Sample Business Contracts


Employment Agreement - LeapFrog Enterprises Inc. and Paul Rioux

Employment Forms

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                              EMPLOYMENT AGREEMENT


      THIS EMPLOYMENT AGREEMENT, dated as of April 1, 2002 ("Agreement"), is
made between LeapFrog Enterprises, Inc., a Delaware corporation (the "Company"),
and Paul Rioux ("Executive") and amends, restates and supersedes the Employment
Agreement dated January 1, 2001.


                                    RECITALS:

      WHEREAS, Executive has been a key executive of the Company, and the
Company deems the continuation of Executive's services during the term of this
Agreement to be material and significant to the Company's success and desires to
ensure that the skills and experience of Executive will remain available to the
Company; and

      WHEREAS, the parties hereto desire to enter into this Agreement providing
for the continued employment of Executive by the Company on the terms and
conditions hereinafter set forth.

                                   AGREEMENT:

      NOW, THEREFORE, in consideration of the mutual promises and subject to the
terms and conditions set forth herein, the parties hereto agree as follows:

SECTION 1.  EMPLOYMENT

      1.1 Position, Duties, Responsibilities, Authority. The Company hereby
employs Executive as the Vice Chairman of the Company, reporting to the
President of the Company, for the Employment Term (as defined below) and on the
terms and conditions hereinafter set forth. In such capacity, Executive shall
have such duties and authority as are customary for, and commensurate with such
position, and such other duties as the Board of Directors may prescribe.
Executive shall, to the best of Executive's ability, carry out such
responsibilities and duties as are commensurate with this position. Executive's
principal office for the performance of services under this Agreement shall be
in the San Francisco/Oakland Bay Area or at any location or locations other than
the aforesaid as Executive shall agree to and as the Company's Board of
Directors may designate from time to time.

Executive agrees to work for the Company, according to the following schedule:
(i) Four days per week, usually Monday through Thursday, from April 1, 2002
through December 31, 2003; and (ii) two days per week from January 1, 2004
through March 31, 2005.

      1.2 Exclusive Employment. During the Employment Term, Executive shall
devote his business time, as described in Section 1.1 above, to his duties and
responsibilities set forth in this Section 1. Without limiting the generally of
the foregoing, Executive shall not, without the
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prior written approval of the Company's Board of Directors, during the
Employment Term, render services of a business, professional or commercial
nature to any other person, firm or corporation, whether for compensation or
otherwise, except that (i) on the days which Executive does not work for the
Company as per the provisions of Section 1.1 above, Executive may perform
services for another organization that does not compete with the Company and
which services do not interfere with Executive's ability to comply with this
Agreement and are not otherwise in conflict with the policies or interests of
the Company; and (ii) Executive may engage in civic, philanthropic and community
service activities and/or serve on the Board of Directors of a company so long
as such activities do not interfere with Executive's ability to comply with this
Agreement and are not otherwise in conflict with the policies or interests of
the Company.

SECTION 2.  COMPENSATION AND OTHER BENEFITS.

      In consideration of Executive's employment, and except as otherwise
provided herein, Executive shall receive from the Company the compensation and
benefits described in this Section 2, in full and complete satisfaction of all
of the Company's obligations to Executive arising from Executive's employment.
The compensation and employee benefits payable to Executive pursuant to this
Agreement may be changed only by the written agreement of the parties. Executive
authorizes the Company to deduct and withhold from all compensation to be paid
to him any and all sums required to be deducted or withheld by the Company
pursuant to the provisions of any federal, state, or local law, regulation,
ruling, or ordinance, including, but not limited to, income tax withholding and
payroll taxes.

      2.1 Base Compensation and Bonus. From April 1, 2002 through December 31,
2003, the Company shall pay to Executive, and Executive shall be entitled to
receive from the Company, a base salary for the employment referred to in
Section 1 hereof of $265,000 per year ("Salary"), and a bonus of $135,000 per
year ("Bonus"), of which 50% shall be guaranteed and 50% shall be subject to
Executive meeting certain minimum operating results as established by the Board
of Directors or the compensation committee thereof during the first quarter of
each year of the Employment Term. From January 1, 2004 through March 31, 2005,
the Company shall pay to Executive, and Executive shall be entitled to receive
from the Company, a base salary for the employment referred to in Section 1
hereof of $132,500 per year ("Salary"), and a bonus of $67,500 per year
("Bonus"), under the same terms mentioned above. Salary shall be payable in
intervals of not less than twice a month in accordance with the Company's
payment policy for executives in effect from time to time. The Bonus shall be
payable within ten (10) days from the time the amount of Bonus has been
determined, but in any case not later than February 15th of the following
calendar year.

For any days of service provided by Executive to the Company over and above
those set forth in Section 1.1 above, the Company shall pay Executive at a rate
of $2,000 per day.

      2.2 Other Benefits. During the Employment Term, Executive shall be
entitled to receive an automobile allowance of $650 per month and such other
specific and applicable employee benefits, such as group medical and dental for
Executive, Executive's spouse and dependent children, life and disability
insurance coverage, sick leave and vacation all as granted to the Company's
executive employees in accordance with the Company's policies and


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<PAGE>
guidelines, including but not limited to contribution requirements for dependent
coverage, as approved by the Company's Board of Directors from time to time. In
addition, conditioned on Executive's medical condition being such that he will
not be rated as a health risk resulting in higher than normal premium costs for
such policy or policies and Executive's agreement to submit to all physical and
medical examinations required to obtain such policy or policies, the Company
shall obtain and maintain during the Employment Term one or more policies of
term life insurance providing an aggregate benefit in the amount of $1,000,000,
over and above the basic life insurance benefit provided to all employees.
Executive shall have the right to designate the beneficiary or beneficiaries of
the benefit payable upon death pursuant to such policy or policies and may
transfer ownership of such policy or policies to any life insurance trust,
family trust or other trust. If the Company fails to maintain the full amount of
such coverage, upon the Executive's death while employed by the Company, the
Company shall pay to his beneficiaries any difference between $1,000,000 and the
benefit payable to Executive or his beneficiaries under such policy or policies.

      2.3 Stock Options. The Company and Executive acknowledge that Executive
has been granted in connection with this Agreement a non-qualified stock option
to purchase 150,000 shares of the Company Class A Common Stock at an exercise
price of $12.50 per share. The vesting period shall be three (3) years, with
1/36th of the total option vesting on January 1, 2002 and 1/36th of the total
option vesting monthly thereafter.

SECTION 3.  EMPLOYMENT TERM AND TERMINATION.

      3.1 Term. Executive's term of employment under this Amended and Restated
Employment Agreement shall commence as of the date hereof and shall terminate on
March 31, 2005, unless terminated earlier pursuant to Sections 3.2, 3.3, 3.4 or
3.5 hereof ("Employment Term").

      3.2 Termination by Death. Executive's term of employment will terminate
upon the death of Executive; provided that the Company shall pay to the estate
of the Executive any unpaid Salary or Bonus to the extent earned at the date of
death, any amounts payable by the Company at the date of death under the life
insurance policies as provided in Section 2.3, and any amounts payable pursuant
to the Company's employee benefit plans in accordance with such plans.

      3.3 Termination Upon Permanent Disability. Executive's term of employment
shall terminate upon the "permanent disability" of Executive. As used herein,
the term "permanent disability" shall mean a physical or mental disability that
renders Executive unable to perform his normal duties for the Company for a
period of 120 consecutive days as determined by a licensed physician. The
Company and Executive or his legal representative shall use their best efforts
to agree on the physician to determine permanent disability. If they cannot
agree within ten (10) days after the first party makes a written proposal
stating the name of a physician, then the other party shall select a physician
within ten (10) days and within ten (10) days thereafter the two physicians
shall select a third physician. All such physicians must be board certified in
the medical area giving rise to the alleged disability. The determination of the
third physician shall be final and binding. If one party fails to select a
physician within said ten (10) day period, the physician named by the other
party shall make the determination of permanent disability.


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<PAGE>
Upon termination of Executive for permanent disability, the Company shall pay to
Executive any unpaid Salary or Bonus to the extent earned at the date of
termination for permanent disability, any amounts payable by the Company at the
date of termination for permanent disability under the Company's disability
policies, and any amounts payable by the Company pursuant to the Company's other
employee benefit plans in accordance with such plans.

      3.4 Termination for Cause. The Company shall have the right to terminate
the employment of Executive for "Cause" by delivering to him a written notice
specifying such Cause. Executive shall be entitled to at least ten (10) days'
prior written notice of the Company's intention to terminate his employment for
any Cause specifying the grounds for such termination. If the Company exercises
such right, its obligation under this Agreement to make any further payments to
Executive, other than any unpaid Salary, Bonus and any amounts payable pursuant
to the Company's employee benefit plans in accordance with such plans due in, or
allocable to, the period prior to said termination, shall thereupon cease and
terminate. For purposes of this Agreement, a termination shall be for "Cause" if
the Executive shall: (i) commit an act of fraud, embezzlement or
misappropriation involving the Company; (ii) be convicted by a court of
competent jurisdiction of, or enter a plea of guilty of no contest to, any
felony involving moral turpitude or dishonesty; (iii) commit an act, or fail to
commit an act, involving the Company which amounts to, or with the passage of
time would amount to, willful misconduct, wanton misconduct, gross negligence or
a breach of this Agreement and which results or will result in significant harm
to the Company; or (iv) willfully fail to perform the responsibilities and
duties specified herein for a period of ten (10) days following receipt of
written notice from the Company which specifically describes past instances of
willful failure of performance; provided that in the case of (iv) above, during
the ten (10) day period following receipt of such notice, Executive shall be
given the opportunity to take reasonable steps to cure any such claimed past
failure of performance.

      3.5 Compensation and Benefits Upon Termination Without Cause. In the event
the Company terminates the Executive's employment during the Employment Term for
any reason other than the death or permanent disability of Executive, or Cause,
or Executive resigns for Good Reason during the Employment Term, and Section 3.6
hereof is not applicable to such termination or resignation, the Company shall
pay to Executive: (i) in a lump sum within thirty (30) days of the effective
date of termination, any Salary due through the date of termination; (ii) in a
lump sum within thirty (30) days of the effective date of termination, the
balance of Executive's Salary, which he would have been entitled to receive
through the end of the Severance Period (as defined below), (iii) in a lump sum
within thirty (30) days of the effective date of termination, all of Executive's
guaranteed Bonus and a pro rata portion of Executive's Bonus which is not
guaranteed (annualizing results of operations for the period prior to the date
of termination), which he would have been entitled to receive through the end of
the Severance Period, and (iv) continuation of benefits upon the same terms and
conditions then in effect on the date of termination under all medical, dental
and life insurance plans through the end of the Severance Period, provided that
Executive at his own expense shall be entitled to continue appropriate benefits
under any applicable COBRA program thereafter. In addition to the foregoing, all
unvested stock options held by Executive shall continue to vest through the end
of the Severance Period and shall be exercisable for that specific period
following the end of the Severance Period as provided under the applicable stock
option agreements in the case of


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<PAGE>
termination of employment. As used in this Section 3.5, the Severance Period
shall mean twelve (12) months after the effective date of termination.

      3.6 Compensation Payable in the Event of a Change of Control. If, in
connection with a Change of Control transaction as defined below, either the
employment of Executive is terminated by the Company for any reason other than
the death or permanent disability of Executive or Cause within ninety (90) days
prior to or within twelve (12) months after a Change of Control transaction or
Executive resigns for Good Reason within such period, the Company shall pay to
Executive, within five (5) business days following the consummation of a Change
of Control transaction, an amount equal to 1.5 times Executive's Salary and
Bonus paid for the immediately preceding fiscal year of the Company plus any
amounts required to be paid pursuant to Section 3.7. Executive also shall
receive benefits under applicable employee benefit plans as provided in Section
3.5(iv). In addition, notwithstanding anything to the contrary contained herein
or in any stock option or similar agreement to which Executive is a party, upon
the occurrence of a Change of Control, regardless of whether Executive's
employment is terminated, all unvested stock options shall immediately vest and
become exercisable in full (or, if applicable, all repurchase obligations of the
Company shall immediately lapse) and such options shall remain exercisable for
the period specified in the applicable option agreement. For purposes of this
Agreement, a "Change of Control" of the Company shall mean (i) any "person" (as
such term is used in Section 13(d) of the Securities Exchange Act of 1934, as
amended, the "Exchange Act") other than an Affiliated Purchaser becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) after the
date of this Agreement of securities of the Company representing at least a
majority of the combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors; (ii) the Company
is merged or consolidated with any person other than an Affiliated Purchaser and
as a result of such merger or consolidation the beneficial owners of securities
of the Company before such merger or consolidation hold immediately after such
merger or consolidation less than a majority of the combined voting power of the
outstanding securities of the surviving or resulting company ordinarily having
the right to vote at elections of directors, or (iii) the Company sells or
transfers all or substantially all of its assets to a person other than an
Affiliated Purchaser. For purposes of the foregoing, an "Affiliated Purchaser"
means (i) any person that is a beneficial owner of securities of the Company on
or before the date of this Agreement and/or any affiliate thereof (including,
without limitation, the members of Frogpond, LLC), and/or (ii) any employee
benefit plan, sponsored or maintained by the Company or any affiliate, or any
group of persons which includes such a plan.

      3.7   Gross - Up of Payments.

            (a) The provisions of Section 3.7 shall be applicable only prior to
the Company's consummation of an underwritten initial public offering (an
"IPO"). If any of the payments or benefits received or to be received by
Executive pursuant to Section 3.6 hereof in connection with a Change of Control
(all such payments and benefits, excluding the Gross-Up Payment provided for in
this Section 3.7, being hereinafter referred to as the "Total Payments") will be
subject to the excise tax (the "Excise Tax") imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to
Executive an additional amount (the "Gross-Up Payment") such that the net amount
retained by Executive, after deduction of any Excise Tax on the Total Payments
and any federal, state and local income


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<PAGE>
and employment taxes incurred by the Executive in connection with payment of the
Gross-Up Payment, shall be equal to the Total Payments less any federal, state
and local income and employment taxes incurred on the Total Payments. The
provisions of this Section 3.7 shall terminate and no longer be applicable upon
a closing of an IPO.

            (b) For purposes of determining whether any of the payments will be
subject to the Excise Tax and the amount of such Excise Tax, (A) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("Tax
Counsel") reasonably acceptable to Executive and selected by the accounting firm
which was, immediately prior to the change in control, the Company's independent
auditor (the "Auditor"), such payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of Section 280G(b)(4)(A) of
the Code, (B) all "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the
meaning of Section 280G(b)(4)(B) of the Code) in excess of the Base Amount
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax, and (C) the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Auditor in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount
of the Gross-Up Payment, Executive shall be deemed to pay federal income tax at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive's
residence or Executive's place of business, whichever is higher, on the date of
termination of employment (or if there is not yet a termination date, then the
date on which the Gross-Up Payment is calculated for purposes of this Section
3.7), net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. If the Company has
complied with the provisions of Section 280G(5)(A)(ii), then none of the
payments will be subject to the Excise Tax, and no Gross-Up Payment will be
made.

            (c) In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-Up
Payment, Executive shall repay to the Company, within five (5) business days
following the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (including that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income and employment taxes imposed on
the Gross-Up Payment being repaid by Executive), to the extent that such
repayment results in a reduction in the Excise Tax and a dollar-for-dollar
reduction in Executive's taxable income and wages of purposes of federal, state
and local income and employment taxes, plus interest on the amount of such
repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing in the event any portion of the amount to be
repaid to the Company has been paid to any tax authority, repayment thereof
shall not be required until actual refund or credit of such portion has been
made to Executive, and interest payable to the Company shall not exceed the
interest received or credited to Executive by such tax authority. In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder in calculating the Gross-Up Payment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make


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<PAGE>
an additional Gross-Up Payment in respect of such excess (including any
interest, penalties or additions payable by Executive with respect to such
excess and the Gross-Up Payment attributable to the Excise Tax and federal,
state, and local income and employment taxes imposed on the Gross-Up Payment
being made to Executive) within five (5) business days following the time that
the amount of such excess if finally determined. Executive and the Company shall
each reasonably cooperate with each other in connection with any administrative
or judicial proceedings concerning the existence or amount of liability for
Excise Tax with respect to the Total Payments.

                  (d) The payments provided in this Section 3.7 hereof shall be
made not later than the thirtieth(30th) day following the date of termination of
employment (or if there is no such termination date, then the date on which the
Gross-Up Payment is calculated for purposes of this Section 3.7.

      3.8 Definition of Good Reason. For purposes of Sections 3.5 and 3.6,
Executive's termination of employment with the Company shall be deemed for "Good
Reason" if any of the following events occur without Executive's express written
consent and Executive resigns within six months after such event occurring but
only if Executive provides the Company with written notice of his belief that
any one of the following specific events has occurred and during the thirty (30)
day period following receipt of such notice, the Company fails to cure any such
event:

      (a) The assignment to Executive by the Company of duties inconsistent
      with, or a substantial alteration in the nature or status of, Executive's
      responsibilities as provided in Section 1.1, other than the assignment of
      more senior duties, or the failure to elect or re-elect Executive as a
      director of the Company or the removal of him from any such positions;

      (b) A reduction by the Company in Executive's cash compensation pursuant
      to Section 2.1 or as such compensation may have been increased during the
      Employment Term;

      (c) Any failure by the Company to continue in effect without substantial
      adverse change any compensation, incentive, welfare or benefit plan or
      arrangement, in which Executive is participating at the time of a Change
      of Control (or any other plans providing Executive with substantially
      similar benefits) (hereinafter referred to as "Benefit Plans"), or the
      taking of any action by the Company which would adversely affect, either
      as to the past or prospectively, Executive's participation in or
      materially reduce or deprive Executive of his benefits that were provided
      under any such Benefit Plan at the time of a Change of Control; unless an
      equitable substitute arrangement (embodied in an ongoing substitute or
      alternative Benefit Plan) has been made for the benefit of Executive with
      respect to the Benefit Plan in question;

      (d) Relocation to any place more than 25 miles from the office regularly
      occupied by Executive, except for required travel by Executive on the
      Company's business to an extent substantially consistent with past
      practice;


                                       7
<PAGE>
      (e) Any material breach by the Company of any provision of this Agreement
      or the failure by the Company or by any successor or assign of the Company
      (whether by operation of law or otherwise, including any surviving company
      in a merger or similar transaction involving the Company), within ten (10)
      business days after written request to the Company or any successor or
      assign of the Company by Executive following a Change of Control to
      deliver to Executive an agreement expressly reaffirming its obligations
      under or agreeing to assume and comply with the obligations of the Company
      under this Agreement.

SECTION 4.  BUSINESS EXPENSES.

      The Company shall pay for or reimburse Executive for all reasonable
business expenses incurred by Executive in the performance of his duties
hereunder, upon submission to the Company in accordance with Company policy of a
written accounting of such expenses, which accounting shall include an itemized
list of all expenses incurred, the business purposes for which such expenses
were incurred, and such receipts as Executive reasonably has been able to
obtain.

SECTION 5.  COVENANTS OF EXECUTIVE.

      5.1   Acknowledgments.  Executive acknowledges the following:

            5.1.1 Access to Confidential Information. Executive's services
previously rendered to the Company and to be rendered hereunder have placed him
and shall continue to place him in a position of confidence and trust which
shall allow him access to "Confidential Information" (as hereinafter defined).

            5.1.2 Fair and Reasonable Covenants. The type and period of
restrictions imposed by the covenants in this Section 5 are fair and reasonable
and such restrictions will not prevent Executive from earning a livelihood.

            5.2   Covenant as to Nondisclosure or Use of Confidential
Information.  Executive agrees as follows:

            5.2.1 Executive shall not at any time during or after Executive's
employment, disclose to anyone outside of the Company or use for any purpose
that is not expressly authorized by the Company Confidential Information.
Executive shall not deliver, reproduce or in any way allow any Confidential
Information to be delivered to or used by any third parties without specific
written consent of a duly authorized representative of the Company.

            5.2.2 The Company's agreements with other persons or with the U.S.
government, or its agencies, may include agreements that impose obligations or
restrictions regarding inventions that occur in connection with work relating to
such an agreement, or regarding the confidential nature of work pursuant to such
an agreement. Executive agrees to be bound by all such lawful obligations and
restrictions, and to do whatever is necessary to satisfy the obligations of the
Company.


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<PAGE>
            5.2.3 If this Agreement is terminated for any reason, Executive will
promptly surrender and deliver to the Company all Confidential Information.
Executive will not retain any description or other document that contains or
relates to any Confidential Information that Executive may produce, obtain or
otherwise learn about during employment with the Company.

      5.3 Assignment of Inventions. Executive assigns and transfers to the
Company Executive's entire right, title and interest in and to all inventions;
including, but not limited to, ideas, improvements, designs and discoveries
("Inventions"), whether or not patentable and whether or not reduced to
practice, or conceived by Executive (whether made solely by Executive or jointly
with others) during Executive's employment with the Company which relate in any
manner to the actual or demonstrably anticipated business, work or research and
development of the Company or its subsidiaries, or result from or are suggested
by any task assigned to Executive or any work performance by Executive for or on
behalf of the Company or its subsidiaries. All Inventions are the sole property
of the Company; provided, however, that this Agreement does not require
assignment of an Invention which qualifies fully for protection under Section
2870 of the California Labor Code (Section 2870), which provides as follows:

            5.3.1 Any provision in an employment agreement which provides that
an employee shall assign or offer to assign any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time and without using the
employer's equipment, suppliers, facilities or trade secrets information except
for those Inventions that either:

                  (a) relate at the time of conception or reduction to practice
      of the invention to the employer's business, or actual or demonstrably
      anticipated research or development of the employer; or

                  (b)   result from any work performed by the employee for the
      employer

            5.3.2 To the extent a provision in an employment agreement purports
to require an employee to assign an invention otherwise excluded from being
required to be assigned under Section 5.3. 1, the provision is against the
public policy of this state and is unenforceable.

      5.4   Disclosure Of Inventions; Patents, Copyrights and Mask Work
Rights.  Executive agrees that in connection with any Invention:

            5.4.1 To keep and maintain adequate and current written records of
all Inventions made by Executive (in the form of notes, sketches, drawings and
other forms specified by the Company) while employed by the Company. These
records shall be available to the Company and shall be and remain the sole
property of the Company at all times. Executive will disclose such Inventions
promptly in writing to Executive's immediate supervisor at the Company, with a
copy to the Company Secretary, whether or not Executive believes the Invention
is protected by Section 2870. Such disclosure shall be received in confidence by
the Company. Within thirty (30) days after receipt of such disclosure, the
Company shall respond to Executive specifying that the Company either (i) claims
that the Invention is an assignable invention (as defined below in Section
5.4.2), (ii) relinquishes any claim to the Invention or (iii) requires further
or more detailed disclosure to assess its rights to the Invention under this


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<PAGE>
Agreement. In the case of clause (iii) above, the Company shall permit Executive
time during normal business hours reasonably necessary to prepare a more
detailed disclosure; and the Company shall provide an additional response as
described in this Section 5.4.1 within thirty (30) days after receipt by the
Company of such further or more detailed disclosure.

            5.4.2 Upon request, to promptly execute a written assignment of
title to the Company for any Invention required to be assigned by Section 5.3
("assignable invention") and Executive will preserve any such assignable
invention as Confidential Information.

            5.4.3 Upon request, to assist the Company or its nominee (at its
expense) during and at any time subsequent to Executive's employment in every
reasonable way to obtain for the Company's or its nominee's benefits., patents,
copyrights, mask work rights and other statutory rights ("Statutory Rights") for
such assignable inventions in any and all countries, which inventions shall be
and remain the sole and exclusive property of the Company or its nominee whether
or not patented, copyrighted or the subject of a mask work right. Executive
shall execute such papers and perform such lawful acts as the Company deems
necessary to exercise all rights, title and interest in such Statutory Rights,

            5.4.4 To execute and deliver to the Company or its nominee upon
request and at its, expense all documents, including applications for and
assignments of Statutory Rights to be issued therefore, as the Company
determines are necessary or desirable to apply for and obtain Statutory Rights
on such assignable inventions in any and all countries arid/or to protect the
interest of the Company or its nominee in Statutory Rights and to vest title
thereto in the Company or its nominee.

      5.5 Return of Business Records and Equipment. Upon termination of
Executive's employment hereunder, Executive shall promptly return to the
Company: (i) all documents, records, procedures, books, notebooks, and any other
documentation in any form whatsoever, including but not limited to written,
audio, video or electronic, containing any Information pertaining to the Company
which includes Confidential Information, including any and all copies of such
documentation then in Executive's possession or control regardless of whether
such documentation was prepared or compiled by Executive, Company, other
employees of the Company, representatives, agents, or independent contractors,
and (ii) all equipment or tangible personal property entrusted to Executive by
the Company. Executive acknowledges that all such documentation, copies of such
documentation, equipment, and tangible personal property are and shall at all
times remain the sole and exclusive property of the Company.

      5.6   Additional Covenants Protecting the Interests of the Company.
Executive agrees as follows:

            5.6.1 That at all times during his employment hereunder, he shall
comply with the Company's employee manual and other policies and procedures
reasonably established by the Company from time to time concerning matters such
as management, supervision, recruiting, diversity, and sexual harassment.

            5.6.2 That during his employment hereunder, he shall not directly or
indirectly, individually or together or through any affiliate or other person,
firm, corporation or entity


                                       10
<PAGE>
engage in any other business activity which would materially interfere with the
performance of his duties hereunder including, but not limited to, engaging in
any Competitive Business with that conducted by Company. For purposes of this
Section 5.6.2, "Competitive Business" shall mean the toy/game and children's
educational and entertainment products business as conducted or contemplated to
be conducted by the Company during the Employment Term.

            5.6.3 That for a period of one year following a termination of
employment other than following a Change of Control, he shall not, directly or
indirectly, individually, or together through any other person, firm,
corporation or entity, (i) approach, counsel, solicit or attempt to induce any
member of senior management of the Company (defined as an officer with a title
of vice president or higher) who is then in the employ of the Company, to leave
their employ, or employ or attempt to employ any such person, or (ii) aid or
counsel any other person, firm, corporation or entity to do any of the above.

            5.6.4 That for a period of one year following a termination of
employment other than following a Change of Control, he shall not, directly or
indirectly, individually, or together through any other person, firm,
corporation or entity, (i) enter into a business relationship with any material
customer of the Company relating to the children's educational and entertainment
products business in which the Company is engaged at the time of termination of
employment or (ii) discourage any person or entity which is a customer of the
Company from continuing its business relationship with the Company.

            5.6.5 That Executive agrees that, for a period of three years
following his termination of employment under this Agreement, he shall, upon
Company's reasonable request and in good faith and with his best efforts,
subject to his reasonable availability, cooperate and assist Company in any
dispute, controversy, or litigation in which Company may be involved and with
respect to which Executive obtained knowledge while employed by the Company or
any of its affiliates, successors, or assigns, including, but not limited to,
his participation in any court or arbitration proceedings, giving of testimony,
signing of affidavits, or such other personal cooperation as counsel for the
Company shall request. Any such activities shall be scheduled, to the extent
reasonably possible, to accommodate Executive's business and personal
obligations at the time. The Company shall pay Executive's reasonable travel and
incidental out-of-pocket expenses incurred in connection with any such
cooperation, as well as the reasonable costs of an attorney Executive engages to
advise him in connection with the foregoing.

      5.7   Certain Definition. The following definitions are applicable to
this Section 5:

            5.7.2 Confidential Information. "Confidential Information" shall
mean information and compilation of information relevant to the business of the
Company provided to Executive during his employment with the Company and/or an
affiliate of the Company or to which Executive had access or which he compiled
while an employee of the Company mid/or an affiliate of the Company, including,
but not limited to, information regarding any trade secrets, proprietary
knowledge, operating procedures, finances, financial condition, organization,
employees, customers, clients, agents, other personnel, business activities,
budgets, strategic or financial plans, objectives, marketing plans, prices and
price lists, operating and training materials, data bases and analyses, designs,
formulae, test data and all other documents relating thereto or strategies of
the Company; provided, however, the term Confidential Information as


                                       11
<PAGE>
used herein shall not include information: (i) which has become public,
published or is otherwise in the public domain through no fault of Executive
prior to any disclosure thereof by Executive; (ii) which was known to Executive
prior to his employment or affiliation with the Company; (iii) which is required
to be disclosed by statute, regulation or court order, or (iv) which is known
generally to the toy/game and children's educational and entertainment products
industry.

            5.7.3       The Company.  As used throughout this Section 5, the
term "Company" shall be deemed to include and refer to any company or person
affiliated with the Company.

      5.8 Remedies. In view of the position of confidence which Executive will
enjoy with the Company and the anticipated relationship with the clients,
customers, and employees of the Company and its affiliates pursuant to his
employment hereunder, and recognizing both the access to confidential financial
and other information which Executive will have pursuant to his employment,
Executive expressly acknowledges that the restrictive covenants set forth in
this Section 5 are reasonable and necessary in order to protect and maintain the
proprietary interests and other legitimate business interests of the Company and
its affiliates. Executive further acknowledges that (1) it would be difficult to
calculate damages to the Company and its affiliates from any breach of his
obligations under this Section 5, (ii) that injury to the Company and its
affiliates from any such breach would be irreparable and impossible to measure,
and (iii) that the remedy at law for any breach or threatened breach of this
Section 5 would therefore be an inadequate remedy and, accordingly, the Company
shall, in addition to all other available remedies (including without limitation
seeking such damages as it can show it and its affiliates has sustained by
reason of such breach and/or the exercise of all other rights it has under this
Agreement), be entitled to injunctive and other similar equitable remedies.

SECTION 6.  REPRESENTATIONS BY EXECUTIVE

            Executive represents and warrants that he is free to enter into and
perform each of the terms and conditions of this Agreement; and that his
execution and/or performance of all his obligations under this Agreement does
not and will not violate or breach any other agreement between Executive and any
other person or entity. Executive acknowledges that but for this representation
and warranty, the Company would not agree to enter into this Agreement.

SECTION 7.  ASSIGNABILITY.

            This Agreement is binding upon and inures to the benefit of the
parties and their respective heirs, executors, administrators, personal
representatives, successors and assigns. The Company may assign its rights or
delegate its duties under this Agreement at any time and from time to time, but
such assignment shall not relieve the Company of its obligations hereunder.
However, the parties acknowledge that the availability of Executive to perform
services and the covenants provided by Executive hereunder have been a material
consideration for the Company to enter into this Agreement. Accordingly,
Executive may not assign any of his rights or delegate any of his duties under
this Agreement, either voluntarily or by operation of law, without the prior
written consent of the Company, which may be given or withheld by the Company in
its sole and absolute discretion.

SECTION 8.  NOTICES.


                                       12
<PAGE>
            All notices, requests, demands or other communications hereunder
shall be deemed to have been duly given when delivered, addressed as follows (or
at such other address is the addressed party may have substituted by notice
pursuant to this Section 8):

            If to Executive:        Paul Rioux
                                    _________________________

                                    _________________________


            If to the Company:      Leapfrog Enterprises, Inc.
                                    6401 Hollis Street, Suite 150
                                    Emeryville, CA 94608
                                    Attn: ______________

SECTION 9.  MISCELLANEOUS.

      9.1 Entire Agreement. This Agreement and the exhibits hereto and the
agreements referenced herein embody the entire representations, warranties,
covenants and agreements in relation to the subject matter hereof and supersede
any previous agreement between the Company and Executive. No other
representations, warranties, covenants, understandings or agreements in relation
hereto exist between the panics except as otherwise expressly provided herein.

      9.2   Amendment.  This Agreement may not be amended except by an
instrument in writing duly executed by the parties hereto.

      9.3   Applicable Law; Choice of Forum.  This Agreement has been made and
executed under, and will be construed and interpreted in accordance with, the
laws of the State of California.

      9.4 Attorneys' Fees. The Company agrees to reimburse Executive for legal
fees incurred in connection with the preparation and negotiation of this
Agreement up to a maximum of $12,500. In any action or proceeding to enforce or
interpret this Agreement, or arising out of this Agreement, the prevailing party
or parties are entitled to recover a reasonable allowance for fees and
disbursements of counsel and costs of arbitration or suit, to be determined by
the court in which the action or proceeding is brought.

      9.5 Provisions Severable. Every provision of this Agreement is intended to
be severable from every other provision of this Agreement. If any provision of
this Agreement is held to be void or unenforceable, in whole or in part, the
remaining provisions will remain. in full force and effect, unless the remaining
provisions are so eviscerated by such holding that they do not reflect the
intent of the panics in entering into this Agreement. If any provision of this
Agreement is held to be unreasonable or excessive in scope or duration, that
provision will be enforced to the maximum extent permitted by law.

      9.6 Non-Waiver of Rights and Breaches. Any waiver by a party of any breach
of any provision of this Agreement will Pot be deemed to be a waiver of any
subsequent breach of that


                                       13
<PAGE>
provision. or of any breach of any other provision of this Agreement. No failure
or delay in exercising any right, power, or privilege granted to a party under
any provision of this Agreement will be deemed a waiver of chat or any, other
right, power or privilege. No single or partial exercise of any right, power or
privilege granted to a party under any provision of this Agreement will preclude
any other or further exercise of that or any other right, power or privilege.

      9.7 Interpretation of Agreement. Each of the parties has been represented
by counsel in the negotiation and preparation of this Agreement. The parties
agree that this Agreement is to be construed as jointly drafted, Accordingly,
this Agreement will be construed according to the fair meaning of its language,
and the rule of construction that ambiguities are to be resolved against the
drafting party will not be employed in the interpretation of this Agreement.

      9.8 Gender and Number. Concerning the words used in this Agreement, the
singular form shall include the plural form, the masculine gender shall include
the feminine or neuter gender, and vice versa, as the context requires, and the
word 'person' shall include any natural person partnership, corporation,
association, trust, estate or other legal entity.

      9.9 Headings. The headings of the Sections and Paragraphs of this
Agreement am inserted for ease of reference only, and will have no effect in the
construction or interpretation of this Agreement.

      9.10 Counterparts. This Agreement and any amendment or supplement to this
Agreement may be executed in two or more counterparts, each of which will
constitute an original but all of which will together constitute a single
instrument. Transmission by facsimile of an executed counterpart signature page
hereof by a party hereto shall constitute due execution and delivery of this
Agreement by such party.

      9.11 No Mitigation; Payment Obligations Absolute. Executive shall not be
required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Agreement be reduced by any compensation
earned by Executive as a result of employment by another employer. The Company's
obligations to pay Executive the amounts provided hereunder shall be absolute
and unconditional and shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right the Company may have against Executive, any of which may be asserted
against Executive in a separate proceeding.


                                       14
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.




                                   EXECUTIVE:


                                   /s/ Paul Rioux
                                   ---------------------
                                   Paul Rioux



                                    COMPANY:

                                    LEAPFROG ENTERPRISES, INC.



                                    By: /s/ James P. Curley
                                       ---------------------------
                                    Name: James P. Curley
                                         -------------------------
                                    Title Chief Executive Officer
                                         -------------------------



                                       15
<PAGE>
                        AMENDMENT TO EMPLOYMENT AGREEMENT




      This AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is entered into and
made effective as of April 1, 2002 by and between LeapFrog Enterprises, Inc., a
Delaware corporation (the "Company), and Paul Rioux ("Employee").

      WHEREAS, the Employee and the Company entered into that certain Employment
Agreement effective as of April 1, 2002 (the "Employment Agreement"), a copy of
which is attached hereto as Exhibit A; and

      WHEREAS, the Employee and the Company mutually wish to modify certain
provisions of the Employment Agreement;

      NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:

      1. EMPLOYMENT AGREEMENT. This Amendment amends and supersedes the
Employment Agreement only as to those specific provisions referenced herein. The
Amendment and the Employment Agreement shall be taken together and construed as
one agreement, except that when the terms of this Amendment conflict with the
terms of the Employment Agreement, this Amendment shall be controlling. Unless
specifically defined in this Amendment, capitalized terms shall be given the
definition ascribed to them in the Employment Agreement.

      2. MODIFICATION OF PROVISIONS. The parties agree that the Employment
Agreement shall be modified in the manner described below.

            2.1 BASE COMPENSATION AND BONUS. Section 2.1 of the Employment
Agreement shall be modified to read: "From April 1, 2002 through December 31,
2003, the Company shall pay to Executive, and Executive shall be entitled to
receive from the Company, a base salary for the employment referred to in
Section 1 hereof of $265,000 per year ("Salary"), and a bonus of $135,000 per
year ("Bonus") of which 70% shall be guaranteed and 30% shall be subject to
Executive meeting certain minimum operating results as established by the Board
of Directors or the Compensation Committee thereof during the first quarter of
each year of the Employment Term. From January 1, 2004 through March 31, 2005,
the Company shall pay to Executive, and Executive shall be entitled to receive
from the Company, a base salary for the employment referred to in Section 1
hereof of $132,500 per year ("Salary"), and a bonus of $67,500 per year
("Bonus"), under the same terms mentioned above. Salary shall be payable in
intervals of not less than twice a month in accordance with the Company's
payment policy for executives in effect from time to time. The Bonus shall be
payable within ten (10) days from the time the amount of Bonus has been
determined, but in any case not later than February 15th of the following
calendar year.

For any days of service provided by Executive to the Company over and above
those set forth in Section 1.1 above, the Company shall pay Executive at a rate
of $2,000 per day."


                                       16
<PAGE>
            2.2 STOCK OPTIONS. Section 2.3 of the Employment Agreement shall be
modified to read: "The Company and Executive acknowledge that Executive has been
granted in connection with this Agreement a non-qualified stock option to
purchase 150,000 shares of the Company Class A Common Stock at an exercise price
of $12.50 per share. The vesting period shall be three (3) years, with 1/36th of
the total option vesting on January 1, 2002 and 1/36th of the total option
vesting monthly thereafter. Stock option agreements issued to Executive prior to
April 1, 2002 shall remain in full force and effect."

      3. ENTIRE AGREEMENT. This Amendment, along with the Employment Agreement,
the Company's Stock Option Plan, and the Stock Option Agreements contains the
entire agreement between the parties and constitutes the complete, final and
exclusive embodiment of their agreement with respect to the subject matter of
the of the Amendment and the Employment Agreement. This Amendment is executed
without reliance upon any promise, warranty or representation, written or oral,
by any party or any representative of any party other than those expressly
contained herein and it supersedes any other such promises, warranties or
representations. Each party has carefully read this Amendment, and has been
advised of its meaning and consequences by his or its respective attorney, and
signed the same of his or its own free will. The Amendment may not be amended or
modified except in a writing signed by both the Employee and a duly authorized
officer of the Company.

In Witness Whereof, the parties have duly authorized and caused this Amendment
to be executed as of the date first written above.



LEAPFROG ENTERPRISES, INC.:                     PAUL RIOUX, AN INDIVIDUAL:



By: /s/ Michael C. Wood                            /s/ Paul Rioux
   ------------------------------                  --------------

      Name:

      Title:

Date:                                           Date:
       -----------------------                         ---------------------


                                       17


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