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                                                                   EXHIBIT 10.04
                              AMENDED AND RESTATED
                        KNOWLEDGE KIDS ENTERPRISES, INC.
                                STOCK OPTION PLAN

                                    RECITALS

         KNOWLEDGE KIDS ENTERPRISES, INC. (the "Company") adopted a STOCK OPTION
PLAN on September 25, 1997 (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 KNOWLEDGE
KIDS ENTERPRISES, INC. STOCK OPTION PLAN amends and completely restates the
Original Plan.

                                   ARTICLE 1

                                     GENERAL

         1.1 PURPOSE.

         The purposes of this Amended and Restated Stock Option Plan (the
"Plan") are to: (1) closely associate the interests of the management of the
Company and Affiliates of the Company with the shareholders by reinforcing the
relationship between participants' rewards and shareholder gains; (2) provide
management with an equity ownership in the Company commensurate with Company
performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and (4) provide an incentive to management for
continuous employment with the Company.

         1.2 ADMINISTRATION.

                  (a) The Plan shall be administered by the Board of Directors
of the Company (the "Board") as constituted from time to time. The Board may, in
its discretion, delegate the administration of the Plan or any aspect thereof to
the Compensation Committee of the Company, as constituted from time to time, in
which case references herein to the "Board" shall be deemed to refer to the
Compensation Committee of the Company, as appropriate.

                  (b) The Board shall have the authority, in its sole discretion
and from time to time to:

                           (i) designate the employees or classes of employees
eligible to participate in the Plan;

                           (ii) grant awards provided in the Plan in such form
and amount as the Board shall determine;

                           (iii) impose such limitations, restrictions and
conditions upon any such award as the Board shall deem appropriate; and

                                       1.
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                           (iv) interpret the Plan, adopt, amend, and rescind
rules and regulations relating to the Plan, and make all other determinations
and take all other action necessary or advisable for the implementation and
administration of the Plan.

                  (c) Decisions and determinations of the Board on all matters
relating to the Plan shall be in its reasonable discretion and shall be
conclusive. No member of the Board shall be liable for any action taken or
decision made in good faith relating to the Plan or any award thereunder.

         1.3 ELIGIBILITY FOR PARTICIPATION.

         Participants in the Plan shall be selected by the Board from the
executive officers and other key employees of the Company who occupy responsible
managerial or professional positions and who have the capability of making a
substantial contribution to the success of the Company. Additionally, at the
sole and absolute discretion of the Board, selected consultants of the Company
who are independent contractors may also be participants as to Stock Options,
but not as to Incentive Stock Options. In making this selection and in
determining the form and amount of awards, the Board shall consider any factors
deemed relevant, including the individual's functions, responsibilities, value
of services to the Company, and past and potential contributions to the
Company's profitability and sound growth.

         1.4 TYPES OF AWARDS UNDER PLAN.

         Awards under the Plan may be in the form of any one or more of the
following:

                           (i) Stock Options, as described in Article II; and/or

                           (ii) Incentive Stock Options, as described in Article
                  III.

         1.5 AGGREGATE LIMITATION ON AWARDS.

         Shares of stock which may be issued under the Plan shall be authorized
and unissued or treasury shares of Class A Common Stock of the Company (the
"Class A Common Stock"). The maximum number of shares which may be issued under
the Plan shall be 10,000,000. If any option shall for any reason expire or
otherwise terminate in whole or in part, without having been exercised in full,
the Class A Common Stock not purchased under such Option shall revert to and
again become available for issuance under the Plan.

         1.6 EFFECTIVE DATE AND TERM OF PLAN.

                  (a) The Plan shall become effective on the date as of which it
is approved by the shareholders and the Board of the Company.

                  (b) No awards shall be made under the Plan after December 31,
2006 provided, however, that the Plan and all awards made under the Plan prior
to such date shall remain in effect until such awards have been satisfied or
terminated in accordance with the Plan and the terms of such awards.

                                       2.
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                                   ARTICLE 2

                                  STOCK OPTIONS

         2.1 AWARD OF STOCK OPTIONS.

         The Board may from time to time, and subject to the provisions of the
Plan and such other terms and conditions as the Board may prescribe, grant to
any participant in the Plan one or more options to purchase for cash the number
of shares of Class A Common Stock ("Stock Options") allotted by the Board. The
date a Stock Option is granted shall mean the date selected by the Board as of
which the Board allots a specific number of shares to a participant pursuant to
the Plan. The Stock Options are not intended to qualify as incentive stock
options under the provisions of Section 422 of the Internal Revenue Code of 1986
as amended.

         2.2 STOCK OPTION AGREEMENTS.

         The grant of a Stock Option shall be evidenced by a written Stock
Option Agreement, executed by the Company and the holder of a Stock Option (the
"optionee"), stating the number of shares of Class A Common Stock subject to the
Stock Option evidenced thereby, and in such form as the Board may from time to
time determine.

         2.3 STOCK OPTION PRICE.

         The Option Price per share of Class A Common Stock deliverable upon the
exercise of a Stock Option shall be 100% of the fair market value of a share of
Class A Common Stock on the date the Stock Option is granted, unless otherwise
determined by the Board or pursuant to an employment agreement.

         2.4 TERM AND EXERCISE.

         Each Stock Option shall be exercisable pursuant to the vesting schedule
set forth in the Stock Option Agreement granting such Stock Option. Unless a
different period is provided by the Board, by another Section of this Plan, or a
Stock Option Agreement, each Stock Option may be exercised until December 31,
2006 (the "Option Term"). No Stock Option shall be exercisable after the
expiration of its Option Term.

         2.5 MANNER OF PAYMENT.

         Each Stock Option Agreement shall set forth the procedure governing the
exercise of the Stock Option granted thereunder, and shall provide that, upon
such exercise in respect of any shares of Class A Common Stock subject thereto,
the optionee shall pay to the Company, in full, the Option Price for such shares
with cash (in U.S. Dollars); provided, however, that, prior to an "Initial
Public offering" (as defined herein), if such exercise is made after Optionee's
employment with the Company terminates for any reason other than "Cause" (as
defined herein), and further provided that Optionee had been employed by the
Company for at least one year prior to such termination, then Optionee may pay
the Option Price to the Company: (i) with cash (in U.S. Dollars); (ii) through
the surrender of previously acquired shares of Class A Common Stock, based on
the fair market value thereof on the surrender date, held by the Optionee for

                                       3.
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more than six months at the time of exercise; (iii) with a Promissory Note (as
defined herein) ; or (iv) with any combination of (i) through (iii).

         2.6 ISSUANCE OF SHARES.

         As soon as practicable after receipt of payment, the Company shall
deliver to the optionee a certificate or certificates for such shares of Class A
Common Stock. The optionee shall become a shareholder of the Company with
respect to Class A Common Stock represented by share certificates so issued and
as such shall be fully entitled to all rights of a shareholder holding Class A
Common Stock.

         2.7 DEATH OF OPTIONEE.

         Upon the death of the optionee, any Stock Options held by optionee and
exercisable on the date of death may be exercised by the optionee's estate, or
by a person who acquires the right to exercise such Stock Option by bequest or
inheritance or by reason of the death of the optionee, provided that such
exercise occurs within both the remaining Option Term of the Stock Option and
six months after the optionee's death. Any Stock Options held by optionee which
are not exercisable on the date of optionee's death shall terminate upon
optionee's death. Any Stock Options held by optionee which were exercisable on
the date of optionee's death but which are not exercised within the shorter of:
(i) the remaining Option Term or (ii) the six month period following optionee's
death, shall terminate at the end of the shorter of the two periods.

         2.8 DISABILITY OF OPTIONEE.

         Upon termination of the optionee's employment by reason of permanent
disability (as determined by the Board, or if such optionee has an employment
agreement with the Company, then as determined pursuant to said employment
agreement), any Stock options held by optionee and exercisable on the date of
such termination may be exercised by optionee, provided that such exercise
occurs within both the remaining Option Term of the Stock option and within six
months from the date of termination. Any Stock options held by optionee which
are not exercisable on the date of optionee's termination shall terminate on the
date of optionee's termination. Any Stock Options held by optionee which were
exercisable on the date of optionee's termination but which are not exercised
within the shorter of: (i) the remaining option Term or (ii) the six month
period following optionee's termination, shall terminate at the end of the
shorter of the two periods.

         2.9 TERMINATION FOR OTHER REASONS.

         Except as provided in Sections 2.7 or 2.8 or except as otherwise
determined by the Board or as provided in a Stock Option Agreement or an
applicable employment agreement, upon termination of the optionee's employment,
any Stock Options held by optionee and exercisable on the date of such
termination may be exercised by optionee, provided that such exercise occurs
within both the remaining Option Term of the Stock Option and within three
months from the date of termination. Any Stock Options held by optionee which
are not exercisable on the date of optionee's termination shall terminate on the
date of optionee's termination. Any Stock options held by optionee which were
exercisable on the date of optionee's termination but which are not exercised
within the shorter of: (i) the remaining Option Term or (ii) the three month

                                       4.
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period following optionee's termination, shall terminate at the end of the
shorter of the two periods. Notwithstanding the foregoing, if the exercise of a
Stock Option following termination of the optionee's employment would result in
liability under Section 16(b) of the Securities Exchange Act of 1934, then,
except as provided in Sections 2.7 or 2.8, such Stock Options shall terminate on
the earlier of (i) the expiration of the Option Term, or (ii) the tenth day
after the last date on which such exercise would result in such liability under
Section 16(b) of the Securities Exchange Act of 1934. Additionally, if the
exercise of a Stock Option following termination of the optionee's employment
would be prohibited solely because the issuance of shares would violate the
registration requirements under the Securities Act of 1933, then, except as
provided in Sections 2.7 or 2.8, such Stock Options shall terminate on the
earlier of (i) the expiration of the Option Term, or (ii) the tenth day after
the day on which such registration requirements would no longer be violated by
the issuance of such shares.

                                   ARTICLE 3

                             INCENTIVE STOCK OPTIONS

         3.1 AWARD OF INCENTIVE STOCK OPTIONS.

         The Board may, from time to time and subject to the provisions of the
Plan and such other terms and conditions as the Board may prescribe, grant to
any participant in the Plan one or more "incentive stock options" (intended to
qualify as such under the provisions of Section 422 of the Code ("Incentive
Stock Options")) to purchase for cash the number of shares of Class A Common
Stock allotted by the Board. The date an Incentive Stock Option is granted shall
mean the date selected by the Board as of which the Board allots a specific
number of shares to a participant pursuant to the Plan.

         3.2 INCENTIVE STOCK OPTION AGREEMENTS.

         The grant of an Incentive Stock Option shall be evidenced by a written
Incentive Stock Option Agreement, executed by the Company and the holder of an
Incentive Stock Option (the "optionee"), stating the number of shares of Class A
Common Stock subject to the Incentive Stock option evidenced thereby, and in
such form as the Board may from time to time determine.

         3.3 INCENTIVE STOCK OPTION PRICE.

         The Option Price per share of Class A Common Stock deliverable upon the
exercise of an Incentive Stock Option shall be 100% of the fair market value of
a share of Class A Common Stock on the date the Incentive Stock Option is
granted; provided, however, that the Option Price of any Incentive Stock Option
granted to any owner (either directly or through attribution pursuant to Section
424(d) of the Code) of 10% or more of the total combined voting power of the
Company shall be 110% of such fair market value.

         3.4 TERM AND EXERCISE.

         Each Incentive Stock Option shall be exercisable pursuant to the
vesting schedule set forth in the Incentive Stock Option Agreement granting such
Incentive Stock Option. Unless a different period is provided by the Board,
another Section of this Plan, or an Incentive Stock

                                       5.
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Option Agreement, each Incentive Stock Option may be exercised until December
31, 2006 (the "Option Term"). No Incentive Stock Option shall be exercisable
after the expiration of its Option Term. Notwithstanding the foregoing, any
Incentive Stock Option granted to any owner of 10% or more of the total combined
voting power of the Company may be exercised only until December 31, 2002, and
such period shall be defined as the "Option Term" for such Option.

         3.5 MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT.

         The aggregate fair market value (determined on the date the option is
granted) of Class A Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by an optionee during any calendar year shall
not exceed $100,000.

         3.6 DEATH OF OPTIONEE.

         Upon the death of the optionee, any Incentive Stock Options held by
optionee and exercisable on the date of death may be exercised by the optionee's
estate or by a person who acquires the right to exercise such Incentive Stock
Option by bequest or inheritance or by reason of the death of the optionee,
provided that such exercise occurs within both the remaining Option Term of the
Incentive Stock Option and six months after the optionee's death. Any Incentive
Stock Options held by optionee which are not exercisable on the date of
optionee's death shall terminate upon optionee's death. Any Incentive Stock
Options held by optionee which were exercisable on the date of optionee's death
but which are not exercised within the shorter of: (i) the remaining option Term
or (ii) the six month period following optionee's death, shall terminate at the
end of the shorter of the two periods.

         3.7 DISABILITY OF OPTIONEE.

         Upon termination of the optionee's employment by reason of permanent
disability (as determined by the Board, or if such optionee has an employment
agreement with the Company, then as determined pursuant to said employment
agreement), any Incentive Stock Options held by optionee and exercisable on the
date of such termination may be exercised by optionee, provided that such
exercise occurs within both the remaining Option Term of the Incentive Stock
Option and within 6 months from the date of termination. Any Incentive Stock
Options held by optionee which are not exercisable on the date of optionee's
termination shall terminate on the date of optionee's termination. Any Incentive
Stock Options held by optionee which were exercisable on the date of optionee's
termination but which are not exercised within the shorter of: (i) the remaining
Option Term or (ii) the six month period following optionee's termination, shall
terminate at the end of the shorter of the two periods.

         3.8 TERMINATION FOR OTHER REASONS.

         Except as provided in Sections 3.6 or 3.7, or except as otherwise
determined by the Board or as provided in an Incentive Stock Option Agreement or
an applicable employment agreement, upon termination of the optionee's
employment, any Incentive Stock Options held by optionee and exercisable on the
date of such termination may be exercised by optionee, provided that such
exercise occurs within both the remaining Option Term of the Incentive Stock
Option and within three months from the date of termination. Any Incentive Stock
Options held by optionee which are not exercisable on the date of optionee's
termination shall terminate on the date of optionee's

                                       6.
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termination. Any Incentive Stock options held by optionee which were exercisable
on the date of optionee's termination but which are not exercised within the
shorter of: (i) the remaining Option Term or (ii) the three month period
following optionee's termination, shall terminate at the end of the shorter of
the two periods. Notwithstanding the foregoing, if the exercise of an Incentive
Stock Option following termination of the optionee's employment would result in
liability under Section 16(b) of the Securities Exchange Act of 1934, then,
except as provided in Sections 3.6 or 3.7, such Incentive Stock Options shall
terminate on the earlier of (i) the expiration of the Option Term, or (ii) the
tenth day after the last date on which such exercise would result in such
liability under Section 16(b) of the Securities Exchange Act of 1934.
Additionally, if the exercise of an Incentive Stock option following termination
of the optionee's employment would be prohibited solely because the issuance of
shares would violate the registration requirements under the Securities Act of
1933, then, except as provided in Sections 3.6 or 3.7, such Incentive Stock
Options shall terminate on the earlier of (i) the expiration of the Option Term,
or (ii) the tenth day after such registration requirements would no longer be
violated by the issuance of such shares.

         3.9 APPLICABILITY OF STOCK OPTIONS SECTIONS.

         Sections 2.5, Manner of Payment; and 2.6, Issuance of Shares,
applicable to Stock Options, shall apply equally to Incentive Stock Options.
Said Sections are incorporated by reference in this Article III as though fully
set forth herein.

                                   ARTICLE 4

                                  MISCELLANEOUS

         4.1 GENERAL RESTRICTION.

         Each award under the Plan shall be subject to the requirement that, if
at any time the Board shall reasonably determine that the listing, registration,
or qualification of the shares of Class A Common Stock subject or related
thereto upon any securities exchange or under any state or Federal law, or the
consent or approval of any government regulatory body, is necessary as a
condition of, or in connection with, the granting of such award or the issue or
purchase of shares of Class A Common Stock thereunder, such award may not be
consummated in whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or obtained free of
any material conditions not acceptable to the Board in its reasonable
discretion. The Company shall be obligated to make every reasonable effort to
list, register, or qualify the shares or obtain such consent or approval if so
necessary.

         4.2 NON-ASSIGNABILITY.

         No award under the Plan shall be assignable or transferable by the
recipient thereof, except by will or by the laws of descent and distribution.
During the life of the recipient, such award shall be exercisable only by such
person or by such person's guardian or legal representative.

                                       7.
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         4.3 WITHHOLDING TAXES.

         Whenever the Company proposes or is required to issue or transfer
shares of Class A Common Stock under the Plan, the Company shall have the right
to require the grantee to remit to the Company an amount sufficient to satisfy
any Federal, state, and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. Alternatively, the
Company may issue or transfer such shares of Class A Common Stock net of the
number of shares sufficient to satisfy the withholding tax requirements. For
withholding tax purposes, the shares of Class A Common Stock shall be valued on
the date the withholding obligation is incurred.

         4.4 RIGHT TO TERMINATE EMPLOYMENT.

         Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any participant the right to continue in the employment
of the Company or affect any right which the Company may have to terminate the
employment of such participant.

         4.5 NON-UNIFORM DETERMINATIONS.

         The Board's determinations under the Plan (including without limitation
determinations of the persons to receive awards, the form, amount, and timing of
such awards, the terms and provisions of such awards, and the agreements
evidencing same) need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, awards under the Plan, whether
or not such persons are similarly situated.

         4.6 RIGHTS AS A SHAREHOLDER.

         The recipient of any award under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for shares of
Class A Common Stock are issued to him.

         4.7 NO OBLIGATION TO EXERCISE OPTION.

         The granting of an Option shall impose no obligation upon the
participant to exercise such option.

         4.8 DEFINITIONS.

         In this Plan the following definitions shall apply:

                  (a) "Affiliate" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

                  (b) "Cause" shall have the meaning assigned to it in any
relevant employment agreement between the Company and the optionee, otherwise a
termination shall be for "cause" if the employee 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

                                       8.
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dishonesty, (iii) commission of an act which amounts to willful misconduct,
wanton misconduct, or gross negligence, or (iv) willfully fail to perform the
responsibilities and duties of his employment with the Company.

                  (c) "Code" means the Internal Revenue Code of 1986, as
amended.

                  (d) "Fair market value" as of any date and in respect of any
share of Class A Common Stock means (i) the average closing price of a share of
Class A Common Stock on the principal exchange on which such shares are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the ten most current trading days immediately prior to
such date, or (ii) if such 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 such 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 Board, provided that if Michael Wood is a member of the Board at
the time such determination is made, then the determination of the Board must be
by unanimous agreement of the Board, and the Board shall notify the optionee in
writing of its determination (the "Valuation Notice"). If the optionee disputes
the fair market value as determined by the Board, then the optionee shall so
notify the Board in writing (the "Appraisal Notice") within five (5) business
days of delivery of the Valuation Notice. Within fifteen (15) business days of
the delivery of the Appraisal Notice, the Board and the optionee shall each
appoint a professional appraiser to determine the fair market value of such
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 optionee. 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 optionee. In all events,
the appraisers selected shall be unaffiliated with and otherwise independent of
the Company, the optionee, and their affiliates. If the fair market value as
determined by the appraisers is less than, or no more than, five percent (5%)
greater than the value as determined by the Board, then the optionee shall pay
all costs associated with the appraisers. If the fair market value as determined
by the appraisers is more than five percent (5%) greater than the value as
determined by the Board, then the Company shall pay for all costs associated
with the appraisers. In all determinations of fair market value, no discounts
shall be applied for minority interests or lack of liquidity. If the Board is
unable to agree on the fair market value, then the fair market value shall be
determined by an appraiser with the same qualification requirements as set forth
above and the costs associated with such appraisal shall be paid by the Company.

                  (e) "Initial Public Offering" means the Company's first
underwritten public offering of common equity interests under the Securities Act
of 1933, that results in such common equity interests being listed for trading
on a national securities exchange or being authorized for trading on the Nasdaq
National Market System at such time.

                                       9.
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                  (f) "Option" means Stock Option or Incentive Stock Option.

                  (g) "Option Price" means the purchase price per share of Class
A Common Stock deliverable upon the exercise of a Stock Option or Incentive
Stock Option.

                  (h) "Participant" means an employee or consultant of the
Company, to whom an Option is granted under the Plan.

                  (i) "Prime Rate" means shall mean Bank of America National
Trust and Savings Association's ("B of A") reference rate, per annum, announced
by B of A in San Francisco, California, as its "reference rate," with the
understanding that B of A's "reference rate" set by B of A is based on various
factors, including B of A's costs and desired returns, general economic
conditions, and other factors, and is used as a reference point for pricing some
loans, and that B of A may price loans at, above, or below the reference rate.
In the event B of A ceases publication of the Prime Rate, then "Prime Rate"
shall mean the highest rate charged by such bank on short term, unsecured loans
to its most creditworthy large corporate borrowers. In the event B of A (i)
publishes more than one Prime Rate, the higher or highest of such rates shall
apply, or (ii) publishes a retraction or correction of such rate, the rate
reported in such retraction or correction shall apply. In the event that B of A
is acquired, liquidates, or is otherwise no longer carrying on the banking
business, "Prime Rate" shall mean the highest rate charged by a national or
international bank selected by the Board on short term, unsecured loans to its
most creditworthy large corporate borrowers.

                  (j) "Promissory Note" means a promissory note issued by an
Optionee to the Company bearing interest at the Prime Rate in effect at the time
the Promissory Note is executed, plus SO basis points. The principal of such
Promissory Note and all accrued interest thereon shall be due and payable on the
earlier of: (i) the date provided for in such Promissory Note, but in no case
shall such date be later than December 31, 2006; and (ii) one hundred twenty
(120) days after an Initial Public Offering. Optionee shall have no right to pay
such Promissory Note prior to its maturity. The obligation to pay the principal
of such Promissory Note shall be non-recourse as against Optionee and shall be
secured by the shares of the Class A Common Stock of the Company issued to the
Optionee. The obligation to pay the interest, but not the principal, on such
Promissory Note shall be on a full recourse basis to the Optionee.

         4.9 LEAVES OF ABSENCE.

         The Board shall be entitled to make such rules, regulations, and
determinations as it deems appropriate under the Plan in respect of any leave of
absence taken by the recipient of any award. Without limiting the generality of
the foregoing, the Board shall be entitled to determine (i) whether or not any
such leave of absence shall constitute a termination of employment within the
meaning of the Plan and (ii) the impact, if any, of any such leave of absence on
awards under the Plan theretofore made to any recipient who takes such leave of
absence.

         4.10 ADJUSTMENTS.

         In any event of any change in the outstanding Class A Common Stock by
reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares, sale of stock to
existing shareholders or their affiliates for less than fair

                                      10.
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market value, or the like, the Board shall proportionately adjust the number of
shares of Class A Common Stock which may be issued under the Plan, the number of
shares of Class A Common Stock subject to options theretofore granted under the
Plan, the Option Price of options theretofore granted under the Plan, and any
and all other matters deemed appropriate by the Board.

         4.11 TERMINATION OF OPTIONS.

         In the event of: (i) a sale of all or substantially all of the assets
of the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation, or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's Class A Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, then, if the surviving corporation does not agree to assume the
Options outstanding under the Plan or substitute similar options for those
outstanding under the Plan, all options which have been granted but which are
not then exercisable shall become exercisable prior to the consummation of such
event. All outstanding Options which are not exercised prior to such event shall
be terminated unless a Stock Option Agreement or Incentive Stock Option
Agreement provides otherwise. In the event of a dissolution or liquidation of
the Company, all outstanding options shall terminate if not exercised prior to
such dissolution or liquidation unless a Stock Option Agreement or Incentive
Stock Option Agreement provides otherwise.

         4.12 AMENDMENT OF THE PLAN.

                  (a) The Board may, without further action by the shareholders
and without receiving further consideration from the participants, amend this
Plan or condition or modify awards under this Plan in response to changes in
securities or other laws or rules, regulations or regulatory interpretations
thereof applicable to this Plan or to comply with stock exchange rules or
requirements.

                  (b) The Board may at any time and from time to time terminate
or modify or amend the Plan in any respect, except that without shareholder
approval the Board may not (i) increase the maximum number of shares of Class A
Common Stock which may be issued under the Plan (other than increases pursuant
to Section 4.10), (ii) extend the period during which any award may be granted
or exercised, or (iii) extend the term of the Plan. The termination or any
modification or amendment of the Plan, except as provided in subsection (a),
shall not without the consent of a participant, affect his or her rights under
an award previously granted to him or her or under an employment agreement.

         4.13 TERMINATION OR SUSPENSION OF THE PLAN.

                  (a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on December 31, 2006. No
Options may be granted under the Plan while the Plan is suspended or after it is
terminated.

                  (b) Rights and obligations under any Option granted while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the written consent of the person to whom the Option was
granted.

                                      11.
<PAGE>
         4.14 EFFECTIVE DATE OF PLAN.

         The Plan shall become effective as at the date of the original grant of
Options hereunder.

                                      12.<PAGE>
                                                                   EXHIBIT 10.05
                              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

                                       1.
<PAGE>
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.

                                       2.
<PAGE>
         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

                                       3.
<PAGE>
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.

                                       4.
<PAGE>
                                   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

                                       5.
<PAGE>
                           (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.

                                       6.
<PAGE>
                                    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.

                                       7.
<PAGE>
                  (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.

                                       8.
<PAGE>
         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

                                       9.
<PAGE>
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.

                                      10.
<PAGE>
         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

                                      11.
<PAGE>
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
                                         --------------------------------------
                                         Secretary

                                      12.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00038-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00038-of-00352.parquet"}]]