LEAPFROG ENTERPRISES, INC. EXECUTIVE MANAGEMENT SEVERANCE AND CHANGE IN CONTROL BENEFIT PLAN

E XHIBIT 10.03

L EAP F ROG E NTERPRISES , I NC .

E XECUTIVE M ANAGEMENT S EVERANCE

AND C HANGE I N C ONTROL B ENEFIT P LAN

The LeapFrog Enterprises, Inc. Executive Management Severance and Change in Control Benefit Plan (the “Plan” ) was established effective October 30, 2007. The purpose of the Plan is to provide for the payment of severance benefits to certain eligible executive management employees of LeapFrog Enterprises, Inc. (the “Company” ) and its subsidiaries (the “Subsidiaries” , referred to collectively with the Company as “LeapFrog” ) in the event that such employees are subject to qualifying employment terminations. This Plan shall supersede any severance benefit plan, policy or practice previously maintained by LeapFrog, other than (i) the LeapFrog Enterprises, Inc. Senior Management Severance and Change in Control Benefit Plan, and (ii) an individually negotiated agreement relating to severance or change in control benefits that is in effect on an employee’s termination date, in which case such employee’s severance benefit, if any, shall be governed by the terms of such individually negotiated agreement and shall be governed by this Plan only to the extent that the Plan Administrator, in its sole discretion, so determines on a case by case basis, pursuant to Section 3(a) below. This Plan document also is the Summary Plan Description for the Plan.

For purposes of the Plan, the following terms are defined as follows:

(a) “Base Salary” means the Eligible Employee’s annual base pay (excluding incentive pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation).

(b) “Board” means the Board of Directors of the Company.

(c) “Cause” means any of the following has occurred, as reasonably determined by the Company in good faith:

(i) the Eligible Employee is indicted for or convicted of any felony or crime involving moral turpitude or dishonesty;

(ii) the Eligible Employee participates in any fraud against LeapFrog;

(iii) the Eligible Employee materially breaches any material provision of a written agreement with LeapFrog (including, without limitation, the Proprietary Information and Inventions Agreement) or of a written policy of LeapFrog, provided that, if such breach is reasonably susceptible of cure, the Eligible Employee fails to cure such breach within a reasonable period of time (to be determined by the Company in its sole discretion) after receiving notice of such breach from the Company;

1

(iv) the Eligible Employee engages in conduct that demonstrates unfitness to serve; or

(v) the Eligible Employee breaches his or her duties to LeapFrog, including, without limitation, persistent unsatisfactory performance of job duties;

An Eligible Employee’s disability or death shall not constitute Cause for purposes of the Plan.

(d) “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

(i) any Exchange Act Person (as defined in the Company’s 2002 Equity Incentive Plan) (other than Larry Ellison, 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;

(ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such merger, consolidation, or similar transaction, the stockholders of the Company immediately prior thereto do not own, directly or indirectly, outstanding voting securities representing more than fifty percent (50%) of the combined voting power of the surviving entity in such merger, consolidation or similar transaction or more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction;

(iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company; or

(iv) there is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale, lease, license, or other disposition.

(e) “Code” means the Internal Revenue Code of 1986, as amended.

(f) “Company” means LeapFrog Enterprises, Inc. or, following a Change in Control, the surviving entity resulting from such event.

(g) “Covered Termination” means (i) a termination by LeapFrog without Cause or (ii) a Good Reason Resignation by the Eligible Employee.

2

(h) “Eligible Employee” means an executive management employee of LeapFrog who is designated in writing by the Company as an Eligible Employee entitled to benefits under this Plan upon a Covered Termination; provided, however , that the President and Chief Executive Officer of the Company shall not be eligible to participate in the Plan unless specifically authorized by the Board or an authorized committee thereof.

(i) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(j) “Good Reason Resignation” means a voluntary termination of employment by an Eligible Employee within sixty (60) days after the occurrence of one of the following events without the Eligible Employee’s consent:

(i) a material diminution in the Eligible Employee’s authority, duties, or responsibilities;

(ii) a reduction in the Eligible Employee’s Base Salary in an amount greater than ten percent (10%) of the Eligible Employee’s Base Salary prior to such reduction, unless the Base Salary of other similarly-situated employees of LeapFrog is reduced by at least the same percentage;

(iii) a change in the geographic location of the Eligible Employee’s workplace by more than fifty (50) miles from its previous location; or

(iv) a material breach by LeapFrog of the agreement under which the Eligible Employee is employed.

Prior to any Good Reason Resignation, the Eligible Employee must provide written notice to the Company of the existence of the Good Reason event within thirty (30) days following the initial existence of the event, and the Company shall have a period of thirty (30) days following such notice to cure the event. If the event is cured within such time period, the Eligible Employee shall not be entitled to terminate his or her employment pursuant to a Good Reason Resignation.

(a) General Rules. Subject to Section 3(b), the Company will provide the severance benefits described in Section 4 to Eligible Employees whose employment has terminated pursuant to a Covered Termination. Notwithstanding the foregoing, the severance benefits, if any, under the Plan of an Eligible Employee who has an individually negotiated agreement relating to severance or change in control benefits that is in effect on such Eligible Employee’s termination date shall be determined by the Plan Administrator, in its sole discretion, on a case by case basis, such that a determination in the case of one Eligible Employee shall have no bearing on the determination in the case of another Eligible Employee, even if similarly situated, and such determination may involve (i) the application of the severance benefits set forth in Section 4 with an offset reflecting the value of benefits under such individually negotiated agreement, (ii) the disqualification of the Eligible Employee from any severance benefits under the Plan, or (iii) such other benefits as the Plan Administrator, in its sole discretion, may determine.

3

(b) Exceptions to Benefit Entitlement. An employee, whether or not otherwise an Eligible Employee, will not receive benefits under the Plan (or will receive reduced benefits under the Plan, as applicable) in the following circumstances, as determined by the Company in its sole discretion:

(i) The employee’s employment is terminated by LeapFrog for Cause.

(ii) The employee voluntarily terminates employment with LeapFrog and such termination does not constitute a Good Reason Resignation. Voluntary terminations include, but are not limited to, resignation, retirement or failure to return from a leave of absence on the scheduled return date.

(iii) The employee voluntarily terminates employment with LeapFrog in order to accept employment with another entity that is wholly or partly owned (directly or indirectly) by the Company or an affiliate of the Company.

(iv) The employee is offered immediate reemployment by a successor to LeapFrog or by a purchaser of any of its assets, as the case may be, following a change in ownership of the Company or one or more of its Subsidiaries, or sale of all or substantially all the assets of the Company or one or more of the Subsidiaries, or any division or business unit of LeapFrog. For purposes of the foregoing, “immediate reemployment” means that the employee’s employment with such successor or purchaser, as the case may be, results in uninterrupted employment such that the employee does not suffer a lapse in pay as a result of the change in ownership or sale of assets. Notwithstanding the foregoing, even if such employee does not suffer a lapse in pay, if such employee is otherwise an Eligible Employee and terminates employment pursuant to a Good Reason Resignation, the Eligible Employee shall be entitled to receive benefits under the Plan in accordance with Section 4.

(a) Severance Payment. In the event of an Eligible Employee’s Covered Termination, the Eligible Employee shall be entitled to receive cash severance benefits equal to following: (i) the number of months of Base Salary set forth in the second column of the table in Section 4(d)(i) or 4(d)(ii), as applicable (the “Base Severance” ), and (ii) if the Covered Termination occurs during a Change in Control Period (as defined below), a payment equal to the percentage of the Eligible Employee’s annual bonus at target (the “Target Bonus” ) (as such Target Bonus is set forth in the employee’s governing employment agreement or under the terms of the applicable bonus program for the calendar year in which the Eligible Employee’s Covered Termination occurs, as such agreement or program may be in effect at the time of such Covered Termination) as set forth in the third column of the table in Section 4(d)(ii) (the “Bonus Severance” ). The Base Severance and, if applicable, the Bonus Severance are intended to provide the Eligible Employee with compensation for the period following a Covered Termination. Any bonus or other incentive compensation payable to the Eligible Employee for services rendered at any time prior to the date of the Covered Termination shall be determined in accordance with the terms of the applicable employment agreement or bonus plan or program. The following shall apply for purposes of determining an Eligible Employee’s severance benefits:

4

(i) If the Covered Termination does not occur during a Change in Control Period (as defined below), the Base Severance shall be determined pursuant to Section 4(d)(i);

(ii) If the Covered Termination occurs during the period beginning three (3) months before and ending twelve (12) months after a Change in Control (the “Change in Control Period” ), the Base Severance and Bonus Severance shall be determined pursuant to Section 4(d)(ii), and the Eligible Employee shall not be entitled to receive any benefits pursuant to Section 4(d)(i); and

(iii) The Eligible Employee’s Base Salary shall be determined at the rate in effect during the last regularly scheduled payroll period immediately preceding the date of the Eligible Employee’s Covered Termination.

(b) Continued Insurance Benefits . Provided that an Eligible Employee elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 ( “COBRA” ), the Company shall pay the full amount of premiums for the Eligible Employee’s group medical, dental and vision coverage, including coverage for the Eligible Employee’s eligible dependents, through the earlier of (i) the applicable number of months set forth in Section 4(d) following the Covered Termination (the “Severance Period” ) or (ii) the date that the Eligible Employee becomes eligible for group health coverage through a subsequent employer. Each Eligible Employee shall be required to notify the Company immediately if the Eligible Employee becomes eligible to be covered by a group medical, dental or vision insurance plan of a subsequent employer. No provision of this Plan will affect the continuation coverage rules under COBRA, except that the Company’s payment of any applicable insurance premiums will be credited as payment by the Eligible Employee for purposes of the Eligible Employee’s payment required under COBRA. Therefore, the period during which an Eligible Employee may elect whether or not to continue the Company’s group medical, dental or vision coverage under COBRA, the length of time during which COBRA continuation coverage will be made available to the Eligible Employee, and all other rights and obligations of the Eligible Employee under COBRA will be applied in the same manner that such rules would apply in the absence of this Plan. Upon the expiration of the period during which the Company will pay the premiums for the Eligible Employee’s coverage, the Eligible Employee will be responsible for the entire payment of premiums required under COBRA for the duration of the COBRA continuation period. For purposes of this Section 4(b), (i) references to COBRA shall be deemed to refer also to analogous provisions of state law and (ii) any applicable insurance premiums that are paid by the Company shall not include any amounts payable by the Eligible Employee under an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of the Eligible Employee. The following shall apply for purposes of determining the maximum number of months of premiums that the Company shall pay for the Eligible Employee’s coverage under COBRA pursuant to the foregoing:

(i) If the Covered Termination occurs outside of the Change in Control Period, the applicable number of months shall be determined pursuant to Section 4(d)(i);

5

(ii) If the Covered Termination occurs during the Change in Control Period, the applicable number of months shall be determined pursuant to Section 4(d)(ii), and the Eligible Employee shall not be entitled to receive any benefits pursuant to Section 4(d)(i).

(c) Acceleration of Vesting. If an Eligible Employee’s Covered Termination occurs during the Change in Control Period, upon such Covered Termination (i) the vesting and exercisability of all outstanding options to purchase the Company’s stock held by the Eligible Employee on such date shall be accelerated in full, and (ii) all other stock awards that are held by the Eligible Employee 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 the Eligible Employee 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 an Eligible Employee’s Covered Termination occurs outside of the Change in Control Period.

(d) Amount of Benefits.

(i) Covered Termination Outside of the Change in Control Period.

(ii) Covered Termination During the Change in Control Period.

(a) General Rules. Any cash severance benefits provided under this Plan shall be paid, consistent with the terms set forth in Section 4(d)(i) or 4(d)(ii) (as applicable), in either a lump sum or in equal bi-monthly installments paid over the number of months in the Severance Period on the Company’s regularly scheduled payroll periods, with such payment(s) occurring or commencing as soon as practicable following the effective date of the Eligible

6

Employee’s Covered Termination. Severance payments shall be paid subject to applicable withholding for federal, state and local taxes. In the event of an Eligible Employee’s death, any cash severance benefits payable to such employee shall be made to his/her estate on the same payment schedule as would have occurred absent the Eligible Employee’s death. In no event shall payment of any Plan benefit be made prior to the effective date of the Eligible Employee’s Covered Termination or prior to the effective date of the release described in Section 6(a).

(b) Application of Section 409A. Severance payments pursuant to Section 4(a), to the extent of payments made from the date of the Covered Termination through March 15 of the calendar year following the Covered Termination, are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and thus payable pursuant to the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. To the extent such payments are made following said March 15, they are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations made upon an involuntary termination from service and payable pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to the maximum extent permitted by such provision, with any excess amount being regarded as subject to the distribution requirements of Section 409A(a)(2)(A) of the Code, including, without limitation, the requirement of Section 409A(a)(2)(B)(i) of the Code that payment be delayed until six (6) months after separation from service if the Eligible Employee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code at the time of such separation from service.

(a) Release. In order to be eligible to receive benefits under the Plan, an Eligible Employee must execute a general waiver and release in substantially the form attached hereto as Exhibit A, Exhibit B or Exhibit C, as appropriate, and such release must become effective in accordance with its terms. The Company, in its discretion, may modify the form of the required release to comply with applicable law and shall determine the form of the required release, which may be incorporated into a termination agreement or other agreement with the Eligible Employee.

(b) Certain Reductions and Offsets. The Plan Administrator, in its sole discretion, shall have the authority to reduce an Eligible Employee’s severance benefits under the Plan, in whole or in part, by any other severance benefits, pay in lieu of notice, or other similar benefits payable to the Eligible Employee by the Company that become payable in connection with the Eligible Employee’s termination of employment pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act (the “WARN Act” ), or (ii) any Company policy or practice providing for the Eligible Employee to remain on the payroll for a limited period of time after being given notice of the termination of the Eligible Employee’s employment. The benefits provided under this Plan are intended to satisfy, in whole or in part, any and all statutory obligations that may arise out of an Eligible Employee’s termination of employment, and the Plan Administrator shall so construe and implement the terms of the Plan. The Plan Administrator’s decision to apply such reductions to the severance benefits of one Eligible Employee and the amount of such reductions shall in no way obligate the Company to apply the same reductions in the same amounts to the severance benefits of any other Eligible Employee, even if similarly situated. In the Company’s sole discretion, such reductions may be applied on a retroactive basis, with severance benefits previously paid being re-characterized as payments pursuant to the Company’s statutory obligation.

7

(c) Mitigation. Except as otherwise specifically provided herein, an Eligible Employee shall not be required to mitigate damages or the amount of any payment provided under this Plan by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Plan be reduced by any compensation earned by an Eligible Employee as a result of employment by