SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

BETWEEN

JAKKS PACIFIC, INC.

AND

STEPHEN G. BERMAN

DATED NOVEMBER 11, 2010

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), dated
November 11, 2010, by and between Stephen G. Berman (“Executive”) and JAKKS
Pacific, Inc., a Delaware corporation (“JAKKS” or the “Company”).

WITNESSETH:

WHEREAS, Executive and the Company entered into an Employment Agreement dated as
of July 1, 1999, amended as of February 7, 2000, and further amended and
restated by an agreement dated March 26, 2003 and as of January 1, 2003 (such
Employment Agreement, as amended and restated, is referred to as the “2003
Employment Agreement”); and

WHEREAS, Executive and the Company desire to further amend and restate the terms
of the 2003 Employment Agreement to provide for Executive’s continued employment
by the Company on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises, representations and
warranties set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

1.            Offices and Duties. The Company hereby employs Executive during
the Term (as hereinafter defined) to serve as the Company’s Chief Executive
Officer and President and to perform such executive and supervisory duties on
behalf of the Company as the Company’s Board of Directors may from time to time
reasonably direct. The Company’s Board of Directors shall elect Executive to
serve as the Company’s Chief Executive Officer and President, and may elect or
designate Executive to serve in such other corporate offices of the Company or a
subsidiary of the Company as the Company’s Board of Directors from time to time
may deem necessary, proper or advisable. Executive hereby accepts such
employment and agrees that throughout the Term he shall faithfully, diligently
and to the best of his ability, in furtherance of the business of the Company,
perform the duties assigned to him or incidental to the offices assumed by him
pursuant to this Section. Executive shall devote substantially all of his
business time and attention to the business and affairs of the Company, but
Executive shall not be required to devote any minimum amount of time or report
or perform his duties hereunder on a fixed or periodic basis, and, subject to
Sections 9 and 10, Executive may engage or participate in such other activities
incidental to his investment in any other business venture or enterprise as do
not materially interfere with or compromise his ability to perform his duties
hereunder.  Executive shall at all times be subject to the direction and control
of the Company’s Board of Directors, and observe and comply with such rules,
regulations, policies and practices as the Company’s Board of Directors may from
time to time establish.  Executive shall inform the Company’s Board of Directors
prior to accepting election to the board of directors or board of managers of
any other entity, and shall decline to accept such election if the Board of
Directors reasonably objects to his service on such other board of directors.
The Board of Directors hereby consents to Executive’s service on the boards of
directors of Specialty Merchandising Corporation and Simon Equity Partners, both
of which are privately held entities.

 
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2.             Term. The term of this Agreement shall commence as of the date
hereof and the term of this Agreement and Executive’s employment hereunder shall
end on December 31, 2015, subject to earlier termination upon the terms and
conditions provided elsewhere herein (the “Term”). As used herein, “Termination
Date” means the last day of the Term.

3.            Compensation.

a.             Base Salary.  As compensation for his services hereunder, the
Company shall pay to Executive a base salary in 2010 at the annual rate of
$1,115,000 and for the 2011 calendar year at the annual rate of $1,140,000 per
annum, and for each subsequent calendar year during the Term at an annual rate
to be determined by the Compensation Committee of the Company’s Board of
Directors (the “Compensation Committee”), but that is at least $25,000 more than
the annual rate in the immediately preceding calendar year (the “Base
Salary”).  The Base Salary shall be paid to Executive in substantially equal
installments in accordance with the Company’s payroll practices, subject to any
required tax withholding.

b.             Annual Restricted Stock Awards.

i.      Subject to the terms (including, without limitation, the availability of
shares reserved for issuance thereunder) of the Company’s 2002 Stock Award and
Incentive Plan (as in effect on the date hereof and as subsequently may be
amended, from time to time, or any successor plan, the “Plan”) and the
applicable restricted stock agreement, which shall be substantially in the form
annexed hereto as Exhibit A (the “Restricted Stock Agreement”), and as
additional consideration for Executive agreeing to amend and restate the terms
of his 2003 Employment Agreement, on January 1, 2011, January 1, 2012, January
1, 2013, January 1, 2014 and January 1, 2015 (each, an “Annual Issuance Date”)
the Company shall issue to Executive a number of shares of restricted common
stock of the Company, par value $.001 per share (the “Restricted Stock”), with a
value equal to $500,000 (hereafter, the Restricted Stock issued under this
Section 3(b) shall be referred to as the “Section 3(b) Restricted Stock”).  The
number of shares of Section 3(b) Restricted Stock to be issued to Executive on
each Annual Issuance Date shall be determined by dividing $500,000 by the
closing price of a share of the Company’s common stock, par value $.001 per
share (the “Common Stock”), on the first trading date immediately preceding the
Annual Issuance Date.

 
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ii.    The first vesting date for each $500,000 award of Section 3(b) Restricted
Stock shall occur effective as of the date in the calendar year immediately
following the calendar year (the “EPS Reference Year”)  in which the Annual
Issuance Date occurs with respect to such award that it is determined that the
Company’s “Earnings Per Share” (defined below) for the EPS Reference Year is at
least equal to the “Minimum Earnings Per Share” (defined below; such Minimum
Earnings Per Share, the “3% Vesting Condition”). Subject to the satisfaction of
the 3% Vesting Condition, subsequent vesting of each tranche of the Section 3(b)
Restricted Stock awarded for an EPS Reference Year shall occur in accordance
with the vesting schedule annexed as Exhibit B.

iii.   For purposes of this Agreement,

A.           the term “Earnings Per Share” shall mean the net income per share
of the Company’s common stock, calculated on a fully-diluted basis as determined
by the Company’s then current auditors in accordance with GAAP, and such
determination by the Auditors, absent manifest error, will be conclusive and
binding upon the Company and Executive;

B.           the term “GAAP” means generally accepted accounting principles,
applied on a basis consistent with past periods;

C.           the term “Minimum Earnings Per Share” shall mean $1.41 for fiscal
year 2011, $1.45 for fiscal year 2012, $1.49 for fiscal year 2013, $1.54 for
fiscal year 2014 and $1.59 for fiscal year 2015; and

D.           the term “Adjusted Earnings Per Share” means the Earnings Per
Share, as adjusted in the sole discretion of the Compensation Committee to take
account of extraordinary or special items, or as otherwise may be permitted by
the Company’s 2002 Stock Award and Incentive Plan, and such determination by the
Auditors, absent manifest error, as adjusted by the Compensation Committee, will
be conclusive and binding upon the Company and Executive.

c.             2010 Performance Bonus Opportunity.  In addition to the Base
Salary, Executive shall be eligible to receive a performance-based bonus for the
Company’s 2010 fiscal year (the “2010 Bonus”), subject to achievement of the
performance criteria established by the Compensation Committee of the Board of
Directors of the Company on March 31, 2010 set forth on the annexed Exhibit C;
provided, however, that it is agreed that the 2010 Bonus shall be payable eighty
percent (80%) in cash and twenty percent (20%) in Restricted Stock; the number
of shares of Restricted Stock shall be determined by dividing twenty percent
(20%) of the amount of the 2010 Bonus by the closing price of a share of Common
Stock on the first trading date immediately preceding the date on which the 2010
Bonus is determined to have been earned, which shall be not later than
twenty-one (21) business days following the date on which the Auditors’ final
report on the Company’s financial statements for 2010 is issued and delivered to
the Company and in any event not later than April 30, 2011 (the “2010 Award
Date”).  The Company shall pay the cash portion and issue the Restricted Stock
portion of the 2010 Bonus (if any) to Executive, subject to any required tax
withholding, by the 2010 Award Date.  Such Restricted Stock shall be issued
subject to the Plan (including, without limitation, the availability of shares
reserved for issuance thereunder) and the applicable Restricted Stock Agreement,
and shall vest in six (6) equal annual installments equal to 14.5% of the total
number of shares of Restricted Stock awarded as part of the 2010 Bonus (rounded
to the nearest whole number of shares) and one final installment equal to 13% of
the total number of shares of Restricted Stock awarded as part of the 2010
Bonus, the first installment of which shall vest on the 2010 Award Date and
thereafter on January 1 in each subsequent year until the seventh and final
vesting date on January 1, 2017. For the avoidance of doubt, the 2010 Bonus
shall be in addition to, and not in lieu of, the 120,000 shares of Restricted
Stock issued to Executive on January 1, 2010 pursuant to Section 3(a)(ii) of the
2003 Employment Agreement, and such shares shall vest in full on January 1, 2011
in accordance with the terms of the 2003 Employment Agreement (which, for solely
this purpose, are incorporated herein by reference).

 
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d.             Subsequent Annual Performance Bonus Opportunities.  In addition
to the Base Salary and Section 3(b) Restricted Stock compensation, Executive
shall be eligible to receive as compensation for performance during fiscal years
2011, 2012, 2013, 2014 and 2015, a performance-based bonus award equal to up to
300% of Executive’s Base Salary for the applicable fiscal year (hereafter, such
bonus for 2011, 2012, 2013, 2014 and 2015 is referred to as an “Annual
Performance Bonus,” which, together with the Section 3(b) Restricted Stock and
the 2010 Bonus, is referred to herein collectively as the “Bonus”), as further
provided below in this Section 3(d).

i.     The award of the Annual Performance Bonus for fiscal years 2011 through
2015 shall be determined by two different set of criteria, one set of criteria
(the “Base Bonus Criteria”) to be used to establish Executive’s eligibility to
receive that portion of the Annual Performance Bonus equal to a maximum of 200%
of Executive’s Base Salary for that fiscal year (the “Base Annual Performance
Bonus”) and a second set of criteria (the “Additional Bonus Criteria”) to be
used to establish Executive’s eligibility to receive that portion of the Annual
Performance Bonus equal to a maximum of an additional 100% of Executive’s Base
Salary for that fiscal year (the “Additional Annual Performance Bonus”).

ii.    It is agreed that the 2011 Base Bonus Criteria are set forth on Exhibit D
and the 2011 Base Annual Performance Bonus shall be in the amount of (i) the
percentage set forth on the table annexed at Exhibit D that corresponds to the
Company’s 2011 Adjusted EPS, as defined in Exhibit D, multiplied by (ii)
Executive’s Base Salary for calendar year 2011 (i.e., $1,140,000).

 
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iii.   The Base Bonus Criteria for fiscal years after 2011 shall be measured by
the level of the Company’s Adjusted Earnings Per Share growth over the preceding
fiscal year and the levels of increase in Adjusted Earnings Per Share for the
fiscal year for which the Base Bonus Criteria are established and the
corresponding percentage of Base Salary figures (which shall in any event
provide for a Base Annual Performance Bonus of up to 200% of Executive’s Base
Salary), which shall be established by the Compensation Committee in the
exercise of its discretion, to determine the amount of the Base Annual
Performance Bonus for such fiscal year.  The Compensation Committee may, but
shall have no obligation to, continue using the same percentage increases in
Adjusted Earnings Per Share and corresponding percentage of salary figures as
set forth on Exhibit D in determining the criteria for Executive’s Base Annual
Performance Bonus for 2012, 2013, 2014 and 2015.  The Base Salary used to
determine the amount of the Base Annual Performance Bonus shall be the Base
Salary in effect during the fiscal year for which the Base Annual Performance
Bonus is being determined. The Base Bonus Criteria for any fiscal year after
2011 shall be established by the Compensation Committee before the end of the
Company’s first fiscal quarter in such fiscal year.

iv.    A portion of the Base Annual Performance Bonus shall be paid in
Restricted Stock as set forth on Exhibit E, and the balance shall be paid in
cash.  The number of shares of Restricted Stock shall be determined by dividing
the Restricted Stock portion of the Base Annual Performance Bonus by the closing
price of a share of the Common Stock on the first trading date immediately
preceding the date on which the Base Annual Performance Bonus is determined to
have been earned.  The Company shall pay the cash portion and issue the
Restricted Stock portion of the Base Annual Performance Bonus to Executive,
subject to any required tax withholding, not later than twenty-one (21) business
days following the date on which the Auditors’ final report on the Company’s
financial statements for the fiscal year for which the Base Annual Performance
Bonus is awarded is issued and delivered to the Company and in any event not
later than April 30 in the calendar year following such fiscal year (the “Base
Annual Performance Bonus Award Date”).  Such Restricted Stock shall be issued
subject to the Plan (including, without limitation, the availability of shares
reserved for issuance thereunder) and the applicable Restricted Stock Agreement,
and shall vest in equal annual installments, the first installment of which
shall vest on the Base Annual Performance Bonus Award Date and thereafter on
January 1 in each subsequent year until the final vesting date on January 1,
2017, notwithstanding that this Agreement shall have earlier expired or
terminated, but subject to Section 17.

v.     The Additional Annual Performance Bonus shall be payable entirely in
Restricted Stock.  The Additional Bonus Criteria and vesting conditions and
schedules for each annual tranche for award of the Additional Annual Performance
Bonus shall be established by the Compensation Committee before the end of the
Company’s first fiscal quarter in 2011 and each subsequent fiscal year during
the Term.  The Compensation Committee may, but shall have no obligation to, use
performance criteria such as growth in net sales with minimum gross profit and
net profit margins, return on invested capital, growth in free cash flow and
total shareholder return (and any combination of such or other criteria) for
determining the Additional Bonus Criteria, and in determining the vesting dates
for Restricted Stock issued for the Additional Annual Performance Bonus, the
Compensation Committee may, but shall have no obligation to, use the vesting
schedules with respect to the Restricted Stock awarded as part of the Base
Annual Performance Bonus.  Each additional Annual Performance Bonus shall be
paid on or before the April 30 following the fiscal year for which it is earned.

 
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e.             Right to Voting and Dividends. Executive shall not have the right
to vote or receive dividends (whether in cash, stock or any other form) on
shares of Restricted Stock issued under this Agreement until the date of vesting
of such shares.  The number of shares of Restricted Stock issued to Executive
under this Agreement shall be adjusted to take account of any stock split,
change in capitalization or other similar capital event in which the Company’s
stockholders participate generally in respect of all shares of common stock of
the Company, $.001 per share, from and after the date of issuance of the
Restricted Stock issued under this Agreement, the number and class of shares of
Restricted Stock or other securities that Executive shall be entitled to, and
shall hold, pursuant to this Agreement shall be appropriately adjusted or
changed to reflect such capital event or change in capitalization.

f.             Obligation to Keep Sufficient Shares.  The Company shall use its
reasonable best efforts to ensure a sufficient number of shares of Common Stock
remain available for issuance under the Plan at all times to satisfy its
obligations to issue Restricted Stock to Executive pursuant to this Agreement.
In the event that there are insufficient shares available under the Plan to
permit a specific issuance of Restricted Stock to Executive, then the Company
shall take all necessary action to amend the Plan or adopt an additional or
successor plan (including, without limitation, seeking stockholder approval with
respect thereto) as promptly as practicable. Immediately following the adoption
of such amendment or additional or successor plan, the Company shall issue to
Executive the number of shares of Restricted Stock to which Executive is
entitled and was not previously issued, and shall pay to Executive, in cash, any
amounts which Executive would have received in respect of such shares of
Restricted Stock had such shares been issued to Executive on the date or dates
prescribed herein.

g.            No Trust Fund.  Nothing contained herein and no action taken in
respect of any Bonus (or otherwise in respect of Sections 3(b), 3(c) or 3(d))
shall create or be construed to create a trust of any kind.  All Bonuses under
Sections 3(b), 3(c) or 3(d) and all other compensation to Executive shall be
paid from general funds of the Company, and no special or separate fund shall be
established, and no segregation of assets shall be made, to assure payment of
any Bonus hereunder.

h.            Minimum Stock Ownership Requirements.  As further consideration
for the Company’s agreement to award the Section 3(b) Restricted Stock and
provide Executive the opportunity to earn the Annual Performance
Bonus,  Executive agrees that, in addition to the restrictions currently in
effect with respect to his right to sell certain of his shares of Restricted
Stock as described in the Company’s Proxy Statement for the 2010 Annual Meeting
of Stockholders held on October 1, 2010, he shall during the Term not sell or
otherwise transfer shares of Common Stock issued to him pursuant to this
Agreement or the 2003 Employment Agreement (the “Employment Agreement Stock”) if
the Value (determined in the manner set forth below in this subparagraph) of all
of the shares of Common Stock owned by Executive and any other trust or other
entity over which Executive exercises control (including, but not limited to,
the Employment Agreement Stock) is less than three (3) times his Base
Salary.  The “Value” of the Common Stock at any time shall be calculated as (x)
the number of all shares of Common Stock held by Executive at such time,
multiplied by (y) a price per share of Common Stock, determined on the most
recent date that Executive’s Base Salary increased, calculated as the weighted
average of the closing price (giving effect to changes in the number of shares
of Common Stock outstanding on such dates) of the Common Stock on the last
trading day of each financial quarter in the immediately prior fiscal year of
the Company, which Value shall remain the reference Value until the next
increase in Executive’s Base Salary.  In calculating the Value of the Employment
Agreement Stock, unvested Restricted Stock and unexercised options shall not be
included in the Value.

 
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i.             Payment of Withholding Tax.  Executive may request that he be
permitted to sell or otherwise dispose of shares of Restricted Stock or other
shares of Common Stock granted as part of any performance based award
(collectively, the “Award Shares”) to the Company (including but not limited to
by reducing the amount of shares of Restricted Stock that vest) for the purpose
of satisfying any withholding or other tax incurred by Executive as a result of
the issuance of Award Shares (“Withholding Tax”), and the Compensation Committee
shall determine in its discretion whether the Company will purchase or accept
such shares.  If and to the extent that the Company declines such request, and
requires that the Withholding Tax be paid in cash, then Executive may sell, free
of the restrictions in Section 3(h) above, that number of Award Shares equal to
the Withholding Tax not satisfied through the sale or disposition of Award
Shares pursuant to the first sentence of this paragraph, determined as of the
date that Executive’s right to such Award Shares is included in Executive’s
income for income tax purposes.

j.             Adjustments for Subsequent Financial Statement Changes.  To the
extent permitted under applicable law without the imposition of excise taxes, if
following the issuance of any Restricted Stock on account of an Annual
Performance Bonus or payment of any cash or other bonus, an adjustment is
subsequently made to the financial statement or statements of the Company that
would have changed the satisfaction of any condition for the determination of a
bonus payment made to Executive or the issuance or vesting of any such shares of
Restricted Stock or payment of the cash portion of any bonus, the Compensation
Committee shall determine in its reasonable discretion whether any modification
or adjustment is required to said bonus payment previously made, or in the
vesting of the Restricted Stock so affected, and the Company shall promptly give
written notice to Executive of any change proposed to be made, setting forth in
reasonable detail therein the amount of and basis for such change, and if such
Restricted Stock has been sold, whether Executive should be required to pay to
the Company the net proceeds received by Executive from the sale of such
Restricted Stock.  If such change approved by the Compensation Committee
involves an increase to a bonus payment, the Company shall pay such increase to
Executive concurrently with the delivery of such notice; and if such change
approved by the Compensation Committee involves a decrease to any such bonus
payment, Executive shall repay the amount of such decrease to the Company
promptly, and in any event within sixty (60) days after receipt of such notice.
In addition, and notwithstanding any provision in this Agreement to the
contrary, payment and issuance of the cash, stock and any other bonuses received
by Executive under this Agreement, and any other payments and benefits which
Executive receives pursuant to a Company plan or other arrangement, subject to
compliance with all applicable laws, shall be subject to refund and return to
the extent necessary to comply with the requirements of the 2010 Dodd-Frank Wall
Street Reform and Consumer Protection Act or any rule or regulation of the
United States Securities and Exchange Commission.  The provisions of this
paragraph shall survive termination of this Agreement.

 
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k.            Additional Compensation.  The Compensation Committee may, from
time to time, award such additional compensation to Executive, in cash, shares
of stock, options to acquire shares of stock or other equity-based awards, or in
property and in addition to the Restricted Stock and Bonus compensation set
forth in Section 3(b), Section 3(c) and Section 3(d) of this Agreement, as the
Compensation Committee may determine in its sole discretion to be appropriate
based on business criteria established or determined by the Compensation
Committee, including economic and business conditions affecting the Company and
Executive’s personal performance.  Such additional compensation may be awarded
in accordance with the Plan or as otherwise determined by the Compensation
Committee.

l.             Insurance.  At Executive’s request, the Company shall use its
best efforts to procure major medical, hospitalization, dental and disability
insurance for the benefit of Executive and life insurance in the amount of
$1,500,000 in favor of such beneficiary or beneficiaries as Executive may from
time to time designate, and the Company shall pay all premiums and any other
costs or expenses incurred to maintain such policies in effect during the Term.

m.           Other Employee Benefit Plans.  In addition to Executive’s Base
Salary and other compensation provided herein, Executive shall be entitled to
participate, to the extent he is eligible under the terms and conditions
thereof, in any pension, retirement, insurance, medical service or other
employee benefit plan generally available to the executive officers of the
Company, and to receive any other benefits or perquisites generally available to
the executive officers of the Company pursuant to any employment policy or
practice, which may be in effect from time to time during the Term (it being
understood however that Executive’s right to equity based and bonus compensation
shall de determined solely by the provisions of Sections 3(b), 3(c), 3(d) and
3(k) of this Agreement.  Except as otherwise expressly provided herein, the
Company shall be under no obligation hereunder to institute or to continue any
such employee benefit plan or employment policy or practice.

n.            No Compensation for Serving in Other Offices.  During the Term,
Executive shall not be entitled to additional compensation for serving in any
office of the Company (or any subsidiary or Affiliate thereof) to which he is
elected or appointed.

4.             Expense Reimbursements.

a.             The Company shall pay directly, or advance funds to Executive or
reimburse Executive for, all expenses reasonably incurred by him in connection
with the performance of his duties hereunder and the business of the Company,
upon the submission to the Company of itemized expense reports, receipts or
vouchers in accordance with its then customary policies and practices.

b.             During the Term, the Company shall provide to Executive a
suitable automobile or other vehicle for his exclusive use and the Company shall
pay the entire cost of leasing and maintaining such vehicle, including, without
limitation, lease payments, insurance premiums, repair charges, and maintenance
and operating expenses.

 
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5.            Location.  Except for routine travel and temporary accommodations
reasonably required to perform his services hereunder, Executive shall not be
required to perform his services hereunder at any location other than the
principal executive office of the Company, which office shall be located
throughout the Term at its location on the date hereof, or, if relocated, at a
location within a distance of thirty (30) miles from its location on the date
hereof, or at such other office or site to which Executive may, in his sole
discretion, consent; nor shall he be required to relocate his principal
residence to, or otherwise to reside at, any location specified by the Company.
 
6.            Office. During the Term, the Company shall provide Executive with
suitable office space, furnishings and equipment, secretarial and clerical
services and such other facilities and office support as Executive may
reasonably request.
 
7.            Vacation. Executive shall be entitled to four weeks paid vacation
during each year of his employment hereunder, such vacation to be taken at such
time or times as shall be agreed upon by Executive and the Company. Vacation
time shall be cumulative from year to year, except that Executive shall not be
entitled to take more than eight weeks vacation during any consecutive 12-month
period during the Term.
 
8.            Key-Man Insurance.  The Company shall have the right from time to
time to purchase, increase, modify or terminate insurance policies on the life
of Executive for the benefit of the Company in such amounts as the Company may
determine in its sole discretion. In connection therewith, Executive shall, at
such time or times and at such place or places as the Company may reasonably
direct, submit himself to such physical examinations and execute and deliver
such documents as the Company may deem necessary or appropriate.
 
9.            Confidential Information.
 
a.             Executive shall, during the Term and for a period of five (5)
years thereafter, hold in a fiduciary capacity for the benefit of the Company
all confidential or proprietary information relating to or concerned with the
Company and its affiliates or their products, prospective products, operations,
business and affairs (“Confidential Information”), and he shall not, at any time
hereafter, use or disclose any Confidential Information to any Person other than
to the Company or its designees or except as may otherwise be required in
connection with the business and affairs of the Company, and in furtherance of
the foregoing Executive agrees that:
 
i.     Executive will receive, maintain and hold Confidential Information in
strict confidence and will use the same level of care in safeguarding it that he
uses with his own confidential material of a similar nature;
 
ii.    Executive will take all such steps as may be reasonably necessary to
prevent the disclosure of Confidential Information; and
 
iii.   Executive will not utilize Confidential Information without first having
obtained the Company’s written consent to such utilization.
 
b.            The commitments set forth in Section 9(a) shall not extend to any
portion of Confidential Information that is generally available to the public or
that, hereafter, through no act or omission on the part of Executive in
violation of his obligations under this Agreement becomes information generally
available to the public.

 
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c.             At any time upon written request by the Company (i) the
Confidential Information, including any copies, shall be returned to the
Company, and (ii) all documents, drawings, specifications, computer software,
and any other material whatsoever in the possession of Executive that relates to
such Confidential Information, including all copies and/or any other form of
reproduction and/or description thereof made by Executive shall, at the
Company’s option, be returned to the Company or destroyed.
 
d.             In the event that Executive becomes legally compelled (by
deposition, interrogatory, request of documents, subpoena, civil investigative
demand or similar process) to disclose any of the Confidential Information,
Executive shall provide the Company with prompt prior written notice of such
requirement so that it may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement.  In the event that
such protective order or other remedy is not obtained, or the Company waives
compliance with the provisions hereof, Executive agrees to furnish only such
portion of the Confidential Information that is legally required to be furnished
as determined by Executive’s outside counsel in a written opinion letter.
 
10.                    Intellectual Property.  Subject to Sections 2870 and 2871
of the California Labor Code, Executive and the Company agree to the following:
 
a.             Any patent, claim of copyright, trademark, trade name, brand
name, service mark, logo, symbol, trade dress or design, or representation or
expression of any thereof, or registration or application for registration
thereof, or any other trade secret, system, idea, invention, design, system,
procedure, improvement, technical information, know-how, development, discovery,
proprietary right or intellectual property developed, conceived of, invented or
otherwise produced by Executive, alone or with others in connection with the
design, manufacture and marketing of the products of  the Company and its
affiliates, or conceived, developed, created or made by Executive, alone or with
others, during the Term and applicable to the business of the Company or its
affiliates, whether or not patentable or registrable (collectively referred to
as “Trade Rights”) shall become the sole and exclusive property of the Company.
 
b.             Executive shall disclose all Trade Rights promptly and completely
to the Company and shall, during the Term or thereafter, (i) execute all
documents requested by the Company for vesting in the Company the entire right,
title and interest in and to the same, (ii) execute all documents requested by
the Company for filing and procuring such applications for patents, trademarks,
service marks or copyrights as the Company, in its sole discretion, may desire
to prosecute, and (iii) give the Company all assistance it may reasonably
require, including the giving of testimony in any Proceeding (as hereinafter
defined), in order to obtain, maintain and protect the Company’s right therein
and thereto; provided that the Company shall bear the entire cost and expense of
such assistance, including without limitation paying Executive reasonable
compensation for any time or effort expended by Executive in connection with
such assistance after the Termination Date.  In furtherance of the foregoing,
Executive acknowledges and agrees that for all purposes of U.S. and foreign
copyright laws, the Trade Rights and any inventions, discoveries, enhancements
or improvements to any tangible or intangible property, resulting from the
services performed by Employee for Company or its affiliates (for the purposes
of this paragraph all of the foregoing is collectively referred to as the
“Work”), and any and all elements thereof, shall be deemed to constitute “works
for hire” belonging to Company within the meaning of Title 17, United States
Code, Section 101, and any comparable provisions of the law of any other
jurisdiction, such that all right, title and interest therein, including,
without limitation, copyrights and exclusive rights under copyright, vest in
Company.  Executive hereby transfers and conveys to the Company the exclusive,
world-wide, royalty-free, paid-up right to exploit, use, develop, license, and
sell products and services relating to or derived from the Work; and the
exclusive right, title and interest in and to all inventions, improvements,
patent applications and letters patent, “know-how,” and all intellectual
property and other rights, tangible or intangible, which relate to or are based
upon or derived from the Work; and to all information, documents, and
specifications that relate to the Work.  If the Work or any of the elements
thereof is deemed not to be “works for hire” within the meaning of Title 17,
United States Code, Section 101, then Executive hereby assigns and transfers to
the Company all right, title and interest in and to the Work, including rights
throughout the world for good and valuable consideration, receipt of which
Employee hereby acknowledges.  For the sole and exclusive purpose of perfecting
and documenting such limited assignment and transfer, Employee hereby grants to
the Company an irrevocable power of attorney.

 
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c.             Exception to Assignments.   California Labor Code § 2870 provides
that Executive is not required to assign to the Company any of his rights in any
inventions that he develops entirely on his own time without using the Company’s
equipment, supplies, facilities, or trade secret information, except for
inventions that either: (i) relate, at the time the Invention is conceived or
reduced to practice, to the Company’s business or the Company’s actual or
demonstrably anticipated research or development; or (ii) result from any of my
work performed for the Company.  Executive shall advise the Company, promptly in
writing of any inventions that he believes meet such provisions and should
therefore not be assigned to the Company and are not otherwise disclosed on an
exhibit to this Agreement.
 
11.          Restrictive Covenant.
 
a.             During the Term, and if Executive’s employment terminates because
he is discharged by the Company as a result of the occurrence of a  “For Cause
Event” pursuant to Section 13 of this Agreement or he voluntarily resigns other
than for the reasons set forth in Section 14 of this Agreement, for a further
period of one year thereafter, Executive shall not, directly or indirectly, for
himself or on behalf of any other Person, contact any Person who at the time
shall have been within the preceding 12-month period an employee of the Company
(or any subsidiary thereof), for the purpose of enticing away such Person from
the employ of the Company (or any subsidiary thereof), and shall not conduct
activities that constitute raiding of the Company’s employees for employment by
himself or another Person.

 
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b.             Executive acknowledges that the provisions of this Section 11,
and the period of time, geographic area and scope and type of restrictions on
his activities set forth herein, are reasonable and necessary for the protection
of the Company.   Executive acknowledges that Executive’s position as a key
executive of the Company since its formation, including services as Chief
Executive Officer since April 1, 2010, and prior to such date as President,
Chief Operating Officer, Co-Chief Executive Officer, and Secretary with
responsibility for the management of the operations of the Company and its
subsidiaries and the hiring of the Company’s employees and the key employees of
its subsidiaries has required and will require the performance of services which
are special, unique, extraordinary and of an intellectual character, and have
placed and will continue to place him in a position of confidence and trust with
Company and its subsidiaries and their respective employees.  Executive also
acknowledges that Company’s business is conducted and its customers and
prospective customers are located in the United States, Canada, Europe, Hong
Kong, the People’s Republic of China, and throughout the world and that,
therefore, it is impossible to place a geographic limitation upon the scope of
the restrictive covenants contained in this Section 11.   Executive acknowledges
that the type and periods of restriction imposed in Section 11 are fair and
reasonable and are reasonably required for the protection of Company and the
goodwill, business and assets of Company and its affiliates.  If any of the
provisions of this Section 11 relating to time, geographical area, or scope are
deemed by a court of competent jurisdiction to be overly broad or for any other
reason unenforceable, the parties agree that such restrictions herein as to
time, geographical area, or scope shall be reduced to such time, geographical
area, or scope as such court shall hold to be reasonable and legally
enforceable.  In addition, if any court or arbitrator determines that any of the
restrictive covenants contained in this Section 11, or any part thereof, is
invalid or unenforceable, the remainder of the restrictive covenants shall not
thereby be affected and shall be given full effect without regard to the invalid
portions.

c.             Executive acknowledges that a breach of the provisions of this
Section 11 or Section 9 or Section 10 of this Agreement would irreparably damage
Company, and that once such a breach has occurred there may be no accurate way
of determining the amount of damage or loss suffered by Company.  Executive
therefore agrees that Company may seek enforcement of the terms of this Section
11 or Sections 9 and 10 through preliminary or final injunctive relief or other
equitable remedy in court without the requirement to post a bond or other
security.
 
12.          Termination Upon Death or Disability. Executive’s employment
hereunder shall terminate immediately upon his death.  In the event that
Executive is unable to perform his duties hereunder by reason of any disability
or incapacity (due to any physical or mental injury, illness or defect) for an
aggregate of 180 days in any consecutive 12-month period, the Company shall have
the right to terminate Executive’s employment hereunder within 60 days after the
180th day of his disability or incapacity by giving Executive notice to such
effect at least 30 days prior to the date of termination set forth in such
notice, and on such date such employment shall terminate.
 
13.          Termination for Cause.
 
a.             In addition to any other rights or remedies provided by law or in
this Agreement, the Company may terminate Executive’s employment under this
Agreement if:
 
i.     Executive is convicted of, or enters a plea of guilty or nolo contendere
(which plea is not withdrawn prior to its approval by the court) to, a felony
offense and either Executive fails to perfect an appeal of such conviction prior
to the expiration of the maximum period of time within which, under applicable
law or rules of court, such appeal may be perfected or, if Executive does
perfect such an appeal, his conviction of a felony offense is sustained on
appeal; or
 
ii.    the Company’s Board of Directors determines, after due inquiry, based on
convincing evidence, that Executive has:

 
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A.           committed fraud against, or embezzled or misappropriated funds or
other assets of, the Company (or any subsidiary thereof);
 
B.           violated, or caused the Company (or any subsidiary thereof) or any
officer, employee or other agent thereof, or any other Person to violate, any
material law, rule, regulation or ordinance, or any material written policy,
rule or directive of the Company or the Company’s Board of Directors;
 
C.           willfully, or because of gross or persistent inaction, (a) failed
properly to perform his duties hereunder or (b) acted in a manner detrimental
to, or adverse to the  interests of, the Company; or
 
D.           violated, or failed to perform or satisfy any material covenant,
condition or  obligation required to be performed or satisfied by Executive
hereunder; and that, in the case of any violation or failure referred to in
clause (B), (C) or (D) of this paragraph (ii) of Section 13(a), such violation
or failure has caused, or is reasonably likely to cause, the Company to suffer
or incur a substantial casualty, loss, penalty, expense or other liability or
cost.
 
b.             The Company may effect such termination as to the occurrence of
any act or event described in clauses (A) to (D) of paragraph 13(a)(ii) hereof
(each, a “For Cause Event”) by giving Executive notice to such effect, setting
forth in reasonable detail the factual basis for such termination, at least ten
days prior to the date of termination set forth therein; provided, however, that
Executive may avoid such termination if Executive, prior to the date of
termination set forth in such notice, cures to the reasonable satisfaction of
the Company’s Board of Directors the factual basis for termination set forth
therein or otherwise provides the Board of Directors with information reasonably
sufficient for the Board to determine that the termination should not be
effected.
 
c.             In making any determination pursuant to Section 13(a) as to the
occurrence of a For Cause Event, each of the following shall constitute
convincing evidence of such occurrence:
 
i.      if Executive is made a party to, or target of, any Proceeding arising
under or relating to any For Cause Event, Executive’s failure to defend against
such Proceeding or to answer any complaint filed against him therein, or to deny
any claim, charge, averment, or allegation thereof asserting or based upon the
occurrence of a For Cause Event;
 
ii.    any judgment, award, order, decree or other adjudication or ruling in any
such Proceeding finding or based upon the occurrence of a For Cause Event (that
is not reversed or vacated on appeal); or
 
iii.   any settlement or compromise of, or consent decree issued in, any such
Proceeding in which Executive expressly admits the occurrence of a For Cause
Event;
 
provided that none of the foregoing shall be dispositive or create an
irrebuttable presumption of the occurrence of such For Cause Event; and provided
further that the Company’s Board of Directors may rely on any other factor or
event as convincing evidence of the occurrence of a For Cause Event.

 
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d.             In determining and assessing the detrimental effect of any For
Cause Event on the Company and whether such For Cause Event warrants the
termination of Executive’s employment hereunder, the Company’s Board of
Directors shall take the following factors, to the extent applicable and
material, into account:
 
i.     whether the Company’s Board of Directors directed or authorized Executive
to take, or to omit to take, any action involved in such For Cause Event, or
approved, consented to or acquiesced in his taking or omitting to take such
action;
 
ii.    any award of damages, penalty or other sanction, remedy or relief granted
or imposed in any Proceeding based upon or relating to such For Cause Event, and
whether such sanction, remedy or relief is sufficient to recompense the Company
or any other injured Person, or to prevent or to deter the recurrence of such
For Cause Event;
 
iii.   whether any lesser sanction would be appropriate and effective; and
 
iv.    any adverse effect that the loss of Executive’s services would have, or
be reasonably likely to have, upon the Company.
 
14.          Termination by Executive for “Good Reason”. In addition to any
other rights or remedies provided by law or in this Agreement, Executive may
terminate his employment hereunder:
 
a.             if (i) the Company violates, or fails to perform or satisfy any
material covenant, condition or obligation required to be performed or satisfied
by it hereunder (which includes, but is not limited to, any payment required to
be made to Executive under this Agreement or relocation of the Company’s office
in violation of the provisions of Section 5), or (ii) as a result of any action
or failure to act by the Company, there is a material change in Executive’s
title(s) or the nature or scope of the duties, obligations, rights or powers of
Executive’s employment (each of the events specified in clauses (i) and (ii), a
“Good Reason Event”), by giving the Company notice to such effect, setting forth
in reasonable detail the factual basis for such termination, no later than
thirty (30) days after the occurrence of such Good Reason Event, which
termination notice shall specify an effective date of termination at least sixty
(60) days but in no event later than ninety (90) days after the date of such
notice; provided, however, that the Company may avoid such termination if it,
prior to the effective date of termination set forth in such notice, cures or
explains to the reasonable satisfaction of Executive the factual basis for
termination set forth therein, which termination notice shall specify an
effective date of termination at least sixty (60) days but in no event later
than ninety (90) days after receipt of the notice from Executive.
 
b.            if a Change of Control (as hereinafter defined) occurs during the
Term, and a Good Reason Event occurs within the one year period following the
Change of Control, by giving the Company notice of intent to terminate at any
time within thirty (30) days after the occurrence of such Good Reason Event,
setting forth the events or circumstances constituting such Change of Control
and the Good Reason Event, which termination notice shall specify an effective
date of termination at least ten (10) days but in no event later than thirty
(30) days after receipt of the notice from Executive.

 
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15.          Compensation upon Termination.  Notwithstanding anything contained
herein to the contrary, and in addition to Executive’s rights under Section 17:
 
a.             Termination by Company Upon Executive’s Death or Disability.  If
Executive’s employment is terminated pursuant to Section 12, Executive shall be
entitled to receive (i) any Base Salary amounts accrued and unpaid to and
including the Termination Date, (ii) any Bonus amounts earned by Executive in
respect of any completed fiscal year that remain unpaid, and (iii) any expense
reimbursement due to him pursuant to Section 4 in respect of his employment
prior to the Termination Date, payable as provided in Section 15(e), and no
Bonus compensation shall be paid with respect to the fiscal year in which the
Termination Date occurs.
 
b.             Termination by Company for Cause.  If Executive’s employment is
terminated as the result of the occurrence of a For Cause Event pursuant to
Section 13, from and after the Termination Date, the Company shall have no
further obligation to Executive hereunder, including, without limitation, any
obligation pursuant to Section 17, except for the payment to Executive of (i)
any Base Salary amounts accrued and unpaid to and including the Termination
Date, and (ii) any expense reimbursement due to him pursuant to Section 4 in
respect of his employment prior to the Termination Date, payable as provided in
Section 15(e), and no Bonus compensation shall be paid with respect to the
fiscal year in which the Termination Date occurs or any completed fiscal year
that has not been determined to have been earned or remains unpaid (including
but not limited to any unvested shares of Restricted Stock issued to Executive.)
 
c.             Termination by Executive for Good Reason (Other than Upon a
Change of Control) or by Company Other than For Cause. If Executive’s employment
is terminated by Executive pursuant to Section 14(a) as a result of the
occurrence of a Good Reason Event or by the Company other than as a result of
the occurrence of a For Cause Event, Executive shall be entitled to receive (i)
any Base Salary amounts accrued and unpaid to and including the Termination
Date, (ii) any Bonus amounts earned by Executive in respect of any completed
fiscal year that remain unpaid, (iii) any expense reimbursement due to him
pursuant to Section 4 in respect of his employment prior to the Termination
Date, (iv) an amount, in cash, equal to the amount of Base Salary payable for
the balance of the calendar year from and after the Termination Date that
remains unpaid, plus the product of (A) his Base Salary in effect on the
Termination Date, and (B) the number of full calendar years remaining in the
balance of the Term after the Termination Date through December 31, 2015, and
(v) continued major medical, hospitalization, and dental insurance providing
coverage at least as favorable to Executive as that in effect on the Termination
Date through December 31, 2015.   The payments required under clauses (i)
through (iv) of this Section 15(c) shall be payable as provided in Section
15(e).
 
d.             Termination by Executive Upon a Change in Control. If Executive’s
employment is terminated pursuant to Section 14(b), Executive shall be entitled
to receive (i) any Base Salary amounts accrued and unpaid to and including the
Termination Date, (ii) any Bonus amounts earned by Executive in respect of any
completed fiscal year that remain unpaid, (iii) any expense reimbursement due to
him pursuant to Section 4 in respect of his employment prior to the Termination
Date, and (iv) upon the terms and subject to the conditions set forth in Section
16, the Parachute Amount (as hereinafter defined), payable as provided in
Section 15(e).
 
 
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e.              Except for the continuation of insurance coverages and subject
to Section 18, any amount payable to Executive upon termination of his
employment under this Agreement shall be paid promptly, and in any event within
thirty (30) days, after the Termination Date.  If Executive shall die prior to
Executive’s receipt of all payments required under this Agreement, the Company
shall pay Executive’s designated beneficiary or, if there is no designated
beneficiary, his estate all such amounts that would have otherwise been payable
to Executive under this Agreement as of the date of his death.
 
f.               Executive shall have no obligation hereunder to seek or to
accept any other employment after the Termination Date or otherwise to mitigate
the payments required to be made by this Section.
 
16.           Change of Control.
 
a.              For the purposes of this Section 16:
 
  i.    The “Act” is the Securities Exchange Act of 1934, as amended.
 
 ii.    A “person” includes a “group” within the meaning of Section 13(d)(3) of
the Act.
 
iii.   “Control” is used herein as defined in Rule 12b-2 under the Act.
 
 iv.   “Beneficially owns” and “acquisition” are used herein as defined in Rules
13d-3 and 13d-5, respectively, under the Act.
 
  v.    “Non-Affiliated Person” means any person, other than Executive, an
employee stock ownership trust of the Company (or any trustee thereof for the
benefit of such trust), or any person controlled by Executive, the Company or
such a trust.
 
 vi.   “Voting Securities” includes Common Stock and any other securities of the
Company that ordinarily entitle the holders thereof to vote, together with the
holders of Common Stock or as a separate class, with respect to matters
submitted to a vote of the holders of Common Stock, but securities of the
Company as to which the consent of the holders thereof is required by applicable
law or the terms of such securities only with respect to certain specified
transactions or other matters, or the holders of which are entitled to vote only
upon the occurrence of certain specified events (such as default in the payment
of a mandatory dividend on preferred stock or a scheduled installment of
principal or interest of any debt security), shall not be Voting Securities.
 
vii.   “Right” means any option, warrant or other right to acquire any Voting
Security (other than such a right of conversion or exchange included in a Voting
Security).
 
viii.  The “Code” is the Internal Revenue Code of 1986, as amended.
 
 ix.   “Base amount,” “present value” and “parachute payment” are used herein as
defined in Section 280G of the Code.

 
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b.              A “Change of Control” occurs when:
 
A.           a Non-Affiliated Person acquires control of the Company;
 
B.           upon an acquisition of Voting Securities or Rights by a Non-
Affiliated Person or any change in the number or voting power of outstanding
Voting Securities, such Non-Affiliated Person beneficially owns Voting
Securities or Rights entitling such person to cast a number of votes (determined
in accordance with Section 16(g)) equal to or greater than 25% of the sum of (A)
the number of votes that may be cast by all other holders of outstanding Voting
Securities and (B) the number of votes that may be cast by such Non-Affiliated
Person (determined in accordance with Section 16(g)); or
 
C.           upon any change in the membership of the Company’s Board of
Directors, a majority of the directors are persons who are not nominated or
appointed by the Company’s Board of Directors as constituted prior to such
change.
 
c.              The “Parachute Amount” to which Executive shall be entitled
pursuant to Section 15(c) shall equal 2.99 times Executive’s base amount.
 
d.              It is intended that the present value of any payments or
benefits to Executive, whether hereunder or otherwise, that are includable in
the computation of parachute payments shall not exceed 2.99 times the base
amount. Accordingly, if Executive receives any payment or benefit from the
Company prior to payment of the Parachute Amount which, when added to the
Parachute Amount, would subject any of the payments or benefits to Executive to
the excise tax imposed by Section 4999 of the Code, the Parachute Amount shall
be reduced by the least amount necessary to avoid such tax. The Company shall
have no obligation hereunder to make any payment or provide any benefit to
Executive after the payment of the Parachute Amount which would subject any of
such payments or benefits to the excise tax imposed by Section 4999 of the Code.
 
e.              Any other provision hereof notwithstanding, Executive may, prior
to his receipt of the Parachute Amount pursuant to Section 15(c), waive the
payment thereof, or, after his receipt of the Parachute Amount thereunder, treat
some or all of such amount as a loan from the Company which Executive shall
repay to the Company within 180 days after the receipt thereof, together with
interest thereon at the rate provided in Section 7872 of the Code, in either
case, by giving the Company notice to such effect.
 
f.               Any determination of the base amount, the Parachute Amount, any
liability for excise tax under Section 4999 of the Code or other matter required
to be made pursuant to this Section 18, shall be made by the Company’s
regularly-engaged independent certified public accountants, whose determination
shall be conclusive and binding upon the Company and Executive; provided that
such accountants shall give to Executive, on or before the date on which payment
of the Parachute Amount or any later payment or benefit would be made, a notice
setting forth in reasonable detail such determination and the basis therefor,
and stating expressly that Executive is entitled to rely thereon.

 
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g.              The number of votes that may be cast by holders of Voting
Securities or Rights upon the issuance or grant thereof shall be deemed to be
the largest number of votes that may be cast by the holders of such securities
or the holders of any other Voting Securities into which such Voting Securities
or Rights are convertible or for which they are exchangeable or exercisable,
determined as though such Voting Securities or Rights were immediately
convertible, exchangeable or exercisable and without regard to any anti-dilution
or other adjustments provided for therein.
 
17.           Other Termination Provisions. In addition to Executive’s rights
under Section 15:
 
a.              If his employment is terminated by Executive pursuant to Section
14(a) or by the Company other than as the result of the occurrence of a For
Cause Event pursuant to Section 13, all shares of Restricted Stock issued to
Executive that have not yet fully vested prior to the Termination Date shall
immediately vest.
 
b.              Upon request by Executive, on the Termination Date or as soon as
practicable thereafter, the Company shall assign to Executive, and Executive
shall assume, the lease relating to any automobile or other vehicle that the
Company provides for his use on the Termination Date pursuant to Section 4(b)
(other than an automobile or other vehicle owned or leased by Executive), if and
to the extent assignable under the terms and conditions thereof, and thereafter
Executive shall be liable for, and the Company shall be relieved of all
liability for, any amount or other obligation required to be paid or performed
thereunder in respect of any period commencing after the date of assignment.
 
c.              Throughout the 10-year period following the Termination Date,
the Company shall indemnify Executive, and hold him harmless from, any loss,
damages, liability, obligation or expense that he may suffer or incur in
connection with any claim made or Proceeding commenced during such period
relating to his service as a director, officer, employee or agent of the Company
(or any subsidiary thereof) to the same extent and in same manner as the Company
shall be obligated so to indemnify Executive immediately prior to the
Termination Date; provided that, if during such 10-year period the Company
adopts or assumes any indemnification policy or practice with respect to its
directors, officers, employees or agents that is more favorable than that in
effect on the Termination Date, Executive shall be entitled to such more
favorable indemnification.
 
d.              Throughout the 10-year period following the Termination Date,
the Company shall maintain for the benefit of Executive directors’ and officers’
liability insurance (on a “claims made” basis) providing coverage at least as
favorable to Executive (including with respect to limits of liability,
exclusions, and deductible and retention amounts) as that in effect on the
Termination Date.
 
18.           Compliance with Code Section 409A.
 
a.              Unless otherwise expressly provided in this Agreement, any
payment of compensation by the Company to Executive, whether pursuant to this
Agreement or otherwise, shall be made within two and one-half months (2½ months)
after the end of the later of the calendar year or the Company’s fiscal year in
which Executive’s right to such payment vests (i.e., is not subject to a
substantial risk of forfeiture for purposes of Code Section 409A (“Code Section
409A”)).  Such amounts shall not be subject to the requirements of subsection
(b) below applicable to “nonqualified deferred compensation.”

 
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b.              All payments of “nonqualified deferred compensation” (within the
meaning of Code Section 409A) are intended to comply with the requirements of
Code Section 409A, and shall be interpreted in accordance therewith.  Neither
party individually or in combination may accelerate, offset or assign any such
deferred payment, except in compliance with Code Section 409A.  No amount shall
be paid prior to the earliest date on which it is permitted to be paid under
Code Section 409A and Executive shall have no discretion with respect to the
timing of payments except as permitted under Code Section 409A. In the event
that Executive is determined to be a “Specified Employee” (as defined in and
determined in accordance with Code Section 409A) of the Company at a time when
its stock is deemed to be publicly traded on an established securities market,
payments determined to be “nonqualified deferred compensation” payable by reason
of “Separation from Service” (as defined in Code Section 409A) shall be paid no
earlier than (i) the first day of the seventh (7th) calendar month commencing
after such termination of employment, or (ii) Executive’s death, consistent with
and to the extent necessary to meet the requirements of Code Section 409A
without the imposition of excise taxes.  Any payment delayed by reason of the
prior sentence shall be paid in a single lump sum on the earliest date permitted
under Code Section 409A in order to catch up to the original payment schedule,
with interest on such delayed amount equal to the short-term federal rate
applicable under Section 7872(f)(2)(A) of the Code for the month in which occurs
Executive’s Separation from Service.  Thereafter, Executive shall receive any
remaining benefits as if there had not been an earlier delay.
 
c.              For purposes of this Agreement, termination of employment shall
be deemed to occur only upon “Separation from Service” as such term is defined
in Code Section 409A.  Each payment and each installment of any bonus or
severance payments provided for under this Agreement shall be treated as a
separate payment for purposes of application of Code Section 409A. Subsection
(b) above shall not apply to that portion of any amounts payable upon
termination of employment which shall qualify as “involuntary severance” under
Code Section 409A because such amount (i) does not exceed the lesser of (1) two
hundred percent (200%) of Executive’s annualized compensation from the Company
for the calendar year immediately preceding the calendar year during which the
termination of employment occurs, or (2) two hundred percent (200%) of the
annual limitation amount under Section 401(a)(17) of the Code (the maximum
amount of compensation that may be taken into account for purposes of a
tax-qualified retirement plan) for the calendar year during which termination of
employment occurs, and (ii) is paid no later then the end of the second (2nd)
calendar year commencing after termination of employment.

 
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d.              All benefit plans, programs and policies sponsored by the
Company are intended to comply with all requirements of Code Section 409A or to
be structured so as to be exempt from the application of Code Section 409A.  All
expense reimbursement or in-kind benefits subject to Code Section 409A which are
provided under this Agreement or, unless otherwise specified in writing, under
any Company program or policy, shall be subject to the following rules: (i) the
amount of expenses eligible for reimbursement or in-kind benefits provided
during one calendar year may not affect the benefits provided during any other
year; (ii) reimbursements shall be paid no later than the end of the calendar
year following the year in which Executive incurs such expenses, and Executive
shall take all actions necessary to claim all such reimbursements on a timely
basis to permit the Company to make all such reimbursement payments prior to the
end of said period, and (iii) the right to reimbursement or in-kind benefits
shall not be subject to liquidation or exchange for another benefit.
 
19.           Limitation of Authority. Except as expressly provided herein, no
provision hereof shall be deemed to authorize or empower either party hereto to
act on behalf of, obligate or bind the other party hereto.
 
20.           Notices. Any notice or demand required or permitted to be given or
made hereunder to or upon either party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, telecopy,
telex, e-mail or similar electronic means, provided that a written copy thereof
is sent on the same day by postage-paid first-class mail, to such party at the
following address:

to Executive at:
  
   
  
       
with a copy to:
Loeb & Loeb LLP
 
10100 Santa Monica Blvd., Suite 2200
 
Los Angeles, California 90067
 
Attn: Gerald M. Chizever, Esq.
   
to the Company at:
22619 Pacific Coast Highway
 
Malibu, California 90265
 
Attn: Chairman (if a Chairman has been elected) or Chief Financial Officer
   
with a copy to:
Feder Kaszovitz LLP
 
845 Third Avenue
 
New York, New York 10022-6601
 
Attn: Geoffrey Bass, Esq.

or such other address as either party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this Section.
The date of giving or making of any such notice or demand shall be, in the case
of clause (a) (i), the date of the receipt; in the case of clause (a) (ii), five
business days after such notice or demand is sent; and, in the case of clause
(b), the business day next following the date such notice or demand is sent.
 
21.           Amendment.  Except as otherwise provided herein, no amendment of
this Agreement shall be valid or effective, unless in writing and signed by or
on behalf of the parties hereto.

 
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22.           Waiver.  No course of dealing or omission or delay on the part of
either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
 
23.           Governing Law.  This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of California
without regard to principles of choice of law or conflict of laws.
 
24.           Jurisdiction.  Each of the parties hereto hereby irrevocably
consents and submits to the jurisdiction of the courts of the State of
California and the United States District Court for the Central District of
California in connection with any suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby, waives any
objection to venue in the County of Los Angeles, State of California, or such
District, and agrees that service of any summons, complaint, notice or other
process relating to such Proceeding may be effected in the manner provided by
clause (a) (ii) of Section 20 of this Agreement.
 
25.           Remedies.  In the event of any actual or prospective breach or
default by either party hereto, the other party shall be entitled to equitable
relief, including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive, and
nothing herein shall be deemed to prohibit or limit either party from pursuing
any other remedy or relief available at law or in equity for such actual or
prospective breach or default, including the recovery of damages.
 
26.           Severability.  The provisions hereof are severable and in the
event that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.
 
27.           Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute one and
the same agreement.
 
28.           Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned by either party hereto without the
prior written consent of the other party hereto, and any purported assignment
without such consent shall be void and without effect, except that this
Agreement shall be assigned to, and assumed by, any Person with or into which
the Company merges or consolidates, or which acquires all or substantially all
of its assets, or which otherwise succeeds to and continues the Company’s
business substantially as an entirety. Except as otherwise expressly provided
herein or required by law, Executive shall not have any power of anticipation,
assignment or alienation of any payments required to be made to him hereunder,
and no other Person may acquire any right or interest in any thereof by reason
of any purported sale, assignment or other disposition thereof, whether
voluntary or involuntary, any claim in a bankruptcy or other insolvency
Proceeding against Executive, or any other ruling, judgment, order, writ or
decree.

 
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29.           Survival.   The provisions of this Agreement which by their terms
are or become effective following termination of this Agreement, including but
not limited to the provisions of Section 9, 10, 11, 14, 15, 16, 17, 18, 20, 22,
23, 24, and 25 shall survive the termination of this Agreement.
 
30.           Binding Effect.  This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and shall not be deemed, to create or
confer any right or interest for the benefit of any Person not a party hereto.
 
31.           Titles and Captions.  The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.
 
32.           Grammatical Conventions.  Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.
 
33.           References.  The terms “herein,” “hereto,” “hereof,” “hereby,” and
“hereunder,” and other terms of similar import, refer to this Agreement as a
whole, and not to any Article, Section or other part hereof.
 
34.           No Presumptions. Each party hereto acknowledges that it has had an
opportunity to consult with counsel and has participated in the preparation of
this Agreement. No party hereto is entitled to any presumption with respect to
the interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other party hereto drafted or
controlled the drafting of this Agreement.
 
35.           Certain Definitions.  As used herein:
 
 i.           “Person” includes without limitation a natural person,
corporation, joint stock company, limited liability company, partnership, joint
venture, association, trust, government or governmental authority, agency or
instrumentality, or any group of the foregoing acting in concert.
 
ii.           A “Proceeding” is any suit, action, arbitration, audit,
investigation or other proceeding before or by any court, magistrate,
arbitration panel or other tribunal, or any governmental agency, authority or
instrumentality of competent jurisdiction.

 
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36.           Entire Agreement.  This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes any
prior agreement, commitment or arrangement relating hereto, including, without
limitation, the 2003 Employment Agreement, which shall terminate,
notwithstanding any contrary provision thereof, immediately upon the
commencement of the Term, except that each party thereto shall (a) remain
required to perform any act and to satisfy any obligation or condition that such
party is required to perform or satisfy thereunder with respect to any event
occurring or circumstance existing during the term thereof (including without
limitation the payment or delivery to Executive of any compensation,
reimbursable expense or employee benefit or perquisite to which he may be
entitled, but which has not yet been paid to him, on account of his employment
thereunder) that has not been so performed or satisfied, and (b) retain its
right thereunder to assert or to allege any claim or cause of action relating to
or based upon, or otherwise to enforce, any provision thereof with respect to
any event occurring or circumstance existing during the term thereof.
 
BALANCE OF THIS PAGE DELIBERATELY LEFT BLANK
 
SIGNATURE PAGE FOLLOWS

 
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the
day and year first above written.

THE COMPANY:
 
JAKKS PACIFIC, INC.
     
By:
  
       
Name:
Joel M. Bennett
       
Title:
Executive Vice President and Chief Financial Officer

EXECUTIVE:
     
  
 
Stephen G. Berman
 

 
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EXHIBIT A

FORM OF RESTRICTED STOCK AGREEMENT

(attached)

 
25

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EXHIBIT A
To
2010 Employment Agreement between
Stephen Berman and JAKKS Pacific, Inc.

Restricted Stock Award Agreement
Under the
JAKKS Pacific, Inc.
2002 Stock Award and Incentive Plan

This RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) is entered into on
___________, 201___ by and between Stephen G. Berman (the "Executive") and JAKKS
Pacific, Inc., a Delaware corporation (the “Company”).

WITNESSETH:

WHEREAS, the Company and the Executive are parties to that certain Second
Amended and Restated 2010 Employment Agreement, dated November ___ , 2010 (the
"2010 Employment Agreement"); and

WHEREAS, the terms and conditions of the 2010 Employment Agreement call for the
Company to grant the Executive certain shares of Restricted Stock (as defined
below) in consideration for the Executive agreeing to enter into the 2010
Employment Agreement; and

WHEREAS, pursuant to the Company’s 2002 Stock Award and Incentive Plan (the
“Plan”), the Company’s Board or its Compensation Committee (the “Compensation
Committee”) has approved, in accordance with the terms of the 2010 Employment
Agreement, the grant to the Executive of Restricted Stock set forth herein,
subject to the terms and conditions of this Agreement.

AWARD OF RESTRICTED STOCK
 
The Company hereby grants to the Executive an award of __________ shares of
restricted common stock of the Company, par value $.001 per share (the
“Restricted Stock”), subject to, and in accordance with, the restrictions,
terms, and conditions set forth in this Agreement.   The grant date of this
award of Restricted Stock is _________, 201___ (the “Grant Date”).
 
This Agreement shall be construed in accordance with, and subject to, the
provisions of the Plan (the provisions of which are incorporated herein by
reference) and, except as otherwise expressly set forth herein, the capitalized
terms used in this Agreement shall have the same definitions as set forth in the
Plan and the 2010 Employment Agreement.

 
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RESTRICTIONS
 
Subject to Sections 2.2 and 3.2 below, and provided in all instances that the
Executive’s employment with the Company has not been terminated for cause by the
Company in accordance with the provisions of the 2010 Employment Agreement prior
to January 1, ________ (the “Final Vesting Date”, that number of shares of
Restricted Stock set forth below shall vest on each of the dates set forth below
(the “Vesting Date”) such that on each Vesting Date such number of shares of
Restricted Stock shall be fully vested1:
 
Vesting Date
 
Number of Shares that Vest
           

None of the Restricted Stock may be sold, assigned, transferred, pledged, or
otherwise encumbered prior to each Vesting Date, and thereafter the Restricted
Stock shall not be sold, assigned transferred, pledged, or otherwise encumbered
except in accordance with the minimum stock holding requirements provided for in
Section 3(h) of the 2010 Employment Agreement.
 
[Insert for Shares issued under Section 3(b) of the 2010 Employment Agreement:]
Notwithstanding the Vesting Dates set forth in Section 2.1 above, and in order
for the Company to preserve the deductibility under Section 162(m) of the Code
of the grant of Restricted Stock provided hereby, as a condition precedent to
the effectiveness of the above-described vesting schedule, the 3% Vesting
Condition (defined in Section 3(b) of the 2010 Employment Agreement) must be
satisfied.  In the event the 3% Vesting Condition is not satisfied, (i) the
grant of Restricted Stock pursuant to this Agreement shall be null and void,
(ii) the Executive shall forfeit any right to receive any Restricted Stock,
(iii) any entries on the stock books and ledgers of the Company with respect to
the shares of Restricted Stock shall be cancelled, and (iv) the Restricted Stock
shall become authorized but unissued shares of the Company's common stock, par
value $.001 per share (the "Common Stock").
 
The Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered prior to the date, if ever, that the Restricted Stock
becomes vested in accordance with the terms of this Agreement.
 

--------------------------------------------------------------------------------

1 Vesting Schedule to be in accordance with relevant provisions of Section 3 of
the 2010 Employment Agreement

 
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STOCK; DIVIDENDS; VOTING
 
The stock certificate(s) evidencing the Restricted Stock shall be registered on
the Company's books in the name of the Executive as of the Grant Date. The
Company may issue stock certificates or otherwise evidence the Executive’s
interest by using a book entry account.  The Company may, in its sole
discretion, maintain physical possession or custody of such stock certificates
until such time as the shares of Restricted Stock are free of the restrictions
contained in Article 2.  The Company reserves the right to place a legend on the
stock certificate(s) restricting the transferability of such certificates and
referring to the terms and conditions (including forfeiture) of this Agreement
and the Plan.
 
During the period the Restricted Stock is not vested, Executive shall not have
the right to vote or receive dividends (whether in cash, stock or any other
form) on shares of Restricted Stock issued under this Agreement until the date
of vesting of such shares.
 
In the event of a stock split, change in capitalization or other similar capital
event in which the Company’s stockholders participate generally in respect of
all shares of common stock of the Company, par value $.001 per share, from and
after the date of issuance of the Restricted Stock, the number and class of
shares of Restricted Stock or other securities that the Executive shall be
entitled to, and shall hold, pursuant to this Agreement shall be appropriately
adjusted or changed to reflect such change in capitalization, provided that any
such additional shares of Restricted Stock or different shares or securities
shall remain subject to the restrictions contained in this Agreement.
 
The Executive represents and warrants that he is acquiring the Restricted Stock
for investment purposes only, and not with a view to distribution thereof.  The
Executive is aware that the Restricted Stock may not be registered under the
federal or any state securities laws and that, in addition to the other
restrictions on the shares of Restricted Stock, the Restricted Stock will not be
able to be transferred unless an exemption from registration is available or the
Restricted Stock becomes registered.  By making this award of Restricted Stock,
the Company is not undertaking any obligation to register the Restricted Stock
under any federal or state securities laws.
 
NO RIGHT TO CONTINUED SERVICE AS AN EXECUTIVE
 
Nothing in this Agreement or the Plan shall be interpreted or construed to
confer upon the Executive any right with respect to continuance as an employee
of the Company or any subsidiary of the Company, nor shall this Agreement or the
Plan interfere in any way with the right of the Company or a subsidiary of the
Company or their respective stockholders to terminate the Executive’s service as
a director at any time.

 
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TAXES AND WITHHOLDING
 
The Executive shall be responsible for all federal, state, and local income
taxes payable with respect to this award of Restricted Stock.  The Executive
shall have the right to make such elections under the Code as are available in
connection with this award of Restricted Stock.  The Company and the Executive
agree to report the value of the Restricted Stock in a consistent manner for
federal income tax purposes.  The Company shall have the right to retain and
withhold from any payment of Restricted Stock the amount of taxes (if any)
required by any government to be withheld or otherwise deducted and paid with
respect to such payment.  At its discretion, the Company may require the
Executive to reimburse the Company for any such taxes required to be withheld
and may withhold any distribution in whole or in part until the Company is so
reimbursed.  In lieu thereof, the Company shall have the right to withhold from
any other cash amounts due to the Executive an amount equal to such taxes
required to be withheld or withhold and cancel (in whole or in part) a number of
shares of Restricted Stock having a market value not less than the amount of
such taxes.
 
EXECUTIVE BOUND BY THE PLAN
 
The Executive hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all the terms and provisions thereof.
 
MODIFICATION OF AGREEMENT
 
This Agreement may be modified, amended, suspended, or terminated, or any of the
terms or conditions hereof waived, only by a written instrument executed by the
parties hereto.
 
SEVERABILITY
 
Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.
 
GOVERNING LAW
 
The validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the State of Delaware without giving effect to
the conflicts of laws principles thereof.
 
SUCCESSORS IN INTEREST
 
This Agreement shall inure to the benefit of, and be binding upon, the Company
and its successors and assigns, whether by merger, consolidation,
reorganization, sale of assets, or otherwise.  This Agreement shall inure to the
benefit of the Executive’s legal representatives.  All obligations imposed upon
the Executive and all rights granted to the Company under this Agreement shall
be final, binding, and conclusive upon the Executive’s heirs, executors,
administrators, and successors.

 
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RESOLUTION OF DISPUTES
 
Any dispute or disagreement which may arise under, or as a result of, or in any
way relate to the interpretation, construction, or application of this Agreement
shall be determined by the Board. Any determination made hereunder shall be
final, binding, and conclusive on the Executive and the Company for all
purposes.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

JAKKS PACIFIC, INC.
 
EXECUTIVE
         
By:
  
 
  
 
Name:
  
 
Stephen G. Berman
 
Title:
  
   

 
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EXHIBIT B
VESTING SCHEDULE FOR SHARES OF RESTRICTED STOCK ISSUED UNDER SECTION 3(b)

Dollar Value
of Shares
Issued
 
Issuance
Date
 
First Vesting Date
 
% of
Shares
Vesting
on First
Vesting
Date
   
Second
Vesting
Date2
 
% of
Shares
Vesting
on
Second
Vesting
Date
   
Third
Vesting
Date
 
% of
Shares
Vesting
on
Third
Vesting
Date
   
Fourth
Vesting
Date
   
% of
Shares
Vesting
on
Fourth
Vesting
Date
   
Fifth
Vesting
Date
   
% of
Shares
Vesting
on Fifth
Vesting
Date
   
Sixth
Vesting
Date
   
% of Shares
Vesting on
Sixth
Vesting
Date
 
$500,000.00
 
Jan 1, 2011
 
Date in 2012 as of which the 3% Vesting Condition is determined to have been
satisfied
    16⅔ %  
Jan 1, 2013
    16⅔ %  
Jan 1, 2014
    16⅔ %  
Jan 1, 2015
      16⅔ %  
Jan 1, 2016
      16⅔ %  
Jan 1, 2017
      16⅔ %
$500,000.00
 
Jan 1, 2012
 
Date in 2013 as of which the 3% Vesting Condition is determined to have been
satisfied
    20 %  
Jan 1, 2014
    20 %  
Jan 1, 2015
    20 %  
Jan 1, 2016
      20 %  
Jan 1, 2017
      20 %     N/A       N/A  
$500,000.00
 
Jan 1, 2013
 
Date in 2014 as of which the 3% Vesting Condition is determined to have been
satisfied
    25 %  
Jan 1, 2015
    25 %  
Jan 1, 2016
    25 %  
Jan 1, 2017
      25 %     N/A       N/A       N/A       N/A  
$500,000.00
 
Jan 1, 2014
 
Date in 2015 as of which the 3% Vesting Condition is determined to have been
satisfied
    33⅓ %  
Jan 1, 2016
    33⅓ %  
Jan 1, 2017
    33⅓ %     N/A       N/A       N/A       N/A       N/A       N/A  
$500,000.00
 
Jan 1, 2015
 
Date in 2016 as of which the 3% Vesting Condition is determined to have been
satisfied
    50 %  
Jan 1,
2017
    50 %  
N/A
    N/A       N/A       N/A       N/A       N/A       N/A       N/A  

 

--------------------------------------------------------------------------------

2 This schedule assumes that for each issuance of Section 3(b) Restricted Stock,
the 3% Vesting Condition is satisfied as of the first possible vesting date.
 
 
31

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EXHIBIT C

2010 BONUS TARGETS

On March 31, 2010, the Compensation Committee adopted the following 2010
Adjusted EPS (defined below) targets for determining the bonus for Executive for
fiscal 2010. Executive’s 2010 Bonus shall be equal to the percentage of his Base
Salary for 2010 set forth in the table below that corresponds to the Company’s
actual 2010 Adjusted EPS:

Minimum Adjusted
2010 EPS ($) at
which
Corresponding
Bonus Level is
Earned
 
Bonus
(% of Base
Salary)
 
1.17
    20 %
 
       
1.20
    30 %          
1.23
    40 %          
1.26
    50 %          
1.30
    75 %          
1.33
    100 %          
1.36
    130 %          
1.39
    150 %          
1.42
    160 %          
1.46
    180 %          
1.50
    200 %

The term “2010 Adjusted EPS” means the Adjusted Earnings Per Share for the 2010
fiscal year of the Company. The 2010 Adjusted EPS targets set forth in the table
above assume that the minimum aggregate bonuses in cash, shares of stock,
options or other equity awards awarded to employees other than Executive will
equal at least $1,200,000 in calculating the $1.17 2010 Adjusted EPS target and
at least $2,000,000 in calculating the 2010 Adjusted EPS growth targets that
equal or exceed $1.33. The Compensation Committee reserves the right to modify
the 2010 Adjusted EPS targets and corresponding bonus amounts in the exercise of
its discretion to take account of any new acquisitions that are concluded in
2010, changes in the outstanding shares used to calculate the 2010 Adjusted EPS
resulting from stock repurchases by the Company and redemption of the Company’s
senior convertible notes due in 2023, the amount of bonuses awarded to
employees, or as otherwise determined by the Compensation Committee.

 
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EXHIBIT D

BASE BONUS CRITERIA FOR 2011

Executive’s 2011 Base Annual Performance Bonus shall be calculated as
Executive’s Base Salary for 2011 (i.e., $1,140,000), multiplied by the
percentage of Base Salary set forth in the table below that corresponds to the
Company’s actual 2011 Adjusted EPS (defined below):

2011 Adjusted EPS
($)
 
Bonus
(% of Base Salary)
 
Less than 1.37
    0 %          
1.37
    20 %          
1.40
    30 %          
1.44
    40 %          
1.48
    50 %          
1.52
    75 %          
1.56
    100 %          
1.60
    130 %          
1.64
    150 %          
1.70
    160 %          
1.74
    180 %          
1.78
    200 %

The foregoing targets shall be adjusted so that the initial target under which
Executive can earn a bonus equal to 20% of Base Salary (the “Initial EPS
Target”) is the greater of $1.37 and the amount that is 3% higher than Adjusted
Earnings Per Share for the 2010 fiscal year of the Company, and each subsequent
tranche shall be adjusted accordingly so that the maximum bonus, equal to 200%
of Executive’s 2011 Base Salary, is earned if 2011 Adjusted EPS is 30% higher
than the Initial EPS Target.

The term “2011 Adjusted EPS” means the Adjusted Earnings Per Share for the 2011
fiscal year of the Company. The Compensation Committee also reserves the right
to modify the bonus targets and corresponding percentage of Executive’s Base
Salary (subject to Section 3(e)(i) of the Agreement) in the exercise of its
discretion to take account of any new acquisitions concluded in 2010 and 2011,
changes in the outstanding shares used to calculate the 2011 Adjusted EPS
resulting from stock repurchases by the Company, the amount of bonuses awarded
to employees, or as otherwise determined by the Compensation Committee in its
discretion.

 
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EXHIBIT E

PERCENTAGES OF
BASE ANNUAL PERFORMANCE BONUS
PAYABLE IN RESTRICTED STOCK AND CASH

Fiscal Year for
which Base Annual
Performance Bonus
is Awarded
 
Percentage of
Base Annual
Performance
Bonus Payable in
Restricted Stock
   
Percentage of Base
Annual
Performance
Bonus Payable in
Cash
 
2011
    25 %     75 %
2012
    40 %     60 %
2013
    40 %     60 %
2014
    40 %     60 %
2015
    20 %     80 %

 
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