|EMPLOYMENT AGREEMENT


AGREEMENT
dated as of December 11. 2006 (the Effective Date) between TC Digital Games,
LLC with offices at 162 S. Rancho Santa Fe Road, Suite B-30 Encinitas, CA 92024
(Employer), and John Milito (Employee), 162 S. Rancho Santa Fe
Road, Suite B-30 Encinitas, CA 92024.


W I T N E S S E T H :


WHEREAS,
Employer desires to retain the services of Employee and Employee desires to be employed by
Employer upon the terms and conditions hereinafter set forth;


NOW,
THEREFORE, in consideration of the covenants herein contained, the parties hereto agree as
follows:


     1.    
          Employment and Duties. Employer hereby employs Employee and Employee
          hereby agrees to serve as Executive Vice President of Employer subject in all
          cases to the overall authority of the Management Committee of Employer and to
          the terms and conditions of the Operating Agreement of Employer. Employee agrees
          to perform such services for Employer consistent with Employees position
          as shall, from time to time, be assigned to Employee by the Management Committee
          and/or the President and Chief Executive Officer of Employer. Employee shall
          also perform such services customary to such office as are necessary for the
          operations of Employer. Employee shall use Employees best efforts to
          promote the interests of Employer and shall devote Employees full business
          time, energy and skill exclusively to the business and affairs of Employer
          during the Term set forth below in Paragraph 2.


     2.    
          Term of Employment.


     (a)    
          The term of Employees employment hereunder shall commence on December 11,
          2006 and shall conclude on December 31, 2009 (the Initial Term),
          unless terminated earlier in accordance with Paragraph 8 herein or extended in
          accordance with Paragraph 2(b) herein.


     (b)    
          The Initial Term of this Agreement shall be automatically extended for
          successive one (1) year periods, beginning on January 1 of each year (beginning
          2010) unless prior written notice has been provided by either party pursuant to
          Paragraph 15 herein, within one hundred eighty (180) days prior to the
          expiration of the Initial Term or the then current Term, as the case may be,
          indicating an intention not to renew this Agreement (a Non-Renewal
          Notice). The Initial Term and the period of employment, if any, following
          the Initial Term is referred to herein as the Term.


     3.    
          Compensation.


     (a)    
          Salary. As compensation for Employees services during the Term,
          Employer shall pay Employee a salary at the rate of Three Hundred Fifty Thousand
          Dollars ($350,000) per annum for each calendar year during the Term in regular
          periodic payments in accordance with Employers policy (as may be increased
          from time to time, the Salary). Such Salary shall be prorated for
          any partial year of employment on the basis of a 365-day fiscal year. 4Kids
          Entertainment, Inc., an affiliate of Employer (4Kids), acknowledges
          and agrees that it shall guarantee the obligations of Employer, which are set
          forth in this Paragraph 3(a), as evidenced by its signature hereto.


     (b)    
          Bonus.


     (i)    
          Employee shall receive a signing bonus of $125,000 to be paid no later than
          January 15, 2007. Employee shall also be entitled to receive to such bonuses as
          shall be determined by the Management Committee of the Employer in its sole
          discretion, subject to Paragraph 3(b)(ii) below.


     (ii)    
          If Employer attains 60% of the projected revenues approved by the Management
          Committee (as defined in Employers Operating Agreement) in the annual
          budgeting process for calendar year 2007 and/or 2008, it being agreed and
          understood that the projected revenues approved by the Management Committee may
          not be more than twenty percent (20%) higher than the projected revenues
          contained in the Annual Budget (as defined in Employers Operating
          Agreement) delivered by the Officers (as defined in Employers Operating
          Agreement) of Employer for approval by the Management Committee (the
          Projected Revenues), then Employee shall receive a minimum bonus of
          $100,000 if the Projected Revenues shall have been met for calendar year 2007
          and a minimum bonus of $200,000 if the Projected Revenues shall have been met
          for calendar year 2008. The Projected Revenues for 2007 approved by the
          Management Committee are attached hereto as Attachment 1 and made a part hereof.
          Any bonus payable pursuant to this subparagraph 3(b) (ii) shall be paid by no
          later than March 15th of the year immediately succeeding the calendar year to
          which such bonus pertains.


     (iii)    
          4Kids acknowledges and agrees that it shall guarantee the payment obligations of
          Employer, which are set forth in this Paragraph 3(b), as evidenced by its
          signature hereto.


     (c)    
          Withholding. All payments of compensation shall be made in appropriate
          installments to conform with the regular payroll dates for salaried personnel of
          Employer. Employer shall be entitled to deduct from each salary payment, all
          deductions as may be required by law, including, without limitation, deductions
          for federal, state and local income taxes and FICA.


     (d)    
          Fringe Benefits. During the Term, Employee shall be entitled to
          participate in all insurance, and other benefits (collectively Fringe
          Benefits) as are now, or hereafter may be, established by Employer for the
          benefit of all employees of Employer, subject, however, to the provisions of the
          various benefit plans and programs in effect from time to time.


     (e)    
          Vacation. Employee shall be entitled to accrued vacation at the rate of
          three (3) weeks per calendar year during the Term, which vacation shall only be
          taken at such times that will not materially interfere with the performance of
          Employees duties and responsibilities hereunder. Any vacation days not
          used by Employee may not be accrued for future years. All vacation days must be
          utilized in accordance with the policy of Employer.


     (f)    
          Expenses. Employer shall reimburse Employee in conformity with the
          expense reimbursement practices of Employer for the reasonable, ordinary and
          necessary business expenses incurred by Employee in the performance of
          Employees duties hereunder. Employee shall submit all receipts, invoices
          and other such documents evidencing such expenses as may be required by the
          policy of Employer.


     4.    
          Place of Employment.


During
the Term, Employee shall be required to perform Employees duties at the principal
office of Employer in the San Diego metropolitan area. Employee shall undertake all
reasonable travel required by Employer in connection with the performance of
Employees duties hereunder.


5. Non-Competition and
Protection of Confidential Information.


     (a)    
          Employee agrees that Employees services hereunder are of a special,
          unique, extraordinary and intellectual character and his position with Employer
          places him in a position of confidence and trust with the clients and employees
          of Employer. Employee acknowledges that inasmuch as the business of Employer is
          carried on in several states of the United States and that it is the intention
          of Employer to continue to expand the geographic area in which Employer engages
          in its business and marketing efforts and accordingly, it is reasonable that the
          restrictive covenants set forth below are not limited by specific geographic
          area but by the location of Employers clients and potential clients.
          Employee further acknowledges that the rendering of services to the clients of
          Employer necessarily requires the disclosure of confidential information and
          trade secrets of Employer (such as, without limitation, production methods,
          marketing and licensing plans and strategies for Employer and marketing
          budgets). Employee and Employer agree that in the course of employment
          hereunder, Employee has and will continue to develop a personal acquaintanceship
          and relationship with Employers clients, and knowledge of those
          clients affairs and requirements. Employee acknowledges that
          Employers relationships with its established clientele may therefore be
          placed in Employees hands in confidence and trust. Employee consequently
          agrees that it is reasonable and necessary for the protection of the goodwill
          and business of Employer that Employee make the covenants contained herein.


Accordingly,
Employee agrees that while he is in Employers employ and for a period of one (1)
year thereafter, Employee shall not directly or indirectly:


     (i)    
          attempt in any manner to solicit from any client (except on behalf of Employer)
          business of the type performed by Employer or to persuade any client of Employer
          to cease to do business or to reduce the amount of business which any such
          client has customarily done or contemplates doing with Employer;


     (ii)    
          employ or attempt to employ or assist anyone else to employ any person who is
          then or at any time during the preceding year was in Employers employ; or


     (iii)    
          render any services of the type rendered by Employer to its clients to or for
          any client of Employer unless such services are rendered as an employee or
          consultant of Employer.


Notwithstanding
anything herein to the contrary, the term client shall mean (i) any person
(whether individual or business entity) who is the owner, in whole or in part, of any
rights to any property represented by Employer or whose television series is being
produced or adapted by Employer; and (ii) any person (whether individual or business
entity) who was a client or licensee of Employer at any time during the one (1) year
period immediately preceding the date of termination of employment.


     (b)    
          Employee also agrees that either during the Term or at any other time
          thereafter, Employee shall not divulge to anyone (other than Employer or any
          persons designated by Employer) any knowledge or information of any type
          whatsoever of a confidential nature relating to the business of Employer or its
          clients including, without limitation, all types of trade secrets, business
          strategies or marketing, licensing, advertising and/or promotional plans.
          Employee further agrees not to disclose, publish or make use of any such
          knowledge or information of a confidential nature other than in the performance
          of Employees duties hereunder without the prior written consent of
          Employer. For purposes of this paragraph, the term information shall
          not include information which becomes public knowledge other than through a
          breach of this covenant by Employee or any confidential information that
          Employee is required to disclose in any judicial or administrative proceeding
          pursuant to any subpoena or court order.


     (c)    
          In the event that Employee resigns without Good Reason or there is a Termination
          without Cause (as such terms are hereinafter defined), then until the expiration
          of the date that is one (1) year following the termination date, Employee shall
          be barred from directly or indirectly consulting with, rendering services to or
          being employed by, any company that directly competes with Employer
          (collectively Competitor). Notwithstanding the foregoing, if this
          Agreement is terminated without Good Reason or there is a Termination without
          Cause, and within the one year following the termination of employment with
          Employer as contemplated in this Paragraph 5(c), Employee is offered employment
          by a Competitor, Employee shall promptly notify Employer in writing of the terms
          and conditions of the same. If Employer consents in writing to the rendering of
          services by Employee for a Competitor during said one year period and Employee
          accepts such employment, then upon commencement of such new employment, the
          Salary payable by Employer to Employee pursuant to Paragraph 8 (d) shall cease
          as of the date of commencement of such employment with a Competitor.


     (d)    
          If Employee commits a breach of any of the provisions of Paragraphs 5(a), 5 (b)
          or 5(c). Employer shall have the right to have the provisions of this Agreement
          specifically enforced by any court having equity jurisdiction, it being
          acknowledged and agreed that any such breach will cause irreparable injury to
          Employer and that money damages will not provide an adequate remedy to Employer.
          In addition, Employer may take all such other actions and remedies available to
          it under law or in equity and shall be entitled to such damages as it can show
          it has sustained by reason of such breach.


     (e)    
          The parties acknowledge that the type and periods of restriction imposed in the
          provisions of Paragraphs 5(a), 5(b), and 5(c), are fair and are reasonably
          required for the protection of Employer and the goodwill associated with the
          business of Employer. If any of the covenants in Paragraphs 5(a), 5(b) and/or
          5(c), or any part thereof, is hereafter construed to be invalid or unenforceable
          the same shall not affect the remainder of the covenant or covenants, which
          shall be given full effect, without regard to the invalid portions. If any of
          the covenants contained in Paragraphs 5(a), 5(b) and/or 5(c) or any part
          thereof, is held to be unenforceable because of the duration of such provision
          or the area covered thereby, the parties agree that the court making such
          determination shall have the power to reduce the duration and/or areas of such
          provision and, in its reduced form, said provision shall then be enforceable.


     6.    
          Intellectual Property. Employee agrees that all rights (including
          copyright and trademark rights) to (i) materials written by Employee in the
          course of his employment, including without limitation, artwork, advertising and
          promotional materials, and (ii) all character names, nicknames or slogans, and
          any ideas, proposals and plans invented or developed by Employee during the Term
          which relate directly to the business of Employer or any of its clients are the
          property of Employer. Employee further agrees, at Employers request and
          expense, to do whatever is necessary or desirable to secure the rights to said
          materials, ideas, proposals and plans, whether by copyright, trademark, patent
          or otherwise. If requested by Employer, Employee shall execute and deliver such
          documents of assignment as shall be necessary in Employers sole judgment,
          to assign, transfer and convey all rights thereto to Employer. Notwithstanding
          anything herein to the contrary, Employee shall have the right during non
          business hours during the Term to write and develop new ideas, written materials
          and concepts unrelated to the television series and productions, concepts,
          characters and properties of Employer and affiliates and their clients
          (Original Employee Concepts). In the event that Employee creates
          Original Employee Concepts during non-business hours working not at the
          direction of Employer, the rights to such Original Employee Concepts shall be
          owned by Employee and not by Employer.


     7.    
          Employees Representations. Employee represents and warrants that:


     (a)    
          Employee has the right to enter into this Agreement and is not subject to any
          contract, commitment, agreement, arrangement or restriction of any kind which
          would prevent Employee from performing Employees duties and obligations
          hereunder;


     (b)    
          Employee is currently in good health and to the best of Employees
          knowledge, Employee is not subject to any undisclosed medical condition which
          might have a material effect on Employees ability to perform
          satisfactorily Employees services hereunder.


     8.    
          Termination.


     (a)    
          This Agreement may be terminated immediately on the death of Employee and may be
          terminated immediately on written notice in the event of the physical or mental
          disability of Employee to such an extent that Employee is unable to render
          services to Employer for a period of ninety (90) days in any consecutive twelve
          month period.


     (b)    
          In the event that Employer terminates this Agreement due to Employees
          death, Employee shall be paid Employees Salary and shall continue to
          receive all accrued Fringe Benefits hereunder through the date of
          Employees death. In the event that Employer terminates this Agreement due
          to Employees disability, Employee shall be paid Employees Salary and
          shall continue to receive all accrued Fringe Benefits hereunder until the date
          in which the termination for disability occurred.


     (c)    
          Employer shall have the right at any time, by written notice to Employee, to
          immediately terminate this Agreement for Cause, which for purposes
          of this Agreement shall be defined as:


     (i)    
          Employees conviction of any act which constitutes a felony under federal,
          state or local laws;


     (ii)    
          Employees failure to act in accordance with the reasonable directions of
          the Management Committee of Employer directing Employee to perform services
          consistent with Employees position with Employer, which failure is not
          cured by Employee within ten (10) days after Employees receipt of written
          notice thereof from Employer, provided, however, that if the failure to act is
          not capable of cure within such ten (10) day period, then such other, longer
          cure period, which is reasonable to cure such failure to act;


     (iii)    
          Employees dishonesty, including embezzlement or misappropriation of funds,
          which materially and adversely affects the business of Employer;


     (iv)    
          Employees use of illegal drugs which in the reasonable judgment of
          Employer, interferes with the performance of Employees obligations under
          this Agreement;


     (v)    
          Employees use of alcohol that impairs his ability to perform his duties
          hereunder;


     (vi)    
          Employees commission of any act of moral turpitude offensive to the
          conscience which becomes public and causes embarrassment to Employer;


     (vii)    
          Employees failure to cure any other material breach of this Agreement
          within ten (10) business days of receipt of a written notice from Employer
          specifying such breach, provided, however, that if the failure to act is not
          capable of cure in such 10-day period, then such other, longer cure period which
          is reasonable to cure such breach.


In
the event that Employer terminates this Agreement for Cause, Employee shall be paid
Employees Salary and shall continue to receive all Fringe Benefits through the date
of termination. Thereafter, Employer shall have no further obligation to Employee.


     (d)    
          Notwithstanding anything in this Agreement to the contrary, Employer shall have
          the right to terminate Employee for reasons other than those set forth in
          Paragraphs 8(a), 8(b), 8(c) (Termination without Cause) by
          delivering a written notice of such termination to Employee. In the event such
          written notice of termination is delivered, Employee shall continue to receive
          his Salary from Employer for the balance of the Term.


     (e)    
          Employer shall have the right to terminate this Agreement by providing Employee
          with not less than ninety (90) days prior written notice in the event that (i)
          Employer elects to wind-up its business, or (ii) during any calendar year of the
          Term, commencing with calendar year 2007 (the Measurement Period),
          the Company fails to meet the Projected Revenues. Employers right to
          terminate this Agreement as provided in Subparagraph 8(e)(ii) above is
          conditioned on (w) Employee still serving as Executive Vice President during the
          Measurement Period, (x) Employee is still then responsible for assisting in the
          running of the business of the Company, (y) substantially all of the material
          support services to be provided by Employer and 4Kids Entertainment, Inc.,
          pursuant to the Operating Agreement of Employer of even date herewith, have been
          provided and/or implemented as therein contemplated including, without
          limitation, the granting of funding to Employer, and (z) no Force Majeure has
          materially contributed to the variance from budget. For the purposes of this
          Agreement, Force Majeure shall mean the occurrence of any of the
          following events: accidents, strikes, riots, wars, fire, terrorist acts, acts of
          God, or any other event beyond the reasonable control of Employee which, in each
          case, affects the performance of the Company. Notwithstanding anything to the
          contrary in this Paragraph 8(e), Employer may not terminate Employee pursuant to
          this Paragraph 8(e) if Employer has earned, during the Measurement Period, more
          than $2,000,000 in profits.


     (f)    
          In the event that Employee resigns without Good Reason, Employee shall not
          receive any further Salary, Fringe Benefits or bonuses hereunder other than as
          required by COBRA or any similar state law or subsequently enacted law replacing
          COBRA. Employee shall provide at least thirty (30) days written notice of such
          resignation or voluntary termination.


     (g)    
          Notwithstanding anything in this Agreement to the contrary, Employee shall have
          the right to terminate his employment with Employee for Good Reason by
          delivering a written notice of such termination to Employer. In the event such
          written notice of termination is delivered, Employee shall continue to receive
          his Salary from Employer for the balance of the Term. As used herein, Good
          Reason shall mean the occurrence of any of the following events:


     (i)    
          a substantial diminution in the nature of Employees responsibilities,
          title or reporting level as they exist on the Effective Date of this Agreement,
          or the addition by the Management Committee of responsibilities that are
          inconsistent with the office held by Employee as of the Effective Date;


     (ii)    
          the relocation of the Employers executive offices or principal business
          location outside of San Diego county;


     (iii)    
          (A) a reduction by Employer of the Employees annual Salary and/or, (B) a
          reduction in the amount of the annual bonus, as contemplated on the date hereof,
          by more than 50%;


     (iv)    
          a failure by Employer to obtain from any successor, before the succession takes
          place, an agreement to assume and perform all of the terms and conditions of
          this Agreement; or


     (v)    
          a material breach of this Agreement by Employer that is not cured within ten
          (10) business days after Employers receipt of a written notice of breach
          from Employee.


In
the event of a termination for Good Reason, Employee shall continue to receive his Salary
from Employer for the balance of the Term.


     (h)    
          In the event that Employer terminates this Agreement in accordance with
          Paragraph 8(a) or 8(d), Employee shall receive a pro-rata share of any bonus
          payable to Employee pursuant to subparagraph 3(b)(ii) with respect to the year
          during which the termination Agreement in accordance with Paragraph 8(a) or 8(d)
          takes place.


     (i)    
          Upon termination of this Agreement, Employee shall promptly return all of
          Employers property to Employer.


     (j)    
          Notwithstanding any termination of this Agreement, Employees obligations
          to Employer pursuant to Paragraphs 5 and 6 of this Agreement, and
          Employers obligations pursuant to Paragraph 8, shall survive the
          termination of this Agreement.


     (k)    
          4Kids acknowledges and agrees that it shall guarantee the payment obligations of
          Employer, which are set forth in Paragraph 8, as evidenced by its signature
          hereto.


     9.    
          Life Insurance. Employer shall have the right to purchase life insurance
          on the life of Employee at Employers sole expense and with Employer as the
          sole beneficiary thereof. Employee shall cooperate fully with Employer in
          obtaining such life insurance, sign any necessary consents, applications and
          other related forms or documents and take any required medical examinations
          reasonably required.


     10.    
          Assignment. This Agreement is a personal contract and Employee may not
          assign, sell or transfer Employees rights, interests and obligations
          hereunder. Any assignment contrary to this Paragraph shall be null and void of
          no force and effect. In the event of any attempted assignment or transfer of
          rights hereunder by Employee contrary to the provisions hereof, Employer shall
          have no further liability for payments hereunder. The rights and obligations of
          Employer hereunder shall be binding upon and run in favor of the successors and
          assigns of Employer.


     11.    
          Entire Understanding; Governing Law. This Agreement represents the entire
          agreement and understanding between the parties with respect to the subject
          matter hereof and supersedes all prior agreements and understandings relating to
          the employment of Employee. This Agreement shall be governed by, and construed
          in accordance with, the laws of the State of California applicable to agreements
          made and to be performed entirely within California.


     12.    
          Modification. This Agreement may not be amended, modified, canceled,
          discharged, extended or changed except by an agreement in writing signed by the
          party against whom enforcement of any such amendment, modification,
          cancellation, discharge, extension or change is sought.


     13.    
          Headings. Paragraph headings contained in this Agreement are for
          convenience of reference only and shall not be considered a part of this
          Agreement.


     14.    
          Severability. If any provision or if any part of any provision of this
          Agreement is found to be unenforceable, illegal or contrary to public policy by
          a court of competent jurisdiction, the parties agree that this Agreement shall
          remain in full force and effect except for such provision or part of any such
          provision held to be unenforceable.


     15.    
          Notices. Any notices or other communications required or permitted
          hereunder shall be in writing and shall be deemed effective when delivered in
          person, sent by overnight courier (e.g. Federal Express), telefaxed with a
          follow up copy by regular mail or sent by registered or certified mail, return
          receipt requested, in which case the notice shall be deemed effective on the
          date of deposit in the mails, postage prepaid, addressed to Employee at
          Employees then current home address and, in the case of Employer,
          addressed to Employer at its offices located at the address set forth on page 1.
          Either party may change the address to which notices are to be addressed by
          notice in writing given to the other in accordance with the terms hereof.


     16.    
          Counterparts. This Agreement may be signed in any number of counterparts,
          each of which shall be an original, and all of which, taken together, shall
          constitute one instrument.


IN
WITNESS WHEREOF, Employer has, by its appropriate officer, and Employee has signed this
Agreement as of the day and year first above written.
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--------------------------------------------------------------------------------------

| | TC Digital Games, LLC                                        
| | -------------------------------------------------------------
| | By:
/s/ Alfred R. Kahn
      Alfred R. Kahn          Chairman



|Agreed to and Accepted:



By:/s/John MilitoJohn Milito



4Kids Entertainment, Inc.



By:/s/ Samuel R. NewbornSamuel R. Newborn                  Executive VP
|---------------------------------------------------------------------------------------------------------------------------------------------------------------

|Attachment 1


Projected Revenues for
2007


1. $XXXXXXXXXXXX
|-------------------------------------------------------------