8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

_________________

Date of Report
(Date of earliest
event reported):	April 5, 2007

The Middleton Doll Company

(Exact name of registrant as specified in its charter)

Wisconsin	0-22663	39-1364345
(State or other	(Commission File	(IRS Employer
jurisdiction of	Number)	Identification No.)
incorporation)

1050 Walnut Ridge Drive, Hartland, Wisconsin 53029-8303

(Address of principal executive offices, including zip code)

(262) 369-8163

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

_________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

        On April 5, 2007, the Compensation Committee (the “Committee”) of the Board of Directors of The Middleton Doll Company (the “Company”) awarded Craig R. Bald, Vice President Finance, Chief Financial Officer, Secretary and Treasurer of the Company, and Kenneth A. Werner, Jr., a director of the Company and the President of the Company’s subsidiaries, License Products, Inc. and Lee Middleton Original Dolls, Inc., restricted shares of Common Stock and nonqualified stock options. The nonqualified stock options were granted under The Middleton Doll Company 2003 Stock Option Plan, as amended (the “2003 Plan”). Mr. Bald was granted 25,000 restricted shares of Common Stock, and Mr. Werner was granted 50,000 restricted shares of Common Stock. Mr. Bald was granted an option to purchase 50,000 shares of Common Stock, and Mr. Werner was granted an option to purchase 100,000 shares of Common Stock. The option price was $0.33 per share, being the fair market value (namely, the closing sale price of the Common Stock) of a share of Common Stock on April 5, 2007, the grant date.

        All shares of restricted stock discussed in this Item 5.02 vest ratably over a three year period from the date of grant, based upon continued service as an employee, or earlier in the event of death or disability or change of control. Prior to vesting, Messrs. Bald and Werner are entitled to receive dividends on the shares of restricted stock (dividends paid in shares of Common Stock are subject to the same risk of forfeiture and restrictions on transferability as the restricted shares) and to exercise voting rights. All of the options discussed in this Item 5.02 vest ratably over a four year period from the date of grant, and expire 10 years from the date of grant.

        In connection with granting the options, the Committee amended the 2003 Plan to (1) provide that the exercise price of stock option grants under the 2003 Plan is the fair market value (namely, the closing sale price of the Common Stock) of the Common Stock on the date of the grant, not on the business day immediately prior to the date of grant; and (2) increase the number of shares of Common Stock that may be granted to a participant in any single fiscal year from 85,000 to 100,000. The 2003 Plan, as amended, the form of Restricted Stock Grant Agreement and the form of Non-Qualified Stock Option Agreement are attached to this Current Report on Form 8-K and are incorporated by reference into this Current Report.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

Not applicable.

(b) Pro Forma Financial Information.

Not applicable.

(c) Shell Company Transactions.

Not applicable.

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(d) Exhibits. The following exhibits are being furnished herewith:

10.1 The Middleton Doll Company 2003 Stock Option Plan, as amended.

10.2 Form of Restricted Stock Grant Agreement.

10.3 Form of Non-Qualified Stock Option Agreement.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

THE MIDDLETON DOLL COMPANY

(Registrant)

By:  /s/ Craig R. Bald

        Craig R. Bald

        Vice President Finance, Chief Financial Officer,

        Secretary and Treasurer

Dated: April 11, 2007

Signature Page

THE MIDDLETON DOLL COMPANY

Exhibit Index to Current Report on Form 8-K dated April 11, 2007

Exhibit
Number

10.1 The Middleton Doll Company 2003 Stock Option Plan, as amended.

10.2 Form of Restricted Stock Grant Agreement.

10.3 Form of Non-Qualified Stock Option Agreement.

Exhibit Index

EX-10.1

[Amended and restated for purposes of this filing on Form 8-K]

THE MIDDLETON DOLL COMPANY
2003 STOCK OPTION PLAN

Section 1. Purpose

        The purpose of The Middleton Doll Company 2003 Stock Option Plan (the “Plan”) is to promote the best interests of The Middleton Doll Company, a Wisconsin corporation (together with any successor thereto, the “Company”), its subsidiaries and shareholders by encouraging and providing for the acquisition of an equity interest in the Company by officers and key employees and by enabling the Company and its subsidiaries to attract and retain the services of officers and key employees upon whose judgment, interest, skills, and special effort the successful conduct of the operations of the Company and its subsidiaries is largely dependent.

Section 2. Effective Date

        The Plan shall become effective on February 19, 2003, subject to the approval of the Plan by the shareholders of the Company at the Company’s 2003 Annual Shareholders Meeting. To the extent that any stock options are granted under the Plan prior to its approval by shareholders, the grants shall be contingent on approval of the Plan by the shareholders of the Company.

Section 3. Administration

        A committee (the “Committee”) of the Company’s Board of Directors (the “Board”) shall administer the Plan. The Committee shall consist of not less than two directors, each of whom shall qualify as a “non-employee director” within the meaning of Rule 16b-3 (“Rule 16b-3”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as an “outside director” under Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provisions thereto. If at any time the Committee shall not be in existence, the Board shall administer the Plan.

        Subject to the terms of the Plan and applicable law, the Committee shall have full power and authority to (a) interpret and administer the Plan and any instrument or agreement relating to, or made under, the Plan; (b) establish, amend, suspend or waive any rules and regulations related to the Plan and appoint any agents that it deems appropriate for the proper administration of the Plan; and (c) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. The Committee’s decisions and determinations under the Plan need not be uniform and may be made selectively among participants, whether or not they are similarly situated. A majority of the members of the Committee shall constitute a quorum and all determinations of the Committee shall be made by a majority of its members. The Committee may make any determination under the Plan without notice or meeting of the Committee by a writing signed by a majority of the Committee members.

Section 4. Eligibility and Participation

        The Committee, in its discretion, may designate from time to time officers and other key employees of the Company and its subsidiaries to participate in the Plan. The Committee shall consider such factors as it deems appropriate in selecting participants and in determining the amount of their respective benefits. The Committee’s designation of a participant in any year shall not require the Committee to designate such person to receive a benefit in any other year.

Section 5. Stock Subject to Plan

5.1. Number. Subject to adjustment as provided in Section 5.3, the total number of shares of Common Stock of the Company, par value 6 2/3 cents per share (the “Stock”), which may be issued under the Plan shall be 250,000 shares. The shares to be delivered under the Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock. Subject to adjustment as provided in Section 5.3, no participant shall be granted stock options in any single fiscal year of the Company for more than 100,000 shares of Stock. In all cases, determinations under this Section 5 shall be made in a manner that is consistent with the exemption for performance-based compensation provided by Section 162(m) of the Code (or any successor provision thereto) and any regulations promulgated thereunder.

5.2. Unused Stock: Unexercised Rights. If, after the effective date of the Plan, any shares of Stock covered by a stock option granted under the Plan, or to which any stock option relates, are forfeited or if a stock option otherwise terminates, expires, or is canceled prior to the delivery of all of the shares of Stock or of other consideration issuable or payable pursuant to such stock option, then the number of shares of Stock counted against the number of shares available under the Plan in connection with the grant of such stock option, shall again be available for the granting of additional stock options under the Plan. In the event the exercise price of a stock option or tax withholding obligations respecting such stock option are paid in whole or in part through the delivery (or withholding) of shares of Stock, the shares delivered (or withheld) in payment of such exercise price or withholding tax obligations may be subject to new options under this Plan.

5.3. Adjustment in Capitalization. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Stock or other securities of the Company, issuance of warrants or other rights to purchase Stock or other securities of the Company, or other similar corporate transaction or event affects the Stock such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee may, in such manner as it may deem equitable, adjust any or all of the (a) number of shares of Stock subject to the Plan (including the individual limits described in Section 5.1) and which thereafter may be made the subject of stock options under the Plan; (b) the number of shares of Stock subject to outstanding stock options; and (c) the grant, purchase or exercise price with respect to any stock option; or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding stock option in lieu of any of the foregoing adjustments; provided, however, that the number of shares of Stock subject to any stock option shall always be a whole number.

Section 6. Term of Plan

        The Plan shall remain in effect until all shares reserved for issuance hereunder have been issued, subject to earlier termination by the Board pursuant to Section 11.1. However, unless otherwise expressly provided in the Plan or in an applicable option agreement, any stock option theretofore granted may extend beyond such date and, to the extent set forth in the Plan, the authority of the Committee to amend, alter, adjust, suspend, discontinue or terminate any such stock option, or to waive any conditions or restrictions with respect to any such stock option, and the authority of the Board to amend the Plan, shall extend beyond such date.

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Section 7. Stock Options

7.1. Grant of Options. Options may be granted to participants at any time and from time to time as shall be determined by the Committee. Subject to the limits of Section 5.1 and Section 7.2, the Committee shall have complete discretion in determining the number, terms and conditions of options granted to a participant. All options granted shall be non-qualified stock options.

7.2. Non-qualified Stock Options. Non-qualified stock options will be exercisable at purchase prices of not less than One Hundred percent (100%) of the Fair Market Value of the Stock on the day of grant. Non-qualified stock options will be exercisable as determined by the Committee over not more than ten (10) years after the date of grant and shall terminate at such time as the Committee shall determine.

7.3. Option Agreement. Each option granted under the Plan shall be evidenced by an option agreement that shall be signed by the participant and an appropriate officer of the Company. The option agreement shall specify the option price, the vesting, the duration of the option, the number of shares of Stock to which the option pertains and such other provisions as the Committee shall determine (including, without limitation, non-compete, confidentiality or other similar provisions or provisions relating to transfer).

7.4. Fair Market Value. The “Fair Market Value” of the Stock shall be determined by such methods or procedures as shall be established from time to time by the Committee; provided, however, that the Fair Market Value shall not be less than the par value of the Stock; and provided further, that (a) if the Stock is traded on the over-the-counter market, then the Fair Market Value shall be the closing sale price for the Stock in the over-the-counter market on the measurement date (or if there was no sale of the Stock on such date, on the immediately preceding date on which there was a sale of the Stock), as reported by the National Association of Securities Dealers Automated Quotation System (or any successor), or (b) if the Stock is listed on a national securities exchange or national securities association, then the Fair Market Value shall be the closing sale price for the Stock on the Composite Tape on the measurement date.

7.5. Payment. The Committee shall determine the methods and the forms for payment of the purchase price of stock options, including (a) by delivery of cash or previously owned shares of Stock or other securities of the Company having a then Fair Market Value equal to the purchase price of such shares; or (b) by delivery (including by means of a facsimile transmission) to the Company or its designated agent of an executed irrevocable option exercise form together with irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the Stock and deliver the sale or margin loan proceeds directly to the Company to pay the purchase price; provided that in no event shall the shares of Stock to be issued upon the exercise of the stock options be transferred to the participant, nor shall the participant’s name be recorded on the Company’s shareholder ledger as the holder of record of such shares, until the Company has received payment in full for such shares, including the payment of any tax attributable to the shares to be delivered (as provided in Section 12). If a facsimile transmission is used by the participant to deliver the executed irrevocable option exercise form and related materials, then the participant should mail the original executed copy of the documents to the Company promptly after sending the facsimile. Notwithstanding the foregoing provisions, the Committee may limit the ability of a participant to pay the exercise price by delivery of previously owned shares or other securities of the Company or by delivery of an executed irrevocable option exercise form (collectively, the “Alternative Option Exercise Method”), if in the opinion of the Committee, in consultation with legal counsel as appropriate, (a) (i) the participant is or within the six months preceding the exercise of the stock option was subject to reporting under Section 16(a) of the Exchange Act and (ii) there is a substantial likelihood that the Alternative Option Exercise Method could subject the participant to a substantial risk of short-swing profit liability under Section 16(b) of the Exchange Act; (b) the Alternative Option Exercise Method could have an adverse tax or accounting effect on the Company; or (c) the Alternative Option Exercise Method could subject the Company to a risk of liability under the Exchange Act.

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Section 8. Transferability

        Each stock option granted under the Plan shall not be transferable other than by will or the laws of descent and distribution, except that a participant may, to the extent allowed by the Committee and in a manner specified by the committee (a) designate in writing a beneficiary to exercise the stock option after the participant’s death or (b) transfer any stock option.

Section 9. Rights of Employees

        Nothing in the Plan shall interfere with or limit in any way the right of the Company or any subsidiary to terminate any participant’s employment at any time nor confer upon any participant any right to continue in the employ of the Company or any subsidiary.

Section 10. Change of Control

        In order to preserve a participant’s rights under a stock option granted under the Plan 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 in its discretion may, at the time the stock option is granted or at anytime thereafter, take one or more of the following actions: (a) provide for the acceleration of any time period relating to the exercise of the stock option; (b) provide for the purchase of the stock option for an amount of cash or other property that could have been received upon the exercise of the stock option had the option been currently exercisable or payable; (c) adjust the terms of the stock option in the manner determined by the Board to reflect the Change of Control; (d) cause the stock option to be assumed, or new right substituted for the stock option, by another entity; or (e) make such other provision as the Board may consider equitable and in the best interests of the Company.

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Section 11. Amendment, Modification and Termination of Plan

11.1. Amendment, Modification and Termination of Plan. The Board may at any time amend, alter, suspend, discontinue or terminate the Plan; provided, however, that shareholder approval of any amendment of the Plan shall be obtained if otherwise required by (a) the Code or any rules promulgated thereunder, (b) the listing requirements of the principal national securities exchange, national securities association or over-the-counter market on which the Stock is then traded, or (c) any other applicable law. To the extent permitted by applicable law, the Committee may also amend the Plan, provided that any such amendments shall be reported to the Board. Termination of the Plan shall not affect the right of participants with respect to stock options previously granted to them, and all unexpired stock options shall continue in force and effect after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. Notwithstanding the foregoing, the Board and Committee are prohibited from amending the provisions of the Plan that prohibit the repricing of options without shareholder approval.

11.2. Waiver of Conditions. The Committee may, in whole or in part, waive any conditions or other restrictions with respect to any stock option granted under the Plan.

Section 12. Taxes

        The Company shall be entitled to withhold the amount of any tax attributable to any shares of Stock deliverable under the Plan after giving the person entitled to receive such shares of Stock 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 a participant to pay all or a portion of the federal, state and local withholding taxes arising in connection with the exercise of a stock option under the Plan by electing to (a) have the Company withhold shares of Stock, (b) tender back shares of Stock received in connection with such benefit, or (c) deliver other previously owned shares of Stock, in each case such stock having a then Fair Market Value 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 obligations associated with the transaction. The election must be made on or before the date as of which the amount of tax to be withheld is determined and otherwise as required by the Committee. The Fair Market Value of fractional shares of Stock remaining after payment of the withholding taxes shall be paid to the participant in cash.

Section 13. Miscellaneous

13.1. Stock Transfer Restrictions

(a) Shares of Stock purchased under the Plan may not be sold or otherwise disposed of except (i) pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Act”), or in a transaction which, in the opinion of counsel for the Company, is exempt from registration under the Act; and (ii) in compliance with state securities laws. The Committee may waive the foregoing restrictions, in whole or in part, in any particular case or cases or may terminate such restrictions whenever the Committee determines that such restrictions afford no substantial benefit to the Company.

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(b) All certificates for shares delivered under the Plan pursuant to any option or the exercise thereof shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the Plan and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate references to such restrictions.

13.2. Other Provisions. The grant of any option under the Plan may also be subject to other provisions (whether or not applicable to the benefit awarded to any other participant) as the Committee determines appropriate, including, without limitation provisions for (a) one or more means to enable participants to defer recognition of taxable income relating to stock options or cash payments derived therefrom, which means may provide for a return to a participant on amounts deferred as determined by the Committee (provided that no such deferral means may result in an increase in the number of shares of Stock issuable hereunder); (b) restrictions on resale or other disposition; and (c) compliance with federal or state securities laws and any applicable national securities exchange, national securities association or over-the-counter market requirements.

13.3. No Rights as Shareholder. No participant shall have any voting or dividend rights or other rights as a shareholder with respect to any shares of Stock subject to a stock option granted under the Plan before the date of transfer to the participant of a certificate or certificates for such shares and recording of the participant’s name on the Company’s shareholder ledger as the holder of record of such shares.

13.4. Option Agreement. No person shall have any rights under any stock option granted under the Plan unless and until the Company and the participant to whom the stock option was granted shall have executed an option agreement in such form as shall have been approved by the Committee. An option agreement shall constitute a binding contract between the Company and the participant, and every participant, upon acceptance of such option agreement, shall be bound by the terms and restrictions of such agreement and this Plan.

Section 14. Legal Construction

14.1. Requirements of Law. The granting of stock options under the Plan and the issuance of shares of Stock in connection with the exercise of any such stock options are subject to all applicable laws, rules and regulations, and to any required approvals by any governmental agencies or national securities exchange, national securities association or over-the-counter market on which the Stock may from time to time be listed or traded.

14.2. Repricing Prohibited. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Sections 5.3 and Section 10, the Committee, the Board and each other person is prohibited from decreasing the exercise price for any outstanding option granted to a Participant under this Plan after the date of grant or allowing a Participant to surrender an outstanding option granted under this Plan to the Company as consideration for the grant of a new option with a lower exercise price.

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14.3. Governing Law. The Plan and all option agreements under the Plan shall be construed in accordance with and governed by the laws of the State of Wisconsin, without reference to conflict of law principles thereof.

14.4. Severability. If any provision of the Plan or any option agreement or any stock option (a) is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or stock option, or (b) would disqualify the Plan, any option agreement or any stock option under any law deemed applicable by the Committee, then such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, any option agreement or the stock option, such provision shall be stricken as to such jurisdiction, person or stock option, and the remainder of the Plan, any such option agreement and any such stock option shall remain in full force and effect.

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EX-10.2

THE MIDDLETON DOLL COMPANY

FORM OF RESTRICTED STOCK GRANT AGREEMENT

        THIS RESTRICTED STOCK GRANT 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 “Executive”) effective as of ____________________ (the “Date of Award”).

RECITALS

        WHEREAS, the Board of Directors of the Company (the “Board”) determined that to promote the best interests of the Company, its subsidiaries and shareholders it was advisable to provide opportunities for additional stock ownership by the Company’s officers and key employees to increase their proprietary interest in the Company and their identification with the interests of the shareholders of the Company;

        WHEREAS, the Board authorized the Compensation Committee (the “Committee”) to grant shares of the Company’s common stock, par value 6 2/3 cents per share (the “Common Stock”), to certain officers and key employees, with such shares of Common Stock to be delivered from presently authorized and issued but not outstanding shares of Common Stock held by the Company as treasury shares; and

        WHEREAS, the Executive is an officer or other key employee to whom the Committee desires to grant shares of Common Stock to increase the Executive’s incentive and personal interest in the continued success and growth of the Company.

AGREEMENT

        NOW, THEREFORE, the parties agree as follows:

    1.        Grant of Restricted Stock. Subject to the terms and conditions of this Agreement, the Committee hereby grants to the Executive __________________ shares of Common Stock (the “Restricted Shares”).

    2.        Employment by the Company. The Restricted Shares granted hereunder are awarded on the condition that the Executive remains employed by the Company or a subsidiary of the Company from the Date of Award through the vesting of the Restricted Shares as provided for below.However, neither such condition nor the award of the Restricted Shares shall impose upon the Company any obligation to retain the Executive in its employ for any given period or upon any specific terms of employment.

    3.        Period of Restriction.

a. Vesting Period. ________________ of the Restricted Shares will vest on each of the first ___________ anniversaries of the Date of Award, provided the Executive is employed by the Company or a subsidiary on the applicable vesting date. If the Executive’s employment terminates prior to the date the Restricted Shares are vested as a result of death or disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”)), the Restricted Shares will become fully vested on such date of termination. Upon any other termination of employment prior to the date the Restricted Shares are vested, the Executive will forfeit the Restricted Shares unless otherwise determined by the Board or Committee. Notwithstanding the foregoing, in the event of any sale of assets, merger, consolidation, combination or other corporate reorganization, restructuring or change of control of the Company (a “Change of Control”), all Restricted Shares shall become vested in full provided the Executive is employed by the Company or a subsidiary on the date of such Change of Control.

b. Non-Transferability of Shares. The Executive may not sell, transfer or otherwise alienate or hypothecate any of the Restricted Shares until they are vested.

c. Voting and Dividends. While the Restricted Shares are subject to forfeiture, the Executive may exercise full voting rights and will receive all dividends and other distributions paid with respect to the Restricted Shares, in each case so long as the applicable record date occurs before the Restricted Shares are forfeited. If, however, any such dividends or distributions are paid in shares of Common Stock, such shares will be subject to the same risk of forfeiture, restrictions on transferability and other terms of this Agreement as are the Restricted Shares with respect to which they were paid.

    4.        Restrictions on Transfer of Shares.

    a.        Securities Laws. The Executive acknowledges that he or she is acquiring the Restricted Shares for investment purposes only and not with a view to resale or other distribution thereof to the public in violation of the Securities Act of 1933, as amended from time to time (the “Securities Act”). The Executive agrees and acknowledges with respect to any Restricted Shares that have not been registered under the Securities Act, that (i) the Executive will not sell or otherwise dispose of such shares except pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or in a transaction which in the opinion of counsel for the Company is exempt from such registration, and (ii) a legend will be placed on the certificates for the shares to such effect. As further conditions to the issuance of the Restricted Shares, the Executive agrees for himself, his beneficiary(ies), and his heirs, legatees and legal representatives to execute and deliver to the Company such investment representations and warranties, to enter into a restrictive stock transfer agreement, and to take or refrain from taking such other actions, as counsel for the Company determines may be necessary or appropriate for compliance with the Securities Act and any applicable federal or state securities laws, regardless of whether the shares have at that time been registered under the Securities Act or qualified under the securities laws of any state.

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    b.        The certificate(s) for the Restricted Shares shall bear the following legend:

        “The shares of Common Stock represented by this certificate are restricted securities as that term is defined under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). These shares may not be sold, transferred or disposed of unless they are registered under the Securities Act, or sold in a transaction that is exempt from registration under the Securities Act and any applicable state securities laws. Any sale, assignment, exchange, gift, transfer or other disposition of the Common Stock represented by this certificate is subject to the terms and conditions of a Stock Grant Agreement, dated and effective as of ___________________.”

    5.       Registration. The Restricted Shares may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued, such certificate shall be registered in the name of the Executive and shall bear the legend provided for above.

    6.       Escrow/Issuance of Shares. The Restricted Shares will be held in escrow by the Company, as escrow agent. The Company will give the Executive a receipt for the Restricted Shares held in escrow that will state that the Company holds such shares in escrow for the Executive’s account, subject to the terms of this Agreement, and the Executive will give the Company a stock power for such shares duly endorsed in blank which will be used in the event such shares are forfeited in whole or in part. As soon as practicable after the vesting date, the Restricted Shares will cease to be held in escrow, and certificate(s) for such number of shares will be delivered to the Executive or, in the case of the Executive’s death, to his or her beneficiary.

    7.       Beneficiary. The Executive may designate one or more beneficiaries who shall be entitled to receive the Restricted Shares that vest upon the death of Executive. The Executive may from time to time revoke or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Company. The last such designation received by the Company shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Company prior to the Executive’s death, and in no event shall any designation be effective as of a date prior to such receipt. If no beneficiary designation is in effect at the time of Executive’s death, or if no designated beneficiary survives the Executive or if such designation conflicts with law, the Executive’s estate will be considered the beneficiary. If the Board or Committee is in doubt as to the right of any person to receive the Restricted Shares, the Company may refuse to issue shares to any individual, without liability for any interest or dividends on the underlying Common Stock, until the Board or Committee determines the person entitled to receive the shares, or the Company may apply to any court of appropriate jurisdiction and such application shall be a complete discharge of the liability of the Company therefor.

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    8.       Non-Transferability of Award. This Agreement shall not be transferable other than by will or by the laws of descent and distribution, or pursuant to a beneficiary designation filed in accordance with this Agreement.

    9.       Tax Withholding. To the extent that the receipt of the Restricted Shares results in income to the Executive for federal, state or local income tax purposes, the Executive shall deliver to the Company at the time the Company (or a subsidiary) is obligated to withhold taxes in connection with such receipt or vesting, as the case may be, such amount as the Company requires to meet its withholding obligation under applicable tax laws or regulations, and if the Executive fails to do so, the Company has the right and authority to deduct or withhold from other compensation payable to the Executive an amount sufficient to satisfy its withholding obligations. If the Executive does not make an election under Section 83(b) of the Code in connection with this Agreement, the Participant may satisfy the withholding requirement, in whole or in part, by electing to have the Company withhold for its own account that number of Restricted Shares otherwise deliverable to the Participant from escrow hereunder on the date the tax is to be determined having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that the Company must withhold in connection with the vesting of such Restricted Shares. Such election must be irrevocable, in writing, and submitted to the Secretary of the Company before the applicable vesting date. The Fair Market Value of any fractional share of Common Stock not used to satisfy the withholding obligation (as determined on the date the tax is determined) will be paid in cash. The “Fair Market Value” of the Common Stock shall be determined by such methods or procedures as shall be established from time to time by the Board or the Committee; provided, however, that the Fair Market Value shall not be less than the par value of the Common Stock; and provided further, that (a) if the Common Stock is traded on the over-the-counter market, then the Fair Market Value shall be the closing sale price for the Common Stock in the over-the-counter market on the measurement date (or if there was no sale of the Common Stock on such date, on the immediately preceding date on which there was a sale of the Common Stock), as reported by the National Association of Securities Dealers Automated Quotation System (or any successor), or (b) if the Common Stock is listed on a national securities exchange or national securities association, then the Fair Market Value shall be the closing sale price for the Common Stock on the Composite Tape on the measurement date.

    10.       Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be a waiver of such provision or of any other provision hereof.

    11.       Notices. Any notice hereunder to the Company shall be addressed to it at its office, 1050 Walnut Ridge Drive, Hartland, Wisconsin 53029, and any notice hereunder to Executive shall be addressed to him or her at the last home address on file with the Company. Either party may designate some other address at any time hereafter in writing.

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    12.       Adjustment Provisions. In the event of any change in the Common Stock, whether by reason of a declaration of a stock dividend (other than a stock dividend declared in lieu of an ordinary cash dividend), spin-off, merger, consolidation, recapitalization, split-up, combination or exchange of shares, or otherwise, the aggregate number of Restricted Shares subject to this Agreement shall be appropriately adjusted in order to prevent dilution or enlargement of the benefits intended to be made available under this Agreement.

    13.       Severability. In the event any provision of the Agreement is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining provisions of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.

    14.       Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto.

    15.       Interpretation. As a condition of the granting of the Restricted Shares, the Executive agrees for himself or herself and his or her legal heirs, legatees or representatives, that any dispute or disagreement that may arise under or as a result of or pursuant to this Agreement shall be determined by the Board or the Committee in its sole discretion, and any interpretation by the Board or the Committee of the terms of this Agreement shall be final, binding and conclusive.

    16.       Powers of the Company Not Affected. The existence of this Agreement or the Restricted Shares herein granted shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred, or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

    17.       Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Wisconsin, without reference to conflict of law principles thereof.

    18.       Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

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        IN WITNESS WHEREOF, the parties have executed this Restricted Stock Grant Agreement dated and effective as of the date first above written.

THE MIDDLETON DOLL COMPANY

By:__________________________________

Its:__________________________________

The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Restricted Stock Grant Agreement.

_______________________________________
                (Executive)

Name:__________________________________

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EX-10.3

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 obligations associated with the transaction. The election must be made on or before the date as of which the amount of tax to be withheld is determined and otherwise as required by the Committee. The Fair Market Value of fractional shares of Common Stock remaining after payment of the withholding taxes shall be paid to the Participant in cash.

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        6.    Non-Transferability. The Participant shall have no rights to sell, assign, transfer, pledge, assign or otherwise alienate the Option under this Agreement, except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code (as defined in the Plan) or Title I of ERISA, or the rules thereunder, and any such attempted sale, assignment, transfer, pledge or other conveyance shall be null and void. The Option shall be exercisable during the Participant’s lifetime only by the Participant (or his or her legal representative).

        7.    Beneficiary. The person whose name appears on the signature page hereof after the caption “Beneficiary” or any successor designated by the Participant in accordance herewith (the person who is Participant’s Beneficiary at the time of his or her death is referred to as the “Beneficiary”) shall be entitled to exercise the Option, to the extent it is exercisable, after the death of the Participant. The Participant may from time to time revoke or change his or her Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Board of Directors. The last such designation received by the Board of Directors shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Board of Directors prior to the Participant’s death, and in no event shall any designation be effective as of a date prior to such receipt. If no Beneficiary designation is in effect at the time of the Participant’s death, or if no designated Beneficiary survives the Participant or if such designation conflicts with law, the Participant’s estate shall be entitled to exercise the Option, to the extent it is exercisable after the death of the Participant. If the Committee is in doubt as to the right of any person to exercise the Option, then the Company may refuse to recognize such exercise, without liability for any interest or dividends on the underlying Shares, until the Board of Directors determines the person entitled to exercise the Option, or the Company may apply to any court of appropriate jurisdiction and such application shall be a complete discharge of the liability of the Company therefor.

        8.    Securities Law Restrictions. The Participant acknowledges that he or she is acquiring the Option and the Shares purchasable pursuant to the Option for investment purposes only and not with a view to resale or other distribution thereof to the public in violation of the Securities Act of 1933, as amended (the “Act”). The Participant agrees and acknowledges with respect to any Shares that have not been registered under the Act, that (i) Participant will not sell or otherwise dispose of such Shares except pursuant to an effective registration statement under the Act and any applicable state securities laws, or in a transaction which in the opinion of counsel for the Company, is exempt from such registration, and (ii) a legend will be placed on the certificates for the Shares to such effect. As further conditions to the issuance of the Shares, the Participant agrees for himself or herself, and his or her heirs, legatees and legal representatives, prior to such issuance to execute and deliver to the Company such investment representations and warranties, and to take such other actions, as counsel for the Company determines may be necessary or appropriate for compliance with the Act and any applicable securities laws.

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        Unless otherwise determined by the Board of Directors, the Participant agrees that any certificate representing shares of Common Stock acquired upon exercise of the Option shall bear the following legend:

“The shares of Common Stock represented by this certificate are restricted securities as that term is defined under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Act”). These shares may not be sold, transferred or disposed of unless they are registered under the Act, or sold in a transaction that is exempt from registration under the Act and any applicable state securities laws. Any sale, assignment, exchange, gift, transfer or other disposition of the Common Stock represented by this certificate is subject to the terms and conditions of a Non-Qualified Stock Option Agreement, dated and effective as of __________________ and The Middleton Doll Company 2003 Stock Option Plan.”

        9.    Limited Interest.

            a.     The grant of the Option shall not be construed as giving the Participant any interest other than as provided in this Agreement.

            b.     The Participant shall not have any voting or dividend rights or other rights as a shareholder with respect to the Shares before the date of transfer to the Participant of a certificate or certificates for such shares and recording of the Participant’s name on the Company’s shareholder ledger as the holder of record of such shares.

            c.     Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any subsidiary to terminate the Participant’s employment at any time nor confer upon the Participant any right to continue in the employ of the Company or any subsidiary.

            d.     The grant of the Option shall not affect in any way the right or power of the Company to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company’s capital structure or its business, or any merger, consolidation or business combination of the Company, or any issuance or modification of any term, condition, or covenant of any bond, debenture, debt, preferred stock or other instrument ahead of or affecting the Shares or the rights of the holders thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other Company act or proceeding, whether of a similar character or otherwise.

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        10.    Incorporation by Reference. The terms of the Plan to the extent not stated herein are expressly incorporated herein by reference and in the event of any conflict between this Agreement and the Plan, the Plan shall govern.

        11.    Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Wisconsin, without reference to conflict of law principles thereof.

        12.    Amendment. This Agreement may not be amended, modified, terminated or otherwise altered except by the written consent of the parties hereto.

        13.    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

        14.    Severability. If any provision of this Agreement, the Option or the Plan (a) is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to the Participant or the Option, or (b) would disqualify this Agreement, the Option or the Plan under any law deemed applicable by the Committee, then such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Agreement, the Option or the Plan, then such provision shall be stricken as to such jurisdiction, the Participant or the Option, and the remainder of this Agreement, the Option and the Plan shall remain in full force and effect.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

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        IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer and the Participant has hereunto affixed his or her hand, dated and effective as of the date first set forth above.

	THE MIDDLETON DOLL COMPANY
	(“Company”)
	By:_________________________________
	Its:_________________________________
	(“Participant”)
	___________________________________
	Name:______________________________
Date of Agreement:  ________________	Grant Date:  ________________
Exercise Price Per Share: ______________	Option Expiration Date: _____________
No. of Shares: ______________
Beneficiary: ____________________________	Address of Beneficiary:
	___________________________________
	___________________________________
Beneficiary Tax Identification No.:
______________________________________

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