Exhibit 10.01
L EAP F ROG E NTERPRISES , I NC .
A MENDED AND R ESTATED 2002 E QUITY I NCENTIVE P LAN
A DOPTED : M AY 24, 2002
A PPROVED B Y S TOCKHOLDERS : J ULY 19, 2002
A MENDED AND R ESTATED : A PRIL 20, 2004
A MENDMENT AND R ESTATEMENT A PPROVED BY S TOCKHOLDERS : J UNE 10, 2004
A MENDED AND R ESTATED : M ARCH 27, 2006
A MENDMENT AND R ESTATEMENT A PPROVED BY S TOCKHOLDERS : J UNE 16, 2006
A MENDED AND R ESTATED : F EBRUARY 28, 2007
A MENDMENT AND R ESTATEMENT A PPROVED BY S TOCKHOLDERS : M AY 1, 2007
A MENDED AND R ESTATED : J UNE 4, 2009
A MENDMENT AND R ESTATEMENT A PPROVED BY S TOCKHOLDERS : A UGUST 26, 2009
T ERMINATION D ATE : M AY 23, 2012
P URPOSES .
(a) Eligible Stock Award
Recipients. The persons
eligible to receive Stock Awards are the Employees, Directors and
Consultants of the Company and its Affiliates; provided, however,
that notwithstanding the foregoing, the Employees, Directors and
Consultants of a Parent shall not be eligible to receive any Stock
Awards under the Plan.
(b) Available Stock
Awards. The purpose of
the Plan is to provide a means by which eligible recipients of
Stock Awards may be given an opportunity to benefit from increases
in value of the Class A Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses,
(iv) rights to acquire restricted stock, (v) Restricted
Stock Unit Awards, and (vi) Stock Appreciation
Rights.
(c) General Purpose.
The Company, by means of the Plan,
seeks to retain the services of the group of persons eligible to
receive Stock Awards, to secure and retain the services of new
members of this group and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its
Affiliates.
(d) Establishment.
This Plan is a complete amendment
and restatement of the Company’s Stock Option Plan that was
previously adopted effective September 25, 1997. Any Stock
Awards granted prior to the effective date of this amended and
restated Plan shall be governed by the terms of the Plan as in
effect at the time such Stock Awards were granted. The Company
shall submit this amended and restated Plan for stockholder
approval and shall also seek stockholder approval to extend the
term of the Plan to the day before the tenth
(10th) anniversary of the date the amended and restated Plan
is adopted by the Board or approved by the stockholders of the
Company, whichever is earlier, unless sooner terminated by the
Board.
2. D EFINITIONS .
(a)
“Affiliate” means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as
those terms are defined in Sections 424(e) and (f), respectively,
of the Code.
(b)
“Board” means the Board of Directors of the
Company.
(c) “Capitalization
Adjustment” has
the meaning ascribed to that term in Section 11(a).
(d) Change in
Control” means
the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events after 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:
(i) any Exchange Act Person becomes the Owner,
directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of
the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar
transaction;
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(ii) there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the Company
and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or
indirectly, outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power
of the surviving Entity in such merger, consolidation or similar
transaction or more than fifty percent (50%) of the combined
outstanding voting power of the parent of the surviving Entity in
such merger, consolidation or similar transaction;
(iii) the stockholders of the Company approve or the
Board approves a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company
shall otherwise occur, and as a result of which the operations of
the Company are no longer being conducted; or
(iv) there is consummated a sale, lease, license or
other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries, other than a sale,
lease, license or other disposition of all or substantially all of
the consolidated assets of the Company and its Subsidiaries to an
Entity, more than fifty percent (50%) of the combined voting
power of the voting securities of which are Owned by stockholders
of the Company in substantially the same proportions as their
Ownership of the Company immediately prior to such sale, lease,
license or other disposition.
Notwithstanding the foregoing or any
other provision of this Plan, the definition of Change in Control
(or any analogous term) in an individual written agreement between
the Company or any Affiliate and the Participant shall supersede
the foregoing definition with respect to Stock Awards subject to
such agreement (it being understood, however, that if no definition
of Change in Control or any analogous term is set forth in such an
individual written agreement, the foregoing definition shall
apply).
(e) “Class A Common
Stock” means
the Class A common stock of the Company.
(f) “ Code
” means the
Internal Revenue Code of 1986, as amended.
(g)
“Committee” means a committee of one or more members of the
Board appointed by the Board in accordance with
Section 3(c).
(h)
“Company” means LeapFrog Enterprises, Inc., a Delaware
corporation.
(i)
“Consultant” means any person, including an advisor,
(i) engaged by the Company or an Affiliate to render
consulting or advisory services and who is compensated for such
services or (ii) serving as a member of the Board of Directors
of an Affiliate and who is compensated for such services. However,
the term “Consultant” shall not include Directors who
are not compensated by the Company for their services as Directors,
and the payment of a director’s fee by the Company for
services as a Director shall not cause a Director to be considered
a “Consultant” for purposes of the Plan.
(j) “Continuous
Service” means
that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for
which the Participant renders such service, provided that there is
no interruption or termination of the Participant’s service
with the Company or an Affiliate, shall not terminate a
Participant’s Continuous Service. For example, a change in
status from an Employee of the Company to a Consultant of an
Affiliate or a Director shall not constitute an interruption of
Continuous Service. Notwithstanding the foregoing or anything in
the Plan to the contrary, unless (i) otherwise provided in a
Stock Award Agreement or (ii) following the date of grant of a
Stock Award, determined otherwise by the Board with respect to any
Participant who is then an officer of the Company within the
meaning of Section 16 of the Exchange Act or by the chief
executive officer of the Company with respect to any other
Participant, in the event that a Participant terminates his or her
service with the Company or an Affiliate as an Employee, the
Participant shall cease vesting in any of his or her Stock Awards
as of such date of termination, regardless of whether the
Participant continues his or her service in the capacity of a
Director or Consultant without interruption or termination. The
Board or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave of
absence approved by that party, including sick leave, military
leave or any other personal leave. Notwithstanding the foregoing, a
leave of absence shall be treated as Continuous Service for
purposes of vesting in a Stock Award only to such extent as may be
provided in the Company’s leave of absence policy or in the
written terms of the Participant’s leave of
absence.
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(k) “Corporate
Transaction” means the occurrence, in a single transaction or
in a series of related transactions, of any one or more of the
following events:
(i) a sale or other disposition of all or
substantially all, as determined by the Board in its discretion, of
the consolidated assets of the Company and its
Subsidiaries;
(ii) a sale or other disposition of at least ninety
percent (90%) of the outstanding securities of the
Company;
(iii) a merger, consolidation or similar transaction
following which the Company is not the surviving corporation;
or
(iv) a merger, consolidation or similar transaction
following which the Company is the surviving corporation but the
shares of Class A Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of
securities, cash or otherwise.
(l) “Covered
Employee” means
the chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as
determined for purposes of Section 162(m) of the
Code.
(m)
“Director” means a member of the Board of Directors of the
Company.
(n) “Disability
” means the
permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.
(o)
“Employee” means any person employed by the Company or an
Affiliate. Service as a Director or payment of a director’s
fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an
Affiliate.
(p)
“Entity” means a corporation, partnership or other
entity.
(q) “Exchange
Act” means the
Securities Exchange Act of 1934, as amended.
(r) “Exchange Act
Person” means
any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act), except
that “Exchange Act Person” shall not include
(A) the Company or any Subsidiary of the Company, (B) any
employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any Subsidiary of the
Company, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (D) an Entity
Owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their Ownership of stock
of the Company.
(s) “Fair Market
Value” means,
as of any date, the value of the Class A Common Stock
determined as follows:
(i) If the Class A Common Stock is listed on
any established stock exchange or traded on the Nasdaq National
Market or the Nasdaq SmallCap Market, the Fair Market Value of a
share of Class A Common Stock shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Class A Common Stock) on
the last market trading day prior to the day of determination, as
reported in The Wall Street Journal or such other source as the
Board deems reliable.
(ii) In the absence of such markets for the
Class A Common Stock, the Fair Market Value shall be
determined by the Board based upon an independent appraisal in
compliance with Section 409A of the Code or, in the case of an
Incentive Stock Option, in compliance with Section 422 of the
Code.
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(t) “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.
(u) “Non-Employee
Director” means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly)
from the Company or its parent or a subsidiary for services
rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction as to which
disclosure would be required under Item 404(a) of Regulation
S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation
S-K; or (ii) is otherwise considered a “non-employee
director” for purposes of Rule 16b-3.
(v) “Nonstatutory Stock
Option” means
an Option not intended to qualify as an Incentive Stock
Option.
(w)
“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.
(x)
“Option” means an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.
(y) “Option
Agreement” means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to
the terms and conditions of the Plan.
(z)
“Optionholder” means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds
an outstanding Option.
(aa) “Outside
Director” means
a Director who either (i) is not a current employee of the
Company or an “affiliated corporation” (within the
meaning of Treasury Regulations promulgated under
Section 162(m) of the Code), is not a former employee of the
Company or an “affiliated corporation” receiving
compensation for prior services (other than benefits under a
tax-qualified pension plan), was not an officer of the Company or
an “affiliated corporation” at any time and is not
currently receiving direct or indirect remuneration from the
Company or an “affiliated corporation” for services in
any capacity other than as a Director or (ii) is otherwise
considered an “outside director” for purposes of
Section 162(m) of the Code.
(bb) “Own,”
“Owned,” “Owner,”
“Ownership” A person or Entity shall be deemed to
“Own,” to have “Owned,” to be the
“Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power, which includes the power to
vote or to direct the voting, with respect to such
securities.
(cc)
“Parent” means any parent corporation of the Company,
whether now or hereafter existing, as such term is defined in
Section 424(e) of the Code.
(dd)
“Participant” means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds
an outstanding Stock Award.
(ee) “Performance
Criteria” means the one or more criteria that the
Committee shall select for purposes of establishing the Performance
Goal(s) for a Performance Period. The Performance Criteria that
will be used to establish such Performance Goal(s) may be based on
any one of, or combination of, the following: (i) earnings per
share; (ii) earnings before interest, taxes and depreciation;
(iii) earnings before interest, taxes, depreciation and
amortization (EBITDA); (iv) net earnings; (v) total
shareholder return; (vi) return on equity; (vii) return
on assets; (viii) return on investment; (ix) return on
capital employed; (x) operating margin (xi) gross margin;
(xii) operating income; (xiii) net income; (xiv) net
operating income; (xv) net operating income after tax;
(xvi) pre- and after-tax income; (xvii) pre-tax profit;
(xviii) operating cash flow; (xix) revenue;
(xx) revenue growth; (xxi) expenses;
(xxii) improvement in or attainment of expense levels;
(xxiii) improvement in or attainment of working capital
levels; (xxiv) economic value added; (xxv) market share;
(xxvi) cash flow; (xxvii) cash flow per share;
(xxviii) economic value added (or an equivalent metric);
(xxix) share price performance; (xxx) debt reduction;
and
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(xxxi) other measures of performance selected by
the Committee. Partial achievement of the specified criteria may
result in the payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement. The Committee
shall, within the time period required by Section 162(m) of
the Code (generally, the first 90 days of the Performance Period),
define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance
Period.
(ff) “Performance
Goals” means,
for a Performance Period, the one or more goals established by the
Committee for the Performance Period based upon the Performance
Criteria. The Committee is authorized at any time during the time
period permitted by Section 162(m) of the Code (generally,
prior to the 90th day of a Performance Period), or at any time
thereafter, in its sole and absolute discretion, to adjust or
modify the calculation of a Performance Goal for such Performance
Period in order to prevent the dilution or enlargement of the
rights of Participants, (a) in the event of, or in
anticipation of, any unusual or extraordinary corporate item,
transaction, event or development; (b) in recognition of, or
in anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the Company,
or in response to, or in anticipation of, changes in applicable
laws, regulations, accounting principles, or business conditions;
or (c) in view of the Committee’s assessment of the
business strategy of the Company, performance of comparable
organizations, economic and business conditions, and any other
circumstances deemed relevant. Specifically, the Committee is
authorized to make adjustment in the method of calculating
attainment of Performance Goals and objectives for a Performance
Period as follows: (i) to exclude the dilutive effects of
acquisitions or joint ventures; (ii) to assume that any
business divested by the Company achieved performance objectives at
targeted levels during the balance of a Performance Period
following such divestiture; and (iii) to exclude the effect of
any change in the outstanding shares of common stock of the Company
by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares or other similar corporate
change, or any distributions to common shareholders other than
regular cash dividends. In addition, with respect to Performance
Goals established for Participants who are not Covered Employees,
and who will not be Covered Employees at the time the compensation
will be paid, the Committee is authorized to make adjustment in the
method of calculating attainment of Performance Goals and
objectives for a Performance Period as follows: (i) to exclude
restructuring and/or other nonrecurring charges; (ii) to
exclude change rate effects, as applicable, for non-U.S. dollar
denominated net sales and operating earnings; (iii) to exclude
the effects of changes to generally accepted accounting standards
required by the Financial Accounting Standards Board; (iv) to
exclude the effects to any statutory adjustments to corporate tax
rates; (v) to exclude the impact of any “extraordinary
items” as determined under generally accepted accounting
principles; and (vi) to exclude any other unusual,
non-recurring gain or loss or other extraordinary item.
(gg) “Performance
Period” means
the one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for
the purpose of determining a Participant’s right to and the
payment of a Performance Award.
(hh)
“Plan” means this amended and restated LeapFrog
Enterprises, Inc. 2002 Equity Incentive Plan.
(ii) “Restricted Stock
Unit Award” means a right to receive shares of Common Stock
which is granted pursuant to the terms and conditions of
Section 7(c).
(jj) “Restricted Stock
Unit Award Agreement” means a written agreement between the Company
and a holder of a Restricted Stock Unit Award evidencing the terms
and conditions of a Restricted Stock Unit Award grant. Each
Restricted Stock Unit Award Agreement shall be subject to the terms
and conditions of the Plan.
(kk) “Rule
16b-3” means
Rule 16b-3 promulgated under the Exchange Act or any successor to
Rule 16b-3, as in effect from time to time.
(ll) “Securities
Act” means the
Securities Act of 1933, as amended.
(mm) “Stock Appreciation
Right” means a
right to receive the appreciation on Common Stock that is granted
pursuant to the terms and conditions of
Section 7(d).
(nn) “Stock Appreciation
Right Agreement” means a written agreement between the Company
and a holder of a Stock Appreciation Right evidencing the terms and
conditions of a Stock Appreciation Right grant. Each Stock
Appreciation Right Agreement shall be subject to the terms and
conditions of the Plan.
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(oo) “Stock
Award” means
any right granted under the Plan, including an Option, a stock
bonus, a right to acquire restricted stock, a Restricted Stock Unit
Award, and a Stock Appreciation Right.
(pp) “Stock Award
Agreement” means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions
of an individual Stock Award grant. Each Stock Award Agreement
shall be subject to the terms and conditions of the
Plan.
(qq)
“Subsidiary” means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time,
directly or indirectly, Owned by the Company, and (ii) any
partnership in which the Company has a direct or indirect interest
(whether in the form of voting or participation in profits or
capital contribution) of more than fifty percent (50%).
(rr) “Ten Percent
Stockholder” means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or of any of its
Affiliates.
3. A DMINISTRATION .
(a) Administration by
Board. The Board shall
administer the Plan unless and until the Board delegates
administration to a Committee, as provided in
Section 3(c).
(b) Powers of Board.
The Board shall have the power,
subject to, and within the limitations of, the express provisions
of the Plan:
(i) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when
and how each Stock Award shall be granted; what type or combination
of types of Stock Award shall be granted; the provisions of each
Stock Award granted (which need not be identical), including the
time or times when a person shall be permitted to receive
Class A Common Stock pursuant to a Stock Award; and the number
of shares of Class A Common Stock with respect to which a
Stock Award shall be granted to each such person.
(ii) To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules
and regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or inconsistency in
the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully
effective.
(iii) To amend the Plan or a Stock Award as provided
in Section 12.
(iv) To terminate or suspend the Plan as provided in
Section 13.
(v) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.
(c) Delegation to
Committee.
(i) General.
The Board may delegate
administration of the Plan to a Committee or Committees of one
(1) or more members of the Board, and the term
“Committee” shall apply to any person or persons to
whom such authority has been delegated. If administration is
delegated to a Committee, the Committee shall have, in connection
with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions
of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board
the administration of the Plan.
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(ii) Section 162(m) and Rule
16b-3 Compliance. In the
discretion of the Board, the Committee may consist solely of two or
more Outside Directors, in accordance with Section 162(m) of
the Code, and/or solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3. Within the scope of such authority, the
Board or the Committee may (1) delegate to a committee of one
or more members of the Board who are not Outside Directors the
authority to grant Stock Awards to eligible persons who are either
(a) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting
from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code
and/or (2) delegate to a committee of one or more members of
the Board who are not Non-Employee Directors the authority to grant
Stock Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act.
(d) Effect of Board’s
Decision. All
determinations, interpretations and constructions made by the Board
in good faith shall not be subject to review by any person and
shall be final, binding and conclusive on all persons.
4. S HARES S UBJECT TO THE P LAN .
(a) Share Reserve.
Subject to the provisions of
Section 11(a) relating to Capitalization Adjustments, the
number of shares of Class A Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate
Twenty-Four Million (24,000,000) shares of Class A Common
Stock. Effective as of June 16, 2006, subject to
Section 4(b), the number of shares available for issuance
under the Plan shall be reduced by: (i) one (1) share for
each share of Class A Common Stock issued pursuant to an
Option granted under Section 6 or a Stock Appreciation Right
granted under Section 7(d); and (ii) two (2) shares
for each share of Class A Common Stock issued pursuant to a
stock bonus award under Section 7(a), a restricted stock award
under Section 7(b), or a Restricted Stock Unit Award under
Section 7(c). Shares may be issued in connection with a merger
or acquisition as permitted by NYSE Listed Company Manual
Section 303A.08 or, if applicable, NASD Rule
4350(i)(1)(A)(iii) or AMEX Company Guide Section 711 and such
issuance shall not reduce the number of shares available for
issuance under the Plan.
(b) Reversion of Shares to the
Sha
