Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 1 of 109 USr S SDNY DOCUMENT ELECTRONICALLY FILED UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK DOC #: DATE FILED:

In re: JAAKS PACIFIC, INC. SHAREHOLDERS CLASS ACTION LITIGATION, No. 04 Civ. 8807 (RJS) ORDER

This Document Relates to:

All actions

RICHARD J. SULLIVAN, United States District Judge.

This is a securities class action brought by lead Plaintiffs Kenneth J. Tucker, Tonia R.

Tucker-Kraus, Michael Kraus, and Indiana Electrical Workers Pension Trust Fund IBEW against

Defendants JAKKS Pacific Inc., Jack Friedman, Steven G. Berman, and Joel M. Bennett. Plaintiffs

allege violations of the Securities Exchange Act of 1934 based on allegedly false and misleading

statements contained in JAKKS securities filings from December 3, 1999 through October 19, 2004

inclusive (the "Class Period"). More specifically, Plaintiffs allege that Defendants made material

misstatements and omissions in connection with a scheme of commercial bribery undertaken by

JAKKS in order to secure valuable licensing agreements with World Wrestling Entertainment, Inc.

("WWE"). Now before the Court is Plaintiffs' unopposed motion pursuant to Federal Rule of Civil

Procedure 23(e) for an Order (i) preliminarily certifying a class for purposes of settlement only, (ii)

certifying lead Plaintiffs and co-lead counsel as class Plaintiffs and counsel, respectively, (iii)

approving the proposed manner and form of notice to the proposed class, proof of claim and release

form, and summary notice, (iv) preliminarily approving the proposed settlement of this action on the

terms set forth in the parties' Stipulation of Settlement ("Settlement") dated November 2, 2009, (v) appointing Gilardi & Co. LLC as claims administrator to supervise and administer the proposed Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 2 of 109

notice and the processing of claims, and (vi) scheduling a fairness hearing.' For the reasons that follow, the Court grants the motion in its entirety.

I. BACKGROUND

A. The Underlying Conduct at JAKKS

The Second Amended Complaint ("SAC", or the "Complaint") alleges that JAAKS engaged

in a bribery scheme in order to obtain lucrative toy and video-game licenses from WWE. JAKKS is

a Delaware corporation formed in 1995 that operates a multi-line, multi-brand toy company that

designs, develops, produces and markets toys and related products. (SAC ¶ 32.) WWE is a famous

"integrated media and entertainment company" that produces, televises, and markets wrestling on

television. (Id. ¶ 33.)

On October 24, 1995, JAKKS and WWE entered into a license agreement through WWE's

licensing agent, Stanley Shanker & Associates Inc. ("SSAI"), which allowed JAKKS to manufacture

and market WWE toys in the United States. (Id. ¶¶ 4, 34.) Over the next three years, the Complaint

alleges that JAKKS participated in a scheme to secure further licensing agreements by using bribes

and kickbacks. Specifically, the Complaint alleges that JAKKS paid both SSAI and James Bell,

Senior Vice President for Licensing and Merchandising for WWE, bribes laundered through foreign

subsidiaries in exchange for the granting of licenses on favorable terms. (Id. ¶¶ 35-51.) The fruits of

this scheme, according to the Complaint, included an international toy license agreement entered into

on February 10, 1997, a video game license agreement entered into on June 23, 1998, and extensions

of the toy licenses granted on June 24, 1998. (Id. ¶¶ 37, 46-51.)

Plaintiffs allege that the failure of JAKKS to disclose the alleged wrongful conduct rendered

A list of the documents submitted with lead Plaintiffs' motion is annexed to this decision.

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many statements in its public securities filings false and misleading and caused the price of JAKKS securities to be artificially inflated from December 3, 1999, the date on which JAKKS first trumpeted its WWE video game line, through October 19, 2004, the date on which the alleged bribery scheme came to light. (Id. $ 56.)

On October 19, 2004, JAKKS released its third quarter results and first disclosed that it was

"`engaged in discussions with the WWE' concerning the `validity of the licenses as a result of certain

transactions between [JAKKS] and [SSAI] that occurred more than six years ago."' (Id. ¶ 88.) The

price of JAKKS stock dropped immediately from $24.15 to $18.81 per share. As details continued

to emerge about the bribery scheme, both through a JAKKS earnings call and from a lawsuit filed by

WWE against SSAI, the price of JAAKS dropped to $12.96 per share by the end of business on

October 20, 2004. (Id. ¶ 93.)

B. Procedural History

Beginning on November 5, 2004, a number of securities class action lawsuits were filed in

this District on behalf of purchasers of JAAKS common stock during the class period. By Order

dated January 25, 2005, the Honorable Kenneth M. Karas, District Judge, consolidated these actions

into the above-captioned case. (Doc. No. 29.) On May 11, 2005, the Court appointed lead Plaintiffs

and approved the law firms of Millberg Weiss LLP (now Milberg LLP) and Coughlin Stoia Geller

Rudman & Robins LLP (now Robbins Geller Rudman & Dowd LLP) as co-lead counsel. On July

11, 2005, lead Plaintiffs filed a Consolidated Amended Complaint. (Doc. No. 62.)

On September 9, 2005, Defendants moved to dismiss the Amended Complaint. On January

25, 2008, Judge Karas issued an opinion and order granting in part and denying in part Defendants'

motion to dismiss and granting Plaintiffs leave to re-plead their dismissed claims. (Doc. No. 87.)

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On March 3, 2008, the case was reassigned to my docket. Plaintiffs filed the Second Amended

Complaint on March 14, 2008. (Doc. No. 95.) Defendants then moved to dismiss the Second

Amended Complaint and the motion became fully submitted on August 11, 2008. (Doc. No. 101.)

On February 12, 2009, the parties attended an all-day mediation before the Hon. Nicholas

Politan, a retired federal judge. (Pls.' Mem. 4.) The parties were then able to come to an agreement- in-principal on February 12, 2009. (Id.) The terms of the agreement-in-principal were finalized in the parties' Stipulation of Settlement, which was entered into on November 2, 2009. (Pls.' Mot. for

Preliminary Approval of Class Settlement Ex. 1 (the Settlement).) The Settlement requires that,

within fifteen days of this order, JAAKS pay $3.925 million into an escrow account maintained by

lead co-counsel. (Settlement § 3. L) The funds will be used to pay (i) compensation to class

members, (ii) administrative costs, (iii) attorneys' fees, and (iv) taxes. (Id. § 3.4.)

II. DISCUSSION

Class actions such as this are governed by Rule 23 of the Federal Rules of Civil Procedure.

Here, the parties seek the Court's preliminary approval of the Settlement pursuant to Rule 23(e),

which sets forth the procedures applicable to a proposed settlement. In the Second Circuit, there has

been a preference "to apply Rule 23 according to a liberal rather than a restrictive interpretation." In

re NASDAQ Market-Makers Antitrust Litig., 169 F.R.D. 493, 504 (S.D.N.Y. 1996) (citation

omitted). Preliminary approval of a proposed settlement is the first in a two-step process required

before a class action may be settled. The second step requires notice to class members of the

proposed settlement and a hearing at which the class members and the settling parties may be heard

regarding the court's final approval of the settlement. In re NASDAQ Market-Makers Antitrust

Litig., 176 F.R.D. 99,102 (S.D.N.Y. 1997).

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In In re Initial Public Offering Securities Litigation, Judge Scheindlin summarized the role of the district court in evaluating a proposed settlement:

Unlike settlements in ordinary suits, the settlement of a class action must be approved by the court. The court owes a duty to class members to ensure that the proposed settlement is fair, reasonable, and adequate. In making this determination, the court's primary concern is with the substantive terms of the settlement; accordingly, the court must compare the terms of the compromise with the likely rewards of litigation. The trial judge must apprise herself of all facts necessary for an intelligent and objective opinion of the probabilities of ultimate success should the claim be litigated. The court should not go so far as to effectively conduct a trial on the merits, but should make findings of fact and conclusions of law whenever the propriety of the settlement is seriously in dispute. The court must also scrutinize the negotiating process leading up to the settlement. A presumption of fairness, adequacy, and reasonableness may attach to a class settlement reached in arm's-length negotiations between experienced, capable counsel after meaningful discovery.

243 F.R.D. 79, 82-83 (S.D.N.Y. 2007) (internal quotation marks and citations omitted). The

propriety of this settlement is not seriously in dispute. Even though lead Plaintiffs' motion is

unopposed and the Settlement is straightforward, the Court is nevertheless required to scrutinize it

before making a ruling. What follows is a brief discussion of the Court's reasons for preliminarily

certifying the proposed class for settlement purposes and for preliminarily approving this proposed

settlement.

A. Class Certification

Courts often certify classes for settlement purposes, and it is not uncommon for courts to certify settlement classes on a preliminary basis, at the same time as the preliminary approval of the fairness of the settlement, solely for the purpose of settlement, deferring final certification of the class until after the fairness hearing. See, e.g., In re Stock Exchs. Options Trading Antitrust Litig.,

No. 99 Civ. 0962 (RCC), 2005 WL 1635158, *5 (S.D.N.Y. July 8, 2005) (internal quotation marks and citation omitted); see also Denney v. Deutsche BankAG, 443 F.3d 253, 262, 270 (2d Cir. 2006)

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(holding that "[c]onditional certification survives the 2003 amendments to Rule 23(c)(1)," finding no abuse of discretion in the district court's conditional certification for settlement purposes only, but remanding for modification of other provisions in the agreement). Plaintiffs now ask the Court to exercise its discretion to certify the proposed class pursuant to Rule 23(a) and (b)(3).

1. Rule 23(a)

Rule 23(a) provides:

Prerequisites. One or more member of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). Recently, the Second Circuit reiterated that a Court must be persuaded that all

of the elements of Rule 23 are met by a preponderance of the evidence before certifying a class. See

In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29, 35 (2d Cir. 2009).

a. Rule 23(a)(1) — Numerosity

The rule requires that the class be "so numerous that joinder of all members is impracticable"

— but not necessarily "impossible." Robidoux v. Celani, 987 F.2d 931, 935 (2d Cir. 1993). The

potential difficulty or inconvenience of joining all members of the class may justify a class action.

See In re Indep. Energy Holdings PLC Sec. Litig., 210 F.R.D. 476 (S.D.N.Y. 2002). A

determination of practicability depends upon all the circumstances of a case, including the "(1) judicial economy arising from avoidance of a multiplicity of actions; (2) geographic dispersion of

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class members; (3) financial resources of class members; (4) the ability of claimants to institute individual suits, and (5) requests for prospective injunctive relief which would involve future class members." Robidoux, 987 F.2d at 936 (citation omitted).

Precise calculation of the number of class members is not required before certifying a class;

in fact, numbers in excess of forty generally satisfy the numerosity requirement. See Consol. Rail

Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995). In this case, it is self-evident that the

number of shareholder class members far exceeds forty. Indeed, the class consists of all purchases of

JAKKS common stock over a nearly five-year period. As of November 9, 2004, there were

approximately 26.2 million shares of JAKKS common stock outsanding. (Pls.' Mem. 13). Thus,

there can be no doubt that the number of class members is in the tens of thousands, if not millions.

Cf. In re NYSE Specialists Sec. Litig., 260 F.R.D. 55, 69-70 (S.D.N.Y.2009) (noting that numerosity

is normally satisfied for shareholder class actions involving publicly traded companies).

b. Rule 23(a)(2) — Commonality

The commonality requirement is satisfied when the class members' claims share a common

question of law or fact. See Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 155 (2d

Cir. 2001). This requirement "has been applied permissively in securities fraud litigation. In

general, where putative class members have been injured by similar material misrepresentations and

omissions, the commonality requirement is satisfied." Fogarazzo v. Lehman Bros., 232 F.R.D. 176,

180 (S.D.N.Y. 2005) (citations omitted). The misstatements and representations underlying this lawsuit concern a single series of wrongdoing: the bribery scheme associated with securing the

WWE licenses. "Where the facts as alleged show that Defendants' course of conduct concealed material information from an entire putative class, the commonality requirement is met." In re

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Oxford Health Plans, Inc., 191 F.R.D. 369, 374 (S.D.N.Y. 2000).

c. Rule 23(a)(3) — Typicality

"Typicality ... does not require that the situations of the named representatives and the class members be identical." In re Oxford Health Plans, Inc. Sec. Litig., 199 F.R.D. 119 (S.D.N.Y. 2001).

This requirement is satisfied if it is shown that "each class member's claim arises from the same course of events and each class member makes similar legal arguments to prove the defendant's

liability." In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d at 35. Put another way, typicality has been demonstrated where the "injuries derive from a unitary course of conduct by a single

system." Marisol A. v. Giuliani, 126 F.3d 372, 379 (2d Cir. 1997) (per curiam). "When it is alleged

that the same unlawful conduct was directed at or affected both the named plaintiff and the class

sought to be represented, the typicality requirement is usually met irrespective of minor variations in the fact patterns underlying individual claims." Robidoux at 936-37. In this action, JAKKS and the

individual Defendants' liability to any class member would necessarily be premised on the same misstatements and omissions and on the same legal theories. And there is no question that the lead

Plaintiffs, as class representatives, would "have the incentive to prove all the elements of the cause

of action which would be presented by the individual members of the class were they initiating

individualized actions." Oxford, 199 F.R.D. at 123.

d. Rule 23(a)(4) — Adequacy

In Flag, the Second Circuit explained that "[a]dequacy entails inquiry as to whether: 1) plaintiffs interests are antagonistic to the interest of other members of the class and 2) plaintiffs attorneys are qualified, experienced and able to conduct the litigation." 574 F.3d at 35 (internal quotation marks omitted). Thus, a court should "focus ... on uncovering `conflicts of interest

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between named parties and the class they seek to represent."' Id. (quoting Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 625 (1997)). Only "fundamental" conflicts, however, will defeat a motion for class certification. Id.

Here, there is no sign of any potential conflict between the lead Plaintiffs and the rest of the class let alone a "fundamental" conflict. Lead Plaintiffs' interests are not at odds with or inconsistent with the rest of the class — they seek the same relief for themselves as for the rest of the class. Indeed, the factual and legal claims of lead Plaintiffs and the class arise from the same nexus of operative facts and course of conduct by Defendants.

As to the competence of co-lead counsel, both Milberg LLP and Robbins Geller Rudman &

Dowd LLP are experienced firms in the field of securities litigation. In addition, they have represented the interests of lead Plaintiffs diligently and competently thus far in this litigation.

Accordingly, the Court has little doubt that lead Plaintiffs and co-lead counsel will adequately represent the interests of the class members in this case.

e. Ascertainability

Although Rule 23(a) does not expressly require that a class be definite in order to be certified, a requirement that there be an identifiable class has been implied by the courts. This implied requirement is often referred to as "ascertainability." Fogarazzo, 232 F.R.D. at 181 (citations omitted). An ascertainable class exists if its members can be identified by reference to objective criteria. See Dunnigan v. Metro. Life Ins. Co., 214 F.R.D. 125, 135 (S.D.N.Y. 2003) (citation and quotations omitted). "Class members need not be ascertained prior to certification, but the exact membership of the class must be ascertainable at some point in the case." Fogarazzo, 232 F.R.D. at

181 (internal quotation marks omitted).

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The class proposed here is easily ascertainable using objective criteria. The class members

— purchasers of JAKKS common stock during the precisely defined class period — may be identified by using commonly held records of securities holders. The Settlement requires Defendants to "cooperate in the administration of the Settlement to the extent reasonably necessary to effectuate its terms, including providing without charge all information from JAKKS' transfer records concerning the identity of Class Members and their transactions." (Settlement § 5. 1.) Accordingly, there exists an objective basis to determine which former or current JAKKS stockholders qualify to be the members of the class.

2. Rule 23(b)(3)

Rule 23(a) imposes threshold requirements applicable to all class actions. When these are met, in a suit for money damages, the court must move on to Rule 23(b), which allows for three alternative types of class actions. Plaintiffs here seek approval under the third category, set forth in

subsection 23(b)(3), which allows that a class action to be maintained if Rule 23(a) is satisfied and if:

the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:

(A) the class members' interests in individually controlling the prosecution or defense of separate actions;

(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;

(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and

(D) the likely difficulties in managing a class action.

Fed. R. Civ. P. 23(b)(3).

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"The predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Amchem Prods., Inc. v. Windsor, 521 U.S. 591,623 (1997).

"Even if Rule 23(a)'s commonality requirement may be satisfied by [plaintiffs'] shared experience, the predominance criterion is far more demanding." Id. at 623-24. "Not only must plaintiffs establish the existence of legal and factual issues common to class members.... they must also show that those common issues predominate for certification pursuant to Rule 23(b)(3)." Rios v. Marshall,

100 F.R.D. 395, 407 (S.D.N.Y. 1983).

In Moore v. PaineWebber, Inc., the Second Circuit held that "class certification of fraud claims based on oral misrepresentations is appropriate only where the misrepresentations relied upon were materially uniform, allowing such misrepresentations to be demonstrated using generalized rather than individualized proof." 306 F.3d 1247, 1249 (2d Cir. 2002). The opinion elaborated:

"Class-wide issues predominate if resolution of some of the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof." Id. at 1252. The Supreme Court has noted, however, that the predominance test generally is "readily met in certain cases alleging consumer or securities fraud." Amchem, 521 U.S. at 625; accord In re

Indep. Energy Holdings PLC Sec. Litig., 210 F.R.D. 476, 486 (S.D.N.Y. 2002) ("Class actions are generally well-suited to securities fraud cases, in large part because they avoid the time and expense of requiring all class members to proceed individually." (internal quotation marks and citations omitted)).

The predominance requirement is easily satisfied here. The fact that there are thousands of individual transactions does not necessarily preclude class certification a defendant's conduct

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with respect to each transaction may be similar or even identical. "In securities fraud class actions in which the fraud is alleged to have been carried out through public communications to a wide variety of market participants, common issues of law and fact will generally predominate over individual issues." Dietrich v. Bauer, 192 F.R.D. 119, 127-28 (S.D.N.Y. 2000). This is such a case. While damage amounts may vary among individual investors, liability can be determined on a class-wide basis. Lead Plaintiffs allege that Defendants' misstatements and omissions injured all the members of the class and caused the entire class's losses. These allegations satisfy Rule 23(b)(3)'s predominance requirement for settlement purposes.

There is also no question here that the class action device is superior to other methods of litigation. Rule 23(b)(3)(A)-(D) lists four non-exclusive factors for the court to consider. As the

Supreme Court stated in Amchem: "The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights." 521 U.S. at 617 (internal quotation marks omitted). As a practical matter, individual JAKKS investors are not likely to bring separate lawsuits seeking relief.

In any event, any individual who wants to do so will be free to exclude himself from the settlement class before final approval of a settlement.

Also relevant is the second factor listed — the extent and nature of any litigation concerning the controversy already commenced by or against members of the class, which "in certain instances may indicate that there are more appropriate vehicles than the proposed class action for vindicating the rights of putative class members." Rios, 100 F.R.D. At 409. Here the Settlement explicitly excepts ERISA claims and the claims brought in the consolidated derivative action, In re JAKKS

Pacific, Inc. Derivative Action, No. 04 Civ. 9441 (RJS).

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As to the third factor listed in Rule 23(b)(3)(c) — the desirability of concentrating the litigation in a particular forum — it has been observed in similar cases that "it serves the interest of justice to resolve the common disputes of potential class members in one forum." See In re Frontier

Ins. Group, Inc. Sec. Litig., 172 F.R.D. 31, 48-49 (E.D.N.Y. 1997). Thus, the Court has little doubt that the requirement of Rule 23(b)(3)(c) is met.

Finally, the fourth factor — manageability of the litigation — is inapplicable here, because the plaintiffs seek certification solely for the purposes of settlement. See Amchem, 521 U.S. at 620.

In sum, the Court finds that the class action device is superior to other available methods for resolution of this controversy. Finding that all the requirements of Rules 23(a) and 23(b)(3) have been met at this point, the Court will certify the following class for the purposes of settlement only:

all persons who purchased JAKKS common stock during the period between December 3, 1999 and October 19, 2004, inclusive. Excluded from the Class are: Defendants, JAKKS's directors and officers during the Class Period, any Person, firm, trust, corporation, officer, director or other individual or entity in which any defendant has a controlling interest or which is related to or affiliated with any of the defendants, and the legal representatives, agents, heirs, successors, or assigns of any excluded party.

(Proposed Order 2.)

B. Preliminary Approval of Settlement

A court may approve a class action settlement if it is "fair, adequate, and reasonable, and not a product of collusion." In re In re Global Crossing Sec. and ERISA Litig., 225 F.R.D. 436, 455

(S.D.N.Y. 2004) (citing Joel A. v. Giuliani, 218 F.3d 132, 138-39 (2d Cir. 2000)).

Preliminary approval of a proposed settlement is appropriate where it is the result of serious, informed, and non-collusive negotiations, where there are no grounds to doubt its fairness and no other obvious deficiencies (such as unduly preferential treatment of class representatives or of segments of the class, or excessive compensation for attorneys), and where the settlement appears to fall within the range of possible approval.

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In re Gilat Satellite Networks, Ltd., No. 02 Civ. 1510 (CPS), 2007 WL 1191048, *9 (E.D.N.Y. April

19, 2007) (citations omitted). Thus, a court determines the fairness of a settlement by looking at both negotiating process leading to the settlement and the terms of the settlement itself. See D Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001). In reviewing a proposed settlement for preliminary approval, rather than final approval, the Court need only determine whether the proposed settlement is possibly fair, adequate, and reasonable. In re Prudential Sec. Ltd. P'ships, 163 F.R.D.

200,209 (S.D.N.Y. 1995).2

1. Good Faith, Arm's-Length Negotiations

For purposes of preliminary approval, the Court is satisfied that the negotiations leading up to the Settlement were undertaken in good faith and at arm's-length. As mentioned above, the settlement was reached only after considerable motion practice and a full-day mediation session with retired Judge Politan. In addition, both lead Plaintiffs and Defendants are represented by law firms experienced in securities litigation. Thus, there is nothing in the record which places the integrity of the settlement process in doubt.

2. The Proposed Settlement Is Reasonable

This proposed settlement falls with in a "range of possible approval." In re Nasdaq

Market-Makers Antitrust Litig., 176 F.R.D. 99 (S.D.N.Y. 1997). The settlement amount, $3.925 million, appears, at this stage of litigation, to reasonably value Plaintiffs' case given the uncertainty

2 A court reviewing a settlement for final approval must address the nine factors laid out in City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974). For preliminary approval purposes, however, we do not need to make such an intensive analysis. To try to do so before the fairness hearing would be premature. See Reade-Alvarez v. Eltman, Eltman & Cooper, P.C., 237 F.R.D. 26, 34 (E.D.N.Y. 2006).

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and risks attendant with a securities cases. Plaintiffs face the costs of extensive discovery, a pending motion to dismiss, summary judgment, and do so while facing experienced and sophisticated defense counsel. Indeed, plaintiffs' who proceed to trial always face the risk of obtaining no recovery at all.

See Wright v. Stern, 553 F. Supp. 2d 337, 228 (S.D.N.Y. 2008).

Moreover, going to trial involves all manner of risk. In cases involving publicly traded securities and purchases or sales in public securities markets, the elements of a securities fraud claim for violation of Section I O(b) and Rule l Ob -5 are: (1) a material misrepresentation (or omission); (2) scienter, i.e., a wrongful state of mind; (3) a connection with the purchase or sale of a security; (4) reliance, often referred to in cases involving public securities markets (fraud-on-the-market cases) as transaction causation; (5) economic loss; and (6) loss causation, i. e., a causal connection between the material misrepresentation and the loss. See Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 341-42

(2005). "In evaluating the settlement of a securities class action, federal courts, including this Court, have long recognized that such litigation is notably difficult and notoriously uncertain." In re

Sumitomo Copper Litig., 189 F.R.D. 274, 281 (S.D.N.Y. 1999) (citation and quotation omitted).

3. The Proposed Plan Does Not Favor Lead Plaintiffs

The Court also notes that there is no indication of any "deficiencies" in the proposed settlement that would undermine its fairness, and it does not "improperly grant preferential treatment to class representatives or segments of the class," In re Nasdaq Market-Makers, 176 F.R.D. at 102, or provide for excessive compensation for attorneys, for example. The proposed plan of allocation provides for distribution of the settlement funds to class members based upon when they purchased and sold JAKKS securities. In addition, the entire net amount will be distributed — no portion is to be returned to Defendants. (See Settlement § 7.11.)

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a. Attorneys' Fees Will Be Determined by the Court

The Settlement requires co-lead counsel to file applications for fees and expenses from the settlement fund with the Court. (Settlement § 6. 1.) The proposed notice represents that the award of attorneys' fees will not exceed thirty percent of the gross settlement fund. (Proposed Notice 14.)

After the hearing and final approval of the settlement, the Court will review the fee applications and issue an order awarding whatever amount it considers appropriate. The Settlement also provides that these fees and expenses are to be paid only from the settlement fund. (Settlement § 6. 1.)

b. The Proposed Plan of Allocation

The allocation of the settlement must also be fair and reasonable. In re Sterling Foster &

Co., Inc., Sec. Litig., 238 F. Supp. 2d 480, 486 (E.D.N.Y. 2002). "The purpose of developing a plan of allocation is to devise a method that permits the equitable distribution of limited settlement proceeds to eligible class members." Beecher v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978). The plan of allocation proposed here is not contained in the Settlement itself, but it is contained in the proposed notice. (See Proposed Notice 18-22.) The plan of allocation essentially distributes the settlement fund among the class members according to the dates on which they bought and sold their shares of JAKKS. (Id.) Courts frequently approve settlements allocated on the basis of each investor's loss. See, e.g., In re Luxottica Group S.p.A. Sec. Litig., 233 F.R.D. 306,316-17 (E.D.N.Y.

2006). Although it is not for the Court to approve a plan of allocation in advance of the fairness hearing, the Court notes that it appears to be clearly described and fair.

c. Claims Administrator

At the request of lead Plaintiffs, the Court will appoint Gilardi & Co. LLC, which has extensive experience as a claims administrator in securities actions, as claims administrator in this

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settlement. The Court notes that the Settlement requires that "[t]he Claims Administrator shall administer the Settlement under subject to the jurisdiction of the Court" and at the direction of co- lead counsel and the Court. (Settlement § 5.1) Sections five and seven of the Settlement more fully spell out the duties of the claims administrator and the process that it is to follow. (See id. §§ 5, 7.)

4. Proposed Class Notice is Proper

Exhibits A-1 through A-3 to the Settlement are the Proposed Notice, Proof of Claim, and

Summary Notice. "Due process requires that the notice to class members fairly apprise the ... members of the class of the terms of the proposed settlement and of the options that are open to them in connection with [the] proceedings." Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072,

1079 (2d Cir. 1995) (internal quotation marks and citations omitted). In In re Global Crossing

Securities and ERISA Litigation, Judge Lynch summarized the notice requirements for a class action such as this one:

Where, as here, the parties seek simultaneously to certify a settlement class and to settle a class action, the elements of Rule 23(c) notice (for class certification) are combined with the elements of Rule 23(e) notice (for settlement or dismissal). As Rule 23(e)'s notice requirements are less specific than that of Rule 23(c)'s, the Court will focus on Rule 23(c)'s requirements.

Under both the Federal Rules of Civil Procedure and due process norms, the adequacy of notice to class members depends on the particular circumstances of each case. See Fed.R.Civ.P. 23(c)(2)(13) (requiring, for opt-out classes certified under Rule 23(b)(3), "the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort"); see [also] Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950) (due process requires "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections"). Conformity with the requirements of Rule 23(c)(2) fulfills the due process mandate. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173 (1974). Thus, for opt-out class actions, due process and the Federal Rules require individual notice only to "all class members whose names and addresses may be ascertained through reasonable effort." Id.

17 Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 18 of 109

225 F.R.D. 436,448 (S.D.N.Y. 2004).

The content of the notice is also prescribed by Rule 23(c)(2)(B), which requires that the notice must "clearly and concisely state in plain, easily understood language" the (1) nature of the action; (2) definition of the certified class; (3) the class claims, issues, or defenses; (4) that a class member may appear through counsel; (5) that a class member will be excluded at his request; (6) the time and manner for requesting exclusion; and (7) the binding effect of a class judgment under Rule

23(c)(3). See Fed. R. Civ. P. 23(c)(2)(B). In addition, notice must satisfy the requirements of the

PLSRA, namely:

Any proposed or final settlement agreement that is published or otherwise disseminated to the class shall include each of the following statements, along with a cover page summarizing the information contained in such statements:

(A) Statement of recovery — the amount of the settlement determined in the aggregate and on an average per share basis;

(B) Statement of potential outcome of case — amount of damages per share recoverable if plaintiffs were to prevail on every claim. If the parties are unable to agree on damages, a statement concerning the issues on which the parties disagree;

(C) Statement of fees — statement of fees and costs to be applied for in the aggregate and on a per share basis;

(D) Identification of lawyers' representatives —the name, telephone number, and address of counsel available to answer questions; and

(E) Reasons for settlement —a brief statement explaining the reasons why the parties are proposing the settlement.

15 U.S.C. §§ 78u-4(a)(7).

The notice in this case satisfies all the foregoing requirements. In addition to the notice mailed to individual potential class members, there will be a Summary Notice published in Investor's

Business Daily. (See Proposed Order 4.)

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B. Fairness Hearing

The Court will hold a Fairness Hearing on October 19, 2010 at 10:00 a.m. All potential class members who wish to opt out of the class must submit notice of such intention to the Claims

Administrator no later than twenty-one days before the October 19, 2010 hearing, September 28,

2010.

III. CONCLUSION

For the foregoing reasons, the Court (1) provisionally approves the class defined herein for settlement purposes only, (2) certifies lead plaintiffs and co-lead counsel as class plaintiffs and counsel respectively, (3) preliminarily approves the proposed settlement set forth in the attached

Settlement Stipulation, (4) approves the attached proposed notice to class members and directs the issuance of the same pursuant to the terms of the Settlement, (5) and appoints Gilardi & Co. LLC as claims administrator. The Court will hold a fairness hearing on October 19, 2010 at 10:00 a.m.

The parties shall abide by the procedures set forth in the Settlement Stipulation and Proposed

Order between today and the fairness hearing.

SO ORDERED.

Dated: June 29, 2010 New York, New York

AICHAADJ. AN UNITED STATES DISTRICT JUDGE

19 Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 20 of 109

Attachments

Ex. A Stipulation of Settlement Ex. B Proposed Order Preliminarily Approving Settlement, which annexes Ex. B-1 Proposed Notice to Class Members Ex. B-2 Proof of Claim and Release Form Ex. B-3 Summary Notice Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 21 of 109

EXHIBIT A Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 22 of 109

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x In re JAKKS PACIFIC, INC. Civil Action No. 04-CV-8807 (RJS) SHAREHOLDERS CLASS ACTION LITIGATION CLASS ACTION

This Document Relates To: STIPULATION OF SETTLEMENT ALL ACTIONS. x

This Stipulation of Settlement dated 140"er ,Z, 2009 (the "Stipulation") is made and entered into pursuant to Rule 23 of the Federal Rules of Civil Procedure and contains the terms of a settlement by and among the following Settling Parties to the above-captioned

litigation (the "Litigation"): (i) Lead Plaintiffs Indiana Electrical Workers Pension Trust Fund

IBEW, Kenneth J. Tucker, Tonia R Tucker-Kraus and Michael Kraus (the "Lead Plaintiffs") (on

behalf of themselves and each of the Class Members, as defined below), and (ii) Dethndants JAKKS Pacific, Inc. ("JAKKS" or the "Company'), Jack Friedman, Steven G. Berman and Joel M. Bennett (collectively, the "De&ndan&% by and through their respective undersigned counsel of record in the above-captioned matter.

This Stipulation is intended by the Settling Parties to fully, finally and forever resolve, discharge and settle the Released Claims against the Released Parties, upon and subject to the

terms and conditions hereof and subject to the approval of this Court.

L THE LITIGATION On and after November 5, 2004, a number of securities class action complaints were filed

in the United States District Court fir the Southern District of New York (the "Court') on behalf of purchasers of JAKKS common stock between December 3, 1999 and October 19, 2004,

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inclusive, alleging violations of the Securities Exchange Act of 1934. By Order dated January

25, 2005, the Court consolidated these actions under the caption above. By Order dated May 11, 2005, the Court appointed the Lead Plaintiffs and approved Lead Plaintiffs' choice of Co-Lead Counsel.

On July 11, 2005, Lead Plaintiffs filed a consolidated complaint (the "Complaint") against Defendants alleging that in order to procure valuable international license agreements to manufacture and market World Wrestling Entertainment, Inc. ("WWE") toys, JAKKS bribed a senior WWE executive (James Bell ("Bell'l) and WWE's licensing agent, Stanley Shenker &

Associates, Inc. ("SSAI"). In exchange for the alleged bribes from JAKKS, allegedly laundered

through foreign corporations, Bell and SSAI allegedly agreed to assist JAKKS in securing a WWE videogame license and favorable amendments to the toy licenses. During the Class Period, JAKKS publicly reported positive financial results which it attributed, in material part, to

its WWE product line.

On October 19, 2004, JAKKS issued a press release announcing its-third-quarter 2004 financial results, and stating that it was "engaged in discussions with WWE over the validity of

its toy and video games license." On that news, the price of JAKKS common stock L1122%, from $24.15 to $18.81. Later that day, it was reported that the WWE had filed a complaint against JAKKS and the Individual Defendants, among others, alleging that they had perpetrated a bribery scheme involving lucrative licensing deals, in violation ofthe Racketeer Influenced and Corrupt Organization Act and bribery laws. On the following trading day, the price of JAKKS fell 31% from its closing price on October 19, 2004, to close at $12.96 per share.

On September 9, 2005, Defendants moved to dismiss the Complaint. On January 25,

2008, the Court issued an Opinion and Order (the "Order') on Defendants' motion to dismiss.

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The Court granted in part and denied in part the motion, giving Lead Plaintiffs leave to amend their complaint to address certain deficiencies.

On March 14, 2008, Plaintiffs filed the Second Amended Complaint (" SAC'j. Defendants moved to dismiss the SAC on June 5, 2008, and Plaintiffs filed an opposition brief on July 21, 2008. Defendants filed a reply brief; and the parties were awaiting oral argument, when they decided to attempt to settle the litigation.

On February 12, 2009, the parties attended an all-day mediation before the Hon. Nicholas Politan (Ret.). Following a full-day mediation on February 12, 2009, and additional discussions between the parties, on February 24, 2009, an agreement-in-principle to settle the Litigation on the terms set forth herein was reached.

IL CLAIMS OF THE LEAD PLARMFFS AND BENEFITS OF SE's ILEMEM

Co-Lead Counsel, on behalf of Lead Plaintiffs, have conducted an extensive investigation

relating to the claims and the underlying events and transactions alleged in the Complaint. Co- Lead Counsel's investigation included: () review of JAKKS' SEC filings, regulatory filings and reports, securities analysts' reports and advisories about the Company, press releases, and other public statements issued by the Company; (ii) review of media reports about the Company; and

(iii) interviews with persons with knowledge of the alleged misconduct, including former employees ofJAKKS.

Lead Plaintiffs believe that the claims asserted in the Litigation have merit. However, Lead Plaintiffs and Co-Lead Counsel recognize the expense, length and complexity of continued proceedings necessary to prosecute the Litigation against the Defendants through trial and

appeal. Lead Plaintiffs and Co-Lead Counsel also have taken into account the uncertain outcome and the risk of litigation, especially in complex actions such as this Litigation, as well as the

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difficulties and delays inherent in such litigation. Co-Lead Counsel also are mindful of the

inheren problems of proof of and possible defenses to, the allegations and claims asserted in the

Litigation. Accordingly, Lead Plaintiffs, by their counsel, conducted discussions and arm's-length negotiations with counsel for Defendants, supervised by a forte Federal Judge, with respect to a compromise and settlement of the Litigation, with a view to settling the issues in dispute against the Defendants and achieving the best relief possible consistent with the interests of the

Class. Based upon their investigation as set forth above, which Co-Lead Counsel have . determined is sufficient to reach a conclusion that the Litigation should be settled without the need for additional information, including discovery, Co-Lead Counsel have concluded that the

terms and conditions of this Stipulation are far,i reasonable and adequate to Lead Plaintiffs and the Class, and in their best interests. Co-Lead Counsel and Lead Plaintiffs believe that the

Settlement set forth in this Stipulation confers substantial benefits upon the Class and each of the

Class Members, and have agreed to settle the claims raised in the Litigation pursuant to the terms and provisions of this Stipulation, after considering: (a) the benefits that Lead Plaintiffs and the members of the Class will receive from the settlement of the Litigation; (b) the attendant risks of litigation; and (c) the desirability of permitting the Settlement to be consummated as provided by the terms of" Stipulation.

M. DEFENDANTS' DENMU OF WRONGDOING AND LIABILITY The Defendants have denied and continue to deny all allegations of any wrongdoing or liability against them whatsoever arising out of any of the conduct, statements, acts or omissions

alleged in the Litigation. Tlw Defendants also have denied and continue to deny, inter alia, the

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allegations that they committed any wrongdoing, that Defendants made any material misrep-

resentations or omissions, that the price of JAKKS common stock was artificially inflated during the Class Period, that the Lead Plaintiffs or the Class, as defined below, have suffered any

damages, or that the Lead Plaintiffs or the Class were harmed by any conduct alleged in the Litigation or that could have been alleged therein. Defendants do not in any way acknowledge any fault, liability or wrongdoing of any kind. This Stipulation and all related documents are not, and shall not in any event be construed or deemed to be evidence of or an admission or concession on the part of the Defendants with respect to any claim of or of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in Defendants' defenses. Nonetheless, the Defendants have concluded that further conduct of the Litigation would be protracted, time-consuming, expensive and distracting, including, without limitation, to

JAKKS and its management, and that it is desirable that the Litigation be fully and finally settled. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in codex cases like the Litigation. The Defendants have, therefore, determined that it is desirable and beneficial that the Litigation be settled in the manner and upon

the terms and conditions set forth in this Stipulation.

IV. TERMS OF STTPULATION AND AGREEMENT OF SETTLEMENT NOW THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and among the Lead Plaintiffs (on behalf of themselves and each of the Class Members) and the Defendants, by . and through their respective undersigned counsel or attorneys of record, that without any admission or concession on the part of Lead Plaintiffs of any lack of merit of the Litigation

Whatsoever, and without any admission or concession by the Defendants of any liability or wrongdoing or lack of merit in the defenses to the Litigation whatsoever, subject to the approval

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of the Court pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, and in consideration

of the benefits flowing to the Settling Parties from the Settlement, that all Released Claims as against the Released Parties shaU be finally, fully and forever compromised, settled, and released and the Litigation shall be dismissed with prejudice as to all Released Parties, upon and subject to the following terms and conditions: 1. Certain Definitions As used in this Stipulation, the following terms have the meanings specified below: 1.1 "Authorized Claimant" means any Class Member whose claim for recovery has been allowed pursuant to the terms ofthis Stipulation. 1.2 "Claims Administrator" means the fain of Gilardi & Co. LLC. 1.3 "Class" and "Class Members" mean all Persons who purchased JAKKS common stock between December 3, 1999 and October 19, 2004, inclusive. Excluded from the Class are:

Defendants, JAKKS's directors and officers during the Class Period, any Person, firm, trust,

corporation, officer, director or other individual or entity in which any defendant has a controlling interest or which is related to or affiliated with any of the defendants, and the legal representatives, agents, heirs, successors, or assigns of any excluded party. Also excluded from the Class are any putative Class Members who timely and validly exclude themselves from the Class in accordance with the requirements sett forth in the Notice. 1.4 "Class Period" means the period between December 3, 1999 and October 19, 2004, inclusive.

1.5 "Defendants" means JAKKS, Jack Friedman, Steven G. Berman and Joel M. Bennett.

1.6 "Derivative Actions" means Oppeeheim v. Friedman, et al., No. 05 Civ. 2046

(RJS) (S.D.N.Y.), Freeport Partners, LLC v. Frie&nan, et al., Case No. 04 Civ. 9441 (RJS) -6- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 28 of 109

(S.D.N.Y.), and Warr v Friedman, et al., No. BC330477 (Cal. Super. Ct., County of Los Angeles). 1.7 `Effective Date" means the date upon which the Settlement contemplated by this

Stipulation shall become effective, as set forth in 111.1 below. 1.8 `Escrow Agents" means Coughlin Stoia Geller Rudman & Robbins LLP or its successor(s) and Milberg LLP or its successor(s). The Escrow Agents shall maintain the Settlement Fund in a segregated escrow account not available to the creditors of the Escrow Agents and shall not disburse any amount from the escrow account except as authorized by this Stipulation.

1.9 "Individual Defendants" means Jack Friedman, Steven G. Berman and Joel M. Bennett. 1.10 "Lead Plaintiffs" means Indiana Electrical Workers Pension Fund IBEW, Kenneth J. Tucker, Tonia R. Tucker-Kraus and Michael Kraus.

1.11 "Notice" means the Notice of Pendency and Proposed Settlement of Class Action, Motion for Attorneys' Fees and Settlement Fairness Hearing, which is to be sent to Class

Members, substantially in the form attached hereto as Exhibit A-1. 1.12 "Order and Final Judgment" means the proposed order to be entered by the Court approving the Settlement, substantially in the form attached hereto as Exhibit B. 1.13 "Order for Notice and Hearing" means the proposed order to be entered by the Court preliminarily approving the Settlement and directing notice thereof to the Class, substantially in the inrm attached hereto as Exhibit A.

I.14 "Person" means an individual, corporation, partnership, limited partnership,

limited liability partnership (LLP), limited liability company (LLC), association, joint stock

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company, joint venture, estate, legal representative, trust, unincorporated association,

government or any political subdivision or agency thereof, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, and assignees. 1.15 "Plaintiffs' Counsel" means any counsel who have appeared on behalf of any plaintiff in the Litigation (and any successor(s) thereof). 1.16 "Plaintiffs' Co-Lead Counsel" means Coughlin Stoia Geller Rudman & Robbins

LLP, (and any successor(s) thereof) and Milberg LLP (and any successor(s) thereof). 1.17 "Proof of Claim" means the proposed Proof of Claim and Release form to be submitted by Class Members, substantially in the form attached hereto as Exhibit A-2. 1.18 "Released Claims" means any and all claims, debts, demands, rights or causes of action or liabilities of any nature or description whatsoever (including, but not limited to, claims

for damages, interest, attorneys' fees, expert or consulting fees, and any other costs, expenses, or

liability whatsoever), whether based on federal, state, local, statutory or common law or any

other law, rule or regulation, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured or unmatured, whether class or individual in nature, including both known claims and Unknown Claims, that have been or could have been asserted in any forum by Lead Plaintiffs or the Class Members or any of them or the heirs, successors and assigns of any of them, against any of the Released Parties, which arise out og are based on, or relate in any way, directly or indirectly, to any of the allegations, acts, transactions, facts, events, matters or occurrences, representations or omissions involved, asserted, set forth, referred to or that could have been asserted in the Litigation and arise out of are based on, or relate in any way to the purchase of JAKKS common stock by any Class Member during the Class Period "Released Claims" do not include the derivative claims raised in the Derivative Actions.

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"Released Claims" does not mean or include claims, if any, against the Released Parties arising

under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001, et seq. ("ERISA") which are not common to all Class Members. 1.19 "Released Defendants' Clairns" means any and all claims, rights or causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or common law i or any other law, rule or regulation, including both known claims and Unknown Claims (as defined in 11.24 below), that have been or could have been asserted in the Litigation or any

forum by the Defendants, or the heirs, successors and assigns of any of them against the Lead Plaintiffs, any of the Class Members or their attorneys, which arise out of or relate in any way to the institution, prosecution, or settlement of the Litigation, excluding any claims for breaches of

this Stipulation. 1.20 "Released Parties' means each and all of the Defendants, their respective past or present advisors, affiliates, agents, assigns, attomeys, banks or investment banks, co-insurers,

consultants, directors, divisions, present and former employees, heirs, insurers, investment

advisors, members, officers. parents, predecessors, principals, reinsurers, representatives, stockholders, spouses, subsidiaries, successors, related or affiliated entities, any entity in which any Defendant has a controlling interest, any member of an individual Defendant's immediate family, or any trust of which any Defendant is the settlor or which is for the benefit of any individual Defendant and/or member(s) of his family. 1.21 "Settlement" means the settlement embodied by this Stipulation. 1.22 "Settling Parties" means, collectively, each of the Defendants and the Lead

Plaintiffs on behalf ofthemselves and each ofthe Class Members.

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1.23 "Summary Notice" means the Summary Notice for publication, substantially in

the form attached hereto as Exhibit A-3. 124 "Unknown Claims" means any and all Released Claims which the Lead Plaintiffs or any Class Members do not know or suspect to exist in his, her or its favor at the time of the release ofthe Released Parties, and any Released Defendants' Claims which any Defendant does not know or suspect to exist in his, her or its favor, which if known by him, her or it might have affected his, her or its decision(s) with respect to the Settlement. With respect to any and all Released Claims and Released Defendants' Claims, the Settling Parties stipulate and agree that upon the Effective Date, the Lead Plaintiffs and Defendants shall expressly waive, and each Class Member shall be deemed to have waived, and by operation of the Order and Final Judgment shall have expressly waived, any and all provisions, rights and benefits conferred by

any law of any state or territory of the United States, or principle of common law, which is

similar, comparable, or equivalent to California Civil Code § 1542, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. Lead Plaintiffs and the Class Members may hereafter discover facts in addition to or different

from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but the Lead Plaintiffs shall expressly waive, and each Class Member, upon the Effective Date, shall be deemed to have, and by operation of the Order and Final Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not

concealed or hidden, which now exist, or beretofore have existed, upon any theory of law or

equity now existing or coming into existence in the future, including, but not limited to, breach

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of any duty, law or rule, without regard to the subsequent discovery or existence of such different

or additional facts. Defendants may hereafter discover facts in addition to or different from those which he or it now knows or believes to be true with respect to the subject matter ofthe Released

Defendants' Claims, but Defendants shall expressly waive, and by operation of the Order and Final Judgment shall have fully, finally, and forever settled and released any and all Released Defendants' Claims, known or unknown, suspected or unsuspected, contingent or non- contingeit, whether or not conceded or hidden, which now exist, or heretofore have existed, upon any theory, or law or equity now existing or coming into existence in the future, including,

but not limited to, breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. bead Plaintiff's and Defendants acknowledge, and the Class Members by operation of law shall be deemed by operation of the Order and Final

Judgment to have acknowledged, that the inclusion of "Unknown Claims" in the definition of

Released Claims and Released Defendants' Claims was separately bargained for and was a key

element ofthe Settlement.

2. Scope and Effect of Settlement 2.1 The obligations incurred pursuant to this Stipulation shall be in full and final disposition of the Litigation and any and all Released Claims as against all Released Parties and any and all Released Defendants' Claims. 2.2 Upon the Effective Date, Lead Plaintiffs and members of the Class, on behalf of themselves and each of their heirs, executors, administrators, successors and assigns, and any Persons they represent, shall, with respect to each and every Released Claim, release and folly, finally and forever discharge, and shall forever be enjoined from prosecuting, any Released Claim against any ofthe Released Parties.

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2.3 Upon the Effective Date, each of the Released Parties, on behalf of themselves

and their heirs, successors and assigns, shall release and fully, finally and forever discharge each and every of the Released Defendants' Claims, and shall forever be enjoined from prosecuting the Released Defendants' Claims.

3. The Settlement Consideration 3.1 In full settlement of the Released Claims, within fifteen (15) business days thlbwing the Court's entry of an Order fDr Notice and Hearing substantially in the form attached hereto as Exhibit A, JAKKS shall pay, or cause to be paid, the sum of Three Million, Nine Hundred and Twenty--Five Thousand Dollars ($3,925,000) (the "Settlement Amount") into a

separate interest-bearing escrow account maintained by the Escrow Agents, on behalf of Lead Plaintiffs and the Class. 3.2 The Settlement will be funded entirely from the proceeds of Defendants' drectors'i and officers' liability insurance. Defendants' directors and officers liability insurance

carrier has agreed to fund the Settlement and Defendants will use their best efforts to ensure that

Defendants' directors' and officers' liability insurance carrier complies with its commitment to JAKKS. All funds hold by the Escrow Agent shall be deemed to be in custodia legis of the Court and shall remain subject to the jurisdiction of the Court until such time as the funds shall be distributed pursuant to this Stipulation and Order ofthe Court. 3.3 The sum in the interest-bearing escrow account, from which any Taxes (as defined below) and other expenses and costs as described below shall be paid, shall be the "Settlement Fund." 3.4 The Settlement Fund shall be applied as follows:

(a) to pay the Notice and Administration Costs referred to in 152 hereof

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(b) to pay the attorneys' fee and expense award referred to in 116.1-6.4 hereof,

(c) to pay the Taxes and Tax Expenses described in 13.8 hereof, and (d) to distribute the balance of the Settlement Fund (the 'Net Settlement Fund'I to Authorized Claimants as provided in 117.1-7.5 hereof. b. The Escrow Agents 3.5 The Escrow Agents shall invest any funds in the Settlement Fund in excess of One Hundred Thousand Dollars ($100,000) in instruments backed by the full faith and credit of the United States Government or fully insured by the United States Government, or any agency thereof, and shall reinvest the proceeds of those instruments as they mature in similar instruments at their then-current market rates. Any funds held by the Escrow Agents in escrow

hereunder m an amount of less than One Hundred Thousand Dollars ($100,000) shall be held in

an interest bearing bank account insured by the FDIC.

3.6 All Rinds held by the Escrow Agents shall be deemed and considered to be in the custody of the Court, and shall remain subject to the jurisdiction of the Court until such time as

such funds shall be distributed or returned to the Persons) paying the same pursuant to this Stipulation and/or further order(s) ofthe Court. 3.7 The Escrow Agents shall not disburse the Settlement Fund except as provided in

this Stipulation, by an order of the Court, or with the prior written agreement of counsel for the Defendants and Plaintiff's' Co-Lead Counsel_

C. Taxes and Tax Expenses 3.8 (a) The Settling Parties and the Escrow Agents agree to treat the Settlement Fund as being at all times a "qualified settlement Rind" within the meaning of Treasury Reg.

§1.468B-2(k)(1). In addition, the Escrow Agents shall timely make such elections as necessary -13- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 35 of 109

or advisable to carry out the provision of this 93.8, including the `relation-back election' (as

defined in Treasury Reg. §1.46813-1) back to the earliest permitted date. Such elections shall be

made in compliance with the procedures and requirements contained in such regulations. It shall be the responsibility of the Escrow Agents to timely and properly prepare and deliver the necessary documentation fDr signature by all necessary parties, and thereafter to cause the appropriate filngi to occur.

(b) For the purpose of §468B of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, the "administrator" shall be the Escrow Agents. The Escrow Agents shall timely and properly file all informational and other tax returns necessary or advisable with respect to the Settlement Fund (including, without limitation, the returns described in Treasury Reg. § 1.468B-2(k)). Such returns (as well as the election described in 93.8 (a) hereof) shall be consistent with this 93.8 and in all events shall reflect that all Taxes (including any estimated Taxes, interest or penalties) on the income earned by the

Settlement Fund shall be paid out ofthe Settlement Fund as provided in 93.8 (c) hereof.

(c) All (i) Taxes (including any estimated Taxes, interest or penalties) arising

with respect to the income earned by the Settlement Fund, including any Taxes or tax detriment that may be imposed upon the Defendants or their counsel with respect to any income earned by the Settlement Fund for any period during which the Settlement Fund does not qualify as a "qualified settlement fund" for federal or state income tax purposes ("Taxes"), and (ii) expenses and costs incurred in connection with the taxation of the Settlement Fund and operation and

implementation of this 93.8 (including, without limitation, expenses of tax attorneys and/or accountants) and mailing and distribution costs and expenses related to filing (or failing to file) the returns described in this 93.8 ('Tax Expenses") shall be paid out of the Settlement Fund. The

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Defendants and their counsel shall have no liability or responsibility for the payment of any

Taxes or Tax Expenses. The Settlement Fund shall indemnify and hold each of the Defendants and Released Parties and their counsel harmless for any Taxes and Tax Expenses (including, without limitation, Taxes payable by reason of any such indemnification). Further, Taxes and

Tax Expenses shall be treated as, and considered to be, a cost of administration of the Settlement Fund, and shall be timely paid by the Escrow Agents out of the Settlement Fund without prior order from the Court, and the Escrow Agents shall be obligated (notwithstanding anything herein to the contrary) to withhold from distribution to Authorized Claimants any funds necessary to pay such amounts, including the establishment of adequate reserves for any Taxes and Tax Expenses (as well as any amounts that may be required to be wkbheld under Treasury Reg. §l.468B-2(l)(2)); neither the Defendants nor their counsel are responsible nor shall they have

any liability therefore. The Settling Parties agree to cooperate with the Escrow Agents, each other, and their tax attorneys and accountants to the extent necessary to carry out the provisions

of this 13.8. (d) For the purpose of this I3.8, references to the Settlement Fund shall

include both the Settlement Fund and the Notice and Administration Fund and shall also include

any earnings thereon. d. Termination of Settlement 3.9 In the event that the Stipulation is not approved, or is terminated, canceled, or fails to become effective for any reason, the Settling Parties shall be deemed to have reverted to their respective status in the Litigation as of the execution of this Stipulation. In such event, the

terms and provisions of this Stipulation, with the exception of T3.5 -3.9 and 12.1 -12.2 hereof;

shall have no further f Dree and effect with respect to the Settling Parties and shall not be used in the Litigation, and any judgment or order entered by the Court in accordance with the terms of -15-

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their Stipulation shall be treated as vacated, mmc pro tune. The Settlement Fund (including

accrued interest), phis any amount then remaining in the Notice and Administration Fund

(including accrued interests less any taxes and expenses actually incurred or due and owing in

connection with the settlement provided for herein shall be refunded to such Person(s) that paid

the Settlement Amount. No order of the Court or modification or reversal on appeal of any order

of the Court concerning any Plan of Allocation or the amount of any attorneys' fee and expenses award approved by the Court shall constitute grounds for cancellation or termination of the Stipulation.

4. Preliminary Approval, Order for Notice and Hearing, and Settlement Hearing 4.1 As soon as practical following execution of the Stipulation, Plaintiffs' Co-Lead Counsel shall submit the Stipulation, together with its Exhibits, to the Court and shall apply for

entry of an Order for Notice and Hearing, substantially in the form of Exhibit A hereto,

requesting, inter alia, the preliminary approval of the Settlement set forth in the Stipulation, and

approval £or the mailing of the Notice and the Proof of Claim, and publication of the Summary Notice, substantially in the forms of Exhibits A-1, A-2 and A-3 attached hereto. 4.2 Plaintiffs' Co-Lead Counsel shall request that, after the Notice and the Proof of Claim are mailed and the Summary Notice are published, the Court hold a hearing (the "Settlement Hearing') to consider and determine whether to approve the Settlement as fair, reasonable and adequate, and whether the Order and Final Judgment, substantially in the form of

Exhibit B attached hereto, should be entered approving the Settlement as set forth herein and dismissing the Litigation with prejudice. At or after the Settlement Hearing, Plaintiffs' Co-Lead Counsel will also request that the Court approve the proposed Plan of Allocation and the Fee and Expense Application.

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5. Administration of the Settlement Fund 5.1 The Claims Administrator shall administer the Settlement subject to the jurisdiction ofthe Court. The Claims Administrator, subject to such supervision and direction of the Court and/or Plaintiffs' Co-Lead Counsel as may be necessary or as circumstances may

require, shall administer the Settlement, including administering and calculating the claims submitted by Class Members, and shall oversee distribution of the Net Settlement Fund to Authorized Claimants. Defendants, through their counsel, shall cooperate in the administration of the Settlement to the extent reasonably necessary to effectuate its terms, including providing without charge all information from JAKKS' transfer records concerning the identity of Class

Members and their transactions. Except for their obligation to pay or cause the Settlement Amount to be paid as set forth in Section 3 and to cooperate in the production of information with respect to the identification of Class Members from JAKKS' shareholder transfer records, Defendants shall have no responsibility for the administration of the Settlement and shall have no

liability to the Class in connection with such administration. 52 All reasonable costs and expenses of notice to Class Members and administration

of the Settlement Fund, escrow fees, taxes, custodial fees and expenses incurred in connection with processing Proofs of Claim or distributing the Settlement Fund (the "Notice and Administration Costs'), shall be paid ffom the Settlement Fund. Upon the establishment and funding of the Settlement Fund, a sum not to exceed Two Hundred and Fifty Thousand Dollars ($250,000.00) of the Settlement Fund shall be allocated for the express purpose of providing notice of the Settlement and to administer the Settlement pursuant to the terms of the Order for

Notice and Hearing (`Notice and Administration Fund'J, and unspent funds shall be returned to

the Settlement Fund. Funds may be disbursed from the Notice and Administration Fund for these purposes without further approval of Defendants or the Court. The Notice and -17-

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Administration Fund shall be administered by the Escrow Agents as part ofthe Settlement Fund

Upon the Effective Date, Plaintiffs' Co-Lead Counsel without further approval of Defendants or the Court, may pay from the Settlement Fund any Notice and Administration Costs associated with the administration of the Settlement, the processing of submitted claims, and distribution of the Net Settlement Fund to Authorized Claimants in excess of the Notice and Administration Fund.

6. Plaintiffs' Counsel's Attorneys' Fees and Expenses 6.1 Plaintiffs' Co-Load Counsel will apply to the Court for an award from the Settlement Fund of attorneys' fees and expenses in connection with prosecuting the Litigation, plus interest on such attorneys' fees and expenses at the same rate and for the same periods as earned by the Settlement Fund (until paid), (the "Fee and Expense Application') in an amount to

be approved by the Court. Such attorneys' fees and expenses, as are awarded by the Court, shall

be payable from the Settlement Fund to Plaintiffs' Co-Lead Counsel immediately upon the

Court's award of such fees and expenses, notwithstanding any collateral attack on the Settlement or any part thereof subject to Plaintiffs' Counsel's joint and several obligation to make appropriate refunds or repayments to the Settlement Fund plus accrued interest at the same net rate as is earned by the Settlement Fund, if and when, as a result of any successful collateral attack, the fee or cost award is reduced or reversed. Plaintiff's' Co-Lead Counsel shall allocate

the attorneys' Sees amongst Plaintiffs' Counsel in a manner which they, in good faith, believe reflects the contribution of such counsel to the prosecution and settlement of the Litigation. 6.2 In the event that the Effective Date does not occur, or the Order and Final Judgment or the order approving the Fee and Expense Application is reversed or modified, or the Stipulation is terminated or cancelled for any reason, and in the event that any attorneys' fees,

expenses and costs have been paid to any extent, Plaintiffs' Counsel who received such fees, -18- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 40 of 109

expenses and costs shag within five (5) business days from receiving notice from Defendants'

counsel or from a court of appropriate jurisdiction, refund to the Settlement Fund the fees,

expenses and costs previously paid to them from the Settlement Fund plus interest thereon at the

same rate as earned on the Settlement Fund in an amount consistent with such reversal or modification. Each law firm, as a condition of receiving such fires and expenses, on behalf of itself and each partner and/or shareholder of it, agrees that the law firm and its partners and/or shareholders are subject to the jurisdiction of the Court for purposes of enforcing the provisions ofthis paragraph.

6.3 The procedure for and the allowance or disallowance by the Court of any applications by Plaintiffs' Co-Lead Counsel for attorneys' fees, expenses and costs to be paid out of the Settlement Fund are not part of the Settlement set firth in this Stipulation, and are to be considered by the Court separately from the Court's consideration ofthe fairness, reasonableness and adequacy ofthe Settlement set firth in this Stipulation, and any order or proceeding relating

to the Fee and Expense Application, or any appeal from any order relating thereto or reversal or

modification thereof; shall not operate to terminate or cancel the Stipulation, or affect or delay

the finality of the Order and Final Judgment approving the Stipulation and the Settlement of the Litigation set forth herein. 6.4 The Released Parties shall have no responsibility for, and no liability whatsoever with respect to, any payment of attorneys' fees and expenses to Plaintiffs' Counsel over and

above payment from the Settlement Fund. The Released Parties shall have no responsibility fir,

and no liability whatsoever with respect to, the allocation among Plaintiffs' Counsel, and/or any other Person who may assert some claim thereto, of any Fee and Expense Application, or any award relating thereto that the Court may make in the Litigation.

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7. Distribution to Authorized Claimants 7.1 The Net Settlement Furl shall be distributed to Authorized Claimants substantially in accordance with the Plan of Allocation to be described in the Notice and approved by the Court.

7.2 The Claims Administrator shall determine each Authorized Claimant's pro rata share of the Net Settlement Fund based upon each Authorized Claimant's recognized claim (as defined in the Plan of Allocation described in the Notice attached hereto as Exhibit A-1, or in such other Plan of Allocation as the Court approves).

7.3 The Plan of Allocation proposed in the Notice is not a necessary term of this Stipulation and it is not a condition of this Stipulation that the Plan of Allocation be approved.

7.4 Each Authorized Claimant shall be allocated a pro rata share of the Net

Sottlement Fund based on his, her, or its recognized claim compared to the total recognized claims of all Authorized Claimants. The Defendants shall have no involvement in reviewing or challenging claims.

7.5 Plaintiffs' Co-Lead Counsel shall be responsible for supervising the administration of the Settlement and disbursement of the Net Settlement Fund by the Claims

Administrator. Plaintiffs' Co-Lead Counsel shall have the right, but not the obligation, to waive what they deem to be formal or technical defects in any Proofs of Claim submitted in the interests of achieving substantial justice. 7.6 For purposes of determining the extent, if any, to which a Class Member shall be entitled to be treated as an "Authorized Claimant," the following conditions shall apply:

(a) Each Class Member shall be required to submit a Proof of Claim (see

Exhibit A-2 attached hereto supported by such documents as are designated therein, including

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proof of the Class Member's loss, or such other documents or proof as Plaintiffs' Co-Lead Counsel, in its discretion, may deem acceptable;

(b) All Proofs of Claim must be submitted by the date specified in the Notice unless such period is extended by order of the CourL Any Class Member who fails to su6nk a Proof of Claim by such date shall be forever barred from receiving any payment pursuant to this Stipulation (unless, by order of the Court, a later submitted Proof of Claim by such Class Member is approved), and shall in all other respects be bound by all of the terms of this

Stipulation and the Settlement, including the terns of the Order and Final Judgment to be entered in the Litigation and the releases provided for herein, and will be barred from bringing any action against the Released Parties concerning the Released Claims. A Proof of Claim shall be deemed

to have been submitted when posted, if received with a postmark indicated on the envelope and if mailed by fast-class mail and addressed in accordance with the instructions thereon. In all

other cases, the Proof of Claim shaft be deemed to have been submitted when-actually received

by the Claims Administrator; (c) Each Proof of Claim shall be submitted to and reviewed by the Claims

Administrator, under the supervision of Plaintiffs' Co-Lead Counsel, who shall determine in

accordance with this Stipulation the extent, if any, to which each claim shall be allowed, subject to review by the Court pursuant to subparagraph (e) below;

(d) Proofs of Claim that do not meet the submission requirements may be rejected. Prior to rejection of a Proof of Claim, the Claims Administrator shall communicate with the Class Member in order to remedy the curable deficiencies in the Proof of Claim submitted. The Claims Administrator, under supervision of Plaintiffs' Co-Lead Counsel, shall notify, in a timely fashion and in writing, all Class Members whose Proofs of Claim they propose

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to reject in whole or in part, setting forth the reasons therefore, and shall indicate in such notice that the Class Member whose claim is to be rejected has the right to a review by the Court if the Class Member so desires and complies with the requirements of subparagraph (e) below; and

(e) If any Class Member whose claim has been rejected in whole or in part desires to contest such rejection, the Class Member must, within twenty (20) calendar days after the date of mailing of the notice required in subparagraph (d) above, serve upon the Claims Administrator a notice and statement of reasons indicating the Class Member's grounds for contesting the rejection along with any supporting documentation, and requesting a review

thereof by the Court. If a dispute concerning a claim cannot be otherwise resolved, Plaintiffs'

Co-Lead Counsel shall thereafter present the request for review to the Court. 7.7 Each Class Member shall be deemed to' have submitted to the jurisdiction of the Court with respect to the Class Member's claim, and the claim will be subject to investigation and discovery under the Federal Rules of Civil Procedure, provided that such investigation and discovery shall be limited to that Class Member's status as a Class Member and the validity and

amount of the Class Member's claim. No discovery shall be allowed on the merits of the

Litigation or Settlement in connection with processing of the Proofs of Claim. 7.8 Payment pursuant to this Stipulation shall be deemed final and conclusive against all Class Members. All Class Members whose claims are not approved by the Court shall be barred from participating in distributions from the Net Settlement Fund, but otherwise shall be bound by all of the terms of this Stipulation and the Settlement, including the terms of the Order and Final Judgment to be entered in the Litigation and the releases provided for herein, and will

be barred from bringing any action against the Released Parties concerning the Released Claims.

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7.9 All proceedings with respect to the administration, processing and determination

of claims described by 117.1-7.14 of this Stipulation and the determination of all controversies relating thereto, including disputed questions of law and fact with respect to the validity of claims, shall be subject to the jurisdiction ofthe Court.

7.10 The Net Settlement Fund shall be distributed to Authorized Claimants by the Claims Administrator only after the Effective Date and after: (i) all claims have been processed, and all Class Members whose claims have been rejected or disallowed, in whole or in part, have been notified and provided the opportunity to be heard concerning such rejection or

disallowance; (it) all objections with respect to all rejected or disallowed claims have been resolved by the Court, and all appeals therefrom have been resolved or the time therefore has

expired; (iii) all matters with respect to attorneys' fees have been resolved by the Court, all appeals therefrom have been resolved or the time therefore has expired; and (iv) all costs of administration have been paid.

7.11 If any funds remain in the Net Settlement Fund by reason of un-cashed checks, or

otherwise, after the Claims Administrator has made reasonable and diligent efforts to have Authorized Claimants who are entitled to participate in the distribution of the Net Settlement

Fund cash their distribution checks, then any balance remaining in the Net Settlement Fund six (6) months after the initial distribution of such funds shall be used: (a) fast, to pay any amounts mistakenly omitted from the initial distribution to Authorized Claimants or to pay any late, but otherwise valid and fully documented claims received after the cut-off date used to make the initial distribution, provided that such distributions to any late post-distribution claimants meet

all of the other criteria for inclusion in the initial distribution, (b) second, to pay any additional

settlement administration fees and expenses, including those of Plaintiffs' Co-Lead Counsel as

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may be approved by the Court, and (c) finally, to make a second distribution to Authorized

Claimants who cashed their checks from the initial distribution, after payment of the estimated

costs or fees to be incurred in administering the Net Settlement Fund and in making this second distribution, if such second distribution is economically feasible. If after six (6) months following such second distribution, if undertaken, or if such second distribution is not undertaken, any funds remaining in the Net Settlement Fund after the Claims Administrator has

made reasonable and diligent efforts to have Authorized Claimants who are entitled to participate

in this Settlement cash their checks, the Claims Administrator shall donate any funds remaining in the Net Settlement Fund to an appropriate not-for-profit or charitable organization. 7.12 This is not a claims-made settlement and, if all conditions of the Stipulation are satisfied and the Effective Date occurs, no portion of the Settlement Fund will be returned to

such Person(s) that paid the Settlement Amount. The Released Parties shall have no

responsibr7ity for, interest in, or liability whatsoever with respect to the investment or

distribution of the Net Settlement Fund, the Plan of Allocation, the determination, administration or cak-mlatlon of claims, the payment or withholding of Taxes, or any losses incurred in

connection therewith. 7.13 No Person shall have any claim against the Lead Plaintiffs, Plaintiffs' Counsel, Defendants, the Released Parties, or their counsel based on the administration of the Settlement, including, without limitation, the processing of claims and distributions made in accordance with this Stipulation and the Settlement contained herein, the Plan of Allocation, or further order(s) of the Court. 7.14 It is understood and agreed by the Settling Parties that any proposed Plan of Allocation of the Net Settlement Fund, including, but not limited to, any adjustments to an

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Authorized Claimant's claim set forth therein, is not a part of the Stipulation and is to be considered by the Court separately from the Court's consideration ofthe fairness, reasonableness and adequacy of the Settlement set forth in this Stipulation, and any order or proceeding relating

to the Plan of Allocation shall not operate to terminate or cancel the Stipulation or affect the finality of the Court's Order and Final Judgment approving the Stipulation and the Settlement set forth herein, or any other orders entered pursuant to the Stipulation. 8. Terms of Order for Notice and Hearing 8.1 Concurrent with their application for preliminary Court approval of the Settlement contemplated by this Stipulation, Plaintiffs' Co-Lead Counsel shall apply to the Court fDr entry

of an Order for Notice and Hearing, substantially in the fDrm attached hereto as Exhibit A.

9. Terms of Order and Final Judgment 9.1 If the Settlement contemplated by this Stipulation is approved by the Court,

counsel for the Settling Parties shall request that the Court enter an Order and Final Judgment, substantially in the form attached hereto as Exhibit B.

9.2 The Order and Final Judgment shall provide, wrier alia, that (a) upon the Effective.

Date, Lead Plaintiffs and members of the Class, on behalf of themselves, their heirs, successors

and assigns, and any other Person claiming (now or in the future) through or on behalf of them, shall be deemed to have, and by operation of the Order and Final Judgment shall have, fully, finally, and forever released, relinquished and discharged all Released Claims against the Released Parties; and (b) that upon the Effective Date, each and every Released Party, on behalf of themselves, their heirs, successors and assigns, and any other Person claiming (now or in the

future) through or on behalf of them, shall be deemed to have, and by operation of this Order and

Final Judgment shall have, fully, finally, and forever released, relinquished and discharged all Released Defendants' Claims -25- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 47 of 109

9.3 The Parties shall request that the Court enter a PSLRA Contribution Bar Order as

follows: In accordance with 15 U.S.C. § 78u11(f)(7)(A) and the agreement of the parties, any and all claims for contribution arising out of any Released Claim: (i) by any person or entity against any of the Released Parties, and (ii) by any of the Released Parties against any person or entity other than as set out in 15 U.S.C. § 78u-4(fl(7)(Axii) are hereby permanently barred, extinguished, discharged, satisfied, and unenforceable. Accordingly, without limitation to any of the above, @ any person or entity is hereby permanently enjoined from commencing, prosecuting, or asserting against any of the Released Parties any claim for contribution, and (ii) the Released Parties are hereby permanently enjoined from commencing, prosecuting, or asserting against any person or entity any claim for contribution. In accordance with 15 U.S.C. § 78u-4(fl(7)(B) and the agreement of the parties, any final verdict or judgment that might be

obtained by or on behalf of the Class or any member of the Class against any person or entity for

loss for which such person or entity and any Released Party are found to be jointly liable shall be reduced by the greater of (1) an amount that corresponds to the percentage of responsibility of any such Released Party for common damages or (ii) the amount paid to the Class or any member of the Class by or on behalf of each such Released Party for common damages. 9.4 Notwithstanding anything else in this Stipulation, nothing shall release, interfere with, limit, or bar the assertion by any Defendant of any claim for insurance coverage under any insurance, reinsurance, or indemnity policy that provides coverage or for the payment of attorneys fees and costs under any contract or other right respecting the conduct at issue in the Litigation or arising from any Defendants' alleged liability to the Class or any member of the Class.

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10. Termination of Settlement 10.1 Subject to 110.3 hereof; JAKKS has the option to terminate the Settlement in the event that the aggregate number of shares of JAKKS common stock purchased during the Class Period by Class Members who would otherwise be entitled to participate as members of the Class, but who timely and validly request exclusion, equals or exceeds a certain percentage of the total number of shares of JAKKS common stock traded during the Class Period, as set forth in a Supplemental Agreement between JAKKS and bead Plaintiffs. 10.2 If JAKKS elects to exercise the option set forth in 110.1 hereof; written notice of

such election must be provided to Plaintiffs' Co-bead Counsel and filed with the Court on or ~

before five (5) calendar days prior to the Settlement Hearing. Such notice may be served by hand delivery or fax. JAKKS may withdraw its election by providing written notice of such termination, by hand delivery or fix, to Plaintiffs' Co-Lead Counsel no later than 5:00 P.M. Eastern Time on the day prior to the Settlement Hearing, or by such later date as the •Settling

Parties agree in writing.

10.3 If JAKKS elects to terminate the Stipulation pursuant to 110.1 hereof; Plaintiffs' Co-Lead Counsel may review the validity of any Class Member's request for exclusion and may attempt to cause retraction or withdrawal of any request for exclusion. No Defendant or Released Party shall in any way interfere with, obstruct or seek to enjoin legitimate and lawful efforts by Lead Plaintiffs to seek to have those Class Members who requested exclusion to withdraw their requests for exclusion. It by the day before the Settlement Hearing (or a later

date agreed upon in writing), Lead Plaintiffs are successful in reducing the number of excluded Class Members so that those Class Members excluded, in the aggregate, purchased shares in an amount less than the percentage of the total number of shares of JAKKS common stock traded during the Class Period, as set forth in the Supplemental Agreement, then any termination of the -27- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 49 of 109

Stipulation by JAKKS shall automatically be deemed null and void. In that event, Plaintiffs' Co-

Lead Counsel shall serve on counsel for the Defendants by hand delivery or fax a statement identifying the Class Members who have withdrawn their requests for exclusion. 10.4 If JAKKS elects to terminate the Stipulation in accordance with 110.1 and such withdrawal is not nullified in accordance with 110.3, the Stipulation shall be withdrawn and

terminated and deemed null and void, and the provisions of 13.9 shall apply. 11. Effective Date of Settlement, Waiver or Termination 11.1 The Effective Date of the Settlement shall be the date by which all the following shall have occurred: (a) entry of the Order for Notice and Hearing in all material respects in the

form attached hereto as Exhibit A;

(b) payment of the Settlement Amount to the Settlement Fund by Defendants or on their behalf; (c) approval by the Court ofthe Settlement, following notice to the Class and a hearing, as prescribed by Rule 23 ofthe Federal Rules of Civil Procedure;

(d) expiration of the time for JAKKS to exercise its option to terminate the Stipulation in accordance with the terms of the Supplemental Agreement described in 110.1 hereof; without the exercise of that option; and (e) entry by the Court of an Order and Final Judgment, in all material respects in the form set forth in Exhibit B attached hereto, and the expiration of any time for appeal or review of such Order and Final Judgment, or, if any appeal is filed and not dismissed, after such

Order and Final Judgment is upheld on appeal in aU material respects and is no longer subject to review upon appeal, review by writ of certiorari or mandamus, or, in the event that the Court

enters an order and final judgment in a form other than that provided above ("Alternative -28- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 50 of 109

Judgment') and JAKKS does not elect to terminate this Settlement, the date that such Alternative

Judgment becomes final and no longer subject to appeal or review.

11.2 Upon the occurrence of all of the events referenced in 111.1 hereof; any and all remaining interest or right of the Defendants in or to the Settlement Fund, if arty, shall be extinguished. 11.3 Defendants' counsel or Plaintiffs' Co-Lead Counsel shall have the right to terminate the Settlement and this Stipulation by providing written notice of their election to do so

("Termination Notice') to all other Settling Parties within thirty (30) days of (a) the Court's declining to enter the Order for Notice and Hearing in any material respect; (b) the Court's refusal to approve this Stipulation or any material part of it; (c) the Court's declining to enter the Order and Final Judgment in any material respect; (d) the date upon which the Order and Final

Judgment is modified or reversed in any material respect by any court; or (e) the date upon' which an Alternative Judgment is modified or reversed in any material respect by any court

Plaintiffs' Co-Lead Counsel shall also have the right to terminate the Settlement thirty (30) calendar days after Defendants' failure to timely pay the Settlement Amount. 11.4 In the event that the Settlement is terminated or fails to become effective in accordance with its terms for any reason, then the terms of 13.9 shall apply.

12. No Admission of Wrongdoing 12.1 Defendants have vigorously denied, and continue to deny, that they have committed any violation of the federal securities laws or other laws, and have vigorously denied

and continue to deny all allegations of wrongdoing or liability whatsoever with respect to the Released. Claims, inchxft any and all claims of wrongdoing or liability alleged or asserted in the Litigation. Defendants state that they are agreeing to this Settlement solely because it will

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eliminate the substantial burden, expense and uncertainties of further litigation and the

concomitant distraction of resources and efforts from their businesses. 12.2 This Stipulation, all negotiations, statements, and proceedings in connection

herewith and any act performed or document executed pursuant to, in furtherance of, or in connection with the Stipulation or the Settlement shalt not, in any event, be construed or deemed to be evidence of an admission or concession on the part of the Lead Plaintiffs, any Defendant, any Class Member, or any other Person, of any liability or wrongdoing of any nature whatsoever by them, or any of them, and shall not be offered or received in evidence in any civil, criminal or administrative action or proceeding in any court, administrative agency or other tribunal (except an action to enforce this Stipulation and Settlement contemplated hereby), or be used in any way

as an admission, concession, or evidence of any liability or wrongdoing of any nature whatsoever, and shall not be construed as, or deemed to be evidence of an admission or

concession that Lead Plaintiffs, any member of the Class, any present or former stockholder of JAKKS, or any other Person, has or has not suffered any damage; provided, however, that nothing contained in this section shall prevent this Stipulation (or any agreement or order relating

thereto) from being used, offered, or received in evidence in any proceeding to approve, enforce, or otherwise efliectuate the Settlement (or any agreement or order relating thereto) or the Final Judgment, or in which the reasonableness, fairness, or good faith of Defendants in participating in the Settlement (or any agreement or order relating thereto) is in issue, or to enforce or effectuate provisions of this Settlement, the Final Judgment, or the Proofs of Claim and Release as to Defendants, Released Parties, Lead Plaintiff's, or the Settlement Class Members

13. M1seelkneous Provisions 13.1 All of the Exhibits attached to this Stipulation arc material and integral parts hereof and are hereby incorporated by refmcnee as though fully set forth herein. -30- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 52 of 109

13.2 The Settling Parties: (a) acknowledge that it is their intent to consummate this

Settlement; (b) agree to cooperate to the extent reasonably necessary to effectuate and implement all terms and conditions of this Stipulation; and (c) agree to exercise their best efforts to accomplish the foregoing terms and conditions of this Stipulation. 13.3 The Settling Parties intend this Settlement to be a final and complete resolution of all disputes between them with respect to the Litigation, including all facts and claims that were asserted or which could be asserted by Lead Plaintiffs and the Class Members against the Released Parties with respect to the Released Claims, and shall not be deemed an admission or concession of any nature whatsoever by any Settling Party as to the merits of any claim or defense. The Settling Parties agree that the amount paid to the Settlement Amount and the other terms of the Settlement were negotiated at arm's length in good faith by the Settling Parties, and

reflect a Settlement that was reached voluntarily after consultation with experienced legal

counsel Lead Plaintiffs, on behalf of themselves and the Class, and Defendants, agree not to

assert in any forum that the Litigation was brought by Lead Plaintiffs or defended by Defendants in bad faith or without a reasonable basis. The Settling Parties shall assert no claims of any violation of Rule 11 of the Federal Rules of Civil Procedure relating to the prosecution, defense, or settlement of the Litigation, and the Order and Final Judgment shall contain a provision that during the course of the Litigation, the Settling Parties and their respective counsel at all tunes hereto complied with and satisfied the requirements of Rule 11. 13.4 Defendants may file the Stipulation and/or the Order and Final Judgment in any action that may be brought against them in order to support a defense or counterclaim based on principles of res judicata, collateral estoppel, release, good faith settlement, judgment bar or

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reduction, or any other theory of claim preclusion or issue preclusion or similar defense or

counterclaim. 13.5 All agreements made and orders entered during the course of this Litigation

relating to the confidentiality of documents and information shall survive this Stipulation pursuant to their terns. 13.6 This Stipulation may not be modified or amended in any way, nor may any of its provisions be waived except by a writing signed by or on behalf of all Settling Parties or their respective attorneys, or successors-in-interest.

13.7 The headings and captions in this Stipulation are used for the purpose of

convenience only and are not meant to have any legal effect on the meaning or interpretation of this Stipulation or any of its terms or provisions. 13.8 The administration and consummation of the Settlement as embodied in this Stipulation shall be under the authority of the Court and the Court shall retain jurisdiction with

respect to the implementation and enforcement of the terms of this Stipulation and for the

purpose of entering orders providing for awards of attorneys' fees and expenses to Plaintiffs'

Counsel. 13.9 The waiver by one party of any breach of this Stipulation by any other party shall not be deemed a waiver of any other prior or subsequent breach of this Stipulation. 13.10 This Stipulation, the Exhibits attached hereto and the Supplemental Agreement constitute the entire agreement among the Settling Parties concerning the settlement of the

Litigation, and no representations, warranties, or inducements have been made by any party hereto concerning this Stipulation and its Exhibits and the Supplemental Agreement other than

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those contained and memorialized in such documents. Except as provided herein, each Settling

Party shall bear its own costs. 13.11 This Stipulation may be executed in one or more counterparts. All executed counterparts and each of them shall be deemed to be one and the same instrument. 13.12 This Stipulation shall be binding upon, and inure to the benefit of, the heirs,

successors and assigns of the Settling Parties. 13.13 The construction, interpretation, operation, effect and validity of this Stipulation, and all documents necessary to effectuate it, shall be governed by the laws of the State of New York without regard to any choice of law principle, except to the extent that federal law requires that federal law governs.

13.14 This Stipulation shall not be construed more strictly against one party than

another merely by virtue of the fact that it, or any part of it, may have been prepared by counsel for one of the Settling Parties, it being recognized that it is the result of arm's-length negotiations between the Settling Parties and all Settling Parties have contributed substantially and materially to the preparation of this Stipulation.

13.15 All counsel and any other Person executing this Stipulation and any of the Exhibits hereto, or any related settlement documents, warrant and represent that they have the full authority to do so and that they have the authority to take appropriate action required or permitted to be taken pursuant to the Stipulation to effectuate its terms. 13.16 Plaintiffs' Co-Lead Counsel and counsel for Defendants agree to cooperate fully with one another in seeking Court approval of the Order for Notice and Hearing, the Stipulation and the Settlement, and to agree upon and execute all such other documentation promptly as may

be reasonably required to obtain final approval by the Court of the Settlement.

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13.17 If a case is commenced in respect of any Defendant contributing to the Settlement

Amount (or any insurer contributing funds to the Cash Settlement Amount on behalf of any

Defendant) under Title 11 of the United States Code (Bankruptcy), or a trustee, receiver,

conservator, or other fiduciary is appointed under any similar law, and in the event of the entry of a final order of a court of competent jurisdiction determining the transfer of money to the Gross Settlement Fund or any portion thereof by or on behalf of such Defendant to be a preference, voidable transfer, fraudulent transfer or similar transaction and any portion thereof is

required to be resumed, and such amount is not promptly deposited to the Gross Settlement Fund

by others, then, at the election of Plaintiffs' Co-Lead Counsel, the parties shall jointly move the Court to vacate and set aside the releases given and Judgment entered in favor of the Defendants pursuant to this Stipulation, which releases and Judgment shall be null and void, and the parties

shall be restored to their respective positions in the Litigation immediately prior to the execution

of this Stipulation and any cash amounts in the Gross Settlement Fund and Notice and

Administration Fund shall be returned as provided in 13.9 above.

IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed,

by their duly authorized attorneys, dated 0*%v-qb*r 2, 2009. COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP SAMUEL H. RUDMAN (SR-7959) ROBERT M. ROTHMA.NN (RR-6090) DAVID A. ROSENFELD (DR-7564)

ROBERT M. ROTHMAN

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58 South Service Road, Suite 200 Melville, NY 11747 Telephone: 631 /367-7100 631/367-1173 (fax) Email: rrotbananQa csgrr.com

MILBERG LLP KIRK E. CHAPMAN (KC-7371) MATTHEW A KUPILLAS (MK-6428) TODD L. KAMMERMAN (TK-0601)

MATTHEW A

One Pena Plays New York, NY 10119 Telephone: 212/594-5300 2111868-1229 (fax) Email: mkupillas®milberg.com Co-Lead Counsel for Plaintiffs SKADDEN, ARPS, SLATE, MEAGHER 8t FLOM LLP JONATHAN J. LERNER (JL-7117) MICHAEL H. GRUENGLAS (MG-8705)

MICHAEL IL GRUENGLAS

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4 Times Square New York, NY 10036 Telephone: 212/735-3000 212!735-2000 (fax) Email: michaelgruenglas®skadden.com

FEDER KASZOVITZ LLP JONATHAN D. HONIG (JH-7577) 845 Third Avenue, 11th Floor New York, NY 10022-6601 Telephone: 212888-8200 2121888-7776 (fax) Email: [email protected] Counsel for Defendants

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EXHIBIT B Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 59 of 109

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x In re JAKKS PACIFIC, INC. Civil Action No. 04-CV-8807 (RJS) SHAREHOLDERS CLASS ACTION LITIGATION : CLASS ACTION

[PROPOSED] ORDER PRELIMINARILY This Document Relates To: ; APPROVING SETTLEMENT AND PROVIDING FOR NOTICE ALL ACTIONS. x

WHEREAS, on November 2, 2009, the parties to the above-captioned litigation (the

"Litigation") entered into a Stipulation of Settlement (the "Stipulation") which is subject to

review and approval under Rule 23 of the Federal Rules of Civil Procedure and which, together with the exhibits thereto, sets forth the terms and conditions for the proposed settlement of the

claims asserted in the Litigation with prejudice. Having read and considered the Stipulation (the

defined terms of which are incorporated herein) and the exhibits annexed thereto and having heard the Settling Parties and given due consideration; and

NOW THEREFORE, IT IS HEREBY ORDERED:

1. The Court does hereby preliminarily approve the Stipulation and the Settlement

set forth therein, including the releases contained therein, as being fair, reasonable and adequate

as to the Class Members, subject to further consideration at the Settlement Hearing described below.

2. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, a hearing (the

"Settlement Hearing") shall be held before this Court on , 20_, at _ _.m., in

Courtroom 1 of the Daniel Patrick Moynihan United States Courthouse for the Southern District

of New York, 500 Pearl Street, New York, New York 10007, to determine: (a) whether the

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proposed Settlement of the Litigation on the terms and conditions provided for in the Stipulation is fair, reasonable and adequate and should be approved by the Court; and whether an Order and

Final Judgment, substantially in the form of Exhibit B to the Stipulation, should be entered herein; (b) whether the proposed Plan of Allocation should be approved by the Court; and (c) whether and in what amounts fees and expenses and interest thereon should be awarded to

Plaintiffs' Co-Lead Counsel. The Court may adjourn the Settlement Hearing without further notice to members of the Class.

3. Pursuant to Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure, and

for the purposes of the Settlement only, this Action is hereby certified as a class action on behalf

of a Class of all Persons who purchased JAKKS common stock during the period between

December 3, 1999 and October 19, 2004, inclusive. Excluded from the Class are: Defendants,

JAKKS's directors and officers during the Class Period, any Person, firm, trust, corporation,

officer, director or other individual or entity in which any defendant has a controlling interest or

which is related to or affiliated with any of the defendants, and the legal representatives, agents,

heirs, successors, or assigns of any excluded party. Those Persons or entities who timely and

validly request exclusion from the Settlement Class in accordance with the requirements set forth

in the Notice of Pendency and Proposed Settlement of Class Action (the "Notice") to be sent to

the Settlement Class, shall also be excluded from the Settlement Class.

4. The Court finds that for the purposes of the Settlement only, that the prerequisites

for a class action under Rules 23(a) and (b)(3) of the Federal Rules of Civil Procedure have been

satisfied in that: (a) the members of the Class are so numerous that joinder of all Class Members

in the Litigation is impracticable; (b) there are questions of law and fact common to the Class;

(c) the claims of the Lead Plaintiffs are typical of the claims of the Class; (d) the Lead Plaintiffs

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and Plaintiffs' Co-Lead Counsel have represented, and will fairly and adequately represent, the interests of the Class; (e) the questions of law and fact common to the members of the Class predominate over any questions affecting only individual members of the Class; and (f) a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

5. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, and for the purposes of the Settlement only, Lead Plaintiffs Indiana Electrical Workers Pension Trust Fund IBEW,

Kenneth J. Tucker, Tonia R. Tucker-Kraus and Michael Kraus are certified as Class

Representatives and Plaintiffs' Co-Lead Counsel are certified as class counsel.

6. The Court approves, as to form and content, the Notice of Pendency and Proposed

Settlement of Class Action, Motion for Attorneys' Fees and Settlement Fairness Hearing (the

"Notice"), the Proof of Claim and Release form (the "Proof of Claim"), and the Summary Notice

annexed as Exhibits A-1, A-2 and A-3 hereto.

7. Pursuant to Rule 23(c) of the Federal Rules of Civil Procedure, the Court appoints the firm of Gilardi & Co. LLC ("Claims Administrator") to supervise and administer the notice procedure as well as the processing of claims as more fully set forth below:

(a) Not later than five (5) business days from the date of this Order, JAKKS

shall, at its own expense, provide to Plaintiffs' Co-Lead Counsel the Company's transfer records

in a form acceptable to Plaintiffs' Co-Lead Counsel and the Claims Administrator;

(b) Not later than , 20 (the "Notice Date"), the Claims

Administrator shall cause a copy of the Notice and the Proof of Claim, substantially in the forms

annexed as Exhibits A-1 and A-2 hereto, to be mailed by first class mail to all Class Members who can be identified with reasonable effort and to be posted on a website at www.gilardi.com;

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(c) Within ten days of the Notice Date, the Claims Administrator shall cause the Summary Notice to be published once in the national edition of Investor's Business Daily; and

(d) At or before the Settlement Hearing, Plaintiffs' Co-Lead Counsel shall serve on Defendants' counsel and file with the Court proof, by affidavit or declaration, of such mailing and publishing.

8. Nominees who purchased JAKKS common stock for the benefit of another

Person during the period between December 3, 1999 and October 19, 2004, inclusive, are directed to send the Notice and the Proof of Claim to all such beneficial owners of JAKKS common stock within ten (10) days after receipt thereof, or to send a list of the names and addresses of such beneficial owners to the Claims Administrator within ten (10) days of receipt thereof, in which event the Claims Administrator shall promptly mail the Notice and the Proof of

Claim to such beneficial owners. Nominee purchasers who elect to send the Notice and Proof of

Claim to their beneficial owners shall send a statement to the Claims Administrator confirming that the mailing was made as directed. Additional copies of the Notice and the Proof of Claim shall be made available to any record holder requesting such for the purpose of distribution to beneficial owners, and such record holders shall be reimbursed from the Gross Settlement Fund, upon receipt by the Claims Administrator of proper documentation, for the reasonable expense of sending the Notices and Proofs of Claim to beneficial owners. Plaintiffs' Co-Lead Counsel shall, at or before the Settlement Hearing, file with the Court proof of mailing of the Notice and Proof of Claim.

9. The form and content of the Notice, and the method set forth herein of notifying the Class of the Settlement and its terms and conditions, meet the requirements of Rule 23 of the

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Federal Rules of Civil Procedure, Section 21 D(a)(7) of the Securities Exchange Act of 1934, 15

U.S.C. §78u-4(a)(7) as amended by the Private Securities Litigation Reform Act of 1995, and due process, constitute the best notice practicable under the circumstances, and shall constitute due and sufficient notice to all Persons entitled thereto.

10. In order to be entitled to participate in the Net Settlement Fund, in the event the

Settlement is effected in accordance with the terms and conditions set forth in the Stipulation, each Class Member shall take the following actions and be subject to the following conditions;

(a) A properly executed Proof of Claim (the "Proof of Claim"), substantially in the form attached hereto as Exhibit 2, must be submitted to the Claims Administrator, at the

Post Office Box indicated in the Notice, postmarked not later than , 20—.

Such deadline may be further extended by Court Order. Each Proof of Claim shall be deemed to have been submitted when postmarked (if properly addressed and mailed by first class mail, postage prepaid) provided such Proof of Claim is actually received prior to the motion for an order of the Court approving distribution of the Net Settlement Fund. Any Proof of Claim submitted in any other manner shall be deemed to have been submitted when it was actually received at the address designated in the Notice.

(b) The Proof of Claim submitted by each Class Member must satisfy the following conditions: (i) it must be properly completed, signed and submitted in a timely manner in accordance with the provisions of the preceding subparagraph; (ii) it must be accompanied by adequate supporting documentation for the transactions reported therein, in the form of broker confirmation slips, broker account statements, an authorized statement from the broker containing the transactional information found in a broker confirmation slip, or such other documentation as is deemed adequate by Plaintiffs' Co-Lead Counsel; (iii) if the person

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executing the Proof of Claim is acting in a representative capacity, a certification of his current authority to act on behalf of the Class Member must be included in the Proof of Claim; and (iv) the Proof of Claim must be complete and contain no material deletions or modifications of any of the printed matter contained therein and must be signed under penalty of perjury.

(c) As part of the Proof of Claim, each Class Member shall submit to the jurisdiction of the Court with respect to the claim submitted, and shall (subject to effectuation of the Settlement) release all Released Claims as provided in the Stipulation.

11. Any Class Member who does not timely submit a Proof of Claim within the time provided for, shall be barred from sharing in the distribution of the proceeds of the Net

Settlement Fund, unless otherwise ordered by the Court. Notwithstanding the foregoing,

Plaintiffs' Co-Lead Counsel may, in their discretion, accept for processing late claims so long as the distribution of the Net Settlement Fund to Authorized Claimants is not materially delayed

thereby.

12. Any member of the Class who does not submit a Proof of Claim form in the manner stated in this Order shall be deemed to have waived his, her or its right to share in the

Net Settlement Fund, and shall forever be barred from sharing in the Net Settlement Fund. Any

such member of the Class, however, in all other respects shall be subject to and bound by all of

the terms of the Settlement, including the terms of the Stipulation, the Order and Final Judgment

and the releases provided for by the Stipulation and the Order and Final Judgment unless such member of the Class has submitted a request to be excluded from the Class in the manner

required by this Order.

13. Class Members shall be bound by all determinations and judgments in this

Litigation, whether favorable or unfavorable, unless such persons request exclusion from the

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Class in a timely and proper manner, as hereinafter provided. A Class Member wishing to make such request shall mail the request in written form by first class mail postmarked no later than

, 20 to the address designated in the Notice. Such request for exclusion shall clearly indicate the name, address and telephone number of the person seeking exclusion, that the sender requests to be excluded from the Class in the JAKKS Pacific Securities

Litigation, and must be signed by such person. Such persons requesting exclusion are also directed to state: the date(s), price(s), and number(s) of shares of all purchases and sales of

JAKKS common stock during the Class Period. The request for exclusion shall not be effective unless it provides the required information and is made within the time stated above, or the exclusion is otherwise accepted by the Court.

14. Class Members requesting exclusion from the Class shall not be entitled to receive any payment out of the Net Settlement Fund as described in the Stipulation and Notice.

15. Any Class Member may be heard and/or appear at the Settlement Hearing to show cause why the proposed Settlement should not be approved as fair, reasonable and adequate, why the Order and Final Judgment should not be entered thereon, why the Proposed Plan of

Allocation should not be approved as fair, reasonable and adequate; or why Plaintiffs' Co-Lead

Counsel should not be awarded attorneys' fees and expenses in the amounts sought by them; provided, however, that no Class Member shall be heard or be entitled to contest the approval of the terms and conditions of the proposed Settlement, the Order and Final Judgment to be entered, the proposed Plan of Allocation, or Plaintiffs' Co-Lead Counsel's application for fees and expenses, unless on or before , 20 , the Class Member has served, by hand or by first-class mail, written objections and copies of any supporting papers and briefs (which must contain proof of purchase of JAKKS shares during the Class Period) upon Ellen Gusikoff

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Stewart, Coughlin Stoia Geller Rudman & Robbins LLP, 655 West Broadway, Suite 1900, San

Diego, CA 92101, Matthew A. Kupillas, Milberg LLP, One Penn Plaza, New York, NY 10119, and Michael H. Gruenglas, Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square,

New York, NY 10036, and said objections, papers and briefs showing due proof of service upon all counsel identified above are filed with the Clerk of the United States District Court for the

Southern District of New York, 500 Pearl Street, New York, NY 10007. Attendance at the

Settlement Hearing is not necessary; however, persons wishing to be heard orally in opposition to the approval of the Settlement, the proposed Plan of Allocation, and/or the request for attorneys' fees and expenses are required to indicate in their written objection their intention to appear at the hearing. Persons who intend to object to the Settlement, the proposed Plan of

Allocation, and/or counsel's application for an award of attorneys' fees and expenses and desire to present evidence at the Settlement Hearing must include in their written objections the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the

Settlement Hearing. Class Members do not need to appear at the Settlement Hearing or take any other action to indicate their approval.

16. Any member of the Class may enter an appearance in the Litigation at their own expense individually or through counsel of their own choice. If a Class Member hires an attorney to represent him, her or it in connection with filing an objection, the attorney must both serve on Plaintiffs' Co-Lead Counsel and counsel for Defendants and file with the Court a notice of appearance. Any such notice of appearance must be received by Plaintiffs' Co-Lead Counsel, counsel for Defendants and the Court by no later than fourteen (14) days before the Settlement

Hearing date of , 20_.

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17. Any member of the Class who does not make his, her or its objection in the manner provided shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to the fairness, reasonableness or adequacy of the proposed

Settlement as set forth in the Stipulation, to the proposed Plan of Allocation, and to the award of attorneys' fees and expenses to Plaintiffs' Counsel, unless otherwise ordered by the Court.

18. All proceedings in the Litigation are stayed until further order of the Court, except as may be necessary to implement the Settlement or comply with the terms of the Stipulation.

Pending final determination of whether the Settlement should be approved, neither the Lead

Plaintiffs nor any Class Member nor anyone who acts or purports to act on their behalf, shall, either directly, representatively, or in any other capacity, shall commence or prosecute against any of the Released Parties, any action or proceeding in any court or tribunal asserting any of the

Released Claims, regardless of whether or not any such Class Member has appeared in the

Litigation.

19. This Order, the Settlement, and any of their terms, and all negotiations, discussions and proceedings in connection with this Order and the Settlement, shall not constitute evidence, or an admission by any of the Defendants or the other Released Parties, that any acts of wrongdoing have or have not been committed and shall not be deemed to create any inference that there is or is not any liability on the part of any of the Defendants or any other

Released Parties. This Order, the Settlement, and any of their terms, and all negotiations, discussions and proceedings in connection with this Order and the Settlement, shall not be offered or received in evidence or used for any other purpose in this or any other proceeding in any court, administrative agency, arbitration tribunal, or other forum of any kind or character in

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the United States or any other country except as necessary to enforce the terms of this Order and/or the Settlement.

20. All reasonable costs incurred in identifying and notifying Class Members, as well as in administering the Settlement Fund, shall be paid as set forth in the Stipulation. If for any reason the Settlement does not become effective in accordance with the terms of the Stipulation, neither the Lead Plaintiffs nor Plaintiffs' Counsel shall have any obligation to repay the reasonable and actual costs of class notice and administration.

21. All funds held by the Escrow Agent shall be deemed and considered to be in custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such funds shall be distributed pursuant to the Stipulation and further order(s) of the

Court.

22. Plaintiffs' Lead Counsel or their agents are authorized and directed to prepare any tax returns required to be filed on behalf of or in respect of the Settlement Fund and to cause any

Taxes due and owing to be paid from the Settlement Fund, and to otherwise perform all obligations with respect to Taxes and any reporting or filing in respect thereof as contemplated by the Stipulation, without further order of the Court.

23. As provided in the Stipulation, Plaintiffs' Lead Counsel may pay the Claims

Administrator the reasonable fees and costs associated with giving notice to the Settlement Class and the review of claims and administration of the Settlement out of the Settlement Fund without further order of the Court.

24. If for any reason the Settlement does not become effective in accordance with the terms of the Stipulation, this Order shall be vacated nunc pro tunc.

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25. Without further order of the Court, the Settling Parties may agree to reasonable extensions of time to carry out any of the provisions of this Order or the Stipulation.

26. The Court reserves the right to adjourn the date of the Settlement Hearing without further notice to the members of the Class, and retains jurisdiction to consider all further applications arising out of or connected with the proposed Settlement. The Court may approve the Settlement, with such modifications as may be agreed to by the Settling Parties, if appropriate, without further notice to the Class.

27. The Court retains exclusive jurisdiction over the Litigation to consider all further matters arising out of or connected with the Settlement.

IT IS SO ORDERED.

DATED: THE HONORABLE RICHARD J. SULLIVAN UNITED STATES DISTRICT JUDGE

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EXHIBIT B- I Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 71 of 109

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x In re JAKKS PACIFIC, INC. : Civil Action No. 04-CV-8807 (RJS) SHAREHOLDERS CLASS ACTION : CLASS ACTION LITIGATION : NOTICE

x

NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED SETTLEMENT, MOTION FOR ATTORNEYS' FEES AND SETTLEMENT FAIRNESS HEARING

If you purchased JAKKS Pacific, Inc. common stock between December 3, 1999 and October 19, 2004, inclusive, then you could get a payment from a class action settlement.

A federal court authorized this notice. This is not a solicitation from a lawyer.

• The settlement will provide a $3.925 million settlement fund for the benefit of investors who bought shares of JAKKS common stock between December 3,1999 and October 19, 2004, inclusive.

• The proposed Settlement resolves class action litigation (the "Litigation") over whether JAKKS made certain public misrepresentations and/or omissions regarding its license agreements with World Wrestling Entertainment, Inc. during the Class Period in violation of federal securities laws.

• Your legal rights are affected whether you act or do not act. Read this notice carefully.

YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT:

SUBMIT A CLAIM FORM The only way to get a payment. BY , 20_

EXCLUDE YOURSELF Get no payment. This is the only option that allows you to BY , 20_ ever be part of any other lawsuit against the Defendants and the other Released Parties about the Released Claims.

OBJECT BY Write to the Court about why you do not like the settlement. 20

GO TO A HEARING ON Ask to speak in Court about the settlement. ,20_

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DO NOTHING Get no payment. Give up rights.

• These rights and options - and the deadlines to exercise them - are explained in this notice.

• The Court in charge of this case still has to decide whether to approve the settlement. Payments will be made if the Court approves the settlement and after appeals are resolved. Please be patient.

• This Notice is not intended to be, and should not be construed as, an expression of any opinion by the Court with respect to the truth of the allegations or the merits of the claims or defenses asserted in this case.

SUMMARY OF NOTICE A. Statement of Plaintiff Recovery

Pursuant to the settlement described herein, a Settlement Fund consisting of $3.925 million in cash, plus interest, has been established. Plaintiffs estimate that there were approximately 20.47 million shares of JAKKS common stock traded during the Class Period which may have been damaged. Plaintiffs estimate that the average recovery per damaged share of JAKKS common stock under the settlement is 19.2¢ per damaged share' before deduction of Court-awarded attorneys' fees and expenses. A Class Member's actual recovery will be a proportion of the Net Settlement Fund determined by that claimant's Recognized Claim as compared to the total Recognized Claims of all Class Members who submit acceptable Proofs of Claim. Depending on the number of claims submitted, when during the Class Period a Class Member purchased shares of JAKKS common stock, the purchase price paid, and whether those shares were held at the end of the Class Period or sold during the Class Period, and, if sold, when they were sold and the amount received, an individual Class Member may receive more or less than this average amount. See the Plan of Allocation beginning on page 18 for more information on your Recognized Claim.

B. Statement of Potential Outcome of Case

The parties disagree on both liability and damages and do not agree on the average amount of damages per share that would be recoverable if plaintiffs were to have prevailed on each claim alleged. The issues on which the parties disagree include: (1) whether the statements made or facts allegedly omitted were material, false, misleading or otherwise actionable under the securities laws; (2) the appropriate economic model for determining the amount by which the price of JAKKS common stock was allegedly artificially inflated (if at all) during the Class

I An allegedly damaged share might have been traded more than once during the Class Period, and the indicated average recovery would be the total for all purchasers of that share.

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Period as a result of any alleged misstatements and/or omissions; (3) the amount by which the price of JAKKS common stock was allegedly artificially inflated (if at all) during the Class Period; (4) the effect of various market forces influencing the trading price of JAKKS common stock at various times during the Class Period; (5) the extent to which external factors, such as general market and industry conditions, influenced the trading price of JAKKS common stock at various times during the Class Period; (6) the extent to which the various matters that the Lead Plaintiffs alleged were materially false or misleading influenced (if at all) the trading price of JAKKS common stock at various times during the Class Period; and (7) the extent to which the various allegedly adverse material facts that the Lead Plaintiffs alleged were omitted influenced (if at all) the trading price of JAKKS common stock at various times during the Class Period. The Defendants deny that they are liable to Lead Plaintiffs or the Class, and deny that Lead Plaintiffs or the Class have suffered any legally cognizable damages.

C. Statement of Attorneys' Fees and Costs Sought

Plaintiffs' Co-Lead Counsel are moving the Court to award attorneys' fees not to exceed thirty percent (301/6) of the Gross Settlement Fund, plus expenses incurred in connection with the prosecution of this Litigation in the approximate amount of $100,000. The requested fees and expenses would amount to an average of approximately 6.2¢ per damaged share in total for fees and expenses. Plaintiffs' Counsel have expended considerable time and effort in the prosecution of this litigation on a contingent fee basis, and have advanced the expenses of the litigation, in the expectation that if they were successful in obtaining a recovery for the Class they would be paid from such recovery. In this type of litigation it is customary for counsel to be awarded a percentage of the common fund recovery as their attorneys' fees.

D. Further Information

Further information regarding the Litigation and this Notice may be obtained by contacting Plaintiffs' Co-Lead Counsel: Ellen Gusikoff Stewart, Esq., Coughlin Stoia Geller Rudman .& Robbins LLP, 655 West Broadway, Suite 1900, San Diego, California 92101, Telephone (619) 231-1058; or Matthew A. Kupillas, Esq., Milberg LLP, One Penn Plaza, New York, New York 10119-0165, Telephone (212) 594-5300.

E. Reasons for the Settlement

For the plaintiffs, the principal reason for the settlement is the benefit to be provided to the Class now. This benefit must be compared to the risk that no recovery might be achieved after a contested trial and likely appeals, possibly years into the future. The Lead Plaintiffs believe that the proposed Settlement is a very good recovery and is in the best interests of the Class. Because of the risks associated with continuing to litigate and proceeding to trial, there was a danger that the Class would not have prevailed on any of their claims, in which case the Class would receive nothing. The claims advanced by the Class involve complex legal, financial and technical issues, requiring extensive expert testimony, which would add considerably to the expense and duration of the Litigation. Even after extensive investigation and discovery, questions remain regarding Defendants' liability, whether a jury might find them liable, and the true measure of the Class's damages, if any. The amount of damages recoverable by the Class was and is challenged by the Defendants. Recoverable damages in this case are limited to losses -3- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 74 of 109

caused by conduct actionable under applicable law. Had the Litigation gone to trial, Defendants would have asserted, inter alia, that any losses to the Class were caused by non-actionable market factors, and that throughout the Class Period the uncertainties and risks associated with the purchase of JAKKS common stock were fully and adequately disclosed.

For the Defendants, who deny all allegations of wrongdoing or liability whatsoever, the principal reason for the settlement is to eliminate the expense, risks, and uncertain outcome of the litigation.

[END OF COVER PAGE]

WHAT THIS NOTICE CONTAINS

Table of Contents

Page SUMMARY OF NOTICE 2 A. Statement of Plaintiff Recovery 2 B. Statement of Potential Outcome of Case 2

C. Statement of Attorneys' Fees and Costs Sought 3

D. Further Information 3

E. Reasons for the Settlement 3

BASIC INFORMATION 7

1. Why did I get this package? 7

2. What is this lawsuit about? 7 3. Why is this a class action? 8

4. Why is there a settlement? 8 WHO IS IN THE SETTLEMENT 9

5. How do I know if I am part of the settlement? 9

6. Are there exceptions to being included? 10 7. What if I am still not sure if I am included? 10

THE SETTLEMENT BENEFITS — WHAT YOU GET 10 -4- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 75 of 109

8. What does the settlement provide? 10

9. How much will my payment be? 11

HOW YOU GET A PAYMENT — SUBMITTING A PROOF OF CLAIM FORM 11

10. How can I get a payment? 11 11. When will I get my payment? 11

12. What am I giving up to get a payment or stay in the Class? 11

EXCLUDING YOURSELF FROM THE SETTLEMENT 12

13. How do I exclude myself from the proposed settlement? 13 14. If I do not exclude myself, can I sue the Defendants and the other Released Parties for the same thing later? 13

15. If I exclude myself, can I get money from the proposed settlement? 13

THE LAWYERS REPRESENTING THE CLASS 13

16. Do I have a lawyer in this case? 13

17. How will the lawyers be paid? 14

OBJECTING TO THE SETTLEMENT 14 18. How do I tell the Court that I disapprove of the proposed settlement? 14

19. What is the difference between objecting and excluding? 15

THE COURT'S SETTLEMENT FAIRNESS HEARING 15 20. When and where will the Court decide whether to approve the proposed settlement? 16 21. Do I have to attend the hearing? 16

22. May I speak at the hearing? 16

IF YOU DO NOTHING 17

23. What happens if I do nothing at all? 17 GETTING MORE INFORMATION 17

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24. Are there more details about the proposed settlement? 17

25. How do T get more information? 17

PLAN OF ALLOCATION OF NET SETTLEMENT FUND AMONG CLASS MEMBERS 18 SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES 22

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BASIC INFORMATION

1. Why did I get this package?

You or someone in your family may have purchased shares of JAKKS common stock between December 3, 1999 and October 19, 2004, inclusive (the "Class Period").

The Court directed that this Notice be sent to Class Members because they have a right to know about a proposed settlement of a class action lawsuit, and about all of their options, before the Court decides whether to approve the settlement. If the Court approves the settlement, and after objections and appeals are resolved, an administrator appointed by the Court will make the payments that the settlement allows. This package explains the lawsuit, the settlement, Class Members' legal rights, what benefits are available, who is eligible for them, and how to get them.

The Court in charge of the case is the United States District Court for the Southern District of New York, and the case is known as In re JAKKS Pacific, Inc. Shareholders Class Action Litigation, Civil Action No. 04-CV-8807 (RJS). This case was assigned to United States District Judge Richard J. Sullivan. The people who sued are called plaintiffs, and the company and the persons they sued, JAKKS and Jack Friedman, Steven G. Berman and Joel M. Bennett, are called the Defendants.

2. What is this lawsuit about?

JAKKS designs, develops, produces and markets toys and related products using well- recognized trademarks and brand names it licenses. Prior to the Class Period, JAKKS licensed the rights from World Wrestling Entertainment, Inc. ('WWE'), an integrated media and entertainment company, to manufacture toys bearing the WWE brand name in the United States. On and after November 5, 2004, a number of securities class action complaints were filed in the United States District Court for the Southern District of New York (the "Court") on behalf of purchasers of JAKKS common stock between December 3, 1999 and October 19, 2004, inclusive, alleging violations of the Securities Exchange Act of 1934.

On July 11, 2005, Lead Plaintiffs filed a consolidated complaint (the "Complaint") against Defendants alleging that in order to procure valuable international license agreements to manufacture and market WWE toys, JAKKS allegedly bribed a senior WWE executive (James Bell ("Bell")) and WWE's licensing agent, Stanley Shenker & Associates, Inc. ("SSAI"). In exchange for the alleged bribes from JAKKS, allegedly laundered through foreign corporations, Bell and SSAI allegedly agreed to assist JAKKS in securing a WWE videogame license and favorable amendments to the toy licenses. During the Class Period, JAKKS publicly reported positive financial results which it attributed, in material part, to its WWE product line.

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On October 19, 2004, JAKKS issued a press release announcing its third-quarter 2004 financial results, and stating that it was "engaged in discussions with WWE over the validity of its toy and video games license." On that news, the price of JAKKS common stock fell 22%, from $24.15 to $18.81. Later that day, it was reported that the WWE had filed a complaint against JAKKS and the Individual Defendants, among others, alleging that they had perpetrated a bribery scheme involving lucrative licensing deals, in violation of the Racketeer Influenced and Corrupt Organization Act and bribery laws. On the following trading day, the price of JAKKS common stock fell 31 % from its closing price on October 19, 2004, to close at $12.96 per share.

3. Why is this a class action?

In a class action, one or more people called class representatives (in this case Lead Plaintiffs Indiana Electrical Workers Pension Trust Fund IBEW, Kenneth J. Tucker, Tonia R. Tucker-Kraus and Michael Kraus), sue on behalf of people who have similar claims. All these people are class members. Bringing a case, such as this one, as a class action allows adjudication of many similar claims of persons and entities that might be economically too small to bring in individual actions. One court resolves the issues for all class members, except for those who exclude themselves from the class.

4. Why is there a settlement?

On September 9, 2005, Defendants moved to dismiss the Complaint. On January 25, 2008, the Court issued an Opinion and Order, granting in part and denying in part the motion, giving Lead Plaintiffs leave to amend their complaint to address certain deficiencies.

On March 14, 2008, Plaintiffs filed the Second Amended Complaint ("SAC"). Defendants moved to dismiss the SAC on June 5, 2008, and Plaintiffs filed an opposition brief on July 21, 2008. Defendants filed a reply brief. While the parties were awaiting oral argument, settlement negotiations began. On February 12, 2009, the parties attended an all-day mediation before the Hon. Nicholas Politan (Ret.). Following a full-day mediation on February 12, 2009, and additional discussions between the parties, on February 24, 2009, an agreement-in-principle to settle the Litigation on the terms set forth herein was reached.

The Court did not finally decide in favor of Plaintiffs or Defendants. Instead, both sides, with the assistance of a mediator, agreed to a settlement. That way, they avoid the risks and cost of a trial, and the people affected will get compensation. The Lead Plaintiffs and their attorneys think the settlement is best for the Class.

Plaintiffs' Co-Lead Counsel, on behalf of Lead Plaintiffs, have conducted an extensive investigation relating to the claims and the underlying events and transactions alleged in the Complaint. Plaintiffs' Co-Lead Counsel's investigation included: (i) review of JAKKS' SEC

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filings, regulatory filings and reports, securities analysts' reports and advisories about JAKKS, press releases, and other public statements issued by JAKKS; (ii) review of media reports about JAKKS; and (iii) interviews with persons with knowledge of the alleged misconduct, including former employees of JAKKS.

Lead Plaintiffs believe that the claims asserted in the Litigation have merit. However, Lead Plaintiffs and Plaintiffs' Co-Lead Counsel recognize the expense, length and complexity of continued proceedings necessary to prosecute the Litigation against the Defendants through trial and appeal. Lead Plaintiffs and Plaintiffs' Co-Lead Counsel also have taken into account the uncertain outcome and the risk of litigation, especially in complex actions such as this Litigation, as well as the difficulties and delays inherent in such litigation. Plaintiffs' Co-Lead Counsel also are mindful of the inherent problems of proof of, and possible defenses to, the allegations and claims asserted in the Litigation. The Defendants have denied and continue to deny all allegations of any wrongdoing or liability against them whatsoever arising out of any of the conduct, statements, acts or omissions alleged in the Litigation. The Defendants also have denied and continue to deny, inter alia, the allegations that they committed any wrongdoing, that Defendants made any material misrep- resentations or omissions, that the price of JAKKS common stock was artificially inflated during the Class Period, that the Lead Plaintiffs or the Class, as defined below, have suffered any damages, or that the Lead Plaintiffs or the Class were harmed by any conduct alleged in the Litigation or that could have been alleged therein.

Nonetheless, the Defendants have concluded that further conduct of the Litigation would be protracted, time-consuming, expensive and distracting, including, without limitation, to JAKKS and its management, and that it is desirable that the Litigation be fully and finally settled. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like the Litigation. The Defendants have, therefore, determined that it is desirable and beneficial that the Litigation be settled in the manner and upon the terms and conditions of the Settlement.

WHO IS IN THE SETTLEMENT To see if you will get money from this settlement, you first have to decide if you are a Class Member.

5. How do I know if I am part of the settlement?

The Court directed, for the purposes of the proposed settlement, that everyone who fits this description is a Class Member: all Persons who purchased JAKKS common stock between December 3, 1999 and October 19, 2004, inclusive.

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6. Are there exceptions to being included?

Excluded from the Class are: Defendants, JAKKS's directors and officers during the Class Period, any Person, firm, trust, corporation, officer, director or other individual or entity in which any defendant has a controlling interest or which is related to or affiliated with any of the defendants, and the legal representatives, agents, heirs, successors, or assigns of any excluded Ply If one of your mutual funds purchased shares of JAKKS common stock during the Class Period, that alone does not make you a Class Member. You are a Class Member only if you directly purchased shares of JAKKS common stock during the Class Period. Check your investment records or contact your broker to see if you purchased JAKKS common stock during the Class Period. If you sold JAKKS common stock during the Class Period, that alone does not make you a Class Member. You are a Class Member only if you purchased your shares during the Class Period.

7. What if I am still not sure if I am included?

If you are still not sure whether you are included, you can ask for free help. You can call 1-(888) 878-1361 or visit [wwwgllardi.com/jakksj for more information. Or you can fill out and return the Proof of Claim form described on page 11, in question 10, to see if you qualify.

THE SETTLEMENT BENEFITS — WHAT YOU GET

8. What does the settlement provide?

In exchange for the Settlement and dismissal of the Litigation, Defendants have agreed to create a $3.925 million cash fund to be divided, after fees and expenses, among all Class Members who send in valid Proof of Claim forms. A portion of the Settlement Fund will be used for certain administrative expenses, including costs of printing and mailing this Notice, the cost of publishing a newspaper notice, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. In addition, as explained below, a portion of the Settlement Fund may be awarded by the Court to Plaintiffs' Co-Lead Counsel as attorneys' fees and expenses. The balance of the Settlement Fund (the "Net Settlement Fund") will be distributed according to the Plan of Allocation described below to Class Members who submit a valid and timely Proof of Claim.

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9. How much will my payment be?

Your share of the fund will depend on the total Recognized Claims represented by the valid Proof of Claim forms that Class Members send in, how many shares of JAKKS common stock you bought, how much you paid for them, and when you bought and whether or when you sold them, and if so for how much you sold them. You can calculate your Recognized Claim in accordance with the formula shown below in the Plan of Allocation. It is unlikely that you will get a payment for all of your Recognized Claim. After all Class Members have sent in their Proof of Claim forms, the payment you get will be a part of the Net Settlement Fund equal to your Recognized Claim divided by the total of everyone's Recognized Claims. See the Plan of Allocation beginning on page 18 for more information on your Recognized Claim.

HOW YOU GET A PAYMENT — SUBMITTING A PROOF OF CLAIM FORM

10. How can I get a payment?

To qualify for a payment, you must send in a Proof of Claim form. A Proof of Claim form is being circulated with this Notice. You may also get a Proof of Claim form on the Internet at [www. gilardi.com/jakks] . Read the instructions carefully, fill out the Proof of Claim form, include all the documents the form asks for, sign it, and mail it postmarked no later than ,20—.

11. When will I get my payment?

The Court will hold a hearing on , 20_, to decide whether to approve the settlement. If the Court approves the settlement after that, there may be appeals. It is always uncertain whether these appeals can be resolved, and resolving them can take time, perhaps more than a year. It also takes time for all the Proofs of Claim to be processed. Please be patient.

12. What am I giving up to get a payment or stay in the Class?

Unless you exclude yourself, you are staying in the Class, and that means that, upon the Effective Date, you will release all "Released Claims" (as defined below) against the "Released Parties" (as defined below).

"Released Claims" means any and all claims, debts, demands, rights or causes of action or liabilities of any nature or description whatsoever (including, but not limited to, claims for

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damages, interest, attorneys' fees, expert or consulting fees, and any other costs, expenses, or liability whatsoever), whether based on federal, state, local, statutory or common law or any other law, rule or regulation, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured or uninatured, whether class or individual in nature, including both known claims and Unknown Claims, that have been or could have been asserted in any forum by Lead Plaintiffs or the Class Members or any of them or the heirs, successors and assigns of any of them, against any of the Released Parties, which arise out of, are based on, or relate in any way, directly or indirectly, to any of the allegations, acts, transactions, facts, events, matters or occurrences, representations or omissions involved, asserted, set forth, referred to or that could have been asserted in the Litigation and arise out of, are based on, or relate in any way to the purchase of JAKKS common stock by any Class Member during the Class Period. "Released Claims" do not include the derivative claims raised in Oppenheim v. Friedman, et al., No. 05 Civ. 2046 (RJS) (S.D.N.Y.), Freeport Partners, LLC v. Friedman, et al., Case No. 04 Civ. 9441 (RJS) (S.D.N.Y.), or Warr v. Friedman, et al., No. BC330477 (Cal. Super. Ct., County of Los Angeles). "Released Claims" does not mean or include claims, if any, against the Released Parties arising under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA") which are not common to all Class Members. "Released Parties" means each and all of the Defendants, their respective past or present advisors, affiliates, agents, assigns, attorneys, banks or investment banks, co-insurers, consultants, directors, divisions, present and former employees, heirs, insurers, investment advisors, members, officers, parents, predecessors, principals, reinsurers, representatives, stockholders, spouses, subsidiaries, successors, related or affiliated entities, any entity in which any Defendant has a controlling interest, any member of an individual Defendant's immediate family, or any trust of which any Defendant is the settlor or which is for the benefit of any individual Defendant and/or member(s) of his family.

The Effective Date will occur when an Order entered by the Court approving the Settlement becomes final and not subject to appeal.

If you remain a member of the Class, all of the Court's orders will apply to you and legally bind you.

EXCLUDING YOURSELF FROM THE SETTLEMENT If you do not want a payment from this settlement, but you want to keep any right you may have to sue or continue to sue the Defendants and the other Released Parties, on your own, about the Released Claims, then you must take steps to get out. This is called excluding yourself — or is sometimes referred to as "opting out" of the settlement class. Defendants may withdraw from and terminate the Settlement if putative Class Members who purchased in excess of a certain amount of JAKKS common stock exclude themselves from the Class.

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13. How do I exclude myself from the proposed settlement?

To exclude yourself from the settlement Class, you must send a signed letter by mail stating that you "request exclusion from the Class in In re JAKKS Pacific, Inc. Shareholders Class Action Litigation, Civil Action No. 04-CV-8807 (RJS)." Your letter should state the date(s), price(s), and number(s) of shares of all your purchases and sales of JAKKS common stock during the Class Period. In addition, be sure to include your name, address, telephone number, and your signature. You must mail your exclusion request postmarked no later than 20_ to: Jakks Pacific Securities Litigation EXCLUSIONS c/o Gilardi & Co. LLC, Claims Administrator P.O. Box 8040 San Raphael, CA 94912-8040 You cannot exclude yourself by telephone or by e-mail. If you ask to be excluded, you will not get any settlement payment, and you cannot object to the settlement. You will not be legally bound by anything that happens in this lawsuit, and you may be able to sue (or continue to sue) the Defendants and the other Released Parties in the future.

14. If I do not exclude myself, can I sue the Defendants and the other Released Parties for the same thing later?

No. Unless you exclude yourself, you give up any rights to sue the Defendants and the other Released Parties for any and all Released Claims. If you have a pending lawsuit speak to your lawyer in that case immediately. You must exclude yourself from this Class to continue your own lawsuit. Remember, the exclusion deadline is , 20_.

15. If I exclude myself, can I get money from the proposed settlement?

No. If you exclude yourself, do not send in a Proof of Claim form to ask for any money. But, you may exercise any right you may have to sue, continue to sue, or be part of a different lawsuit against the Defendants and the other Released Parties.

THE LAWYERS REPRESENTING THE CLASS

16. Do I have a lawyer in this case?

The Court ordered that the law firms of Coughlin Stoia Geller Rudman & Robbins LLP in Melville, NY and Milberg LLP in New York, NY will represent the Class. These lawyers are

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called Plaintiffs' Co-Lead Counsel. You will not be separately charged for these lawyers. The Court will determine the amount of Plaintiffs' Co-Lead Counsel's fees and expenses, which will be paid from the Gross Settlement Fund. If you want to be represented by your own lawyer, you may hire one at your own expense.

17. How will the lawyers be paid?

Plaintiffs' Co-Lead Counsel are moving the Court to award attorneys' fees to Plaintiffs' Counsel2 from the Gross Settlement Fund in an amount not to exceed thirty percent (30%) of the Gross Settlement Fund and for reimbursement of their expenses in the approximate amount of $100,000, plus interest on such expenses at the same rate as earned by the Settlement Fund. Plaintiffs' Co-Lead Counsel, without further notice to the Class, will subsequently apply to the Court for payment of the Claims Administrator's fees and expenses incurred in connection with giving notice, administering the settlement and distributing the settlement proceeds to the members of the Class.

Such sums as may be approved by the Court will be paid from the Settlement Fund. .Class Members are not personally liable for any such fees or expenses.

OBJECTING TO THE SETTLEMENT

You can tell the Court that you do not agree with the settlement or some part of it.

18. How do I tell the Court that I disapprove of the proposed settlement?

If you are a Class Member you can object to the Settlement or any of its terms, the proposed Plan of Allocation and/or the application by Plaintiffs' Co-Lead Counsel .for an award of fees and expenses. You may write to the Court setting out your objection. You may give reasons why you think the Court should not approve any or all of the Settlement terms or arrangements. The Court will consider your views if you file a proper objection within the deadline identified, and according to the following procedures.

To object, you must send a signed letter stating that you object to the proposed settlement in the In re JAKKS Pacific, Inc. Shareholders Class Action Litigation, Civil Action No. 04-CV- 8807 (RJS). Be sure to include your name, address, telephone number, and your signature, identify the date(s), price(s), and number(s) of shares of all purchases and sales of JAKKS

2 Included in Plaintiffs' Counsel is the law office of a former associate of Milberg LLP, Michael Swick, who performed services on this matter at Milberg LLP's direction and as part of Milberg LLP's litigation team after leaving Milberg LLP.

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common stock you made during the Class Period, and state the reasons why you object to the Settlement. Your objection must be filed with the Court and served on all the following counsel on or before 120—:

COURT PLAINTIFFS' CO-LEAD DEFENDANTS' COUNSEL COUNSEL Clerk of the Court Ellen Gusikoff Stewart, Esq. Michael H. Graenglas, United States District Court Coughlin Stoia Geller Rudman & Esq. for the Southern District of Robbins LLP Skadden, Arps, Slate, New York 655 West Broadway, Suite 1900 Meagher & Flom LLP Daniel Patrick Moynihan San Diego, CA 92101 Four Times Square United States Courthouse New York, NY 10036 500 Pearl Street Matthew A. Kupillas, Esq. New York, NY 10007-1312 Milberg LLP One Penn Plaza New York, NY 10119-0165

You do not need to go to the Settlement Fairness Hearing to have your written objection considered by the Court. At the Settlement Fairness Hearing, any Class Member who has not previously submitted a request for exclusion from the Class and who has complied with the procedures set out in this question 18 and question 22 below for filing with the Court and providing to the counsel for Plaintiffs and Defendants a statement of an intention to appear at the Settlement Fairness Hearing may also appear and be heard, to the extent allowed by the Court, to state any objection to the Settlement, the Plan of Allocation or Plaintiffs' Co-Lead Counsel's motion for an award of attorneys' fees and reimbursement of expenses. Any such objector may appear in person or arrange, at that objector's expense, for a lawyer to represent the objector at the Hearing.

19. What is the difference between objecting and excluding?

Objecting is simply telling the Court that you do not like something about the proposed settlement. You can object only if you stay in the Class. Excluding yourself is telling the Court that you do not want to be part of the Class. If you exclude yourself; you have no basis to object because the case no longer affects you.

THE COURT'S SETTLEMENT FAIRNESS HEARING

The Court will hold a hearing to decide whether to approve the proposed settlement. You may attend and you may ask to speak, but you do not have to.

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20. When and where will the Court decide whether to approve the proposed

settlement?

The Court will hold a Settlement Fairness Hearing at _: .m. on day, ,20 —, at the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York 10007-1312. At this hearing the Court will consider whether the settlement is fair, reasonable and adequate. At the Settlement Fairness Hearing, the Court also will consider the proposed Plan of Allocation for the proceeds of the Settlement and the application of Plaintiffs' Co-Lead Counsel for attorneys' fees and reimbursement of expenses. The Court will take into consideration any written objections filed in accordance with the instructions at question 18. The Court also may listen to people who have properly indicated, within the deadline identified above, an intention to speak at the hearing; but decisions regarding the conduct of the hearing will be made by the Court. See question 22 for more information about speaking at the hearing. The Court may also decide how much to pay to Plaintiffs' Counsel. After the hearing, the Court will decide whether to approve the settlement. We do not know how long these decisions will take. You should be aware that the Court may change the date and time of the Settlement Fairness Hearing. Thus, if you want to come to the hearing, you should check with Plaintiffs' Co-Lead Counsel before coming to be sure that the date and/or time has not changed.

21. Do I have to attend the hearing?

No. Plaintiffs' Co-Lead Counsel will answer questions the Court may have. But, you are welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As long as you filed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it is not necessary. Class Members do not need to appear at the hearing or take any other action to indicate their approval.

22. May I speak at the hearing?

If you object to the Settlement, you may ask the Court for permission to speak at the Settlement Fairness Hearing. To do so, you must include with your objection (see question 18 above) a statement stating that it is your "Notice of Intention to Appear in In re JAKKS Pacific, Inc. Shareholders Class Action Litigation, Civil Action No. 04-CV-8807 (RJS)." Persons who intend to object to the Settlement, the Plan of Allocation, and/or counsel's application for an award of attorneys' fees and expenses and desire to present evidence at the Settlement Fairness Hearing must include in their written objections the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the Settlement Fairness Hearing. -16- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 87 of 109

Unless otherwise ordered by the Court, you cannot speak at the hearing if you excluded yourself from the Class or if you have not provided written notice of your intention to speak at the Settlement Fairness Hearing by the deadline identified, and in accordance with the procedures described in questions 18 and 20 above.

IF YOU DO NOTHING

23. What happens if I do nothing at all? 1

If you do nothing, you will get no money from this settlement and you will be precluded from starting a lawsuit, continuing with a lawsuit, or being part of any other lawsuit against the Defendants and the other Released Parties about the Released Claims in this case, ever again. To share in the Net Settlement Fund you must submit a Proof of Claim form (see question 10). To start, continue or be a part of any other lawsuit against the Defendants and the other Released Parties about the Released Claims in this case you must exclude yourself from this Class (see question 13).

GETTING MORE INFORMATION

24. Are there more details about the proposed settlement?

This notice summarizes the proposed settlement. More details are in a Stipulation and Agreement of Settlement dated November 2, 2009 (the "Stipulation"). You can get a copy of the Stipulation by visiting [www gilardi comljakks] or by writing to Plaintiffs' Co-Lead Counsel.

You also can call the Claims Administrator at 1-888-878-1361 toll free; write to Jakks Pacific Securities Litigation Settlement, C/O Gilardi & Co. LLC, Claims Administrator, P.O. Box 8040, San Raphael, A 94912-8040; or visit the website at [www gilardi.com1jakks], where you will find answers to common questions about the settlement, a Proof of Claim form, plus other information to help you determine whether you are a Class Member and whether you are eligible for a payment.

25. How do I get more information?

For even more detailed information concerning the matters involved in this Litigation, you may refer to the pleadings, to the Stipulation, to the Orders entered by the Court and to the other papers filed in the Litigation, which may be inspected at the Office of the Clerk of the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York 10007-1312, during regular business hours.

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PLAN OF ALLOCATION OF NET SETTLEMENT FUND AMONG CLASS MEMBERS

The $3,925,000 Cash Settlement Amount and the interest earned thereon shall be the Gross Settlement Fund. The Gross Settlement Fund, less all taxes, approved costs, fees and expenses (the "Net Settlement Fund") shall be distributed to members of the Class who submit acceptable Proofs of Claim ("Authorized Claimants").

The Claims Administrator shall determine each Authorized Claimant's pro rata share of the Net Settlement Fund based upon each Authorized Claimant's "Recognized Claim." The Recognized Claim formula is not intended to be an estimate of the amount of what a Class Member might have been able to recover after a trial; nor is it an estimate of the amount that will be paid to Authorized Claimants pursuant to the settlement. The Recognized Claim formula is the basis upon which the Net Settlement Fund will be proportionately allocated to the Authorized Claimants. The proposed Plan of Allocation takes into account plaintiffs' contention that the price drops occurring on October 19, 2004 and October 20, 2004 reflected the reduction and then elimination of the artificial inflation in the price of Jakks common stock existing prior thereto. The October 19, 2004 price decline was $5.34 per share. The October 20, 2004 price decline was $5.85 per share. In the 90 days following these disclosures the price of Jakks common stock rebounded and to the extent that a Class Member sold in the 90 day period or continued to hold thereafter, their Recognized Claim may be limited by such rebound.

An Authorized Claimant's "Recognized Claim" shall be calculated as follows:

PPP means the purchase price paid (including commissions etc.). SPR means the selling price received (net of commissions etc.). ACP means the average closing price during the period from October 20, 2004 to the day of sale, as shown in the chart below.

1. For shares of Jakks common stock purchased during the time period December 3, 1999 through and including October 18, 2004, the "Recognized Claim" shall be as follows:

a) If sold prior to October 19, 2004, the "Recognized Claim" shall be zero ($0.00).

b) If sold at a loss on October 19, 2004, the "Recognized Claim" shall be the lesser of (i) $5.34 (the October 19, 2004 Price Decline) per share, or (ii) the difference between the PPP minus the SPR;

c) If sold at a loss during the time period from October 20, 2004 through January 14, 2005, the "Recognized Claim" shall be the least of: (i) $11.19 (October 19, 2004 and October 20, 2004 Price Declines) per share; or (ii) the difference between the PPP minus the SPR; or (iii) the difference between the PPP and ACP per share on the date of sale as set forth in the chart below.

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d) If still held as of the close of trading on January 14, 2005, the "Recognized Claim" shall be the lesser of: (i) $11.19 per share (October 19, 2004 and October 20, 2004 Price Declines), or (ii) the difference between the PPP minus $18.98 per share.

2. For shares of Jakks common stock purchased on October 19, 2004, the "Recognized Claim" shall be as follows:

a) If sold prior to October 20, 2004, the "Recognized Claim" shall be zero ($0.00).

b) If sold at a loss during the time period from October 20, 2004 through January 14, 2005, the "Recognized Claim" shall be the least of: (i) $5.85 (October 20, 2004 Price Decline) per share; or (ii) the difference between the PPP minus the SPR; or (iii) the difference between the PPP and ACP per share on the date of sale as set forth in the chart below.

c) If still held as of the close of trading on January 14, 2005, the "Recognized Claim" shall be the lesser of: (i) $5.85 per share (October 20, 2004 Price Declines), or (ii) the difference between the PPP minus $18.98 per share. Average Closing Closing Date Price Price 10/20/2004 $12.96 $12.96 10/21/2004 $13.54 $13.25 10/22/2004 $13.86 $13.45 10/25/2004 $14.83 $13.80 10/26/2004 $15.59 $14.16 10/27/2004 $15.16 $14.32 10/28/2004 $15.68 $14.52 10/29/2004 $15.76 $14.67 11/1/2004 $16.10 $14.83 11/2/2004 $16.33 $14.98 11/3/2004 $16.85 $15.15 11/4/2004 $17.48 $15.35 11/5/2004 $17.69 $15.53 11/8/2004 $17.47 $15.66 11/9/2004 $17.42 $15.78 11/10/2004 $17.88 $15.91 11/11/2004 $17.60 $16.01 11/1212004 $17.50 $16.09 11/15/2004 $17.66 $16.18 11/16/2004 $17.65 $16.25 11/17/2004 $17.16 $16.29 11/18/2004 $16.90 $16.32 11/19/2004 $17.00 $16.35 11/22/2004 $18.26 $16.43 11/23/2004 $18.72 $16.52 11/24/2004 $18.92 $16.61 -19-

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11/26/2004 $19.36 $16.72 11/29/2004 $19.21 $16.81 11/30/2004 $18.62 $16.87 12/1/2004 $19.09 $16.94 12/2/2004 $19.45 $17.02 12/3/2004 $19.24 $17.09 12/6/2004 $19.70 $17.17 12/7/2004 $19.02 $17.23 12/8/2004 $20.07 $17.31 12/9/2004 $19.87 $17.38 12/10/2004 $20.05 $17.45 12113/2004 $20.23 $17.52 12/14/2004 $21.10 $17.61 12/15/2004 $21.22 $17.71 12/16/2004 $20.91 $17.78 12/17/2004 $20.84 $17.86 12/20/2004 $20.94 $17.93 12/21/2004 $21.53 $18.01 12/22/2004 $21.05 $18.08 12/23/2004 $21.84 $18.16 12/27/2004 $22.02 $18.24 12/28/2004 $22.54 $18.33 12/29/2004 $22.89 $18.42 12/30/2004 $22.65 $18.51 12/31/2004 $22.11 $18.58 1/3/2005 $21.39 $18.63 1/4/2005 $21.08 $18.68 1/5/2005 $20.51 $18.71 1/6/2005 $20.87 $18.75 1/7/2005 $20.20 $18.78 1/10/2005 $20.71 $18.81 1/11/2005 $20.62 $18.84 1/12/2005 $21.95 $18.90 1/13/2005 $21.01 $18.93 1/14/2005 $21.96 $18.98 In the event a Class Member has more than one purchase or sale of JAKKS common stock, all purchases and sales shall be matched on a First In First Out ("FIFO") basis, Class Period sales (and sales in the 90 days after the Class Period) will be matched first against any JAKKS shares held at the beginning of the Class Period and then against purchases in chronological order. A purchase or sale of JAKKS common stock shall be deemed to have occurred on the "contract" or "trade" date as opposed to the "settlement" or "payment" date. The receipt or grant by gift, devise or operation of law of JAKKS common stock during the Class Period shall not be deemed a purchase or sale of JAKKS common stock for the calculation of an Authorized Claimant's Recognized Claim nor shall it be deemed an assignment of any claim relating to the purchase of such shares unless specifically provided in the instrument of gift or assignment. The receipt of JAKKS common stock during the Class Period in exchange for securities of any other corporation or entity shall not be deemed a purchase or sale of JAKKS common stock.

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To the extent a Claimant had a gain from his, her or its overall transactions in JAKKS common stock during the Class Period, the value of the Recognized Claim will be zero. To the extent that a Claimant suffered an overall loss on his, her or its overall transactions in JAKKS common stock during the Class Period, but that loss was less than the Recognized Claim calculated above, then the Recognized Claim shall be limited to the amount of the actual loss.

For purposes of determining whether a Claimant had a gain from his, her or its overall transactions in JAKKS common stock during the Class Period (and sales in the 90 days after the Class Period) or suffered a loss, the Claims Administrator shall: (i) total the amount paid for all JAKKS common stock purchased during the Class Period by the claimant (the "Total Purchase Amount"); (ii) match any sales of JAKKS common stock during the Class Period (and sales in the 90 days after the Class Period) first against the Claimant's opening position in the stock (the proceeds of those sales will not be considered for purposes of calculating gains or losses); (iii) total the amount received for sales of the remaining shares of JAKKS common stock sold during the Class Period (and sales in the 90 days after the Class Period) (the "Sales Proceeds"); and (iv) ascribe a $19.98 per share holding value for the number of shares of JAKKS common stock purchased during the Class Period and still held at the close of trading on January 14, 2005, 90- days after the end of the Class Period ("Holding Value"). The difference between (x) the Total Purchase Amount ((i) above) and (y) the sum of the Sales Proceeds ((iii) above) and the Holding Value ((iv) above) will be deemed a Claimant's gain or loss on his, her or its overall transactions in JAKKS common stock during the Class Period (and sales in the 90 days after the Class Period).

Each Authorized Claimant shall be allocated a pro rata share of the Net Settlement Fund based on his, her or its Recognized Claim as compared to the total Recognized Claims of all Authorized Claimants. The minimum distribution amount to an Authorized Claimant with a valid Recognized Claim shall be $10.00.

Class Members who do not submit acceptable Proofs of Claim will not share in the settlement proceeds. Class Members who do not either submit a request for exclusion or submit an acceptable Proof of Clain will nevertheless be bound by the settlement and the Order and Final Judgment of the Court dismissing this Litigation. Distributions will be made to Authorized Claimants after all claims have been processed and after the Court has finally approved the settlement. If any funds remain in the Net Settlement Fund by reason of un-cashed distributions or otherwise, then, after the Claims Administrator has made reasonable and diligent efforts to have Class Members who are entitled to participate in the distribution of the Net Settlement Fund cash their distributions, any balance remaining in the Net Settlement Fund one (1) year after the initial distribution of such funds shall be re-distributed to Class Members who have cashed their initial distributions and who would receive at least $10.00 from such re-distribution, after payment of any unpaid costs or fees incurred in administering the Net Settlement Fund for such re-distribution. If after six months after such re-distribution any funds shall remain in the Net Settlement Fund, then such balance shall be contributed to non-sectarian, not-for-profit, 501(c)(3) organization(s) designated by Plaintiffs' Co-Lead Counsel.

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Plaintiffs, Defendants, their respective counsel, and all other Released Parties shall have no responsibility for or liability whatsoever for the investment or distribution of the Settlement Fund, the Net Settlement Fund, the Plan of Allocation or the determination, administration, calculation, or payment of any Proof of Claim or non-performance of the Claims Administrator, the payment or withholding of taxes owed by the Settlement Fund or any losses incurred in connection therewith.

SPECIAL NOTICE TO SECURI'T'IES BROKERS AND OTHER NOMINEES

If you purchased common stock of JAKKS Pacific, Inc. between December 3, 1999 and October 19, 2004, inclusive, for the beneficial interest of a person or organization other than yourself, the Court has directed that, WITHIN TEN (10) DAYS AFTER YOU RECEIVE THIS NOTICE, you must either: (1) send a copy of this Notice and the Proof of Claim by first class mail to all such Persons; or (2) provide a list of the names and addresses of such Persons to the Claims Administrator:

Jakks Pacific Securities Litigation c/o Gilardi & Co. LLC, Claims Administrator P.O. Box 8040 San Raphael, CA 94912-8040 (888)878-1361

If you choose to mail the Notice and Proof of Claim yourself, you may obtain from the Claims Administrator (without cost to you) as many additional copies of these documents as you will need to complete the mailing.

Regardless of whether you choose to complete the mailing yourself or elect to have the mailing performed for you, you may obtain reimbursement for or advancement of reasonable administrative costs actually incurred or expected to be incurred in connection with forwarding the Notice and Proof of Claim and which would not have been incurred but for the obligation to forward the Notice and Proof of Claim, upon submission of appropriate documentation to the Claims Administrator. All communications concerning the foregoing should be addressed to the Claims Administrator.

PLEASE DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE.

Dated: New York, New York 2009

By Order of the Court UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

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EXHIBIT B-2 Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 94 of 109

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x In re JAKKS PACIFIC, INC. Civil Action No. 04-CV-8807 (RJS) SHAREHOLDERS CLASS ACTION LITIGATION ; CLASS ACTION PROOF OF CLAIM AND RELEASE This Document Relates To: ALL ACTIONS. x

I. GENERAL INSTRUCTIONS 1. To recover as a member of the Class based on your claims in the consolidated action entitled In re JAKKS Pacific, Inc. Shareholders Class Action Litigation, Case No. 04-CV-

8807(RJS) (the "Litigation"), you must complete and, on page 11 hereof, sign this Proof of

Claim and Release. If you fail to file a properly addressed (as set forth in paragraph 3 below)

Proof of Claim and Release, your claim may be rejected and you may be precluded from any recovery from the Net Settlement Fund created in connection with the proposed Settlement of the

Litigation.

2. Submission of this Proof of Claim and Release, however, does not assure that you will share in the proceeds of the Settlement of the Litigation.

3. YOU MUST MAIL YOUR COMPLETED AND SIGNED PROOF OF CLAIM

AND RELEASE POSTMARKED ON OR BEFORE 20 , ADDRESSED AS

FOLLOWS:

Jakks Pacific Securities Litigation c/o Gilardi & Co. LLC, Claims Administrator P.O. Box 8040 San Raphael, CA 94912-8040

- 1 - Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 95 of 109

If you are NOT a member of the Class (as defined in the Notice of Pendency and Proposed

Settlement of Class Action, Motion for Attorneys' Fees and Settlement Fairness Hearing (the

"Notice")), DO NOT submit a Proof of Claim and Release form.

4. If you are a member of the Class and you did not timely request exclusion in connection with the proposed Settlement, you are bound by the terms of any judgment entered in the Litigation, including the releases provided therein, WHETHER OR NOT YOU SUBMIT A

PROOF OF CLAIM AND RELEASE FORM.

H. CLAIMANT IDENTIFICATION If you purchased JAKKS common stock and held the certificate(s) in your name, you are the beneficial purchaser as well as the record purchaser. If, however, you purchased JAKKS common stock and the certificate(s) were registered in the name of a third party, such as a nominee or brokerage firm, you are the beneficial purchaser and the third party is the record purchaser.

Use Part I of this form entitled "Claimant Identification" to identify each purchaser of record ("nominee"), if different from the beneficial purchaser of the JAKKS common stock which forms the basis of this claim. THIS CLAIM MUST BE FILED BY THE ACTUAL

BENEFICIAL PURCHASER(S) OR ACQUIRERS(S), OR THE LEGAL REPRESENTATIVE

OF SUCH PURCHASER(S) OR ACQUIRER(S), OF THE JAKKS COMMON STOCK UPON

WHICH THIS CLAIM IS BASED.

All joint purchasers must sign this claim. Executors, administrators, guardians, conservators and trustees must complete and sign this claim on behalf of persons represented by them and their authority must accompany this claim and their titles or capacities must be stated.

The Social Security (or taxpayer identification) number and telephone number of the beneficial

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owner may be used in verifying the claim. Failure to provide the foregoing information could delay verification of your claim or result in rejection of the claim.

If you are acting in a representative capacity on behalf of a Class Member (for example, as an executor, administrator, trustee, or other representative), you must submit evidence of your current authority to act on behalf of that Class Member. Such evidence would include, for example, letters testamentary, letters of administration, or a copy of the trust documents.

NOTICE REGARDING ELECTRONIC FILES: Certain claimants with large numbers of transactions may request to, or may be requested to, submit information regarding their transactions in electronic files. All Claimants MUST submit a manually signed paper Proof of

Claim form listing all their transactions whether or not they also submit electronic copies. If you wish to file your claim electronically, you must contact the Claims Administrator at 1-(888)

8778-1361 or visit their website at www.gilardi.com/jakks to obtain the required file layout. No electronic files will be considered to have been properly submitted unless the Claims

Administrator issues to the Claimant a written acknowledgement of receipt and acceptance of electronically submitted data.

III. CLAIM FORM Use Part II of this form entitled "Schedule of Transactions in JAKKS Common Stock" to supply all required details of your transaction(s) in JAKKS common stock. If you need more space or additional schedules, attach separate sheets giving all of the required information in substantially the same form. Sign and print or type your name on each additional sheet.

On the schedules, provide all of the requested information with respect to all of your purchases and all of your sales of JAKKS common stock which took place at any time between

December 3, 1999 and October 19, 2004, inclusive (the "Class Period"), whether such transactions resulted in a profit or a loss. You must also provide all of the requested information -3- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 97 of 109

with respect to all of the JAKKS common stock you held at the beginning of trading on

December 3, 1999, and at the close of trading on October 19, 2004. Failure to report all such transactions may result in the rejection of your claim.

List each transaction in the Class Period separately and in chronological order, by trade date, beginning with the earliest. You must accurately provide the month, day and year of each transaction you list.

The date of covering a "short sale" is deemed to be the date of purchase of JAKKS common stock. The date of a "short sale" is deemed to be the date of sale of JAKKS common stock.

Copies of stockbroker's confirmation slips, stockbroker's statements, or other documents evidencing your transactions in JAKKS common stock should be attached to your claim. If any such documents are not in your possession, please obtain a copy or equivalent documents from your broker because these documents are necessary to prove and process your claim. Failure to provide this documentation could delay verification of your claim or result in rejection of your claim.

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Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 98 of 109

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

In re JAKKS Pacific, Inc. Shareholders Class Action Litigation

Case No. 04-CV-8807 (RJS)

PROOF OF CLAIM AND RELEASE

Must Be Postmarked No Later Than:

,20_

Please Type or Print

PART I: CLAIMANT IDENTIFICATION

Beneficial Owner's Name (First, Middle, Last)

Street Address

City State or Province

Zip Code or Postal Code Country

Individual Social Security Number or Corporation/Other Taxpayer Identification Number

Area Code Telephone Number (work)

Area Code Telephone Number (home)

Record Owner's Name (if different from beneficial owner listed above)

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Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 99 of 109

PART II: SCHEDULE OF TRANSACTIONS IN JAKKS COMMON STOCK

A. Number of shares of JAKKS common stock held at the beginning of trading on December 3, 1999: If none, write "zero" or "0," if other than zero, must be documented.

B. Purchases of JAKKS common stock made during the time period December 3, 1999 through and including October 19, 2004:

Trade Date Number of Total Purchase Price Mo. Day Year Shares Purchased

2. 2. 2.

3. 3. 3.

IMPORTANT: Identify by number listed above all purchases in which you covered a "short sale":

During the time period from October 20, 2004 through and including January 14, 2005, I purchased a total of shares of JAKKS common stock. If none, write "zero" or "0," if other than zero, must be documented..]

C. Sales of JAKKS common stock during the time period December 3, 1999 through and including January 14, 2005, inclusive (if none, write "zero" or "0'), if other than zero, must be documented:

Trade Date Number of Total Sales Price Mo. Day Year Shares Sold

1. 1. 1.

2. 2. 2.

3. 3. 3.

D. Number of shares of JAKKS common stock held at the close of trading on October 19, 2004 . Number of shares of JAKKS common stock held at the close of trading on January 14, 2005: (If none, write "zero" or "0") (If other than zero, must be documented).

If you require additional space, attach extra schedules in the same format as above. Sign

and print your name on each additional page. -6- Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 100 of 109

YOUR SIGNATURE ON PAGE 11 WILL CONSTITUTE YOUR

ACKNOWLEDGMENT OF THE RELEASE.

IV. SUBMISSION TO JURISDICTION OF COURT AND ACKNOWLEDGMENTS I (We) submit this Proof of Claim and Release under the terms of the Stipulation of

Settlement described in the Notice. I (We) also submit to the jurisdiction of the United States

District Court for the Southern District of New York with respect to my (our) claim as a Class

Member and for purposes of enforcing the release set forth herein. I (We) finther acknowledge that I am (we are) bound by and subject to the terms of any judgment that may be entered in the

Litigation. I (We) agree to furnish additional information to the Claims Administrator to support this claim (including transactions in other JAKKS securities, such as options) if requested to do so. I (We) have not submitted any other claim covering the same purchases or sales of JAKKS common stock during the Class Period and know of no other person having done so on my (our) behalf.

V. RELEASE 1. I (We) hereby acknowledge full and complete satisfaction of, and do hereby fully, finally and forever settle, release and discharge from the Released Claims each and all of the

Released Parties.

2. "Released Claims" means any and all claims, debts, demands, rights or causes of action or liabilities of any nature or description whatsoever (including, but not limited to, claims for damages, interest, attorneys' fees, expert or consulting fees, and any other costs, expenses, or liability whatsoever), whether based on federal, state, local, statutory or common law or any other law, rule or regulation, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured or unmatured, whether class or individual in nature,

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including both known claims and Unknown Claims, that have been or could have been asserted in any forum by Lead Plaintiffs or the Class Members or any of them or the heirs, successors and assigns of any of them, against any of the Released Parties, which arise out of, are based on, or relate in any way, directly or indirectly, to any of the allegations, acts, transactions, facts, events, matters or occurrences, representations or omissions involved, asserted, set forth, referred to or that could have been asserted in the Litigation and arise out of, are based on, or relate in any way to the purchase of JAKKS common stock by any Class Member during the Class Period.

"Released Claims" do not include the derivative claims raised in Oppenheim v. Friedman, et al.,

No. 05 Civ. 2046 (RJS) (S.D.N.Y.), Freeport Partners, LLC v. Friedman, et al., Case No. 04

Civ. 9441 (RJS) (S.D.N.Y.), and/or Warr v. Friedman, et al., No. BC330477 (Cal. Super. Ct.,

County of Los Angeles).. "Released Claims" does not mean or include claims, if any, against the

Released Parties arising under the Employee Retirement Income Security Act of 1974, 29 U.S.C.

§ 1001, et seq. ("ERISA") which are not common to all Class Members.

3. "Released Parties" means each and all of the Defendants, their respective past or present advisors, affiliates, agents, assigns, attorneys, banks or investment banks, co-insurers, consultants, directors, divisions, present and former employees, heirs, insurers, investment advisors, members, officers, parents, predecessors, principals, reinsurers, representatives, stockholders, spouses, subsidiaries, successors, related or affiliated entities, any entity in which any Defendant has a controlling interest, any member of an individual Defendant's immediate family, or any trust of which any Defendant is the settlor or which is for the benefit of any individual Defendant and/or member(s) of his family.

4. "Released Defendants' Claims" means any and all claims, rights or causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or common law

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or any other law, rule or regulation, including both known claims and Unknown Claims, that have been or could have been asserted in the Litigation or any forum by the Defendants, or the heirs, successors and assigns of any of them against the Lead Plaintiffs, any of the Class

Members or their attorneys, which arise out of or relate in any way to the institution, prosecution, or settlement of the Litigation, excluding any claims for breaches of this Stipulation.

5. "Unknown Claims" means any and all Released Claims which the Lead Plaintiffs or any Class Members do not know or suspect to exist in his, her or its favor at the time of the release of the Released Parties, and any Released Defendants' Claims which any Defendant does not know or suspect to exist in his, her or its favor, which if known by him, her or it might have affected his, her or its decision(s) with respect to the Settlement. With respect to any and all

Released Claims and Released Defendants' Claims, the Settling Parties stipulate and agree that upon the Effective Date, the Lead Plaintiffs and Defendants shall expressly waive, and each

Class Member shall be deemed to have waived, and by operation of the Order and Final

Judgment shall have expressly waived, any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable, or equivalent to California Civil Code § 1542, which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

Lead Plaintiffs and the Class Members may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but the Lead Plaintiffs shall expressly waive, and each Class Member, upon the Effective Date, shall be deemed to have, and by operation of the Order and Final

Judgment shall have, fully, finally, and forever settled and released any and all Released Claims,

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known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not

concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or

equity now existing or coming into existence in the future, including, but not limited to, breach

of any duty, law or rule, without regard to the subsequent discovery or existence of such different

or additional facts. Defendants may hereafter discover facts in addition to or different from those

which he or it now knows or believes to be true with respect to the subject matter of the Released

Defendants' Claims, but Defendants shall expressly waive, and by operation of the Order and

Final Judgment shall have fully, finally, and forever settled and released any and all Released

Defendants' Claims, known or unknown, suspected or unsuspected, contingent or non-

contingent, whether or not concealed or hidden, which now exist, or heretofore have existed,

upon any theory, or law or equity now existing or coming into existence in the future, including,

but not limited to, breach of any duty, law or rule, without regard to the subsequent discovery or

existence of such different or additional facts. Lead Plaintiffs and Defendants acknowledge, and

the Class Members by operation of law shall be deemed by operation of the Order and Final

Judgment to have acknowledged, that the inclusion of Unknown Claims in the definition of

Released Claims and Released Defendants' Claims was separately bargained for and was a key

element of the Settlement.

This release shall be of no force or effect unless and until the Court approves the

Stipulation of Settlement and the Stipulation becomes effective on the Effective Date.

6. I (We) hereby warrant and represent that I (we) have not assigned or transferred

or purported to assign or transfer, voluntarily or involuntarily, any matter released pursuant to

this release or any other part or portion thereof.

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7. I (We) hereby warrant and represent that I (we) have included information about all of my (our) transactions in JAKKS common stock which occurred during the Class Period as well as the number of shares of JAKKS common stock held by me (us) at the beginning of trading on December 3, 1999 and at the close of trading on January 14, 2005.

8. 1 (We) certify that I am (we are) not subject to backup withholding under the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code.

Note: If you have been notified by the Internal Revenue Service that you are subject to backup withholding, please strike out the language that you are not subject to backup withholding in the certification above.

I declare under penalty of perjury under the laws of the United States of America that the foregoing information supplied by the undersigned is true and correct.

Executed this day of (Month/Year) in (City) (State/Country)

(Sign your name here)

(Type or print your name here)

(Capacity of person(s) signing, e.g., Beneficial Purchaser or Acquirer, Executor or Administrator)

ACCURATE CLAIMS PROCESSING TAKES A SIGNIFICANT AMOUNT OF TIME. THANK YOU FOR YOUR PATIENCE. Reminder Checklist: I. Please sign the above release and declaration. - 11 - Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 105 of 109

2. Remember to attach supporting documentation, if available.

3. Do not send original stock certificates.

4. Keep a copy of your claim form for your records.

5. If you desire an acknowledgment of receipt of your claim form, please send it Certified Mail, Return Receipt Requested. 6. If you move, please send us your new address.

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EXHIBIT B-3 Case 1:04-cv-08807-RJS Document 116 Filed 06/29/2010 Page 107 of 109

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x In re JAKKS PACIFIC, INC. Civil Action No. 04-CV-8807 (RJS) SHAREHOLDERS CLASS ACTION CLASS ACTION LITIGATION SUMMARY NOTICE

x SUMMARY NOTICE OF PENDENCY OF CLASS ACTION, PROPOSED SETTLEMENT AND SETTLEMENT HEARING

TO: ALL PERSONS ("CLASS" OR "CLASS MEMBERS") WHO PURCHASED SHARES OF THE COMMON STOCK OF JAKKS PACIFIC, INC. ("JAKKS") DURING THE TIME PERIOD FROM DECEMBER 3, 1999 THROUGH AND INCLUDING OCTOBER 19, 2004

YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil

Procedure and an order of the United States District Court for the Southern District of New

York, that a hearing will be held on , 20_, at m., before the

Honorable Richard J. Sullivan, at the Daniel Patrick Moynihan U.S. Courthouse, 500 Pearl

Street, New York, New York 10007, for the purpose of determining: (1) whether the proposed settlement of the claims asserted by Lead Plaintiffs in the captioned class action (the

"Litigation") against Defendants JAKKS, Jack Friedman, Steven G. Berman and Joel M. Bennett

(collectively, "Defendants") for the sum of $3,925,000 (the "Settlement Fund") in cash pursuant to the terms set forth in the Stipulation of Settlement dated November 2, 2009 (the "Stipulation") should be approved by the Court as fair, reasonable and adequate; (2) whether, thereafter, the

Litigation should be dismissed with prejudice as set forth in the Stipulation; (3) whether the proposed Plan of Allocation is fair, reasonable and adequate and therefore should be approved; and (4) whether the application of Plaintiffs' Co-Lead Counsel for the payment of attorneys' fees and expenses incurred in connection with the Litigation should be approved.

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If you purchased shares of JAKKS common stock during the period from December 3,

1999 through and including October 19, 2004, YOUR RIGHTS MAY BE AFFECTED BY THE

SETTLEMENT OF THE LITIGATION, which is described in the detailed Notice of Pendency of Class Action and Proposed Settlement, Motion for Attorneys' Fees and Settlement Fairness

Hearing (the "Notice"). The Notice also describes the proposed settlement and the steps Class

Members must take to share in the proposed settlement, request exclusion from the Class, or object to the proposed settlement and any application for attorneys' fees and expenses. If you have not yet received copies of the Notice and the Proof of Claim and Release (the "Proof of

Claim'), you may obtain copies of these documents by contacting the Claims Administrator.

In re Jakks Pacific Securities Litigation c/o Gilardi & Co. LLC, Claims Administrator P.O. Box 8040 San Raphael, CA 94912-8040 (888) 878-1361 www.gilardi.com/j akks

Inquiries, other than requests for the forms of Notice and Proof of Claim, may be made to

Plaintiffs' Co-Lead Counsel

Ellen Gusikoff Stewart, Esq. Matthew A. Kupillas, Esq. COUGHLIN STOIA GELLER MILBERG LLP RUDMAN & ROBBINS LLP One Penn Plaza 655 West Broadway, Suite 1900 New York, NY 10119-0165 San Diego, CA 92101 (212) 594-5300 (619) 231-1058

If you are a Class Member, in order to share in the distribution of the Net Settlement

Fund, you must submit a Proof of Claim postmarked no later than , 20_, establishing that you are entitled to recovery. If you are a Class Member and do not submit a

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proper Proof of Claim, you will not share in the Settlement but you nevertheless will be bound by any judgment entered in the Litigation.

If you desire to be excluded from the Class, you must submit a request for exclusion postmarked by , 20_, in the manner and form explained in the detailed Notice referred to above. All Class Members who have not requested exclusion from the Class will be bound by any judgment entered in the Litigation.

Any objection to the settlement must be mailed or delivered such that it is received by the

Court and by counsel no later than , 20

PLEASE DO NOT CONTACT THE COURT OR THE CLERK'S OFFICE

REGARDING THIS NOTICE. If you have any questions about the settlement, you may contact Plaintiffs' Co-Lead Counsel at the addresses listed above.

DATED: , 2009 BY ORDER OF THE COURT UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

-3-