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Corporate Governance

Audit Committee Charter

Purpose

The primary functions of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of 4Kids Entertainment, Inc. (the “Company”) are to assist the Board in fulfilling its oversight responsibilities with respect to:

(i) the quality and integrity of the financial statements and other financial information that the Company provides to any governmental body or the public;

(ii) the appointment, compensation and oversight of the Company’s independent accounting firm (the “independent accountants”);

(iii) the independent accountants’ qualifications and independence;

(iv) the performance of the Company’s internal audit function and the independent accountants; and

(v) the Company’s compliance with legal and regulatory requirements, provide an open avenue of communication among the independent accountants, financial and senior management, the internal auditing department and the Board and prepare all reports of the Committee (including an audit committee report) to be included in the Company’s annual proxy statement, pursuant to and in accordance with the rules and regulations promulgated by the Securities and Exchange Commission (the “Commission”).

Composition

The Committee shall consist of at least three members. All members of the Committee shall meet regulatory requirements applicable to audit committees, including without limitation, Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the “Act”), and applicable rules and regulations of the Commission.

All members of the Committee shall be, in the Board’s judgment, financially literate, or become so within a reasonable period of time after his or her appointment to the Committee. At least one member of the Committee will, in the Board’s judgment, qualify as an “audit committee financial expert” as such term is defined from time to time by the rules and regulations of the Commission.

The members of the Committee shall be appointed by the Board on the recommendation of the Nominating and Corporate Governance Committee and shall serve until their successors shall be duly elected and qualified. Unless a Chairman is elected by the full Board, the members of the Committee may designate a Chairman by majority vote of the full Committee membership.

Meetings

The Committee shall hold regularly scheduled meetings and such special meetings as circumstances dictate. It shall meet separately, at least quarterly, with management, with the Company’s internal auditors and with the independent accountants to discuss any matters that the Committee or any of these persons or firms believe should be discussed privately. A majority of the members of the Committee shall constitute a quorum for the transaction of any business at any meeting, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of the Committee. Action may be taken by the Committee without a meeting if all of the members of the Committee indicate their approval thereof in writing. The Committee shall report regularly to the Board, through either minutes or special (oral or written) presentations.

Responsibilities and Duties

The Committee’s job is one of oversight and it recognizes that the Company’s management is responsible for preparing the Company’s financial statements and that the independent auditors are responsible for auditing those financial statements. Additionally, the Committee recognizes that the Company’s management, as well as the independent accountants, have more time, knowledge and more detailed information with respect to the Company than do Committee members; consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurances as to the Company’s financial statements or any professional certification as to the independent auditor’s work.

While the Committee has the responsibilities set forth in this Charter, it is not the responsibility of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles.

To fulfill its responsibilities and duties the Audit Committee shall:

Select and oversee the Independent Accountants of the Company.

Recognize that the independent accountants are ultimately accountable to the Board and the Audit Committee, as representatives of the Company’s shareholders.

Have the sole authority to retain and terminate the independent accountants, subject, if applicable, to shareholder ratification.

Be directly responsible for appointing, retaining, compensating and supervising any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, and each such registered public accounting firm must report directly to the Committee. With regard to financial reporting, this responsibility includes the resolution of disagreements between management and the independent accountants.

Review the arrangements for and scope of the outside audit and the fees proposed for such audit, and shall have ultimate authority to approve all audit engagement fees and terms, as well as all permitted non-audit engagements of the independent accountants, subject to the de minimis exception set forth in the Act.

Pre-approve, either directly or through established pre-approval procedures, all auditing services (including all audit, review or attestation engagements required under the securities laws) and all permitted non-audit services by the accountants, subject to the de minimis exception set forth in the Act.

Review, at least annually, the performance and independence of the independent accountants. In conducting its review and evaluation, the Committee shall be provided with a report by the independent accountants describing (i) the independent accountants’ internal quality-control procedures; (ii) any material issues raised by the independent accountant’s internal quality-control review, or peer review, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent accountants, and any steps taken to deal with any such issues; and (iii) for assessment of the independent accountants’ independence, all relationships between the independent accountants and the Company. The Committee shall actively engage in a dialogue with the independent accountants with respect to any disclosed relationship or services which may impact the independent accountants’ objectivity and independence.

Establish clear policies regarding the hiring of employees or former employees of the independent accountants which are consistent with applicable laws, rules and regulations.

Review

Review the Company’s annual financial statements and any reports or other financial information submitted to any governmental body, or the public, including any certification, report, opinion, or review rendered by the independent accountants.

Discuss, prior to public dissemination, the annual audited financial statements and quarterly financial statements with management and the independent accountants, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If appropriate, discuss with management and the independent accountants the Company’s earnings releases, including the use of “pro-forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance, if any, provided to analysts or rating agencies.

Review the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Company’s financial statements.

Review all analyses prepared by management or the independent accountants setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements.

Review with the independent accountants the items as to which the independent accountants are required to report to the Committee pursuant to the Act, including (a) all critical accounting policies and practices to be used; (b) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent accountants; and (c) other material written communications between the independent accountants and management.

Financial Reporting Processes

Receive and review a disclosure from the Chief Executive Officer and Chief Financial Officer during their certification process for the Company’s annual and quarterly reports:

(i) Any significant deficiencies in design or operation of internal controls or material weaknesses therein, and

(ii) Any fraud, whether or not material, involving management or other employees who have a significant role in the Company’s internal controls.

Review with the independent accountants, the Company’s internal auditor, and financial and accounting personnel, the adequacy and effectiveness of the accounting and financial controls of the Company, and elicit any recommendations for the improvement of such internal control procedures or particular areas where new or more detailed controls or procedures are desirable.

Review the internal audit functions of the Company, including the proposed audit plans for the coming year and the coordination of such plans with the independent accountants.

Consider and approve, if appropriate, major changes to the Company’s auditing and accounting principles and practices as suggested by the independent accountants, management, or the internal auditing department.

Regularly review with each of management, the independent accountants and the Company’s internal auditors any difficulties or problems encountered during the course of the audit, including any restrictions on the scope of work or access to required information, and management’s response.

General

Establish procedures for (i) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and (ii) the confidential and/or anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters.

Review, with the Company’s counsel, any legal matter or other significant contingent liability that could have a significant impact on the Company’s financial statements. The Committee shall also have the authority to hire independent counsel or other advisers as it deems necessary to carry out its duties.

Perform any other activities consistent with this Charter, the Company’s Amended and Restated Certificate of Incorporation, the Company’s By-laws and governing law, as the Committee or the Board deems necessary or appropriate.

Discuss with management and the independent accountants the Company’s guidelines and policies with respect to risk assessment and risk management.

Engage independent counsel and other advisors, as it determines necessary to carry out its duties.

Annual Review

The Committee shall produce and provide to the Board an annual performance evaluation of the Committee, which evaluation shall compare the performance of the Committee with the requirements of this charter. The performance evaluation shall also recommend to the Board any improvements to the Committee’s charter deemed necessary or desirable by the Committee. The performance evaluation by the Committee shall be conducted in such a manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by any member of the Committee designated by the Committee to make this report.

Nominating and Corporate Governance Committee Charter

Purpose

The Nominating and Corporate Governance Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of 4Kids Entertainment, Inc. (the “Company”) (1) to identify individuals qualified to become Board members consistent with criteria approved by the Board, and to recommend to the Board that the Board select such director nominees for the next annual meeting of shareholders; (2) to develop and recommend to the Board a set of corporate governance principles applicable to the Company; (3) to oversee the evaluation of the Board and management; and (4) to recommend director nominees to the Board for each committee of the Board.

Committee Membership

The Committee shall consist of at least three members. All members of the Committee shall meet applicable regulatory requirements.

The members of the Committee shall be appointed by the Board and shall serve until their successors shall be duly elected and qualified. Unless a Chairman is elected by the full Board, the members of the Committee may designate a Chairman by majority vote of the full Committee membership. Committee members may be replaced by the Board at any time, with or without cause.

Meetings

The Committee shall hold regularly scheduled meetings and such special meetings as circumstances dictate. To the extent the Committee believes it to be appropriate or advisable, it shall meet in executive session, without management present. A majority of the members of the Committee shall constitute a quorum for the transaction of any business at any meeting, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of the Committee. Action may be taken by the Committee without a meeting if all of the members of the Committee indicate their approval thereof in writing. The Committee shall report regularly to the Board.

Committee Authority and Responsibilities

The Committee shall have the sole authority to retain and terminate any search firm to be used to identify and/or evaluate director candidates and shall have sole authority to approve the search firm’s fees and other retention terms. The Committee shall also have authority to hire and obtain advice and assistance, to the extent it deems reasonably necessary or appropriate, from external legal, accounting or other advisors.

The Committee shall identify individuals qualified to become Board members consistent with the criteria established from time to time by the Committee together with the Board, recommend to the Board qualified candidates for appointment or election as Directors and recommend Directors to the Board for appointment to serve as members of the various Board committees. The Committee shall evaluate and consider any candidate recommended by the shareholders of the Company in accordance with the criteria established from time to time by the Committee together with the Board.

In considering potential candidates, the Committee shall consider applicable regulatory requirements and any criteria established by the Committee together with the Board which criteria may include, among other things, the employment and other professional experience of the candidate, the candidate’s past expertise and involvement in areas which are of relevance to the Company’s business, the candidate’s business ethics and professional reputation, and independence of the candidate.

The Committee’s criteria for assessing potential Board candidates shall be reassessed with the Board from time to time in light of the composition of the Board and the needs and strategic direction of the Company.

The Committee shall make recommendations to the Board with respect to acceptance or rejection of any resignation submitted by a director of the Company.

The Committee shall seek comments from directors and report annually to the Board with an assessment of the performance of each of (i) the Board and (ii) management, to be discussed with the Board following the end of each fiscal year.

The Committee shall develop, recommend to the Board, and oversee the Company’s corporate governance principles and guidelines, and shall at least once a year, review the corporate governance principles and guidelines established by the Board and recommend to the Board any revisions the Committee deems necessary or desirable.

The Committee may form and delegate authority to subcommittees when appropriate.

Code of Ethics and Business Conduct

Code of Ethics and Business Conduct Document

Compensation Committee Charter

Purpose

The Compensation Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of 4Kids Entertainment, Inc. (the “Company”) to discharge the Board’s responsibilities relating to compensation of the Company’s directors and executives and to produce an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations. The Committee has overall responsibility for approving and evaluating the director and officer compensation plans, performance, policies and programs of the Company.

Committee Membership

The Committee shall consist of no fewer than three members. All members of the Committee shall meet applicable regulatory requirements.

Meetings

The Committee shall have the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of director, Chief Executive Officer (“CEO”) or senior executive compensation and shall have sole authority to approve the consultant’s fees and other retention terms. The Committee shall also have authority to hire and obtain advice and assistance, to the extent it deems reasonably necessary or appropriate, from external legal, accounting or other advisors.

The Committee shall review and approve corporate goals and objectives related to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and recommend to the Board the CEO’s compensation levels based on this evaluation, subject to the terms of any existing employment agreement. In determining any long-term incentive component of CEO compensation, the Committee will consider the Company’s performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the CEO in past years.

The Committee shall review and make recommendations to the Board regarding the compensation plans for the Company’s executive officers, including incentive compensation plans and equity-based plans, based upon the corporate goals and objectives relevant to such compensation plans and its evaluation of the executive officers’ performance in light of those goals and objectives, subject to the terms of existing employment agreements.

The Committee shall review and approve employment agreements for all executive officers of the Company.

The Committee shall periodically review and recommend to the Board, corporate goals and objectives for the Company’s compensation policies for its executive officers and other employees, including the Company’s incentive compensation plans and equity-based plans.

The Committee shall act as administrator of the Company’s incentive compensation and equity-based plans and shall have the authority to make grants and awards under such plans to the extent such authority is delegated to the Committee by the Board.

The Committee shall annually review and make recommendations to the Board regarding Director compensation in accordance with the Company’s Corporate Governance Guidelines.

The Committee shall annually produce a report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations.

The Committee may form and delegate authority to subcommittees when appropriate.

Corporate Governance Guidelines

Director Qualifications

The Board of Directors (the “Board”) of 4Kids Entertainment, Inc. (the “Company”) will have a majority of directors who meet the criteria for independence and any other applicable law pertaining to directors. The Nominating and Corporate Governance Committee (the “Nominating Committee”) is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of Board members as well as the composition of the Board as a whole. This assessment will include members’ qualification as independent, as well as consideration of the skills and experience of candidates in the context of the needs of the Board. Nominees for directorship will be recommended by the Nominating Committee in accordance with the policies and principles in its charter and the criteria established by it together with the Board.

Term Limits

The Board does not believe that fixed term limits for Directors are advisable, as they can interfere with the overall objective of maintaining the highest possible functionality and contribution from its members. The Board believes there is a benefit to maintaining a significant degree of continuity among Directors, as members are able to gain greater insight into the Company over time, increasing the value of their contributions. At the same time, however, the Nominating Committee has the responsibility to monitor and assess the contribution of every Director standing for re-election to assure that each such Director is meeting the expectations necessary for continued service on the Board.

Size of the Board

In recent years, the Board has ranged in size from four to six members. The Board believes that this is an appropriate size range, although the total membership of the Board may change if circumstances so warrant. The precise number of members will be determined from time to time by resolution adopted by a majority of Directors in office at the time of the vote, with the objective of achieving a size sufficiently large to encompass members with significant breadth in experience and skills, while still small enough to function efficiently.

Director Responsibilities

The basic responsibility of the Directors is to exercise their business judgment to act in what they reasonably believe to be is the best interest of the Company and its shareholders. In discharging that obligation, Directors should be entitled to rely on the honesty and integrity of the Company’s senior executives and its outside advisors and auditors.

Directors are expected to attend Board meetings and meetings of committees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. Information and data that are important to the Board’s understanding of the business to be conducted at a Board or committee meeting will generally be distributed in writing to the Directors before the meeting, and Directors should review these materials in advance of the meeting.

Chairman and Chief Executive Officer

The Board has no policy with respect to the separation of the offices of Chairman and the Chief Executive Officer. The Board believes that this issue is part of the succession planning process and that it is in the best interests of the Company for the Board to make a determination when it elects a new chief executive officer or at such other times as it deems appropriate.

Agendas for Meetings

To the extent practicable, the Chairman will establish the agenda for each Board meeting. Each Board member is free to suggest the inclusion of items on the agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting.

Executive Sessions

Executive sessions of the non-management Directors will normally be scheduled for each regular meeting of the Board. The Board will determine during the course of the meeting whether an executive session is necessary, but believes that an executive session of non-management Directors should normally be held at least 3 times each year. At least one of the executive sessions will take place with only independent Directors in attendance.

Board Committees

The Board will have at all times an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. All of the members of these committees will be independent Directors in accordance with the rules of the Securities and Exchange Commission. Committee members will be appointed by the Board upon recommendation of the Nominating Committee with consideration of the desires of individual Directors.

Each committee will have its own charter. The charters will set forth the purposes and responsibilities of the committees as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board. The charters will also provide that each committee will annually evaluate its performance.

The Board may, from time to time, establish or maintain additional committees as necessary or appropriate.

Director Access to Officers and Employees

Directors have full and free access to officers and employees of the Company. Any meetings or contacts that a Director wishes to initiate may be arranged through the CEO or the Secretary or directly by the Director. The Directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Company.

The Board may ask any Company employee to attend any Board or committee meeting. The Board may meet in executive session where appropriate without any officer or other Company employees present.

To the extent necessary and appropriate, the Board shall have full and free access to independent advisors. The Board shall have the authority to retain and approve the fees and retention terms of its independent advisors.

Director Compensation

The form and amount of Director compensation will be determined by the Board upon recommendation by the Compensation Committee in accordance with the policies and principles set forth in its charter, and the Compensation Committee will conduct an annual review of Director compensation. The Compensation Committee will consider that Directors’ independence may be compromised if Director compensation and perquisites exceed customary levels, if the Company makes substantial charitable contributions to organizations with which a Director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a Director or an organization with which the Director is affiliated. The Board will critically evaluate each of these matters when determining the form and amount of Director compensation, and the independence of a Director.

Director Orientation and Continuing Education

New Directors will attend presentations by senior management to familiarize them with the Company’s strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its Code of Ethics and Business Conduct, its principal officers, and its internal and independent auditors. In addition, the Company encourages the participation of all Directors in continuing education programs with respect to their roles as directors, and shall reimburse any Director for all reasonable costs incurred in connection therewith.

CEO Evaluation and Management Succession

The Compensation Committee will conduct an annual review of the CEO’s performance, in accordance with the provisions of its charter and will present the results of its review to the Board.

The Board will periodically review and consider succession planning in the event of an emergency involving, or the retirement of, the CEO and will evaluate potential successors to the CEO. The CEO should at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.

Board Interaction with Third Party Constituencies

The Board believes that management speaks for the Company, and therefore it will not normally be appropriate for Directors to speak on behalf of the Company to investors, employees, the press or other third parties. However, there may be instances in which selected Board members may be asked to participate in conversations with representatives of various constituencies, although those interactions will be coordinated with appropriate members of management. In addition, the Company has established a process for interested shareholders to contact the Board directly, on a confidential basis, c/o the Secretary of the Company, 4Kids Entertainment, Inc., 53 West 23rd Street, 11th Floor, New York, New York 10010.

Limits on Service with Other Boards

The Board does not believe that there is a “one size fits all” approach to the issue of service by its members on other boards of directors. In most cases, the number of for-profit boards that a Director serves upon bears only a limited relationship to that Director’s ability to devote sufficient time to his or her service on the Board. It is expected that each Director will devote the time and effort necessary to discharge his or her duties in an appropriate and diligent fashion, irrespective of other activities and commitments. In the event this is not occurring, whether because of service on other boards or for some other reason, the matter will be addressed by the Nominating Committee. The Nominating Committee or the Board as a whole will also make the necessary determination in the event that a member of the Audit Committee serves on the audit committee of more than three public companies.

Annual Performance Evaluation

The Board will conduct an annual performance self-evaluation to determine whether it and its committees are functioning effectively. The Nominating Committee will receive comments from all Directors and report annually to the Board with an assessment of the Board’s performance. This will be discussed with the full Board following the end of each fiscal year. The assessment will focus on the Board’s contribution to the Company and specifically focus on areas in which the Board or management believes that the Board and each committee could improve.