendar years in which the Purchase Right
is outstanding. The amount in clause (y) of the previous sentence shall be
determined in accordance with regulations applicable under Section 423(b)(8) of
the Code based on (i) the number of shares previously purchased with respect to
such calendar years pursuant to such Offering or any other Offering under the
Plan, or pursuant to any other Company or Related Corporation plans intended to
qualify as Employee Stock Purchase Plans, and (ii) the number of shares subject
to other Purchase Rights outstanding on the Offering Date for such Offering
pursuant to the Plan or any other such Company or Related Corporation Employee
Stock Purchase Plan.
(d) The maximum aggregate number of shares of Class A Common Stock
available to be purchased by all Participants under an Offering shall be the
number of shares of Class A Common Stock remaining available under the Plan on
the Offering Date. If the aggregate purchase of shares of Class A Common Stock
upon exercise of Purchase Rights granted under the Offering would exceed the
maximum aggregate number of shares available, the Board shall make a pro rata
allocation of the shares available in a uniform and equitable manner.
(e) Notwithstanding the foregoing, the maximum amount of Earnings that
an Eligible Employee may contribute during any Purchase Period shall not exceed
Six Thousand Dollars ($6,000).
(f) Notwithstanding the foregoing, the maximum number of shares of Class
A Common Stock that an Eligible Employee may purchase on any Purchase Date
during any Offering shall not exceed Two Thousand (2,000) shares.
4. PURCHASE PRICE.
The purchase price of shares of Class A Common Stock under the Offering
shall be the lesser of: (i) eighty-five percent (85%) of the Fair Market Value
of such shares of Class A Common Stock on the Offering Date, or (ii) eighty-five
percent (85%) of the Fair Market Value of such shares of Class A Common Stock on
the applicable Purchase Date, in each case rounded up to the nearest whole cent
per share. For the Initial Offering, the Fair Market Value of the shares of
Class A Common Stock at the time when the Offering commences shall be the price
per share at which shares are first sold to the public in the Company's initial
public offering as specified in the final prospectus for that initial public
offering.
5. PARTICIPATION.
(a) An Eligible Employee may elect to participate in an Offering on the
Offering Date. An Eligible Employee shall elect his or her payroll deduction
percentage on such enrollment form as the Company provides. The completed
enrollment form must be delivered to the Company prior to the date participation
is to be effective, unless a later time for filing the enrollment form is set by
the Company for all Eligible Employees with respect to a given
3.
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Offering. Payroll deduction percentages must be expressed in whole percentages
of Earnings, with a minimum percentage of one percent (1%) and a maximum
percentage of twenty percent (20%). Except as provided in paragraph (e) below
with respect to the Initial Offering, Contributions may be made only by way of
payroll deductions.
(b) A Participant may not increase his or her participation level during
a Purchase Period. A Participant may decrease (including a decrease to zero
percent (0%)) his or her participation level only once during a Purchase Period.
Any such decrease in participation level shall be made by delivering a notice to
the Company or a designated Subsidiary in such form as the Company provides
prior to the ten (10) day period (or such shorter period of time as determined
by the Company and communicated to Participants) immediately preceding the next
Purchase Date of the Purchase Period for which it is to be effective.
(c) A Participant may withdraw from an Offering and receive a refund of
his or her Contributions (reduced to the extent, if any, such Contributions have
been used to acquire shares of Class A Common Stock for the Participant on any
prior Purchase Date) without interest, at any time prior to the end of the
Offering, excluding only each ten (10) day period immediately preceding a
Purchase Date (or such shorter period of time determined by the Company and
communicated to Participants), by delivering a withdrawal notice to the Company
or a designated Subsidiary in such form as the Company provides. A Participant
who has withdrawn from an Offering shall not again participate in such Offering,
but may participate in subsequent Offerings under the Plan in accordance with
the terms of the Plan and the terms of such subsequent Offerings.
(d) Notwithstanding the foregoing or any other provision of this
Offering document or of the Plan to the contrary, neither the enrollment of any
Eligible Employee in the Plan nor any forms relating to participation in the
Plan shall be given effect until such time as a registration statement covering
the registration of the shares under the Plan that are subject to the Offering
has been filed by the Company and has become effective.
(e) Notwithstanding the foregoing or any other provision of this
Offering document or of the Plan to the contrary, with respect to the Initial
Offering only, each Eligible Employee who is employed on the IPO Date
automatically shall be enrolled in the Initial Offering, with a Purchase Right
to purchase up to the number of shares of Class A Common Stock that are
purchasable with 20% of the Eligible Employee's Earnings, subject to the
limitations set forth in Section 3(c)-(f) above. Following the filing of an
effective registration statement pursuant to a Form S-8, such Eligible Employee
shall be provided a certain period of time, as determined by the Company in its
sole discretion, within which to elect to authorize payroll deductions for the
purchase of shares during the Initial Offering (which may be for a percentage
that is less than 20% of the Eligible Employee's Earnings). If such Eligible
Employee elects not to authorize such payroll deductions, the Eligible Employee
instead may purchase shares of Class A Common Stock under the Plan by delivering
a single cash payment for the purchase of such shares to the Company or a
designated Subsidiary prior to the ten (10) day period (or such shorter period
of time as determined by the Company and communicated to Participants)
immediately preceding the Purchase Date under the Initial Offering. If an
Eligible Employee neither elects to authorize payroll deductions nor chooses to
make a cash payment in accordance with the foregoing sentence, then the Eligible
Employee shall not purchase any shares of Class A Common Stock
4.
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during the Initial Offering. After the end of the Initial Offering, in order to
participate in any subsequent Offerings, an Eligible Employee must enroll and
authorize payroll deductions prior to the commencement of the Offering, in
accordance with paragraph (a) above; provided, however, that once an Eligible
Employee enrolls in an Offering and authorizes payroll deductions (including in
connection with the Initial Offering), the Eligible Employee automatically shall
be enrolled for all subsequent Offerings until he or she elects to withdraw from
an Offering pursuant to paragraph (c) above or terminates his or her
participation in the Plan.
6. PURCHASES.
Subject to the limitations contained herein, on each Purchase Date, each
Participant's Contributions (without any increase for interest) shall be applied
to the purchase of whole shares, up to the maximum number of shares permitted
under the Plan and the Offering.
7. NOTICES AND AGREEMENTS.
Any notices or agreements provided for in an Offering or the Plan shall be
given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering, shall be deemed effectively given
upon receipt or, in the case of notices and agreements delivered by the Company,
five (5) days after deposit in the United States mail, postage prepaid.
8. EXERCISE CONTINGENT ON STOCKHOLDER APPROVAL.
The Purchase Rights granted under an Offering are subject to the approval
of the Plan by the stockholders of the Company as required for the Plan to
obtain treatment as an Employee Stock Purchase Plan.
9. OFFERING SUBJECT TO PLAN.
Each Offering is subject to all the provisions of the Plan, and the
provisions of the Plan are hereby made a part of the Offering. The Offering is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of an Offering and those of the
Plan (including interpretations, amendments, rules and regulations which may
from time to time be promulgated and adopted pursuant to the Plan), the
provisions of the Plan shall control.
5.
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6.