Exhibit 10.04

 

DATED September 5, 2014

 

LEAPFROG TOYS (UK) LIMITED

 

and

 

ANTONY HICKS

 

 
SERVICE AGREEMENT

 

 

 

 

 

Table of Contents

 

    Page       1. Interpretation 1       2. Term of appointment 3       3.
Warranties and Conditions 4       4. Duties 4       5. Place of Work 5       6.
Hours of work 6       7. Salary 6       8. Expenses 6       9. Bonus 7       10.
Stock and stock option schemes 7       11. Pensions 8       12. Life assurance
and private medical insurance 9       13. Directors' and officers' insurance 9  
    14. Car allowance 9       15. Holidays 10       16. Incapacity 11       17.
Outside interests 11       18. Confidential information 12       19.
Intellectual property 12       20. Ceasing to be a director 13       21. Payment
in lieu of notice 13       22. Termination without notice 14       23. Reserved
15       24. Obligations on termination 15       25. Post-termination
restrictions 16       26. Disciplinary and grievance procedures 18       27.
Data protection 18       28. Collective agreements 18       29. Reconstruction
and amalgamation 19       30. Notices 19       31. Entire agreement 20       32.
Variation 20       33. Counterparts 20       34. Third party rights 20       35.
Governing law and jurisdiction 20

 

-i-

 

 

THIS AGREEMENT is dated September 5, 2014

 

Parties

 

(1)LEAPFROG TOYS (UK) LTD incorporated and registered in England and Wales with
company number 03891265 whose registered office is at 36 Windsor Street,
Uxbridge, Middlesex UB8 1AB (the “Company”).

 

(2)ANTONY HICKS of [Address Omitted] (“you”)

 

Agreed terms

 

1.Interpretation

 

1.1The definitions and rules of interpretation in this clause 1 apply in this
Agreement.

 

Appointment: your employment by the Company on the terms of this Agreement.

 

Associated Employer: has the meaning given to it in the Employment Rights Act
1996.

 

Board: the board of directors of the Company (including any committee of the
board duly appointed by it).

 

Capacity: as agent, consultant, director, employee, owner, partner, shareholder
or in any other capacity.

 

CEO: the Chief Executive Officer of LeapFrog Enterprises, Inc.

 

Change in Control: the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events: (a) any
Exchange Act Person (as defined in the Company’s 2002 Equity Incentive Plan)
(other than Michael Milken, Lowell Milken, or any combination of the foregoing),
becomes the owner, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities other than by virtue of a merger,
consolidation or similar transaction; (b) there is consummated a merger,
consolidation or similar transaction involving (directly or indirectly) the
Company and, immediately after the consummation of such merger, consolidation,
or similar transaction, the stockholders of the Company immediately prior
thereto do not own, directly or indirectly, outstanding voting securities
representing more than fifty percent (50%) of the combined voting power of the
surviving entity in such merger, consolidation or similar transaction or more
than fifty percent (50%) of the combined outstanding voting power of the parent
of the surviving entity in such merger, consolidation or similar transaction;
(c) the stockholders of the Company approve or the Board approves a plan of
complete dissolution or liquidation of the Company; or (d) there is consummated
a sale, lease, license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, other than a sale,
lease, license or other disposition of all or substantially all of the
consolidated assets of the Company and its Subsidiaries to an entity, more than
fifty percent (50%) of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such sale,
lease, license, or other disposition.

 

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Change in Control Period: the period beginning three (3) months before and
ending twelve (12) months after a Change in Control.

 

Confidential Information: information (whether or not recorded in documentary
form, or stored on any magnetic or optical disk or memory) relating to the
business, products, affairs and finances of the Company and/or any Group Company
for the time being confidential to the Company and/or any Group Company and
trade secrets including technical data and know-how relating to the business of
the Company and/or any Group Company or any of its or their suppliers, clients,
customers, agents, distributors, shareholders, management or other business
contacts including information that you create, develop, receive or obtain in
connection with the Appointment, whether or not such information (if in anything
other than oral form) is marked confidential.

 

Financial Year: the financial year of the Company being the period from 1 April
to 31 March each year.

 

Group Company: Subsidiary and/or Holding Companies of the Company from time to
time and any Subsidiary of any Holding Company from time to time.

 

Incapacity: any sickness, injury or other medical disorder or condition which
prevents you from carrying out your duties.

 

Intellectual Property Rights: patents, rights to Inventions, copyright and
related rights, trade marks, trade names and domain names, rights in get-up,
rights in goodwill or to sue for passing off, unfair competition rights, rights
in designs, rights in computer software, database rights, topography rights,
rights in confidential information (including know-how and trade secrets) and
any other intellectual property rights, in each case whether registered or
unregistered and including all applications (or rights to apply) for, and
renewals or extensions of, such rights and all similar or equivalent rights or
forms of protection which subsist or will subsist now or in the future in any
part of the world.

 

Invention: any invention, idea, discovery, development, improvement or
innovation, whether or not patentable or capable of registration, and whether or
not recorded in any medium.

 

Pre-Contractual Statement: any undertaking, promise, assurance, statement,
representation, warranty or understanding (whether in writing or not) of any
person (whether party to this Agreement or not) relating to the Appointment
which is not expressly set out in this Agreement or any documents referred to in
it.

 

Restricted Business: the business or parts of the business of the Company and
any Group Company with which you were involved to a material extent in the 12
months before the Termination Date.

 

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Restricted Customer: any firm, company or person who, during the 12 months
before the Termination Date, was a customer or prospective customer of or was in
the habit of dealing with the Company or any Group Company and with whom you had
material contact or about whom you became aware or informed in the course of
employment.

 

Restricted Person: anyone employed or engaged by the Company or any Group
Company who could materially damage the interests of the Company or any Group
Company if they were involved in any Capacity in any business concern which
competes with any Restricted Business and with whom you dealt in the 12 months
before the Termination Date in the course of your employment.

 

Subsidiary and Holding Company: in relation to a company mean "subsidiary" and
"holding company" as defined in section 1159 of the Companies Act 2006 and a
company shall be treated, for the purposes only of the membership requirement
contained in subsections 1159(1)(b) and (c), as a member of another company even
if its shares in that other company are registered in the name of (a) another
person (or its nominee), whether by way of security or in connection with the
taking of security, or (b) a nominee.

 

Termination: the termination of the Appointment however caused.

 

Termination Date: the last date of employment, including any notice period under
Clause 2.1.

 

1.2The headings in this Agreement are inserted for convenience only and shall
not affect its construction.

 

1.3A reference to a particular law is a reference to it as it is in force for
the time being taking account of any amendment, extension, or re-enactment and
includes any subordinate legislation for the time being in force made under it.

 

1.4Unless the context otherwise requires, a reference to one gender shall
include a reference to the other genders.

 

1.5Unless the context otherwise requires, words in the singular include the
plural and in the plural include the singular.

 

1.6The words “include”, “including”, “without limitation” and any similar phrase
will be construed as meaning without limitation.

 

2.Term of appointment

 

2.1The Appointment shall commence on September 29, 2014 (the “Commencement
Date”) and shall continue, subject to the remaining terms of this Agreement,
until terminated:

 

(a)by the Company providing you with no less than two months written notice; or

 

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(b)by you providing the Company with no less than two months’ prior written
notice.

 

2.2No employment with a previous employer counts towards your period of
continuous employment with the Company.

 

2.3You consent to the transfer of the Appointment to an Associated Employer at
any time provided that your place of work does not change other than in
accordance with this Agreement.

 

3.Warranties and Conditions

 

3.1You represent and warrant to the Company that, by entering into this
Agreement or performing any of your obligations under it, you will not be in
breach of any court order or any express or implied terms of any contract or
other obligation binding on you and undertake to indemnify the Company and/or
any Group Company against any claims, costs, damages, liabilities or expenses
which the Company and/or any Group Company may incur as a result if you are in
breach of any such obligations.

 

3.2You warrant that you are entitled to work in the United Kingdom without any
additional approvals and will notify the Company immediately if you cease to be
so entitled during the Appointment.

 

3.3You warrant that you are not subject to any restrictions which prevent you
from holding office as a director.

 

4.Duties

 

4.1You shall serve the Company as Chief International Officer (or such other
role as the Board, together with the CEO, considers appropriate from time to
time). You shall report directly to the CEO.

 

4.2During the Appointment you shall:

 

(a)act as a director or officer of the Company and of any Group Company as may
be requested by the CEO;

 

(b)comply with the articles of association (as amended from time to time) of the
Company and any Group Company of which you are a director or officer;

 

(c)abide by any statutory, fiduciary or common-law duties to the Company and/or
any Group Company of which you are a director or officer;

 

(d)not do anything that would cause you to be disqualified from acting as a
director or officer;

 

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(e)comply with the Company's anti-corruption and bribery policy and related
procedures;

 

(f)unless prevented by Incapacity, devote the whole of your time, attention and
abilities to the business of the Company and any Group Company of which you are
an officer;

 

(g)faithfully and diligently exercise such powers and perform such duties as may
from time to time be assigned to you by the CEO together with such person or
persons as may be appointed to act jointly with you;

 

(h)comply with all reasonable and lawful directions given to you by the CEO;

 

(i)promptly make such reports to the CEO in connection with the affairs of the
Company and/or any Group Company on such matters and at such times as are
reasonably required;

 

(j)report your own wrongdoing and any wrongdoing or proposed wrongdoing of any
other employee, director or officer of the Company and/or any Group Company to
the CEO immediately on becoming aware of it;

 

(k)use your best endeavours to promote, protect, develop and extend the business
of the Company and any Group Company; and

 

(l)consent to the Company monitoring and recording any use that you make of the
Company's electronic communications systems for the purpose of ensuring that the
Company's rules are being complied with and for legitimate business purpose.

 

4.3You shall comply with any staff rules, policies and procedures of the Company
and/or any Group Company in place from time to time. Such rules, policies and
procedures do not form part of this Agreement and the Company may amend them at
any time. To the extent that there is any conflict between the terms of this
Agreement and such rules, policies and procedures, this Agreement shall prevail.

 

4.4All documents, manuals, hardware and software provided for your use by the
Company, and any data or documents (including copies) produced, maintained or
stored on the Company's computer systems or other electronic equipment
(including mobile phones), remain the property of the Company.

 

5.Place of Work

 

5.1Other than significant overseas work, your normal place of work is your home
with visits as and when required to the Company’s offices at 36 Windsor Street,
Uxbridge or such other place which the Company may reasonably require for the
proper performance and exercise of your duties.

 

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5.2You agree to travel on the Company's and/or any Group Company's business
(both within the United Kingdom or abroad) as may be required for the proper
performance of your duties.

 

5.3During the Appointment you shall not be required to work outside the United
Kingdom for any continuous period of more than one month.

 

6.Hours of work

 

6.1Your normal working hours shall be 9:00 am to 5:30 pm on Mondays to Fridays
and such additional hours as are necessary for the proper performance of your
duties. You acknowledge that you shall not receive further remuneration in
respect of such additional hours.

 

6.2It is the Company’s understanding that, in accordance with Regulation 20 of
the Working Time Regulations (the “WTR”), your working time is not measured or
pre-determinable by you. Notwithstanding that, to the extent that Regulation
4(1) of the WTR applies to you, you hereby agree in accordance with Regulation 5
of the WTR that the limit of maximum weekly working time set out in Regulation
4(1) of the WTR will not apply to you during the Appointment. You acknowledge
that you may terminate such opt out at any time by giving the Company not less
than three months’ written notice.

 

7.Salary

 

7.1You shall be paid a gross salary of £280,000 per annum (inclusive of any fees
due to you by the Company and/or any Group Company as a director or officer of
the Company and/or any Group Company) (“Salary”).

 

7.2Your Salary shall accrue from day to day and be payable monthly in arrears on
or about the last day of each calendar month directly into your nominated bank
or building society following deductions for income tax and national insurance
contributions, as required.

 

7.3Your Salary shall be reviewed by the Board, together with the CEO, annually,
the first such review to take place in 2015 at the same time as the salary
review of the Company’s other senior executives. The Company is under no
obligation to award an increase following a salary review. There will be no
review of the Salary after notice has been given by either party to terminate
the Appointment.

 

7.4The Company may deduct from the Salary, or any other sums owed to you, any
money owed to the Company and/or any Group Company by you.

 

8.Expenses

 

8.1The Company shall reimburse (or procure the reimbursement of) all reasonable
expenses wholly, properly and necessarily incurred by you in the course of the
Appointment, subject to production of VAT receipts or such other appropriate
evidence of payment as the Company may request.

 

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8.2You shall abide by the Company's policies on expenses in place from time to
time.

 

9.Bonus

 

9.1For Financial Year 2015 (the annual period ending March 31, 2015), you shall
be entitled to receive a guaranteed bonus equal to 75% of the actual Salary
accrued by and payable to you in respect of the period from the Commencement
Date to the end of Financial Year 2015, which will be payable to you at the same
time the Company generally pays bonuses to its other employees (currently
expected to be on or before 30 June 2015) (the “Payment Date”).

 

9.2In respect of each subsequent Financial Year, you shall be entitled to
participate in the bonus scheme for senior executives. The amount of your bonus
in any particular Financial Year (if any payable) shall be determined by the
Board in its sole discretion based on your and the Company’s, and any relevant
Group Company’s, achievement of targets which will be notified to you by the
Board from time to time.

 

9.3Any bonus payment awarded to you shall be purely discretionary and shall not
form part of your contractual remuneration under this Agreement. If the Company
makes a bonus payment to you in respect of a particular Financial Year, it shall
not be obliged to make subsequent bonus payments in respect of any subsequent
Financial Years.

 

9.4The Company may alter the terms of any bonus targets or withdraw them
altogether at any time without prior notice to you.

 

9.5You will have no right to a bonus or time-apportioned bonus in the event you
terminate the Appointment or the Appointment is terminated pursuant to Clause
22.

 

9.6Any bonus payments shall not be pensionable.

 

10.Stock and stock option schemes

 

10.1During the Appointment you will be invited to participate in the LeapFrog
Enterprises, Inc. Employee Stock Purchase Plan (the “Plan”) in accordance with
the rules of the Plan, as relevant, in force and as amended from time to time.
Your participation will be voluntary and will not constitute a contractual
entitlement under this Agreement. Any extinction or curtailment of any rights,
benefits or expectations under the Plan by reason of any transfer or termination
of your Appointment, howsoever arising, will not give rise to any claim for
compensation and your rights or benefits under the Plan will be determined in
accordance with the Plan rules and not in accordance with the provisions of this
Agreement (other than this Clause). The Company reserves the right to modify or
alter the Plan at any time for any reason.

 

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10.2You will be granted 175,000 stock options (the “Stock Options”) and 100,000
restricted stock units (“RSUs”), both pursuant to the Plan and in accordance
with LeapFrog Enterprises, Inc.’s policy with respect to grant date and vesting
commencement date. Subject to your Continuous Service (as defined in the Plan),
(a) one-quarter (1/4) of the Stock Options shall vest on the one-year
anniversary of the vesting commencement date; thereafter the balance of the
Stock Options shall vest over three (3) years, on the monthly anniversary of the
vesting commencement date, in thirty-six (36) equal monthly instalments, and (b)
one-quarter (1/4) of the RSUs shall vest on the 1st, 2nd, 3rd and 4th year
anniversaries of the Vesting Commencement Date. In each Financial Year, you will
be considered for an annual equity grant at the same time as the other senior
executives at the Company, it being understood that such equity grants are in
the sole discretion of the Compensation Committee of LeapFrog Enterprises, Inc.

 

10.3If, during a Change in Control Period, the Company terminates your
employment other than pursuant to clauses 22.1(a) - 22.1(l), or if you resign as
a result of, and within sixty (60) days after the occurrence of, one of the
following events without your consent: (a) a material diminution in your
authority, duties, or responsibilities within twelve months following a Change
in Control; (b) a reduction in your Salary in an amount greater than ten percent
(10%) of your Salary prior to such reduction; (c) a change in the geographic
location of your workplace by more than fifty (50) miles from its previous
location; or (d) a material breach by the Company of this Agreement, the
following shall occur: (i) the vesting and exercisability of all outstanding
options to purchase the Company’s stock held by you on such date shall be
accelerated in full, and (ii) all other stock awards that are held by you on
such date shall vest in full, and any reacquisition or repurchase rights held by
the Company with respect to such stock awards shall lapse.  Any such options
shall remain exercisable by you until the period provided by the agreements
evidencing such options, but in no event beyond the expiration date of such
options.  No accelerated vesting benefits will be provided if your employment
terminates outside of the Change in Control Period.

 

11.Pensions

 

11.1You may join the Company's stakeholder pension scheme (the “Scheme”) (or
such other registered pension scheme as may be set up by the Company to replace
the Scheme) subject to satisfying certain eligibility criteria and subject to
the rules of the Scheme as amended from time to time. Full details of the Scheme
are available from the Human Resources Department.

 

11.2You may make contributions to the scheme of an amount up to the lower of
100% of your Salary and the annual allowance set by HM Revenue & Customs from
time to time. Such contributions shall be payable in equal monthly instalments
in arrears and shall be made by way of deduction from your Salary.

 

11.3If you join the Scheme, the Company shall contribute an amount equal to 5%
of your Salary or, if lower, the contributions payable by you to the Scheme
during each year of the Appointment. The Company's contributions to the Scheme
shall be payable in equal monthly instalments in arrears, and shall be subject
to the rules of the Scheme and the tax reliefs and exemptions available from HM
Revenue & Customs, as amended from time to time.

 

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11.4A contracting-out certificate is not in force in respect of the Appointment.

 

12.Life assurance and private medical insurance

 

12.1You shall be entitled to participate in the Company's life assurance scheme
and the Company’s private medical insurance scheme subject to:

 

(a)the terms of those schemes, as amended from time to time;

 

(b)the rules and/or the insurance policy of the relevant insurance provider(s),
as amended from time to time; and

 

(c)you satisfying the normal underwriting requirements of the relevant insurance
provider(s) and the premium being at a rate which the Company considers
reasonable.

 

Full details of the scheme are available from the Human Resource Department.

 

12.2If the insurance provider(s) refuse for any reason to provide life assurance
benefit and/or private medical insurance benefit to you the Company shall not be
liable to provide any replacement benefit of the same or similar kind or to pay
any compensation in lieu of such benefit.

 

12.3The Company in its sole and absolute discretion reserves the right to
discontinue, vary or amend its life assurance and/or private medical insurance
scheme(s) (including the level of your cover) at any time on reasonable notice
to you.

 

13.Directors' and officers' insurance

 

During the Appointment and for six years following the Termination Date you
shall be entitled to be covered by a policy of directors' and officers'
liability insurance on terms no less favourable than those in place from time to
time for other officers of the Company. A copy of the policy is available from
the Human Resources Department.

 

14.Car allowance

 

14.1Provided that you hold a current driving licence, you shall receive a car
allowance for use of your own car of £8,900 per annum which shall be payable
together with and in the same manner as the salary in accordance with clause 7.
The car allowance shall not be treated as part of the basic salary for any
purpose and shall not be pensionable.

 

14.2The Company shall reimburse you in respect of fuel costs for business miles
at HM Revenue and Customs approved rates.

 

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14.3You shall immediately inform the Company if you are disqualified from
driving and shall cease to be entitled to receive the allowance under clause
14.1 or reimbursement of fuel expenses under clause 14.2.

 

15.Holidays

 

15.1You shall be entitled to 25 days' paid holiday in each holiday year
(increasing to 27 day’s paid holiday after 3 years of service) together with the
usual public holidays in England. The Company's holiday year runs between 1
January and 31 December. If the Appointment commences or terminates part way
through a holiday year, your entitlement during that holiday year shall be
calculated on a pro-rata basis.

 

15.2Holiday shall be taken at such time or times as shall be approved in advance
by the CEO. You shall not, without the consent of the CEO, carry forward any
accrued but untaken holiday entitlement to a subsequent holiday year unless you
have been unavoidably prevented from taking such holiday during the relevant
leave year because of sickness absence or statutory maternity, paternity or
adoption leave.

 

15.3You shall have no entitlement to any payment in lieu of accrued but untaken
holiday except on termination of the Appointment. Subject to clause 15.4 the
amount of such payment in lieu shall be 1/260th of your Salary for each untaken
day of the entitlement under clause 15.1 for the holiday year in which
termination takes place and any untaken days carried forward from the preceding
holiday year.

 

15.4If the Company has terminated or would be entitled to terminate the
Appointment under clause 22, or, if you have terminated the Appointment in
breach of this Agreement, any payment due under clause 15.3 shall be limited to
your statutory entitlement under the Working Time Regulations 1998 and any paid
holidays (including paid public holidays) taken shall be deemed first to have
been taken in satisfaction of that statutory entitlement.

 

15.5If on termination of the Appointment you have taken in excess of your
accrued holiday entitlement, the Company shall be entitled to recover from you,
by way of deduction from any payments due to you or otherwise, one day's pay
calculated at 1/260th of your Salary for each excess day.

 

15.6If either party has served notice to terminate the Appointment, the CEO may
require you to take any accrued but unused holiday entitlement during the notice
period.

 

15.7During any continuous period of absence due to Incapacity of one month or
more you shall not accrue holiday under this Agreement and your entitlement
under clause 15.1 for the holiday year in which such absence takes place shall
be reduced pro rata save that it shall not fall below your entitlement under the
Working Time Regulations 1998.

 

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16.Incapacity

 

16.1If you are absent from work due to Incapacity, you must notify the CEO of
the reason for your absence as soon as possible on your first day of absence. In
all cases of absence a self-certification form must be completed on your return
to work. For any period of Incapacity which lasts for more than seven
consecutive days, a doctor’s certificate stating the reason for absence must be
obtained. Further certificates must be obtained if the absence continues for
longer than the period of the original certificate.

 

16.2During any absence due to Incapacity in excess of six (6) business days in a
calendar year, the Company shall pay you Statutory Sick Pay (“SSP”) provided
that you satisfy the relevant requirements. Your qualifying days for SSP
purposes are Monday to Friday.

 

16.3You agree to consent to medical examinations (at the Company's expense) by a
doctor nominated by the Company should the Company so require. You agree that
any report produced in connection with any such examination may be disclosed to
the Company and the Company may discuss the contents of the report with the
relevant doctor and may disclose its contents with any Group Company.

 

16.4The rights of the Company to terminate the Appointment under the terms of
this Agreement apply even when such termination would or might cause you to
forfeit any entitlement to sick pay or other benefits.

 

17.Outside interests

 

17.1Subject to clause 17.2, during the Appointment you shall not, except as a
representative of the Company or with the prior written approval of the Board
and the CEO, whether paid or unpaid, be directly or indirectly engaged,
concerned or have any financial interest in any Capacity in any other business,
trade, profession or occupation (or the setting up of any business, trade,
profession or occupation).

 

17.2Notwithstanding clause 17.1, you may hold an investment by way of shares or
other securities of not more than 5% of the total issued share capital of any
company (whether or not it is listed or dealt in on a recognised stock exchange)
and invest in a real estate company, solely owned by your family; where such
company does not carry on a business similar to or competitive with any business
for the time being carried on by the Company and/or any Group Company.

 

17.3You agree to disclose to the Board and the CEO any matters relating to your
spouse or civil partner (or anyone living as such), children or parents which
may, in the reasonable opinion of the Board or the CEO, be considered to
interfere, conflict or compete with the proper performance of your obligations
under this Agreement.

 

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18.Confidential information

 

18.1You acknowledge that in the course of the Appointment you will have access
to Confidential Information. You have therefore agreed to accept the
restrictions in this clause 18.

 

18.2You shall not (except in the proper course of your duties), either during
the Appointment or at any time after its termination (however arising), use or
disclose to any person, company or other organisation whatsoever (and shall use
your best endeavours to prevent the publication or disclosure of) any
Confidential Information. This shall not apply to:

 

(a)any use or disclosure authorised in advance by the Board and the CEO or
required by law;

 

(b)any information which is already in, or comes into, the public domain other
than through your unauthorised disclosure; or

 

(c)any protected disclosure within the meaning of section 43A of the Employment
Rights Act 1996.

 

19.Intellectual property

 

19.1You shall give the Company full written details of all Inventions and of all
works embodying Intellectual Property Rights made wholly or partially by you at
any time during the course of the Appointment which relate to, or are reasonably
capable of being used in, the business of the Company and/or any Group Company.
You acknowledge that all Intellectual Property Rights subsisting (or which may
in the future subsist) in all such Inventions and works shall automatically, on
creation, vest in the Company absolutely. To the extent that they do not vest
automatically, you hold them on trust for the Company. You agree promptly to
execute all documents and do all acts as may, in the opinion of the Company, be
necessary to give effect to this clause 19.1.

 

19.2You hereby irrevocably waive all moral rights under the Copyright, Designs
and Patents Act 1988 (and all similar rights in other jurisdictions) which you
have or will have in any existing or future works referred to in clause 19.1.

 

19.3You irrevocably appoint the Company to be your attorney in your name and on
your behalf to execute documents, use your name and do all things which are
necessary or desirable for the Company to obtain for itself or its nominee the
full benefit of this clause. A certificate in writing, signed by any director or
the secretary of the Company, that any instrument or act falls within the
authority conferred by this Agreement shall be conclusive evidence that such is
the case so far as any third party is concerned.

 

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20.Ceasing to be a director

 

20.1Except with the prior approval of the Board and the CEO, or as provided in
the articles of association of the Company and/or any Group Company of which you
are a director or officer, once appointed, you shall not resign as a director or
officer of the Company and/or any Group Company, other than upon your last day
of employment with the Company.

 

20.2If, once appointed, you cease to be a director or officer of the Company
and/or any Group Company (otherwise than by reason of death, resignation or
disqualification pursuant to the articles of association of the Company and/or
the relevant Group Company, as amended from time to time, or by statute or court
order) the Appointment shall continue with you as an employee only and the terms
of this Agreement (other than those relating to the holding of the office of
director or officer) shall continue in full force and effect. You shall have no
claims in respect of such cessation of directorship or office.

 

21.Effect of Termination by Company under Clause 2.1

 

21.1In the event Company terminates your employment pursuant to Clause 2.1,

 

(a)You will be paid your salary, receive benefits, and your equity will continue
to vest, until the Termination Date. For the avoidance of doubt this will
include pro-rata vesting for any partial year up to the Termination Date.

 

(b)You will receive cash severance benefits equal to six (6) months of your base
Salary if notice of termination is given in the nine month period following the
Commencement Date and twelve (12) months of your then-current base Salary if
notice of termination is given thereafter (the “Base Severance”).

 

(c)You will be eligible for a pro-rated bonus based on the portion of the
then-current financial year you are an employee (the “Bonus Severance”). The
amount of the Bonus Severance is subject to the achievement of the goals under
the Company’s then-current bonus plan and approval of the LeapFrog Enterprise,
Inc. Compensation Committee. The Bonus Severance will be paid to you on the
Company’s regular bonus payment date. The Base Severance and Bonus Severance are
collectively referred to as the “Severance Payments.”

 

21.2The Company will pay the Base Severance in equal monthly instalments over
the 6 or 12 month period following the Termination Date, as applicable per
Clause 21(b). The Severance Payments will be less income tax and national
insurance contributions. You agree to sign an agreement releasing the Company of
any claims you may have against the Company prior to receiving any Severance
Payments.

 

21.3Nothing in this clause 21 shall prevent the Company from terminating the
Appointment in breach.

 

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21.4Notwithstanding clause 21.1 you shall not be entitled to the Severance
Payments if the Company would otherwise have been entitled to terminate the
Appointment without notice in accordance with clause 22. In that case the
Company shall also be entitled to recover from you any Severance Payments (or
instalments thereof) already made.

 

22.Termination without notice

 

22.1The Company may also terminate the Appointment with immediate effect without
notice and with no liability to make any further payment to you (other than in
respect of amounts accrued due at the date of termination) if you:

 

(a)are disqualified from acting as a director or officer or resign as a director
or officer from the Company and/or any Group Company without the prior written
approval of the Board and the CEO;

 

(b)fail or cease to meet the requirements of any regulatory body whose consent
is required to enable you to undertake all or any of your duties under the
Appointment or are guilty of a serious breach of the rules and regulations of
such regulatory body or of any compliance manual of the Company and/or any Group
Company;

 

(c)are in breach of the Company's anti-corruption and bribery policy and related
procedures;

 

(d)are guilty of any gross misconduct affecting the business of the Company
and/or any Group Company;

 

(e)commit any serious or repeated breach or non-observance of any of the
provisions of this Agreement or refuse or neglect to comply with any reasonable
and lawful directions of the Board and/or the CEO;

 

(f)are, in the reasonable opinion of the Board, negligent and incompetent in the
performance of your duties;

 

(g)are declared bankrupt or makes any arrangement with or for the benefit of
your creditors or have a county court administration order made against you
under the County Court Act 1984;

 

(h)are convicted of any criminal offence (other than an offence under any road
traffic legislation in the United Kingdom or elsewhere for which a fine or
non-custodial penalty is imposed) or any offence under any regulation or
legislation relating to insider dealing;

 

(i)become of unsound mind (which includes lacking capacity under the Mental
Capacity Act 2005), or a patient under any statute relating to mental health;

 

(j)cease to be eligible to work in the United Kingdom;

 

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(k)are guilty of any fraud or dishonesty or act in any manner which in the
opinion of the Board brings or is likely to bring you or the Company and/or any
Group Company into disrepute or is materially adverse to the interests of the
Company and/or any Group Company;

 

(l)are guilty of a serious breach of any rules issued by the Company from time
to time regarding its electronic communications systems; or

 

22.2The rights of the Company under clause 22.1 are without prejudice to any
other rights that it might have at law to terminate the Appointment or to accept
any breach of this Agreement by you as having brought this Agreement to an end.
Any delay by the Company in exercising its rights to terminate shall not
constitute a waiver thereof.

 

23.Reserved

 

24.Obligations on termination

 

24.1On termination of the Appointment (however arising), you shall:

 

(a)resign immediately without compensation from any office that you hold in or
on behalf of the Company and/or any Group Company;

 

(b)transfer, without payment, to the Company or as it may direct any shares or
other securities held by you in the Company or any Group Company as a nominee or
trustee for the Company or any Group Company and deliver to the Company the
related certificates (for the avoidance of doubt, this Clause does not apply to
vested equity grants to you as an employee);

 

(c)subject to clause 24.2, immediately deliver to the Company all documents,
books, materials, records, correspondence, papers and information (on whatever
media and wherever located) relating to the business or affairs of the Company
and/or any Group Company or its or their business contacts, any keys, credit
card and any other property of the Company or any Group Company, which is in
your possession or under your control;

 

(d)irretrievably delete any information relating to the business of the Company
or any Group Company stored on any magnetic or optical disk or memory and all
matter derived from such sources which is in your possession or under your
control outside the Company's premises; and

 

(e)provide a signed statement that you have complied fully with your obligations
under this clause 24.1 together with such reasonable evidence of compliance as
the Company may request.

 

24.2You hereby irrevocably appoint the Company to be your attorney to execute
and do any such instrument or thing and generally to use your name for the
purpose of giving the Company or its nominee the full benefit of clause 24.1(a)
and clause 24.1(b).

 

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24.3Except as set forth in Clauses 10.3 and 22, on termination of the
Appointment howsoever arising you shall not be entitled to any compensation for
the loss of any rights or benefits under any share option, bonus, long-term
incentive plan or other profit sharing scheme operated by the Company and/or any
Group Company in which you may participate.

 

25.Post-termination restrictions

 

25.1In order to protect the confidential information, trade secrets and business
connections of the Company and each Group Company to which you have access as a
result of the Appointment, you covenant with the Company (for itself and as
trustee and agent for each Group Company) that you shall not:

 

(a)for six months after the Termination Date solicit or endeavour to entice away
from the Company or any Group Company the business or custom of a Restricted
Customer with a view to providing goods or services to that Restricted Customer
in competition with any Restricted Business;

 

(b)for 12 months after the Termination Date in the course of any business
concern which is in competition with any Restricted Business, offer to employ or
engage or otherwise endeavour to entice away from the Company or any Group
Company any Restricted Person;

 

(c)for 12 months after the Termination Date in the course of any business
concern which is in competition with any Restricted Business, employ or engage
or otherwise facilitate the employment or engagement of any Restricted Person,
whether or not such person would be in breach of contract as a result of such
employment or engagement;

 

(d)for 12 months after the Termination Date, be involved in any Capacity with
any business concern which is (or intends to be) in competition with any
Restricted Business;

 

(e)for 12 months after the Termination Date be involved with the provision of
goods or services to (or otherwise have any business dealings with) any
Restricted Customer in the course of any business concern which is in
competition with any Restricted Business; or

 

(f)at any time after the Termination Date, represent yourself as connected with
the Company or any Group Company in any Capacity, other than as a former
employee, or use any registered business names or trading names associated with
the Company or any Group Company.

 

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25.2None of the restrictions in clause 25.1 shall prevent you from:

 

(a)holding an investment by way of shares or other securities of not more than
5% of the total issued share capital of any company, whether or not it is listed
or dealt in on a recognised stock exchange;

 

(b)being engaged or concerned in any business concern insofar as your duties or
work shall relate solely to geographical areas where the business concern is not
in competition with any Restricted Business; or

 

(c)being engaged or concerned in any business concern, provided that your duties
or work shall relate solely to services or activities of a kind with which you
were not concerned to a material extent in the 12 months before the Termination
Date.

 

25.3The restrictions imposed on you by this clause 25 apply to you acting:

 

(a)directly or indirectly; and

 

(b)on your own behalf or on behalf of, or in conjunction with, any firm, company
or person.

 

25.4If you receive an offer to be involved in a business concern in any Capacity
during the Appointment, or before the expiry of the last of the covenants in
this clause 25, you shall give the person making the offer a copy of this clause
25 and shall tell the Company the identity of that person as soon as possible.

 

25.5The Company and you entered into the restrictions in this clause 25 having
been separately legally advised.

 

25.6Each of the restrictions in this clause 25 is intended to be separate and
severable. If any of the restrictions shall be held to be void but would be
valid if part of their wording were deleted, such restriction shall apply with
such deletion as may be necessary to make it valid or effective.

 

25.7If your employment is transferred to any firm, company, person or entity
other than a Group Company (the “New Employer”) pursuant to the Transfer of
Undertakings (Protection of Employment) Regulations 2006, you will, if required,
enter into an agreement with the New Employer containing post-termination
restrictions corresponding to those restrictions in this clause 25, protecting
the confidential information, trade secrets and business connections of the New
Employer.

 

25.8You will, at the request and expense of the Company, enter into a separate
agreement with any Group Company in which you agree to be bound by restrictions
corresponding to those restrictions in this clause 25 (or such of those
restrictions as the Company deems appropriate) in relation to that Group
Company.

 

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26.Disciplinary and grievance procedures

 

26.1You are subject to any disciplinary and grievance procedures implemented by
the Company from time to time. Such procedures do not form part of your contract
of employment.

 

26.2If you want to raise a grievance, you may apply in writing to a member of
the Board or the CEO.

 

26.3If you wish to appeal against a disciplinary decision you may apply in
writing to a member of the Board or the CEO.

 

26.4The Board may suspend you, with pay, from any or all of your duties during
any period in which the Company is investigating any disciplinary matter
involving you or while any disciplinary procedure against you is outstanding.

 

27.Data protection

 

27.1You consent to the Company and/or any Group Company processing data relating
to you for legal, personnel, administrative and management purposes and in
particular to the processing of any sensitive personal data (as defined in the
Data Protection Act 1998) relating to you, including, as appropriate:

 

(a)information about your physical or mental health or condition in order to
monitor sick leave and take decisions as to your fitness for work;

 

(b)your racial or ethnic origin or religious or similar information in order to
monitor compliance with equal opportunities legislation; and

 

(c)information relating to any criminal proceedings in which you have been
involved for insurance purposes and in order to comply with legal requirements
and obligations to third parties.

 

27.2The Company may make such information available to any Group Company, those
who provide products or services to the Company and/or any Group Company (such
as advisers and payroll administrators), regulatory authorities, potential or
future employers, governmental or quasi-governmental organisations and potential
purchasers of the Company or the business in which you work.

 

27.3You consent to the transfer of such information to any Group Company and the
Company's and/or any Group Company's business contacts outside the European
Economic Area in order to further its or their business interests even where the
country or territory in question does not maintain adequate data protection
standards.

 

28.Collective agreements

 

There is no collective agreement which directly affects the Appointment.

 

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29.Reconstruction and amalgamation

 

If the Appointment is terminated at any time by reason of any reconstruction or
amalgamation of the Company or any Group Company, whether by winding up or
otherwise, and you are offered employment with any concern or undertaking
involved in or resulting from the reconstruction or amalgamation on terms which
(considered in their entirety) are no less favourable to any material extent
than the terms of this Agreement, you shall have no claim against the Company or
any such undertaking arising out of or connected with the termination.

 

30.Notices

 

30.1A notice given to a party under this Agreement shall be in writing in the
English language and signed by or on behalf of the party giving it. It shall be
delivered by hand or sent to the party at the address or fax number given in
this Agreement or as otherwise notified in writing to the other party.

 

30.2Any such notice shall be deemed to have been received:

 

(a)if delivered by hand, at the time the notice is left at the address or given
to the addressee;

 

(b)in the case of pre-paid first class UK post or other next working day
delivery service, at 9.00 am on the second business day after posting or at the
time recorded by the delivery service;

 

(c)in the case of pre-paid airmail, 9.00 am on the fifth Business Day after
posting or at the time recorded by the delivery service; or

 

(d)in the case of fax, at the time of transmission.

 

30.3A notice shall have effect from the earlier of its actual or deemed receipt
by the addressee. For the purpose of calculating deemed receipt:

 

(a)all references to time are to local time in the place of deemed receipt; and

 

(b)if deemed receipt would occur on a Saturday or Sunday or a public holiday
when banks are not open for business, deemed receipt is at 9.00 am on the next
business day.

 

30.4A notice required to be given under this Agreement shall not be validly
given if sent by e-mail.

 

30.5This clause does not apply to the service of any proceedings or other
documents in any legal action.

 

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31.Entire agreement

 

31.1This Agreement and any document(s) referred to in it constitutes the whole
agreement between the parties (and in the case of the Company, as agent for any
Group Company) and supersedes all previous discussions, correspondence,
negotiations, arrangements, understandings and agreements between them relating
to its subject matter.

 

31.2Each party acknowledges that in entering into this Agreement it has not
relied on and shall have no remedy in respect of any Pre-Contractual Statement.

 

31.3Each party agrees that its only liability in respect of those
representations and warranties that are set out in this Agreement (whether made
innocently or negligently) shall be for breach of contract.

 

31.4Nothing in this Agreement shall limit or exclude any liability for fraud.

 

32.Variation

 

No variation or agreed termination of this Agreement shall be effective unless
it is in writing and signed by the parties (or their authorised
representatives).

 

33.Counterparts

 

This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be an original, and all the counterparts
together shall constitute one and the same instrument.

 

34.Third party rights

 

No person other than a party to this Agreement may enforce any of its terms.

 

35.Governing law and jurisdiction

 

35.1This Agreement and any dispute or claim arising out of or in connection with
it or its subject matter or formation (including non-contractual disputes or
claims) shall be governed by and construed in accordance with the law of England
and Wales.

 

35.2The parties irrevocably agree that the courts of England and Wales shall
have non-exclusive jurisdiction to settle any dispute or claim that arises out
of or in connection with this Agreement or its subject matter or formation
(including non-contractual disputes or claims).

 

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This document has been executed as a deed and is delivered and takes effect on
the date stated at the beginning of it.

 

Signed as a Deed by LEAPFROG TOYS (UK) LIMITED acting by JOHN BARBOUR: 

/s/ John Barbour (sign)

 

Signed as a Deed

By ANTONY HICKS:

/s/ Antony Hicks (sign)

 

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