THE MIDDLETON DOLL COMPANY

FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT

         THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into by and between The Middleton Doll Company, a Wisconsin corporation (the “Company”), and the person whose signature is set forth on the signature page hereof (the “Participant”) effective as of ___________________.

RECITALS

         WHEREAS , the Company has adopted The Middleton Doll Company 2003 Stock Option Plan (the “Plan”), which provides for the grant of options to officers and other key employees of the Company and its subsidiaries, each as designated by an appropriate committee of the Company’s Board of Directors, as provided in the Plan (the “Committee”), to participate in the Plan;

         WHEREAS , the Participant is an officer or other key employee that the Committee has designated to participate in the Plan; and

         WHEREAS , the Company wishes to grant to the Participant an option to purchase the Company’s common stock, par value 6 2/3 cents per share (the “Common Stock”), on the terms and conditions specified herein to provide a means for the Participant to participate in the future growth of the Company and to increase the Participant’s incentive and personal interest in the continued success and growth of the Company.

AGREEMENT

         NOW , THEREFORE , the parties agree as follows (any capitalized terms used herein but not defined herein shall have the respective meanings given in the Plan):

        1.     Option .

            a.     Grant . Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to the Participant a Non-Qualified Stock Option to purchase all or any part of the shares of Common Stock set forth on the signature page hereof (the “Shares”), at the exercise price set forth on the signature page hereof (collectively, the “Option”).

            b.     Term . The term of the Option shall expire at 11:59 p.m., Wisconsin time, on the date immediately preceding the tenth anniversary of the date of grant of the Option.

            c.     Vesting . _____________ percent (___%) of the Option shall vest on each of the first _____ (__) anniversaries of the grant date.

        2.     Exercise . The Option may not be exercised prior to the date it is vested or after the term of the Option has expired. The Participant may, subject to the limitations of this Agreement and the Plan, exercise all or any portion of the Option that has vested pursuant to Section 1 hereof by providing written notice of exercise to the Company specifying the number of Shares with respect to which the Option is being exercised, which shall be accompanied by payment of the exercise price for such Shares. The exercise price shall be paid as provided in the Plan. No portion of the Option may be exercised after it has expired pursuant to Section 1 hereof.

        3.     Termination of Employment.

            a.     If the employment of the Participant terminates by reason of death or disability, any unvested portion of the Option shall vest in full upon the Participant’s death, and the Participant’s Beneficiary (as hereinafter defined) may exercise the Option for a period of one year after the date of death or date of disability and not thereafter; provided , however , that no Option or portion thereof shall be exercisable after it has expired pursuant to Section 1 hereof. For purposes of this Agreement, the term “disability” shall mean a total and permanent disability as determined by the Committee in its sole discretion.

            b.     If the employment of the Participant terminates for any reason other than death or disability, the Participant (or his or her legal representative) may exercise any portion of the Option that has vested pursuant to Section 1 hereof for a period of three months after the date of such termination of employment and not thereafter; provided , however , that no Option or portion thereof shall be exercisable after it has expired pursuant to Section 1 hereof.

            4.     Change of Control . In the event of any sale of assets, merger, consolidation, combination or other corporate reorganization, restructuring or change of control of the Company (“Change of Control”), the Board of Directors in its discretion may take one or more of the following actions: (a) provide for the acceleration of any time period relating to the exercise of the Option; (b) provide for the purchase of the Option for an amount of cash or other property that could have been received upon the exercise of the Option had the Option been currently exercisable or payable; (c) adjust the terms of the Option in the manner determined by the Board of Directors to reflect the Change of Control; (d) cause the Option to be assumed, or new right substituted for the Option, by another entity; or (e) make such other provision as the Board of Directors may consider equitable and in the best interests of the Company.

        5.     Withholding . The Company may withhold the amount of any tax attributable to any Shares deliverable under the Plan after giving the Participant notice as far in advance as practicable, and the Company may defer making delivery if any such tax may be pending unless and until indemnified to its satisfaction. The Committee may, in its sole discretion and subject to such rules as it may adopt, permit the Participant to pay all or a portion of the federal, state and local withholding taxes arising in connection with the exercise of the Option by electing to (a) have the Company withhold shares of Common Stock, (b) tender back shares of Common Stock received in connection with such benefit, or (c) deliver other previously owned shares of Common Stock, in each case such stock having a then Fair Market Value (as defined in the Plan) equal to the amount to be withheld; provided , however , that the amount to be withheld shall not exceed the Participant’s estimated minimum federal, state and local tax