Document:

EMPLOYMENT AGREEMENT

     THIS  EMPLOYMENT  AGREEMENT  is  made  as  of July 29, 2002, by and between
Racing  Champions Ertl Corporation, a Delaware corporation and subsidiaries (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  Parent  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 Senior Vice President of
            ------
Finance and Chief Financial Officer of the Company and will, under the direction
of the Company's Chief Executive Officer, President and Chairman, 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 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, President, Chairman 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.

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     4.     Compensation.  The  Employee shall receive a base salary of $160,000
            ------------
per year, payable in regular and equal monthly installments (the "Base Salary").

     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.

          (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  in  (i)  the  annual
Management Incentive Bonus Plan on a basis consistent with past practice and her
position  and  level  of  compensation with the Company, and (ii) the Additional
Senior  Management  Incentive  Bonus  Plan described on Exhibit A.  In addition,
Employee  shall  be  entitled  to  participate  in  the  Racing  Champions  Ertl
Corporation  Stock  Incentive  Plan,  as amended as of May 10, 2002 (the "Option
Plan"),  with  discretionary  grants  as determined by the Board of Directors or
Compensation  Committee.  It  is  anticipated that the Options for 2002 shall be
granted  at  the  October,  2002 Board of Directors meeting and that the Options
for  2003  and  2004  will  be  granted  at  the  end  of each calendar quarter.

          (d)     Automobile.  The  Company  agrees to reimburse the Employee up
                  ----------
to  $600.00  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 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 him 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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<PAGE>
          (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 himself to any physical examination which may be required
at  such  reasonable  times  and  places  as  Company  shall  specify.

     6.     Termination.
            ------------

          (a)     Termination  of  the Employment Period.  The Employment Period
                  --------------------------------------
shall  continue  until  the  earlier  of:  (i) April 30, 2005 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 him 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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<PAGE>
               (ii)     For  purposes of this Agreement, "Cause" shall be deemed
to  exist  if  the  Employee  shall  have (1) violated the terms of section 7 or
section  8  of this Agreement; (2) failed to substantially perform her duties to
the  reasonable satisfaction of the Board of Directors; provided that so long as
Robert  Dods,  Boyd  Meyer  or Peter Chung serves a director of the Company, any
determination  pursuant  to  this  clause  (2) must be approved by the Requisite
Founder  Directors; (3) committed a felony or a crime involving moral turpitude;
(4) engaged in serious misconduct which is demonstrably injurious to the Company
or  any  of its Subsidiaries; (5) 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;  or  (6)  committed  acts of
negligence in the performance of her duties which are substantially injurious to
the  Company.

               (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."

          (c)     Termination  for  Disability  or  Death.  In  the  event  of
                  ---------------------------------------
termination  for  Disability  or  death,  payments of the Employee's Base Salary
shall  be  made  to the Employee, her designated beneficiary or her estate for a
period  of  six  months after the Termination Date in accordance with the normal
payroll  practices  of  the Company.  During this period, the Company shall also
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.  During  this  period,  the  Company  will  also  continue
Employee's life insurance and disability coverage, to the extent permitted under
applicable  policies,  and will pay to the Employee the fringe benefits pursuant
to  section  5  which  have  accrued  prior  to  the  Termination  Date.

          (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 or (iii) the Employee resigns for Good
Reason,  the  Employee  shall  be  entitled  to  receive,  as damages for such a
termination,  her Base Salary from the Termination Date to the first anniversary
of  the  Termination  Date,  provided,  however,  that  if  such  termination or
resignation  occurs at any time after the occurrence of or in contemplation of a
Change  of  Control,  then Employee shall be entitled to receive her Base Salary
from  the  Termination  Date  to the second anniversary of the Termination Date.
Such  payment of Base Salary shall be made in accordance with the normal payroll
practices  of the Company.  During this period, the Company shall also 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.  During  this  period,  the  Company  will  also  continue
Employee's  life  insurance and disability coverage and will pay to the Employee
the  fringe  benefits pursuant to section 5 which have accrued prior to the date
of  termination.

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<PAGE>
          (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.

          (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.

     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 him, 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.

                                        5
<PAGE>
          (a)     Noncompetition.  The Employee hereby covenants and agrees that
                  --------------
during  the  Employment  Period  and  for  two years thereafter (the "Noncompete
Period"),  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.

          (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;

               (iii)     induce  or  attempt  to  induce  any  employee,  sales
representative,  consultant  or  other  agent  of  the  Company  or  any  of its
Affiliates  to  terminate  her  relationship  or  breach  any agreement with the
Company  or  any  of  its  Affiliates;  or

               (iv)     hire  any  person  who  was  an  employee,  sales
representative,  consultant  or  other  agent  of  the  Company  or  any  of its
Affiliates  at  any  time  during  the  Noncompete  Period.

                                        6
<PAGE>
     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' 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.

     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.

                                        7
<PAGE>
          "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 20% or more of
either  (i)  the  then  outstanding  shares  of  common  stock  of  Parent  (the
"Outstanding  Common  Stock")  or  (ii)  the  combined  voting power of the then
outstanding  voting  securities  of  Parent  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 Parent, (ii) any acquisition by Parent, (iii) any
acquisition  by  any  employee  benefit  plan  (or  related  trust) sponsored or
maintained  by  Parent  or  any  corporation  controlled  by  Parent 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  Parent  (the  "Incumbent  Board")  cease  for  any  reason to
constitute  at  least  a majority of the Board of Directors of Parent; provided,
however,  that  any individual becoming a director subsequent to the date hereof
whose  election,  or  nomination  for  election  by  Parent'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  Parent;  or

          (c)     Approval  by  the  stockholders of Parent 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 Parent 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 Parent or such corporation
resulting  from  such  Business  Combination)  beneficially  owns,  directly  or
indirectly,  20% 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 Parent, providing for
such  Business  Combination;  or

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<PAGE>
          (d)     Approval  by  the  stockholders  of  Parent  of (i) a complete
liquidation  or  dissolution  of Parent or (ii) the sale or other disposition of
all  or  substantially all of the assets of Parent, 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 20% 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  Parent  or  such corporation), except to the extent that such Person
owned  20%  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 Parent, providing for such sale or other
disposition  of  assets of Parent or were elected, appointed or nominated by the
Board  of  Directors  of  Parent.

          "Founder  Director" at any time means Robert Dods, Boyd Meyer or Peter
           -----------------
Chung  if  at  such  time  such individual is a member of the Company's Board of
Directors.

          "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.

          "Requisite Founder Directors" at any time means (i) if there are three
           ---------------------------
Founder Directors at such time, any two Founder Directors; (ii) if there are two
Founder  Directors  at such time, any Founder Director; or (iii) if there is one
Founder  Director  at  such  time,  such  Founder  Director.

          "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, Executive Vice President, Chief Financial
Officer  and  such other officers of the Company as the Board of Directors shall
determine  from  time  to  time.

                                        9
<PAGE>
          "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.     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.

                                       10
<PAGE>
     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 30, 2001, 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.

     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.

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

                                               RACING CHAMPIONS ERTL CORPORATION
                                               -  COMPENSATION  COMMITTEE

                                                  /s/ John S. Bakalar
                                               ---------------------------------
                                               John S. Bakalar, Director and
                                               Compensation  Committee  Chairman

                                                  /s/ John J. Vosicky
                                               ---------------------------------
                                               John  J. Vosicky,  Director  and
                                               Compensation  Committee  Member

                                                  /s/ Robert E. Dods
                                               ---------------------------------
                                               Robert  E.  Dods,  Chairman  of
                                               the  Board  and  Compensation
                                               Committee Member

                                                 /s/ Jody L. Taylor
                                               ---------------------------------
                                               Jody L. Taylor

                                       11
<PAGE>

                                    EXHIBIT A

                ADDITIONAL SENIOR MANAGEMENT INCENTIVE BONUS PLAN

     Employee  shall  be  entitled  to  participate  in  the  Additional  Senior
Management  Incentive  Bonus  Plan  on  the  following  basis.

     Senior Management shall be entitled to receive annually a cash payout equal
to  5% of the first 5% of the excess of EBITDA over the targets set forth below.
This bonus shall be paid in cash within 30 days after determination of EBITDA to
the  reasonable  satisfaction  of  the  Board  of Directors and Employee for the
applicable  fiscal  year.  Any disagreements regarding the calculation of EBITDA
shall  be  referred  to  and  resolved  by the Company's then independent public
accounting  firm.  In  addition,  Senior  Management  shall  also be entitled to
receive  shares of restricted stock with a fair market value equal to 10% of the
amount  by  which EBITDA exceeds the following targets by more than 5% but equal
to  or less than 10%.  If EBITDA exceeds the following targets by more than 10%,
then  Senior  Management  shall also be entitled to receive 10% of the amount by
which  EBITDA  exceeds  the following targets by more than 10%, paid 40% in cash
and 60% in restricted stock. (See Pay-Out Summary, below).  The restricted stock
shall  be  valued at the average trading price for a share on the date of grant,
less  a  10%  discount  based  on  lack of marketability and the restrictions on
vesting described below.   The restricted stock shall vest in an amount equal to
one  third of the annual grant on the first anniversary of the applicable fiscal
year,  the  second third on the second anniversary of the applicable fiscal year
and  the  final  third  on  the third anniversary of the applicable fiscal year.
Employee  shall  forfeit  any shares which have not vested as of the Termination
Date.   All  non-vested  shares  shall  be  immediately  fully  vested  upon the
occurrence  of  or in contemplation of a Change in Control or due to Termination
under  section  6  (d)  of  the  Agreement.

                               Pay-Out Summary
                               ---------------

                  Amount  EBITDA        Level
Level             Exceeds  Target       Pay-Out %         Payment  Method
-------------------------------------------------------------------------
  1                 up  to  5%           5%                   Cash
  2                 5%  to  10%         10%              Restricted Stock
  3                     10%+            10%              40% in Cash/60%
                                                        in Restricted Stock

                                       12
<PAGE>
          EBITDA Targets
          --------------

     Year             Amount
     ----             ------

     2002           $53,800,000
     2003            59,180,000
     2004            65,098,000

     The  foregoing  targets will be adjusted for any acquisitions, divestitures
and  accounting  changes  on  a  basis  to  be  agreed to by the Company and the
Employee.

Allocation  of  Additional  Incentive  Bonus  Among  Senior  Management
-----------------------------------------------------------------------

     Henseler                          35%
     Stoelting                         35%
     Taylor                            15%
     TBD                               15%

                                       13RACING CHAMPIONS ERTL CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN

                                ARTICLE 1 PURPOSE
                                -----------------

1.01.     Purpose.  The  Racing  Champions  Ertl Corporation Employee Stock
          -------
Purchase  Plan  is  intended  to  provide  a  method whereby employees of Racing
Champions  Corporation and its Subsidiary Corporations (hereinafter referred to,
unless  the  context  otherwise  requires,  as  the  "Company")  will  have  an
opportunity  to  acquire  a  proprietary  interest  in  the  Company through the
purchase  of  shares of Common Stock of the Company.  It is the intention of the
Company  to  have  the  Plan  qualify as an "employee stock purchase plan" under
section  423 of the Internal Revenue Code of 1986, as amended (the "Code").  The
provisions  of  the  Plan  shall  be  construed  so  as  to  extend  and  limit
participation  in  a  manner consistent with the requirements of that section of
the  Code.

                             ARTICLE 2  DEFINITIONS
                             ----------------------

     For  purposes  of the Plan, unless the context clearly indicates otherwise,
the  following  terms  have  the  meanings  set  forth  below:

     (a)  "Base Pay" means regular straight-time earnings excluding payments for
overtime,  shift  premium,  bonuses  and other special payments, commissions and
other  marketing  incentive  payments.

     (b)  "Board"  means  the  Board  of  Directors  of  the  Company.

     (c)  "Committee''  means the Committee of the Board which may be designated
by  the  Board  to administer the Plan pursuant to section 10.02, and which will
consist  of  no  fewer  than  two  members  of  the  Board.

     (d)  "Common  Stock"  means  the Company's Common Stock, par value $.01 per
share.

     (e)  "Employee" means any person who is customarily employed on a full-time
or part-time basis by the Company or any Subsidiary Corporation and is regularly
scheduled  to  work  more  than  20  hours  per  week.

<PAGE>
     (f) "Fair Market Value" means, with respect to a share of Common Stock, the
last sales price (or average of the quoted closing bid and asked prices if there
is  no  last sales price reported) of a share of Common Stock as reported by the
Nasdaq  National Market (or by the principal market on which the Common Stock is
then  listed)  on  the date of valuation, if such date is a business day, or the
immediately  preceding  business day, if such date is not a business day. In the
absence  of an established market for the Common Stock, the Fair Market Value of
a  share  of  Common Stock shall be determined in good faith by the Board or the
Committee.

     (g)  "Participant" means any eligible Employee who elects to participate in
this  Plan  as  provided  by  Article  3.

     (h)  "Payroll  Deduction  Account" means, with respect to each Participant,
the  amounts  credited  to the Participant's account from the payroll deductions
made  by  the  Participant under this Plan, less any amounts withdrawn from such
account  (for  payment  of  Common Stock, payment to the Participant, payment of
withholding  and  other  taxes  or  amounts  or  payment of other obligations or
amounts).

     (i)  "Stock Account" means, with respect to each Participant, the number of
whole  shares  of  Common  Stock  credited  under this Plan to the Participant's
account.  Dividends  with  respect  to  shares  of  Common  Stock  credited to a
Participant's  Stock  Account  shall be paid to the Participant and shall not be
held  in  either  the  Participant's Stock Account or Payroll Deduction Account.

     (j)  "Subsidiary Corporation" means any present or future corporation which
(i)  would  be a "subsidiary corporation" of the Company as that term is defined
in  section  424 of the Code and (ii) is designated as a participant in the Plan
by  the  Board  or  the  Committee.

                    ARTICLE 3  ELIGIBILITY AND PARTICIPATION
                    ----------------------------------------

3.01.     Initial  Eligibility.  Any  Employee  who  has  completed  90  days'
          --------------------
employment  and  is employed by the Company or any Subsidiary Corporation on the
date  his  participation  in the Plan is to become effective will be eligible to
participate  in  offerings under the Plan which commence on or after such 90-day
period  has  concluded.

                                        2
<PAGE>
3.02.     Leave of Absence.  For purposes of participation in the Plan, a person
          ----------------
on  leave  of  absence will be deemed to be an Employee for the first 90 days of
such  leave  of  absence  and  such  Employee's  employment  be  deemed  to have
terminated  at  the  close  of business on the 90th day of such leave of absence
unless  such  Employee has returned to regular full-time or part-time employment
(as  the  case  may  be)  prior  to  the  close  of  business  on such 90th day.
Termination  of  any Employee's leave of absence, other than termination of such
leave  of absence on return to full time or part time employment, will terminate
an  Employee's  participation  in  the  Plan  and  right to exercise any option.

3.03.     Restrictions  on Participation.  Notwithstanding any provisions of the
          ------------------------------
Plan  to  the  contrary, no Employee will be granted an option to participate in
the  Plan:

     (a)  if, immediately after the grant, such Employee would own stock, and/or
hold  outstanding  options to purchase stock, possessing 5% or more of the total
combined  voting  power  or  value  of  all classes of stock of the Company (for
purposes  of this paragraph, the rules of section 424(d) of the Code shall apply
in  determining  stock  ownership  of  any  Employee);  or

     (b)  which  permits  his  rights to purchase stock under all employee stock
purchase  plans of the Company to accrue at a rate which exceeds $25,000 in fair
market  value  of  the stock (determined at the time such option is granted) for
each  calendar  year  in  which  such  option  is  outstanding.

3.04.     Commencement  of  Participation.  An  eligible  Employee  may become a
          -------------------------------
Participant  by  completing an authorization for a payroll deduction on the form
provided  by  the  Company and filing it with the office of the Secretary of the
Company  on or before the date set therefor by the Board or the Committee, which
date  will  be prior to the Offering Commencement Date for any Offering (as such
terms  are  defined  below)  in  which such Employee shall participate.  Payroll
deductions  for  a  Participant  will  commence  on  the  applicable  Offering
Commencement  Date  when  his  authorization  for  a  payroll  deduction becomes
effective and will end on the Offering Termination Date of the Offering to which
such  authorization is applicable unless sooner terminated by the Participant as
provided  in  Article  8.

                                        3
<PAGE>
                              ARTICLE 4  OFFERINGS
                              --------------------

4.01.     Quarterly  Offerings.  The  Plan will be implemented by quarterly
          --------------------
offerings of Common Stock (the "Offerings") commencing, respectively, on January
1,  April  1,  July 1 and October 1 of each year during the term of the Plan and
terminating  on  March  31,  June 30, September 30 and December 31 of such year,
respectively.  The  first  Offering  under the Plan shall commence on October 1,
2002  and  terminate  on  December  31,  2002.  As  used  in the Plan, "Offering
Commencement  Date" means the August 1, January 1, April 1, July 1 or October 1,
as  the  case  may  be,  on  which  the particular Offering begins and "Offering
Termination  Date"  means  the March 31, June 30, September 30 or December 31 as
the  case  may  be,  on  which  the  particular  Offering  terminates.

                          ARTICLE 5  PAYROLL DEDUCTIONS
                          -----------------------------

5.01.     Amount  of  Deduction.  At  the  time  a  Participant  files  his
          ---------------------
authorization  for payroll deduction, he must elect to have deductions made from
his pay on each payday during the time he is a Participant in an Offering at the
rate  of  1,  2,  3,  4,  5,  6, 7, 8, 9 or 10% of his Base Pay in effect at the
Offering  Commencement Date of such Offering.  In the case of a part-time hourly
Employee,  such  Employee's  Base  Pay during an Offering shall be determined by
multiplying  such  Employee's  hourly  rate  of  pay  in  effect on the Offering
Commencement  Date  by  the number of regularly scheduled hours of work for such
Employee  during  such  Offering.

5.02.     Participant's  Payroll Deduction Account.  All payroll deductions made
          ----------------------------------------
for  a  Participant  will be credited to his Payroll Deduction Account under the
Plan.  A  Participant  may  not make any separate cash payment into such Payroll
Deduction  Account  except when on leave of absence and then only as provided in
section  5.04.  No  interest  will be paid or allowed on any money paid into the
Plan  or  credited  to  the  Payroll  Deduction  Account  of  any  Participant.

5.03.     Changes  in  Payroll  Deductions.  A  Participant  may discontinue his
          --------------------------------
participation  in  the Plan as provided in Article 8, but no other change may be
made  during  an  Offering  and,  specifically,  a Participant may not alter the
amount  of  his  payroll  deductions  for  that  Offering.

5.04.     Leave of Absence.  Subject to section 3.02, if a Participant goes on a
          ----------------
leave  of  absence,  such  Participant  will  have  the  right to elect:  (a) to
withdraw the balance in his or her Payroll Deduction Account pursuant to section
7.02,  (b)  to discontinue contributions to the Plan but remain a Participant in
the  Plan, or (c) remain a Participant in the Plan during such leave of absence,
authorizing  deductions  to  be  made  from  payments  by  the  Company  to  the
Participant  during  such leave of absence and undertaking to make cash payments
to the Plan at the end of each payroll period to the extent that amounts payable
by  the  Company to such Participant are insufficient to meet such Participant's
authorized  Plan  deductions.

                                        4
<PAGE>

                          ARTICLE 6  GRANTING OF OPTION
                          -----------------------------

6.01.     Number  of  Option  Shares.  On  the  Commencement  Date  of  each
          --------------------------
Offering,  a  Participant  will  be  deemed  to  have  been granted an option to
purchase  a  maximum  number  of whole shares of Common Stock equal to an amount
determined  as  follows:  an  amount  equal  to  (i)  that  percentage  of  the
Participant's  Base  Pay  which  he has elected to have withheld (but not in any
case  in excess of 10%) multiplied by (ii) the Participant's Base Pay during the
period  of  the  Offering divided by (iii) the option price per share determined
pursuant  to  section 6.02 below.  A Participant's Base Pay during the period of
an  Offering will be determined by multiplying his normal weekly rate of pay (as
in  effect  on  the  last  day  prior to the Commencement Date of the particular
Offering) by 13 or hourly rate by 520, as the case may be, provided that, in the
case of a Participant who is a part time hourly Employee, the Participant's Base
Pay  during  the  period  of  an Offering will be determined by multiplying such
Employee's  hourly  rate  by the number of regularly scheduled hours of work for
such  Employee  during  such  Offering.

6.02.     Option  Price.  The  option  price  of  Common  Stock  purchased  with
          -------------
payroll  deductions made during each Offering for a Participant therein shall be
90%  of  the  Fair Market Value of the Common Stock on the Offering Commencement
Date  or  the  Offering  Termination  Date,  whichever  is  lower.

                          ARTICLE 7  EXERCISE OF OPTION
                          -----------------------------

7.01.     Automatic Exercise.  Unless a Participant gives written notice to  the
          ------------------
Company  as  hereinafter  provided,  his option for the purchase of Common Stock
with  payroll  deductions  made  during any Offering will be deemed to have been
exercised  automatically  on  the  Offering  Termination Date applicable to such
Offering,  for  the  purchase of the number of full shares of Common Stock which
the accumulated payroll deductions in his Payroll Deduction Account at that time
will purchase at the applicable option price (but not in excess of the number of
shares  for  which  options  have  been  granted  to the Participant pursuant to
section  6.01), and any excess in his Payroll Deduction Account will be retained
in  his  Payroll  Deduction  Account  and  carried  over  to  the next Offering.

7.02.     Withdrawal  of  Payroll  Deduction Account.  By written notice  to the
          ------------------------------------------
Secretary  of  the  Company,  at any time prior to the Offering Termination Date
applicable  to  any  Offering,  a  Participant  may  elect  to  withdraw all the
accumulated  payroll  deductions  in his Payroll Deduction Account at such time.

                                        5
<PAGE>
7.03.     Fractional  Shares.  Fractional  shares  will  not be issued under the
          ------------------
Plan  and  any  accumulated  payroll  deductions  which  would have been used to
purchase  fractional  shares  will  be  retained in the applicable Participant's
Payroll  Deduction  Account  and  carried  over  to  the  next  Offering.

7.04.     Transferability  of  Option.  During a Participant's lifetime, options
          ---------------------------
held  by  such  Participant  will  be  exercisable  only  by  that  Participant.

7.05.     Stock Accounts.  The Company will open and maintain a Stock Account in
          --------------
the  name  of  each  Participant  to which will be credited all shares of Common
Stock  purchased  for the Participant's benefit.  All shares held under the Plan
will  be  registered  in  the  name  of  the  Plan, the Company or the Company's
nominee,  and  will  remain  so registered until the shares are delivered to the
Participant.  The  Participant  shall  have the right to sell all or any part of
the  shares  held  in  the  Participant's  Stock Account, pursuant to procedures
established  by  the  Company.  The  Company  may,  in  its discretion, with the
consent  and approval of the Board or the Committee, appoint a licensed security
dealer,  broker, or agent authorized to make purchases and sales of Common Stock
under  the Plan and to hold the shares of Common Stock to be held under the Plan
pursuant  to  this  Section  7.05.

7.06.     Delivery  of  Stock.  A  Participant  may  instruct  the  Company,  in
          -------------------
writing,  at any time to deliver to the Participant a certificate, issued in the
name  of  the  Participant, representing any or all of the full shares of Common
Stock  held  in  the  Participant's Stock Account.  As soon as practicable after
receiving  such  instructions,  the  Company  shall  cause the certificate to be
mailed to the Participant.  Such instruction to the Company, requesting delivery
of a certificate, will not affect the Participant's status under the Plan unless
the  Participant  also  terminates  his  payroll  deduction  authorization.

7.07.     Voting  Rights.  The  Company  will  deliver  to  each  Participant as
          --------------
promptly  as  practicable,  by mail or otherwise, all notices of meetings, proxy
statements  and  other  material distributed by the Company to its stockholders.
The  full  shares  of  Common  Stock in each Participant's Stock Account will be
voted  in  accordance  with  the  Participant's  signed  proxy instructions duly
delivered  to the Company or pursuant to any other method of voting available to
holders  of  Common  Stock.  There  will be no charge to the Participant for the
Company's  retention  or  delivery  of stock certificates, or in connection with
notices,  proxies  or  other  such  material.

                                        6
<PAGE>

                              ARTICLE 8  WITHDRAWAL
                              ---------------------

8.01.     In  General.  As  indicated  in  section  7.02,  a  Participant  may
          -----------
withdraw  payroll deductions credited to his Payroll Deduction under the Plan at
any  time  by giving written notice to the Secretary of the Company.  All of the
Participant's  payroll deductions credited to his Payroll Deduction Account will
be  paid  to  him  promptly  after  receipt  of his notice of withdrawal, and no
further  payroll deductions will be made from his pay during such Offering.  The
Company  may, at its option, treat any attempt to borrow by a Participant on the
security  of  his  accumulated  payroll deductions as an election, under section
7.02,  to  withdraw  such  deductions.

8.02.     Effect  on  Subsequent Participation.  A Participant's withdrawal from
          ------------------------------------
any Offering will not have any effect upon his eligibility to participate in any
succeeding Offering or in any similar plan which may hereafter be adopted by the
Company.

8.03.     Termination  of  Employment.  Upon  termination  of  the Participant's
          ---------------------------
employment  for  any  reason, including retirement (but excluding death while in
the  employ  of  the  Company or continuation of a leave of absence for a period
beyond 90 days), the payroll deductions credited to his or her Payroll Deduction
Account  will be returned to him, or, in the case of his death subsequent to the
termination  of  his employment, to the person or persons entitled thereto under
section  11.01.

8.04.     Termination  of  Employment  Due  to  Death.  Upon  termination of the
          -------------------------------------------
Participant's  employment  because  of his death, his beneficiary (as defined in
section  11.01)  will  have  the  right to elect, by written notice given to the
Secretary  of  the Company prior to the earlier of the Offering Termination Date
or  the  expiration of a period of 60 days commencing with the date of the death
of  the  Participant,  either:

     (a)     to  withdraw  all  of  the  payroll  deductions  credited  to  the
Participant's  Payroll  Deduction  Account  under  the  Plan,  or

     (b)     to  exercise  the  Participant's  option for the purchase of Common
Stock  on  the  Offering  Termination  Date  next  following  the  date  of  the
Participant's  death  for  the  purchase  of the number of full shares of Common
Stock  which  the  accumulated  payroll  deductions in the Participant's Payroll
Deduction  Account  at  the date of the Participant's death will purchase at the
applicable  option  price, and any excess in such Payroll Deduction Account will
be  returned  to  said  beneficiary,  without  interest.

                                        7
<PAGE>
     In the event that no such written notice of election shall be duly received
by  the  office  of  the  Secretary  of  the  Company,  the  beneficiary  will
automatically  be deemed to have elected, pursuant to paragraph (b), to exercise
the  Participant's  option.

8.05.     Leave  of Absence.  A Participant on leave of absence will, subject to
          -----------------
the election made by such Participant pursuant to section 5.04, continue to be a
Participant  in  the  Plan so long as such Participant is on continuous leave of
absence.  A  Participant  who has been on leave of absence for more than 90 days
and  who  therefore  is  not an Employee for the purpose of the Plan will not be
entitled  to  participate  in any Offering commencing after the 90th day of such
leave  of  absence.  Notwithstanding  any other provisions of the Plan, unless a
Participant  on  leave  of  absence  returns  to  regular full time or part time
employment with the Company at the earlier of: (a) the termination of such leave
of  absence or (b) three months from the 90th day of such leave of absence, such
Participant's  participation  in  the  Plan  will terminate on whichever of such
dates  first  occurs.

                                ARTICLE 9  STOCK
                                ----------------

9.01.     Maximum  Shares.  The  maximum   number  of  shares  of  Common  Stock
          ---------------
which  may  be  issued  under  the  Plan,  subject to adjustment upon changes in
capitalization  of  the  Company as provided in section 11.04 is 500,000 shares.
If  the  total  number of shares for which options are exercised on any Offering
Termination  Date  in  accordance  with  Article 6 exceeds the maximum number of
shares for the applicable offering, the Company shall make a pro rata allocation
of  the  shares  available  for delivery and distribution in as nearly a uniform
manner  as  is practicable and as it determines to be equitable, and the balance
of  payroll  deductions  credited  to  the  Payroll  Deduction  Account  of each
Participant  under  the  Plan  will  be returned to him as promptly as possible.

9.02.     Participant's  Interest  in  Option Stock.  A Participant will have no
          -----------------------------------------
interest  in  Common  Stock  covered  by  his  option until such option has been
exercised.

9.03.     Registration  of  Stock.  Common  Stock  to  be  delivered  to  a
          -----------------------
Participant  under  the  Plan will be registered in the name of the Participant,
or,  if  the  Participant  so  directs by written notice to the Secretary of the
Company  prior to the Offering Termination Date applicable thereto, in the names
of  the  Participant  and  one  such  other  person  as  may be designate by the
Participant,  as  joint tenants with rights of survivorship or as tenants by the
entireties,  to  the  extent  permitted  by  applicable  law.

                                        8
<PAGE>
9.04.     Restrictions  on  Exercise.  The Board may, in its discretion, require
          --------------------------
as  conditions  to  the  exercise  of any option that the shares of Common Stock
reserved  for  issuance  upon  the  exercise  of the option be duly listed, upon
official  notice  of  issuance,  upon  a  stock  exchange,  and  that  either:

     (a)  a Registration Statement under the Securities Act of 1933, as amended,
with  respect  to  said  shares  be  effective,  or

     (b)  the  Participant have represented at the time of purchase, in form and
substance  satisfactory to the Company, that it is his intention to purchase the
shares  for  investment  and  not  for  resale  or  distribution.

                           ARTICLE 10  ADMINISTRATION
                           --------------------------

10.01.     Administration.  The  Board  will  be  responsible  for administering
           --------------
the  Plan.  The  Board is authorized to interpret the Plan, to prescribe, amend,
and  rescind  rules  and  regulations  relating  to  the  Plan,  to  provide for
conditions and assurances deemed necessary or advisable to protect the interests
of  the Company, and to make all other determinations necessary or advisable for
the  administration  of  the  Plan,  but  only to the extent not contrary to the
express provisions of the Plan. Determinations, interpretations or other actions
made  or  taken  by  the  Board pursuant to the provisions of this Plan shall be
final  and  binding  and  conclusive  for  all  purposes  and  upon all persons.

10.02.     The Committee.  At  the  discretion of the Board, this  Plan  may  be
           -------------
administered  by  a  Committee  which  shall  be a compensation committee of the
Board.  Such  Committee  shall  have  full  power  and authority, subject to the
limitations  of  the Plan and any limitations imposed by the Board, to construe,
interpret  and  administer  this  Plan and to make determinations which shall be
final  and  binding  and  conclusive  for  all  purposes  and  upon all persons.

                                        9
<PAGE>
                            ARTICLE 11  MISCELLANEOUS
                            -------------------------

11.01.     Designation  of  Beneficiary.  A  Participant  may  file  a  written
           ----------------------------
designation of a beneficiary who is to receive any shares of Common Stock and/or
cash.  Such  designation of beneficiary may be changed by the Participant at any
time  by  written  notice  to the Secretary of the Company.  Upon the death of a
Participant  and  upon receipt by the Company of proof of identity and existence
at  the Participant's death of a beneficiary validly designated by him under the
Plan,  the  Company  will  deliver  such  Common  Stock  and/or  cash  to  such
beneficiary.  In the event of the death of a Participant and in the absence of a
beneficiary  validly designated under the Plan who is living at the time of such
Participant's  death,  the Company will deliver such Common Stock and/or cash to
the  executor  or  administrator of the estate of the Participant, or if no such
executor  or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Common Stock and/or cash to the
spouse  or  to  any one or more dependents of the Participant as the Company may
designate.  No  beneficiary shall, prior to the death of the Participant by whom
he  has  been  designated,  acquire  any  interest  in  the Common Stock or cash
credited  to  the  Participant  under  the  Plan

11.02.     Transferability.  Neither  payroll  deductions  credited  to  a
           ---------------
Participant's  Payroll  Deduction  Account  nor  any  rights  with regard to the
exercise of an option or to receive Common Stock under the Plan may be assigned,
transferred,  pledged,  or  otherwise  disposed of in any way by the Participant
other  than by will or the laws of descent and distribution.  Any such attempted
assignment, transfer, pledge or other disposition will be without effect, except
that  the  Company  may  treat  such  act  as  an  election to withdraw funds in
accordance  with  section  7.02.

11.03.     Use of Funds.  All payroll deductions received or held by the Company
           ------------
under  this  Plan  may  be used by the Company for any corporate purpose and the
Company  will  not  be  obligated  to  segregate  such  payroll  deductions.

11.04.     Adjustment  Upon  Changes  in  Capitalization.
           ---------------------------------------------

     (a) If, while any options are outstanding, the outstanding shares of Common
Stock  of the Company have increased, decreased, changed into, or been exchanged
for  a  different  number or kind of shares or securities of the Company through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock  split  or  similar transaction, appropriate and proportionate adjustments
may  be  made  by the Board or the Committee in the number and/or kind of shares
which  are  subject  to  purchase  under  outstanding  options and on the option
exercise price or prices applicable to such outstanding options. In addition, in
any  such  event,  the  number and/or kind of shares which may be offered in the
Offerings  described  in Article 4 hereof will also be proportionately adjusted.

                                       10
<PAGE>

     (b)  Upon  the  dissolution  or  liquidation  of  the  Company,  or  upon a
reorganization,  merger  or  consolidation  of  the  Company  with  one  or more
corporations  as a result of which the Company is not the surviving corporation,
or  upon  a sale of substantially all of the property or stock of the Company to
another  corporation,  the holder of each option then outstanding under the Plan
will  thereafter  be  entitled  to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised,  as  nearly  as  reasonably  may  be determined, the cash, securities
and/or  property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board will take such steps
in connection with such transactions as the Board deems necessary to assure that
the provisions of this section 11.04 will thereafter be applicable, as nearly as
reasonably  may  be  determined, in relation to the said cash, securities and/or
property  as to which such holder of such option might thereafter be entitled to
receive.

11.05.     Amendment  and  Termination.  The  Board will have complete power and
           ---------------------------
authority to terminate or amend the Plan; provided, however, that the Board will
not,  without  the  approval of the stockholders of the Corporation (i) increase
the  maximum  number  of  shares  which may be issued under any Offering (except
pursuant  to  section  11.04); or (ii) amend the requirements as to the class of
Employees eligible to purchase Common Stock under the Plan or permit the members
of  the  Board  or  the  Committee  to purchase Common Stock under the Plan.  No
termination, modification, or amendment of the Plan may without the consent of a
Participant  then  having  an  option  under  the Plan to purchase Common Stock,
adversely  affect  the  rights  of  such  Participant  under  such  option.

11.06.     Effective Date.  The Plan will become effective as ofOctober 1, 2002,
           --------------
subject  to  approval by the holders of the majority of the Common Stock present
and  represented  at  a special or annual meeting of the stockholders held on or
before  June 30, 2002.  If the Plan is not so approved, the Plan will not become
effective.  The  Plan  will  automatically  terminate  on  July  1,  2007.

11.07.     No  Employment  Rights.  The  Plan  does not, directly or indirectly,
           ----------------------
create  any  right  for  the  benefit  of  any employee or class of employees to
purchase  any  shares  under  the  Plan,  or  create in any employee or class of
employees  any  right with respect to continuation of employment by the Company,
and  it  shall not be deemed to interfere in any way with the Company's right to
terminate,  or  otherwise  modify,  an  employee's  employment  at  any  time.

                                       11
<PAGE>
11.08.     Effect  of Plan.  The provisions of the Plan will, in accordance with
           ---------------
its  terms, be binding upon, and inure to the benefit of, all successors of each
Participant  in  the  Plan,  including,  without  limitation, such Participant's
estate  and  the  executors,  administrators  or  trustees  thereof,  heirs  and
legatees, and any receiver, trustee in bankruptcy or representative of creditors
of  such  Participant.

11.09.     Governing  Law.  The  law  of  the  State of Delaware will govern all
           --------------
matters  relating to this Plan except to the extent it is superseded by the laws
of  the  United  States.

                                       12

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