Exhibit
      10.3





EMPLOYMENT
      AGREEMENT





THIS
      EMPLOYMENT AGREEMENT is made as of
      April 1, 2008, by and between RC2 Corporation, a Delaware corporation (the
      "Company"), and Jody L. Taylor (the "Employee").  Certain capitalized
      terms used herein are defined in Section 10 below.





RECITALS





A.           
      The Company and the Employee desire to terminate any and all prior agreements,
      whether oral or written, between the parties and between the Employee and the
      Company relating to the Employee's employment.





B.           
      The Company desires to employ the Employee and the Employee is willing to make
      her services available to the Company on the terms and conditions set forth
      below.





AGREEMENTS





In
      consideration of the premises and
      the mutual agreements which follow, the parties agree as follows:





1.           
      Employment.  The
      Company hereby employs the Employee and the Employee hereby accepts employment
      with the Company on the terms and subject to the conditions set forth in this
      Agreement.





2.           
      Term.  The
      term of the Employee's employment hereunder shall commence on the date hereof
      and shall continue until terminated as provided in Section 6 below.





3.           
      Duties.  The
      Employee shall serve as the Chief Financial Officer of the Company and will,
      under the direction of the Company's Chief Executive Officer and Board of
      Directors, faithfully and to the best of her ability, perform the duties of
      such
      position.  The Employee shall be one of the principal executive
      officers and Senior Management of the Company and shall, subject to the control
      of the Company's Chief Executive Officer and Board of Directors, have the normal
      duties, responsibilities and authority associated with such
      position.  The Employee shall also perform such additional duties and
      responsibilities which may from time to time be reasonably assigned or delegated
      by the Chief Executive Officer or Board of Directors of the
      Company.  The Employee agrees to devote her entire business time,
      effort, skill and attention to the proper discharge of such duties while
      employed by the Company.











4.            Compensation.  Effective
      April 1, 2008, the Employee shall receive a base salary of $315,000 per year,
      payable in regular and equal monthly installments (the "Base
      Salary").  The Base Salary shall be reviewed annually by the Company
      and increased on April 1st
      of each
      year by the greater of 4% or the most recently published increase in the
      Consumer Price Index.





5.           
      Fringe
      Benefits.





(a)         Vacation.  The
      Employee shall be entitled to four weeks of paid vacation
      annually.  The Employee and the Company shall mutually determine the
      time and intervals of such vacation.





(b)         Medical,
      Health, Dental,
      Disability and Life Coverage.  The Employee shall be eligible
      to participate in any medical, health, dental, disability and life insurance
      policy in effect for the Senior Management of the Company.  The
      Company shall also pay for an annual executive medical physical.





(c)         Incentive Bonus
      and Stock
      Ownership Plans.  The Employee shall be entitled to participate
      in any incentive bonus plan, incentive stock option or other stock ownership
      plan or other incentive compensation plan developed generally for the Senior
      Management of the Company, on a basis consistent with her position and level
      of
      compensation with the Company.  Without limiting the foregoing,
      Employee shall be entitled to participate on a basis consistent with past
      practice and her position and level of compensation with the Company in the
      annual Incentive Bonus Plan, together with all successor or other bonus plans
      (collectively, the "Bonus Plans").  The Employee's Target Bonus under
      the Bonus Plans shall be reviewed annually by the Company and shall be not
      less
      than the amount determined under Schedule 5(c).  In addition, Employee
      shall be entitled to receive annual stock option grants as provided on Schedule
      5(c) attached hereto.  The options will be granted pursuant to a
      Non-Statutory Stock Option Grant Agreement substantially in the form of Exhibit
      A attached hereto.





(d)         Automobile.  The
      Company agrees to reimburse the Employee up to $750.00 per month, as such amount
      may be increased from time to time consistent with the Company's reimbursement
      policy for the Senior Management of the Company to cover Employee's expenses
      in
      connection with her leasing or ownership of an
      automobile.  Additionally, the Company will pay for the gas used for
      business purposes.  All maintenance and insurance expense for the
      automobile is the responsibility of the Employee.





(e)         Reimbursement for
      Reasonable
      Business Expenses.  The Company shall pay or reimburse the
      Employee for reasonable expenses incurred by her in connection with the
      performance of her duties pursuant to this Agreement including, but not
      limited to, travel expenses, expenses in connection with seminars, professional
      conventions or similar professional functions and other reasonable business
      expenses.






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(f)          Key Man
      Insurance.  The parties agree that the Company has the option
      to purchase one or more key man life insurance policies upon the life of the
      Employee.  The Company shall own and shall have the absolute right to
      name the beneficiary or beneficiaries of said policy.  The Employee
      agrees to cooperate fully with the Company in securing said policy, including,
      but not limited to submitting herself to any physical examination which may
      be
      required at such reasonable times and places as Company shall
      specify.





(g)          Life and Disability
      Insurance.  During the Employment Period, the Company shall
      provide coverage of at least $2 million of life insurance and 75% of Base Salary
      of disability insurance.  Such insurance policies to be owned by any
      one or more members of Employee's immediate family or by a trust for the primary
      benefit of Employee's immediate family.  The owner of the policy shall
      have the power to designate the beneficiary and to assign any rights under
      the
      policy.  The Company shall pay 100% of the premiums required under
      these policies; provided, however, that the Company shall not be obligated
      to
      pay greater than $20,000 for such premiums during any fiscal year.  In
      the event that the premiums for such policies would exceed this limitation,
      the
      Company shall consult with the Employee to determine the allocation of such
      amount to the premiums for each type of policy to obtain such insurance as
      may
      be available for an aggregate of $20,000 per fiscal year.





6.           
      Termination.





(a)          Termination of the
      Employment Period.  The Employment Period shall continue until
      the earlier of:  (i) March 31, 2011 unless the parties mutually agree
      in writing to extend the term of this Agreement (such date hereof or such
      extended date being referred to herein as the "Expected Completion Date"),
      (ii) the Employee's death or Disability, (iii) the Employee resigns or
      (iv) the Board of Directors determines that termination of Employee's
      employment is in the best interests of the Company (the "Employment
      Period").  The last day of the Employment Period shall be referred to
      herein as the "Termination Date."





(b)         Definitions.





(i)          For purposes of this
      Agreement, "Disability" shall mean a physical or mental sickness or any injury
      which renders the Employee incapable of performing the services required of
      her
      as an employee of the Company and which does or may be expected to continue
      for
      more than six months during any 12-month period. In the event Employee shall
      be
      able to perform her usual and customary duties on behalf of the
      Company following a period of disability, and does so perform such duties or
      such other duties as are prescribed by the Board of Directors for a period
      of
      three continuous months, any subsequent period of disability shall be regarded
      as a new period of disability for purposes of this Agreement.  The
      Company and the Employee shall determine the existence of a Disability and
      the
      date upon which it occurred.  In the event of a dispute regarding
      whether or when a Disability occurred, the matter shall be referred to a medical
      doctor selected by the Company and the Employee.  In the event of
      their failure to agree upon such a medical doctor, the Company and the Employee
      shall each select a medical doctor who together shall select a third medical
      doctor who shall make the determination.  Such determination shall be
      conclusive and binding upon the parties hereto.






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(ii)          For purposes of this
      Agreement, "Cause" shall be deemed to exist if the Employee shall have [a]
      violated the terms of Section 7 or Section 8 of this Agreement in any
      material respect; [b] knowingly committed a felony or a crime involving
      moral turpitude; [c] intentionally engaged in serious misconduct which is
      demonstrably and materially injurious to the Company and its Subsidiaries;
      [d] intentionally engaged in fraud or dishonesty with respect to the
      Company or any of its Subsidiaries or made a material misrepresentation to
      the
      stockholders or directors of the Company with respect to an item, transaction
      or
      amount in excess of $10,000; or [e] knowingly committed acts of negligence
      in the performance of her duties which are demonstrably and materially injurious
      to the Company.  In all cases, termination for Cause shall be
      determined solely by the Board of Directors and require a two-thirds majority
      vote.





(iii)          For purposes of this
      Agreement, "Good Reason" shall mean (1) the material diminution of the
      Employee's duties set forth in Section 3 above or (2) the relocation
      of the offices at which the Employee is principally employed to a location
      which
      is more than 50 miles from the offices at which the Employee is principally
      employed as of the date hereof; provided, that travel necessary for the
      performance of the Employee's duties set forth in Section 3 above shall not
      determine the location where the Employee is "principally
      employed."





(iv)          For purposes of this
      Agreement, "Specified Employee" shall mean a "key employee" of the Company
      while
      any of its stock is publicly traded on an established securities market or
      otherwise. A "key employee" for this purpose means an individual whose
      compensation hereunder is subject to Code Section 409A and who meets the
      requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii), applied in
      accordance with the regulations under Code Section 416, but disregarding Code
      Section 416(i)(5), and Treasury Regulation Section 1.409A-1(i) at any time
      during the 12 month period ending on December 31 of each
      year.  If the individual meets the definition of a "key employee" as
      of a December 31 of an applicable year, the individual shall be treated as
      a key employee for the entire 12 month period beginning on April 1 of the
      following year.




(c)          Termination for
      Disability
      or Death.  In the event of termination for Disability, payments
      of the Employee's Base Salary shall be made to the Employee for a period of
      six
      months after the Termination Date in accordance with the normal payroll
      practices of the Company.  In addition, for a period of three years
      after the Termination Date, the Company shall reimburse the Employee for amounts
      paid, if any, to continue medical, dental and health coverage pursuant to the
      provisions of the Consolidated Omnibus Budget Reconciliation Act, continue
      Employee's life insurance and disability coverage, to the extent limited by
      Section 5(g), and pay to the Employee a pro rata portion of any bonus payable
      for the year in which termination takes place (if any).  The Company
      shall pay the Employee the actual current year bonus earned, as determined
      at
      year-end, pro-rated by the number of months employed in the year of
      termination.  In the event of termination as a result of the death of
      Employee, Employee's designated beneficiary or her estate shall be entitled
      to
      receive the Base Salary accrued prior to the Termination Date together with
      the
      proceeds of any life insurance obtained pursuant to Section 5(g), plus a payment
      when determinable equaling Employee's pro rata portion of any bonus payable
      under the Bonus Plans for the year in which termination takes place (if
      any).  The Company shall pay the Employee's designated beneficiary or
      her estate the actual current year bonus earned, as determined at year-end,
      pro-rated by the number of months employed in the year of
      termination.






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(d)          Termination by the
      Company
      without Cause or by the Employee for Good Reason.  If
      (i) the Employment Period is terminated by the Company for any reason other
      than for Cause, Disability or death, (ii) the Employment Period is
      terminated by the Company for what the Company believes is Cause or Disability,
      and it is ultimately determined that the Employment Period was terminated
      without Cause or Disability (iii) the Employee resigns for Good Reason or
      (iv) this Agreement is not renewed or otherwise extended by the Company after
      the Expected Completion Date, and the reason for such non-renewal or extension
      is not related to a termination for Cause, Disability or death of the Employee,
      the Employee shall be entitled to receive, as damages for such a termination,
      resignation or non-renewal, her Base Salary from the Termination Date to the
      second anniversary of the Termination Date (the "Salary Continuation Severance
      Payments") to be paid in accordance with the normal payroll practices of the
      Company plus a lump sum payment (the "Bonus Severance Payment") equaling 100%
      of
      the average annual payments under the Bonus Plans over the preceding three
      years, provided, however, that if such a termination or resignation described
      in
      (i), (ii), (iii) or (iv) above occurs at any time after the occurrence of or
      in
      contemplation of a Change of Control, then Employee shall be entitled to receive
      a lump sum payment (the "Change of Control Severance Payment") of her Base
      Salary from the Termination Date to the third anniversary of the Termination
      Date plus the greater of 200% of the average annual payments under the Bonus
      Plans over the preceding three years or 100% of her current year Target Bonus
      amount.  If the Employee's employment is terminated in the manner
      described in this Section 6(d), for a period of three years from the
      Termination Date, the Company
      shall reimburse the Employee for amounts paid, if any, to continue medical,
      dental and health coverage pursuant to the provisions of the Consolidated
      Omnibus Budget Reconciliation Act, continue Employee's life insurance and
      disability coverage to the extent limited by Section 5(g), and pay to the
      Employee the fringe benefits pursuant to Section 5 which have accrued prior
      to
      the  Termination Date.  Notwithstanding the foregoing, if
      the Employee is a Specified Employee as of the date of her termination under
      this Section 6(d), then:





(i)         unless the Employee's
      termination or resignation hereunder is after the occurrence of or in
      contemplation of a Change of Control, the Company shall [a] pay the
      Employee the lump sum Bonus Severance Payment as provided in this Section 6(d)
      above and the normal Salary Continuation Severance Payments as provided in
      this
      Section 6(d) above, but only to the extent that the aggregate of such payments
      for the first six months following Employee's termination or resignation
      hereunder (the "Six Month Period") is less than the maximum amount that may
      be
      paid under the exception to Code Section 409A provided under Treasury Regulation
      Section 1.409A-1(b)(9)(iii) (the "Severance Exception Limit"), [b] to the extent
      any amount payable with the Six Month Period is in excess of the Severance
      Exception Limit (the "Delayed Amount"), on the first regular payroll date on
      or
      after the first day of the month that follows the six month anniversary of
      the
      Employee's Termination Date (the "Delayed Payment Date"), make a lump sum
      payment to the Employee in an amount equal to the sum of the Delayed Amount
      plus
      interest on such amount at the Interest Rate from the Employee's Termination
      Date to the Delayed Payment Date and [c] thereafter pay to the Employee the
      remainder of the Salary Continuation Severance Payments until the second
      anniversary of the Termination Date in accordance with the normal payroll
      practices of the Company; and






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(ii)          upon the Employee's
      termination or resignation hereunder after the occurrence of or in contemplation
      of a Change of Control, the Company shall [a] pay the Employee a lump sum within
      five business days following her termination or resignation hereunder an amount
      equal to the lesser of the Change of Control Severance Payment or the applicable
      Severance Exception Limit and [b] deposit a lump sum payment of the balance
      of
      the Change of Control Severance Payment in a rabbi trust in the form provided
      in
      Revenue Procedure 92-64 or any successor guidance issued by the Internal Revenue
      Service, which shall be administered by an independent trustee, which amount
      shall be invested by the rabbi trust in a bank certificate of deposit or money
      market account and which rabbi trust shall pay such amount (together with any
      interest or earnings thereon) to the Employee on the first business day on
      or
      after the Delayed Payment Date.





For
      purposes of this Section 6(d) only, (x) "Termination Date" shall mean the
      date the Employee separates from service within the meaning of Code Section
      409A.  The Company
      shall not defer or accelerate amounts payable under this Section 6(d) except
      as
      permitted under Code Section 409A and (y) "Interest Rate" shall mean the U.S.
      Bank Prime Rate in effect from time to time as published in the Wall Street
      Journal.





(e)          Termination by the
      Company
      for Cause or by the Employee Without Good Reason.  If the
      Employment Period is terminated by the Company with Cause or as a result of
      the
      Employee's resignation without Good Reason, the Employee shall not be entitled
      to receive her Base Salary or any fringe benefits or bonuses for periods after
      the Termination Date.  If termination occurs as a result of the
      Employee's resignation without Good Reason, the Company shall pay the Employee
      the actual current year bonus earned, as determined at year-end, pro-rated
      by
      the number of months employed in the year of termination.





(f)          Effect of
      Termination.  The termination of the Employment Period pursuant
      to Section 6(a) shall not affect the Employee's obligations as described in
      Sections 7 and 8.





(g)          Acceleration of
      Option
      Vesting.  Upon completion of a Change of Control or upon
      termination of employment due to death or Disability of the Employee, all
      options to purchase stock of the Company held by the Employee shall immediately
      vest and become exercisable by the Employee in accordance with their remaining
      terms (subject, in the case of termination of employment due to death or
      Disability, to the period of exercise set forth in
      Section 6(h)).  The Company agrees to take any and all actions
      necessary or appropriate to effectuate the acceleration of these options and
      to
      permit the Employee to exercise the options in accordance with their terms
      from
      and after this accelerated vesting date.





(h)          Exercise of Options
      Following Termination of Employment.  If the Employee's
      employment is terminated for any reason other than a termination by the Company
      for Cause, the Employee (or her designated beneficiary or her estate in the
      event of the termination of the Employee's employment due to death) may exercise
      any stock options vested as of the Termination Date (after giving effect to
      any
      acceleration of vesting pursuant to Section 6(g)) at any time prior to the
      original expiration date of the stock option or within twelve months after
      the
      Termination Date, whichever period is shorter.






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7.           
      Noncompetition and
      Nonsolicitation.  The Employee acknowledges and agrees that the
      contacts and relationships of the Company and its Affiliates with its customers,
      suppliers, licensors and other business relations are, and have been,
      established and maintained at great expense and provide the Company and its
      Affiliates with a substantial competitive advantage in conducting their
      business.  The Employee acknowledges and agrees that by virtue of the
      Employee's employment with the Company,
      the Employee will have unique and extensive exposure to and personal contact
      with the Company's customers and licensors, and that she will be able to
      establish a unique relationship with those Persons that will enable her, both
      during and after employment, to unfairly compete with the Company and its
      Affiliates.  Furthermore, the parties agree that the terms and
      conditions of the following restrictive covenants are reasonable and necessary
      for the protection of the business, trade secrets and Confidential Information
      (as defined in Section 8 below) of the Company and its Affiliates and to
      prevent great damage or loss to the Company and its Affiliates as a result
      of
      action taken by the Employee.  The Employee acknowledges and agrees
      that the noncompete restrictions and nondisclosure of Confidential Information
      restrictions contained in this Agreement are reasonable and the consideration
      provided for herein is sufficient to fully and adequately compensate the
      Employee for agreeing to such restrictions.  The Employee acknowledges
      that she could continue to actively pursue her career and earn sufficient
      compensation in the same or similar business without breaching any of the
      restrictions contained in this Agreement.





(a)          Noncompetition.  The
      Employee hereby covenants and agrees that during the Employment Period and
      for
      two years thereafter (the "Noncompete Period"), except if employment is
      terminated by the Company or its successor after a Change of Control or this
      Agreement is not renewed or extended by the Company or its successor after
      the
      Expected Completion Date then the Noncompete Period shall be six months, she
      shall not, directly or indirectly, either individually or as an employee,
      principal, agent, partner, shareholder, owner, trustee, beneficiary,
      co-venturer, distributor, consultant, representative or in any other capacity,
      participate in, become associated with, provide assistance to, engage in or
      have
      a financial or other interest in any business, activity or enterprise which
      is
      competitive with the Company or any of its Affiliates or any successor or assign
      of the Company or any of its Affiliates.  The ownership of less than a
      one percent interest in a corporation whose shares are traded in a recognized
      stock exchange or traded in the over-the-counter market, even though that
      corporation may be a competitor of the Company, shall not be deemed financial
      participation in a competitor.  If the final judgment of a court of
      competent jurisdiction declares that any term or provision of this section
      is
      invalid or unenforceable, the parties agree that the court making the
      determination of invalidity or unenforceability shall have the power to reduce
      the scope, duration, or area of the term or provision, to delete specific words
      or phrases, or to replace any invalid or unenforceable term or provision with
      a
      term or provision that is valid and enforceable and that comes closest to
      expressing the intention of the invalid or unenforceable term or provision,
      and
      this Agreement shall be enforceable as so modified.  The term
      "indirectly" as used in this section and Section 8 below is intended to include
      any acts authorized or directed by or on behalf of the Employee or any Affiliate
      of the Employee.






7


(b)          Nonsolicitation.  The
      Employee hereby covenants and agrees that during the Noncompete Period, she
      shall not, directly or indirectly, either individually or as an employee, agent,
      partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor,
      consultant or in any other capacity:





(i)          canvass, solicit or
      accept from any Person who is a customer or licensor of the Company or any
      of
      its Affiliates (any such Person is hereinafter referred to individually as
      a
      "Customer," and collectively as the "Customers") any business which in
      competition with the business of the Company or any of its Affiliates or the
      successors or assigns of the Company or any of its Affiliates, including,
      without limitation, the canvassing, soliciting or accepting of business from
      any
      Person which is or was a Customer of the Company or any of its Affiliates within
      two years preceding the date of this Agreement, during the Employment
      Period or during the Noncompete Period;





(ii)          advise, request,
      induce or attempt to induce any of the Customers, suppliers, or other business
      contacts of the Company or any of its Affiliates who currently have or have
      had
      business relationships with the Company or any of its Affiliates within two
      years preceding the date of this Agreement, during the Employment Period or
      during the Noncompete Period, to withdraw, curtail or cancel any of its business
      or relations with the Company or any of its Affiliates; and





(iii)          hire or induce or
      attempt to induce any officer or other senior manager of the Company or any
      of
      its Affiliates to terminate his or her relationship or breach any agreement
      with
      the Company or any of its Affiliates unless such person has previously been
      terminated by the Company; or





8.           
      Confidential
      Information.  The Employee acknowledges and agrees that the
      customers, business connections, customer lists, procedures, operations,
      techniques, and other aspects of and information about the business of the
      Company and its Affiliates (the "Confidential Information") are established
      at
      great expense and protected as confidential information and provide the Company
      and its Affiliates with a substantial competitive advantage in conducting their
      business.  The Employee further acknowledges and agrees that by virtue
      of her past employment with the Company, and by virtue of her employment with
      the Company, she has had access to and will have access to, and has been
      entrusted with and will be entrusted with, Confidential Information, and that
      the Company would suffer great loss and injury if the Employee would disclose
      this information or use in a manner not specifically authorized by the
      Company.  Therefore, the Employee agrees that during the Employment
      Period and for five years thereafter, she will not, directly or indirectly,
      either individually or as an employee, agent, partner, shareholder, owner
      trustee, beneficiary, co-venturer distributor, consultant or in any other
      capacity, use or disclose or cause to be used or disclosed any Confidential
      Information, unless and to the extent that any such information become generally
      known to and available
      for use by the public other than as a result of the Employee's acts or
      omissions.  The Employee shall deliver to the Company at the
      termination of the Employment Period, or at any other time the Company may
      request, all memoranda, notes, plans, records, reports, computer tapes,
      printouts and software and other documents and data (and copies thereof)
      relating to the Confidential Information, Work Product (as defined below) or
      the
      business of the Company or any of its Affiliates which she may then possess
      or
      have under her control.  The Employee acknowledges and agrees that all
      inventions, innovations, improvements, developments, methods, designs, analyses,
      drawings, reports and all similar or related information (whether or not
      patentable) which relate to the Company's or any of its Affiliate's actual
      or
      anticipated business research and development or existing or future products
      or
      services and which are conceived, developed or made by the Employee while
      employed by the Company and its Affiliates ("Work Product") belong to the
      Company or such Affiliate, as the case may be.






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9.           
      Common Law of Torts
      and Trade Secrets.  The parties agree that nothing in this
      Agreement shall be construed to limit or negate the common law of torts or
      trade
      secrets where it provides the Company and its Affiliates with broader protection
      than that provided herein.





10.          Definitions.





"Affiliate"
      means,
      with respect to any Person, any other Person controlling, controlled by or
      under
      common control with such Person and any partner of a Person which is a
      partnership.





"Change
      of Control"
      means:





(a)          the acquisition
      by any individual, entity or group (within the meaning of Section 13(d)(3)
      or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
      Act")) (a "Person") of beneficial ownership (within the meaning of
      Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either
      (i) the then outstanding shares of common stock of The Company (the
      "Outstanding Common Stock") or (ii) the combined voting power of the then
      outstanding voting securities of the Company entitled to vote generally in
      the
      election of directors (the "Outstanding Voting Securities"); provided, however,
      that the following acquisitions shall not constitute a Change of
      Control:  (i) any acquisition directly from the Company,
      (ii) any acquisition by the Company, (iii) any acquisition by any
      employee benefit plan (or related trust) sponsored or maintained by the Company
      or any corporation controlled by the Company or (iv) any acquisition by any
      corporation pursuant to a transaction which complies with clauses (i), (ii)
      and (iii) of subsection (c) of this definition; or




(b)          individuals who,
      as of the date hereof, constitute the Board of Directors of the Company (the
      "Incumbent Board") cease for any reason to constitute
      at
      least a majority of the Board of Directors of the Company; provided, however,
      that any individual becoming a director subsequent to the date hereof whose
      election, or nomination for election by the Company's stockholders, was approved
      by a vote of at least a majority of the directors then comprising the Incumbent
      Board shall be considered as though such individual were a member of the
      Incumbent Board, but excluding, for this purpose, any such individual whose
      initial assumption of office occurs as a result of an actual or threatened
      election contest with respect to the election or removal of directors or other
      actual or threatened solicitation of proxies or consents by or on behalf of
      a
      Person other than the Board of Directors of the Company; or






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(c)          approval by the
      stockholders of the Company of a reorganization, merger or consolidation (a
      "Business Combination"), in each case, unless, following such Business
      Combination, (i) all or substantially all of the individuals and entities
      who were the beneficial owners, respectively, of the Outstanding Common Stock
      and Outstanding Voting Securities immediately prior to such Business Combination
      beneficially own, directly or indirectly, more than 60% of, respectively, the
      then outstanding shares of common stock and the combined voting power of the
      then outstanding voting securities entitled to vote generally in the election
      of
      directors, as the case may be, of the corporation resulting from such Business
      Combination (including, without limitation, a corporation which as a result
      of
      such transaction owns the Company through one or more Subsidiaries) in
      substantially the same proportions as their ownership, immediately prior to
      such
      Business Combination of the Outstanding Common Stock and Outstanding Voting
      Securities, as the case may be, (ii) no Person (excluding any employee
      benefit plan (or related trust) of the Company or such corporation resulting
      from such Business Combination) beneficially owns, directly or indirectly,
      30%
      or more of, respectively, the then outstanding shares of common stock of the
      corporation resulting from such Business Combination or the combined voting
      power of the then outstanding voting securities of such corporation except
      to
      the extent that such ownership existed prior to the Business Combination and
      (iii) at least a majority of the members of the board of directors of the
      corporation resulting from such Business Combination were members of the
      Incumbent Board at the time of the execution of the initial agreement, or of
      the
      action of the Board of Directors of the Company, providing for such Business
      Combination; or





(d)          approval by the
      stockholders of the Company of (i) a complete liquidation or dissolution of
      the Company or (ii) the sale or other disposition of all or substantially
      all of the assets of the Company, other than to a corporation, with respect
      to
      which following such sale or other disposition, [a] more than 60% of,
      respectively, the then outstanding shares of common stock of such corporation
      and the combined voting power of the then outstanding voting securities of
      such
      corporation entitled to vote generally in the election of directors is then
      beneficially owned, directly or indirectly, by all
      or
      substantially all of the individuals and entities who were the beneficial
      owners, respectively, of the Outstanding Common Stock and Outstanding Voting
      Securities immediately prior to such sale or other disposition in substantially
      the same proportion as their ownership, immediately prior to such sale or other
      disposition, of the Outstanding Common Stock and Outstanding Voting Securities,
      as the case may be, [b] less than 30% of, respectively, the then
      outstanding shares of common stock of such corporation and the combined voting
      power of the then outstanding voting securities of such corporation entitled
      to
      vote generally in the election of directors is then beneficially owned, directly
      or indirectly, by any Person (excluding any employee benefit plan (or related
      trust) of the Company or such corporation), except to the extent that such
      Person owned 30% or more of the Outstanding Common Stock or Outstanding Voting
      Securities prior to the sale or disposition, and [c] at least a majority of
      the members of the board of directors of such corporation were members of the
      Incumbent Board at the time of the execution of the initial agreement, or of
      the
      action of the Board of Directors of the Company, providing for such sale or
      other disposition of assets of the Company or were elected, appointed or
      nominated by the Board of Directors of the Company.






10


"Code"
      means the
      Internal Revenue Code of 1986, as amended or corresponding provisions of
      subsequent superseding federal tax laws, as amended.





"Person"
      means any
      individual, partnership, corporation, limited liability company, association,
      joint stock company, trust, joint venture, unincorporated organization and
      any
      governmental entity or any department, agency or political subdivision
      thereof.





"Senior
      Management" at
      any time means the senior executive officers of the Company which will include,
      without limitation, the Chief Executive Officer, President, Chief Operating
      Officer, Chief Financial Officer and such other officers of the Company as
      the
      Board of Directors shall determine from time to time.





"Subsidiary"
      means,
      with respect to any Person, any corporation, partnership, association or other
      business entity of which (i) if a corporation, a majority of the total
      voting power of shares of stock entitled (without regard to the occurrence
      of
      any contingency) to vote in the election of directors, managers or trustees
      thereof is at the time owned or controlled, directly or indirectly, by that
      Person or one or more of the other Subsidiaries of that Person or a combination
      thereof, or (ii) if a partnership, association or other business entity, a
      majority of the partnership or other similar ownership interest thereof is
      at
      the time owned or controlled, directly or indirectly, by any Person or one
      or
      more Subsidiaries of that Person or a combination thereof.  For
      purposes hereof, a Person or Persons shall be deemed to have a majority
      ownership interest in a partnership, association or other business entity if
      such Person or Persons shall be allocated a majority of partnership, association
      or other business entity gains or losses or shall be or control any
      managing director or general partner of such partnership, association or other
      business entity.






11


"Treasury
      Regulations"
      shall include proposed, temporary and final regulations promulgated under the
      Code in effect as of the date of this Agreement and the corresponding sections
      of any regulations subsequently issued that amend or supersede such
      regulations.





11.          Specific
      Performance.  The Employee acknowledges and agrees that
      irreparable injury to the Company may result in the event the Employee breaches
      any covenant or agreement contained in Sections 7 and 8 and that the remedy
      at law for the breach of any such covenant will be
      inadequate.  Therefore, if the Employee engages in any act in
      violation of the provisions of Sections 7 and 8, the Employee agrees that
      the Company shall be entitled, in addition to such other remedies and damages
      as
      may be available to it by law or under this Agreement, to injunctive relief
      to
      enforce the provisions of Sections 7 and 8.




12.          Waiver.  The
      failure of either party to insist in any one or more instances, upon performance
      of the terms or conditions of this Agreement shall not be construed as a waiver
      or a relinquishment of any right granted hereunder or of the future performance
      of any such term, covenant or condition.





13.          Notices.  Any
      notice to be given hereunder shall be deemed sufficient if addressed in writing
      and delivered by registered or certified mail or delivered personally, in the
      case of the Company, to its principal business office, and in the case of the
      Employee, to her address appearing on the records of the Company, or to such
      other address as she may designate in writing to the Company.





14.          Severability.  In
      the event that any provision shall be held to be invalid or unenforceable for
      any reason whatsoever, it is agreed such invalidity or unenforceability shall
      not affect any other provision of this Agreement and the remaining covenants,
      restrictions and provisions hereof shall remain in full force and effect and
      any
      court of competent jurisdiction may so modify the objectionable provision as
      to
      make it valid, reasonable and enforceable.  Furthermore, the parties
      specifically acknowledge the above covenant not to compete and covenant not
      to
      disclose confidential information are separate and independent
      agreements.





15.          Complete
      Agreement.  Except as otherwise expressly set forth herein,
      this document embodies the complete agreement and understanding among the
      parties hereto with respect to the subject matter hereof and supersedes and
      preempts any prior understandings, agreements or representations by or among
      the
      parties, written or oral, which may have related to the subject matter hereof
      in
      any way.  Without limiting the generality
      of the foregoing, this Agreement supersedes the Employment Agreement, dated
      as
      of April 4, 2005, between the Company and the Employee (together with all
      amendments thereto, the "Prior Agreement").  The Prior Agreement is
      hereby terminated and shall cease to be of any further force or
      effect.






12


16.          Amendment.  This
      Agreement may only be amended by an agreement in writing signed by each of
      the
      parties hereto.





17.          Governing
      Law.  This Agreement shall be governed by and construed
      exclusively in accordance with the laws of the State of Illinois, regardless
      of
      choice of law requirements.





18.          Benefit.  This
      Agreement shall be binding upon and inure to the benefit of and shall be
      enforceable by and against the Company, its successors and assigns and the
      Employee, her heirs, beneficiaries and legal representatives.  It is
      agreed that the rights and obligations of the Employee may not be delegated
      or
      assigned.




[Remainder
      of page intentionally left blank.  Signature page to
      follow.]






13





IN
      WITNESS WHEREOF, the parties have
      executed or caused this Employment Agreement to be executed as of the date
      first
      above written.





RC2
      CORPORATION – COMPENSATION


COMMITTEE




/s/
      John J.
      Vosicky


John
      J.
      Vosicky, Director and Compensation


Committee
      Chairman




/s/
      Thomas M.
      Collinger


Thomas
      M.
      Collinger, Director and


Compensation
      Committee Member




/s/
      Jody L.
      Taylor


Jody
      L.
      Taylor






14




SCHEDULE
      5(c)





TARGET
      INCENTIVE BONUS / INCENTIVE STOCK OPTIONS








If
      Employee is employed by the Company
      on February 1 of any year (beginning with February 1, 2009) during the
      Employment Period, she shall have a targeted incentive bonus (the "Target
      Bonus") of not less than 1.70 times Employee's then Base Salary and receive
      options to acquire shares with a value of not less than $950,000 (determined
      in
      accordance with GAAP consistent with prior practice); provided, however, that
      the Company shall not be required to grant to the Employee in any year options
      to acquire more than the maximum number of shares which may be issued under
      the
      Company's Stock Incentive Plan.  The grant of the options shall be
      made on the earlier of (1) the quarterly meeting of the Board of Directors
      held
      in February of the applicable year or (2) February 28 of the applicable
      year.  The options to be granted pursuant to this Employment Agreement
      shall be granted using a Non-Statutory Stock Option Grant Agreement
      substantially in the form of Exhibit A to the Employment Agreement.












EXHIBIT
      A





NON-STATUTORY
      STOCK OPTION GRANT AGREEMENT





UNDER
      THE
      RC2 CORPORATION


2005
      STOCK INCENTIVE PLAN








THIS
      AGREEMENT, dated as _____________
      (the date of grant), is between _______________ ("Employee") and RC2
      CORPORATION, a Delaware corporation (the "Company").





RECITALS





A.           
      The Company adopted the RC2 Corporation 2005 Stock Incentive Plan (the "Plan"),
      which was approved by its Board of Directors (the "Board") and
      stockholders.





B.           
      The Board has designated Employee as a participant in the Plan.





C.           
      Pursuant to the Plan, Employee and the Company desire to enter into this
      Agreement setting forth the terms and conditions of the options granted to
      Employee under the Plan.





AGREEMENTS





The
      Employee and the Company agree as
      follows:





1.           
      Grant of Stock
      Option.  The Company grants to Employee the right and option
      (hereinafter referred to as the "Option") to purchase all or any part of up
      to
      ________ shares of the Company's Common Stock (the "Option Shares") on the
      terms and conditions set forth below and in the Plan.





2.           
      Option
      Price.  The purchase price of the Option Shares shall be
      $_____ per share.





3.           
      Period of
      Exercise.  Except as provided under the Plan, unless the Option
      is terminated, Employee may exercise this Option for up to, but not in excess
      of, the percent of shares of Common Stock subject to the Option during the
      periods specified below:









Percentage
                of Sharesof
                Common Stock
            
            On
                or After20%40%60%80%100%





Employee's
      right to
      exercise the Option expires ten years from the date of grant (the "Option
      Period"), subject to Section 12 below.





Upon
      completion of a
      Change of Control (as defined in the Employee's Employment Agreement with the
      Company dated as of April 1, 2008 (as amended from time to time, the
      "Employment Agreement") or upon termination of the Employee's employment due
      to
      death or Disability (as defined in the Employment Agreement) of the Employee,
      this Option shall immediately vest and become exercisable by the Employee in
      accordance with its remaining terms (subject, in the case of termination of
      employment due to death or Disability, to the period of exercise set forth
      in
      Section 12 below).  The Company agrees to take any and all
      actions necessary or appropriate to effectuate the acceleration of this Option
      and to permit the Employee to exercise this Option in accordance with its terms
      from and after this accelerated vesting date.





4.           
      Definitions.  Unless
      provided to the contrary in this Agreement, the definitions of the Plan and
      any
      Amendments to the Plan shall apply to this Agreement.





5.           
      Option
      Designation.  The option granted is a Non-Statutory Stock
      Option in accordance with Article VII of the Plan.





6.           
      Change in Capital
      Structure.  The Option rights and exercise price of such Option
      rights will be adjusted in the event of a stock dividend, stock split, reverse
      stock split, recapitalization, reorganization, merger, consolidation,
      acquisition or other change in the capital structure of the Company as
      determined by the Board of Directors in accordance with the Plan.





7.           
      Nontransferability
      of
      Option.  Options shall not be transferable other than by will
      or the laws of descent and distribution and shall be exercisable, during the
      Employee's lifetime, only by her.






2


8.           
      Delivery by the
      Company.  As soon as practicable after receipt of all items
      referred to in Article VII of the Plan and any payment required by
      Article VII of the Plan, the Company shall deliver to the Employee
      certificate(s) issued in Employee's name for the number of Option Shares
      purchased by exercise of the Option.  If delivery is by mail, delivery
      of Option Shares shall be deemed effected when the stock transfer agent of
      the
      Company shall have deposited the certificates in the United States mail,
      addressed to the Employee.





9.           
      Addresses.  All
      notices or statements required to be given to either party hereto shall be
      in
      writing and shall be personally delivered or sent, in the case of the Company,
      to its principal business office and, in the case of Employee, to her address
      as
      shown on the records of the Company or to such address as Employee designates
      in
      writing.  Notice of any change of address shall be sent to the other
      party by registered or certified mail.  It shall be conclusively
      presumed that any notice or statement properly addressed and mailed bearing
      the
      required postage stamps has been delivered to the party to which it is
      addressed.





10.           
      Restrictions Imposed
      by Law.  Notwithstanding any other provision of this Agreement,
      Employee agrees that she shall not exercise the Option and that the Company
      will
      not be obligated to deliver any shares of Common Stock or make any cash payment
      if counsel to the Company determines that such exercise, delivery or payment
      would violate any law or regulation of any governmental authority or any
      agreement between the Company and any national securities exchange upon which
      the Common Stock is listed.  The Company shall in no event be obliged
      to take any affirmative action in order to cause the exercise of the Option
      or
      the resulting delivery of shares of Common Stock or other payment to comply
      with
      any law or regulation of any governmental authority.





11.           
      Employment.  Nothing
      in this Agreement or the Plan shall limit the right of the Company or any parent
      or Subsidiary to terminate the Employee's employment or otherwise impose any
      obligation to employ the Employee.





12.           
      Effect of Termination
      of Employment.  If the Employee's employment is terminated for
      any reason other than a termination by the Company for Cause, the Employee
      (or
      her designated beneficiary or her estate in the event of the termination of
      the
      Employee's employment due to death) may exercise any part of this Option vested
      as of the Termination Date (after giving effect to any acceleration of vesting
      pursuant to Section 3) at any time prior to the original expiration date of
      this Option or within twelve months after the date of termination of employment,
      whichever period is shorter.






3


13.           
      Governing
      Law.  This Agreement shall be construed, administered and
      governed in all respects under and by the laws of the State of
      Delaware.





14.           
      Provisions Consistent
      with Plan.  This Agreement is intended to be construed to be
      consistent with, and is subject to, all applicable provisions of the Plan,
      which
      is incorporated herein by reference.  In the event of a conflict
      between the provisions of this Agreement and the Plan, the provisions of the
      Plan shall prevail.





EMPLOYEE:




________________________________




RC2
      CORPORATION




BY______________________________










4