<PAGE>

                                                                    EXHIBIT 10.3

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement"), dated March
26, 2003 and as of January 1, 2003, by and between Jack Friedman ("Executive")
and JAKKS Pacific, Inc., a Delaware corporation ("JAKKS" or the "Company").

                              W I T N E S S E T H:

        WHEREAS, Executive and the Company entered into an Employment Agreement,
dated as of July 1, 1999 (the "Initial Agreement"), amended as of February 7,
2000 by an Amendment to Employment Agreement (the "First Amendment" and,
together with the Initial Agreement, the "Employment Agreement"); and

        WHEREAS, Executive and the Company desire to amend and restate the terms
of the 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 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 Chairman, 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, 10 and 11, Executive may engage or participate in
such other activities incidental to any other employment, occupation or 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.


<PAGE>

           2. TERM. The employment of Executive hereunder shall commence as of
the date hereof and continue for a term ending on December 31, 2010, 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)(i) Base Salary. As compensation for his services hereunder, the
Company shall pay to Executive a base salary in 2003 at the rate of $965,000 per
annum, and in each subsequent year during the Term at a rate to be determined by
the Compensation Committee of the Company's Board of Directors, but that is at
least $25,000 more than the rate in the immediately preceding year (the "Base
Salary"). The Base Salary shall be paid to Executive in substantially equal
installments no less often than twice monthly, subject to any required tax
withholding.

           (a)(ii) Restricted Stock Awards. Subject to the terms of (including,
without limitation, the availability of shares reserved for issuance thereunder)
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, the "Plan") and
the applicable restricted stock agreement, which shall be substantially in the
form annexed hereto as Exhibit A, and as additional consideration for Executive
agreeing to amend and restate the terms of his Employment Agreement by, among
other things, modifying and replacing the 4% Bonus (as defined in the Initial
Agreement) in the manner provided in Section 3(c) herein, (A) upon the execution
of this Agreement, the Company shall grant to Executive 240,000 shares of
restricted common stock, par value $.001 per share (the "Restricted Stock"), of
the Company and (B) on each of the next seven (7) anniversaries of the date
hereof, the Company shall grant to Executive 120,000 shares of Restricted Stock.
Each award of Restricted Stock shall vest (and associated restrictions shall
lapse) in accordance with Exhibit B hereto and the terms of the applicable
restricted stock agreement.

           (b) 2003 Bonus Opportunity. In addition to the compensation set forth
in Section 3(a), Executive shall be eligible to receive a cash bonus (the "4%
Bonus") in respect of the 2003 Bonus Period (as hereinafter defined) if the
Company's Pre-Tax Income (as hereinafter defined) equals or exceeds the 2003
Bonus Target (as hereinafter defined), in an amount equal to the lesser of (A)
four (4%) percent of such Pre-Tax Income and (B) $2,000,000. If earned, the
Company shall pay the 4% Bonus to Executive, subject to any required tax
withholding, no later than March 31, 2004.

                  For purposes of this Section 3(b):

                  (A) The "2003 Bonus Period" is either calendar year 2003 or,
if the Term ends during 2003 on a day other than December 31, 2003, the portion
of calendar year 2003 ending on the last day of the last full month ending
during the Term.



                                       2
<PAGE>

                  (B) The "2003 Bonus Target" is (A) $2,000,000, if the 2003
Bonus Period consists of twelve (12) calendar months, or (B) in any other case,
the product of (I) $5,479.45 and (II) the number of days included in the 2003
Bonus Period.

                  (C) The "Pre-Tax Income" in the 2003 Bonus Period is the
Company's income before any deduction or reserve for income taxes and without
any adjustment for any extraordinary item.

                  (D) The determination of the 2003 Bonus Target, Pre-Tax Income
and the 4% Bonus for the 2003 Bonus Period, including all estimates, allocations
or prorations required to be made in connection therewith, shall be made by the
Company's regularly-engaged independent certified public accountants (the
"Auditors") in accordance with U.S. generally accepted accounting principles
("GAAP") applied on a basis consistent with past periods, which determination,
absent manifest error, shall be conclusive and binding upon the Company and
Executive. If the 2003 Bonus Period ends prior to December 31, 2003, and any
year-end adjustment is subsequently made that affects the determination of the
4% Bonus for the 2003 Bonus Period, the Company shall promptly give written
notice to Executive of any change proposed to be made to the 4% Bonus, setting
forth in reasonable detail therein the amount of and basis for such change. If
such change involves an increase to the 4% Bonus, the Company shall pay such
increase to Executive concurrently with the delivery of such notice; and if such
change involves a decrease to such 4% Bonus, 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.

           (c) Subsequent Bonus Opportunity. In addition to the compensation
set forth in Section 3(a), Executive shall be eligible to receive during each
year of the Term following calendar year 2003, a performance-based award
determined as follows:

           (c)(i) Cash Bonus. During each calendar year of the Term (or
applicable portion thereof) following calendar year 2003, Executive shall be
eligible to receive, subject to the terms of the Plan, a cash performance bonus
(the "Performance Bonus" and together with the 4% Bonus, the "Bonuses") of up to
200% of Executive's then current Base Salary based on the year-over-year growth
of the Company's Adjusted EPS (as defined below). If awarded with respect to any
such calendar years, the Company shall pay the Performance Bonus to Executive,
subject to any required tax withholding, no later than ninety (90) days after
the later of (i) the end of such calendar year or (ii) completion of an audit by
the Company's then current Auditors. The Base Salary used to determine the
amount of the Performance Bonus shall be the Base Salary in effect during the
calendar year for which the Performance Bonus is being determined.

           (c)(ii) For purposes of calendar year 2004, such Performance Bonus
shall be an amount equal to: (i) the percentage set forth on the following table
which corresponds to the increase in the Company's Adjusted EPS in respect of
calendar year 2004 over the Adjusted EPS during calendar year 2003; MULTIPLIED
BY (ii) the Executive's Base Salary for calendar year



                                       3
<PAGE>

2004.

<TABLE>
<CAPTION>
          ADJUSTED EPS GROWTH                         % OF SALARY
          -------------------                         -----------
<S>                                                   <C>
            [LESS THAN] 1%                                 0%
               1--1.999%                                  50%
               2--4.999%                                 100%
               5--9.999%                                 125%
              10--19.999%                                150%
              20--24.999%                                175%
     [GREATER THAN OR EQUAL TO] 25%                      200%
</TABLE>

           Thereafter, for subsequent years of the Term, the Compensation
Committee of the Board of Directors shall establish the Company's targeted
levels of Adjusted EPS growth and corresponding percentage of salary figures
during the Company's first fiscal quarter. The Compensation Committee may, but
shall have no obligation to, continue using the specific targeted levels of
Adjusted EPS growth and corresponding percentage of salary figures set forth
above in determining the criteria for Executive's Performance Bonus for such
subsequent years; provided, that, the Compensation Committee shall make such
determination in a reasonable manner, taking into account the levels of Adjusted
EPS growth and corresponding percentage of salary figures set forth above.

           (c)(iii) In the event that the Term ends at any time other than on
December 31 of any year, Executive's Performance Bonus in respect of such
calendar year shall be prorated. In the case of calendar year 2004, such
Performance Bonus shall be an amount equal to: (i) the percentage set forth on
the above table that corresponds to the increase in the Company's year-to-date
Adjusted EPS (as determined by the then most recently publicly announced
earnings per share of the Company) over the Adjusted EPS of the Company during
the comparable period in calendar year 2003; MULTIPLIED BY (ii) Executive's Base
Salary for calendar year 2004; MULTIPLIED BY (iii) a fraction, the numerator of
which shall be the number of full calendar months included in the Term for
calendar year 2004 and the denominator of which shall be twelve (12).

           (c)(iv) For all purposes hereof, the term "Adjusted EPS" shall mean
the net income per share of the Company's common stock, par value $.001 per
share (the "Common Stock"), calculated on a fully-diluted basis as determined by
the Company's then current Auditors in accordance with GAAP, applied on a basis
consistent with past periods, 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 Plan, and such determination by the Auditors,
absent manifest error, as adjusted by the Compensation Committee, shall be
conclusive and binding upon the Company and Executive.



                                       4
<PAGE>

           (d) Additional Compensation. The Compensation Committee of the Board
of Directors may, from time to time, award such additional compensation to
Executive, in cash or in property and irrespective of the Bonuses set forth in
Section 3(b) or Section 3(c) hereof, as such Committee may determine in its sole
discretion to be appropriate based on business criteria established or
determined by the 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 Committee.

           (e) 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) 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.

           (f) At his 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 $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.

           (g) In addition to his 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 stock, stock option or other
equity participation plan and any profit-sharing, 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. 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.

           (h) Except as explicitly provided herein, no provision hereof is
intended, or shall be deemed, to impair or limit Executive's eligibility to
receive, or any right he may now or at any time hereafter have to receive, hold
or dispose of any Common Stock of the Company or other securities of the Company
or to receive, hold or exercise any options, warrants or other rights to acquire
any Common Stock or other securities of the Company.

           (i) During the Term, Executive shall not be entitled to additional
compensation for serving in any office of the Company (or any subsidiary
thereof) to which he is elected or appointed.



                                       5
<PAGE>

           4.  EXPENSE ALLOWANCE.

           (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) The Company shall provide to Executive a suitable automobile or
other vehicle for his exclusive use and the Company shall pay the entire cost
thereof, including, without limitation, purchase price or lease payments,
insurance premiums, repair charges, and maintenance and operating expenses, or
if, in lieu thereof, Executive uses his own automobile or other vehicle, the
Company shall grant him a monthly allowance in an amount sufficient to pay all
such costs therefor.

           5. LOCATION. Except for routine travel and temporary accommodation
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 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. 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.



                                       6
<PAGE>

               (a) Executive shall, during the Term and for a period of five
        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 the Executive,
becomes information generally available to the public.

        (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 the 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



                                       7
<PAGE>

Labor Code:

           (i) Any idea, invention, design, process, system, procedure,
improvement, development or discovery conceived, developed, created or made by
Executive, alone or with others, during the Term and applicable to the business
of the Company, whether or not patentable or registrable, shall become the sole
and exclusive property of the Company.

           (ii) Executive shall disclose the same 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.

           11.    NO COMPETITION.

           (a) During the Term and thereafter during the period, if any, that he
receives all or any portion of the Retirement Benefit (as hereinafter defined),
and if his employment terminates because he is discharged by the Company "for
cause" pursuant to Section 13 or he voluntarily resigns pursuant to Section
14(c), for a further period of one year thereafter, Executive shall not,
directly or indirectly:

                  (i) own, control, manage, operate, participate or invest in,
           or otherwise be connected with, in any manner, any business activity,
           venture or enterprise which is engaged in any business in the United
           States in which the Company (or any subsidiary thereof) has been
           engaged in during the Term or the last five years of the Term,
           whichever is shorter, or is engaged in at the time of termination of
           Executive's employment hereunder, or

                  (ii) for himself or on behalf of any other Person, employ or
           engage any Person who at the time shall have been within the
           preceding 12-month period an employee of the Company (or such
           subsidiary) or contact any supplier, customer or employee of the
           Company (or such subsidiary) for the purpose of soliciting or
           diverting any supplier, customer or employee from the Company (or
           such subsidiary).

           (b) The provisions of Section 11(a) notwithstanding, Executive may
invest his funds in securities of an issuer if the securities of such issuer are
listed for trading on a registered securities exchange or actively traded in an
over-the-counter market and Executive's holdings therein represent less than 1%
of the total number of shares or principal amount of the securities of such
issuer outstanding.

           (c) Executive acknowledges that the provisions of this Section, and
the period of



                                       8
<PAGE>

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.

           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:

                  (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



                                       9
<PAGE>

                  (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 for cause 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 any act or event described in clauses (A) to (D) of paragraph (ii)
thereof (each, 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.

           (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:



                                       10
<PAGE>

                  (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. 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, or (ii) as a result of any action or failure to act by the
Company, there is a material change in the nature or scope of the duties,
obligations, rights or powers of Executive's employment, by giving the Company
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 the Company may avoid such termination if it,
prior to the date of termination set forth in such notice, (i) cures or explains
to the reasonable satisfaction of Executive the factual basis for termination
set forth therein, or (ii) confirms in writing that Executive has no further
obligation to perform any of the duties assigned to him by the Company or any
other services for the Company, and continues to pay and/or provide Executive
with the compensation and benefits set forth in Sections 3 and 4 hereof in
accordance with the provisions of this Agreement;

           (b) if a Change of Control (as hereinafter defined) occurs during the
Term, by giving the Company notice to such effect at any time within the
two-year period thereafter, setting forth the event or circumstance constituting
such Change of Control, such termination to be effective upon the date of
termination set forth therein (not more than 30 days after the date of such
notice) or, if no such date is set forth therein, immediately upon delivery of
such notice to the Company; or

           (c) at any time by giving the Company written notice to such effect
at least 60 days prior to the date of termination set forth therein, such
termination to be irrevocable upon receipt of such notice by the Company. The
termination by Executive of his employment hereunder pursuant to Section 14(a)
or 14(b) shall not constitute or be deemed to constitute for any purpose a
"voluntary resignation" of his employment.



                                       11
<PAGE>

           15. COMPENSATION UPON TERMINATION. Notwithstanding anything contained
herein to the contrary:


           (a) Upon termination of Executive's employment hereunder, he shall be
entitled to receive, in any case, any compensation or other amounts due to him
pursuant to Section 3 (except as otherwise provided in Section 15(b) below) or
Section 4 in respect of his employment prior to the Termination Date.

           (b) If Executive is discharged "for cause" 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 any amount
required to be made by Section 15(a), provided, however, that payment of any
Bonus compensation under Sections 3(b), (c) or (d) shall only be made to the
extent it has been earned or awarded with respect to the last full fiscal year
immediately preceding the Termination Date, and no Bonus compensation shall be
paid with respect to the fiscal year in which the Termination Date occurs.

           (c) If his employment is terminated by Executive pursuant to Section
14(a) or by the Company other than "for cause" pursuant to Section 13, he shall
be entitled to receive an amount equal to the product of (i) the sum of (A) his
Base Salary in effect on the Termination Date and (B) his 4% Bonus or
Performance Bonus, as the case may be, for the most recently completed calendar
year prior to the Termination Date, and (ii) a fraction, the numerator of which
is the number of full months remaining in the balance of the Term after the
Termination Date and the denominator of which is 96.

           (d) If his employment terminates pursuant to Section 14(b) and, if at
the time Executive gives the Company the notice of termination referred to
therein, the Company has not given to Executive a notice of termination upon his
disability pursuant to Section 12 or "for cause" pursuant to Section 13, he
shall be entitled to receive, upon the terms and subject to the conditions set
forth in Section 16, the Parachute Amount (as hereinafter defined).

           (e) If his employment terminates pursuant to Section 14(c) based on
Executive's decision to retire from the Company and Executive is at least sixty
seven (67) years old on the Date of Termination, then Executive, in recognition
of his unique contributions to the formation and growth of the Company during
his tenure as Chairman and Chief Executive Officer, shall receive an annual
retirement benefit of $975,000 (the "Retirement Benefit") during the ten (10)
year period following the Termination Date. Notwithstanding the foregoing, if
Executive should die before the payment of his entire Retirement Benefit, the
remaining Retirement Benefit shall be reduced such that Executive's designated
beneficiary or estate, as the case may be, shall be



                                       12
<PAGE>

entitled to receive in a lump sum the positive difference, if any, between
$2,925,000 and any Retirement Benefit already paid by the Company to Executive,
and the Company shall have no further obligation to Executive's designated
beneficiary or estate, as the case may be, in this regard. The Retirement
Benefit shall be paid to Executive in substantially equal installments no less
often than monthly, subject to any required tax withholding, except if it is
reduced in accordance with the foregoing sentence. Executive agrees, if
requested by the Board of Directors, to serve as non-executive Chairman Emeritus
of the Company following the Termination Date for so long as may be requested by
the Board of Directors.

           (f) If his employment terminates pursuant to Section 12 by reason of
his disability or incapacity, Executive shall be entitled to receive a modified
retirement benefit (in all instances net of any insurance proceeds received by
Executive pursuant to Section 3(f)) equal to (i) seventy (70%) percent of the
Retirement Benefit if the disability or incapacity occurs before the Executive
has reached the age of sixty five (65), (ii) eighty (80%) percent of the
Retirement Benefit if the disability or incapacity occurs before the Executive
has reached the age of sixty six (66) or (iii) ninety (90%) percent of the
Retirement Period if the disability or incapacity occurs before the Executive
has reached the age of sixty seven (67).

            (g) Any amount payable to Executive upon termination of his
employment hereunder (with the exception of the Retirement Benefit unless same
is reduced due to Executive's death in accordance with subsection (e) above)
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.

           (h) Except for serving as non-executive Chairman Emeritus as provided
in subsection (e) above, 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.



                                       13
<PAGE>

                  (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.

           (b)    A "Change of Control" occurs when:

                  (i) a Non-Affiliated Person acquires control of the Company;

                  (ii) 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



                                       14
<PAGE>

           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

                  (iii) 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(d) 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(d), 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.

           (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



                                       15
<PAGE>

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.


           (a) 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 purchase agreement or 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.



                                       16
<PAGE>

           (b) 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.

           (c) 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.

           (d) If his employment terminates pursuant to Section 14(c) based on
Executive's decision to retire from the Company and Executive is at least sixty
seven (67) years old on the Date of Termination, then the Company shall maintain
for the benefit of Executive major medical, hospitalization, and dental
insurance and the Company shall pay all premiums and any other costs or expenses
incurred to maintain such policies in effect 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 for the period that Executive receives the Retirement Benefit.

           18. 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.


           19. 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 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 the Company at:    22619 Pacific Coast Highway, Suite 250
                      Malibu, California 90265
                      Attn: President
                      Fax: (310) 456-7099

with a copy to:       Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP



                                       17
<PAGE>

                      750 Lexington Avenue
                      New York, New York 10022
                      Attn: Geoffrey A. Bass, Esq.
                      Fax: (212) 888-7776


to Executive at:      232 West Stafford Road
                      Thousand Oaks, California 91361
                      Fax:   (805) 495-8069

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.

           20. 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.


           21. 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.

           22. 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.


           23. 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 19.

           24. 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



                                       18
<PAGE>

default, including the recovery of damages.


           25. 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.

           26. 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.


           27. 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.

           28. 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.


           29. 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.


           30. 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.

           31. 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,



                                       19
<PAGE>

Section or other part hereof.

           32. 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.

           33.   CERTAIN DEFINITIONS.  As used herein:


           (a) "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.

           (b) 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.

           34. 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 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.



                                       20
<PAGE>

                 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: /s/ Stephen G. Berman
                                               ---------------------------------
                                               Stephen G. Berman
                                               President

                                            EXECUTIVE:


                                            /s/ Jack Friedman
                                            ------------------------------------
                                            Jack Friedman



                                       21