Sample Business Contracts


Agreement and Plan of Merger - WizKids LLC and Topps Co. Inc.




                          AGREEMENT AND PLAN OF MERGER

                                  By and Among

                                 WIZKIDS, LLC,

                            THE TOPPS COMPANY, INC.,

                            TOPPS ENTERPRISES, INC.,

                              TOPPS FINANCE, INC.,

                                      And

                           THE MEMBER REPRESENTATIVE





                           Dated as of June 23, 2003



<PAGE>

                               TABLE OF CONTENTS

LIST OF EXHIBITS                                                        iv

ARTICLE 1. THE MERGER                                                    2
Section 1.01      The Merger                                             2
Section 1.02      Closing                                                2
Section 1.03      Effective Time                                         2
Section 1.04      Effect of the Merger                                   2
Section 1.05      Certificate of Formation and Operating Agreement       2
Section 1.06      Manager and Officers                                   2
Section 1.07      Tax Treatment                                          2
Section 1.08      Organization of the Merger Subsidiary                  3

ARTICLE 2. EFFECT OF MERGER ON THE LIMITED LIABILITY COMPANY INTERESTS
                OF THE CONSTITUENT COMPANIES                             3
Section 2.01      Effect on Merger Subsidiary Interests                  3
Section 2.02      Conversion of Company Interests                        3

ARTICLE 3. MERGER CONSIDERATION                                          4
Section 3.01      Aggregate Merger Consideration                         4
Section 3.02      Closing Payments                                       4
Section 3.03      Post-Closing Payments                                  4
Section 3.04      Net Working Capital Adjustment                         5

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY                 7
Section 4.01      Organization                                           7
Section 4.02      Capital Structure                                      8
Section 4.03      Authority and Enforceability                           8
Section 4.04      No Violation                                           8
Section 4.05      Consents                                               9
Section 4.06      Subsidiaries                                           9
Section 4.07      Financial Statements                                   9
Section 4.08      No Undisclosed Liabilities                            10
Section 4.09      No Company Material Adverse Effect                    10
Section 4.10      No Changes                                            10
Section 4.11      Conduct of the Company Business                       10
Section 4.12      Real Property                                         10
Section 4.13      Tangible Property                                     11
Section 4.14      Inventory                                             11
Section 4.15      Accounts Receivable                                   11
Section 4.16      Intellectual Property                                 12
Section 4.17      Material Contracts                                    13
Section 4.18      Compliance with Law                                   14
Section 4.19      Material Permits                                      14
Section 4.20      Insurance                                             14
Section 4.21      Litigation                                            14
Section 4.22      Taxes                                                 15
Section 4.23      Employee Benefits                                     15
Section 4.24      Employment Matters                                    16
Section 4.25      Labor Relations                                       16
Section 4.26      Environmental Matters                                 17
Section 4.27      Customers and Suppliers                               17
Section 4.28      Brokers' and Finders' Fees                            18
Section 4.29      Affiliate Transactions                                18
Section 4.30      Illegal or Unauthorized Payments;
                     Political Contributions                            18
Section 4.31      Only Representations and Warranties                   18



                                       i
<PAGE>

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR PARTIES
                AND THE MERGER SUBSIDIARY                               18
Section 5.01      Organization                                          18
Section 5.02      Authority and Enforceability                          18
Section 5.03      No Violation                                          19
Section 5.04      Consents                                              19
Section 5.05      Litigation                                            19
Section 5.06      Due Diligence Investigation                           19
Section 5.07      Brokers' and Finders' Fees                            19
Section 5.08      Funding                                               20
Section 5.09      Pre-Merger Notification                               20
Section 5.10      The Merger Subsidiary                                 20

ARTICLE 6. CONDUCT PRIOR TO THE EFFECTIVE TIME                          20
Section 6.01      Affirmative Covenants of the Company                  20
Section 6.02      Negative Covenants of the Company                     20
Section 6.03      Product Releases                                      22
Section 6.04      Authorized Distributions                              22
Section 6.05      Consents and Approvals                                22
Section 6.06      No Solicitation                                       23
Section 6.07      Further Assurances                                    23
Section 6.08      Notice of Breach                                      23

ARTICLE 7. ADDITIONAL COVENANTS                                         23
Section 7.01      Access to Information                                 23
Section 7.02      Public Disclosure                                     24
Section 7.03      Members' Meeting                                      24
Section 7.04      Allocation                                            24
Section 7.05      Payments to Third Parties at Closing                  25
Section 7.06      Payments of Deferred Compensation                     25
Section 7.07      Transfer Taxes                                        25
Section 7.08      Tax Matters                                           25
Section 7.09      Directors' and Officers' Indemnification
                     and Insurance                                      26
Section 7.10      Insurance Policies                                    27
Section 7.11      Topps Credit Facility                                 28
Section 7.12      Employee Benefits and Bonus Plans                     28

ARTICLE 8. CONDITIONS TO THE MERGER                                     29
Section 8.01      Conditions to Each Party's Obligation
                     to Effect the Merger                               29
Section 8.02      Conditions to the Obligations of the Acquiror
                     and the Merger Subsidiary                          29
Section 8.03      Conditions to Obligations of the Company              30

ARTICLE 9. TERMINATION, AMENDMENT AND WAIVER                            31
Section 9.01      Termination                                           31
Section 9.02      Effect of Termination                                 32
Section 9.03      Amendment                                             32
Section 9.04      Extension; Waiver                                     32



                                       ii

<PAGE>

ARTICLE 10. INDEMNIFICATION                                             33
Section 10.01     Survival                                              33
Section 10.02     Indemnification on Behalf of the Company              33
Section 10.03     Indemnification by the Acquiror Parties               33
Section 10.04     Claim Notice                                          34
Section 10.05     Third-Party Claims                                    34
Section 10.06     Cap and Deductible                                    35
Section 10.07     Determination of Damages                              35
Section 10.08     Exclusive Remedy                                      36
Section 10.09     Treatment for Tax Purposes                            36

ARTICLE 11. GENERAL PROVISIONS                                          36
Section 11.01     Member Representative                                 36
Section 11.02     Notices                                               38
Section 11.03     Interpretation                                        38
Section 11.04     Disclosure Schedules                                  39
Section 11.05     Entire Agreement; No Assignment;
                     No Third Party Beneficiaries                       39
Section 11.06     Severability                                          39
Section 11.07     Specific Performance                                  40
Section 11.08     Dispute Resolution                                    40
Section 11.09     Expenses                                              40
Section 11.10     Governing Law                                         40
Section 11.11     Representation                                        41
Section 11.12     Post-Closing Representation                           41
Section 11.13     No Personal Liability                                 41
Section 11.14     Payments to the Paying Agent                          41
Section 11.15     Counterparts                                          41


Schedule I  - Payments to be made to Company Interestholders at Closing
Schedule II - Distribution Percentages for Post-Closing Payments
                 to Company Interestholders



                                      iii

<PAGE>

                                LIST OF EXHIBITS

                        A. Glossary of Defined Terms

                        B. Form of Voting Agreement

                        C. Form of Jordan Weisman Employment Agreement

                        D. Form of Certificate of Merger

                        E. Form of Joinder Agreement

                        F. Form of Indemnification Escrow Agreement

                        G. Form of Working Capital Escrow Agreement

                        H. Methodology of Allocation of the Aggregate Merger
                           Consideration among the Assets of the Company

                        I. Form of Opinion of Davis Wright Tremaine LLP

                        J. Form of Opinion of Willkie Farr & Gallagher



















                                       iv

<PAGE>

                          AGREEMENT AND PLAN OF MERGER

     This  Agreement  and Plan of Merger is made and entered into as of June 23,
2003,  by and among  Wizkids,  LLC, a Delaware  limited  liability  company (the
"Company"),  The Topps Company,  Inc., a Delaware  corporation (the "Acquiror"),
Topps Enterprises, Inc., a Delaware corporation and a wholly owned subsidiary of
the  Acquiror  (the  "Holding  Company"),   Topps  Finance,   Inc.,  a  Delaware
corporation and a wholly owned subsidiary of the Holding Company  ("Finance" and
collectively with the Acquiror and the Holding Company, the "Acquiror Parties"),
and, solely in his capacity as the Member Representative and solely for purposes
of accepting his appointment as Member  Representative  under Section  11.01(b),
Jordan K. Weisman.


                                    RECITALS


     A.  Certain  defined  terms used in this  Agreement  are  contained  in the
Glossary of Defined Terms attached as Exhibit A hereto.

     B. The  respective  boards of  directors  of the  Acquiror  Parties and the
manager of the Company  each deems it  advisable  and in the best  interests  of
their  respective  companies and owners to engage in a business  combination  in
which the Holding  Company will form a wholly owned Delaware  limited  liability
company (the  "Merger  Subsidiary"),  Finance  will make a cash  dividend to the
Holding  Company,  the Holding  Company will  contribute such cash to the Merger
Subsidiary,  and the Merger Subsidiary will merge with and into the Company.  In
furtherance  thereof, the respective boards of directors of the Acquiror Parties
and the manager of the Company each has approved the  execution,  delivery,  and
performance of this Agreement and the other agreements contemplated herein.

     C. Concurrently with the execution and delivery of this Agreement,  certain
members of the Company have duly  executed and delivered to the Acquiror and the
Company a Voting Agreement in the form attached as Exhibit B hereto, dated as of
the date hereof (the "Voting Agreement"),  pursuant to which each of the members
described  therein has agreed to vote his, her or its limited  liability company
interests in the Company in the manner set forth therein.

     D. The  parties  contemplate  that,  at  Closing,  Jordan K.  Weisman,  the
Acquiror,  and the Surviving Company will enter into an employment  agreement in
the  form  attached  as  Exhibit  C  hereto  (the  "Jordan  Weisman   Employment
Agreement"), to become effective at the Effective Time.

     E.  The  parties  desire  to  make  certain  representations,   warranties,
covenants, and agreements in connection with the Merger and to prescribe various
conditions to the consummation thereof, all as further set forth herein.


                                   AGREEMENT

     Accordingly, the parties, intending legally to be bound, agree as follows:


<PAGE>


                                   ARTICLE 1.
                                   THE MERGER

     Section 1.01 The Merger.  Subject to the terms and  conditions set forth in
this  Agreement,  at the Effective Time, the Merger  Subsidiary  shall be merged
with and into the Company,  and the separate limited liability company existence
of the Merger Subsidiary shall cease.  Following the Effective Time, the Company
shall be the  Surviving  Company and a wholly  owned  subsidiary  of the Holding
Company,  and shall by virtue  of the  Merger  continue  its  limited  liability
company existence under the laws of the State of Delaware.

     Section 1.02 Closing.  The closing of the Merger (the "Closing") will occur
at 10:00 a.m.  New York City time on the day that is as  promptly  as  practical
(but in no event  later than the second  business  day)  after  satisfaction  or
waiver of the  conditions  set forth in Article 8 (the "Closing  Date"),  at the
offices of Willkie Farr & Gallagher,  787 Seventh  Avenue,  New York,  New York,
unless  another date,  time or place is agreed to in writing by the Acquiror and
the Company.

     Section 1.03 Effective Time. On the Closing Date, the Acquiror Parties, the
Merger  Subsidiary,  and the Company shall cause the Merger to be consummated by
executing and filing a  certificate  of merger in the form attached as Exhibit D
hereto (the "Certificate of Merger") with the Secretary of State of the State of
Delaware.  The Merger shall become  effective as provided in the  Certificate of
Merger upon or after filing with the Secretary of State of the State of Delaware
(the "Effective Time").

     Section  1.04  Effect of the Merger.  The effect of the Merger  shall be as
provided in this  Agreement and the  applicable  provisions of the Delaware Act.
Without limiting the generality of the foregoing,  and subject  thereto,  at the
Effective Time, all the property, rights,  privileges,  powers and franchises of
the Company and the Merger Subsidiary shall vest in the Surviving  Company,  and
all debts, liabilities and duties of the Company and the Merger Subsidiary shall
become the debts, liabilities and duties of the Surviving Company.

     Section  1.05  Certificate  of  Formation  and  Operating  Agreement.   The
certificate  of formation  and the limited  liability  company  agreement of the
Merger  Subsidiary,  as in effect immediately prior to the Effective Time, shall
be the certificate of formation and the limited  liability  company agreement of
the Surviving Company at the Effective Time, and the Wizkids Operating Agreement
shall be  terminated  and  extinguished,  except that the name of the  Surviving
Company shall be "WizKids, LLC."

     Section 1.06 Manager and Officers.  The manager of the Company  immediately
prior to the  Effective  Time  shall be the  manager  of the  Surviving  Company
immediately   after  the  Effective  Time,  and  the  officers  of  the  Company
immediately  prior to the Effective  Time shall be the officers of the Surviving
Company  immediately after the Effective Time, each to hold office in accordance
with the  provisions  of the  Delaware  Act and the  limited  liability  company
agreement of the Surviving  Company until their  successors are duly elected and
qualified.

     Section  1.07 Tax  Treatment.  The parties  intend  that for United  States
Federal  income tax  purposes  the Merger  will be  treated in  accordance  with
Revenue  Ruling 99-6,  1999-6 C.B. 6. The parties shall report all components of
the Aggregate  Merger  Consideration on their respective Tax Returns as purchase
price in accordance with such Revenue Ruling.



                                       2
<PAGE>

     Section 1.08 Organization of the Merger Subsidiary. Promptly after the date
hereof and prior to  Closing,  the Holding  Company  shall  organize  the Merger
Subsidiary  solely for the purpose of engaging in the Merger and shall cause the
Merger  Subsidiary  to  become  a  party  to this  Agreement  by  executing  and
delivering to the Company the Joinder  Agreement in the form attached as Exhibit
E  hereto.  Between  the date of  formation  of the  Merger  Subsidiary  and the
Effective Time, the Acquiror Parties will ensure that the Merger  Subsidiary has
no material assets or liabilities, other than, immediately prior to Closing, the
Initial  Consideration,  the  FASA  Payment,  and  liabilities  incident  to the
formation of the Merger Subsidiary.



                                   ARTICLE 2.
               EFFECT OF MERGER ON THE LIMITED LIABILITY COMPANY
                     INTERESTS OF THE CONSTITUENT COMPANIES


     Section 2.01 Effect on Merger Subsidiary Interests.  At the Effective Time,
by virtue of the Merger and without any action on the part of any party, Member,
or  other  Person,  the  limited  liability  company  interests  in  the  Merger
Subsidiary  outstanding  immediately  prior  to  the  Effective  Time  shall  be
converted into limited liability company interests in the Surviving Company, and
the  Holding  Company  will be  admitted  as the sole  member  of the  Surviving
Company.

     Section 2.02  Conversion of Company  Interests.  At the Effective  Time, by
virtue of the Merger and without any action on the part of any party, Member, or
other  Person,  each  Company  Interest  outstanding  immediately  prior  to the
Effective  Time  shall be  converted  into the right to receive a portion of the
Aggregate Merger Consideration as follows:

          (a) Each Class A Interest shall be converted into the right to receive
     its Class A Percentage  of the Class A Merger  Consideration  in accordance
     with this  Article 2 and  Article 3, in each case  rounded  to the  nearest
     whole  cent,  net to the  holder,  without  interest  thereon  (except  the
     interest contemplated herein), payable to the holder thereof in cash.

          (b) Each Class B Interest shall be converted into the right to receive
     its Class B Percentage  of the Class B Merger  Consideration  in accordance
     with this  Article 2 and  Article 3, in each case  rounded  to the  nearest
     whole  cent,  net to the  holder,  without  interest  thereon  (except  the
     interest contemplated herein), payable to the holder thereof in cash.

          (c) Each Class C Interest shall be converted into the right to receive
     its Class C Percentage  of the Class C Merger  Consideration  in accordance
     with this  Article 2 and  Article 3, in each case  rounded  to the  nearest
     whole  cent,  net to the  holder,  without  interest  thereon  (except  the
     interest contemplated in herein), payable to the holder thereof in cash.

          (d) All Company Interests,  when converted as provided in this Section
     2.02,  shall no longer be outstanding and shall  automatically be cancelled
     and shall  cease to  exist,  and each  Company  Interest  shall  thereafter
     represent  only the right to receive the  applicable  merger  consideration
     provided in this Section 2.02. Notwithstanding the foregoing and subject to
     the  limitations  of Section  6.02(a)  hereof,  if between the date of this
     Agreement  and the  Effective  Time any Company  Interests  shall have been
     changed into a different  percentage or a different  class by reason of any
     dividend,   subdivision,    reclassification,    recapitalization,   split,
     combination or exchange,  the applicable merger  consideration  provided in
     this  Section  2.02 shall be  correspondingly  adjusted  and rounded to the
     nearest whole cent;  provided,  however,  that under no circumstances shall
     the Aggregate Merger Consideration change.



                                       3

<PAGE>
                                   ARTICLE 3.
                              MERGER CONSIDERATION


     Section 3.01 Aggregate Merger  Consideration.  The total  consideration for
all of the  Company  Interests  shall  be  $29,500,000  in  cash  (the  "Initial
Consideration"),  subject to the Estimated  Adjustment and the Adjustment  under
Section 3.04 (after  giving effect to such  adjustment,  the  "Aggregate  Merger
Consideration").

     Section 3.02 Closing  Payments.  At Closing,  the Acquiror  Parties and the
Merger  Subsidiary  shall  deliver  the  following  amounts by wire  transfer in
immediately available funds:

          (a) The  Acquiror  Parties  and the Merger  Subsidiary  shall  deliver
     $4,000,000 (such amount,  or the remaining  principal  balance thereof from
     time to time,  the  "Indemnification  Escrow  Funds") to U.S. Bank National
     Association  (or a nationally  recognized  financial  institution  selected
     prior to Closing by mutual  agreement  of the  Acquiror and the Company) as
     escrow agent (the "Escrow Agent"), with instructions to deposit such amount
     in a separate,  segregated,  interest-bearing  account  designated for such
     purpose (the "Indemnification Escrow Account"), to be governed by the terms
     of this  Agreement  and an  escrow  agreement,  substantially  in the  form
     attached as Exhibit F (the "Indemnification  Escrow Agreement"),  which the
     parties thereto will enter into at Closing.

          (b) The  Acquiror  Parties  and the Merger  Subsidiary  shall  deliver
     $500,000  (together  with any interest or investment  income  thereon,  the
     "Working Capital Escrow Funds") to the Escrow Agent,  with  instructions to
     deposit  such amount in a separate,  segregated,  interest-bearing  account
     designated for such purpose (the "Working Capital Escrow  Account"),  to be
     governed  by  the  terms  of  this  Agreement  and  an  escrow   agreement,
     substantially  in the form attached as Exhibit G, which the parties thereto
     will enter into at Closing.

          (c) The Acquiror  Parties and the Merger  Subsidiary shall pay the sum
     of $25,000,000 and the Estimated Adjustment (such amount, the "Closing Date
     Payment") to U.S. Bank  National  Association  (or a nationally  recognized
     financial  institution selected prior to Closing by mutual agreement of the
     Acquiror  and the  Company)  as paying  agent (the  "Paying  Agent"),  with
     instructions  to  take  the  following  actions  immediately  upon  receipt
     thereof, and in any case on the Closing Date: (i) to deposit such amount in
     a  separate,  segregated,  interest-bearing  account  designated  for  such
     purpose (the "Payment  Fund"),  established  for the benefit of the Company
     Interestholders,  and (ii) to pay each of the Company  Interestholders from
     the Payment Fund in the respective amounts set forth on Schedule I hereto.

     Section 3.03  Post-Closing  Payments.  With respect to any amounts  payable
after Closing to the Company  Interestholders  (including  reconciliation of the
Adjustment under Section 3.04(e)(i) hereof),  the Acquiror Parties and Surviving
Company shall pay such amounts by wire transfer in immediately  available  funds
to the Paying Agent,  with instructions to take the following actions as soon as
practicable, and in any case within two business days thereafter: (i) to deposit
such  amounts  in the  Payment  Fund  and  (ii)  to  pay  each  of  the  Company
Interestholders  from the Payment Fund in accordance  with the  percentages  set
forth on Schedule II hereto.



                                       4

<PAGE>

     Section 3.04 Net Working Capital Adjustment.

     (a) The Aggregate Merger Consideration shall be increased or decreased,  as
the case may be, by an amount (the "Adjustment") equal to the difference between
$3,700,000 (the "Minimum Net Working Capital") and the Net Working Capital as of
the Closing Date. No later than five business days prior to Closing, the Company
will make a good faith estimate of what it believes the Net Working Capital will
be as of the Closing Date (the  "Estimated  Net Working  Capital").  The Company
will deliver to the Acquiror a written  statement of the  Estimated  Net Working
Capital,  showing an amount equal to the Estimated Net Working  Capital less the
Minimum Net Working  Capital (the  "Estimated  Adjustment"),  and such statement
will serve as the basis for the payments due at Closing under  Section  3.02(c).
The Estimated Adjustment may be either a positive or a negative number.

     (b) For purposes of this Agreement,  "Net Working Capital" means the amount
by which the  aggregate  current  assets of the  Company  exceed  the  aggregate
current liabilities of the Company. For purposes of this definition:

          (i) Current  assets of the Company (A) include cash (to the extent not
     distributed  to the  Company  Interestholders  on or prior  to the  Closing
     Date),  all accounts  receivable (less any reserves taken by the Company as
     of the Closing Date in accordance with GAAP), the net inventory value (less
     any reserves taken by the Company in accordance with Section 3.04(b)(iv)(A)
     hereof as of the Closing Date in accordance with GAAP),  tooling and molds,
     deposits,  and other current assets in accordance with GAAP but (B) exclude
     any Member loans.

          (ii) Other current assets of the Company (A) include prepaid expenses,
     prepaid  insurance,  and prepaid royalties but (B) exclude the FASA Payment
     and any prepaid expenses to Allen & Company LLC.

          (iii) Current  liabilities of the Company (A) include  amounts due and
     owing as of the  Closing  Date (or duly  paid at  Closing  by the  Acquiror
     Parties or the Surviving Company on behalf of the Company and in accordance
     with Section 7.05 or the consent of the Member Representative) for (without
     duplication) the Bank Prepayment  Amount (if any),  Applicable  Transaction
     Costs, trade payables,  accrued expenses in the ordinary course of business
     of the Company,  transfer taxes to the extent provided in Section 7.07, and
     the  Deferred  Compensation,  but (B)  exclude  any  component  of the FASA
     Payment.

          (iv) The parties agree that (A) the inventory  reserves of the Company
     or  Surviving  Company at Closing will be  $1,157,000,  (B) the $404,807 of
     inventory  referenced  in the June 18, 2003 letter from the Company to KPMG
     LLP will be paid by the Company  prior to Closing and such  inventory  will



                                       5

<PAGE>

     not be included as an asset of the  Company on the Closing  Balance  Sheet,
     (C)  neither  the Company  nor the  Surviving  Company  will be required to
     change its practices or policies with respect to revenue  recognition until
     after the  Closing  Date,  (D) no  change  in  practices  or  policies,  or
     difference of opinion  regarding proper practices or policies,  for revenue
     recognition will have any effect whatsoever on the Estimated  Adjustment or
     the Adjustment,  and (E) no change in practices or policies,  or difference
     of opinion regarding proper practices or policies,  for revenue recognition
     or inventory  reserves will have any effect  whatsoever on the completeness
     or  accuracy of any  representations  or  warranties  of the  Company,  the
     covenants of the Company,  or the  conditions  to closing  herein,  or will
     impose any  liability  or  obligation  whatsoever  under  Section  10.02 or
     otherwise on any member of the Company Group (the agreements in this clause
     (iv) are collectively referred to as the "Accounting Policy Exceptions").

     (c) The Acquiror, at its cost, will determine the Net Working Capital as of
the Closing  Date based on an unaudited  balance  sheet of the Company as of the
Closing Date (the "Closing  Balance  Sheet"),  prepared in conformity  with GAAP
(with  the   exception   of  the   Accounting   Policy   Exception   in  Section
3.04(b)(iv)(A),  which is a fixed  amount).  Within 60 days after  Closing,  the
Acquiror  shall cause to be prepared and delivered to the Member  Representative
the Closing  Balance  Sheet,  a statement  of the Net Working  Capital as of the
Closing  Date,  and  the  amount  the  Acquiror  proposes  to be the  Adjustment
(collectively,  the "Adjustment Statement"). The Surviving Company shall provide
the Acquiror and its accountants  access at all reasonable times to the relevant
personnel,  properties,  books and records of the Company for such purposes and,
at the request of the Acquiror,  shall provide its full cooperation to assist in
preparing the Closing Balance Sheet and the Adjustment Statement.  The Surviving
Company's assistance shall include the closing of the books of the Company as of
the Closing Date, the preparation of schedules  supporting the amounts set forth
in the general ledger and other books and records of the Company, and such other
assistance as the Acquiror or its accountants may reasonably request.

     (d) During the 15 days after  delivery  of the  Adjustment  Statement,  the
Member  Representative and his accountants will be permitted,  at the expense of
the Company  Interestholders,  to review the working  papers of the Acquiror and
its  accountants  relating to the  preparation of the Closing  Balance Sheet and
Adjustment  Statement.  If,  within  such 15  days,  the  Member  Representative
notifies  the  Acquiror  that  the  Member  Representative  disagrees  with  the
Acquiror's proposed Adjustment,  and the Member  Representative and the Acquiror
do not agree on the  Adjustment  within five business days after receipt of such
notice of disagreement,  then the matters in dispute shall promptly be submitted
for  resolution  to the Neutral  Accountant.  Prior to  selection of the Neutral
Accountant,  each party shall disclose to the other all material  connections or
affiliations with any proposed  accounting firm. The Neutral Accountant shall be
instructed to make a determination  within 20 days after being selected and such
determination  shall be binding  upon all parties  hereto.  The  Acquiror  shall
initially  pay all fees and  expenses of the Neutral  Accountant  (the  "Neutral
Accountant  Fees"),  and the Acquiror  shall be reimbursed by offset against the
Adjustment under Section 3.04(e) for one-half of such fees and expenses.




                                       6

<PAGE>

     (e) Within one business day after  determination  of the  Adjustment  under
Section 3.04(d) (whether expressly,  by failure of the Member  Representative to
provide  notice of any  disagreement  within the  applicable  period,  or by the
Neutral Accountant):

          (i) If the  difference  between  the  Adjustment  and  one-half of the
     Neutral Accountant Fees is greater than the Estimated Adjustment,  then (A)
     the Acquiror  Parties and the  Surviving  Company shall deliver such excess
     amount to the Company  Interestholders  in  accordance  with  Section  3.03
     hereof, by wire transfer in immediately  available funds, to the account or
     accounts  designated by the Member  Representative,  together with interest
     thereon at the rate of 5% per annum  accruing  since the Closing Date,  and
     (B) the Acquiror and the Member  Representative  shall  instruct the Escrow
     Agent  to  release  the  Working   Capital  Escrow  Funds  to  the  Company
     Interestholders,   less  one-half  of  any  Neutral   Accountant  Fees,  in
     accordance  with  Section  3.03  hereof,  by wire  transfer of  immediately
     available funds.

          (ii) If the  difference  between the  Adjustment  and  one-half of the
     Neutral  Accountant  Fees is less than the Estimated  Adjustment,  then the
     Acquiror and the Member  Representative  shall instruct the Escrow Agent to
     release the amount of such deficit  (together with interest  thereon at the
     rate of 5% per annum  accruing since the Closing Date) to the Acquiror from
     the Working Capital Escrow Funds, by wire transfer in immediately available
     funds.  If such deficit  (together with the interest  thereon) is less than
     the amount of the Working  Capital Escrow Funds,  then the Acquiror and the
     Member  Representative  shall  instruct  the Escrow  Agent to  release  the
     balance of the Working Capital Escrow Funds to the Company  Interestholders
     in accordance  with Section 3.03 hereof,  by wire  transfer of  immediately
     available  funds. If such deficit  (together with the interest  thereon) is
     greater  than the amount of the  Working  Capital  Escrow  Funds,  then the
     Acquiror  shall be paid such  deficiency  from the  Indemnification  Escrow
     Funds.



                                   ARTICLE 4.
                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY


     The Company  represents  and warrants to the  Acquiror  Parties as follows,
except as set forth in the Company Disclosure Schedule attached hereto:

     Section 4.01 Organization.  The Company is a limited liability company duly
organized,  validly existing and in good standing under the laws of the State of
Delaware,  has all requisite  limited  liability  company power and authority to
own,  lease and operate its properties and to carry on its business as now being
conducted,  and is duly qualified to do business as a foreign limited  liability
company in each  jurisdiction  in which the  business it is  conducting,  or the
operation,  ownership  or leasing of its  properties,  makes such  qualification
necessary,  other  than in such  jurisdictions  where the  failure so to qualify
would not reasonably be expected to have,  individually  or in the aggregate,  a
Company Material Adverse Effect. Section 4.01 of the Company Disclosure Schedule
sets forth all  jurisdictions  in which the Company is qualified to do business.
Copies of the  Governing  Documents  of the  Company  have been  provided to the
Acquiror or its representatives.



                                       7


<PAGE>

     Section 4.02 Capital Structure.  The Company has Class A, Class B and Class
C limited liability company  interests.  Section 4.02 of the Company  Disclosure
Schedule  sets  forth a list of all  Company  Interestholders,  and the  Company
Interests  held by  each,  and a list of the  manager  and the  officers  of the
Company.  All of the  outstanding  Company  Interests  are duly  authorized  and
validly  issued and were not issued in  violation  of any  preemptive  rights or
applicable Federal and state securities laws. Except as specified in the Wizkids
Operating Agreement,  (a) the Company has no limited liability company interests
reserved for issuance and no  obligation  to admit any other person as a Member,
(b)  there  are no other  Company  Interests  outstanding,  and (c) there are no
preemptive  rights or any  outstanding  rights of the  Company  relating  to the
issued or unissued  securities  of the Company.  Except as set forth above or on
Section  4.02 of the Company  Disclosure  Schedule,  no equity  interests in the
Company are  outstanding;  the Company does not have  outstanding any securities
convertible  into or  exchangeable  for any  equity  interests,  any  rights  to
subscribe  for or to  purchase  or any  options  for  the  purchase  of,  or any
agreements  providing  for the issuance  (contingent  or  otherwise)  of, or any
calls, commitments or claims of any other character relating to the issuance of,
any equity interests, or any securities convertible into or exchangeable for any
equity interests;  and, except as contemplated by this Agreement, the Company is
not  subject to any  obligation  (contingent  or  otherwise)  to  repurchase  or
otherwise acquire or retire, or to register under the Securities Act, any equity
interests  in the  Company.  Section  4.02 of the  Company  Disclosure  Schedule
contains a list of all  distributions  made by the Company in respect of Class A
Interests, Class B Interests, and Class C Interests through the date hereof.

     Section 4.03  Authority and  Enforceability.  The Company has all requisite
limited liability  company power and authority to enter into this Agreement,  to
carry  out  its  obligations   hereunder  and  to  consummate  the  transactions
contemplated  hereby. The execution and delivery of this Agreement,  the Merger,
the performance of the Company's  obligations  hereunder and the consummation of
the transactions  contemplated hereby have been duly authorized by all necessary
limited  liability  company  action on the part of the  Company,  subject to the
requisite Member  Approval.  This Agreement has been duly executed and delivered
by the Company  and,  subject to the Member  Approval,  and  assuming  that this
Agreement  constitutes the valid and binding  agreement of the Acquiror  Parties
and the Merger  Subsidiary,  constitutes the valid and binding obligation of the
Company,  enforceable in accordance with its terms,  except as may be limited by
the Bankruptcy Exception.

     Section 4.04 No Violation. The execution and delivery of this Agreement and
the consummation of the transactions  contemplated  hereby by the Company do not
(a) conflict  with or result in any breach,  violation of or default under (with
or  without  notice  or  lapse of  time,  or  both)  or give  rise to a right of
termination,  cancellation,  modification  or  acceleration of any obligation or
loss of any benefit under (any such event, a  "Violation")  any provision of the
Governing Documents of the Company,  (b) except as to which requisite waivers or
consents shall be obtained by Closing,  result in a Violation under any Material
Contract,  Insurance Policy, or Material Permit to which the Company is a party,
(c) result in a Violation  under any law or Government  Order that is applicable
to the Company, (d) result in the creation or imposition of any Lien upon any of
the  assets,  properties  or  rights  of  the  Company,  or  (e)  result  in the
cancellation,  modification,  revocation  or  suspension  of any of the Material
Permits,  except,  in the case of clauses (b), (c), (d) and (e), for Violations,
breaches,   defaults,  Liens,  cancellations,   modifications,   revocations  or
suspensions  that,  individually  or in the  aggregate,  would not reasonably be
expected to have a Company  Material  Adverse Effect or prevent the consummation
of the Merger.



                                       8


<PAGE>

     Section 4.05 Consents. No consent, waiver, approval, order or authorization
of, or  registration,  declaration or filing with any  Government  Agency or any
other Person, including a party to any Material Contract with the Company (so as
not to trigger any Violation),  is required by or with respect to the Company in
connection with the execution and delivery of this Agreement or the consummation
of the transactions  contemplated hereby,  except for (a) applicable filings, if
any, as may be required under applicable  securities Laws, (b) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware,  (c)
such filings and approvals as may be required by any  applicable  state takeover
or state securities laws, (d) such filings in connection with any state or local
tax which is attributable to the beneficial ownership of real property,  if any,
by the Company, and (e) the Member Approval.

     Section 4.06 Subsidiaries.

          (a) The Company does not have any  subsidiaries  and is not a party to
     any  partnership  or  joint  venture,  with  the  exception  of (i)  former
     ownership  of 100% of the limited  liability  company  interests in Wizkids
     Ohio,  which was dissolved in 2002,  and (ii) ownership of less than 50% of
     the limited liability company interests in WizKids Games.

          (b) The dissolution of Wizkids Ohio was duly effected under applicable
     Delaware law, and the Company has no ongoing  liabilities or obligations in
     connection with its former ownership thereof.

          ( c) WizKids Games is solely  engaged in the businesses of operating a
     retail  store  in  Redmond,   Washington  and  an  online  store  at  http:
     //ssl3.adhost.com/store.wizkidsgames,  and does not hold any asset  that is
     used in the  operation of the  business of the Company as such  business is
     conducted  on the date hereof.  There are no Contracts  between the Company
     and WizKids Games.

     Section 4.07 Financial Statements.  Attached to Section 4.07 of the Company
Disclosure  Schedule  are  complete  and  correct  copies  of  (a)  the  audited
consolidated  balance sheets of the Company,  and its  consolidated  subsidiary,
Wizkids Ohio, at December 31, 2002, 2001 and 2000, and the related  consolidated
statements of income,  members'  equity and cash flows for the periods ending as
of such dates,  as certified  by KPMG LLP  (collectively,  the "Company  Audited
Financial  Statements"),  and (b) the  Company's  unaudited  balance sheet as of
March 31, 2003,  and the related  unaudited  statements of income and cash flows
for  the  three-month   period  then  ended  (the  "Company  Interim   Financial
Statements" and,  together with the Company Audited  Financial  Statements,  the
"Financial Statements").  The Company Audited Financial Statements, as stated in
the  accompanying  auditors'  report and in the notes  thereto,  and the Company
Interim  Financial  Statements (i) were prepared in accordance with GAAP applied
on a consistent basis during the periods involved,  (ii) fairly present,  in all
material  respects,  the consolidated  financial position of the Company and its
consolidated  subsidiary,  Wizkids  Ohio, as of their  respective  dates and the
related consolidated results of operations and their consolidated cash flows for
the periods ending as of such date, and (iii) are, in all material respects,  in
accordance with applicable  books of account and records of the Company,  except
with  respect  to all the  preceding  clauses,  (A) for  the  Accounting  Policy
Exceptions and (B) that the Company Interim Financial  Statements do not reflect
accruals for Tax  liabilities,  do not contain  footnotes  required by GAAP, are
condensed,  and are subject to year-end adjustments that, individually or in the
aggregate,  would not reasonably be expected to have a Company  Material Adverse
Effect.



                                       9

<PAGE>

     Section 4.08 No  Undisclosed  Liabilities.  Since  December  31, 2002,  and
except as  disclosed  in the  Financial  Statements  or the notes  thereto,  the
Company has not incurred any  liabilities  or  obligations in excess of $100,000
individually  or  $250,000  in the  aggregate  ("Material  Liabilities")  except
liabilities  incurred in the ordinary  course of business  consistent  with past
practices.

     Section 4.09 No Company Material  Adverse Effect.  Since December 31, 2002,
(a) there has been no event,  occurrence,  or condition of any  character  that,
individually or in the aggregate,  has had a Company Material Adverse Effect and
(b) there has been no event,  occurrence,  or condition of any  character  that,
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect.

     Section  4.10 No Changes.  Since  December  31,  2002,  except as otherwise
provided  in or  contemplated  by  this  Agreement  or in  connection  with  the
transactions  contemplated  hereby, the Company has not taken any of the actions
described in Section 6.02 (Negative Covenants of the Company).

     Section  4.11  Conduct of the Company  Business.  Since  December 31, 2002,
except  as  otherwise  provided  in or  contemplated  by  this  Agreement  or in
connection with the transactions contemplated hereby, the Company has carried on
its business in the ordinary course consistent with past practice.

     Section 4.12 Real Property.

          (a) The Company does not own any real property.

          (b) Section 4.12 of the Company Disclosure Schedule sets forth a list,
     complete and accurate in all material respects, of all leases, subleases or
     other agreements (collectively, the "Real Property Leases") under which the
     Company  uses or occupies  or has the right to use or occupy real  property
     material  to the conduct of the  business of the Company as now  conducted,
     taken as a whole.  The  Company has  provided  true,  correct and  complete
     copies of all Real Property Leases to the Acquiror or its  representatives.
     Each  such Real  Property  Lease is valid,  binding  and in full  force and
     effect,  all base rent  payable  by the  Company  as tenant  thereunder  is
     current,  and to the  Knowledge of the  Company,  no  termination  event or
     condition  or uncured  default on the part of the Company  exists under any
     Real  Property  Lease,  including  any  violation  by  the  Company  of its
     obligations  therein to purchase any  Insurance  Policy.  The Company has a
     valid  leasehold  interest  in or other  rights to use or occupy  each such
     parcel of real property (the "Company  Leased Real  Property") (as measured
     in the context of its current  uses),  free and clear of all Liens,  except
     for Permitted Exceptions.

          (c) The Company has not entered into any sublease,  license or similar
     agreement  granting  to any  Person  any  right  to the use,  occupancy  or
     enjoyment of the Company Leased Real Property or any portion thereof.



                                       10


<PAGE>

          (d) There are no guaranties  (from the Company or, to the Knowledge of
     the  Company,  from other  Persons)  in favor of the  lessors of any of the
     Company Leased Real Property.

          (e) The  Company  has not  sold,  assigned,  transferred,  pledged  or
     encumbered all or any part of its leasehold interests in the Company Leased
     Real Property, except for Permitted Exceptions.

     Section 4.13 Tangible Property.  Except for Permitted Exceptions and except
(as of the date of this  Agreement)  for Liens of the Bank (a) the  Company  has
good and valid title to all of the tangible  personal  property  assets owned by
the  Company and  material to the conduct of the  business of the Company as now
conducted,  including those tangible  personal  property assets reflected in the
December  31, 2002  balance  sheet  included in the  Company  Audited  Financial
Statements (except for any properties or assets sold or otherwise disposed of in
the ordinary course of business, or with respect to which the lease, sublease or
other right to use such properties or assets has expired or has been terminated,
in  each  case  after  the  date  hereof  to the  extent  permitted  under  this
Agreement),  and (b) the  Company  owns such assets free and clear of all Liens.
The Company has  provided to the Acquiror or its  representatives  a fixed asset
listing  reflecting  such assets.  Such assets are adequate for the purposes for
which they are presently used in the conduct of the Company's  business,  except
for reasonable wear and tear.

     Section 4.14 Inventory.  Except for promotional items,  obsolete or damaged
inventory as determined by the Company consistent with past practices, and items
written off, written down, or reserved in its financial  statements,  and except
with  respect to the  Accounting  Policy  Exceptions,  (a) the  inventory of the
Company is usable and saleable in the ordinary  course of business within twelve
months and, to the  Knowledge  of the  Company,  at  historical  profit  margins
consistent with past practice, (b) inventory levels have been maintained at such
amounts as are  required  for the  operation  of the  business  in the  ordinary
course, and (c) the Financial Statements include adequate reserves in accordance
with GAAP,  including  reserves  for  obsolete or  slow-moving  inventory.  Such
inventory  is stated at the lower of cost or market  determined  on a  first-in,
first-out  basis  (FIFO).  The Company has not  recalled or been  ordered by any
Government  Agency to recall any collectible  miniature game figures sold by the
Company. No claim for breach of this Section 4.14 may be pursued with respect to
any matter directly or indirectly  reflected in the Net Working Capital,  to the
extent any Damages  resulting  therefrom  have been  recovered  by the  Acquiror
pursuant to Section 3.04 hereof.

     Section 4.15  Accounts  Receivable.  Except with respect to the  Accounting
Policy  Exceptions,  (a) the  accounts  receivable  reflected on the schedule of
receivables   aging  attached  to  Section  4.15  of  the  Disclosure   Schedule
represented,  as of the date  thereof,  valid  obligations  arising  from  sales
actually made or services  actually  rendered in the ordinary course of business
consistent  with  past  practices  and (b) as of the date of such  schedule  and
except as set forth therein,  such accounts  receivable,  in the aggregate,  (i)
were  current and  collectible,  net of  reserves  and  allowances  shown in the
financial  statements or accounting records of the Company, and except as may be
limited by the Bankruptcy Exception,  (ii) to the Knowledge of the Company, were
not subject to counterclaim  or right of set-off,  other than that are normal or
recurring,  or returns in the ordinary  course of business,  and (iii) have been
billed and are generally due within specified terms after such billing. No claim
for  breach of this  Section  4.15 may be  pursued  with  respect  to any matter
directly or indirectly  reflected in the Net Working Capital,  to the extent any
Damages  resulting  therefrom  have been  recovered by the Acquiror  pursuant to
Section 3.04 hereof.



                                       11

<PAGE>

     Section 4.16 Intellectual Property.

          (a) The Company owns all right, title and interest in and to, or has a
     license that is valid and enforceable in all material  respects  (except as
     enforceability may be limited by the Bankruptcy  Exception) to use, all the
     Intellectual  Property used by the Company in connection with its business,
     which  Intellectual  Property  represents all intellectual  property rights
     necessary  to the  conduct  of the  Company's  business  as now  conducted.
     Section 4.16(a) of the Company  Disclosure  Schedule contains a list of all
     Intellectual  Property  that is  registered  to the  Company  or for  which
     registration   to  the   Company  is  pending   ("Registered   Intellectual
     Property").  All pending  applications  listed as  Registered  Intellectual
     Property  are active and have not been  abandoned or finally  refused.  All
     registrations  listed as  Registered  Intellectual  Property  are valid and
     subsisting and have been properly  maintained,  except where the failure to
     maintain  the same  would  not  reasonably  be  expected  to have a Company
     Material Adverse Effect. All Registered  Intellectual  Property is owned by
     the Company, free and clear of Liens, except for Permitted Exceptions.

          (b) Section 4.16(b) of the Company Disclosure Schedule contains a list
     of all  Intellectual  Property that is licensed to the Company,  except for
     shrink-wrap and otherwise  commercially available routine office management
     software, graphic design software, and similar products. The Company is not
     in violation of any contractual  obligations  relating to the protection of
     such Intellectual Property under such licenses.

          (c) The  Combat  Dial  does not  conflict  with or  infringe  upon the
     intellectual  property  rights of  others,  and,  to the  Knowledge  of the
     Company,  no other Person is infringing  upon the Combat Dial. With respect
     to all other Intellectual  Property,  to the Knowledge of the Company, such
     Intellectual   Property  does  not  conflict  with  or  infringe  upon  the
     intellectual   property  rights  of  others.  With  respect  to  all  other
     Intellectual  Property, to the Knowledge of the Company, no other Person is
     infringing upon such Intellectual Property.

          (d) There is no claim,  suit, action or proceeding  pending or, to the
     Knowledge of the Company,  threatened against the Company (i) alleging that
     the  Intellectual  Property  conflicts  with or  infringes  upon any  third
     party's  proprietary rights or (ii) challenging the Company's  ownership or
     use of, or the validity or enforceability of, any Intellectual Property.

          (e) To the  Knowledge of the Company,  no present or former  employee,
     officer or director of the Company,  or agent or outside  contractor of the
     Company,  holds any right,  title or interest,  directly or indirectly,  in
     whole or in part, in or to any Intellectual  Property.  To the Knowledge of
     the Company, (i) none of the Intellectual Property has been used, disclosed
     or  appropriated  to the  detriment  of the  Company for the benefit of any
     Person other than the Company and (ii) no employee,  independent contractor
     or agent of the  Company  has  misappropriated  any trade  secrets or other
     confidential  information  of  any  other  Person  in  the  course  of  the
     performance of his or her duties as an employee,  independent contractor or
     agent of the Company.


                                       12


<PAGE>

          (f) To the  Knowledge  of the  Company,  the  Company's  transmission,
     reproduction,  use,  display  or  modification  of any  content,  software,
     graphical user  interfaces,  embedded code or other materials  contained in
     any of the  Company's Web sites  (including,  framing and linking) or other
     practices  in  connection  therewith  does  not  infringe  or  violate  any
     proprietary or other right of any other Person and, to the Knowledge of the
     Company,  no claim relating to such infringement or violation is threatened
     or pending.

          (g) Each  employee of the  Company  who has, in the regular  course of
     employment   with  the  Company,   created  any  programs,   modifications,
     enhancements or other  inventions,  improvements,  discoveries,  methods or
     works of authorship  ("Works"),  is subject to an obligation to assign such
     Works to the  Company,  or the Company  owns such Works as a matter of law.
     Each  independent  contractor whom the Company hired to create any Works on
     behalf of the Company is subject to an  obligation  to assign such Works to
     the Company or has agreed that such Works are property of the Company.

     Section 4.17  Material  Contracts.  Section 4.17 of the Company  Disclosure
Schedule sets forth a list,  complete and accurate in all material respects,  of
all written  Contracts  to which the Company is a party (other than with respect
to the  Real  Property  Leases),  that  are in  existence  on the  date  of this
Agreement and that contain any of the following (the "Material Contracts"):  (a)
a Contract with a customer or  distributor  under which the Company had sales in
excess of $100,000 in the aggregate in the  twelve-month  period ended March 31,
2003 (the  "Customer  Contracts");  (b) a  Contract  that  contains  a  covenant
restricting  the ability of the Company to compete  with any Person or engage in
any  business  or  activity;  (c) a guaranty  of the  borrowing  of money by, or
extension of credit to, any other Person; (d) a Contract not fully performed for
the purchase or lease of any goods or services for a price in excess of $100,000
in the aggregate over a  twelve-month  period if such Contract is not terminable
by the  Company  without  penalty  on less than 90 days  notice;  (e) a Contract
creating a license or franchise  of the  Intellectual  Property;  (f) any credit
agreement,  loan agreement,  letter of credit,  repurchase agreement,  mortgage,
security agreement,  guarantee,  pledge agreement,  trust indenture,  promissory
note or other document or arrangement  relating to the borrowing of money or for
lines of credit; (g) any employment,  severance or consulting agreement; (h) any
agreement or other arrangement for the sale or purchase of any assets,  property
or rights,  other than in the ordinary  course of business,  or for the grant of
any options or preferential  rights to purchase any assets,  property or rights;
(i) any document  granting any power of attorney  with respect to the affairs of
the Company;  (j) any suretyship  contract,  performance bond or working capital
maintenance  agreement;  (k) any partnership or joint venture agreement to which
the Company is a party; (l) any shareholder  agreement or agreement  relating to
the  issuance  of  any  securities  of  the  Company  or  the  granting  of  any
registration  rights with respect thereto;  and (m) any other material agreement
not made in the  ordinary  course of  business  of the  Company.  A copy of each
Material Contract has been provided to the Acquiror or its representatives. Each
Material Contract is, in all material respects, the valid and binding obligation
of the  Company,  is in full  force  and  effect,  and to the  Knowledge  of the
Company,  is enforceable  against the other parties thereto,  in accordance with
its terms, except as may be limited by the Bankruptcy Exception.  The Company is
not in  material  breach or default  under any  Material  Contract  and,  to the
Knowledge  of the  Company,  no other  party is in  material  breach or  default
thereunder. The Company has not received any written or oral notice of any event
or condition that constitutes,  or with the passage of time would constitute,  a
material default by the Company under any Material Contract. The Company has not
received written notice of termination of any of the Customer Contracts.



                                       13

<PAGE>

     Section  4.18  Compliance  with  Law.  The  Company  is not,  and since its
formation  has not been,  in violation  of, or to the  Knowledge of the Company,
under  investigation  by any Government  Agency with respect to and has not been
threatened  by any  Government  Agency to be charged with or given notice of any
violation of, any applicable  Law,  except for  violations,  investigations  and
charges  that have not had,  and  would  not  reasonably  be  expected  to have,
individually or in the aggregate, a Company Material Adverse Effect.

     Section 4.19 Material Permits. Except for matters that would not reasonably
be expected to have, either individually or in the aggregate, a Company Material
Adverse Effect, (a) the Company owns, holds, or possesses adequate rights to use
all Material  Permits and (b) the  Material  Permits are valid and in full force
and effect.  A list of such Material Permits is set forth in Section 4.19 of the
Company Disclosure Schedule. Each Material Permit has been duly obtained, and is
not subject to any  pending  or, to the  Knowledge  of the  Company,  threatened
administrative or judicial proceeding to revoke, cancel, suspend or declare such
Material Permit invalid in any respect.  The Material Permits are sufficient and
adequate  in  all  respects  to  permit  the  continued  lawful  conduct  of the
businesses of the Company in the manner now  conducted,  and to the Knowledge of
the  Company,  none of the  operations  of the Company are being  conducted in a
manner that  violates  any of the terms or  conditions  under which any Material
Permit  was  granted,  except  for such  violations  as would not have a Company
Material Adverse Effect.

     Section 4.20 Insurance. Set forth in Section 4.20 of the Company Disclosure
Schedule is a list of all insurance policies ("Insurance Policies") covering the
assets, business, equipment,  properties,  operations,  employees, officers, and
directors of the Company  (other than for the provision of Benefit  Plans).  The
Company has provided a true, complete and accurate copy of all such policies and
bonds to the Acquiror or its representatives. All such policies and bonds are in
full force and effect. The Company has purchased the insurance policies that the
Company is  required  by Law to  purchase.  The Company is not in default in any
material  respect  under any  provisions of any such policy of insurance nor has
the Company  received notice of cancellation of any such insurance.  There is no
claim by the Company  pending under any of such  Insurance  Policies as to which
the Company has  received  written  notice that  coverage  has been  questioned,
denied, or disputed by the underwriters of such Insurance Policies. All premiums
due and  payable  under  all such  Insurance  Policies  have been  paid.  To the
Knowledge  of the Company,  there is no  threatened  termination  of, or premium
increase with respect to, any such Insurance Policies.

     Section 4.21  Litigation.  There is no Action  pending  against,  or to the
Knowledge of the  Company,  threatened  against the Company  before any court or
arbitrator or any  Government  Agency which seeks to prevent,  enjoin,  alter or
materially  delay the Merger.  Section 4.21 of the Company  Disclosure  Schedule
sets forth a list and  summary  description  of all  Actions  pending or, to the
Knowledge of the Company, threatened,  before any national, state or local court
or  governmental  or regulatory  authority,  domestic or foreign,  or before any
arbitrator of any nature, brought by or against the Company or, to the Knowledge
of the Company, its manager,  officers,  or Affiliates  involving,  affecting or
relating to the Company, the assets,  properties or rights of the Company or the
transactions contemplated by this Agreement.



                                       14


<PAGE>

     Section 4.22 Taxes. The Company has timely filed or caused to be filed with
appropriate Tax Authorities all Tax Returns that are required to be filed by the
Company.  As of the time of filing,  such Tax Returns  were true and complete in
all material respects.  The Company has timely paid or withheld and remitted (or
there has been paid or withheld and  remitted on its behalf) all material  Taxes
shown as due on such Tax Returns. Except as to the Accounting Policy Exceptions,
charges,  accruals  and  reserves  for Taxes of the  Company  for any tax period
ending prior to the Effective  Time or for any tax period  beginning  before the
Effective  Time but ending after the Effective  Time  (including any such period
for which no Tax Return has yet been filed) have been estimated and reflected on
the Company Interim  Financial  Statements and, to the Knowledge of the Company,
are  adequate  to  cover  such  Taxes  as of the  date of such  Company  Interim
Financial Statements.  There is no claim, audit, suit, or proceeding pending or,
to the  Knowledge  of the  Company,  threatened  in  writing  in  respect of any
material  Tax,  other than normal and routine  audits by  nonfederal  Government
Agencies.  The  Company  has  received  no  notice  of  deficiency  or  proposed
adjustment  with respect to any amount of Taxes of the Company.  The Company has
not executed or entered into with the Internal  Revenue Service or any other Tax
Authority,  a closing  agreement  pursuant  to  Section  7121 of the Code or any
similar  provision  of state,  local,  foreign or other  income  tax law,  which
requires any increase in taxable income or alternative  minimum  taxable income,
or any  reduction in Tax credits for, the Company for any taxable  period ending
after the Closing Date. There are no currently effective agreements, waivers, or
arrangements  extending  the statutory  period of  limitation  applicable to any
claim for, or the period for the collection or assessment of, material Taxes due
from or with respect to the Company for any taxable period.  The Company has not
executed or filed any power of attorney  with  respect to any Taxes with any Tax
Authority.  The Company has not agreed to make any material  adjustment pursuant
to Section  481(a) of the Code (or any  predecessor  provision) by reason of any
change in any accounting  method,  and there is no application  pending with any
Tax Authority requesting  permission for any changes in any accounting method of
the Company  which would  reasonably  cause the Company to include any  material
adjustment in taxable income for any taxable period (or portion  thereof) ending
after the Closing  Date.  No liens for Taxes exist upon any assets or properties
of the Company,  except for statutory  liens for Taxes not yet due and liens for
Taxes the Company is contesting in good faith for which  adequate  reserves have
been  established.  The  Company  is not a party to, is not bound by, and has no
obligation under any Tax sharing  agreement,  Tax  indemnification  agreement or
similar  contract  or  arrangements,   including  any  agreement,   contract  or
arrangement  providing  for the  sharing or ceding of  credits  or  losses.  The
Company has since its inception  been  classified and treated for federal income
tax purposes as a partnership under Treasury  Regulations Section 301.7701-3 and
not as a corporation or an association taxable as a corporation.

     Section 4.23  Employee  Benefits.  Section  4.23 of the Company  Disclosure
Schedule  lists each Benefit Plan of the Company.  None of the Benefit Plans are
subject to Title IV of ERISA, Section 302 of ERISA or Section 412 or 4971 of the
Code, and none is a "multiemployer plan" (as defined in Section 3(37) of ERISA).
The  Company  has never  participated  in a  "multiemployer  plan."  Except  for
noncompliance,  individually  or in the aggregate,  that would not reasonably be
expected to have a Company  Material  Adverse Effect,  (a) each Benefit Plan has
been  administered  in  accordance  with  its  terms  and all  applicable  Laws,



                                       15

<PAGE>

including ERISA and the Code, (b) all benefits under the Benefit Plans have been
properly  provided to the participants in or beneficiaries of the Benefit Plans,
as appropriate, and (c) the Company has not taken or omitted to take any actions
such that the  Company,  or any Person that is a member of a group  described in
Section 414(b),  (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that
includes the Company,  is or would  reasonably  be expected to be subject to any
liabilities,  claims,  judgments,  damages,  penalties,  taxes,  assessments  or
similar items  attributable to (i) the violation of any provision of any Benefit
Plan,  (ii) the  provisions  of Title IV of  ERISA,  Section  301 of  ERISA,  or
Sections  412 or  4971  of the  Code,  or  (iii)  any  failure  to  satisfy  the
requirements  of COBRA.  None of the Company's  employee  welfare  benefit plans
provide  benefits that continue after  termination  except as required by COBRA.
Except as set forth in Section  4.23 of the  Company  Disclosure  Schedule,  the
Merger will not cause any  acceleration  of vesting,  payment of  severance,  or
other changes in benefits under the Benefit Plans,  and no compensation  payable
to any Company Employee, under the Benefit Plans or otherwise, shall as a result
of the Merger or any  termination of employment  following the Merger fail to be
deductible  for Federal  income tax  purposes  by reason of Section  280G of the
Code.  Except for routine claims for benefits due, there are no pending  claims,
actions, or government audits with respect to any Benefit Plan.  Notwithstanding
any other provisions of this Agreement,  the  representations and warranties set
forth  in  this  Section  4.23  constitute  the  exclusive  representations  and
warranties relating to ERISA, Benefit Plans, or other matters described herein.

     Section 4.24  Employment  Matters.  Section 4.24 of the Company  Disclosure
Schedule  contains  a list of all  Company  Employees  as of the dates set forth
therein.  There are no written  Contracts between the Company and any current or
former  Company  Employee other than those listed on Section 4.24 of the Company
Disclosure  Schedules  and  other  than  standard  forms  of  non-disclosure  or
work-for-hire agreements. The Company (a) is not in violation of applicable Laws
respecting employment,  employment practices, terms and conditions of employment
and wages and hours,  (b) has no liability for any arrears of wages or any taxes
or any penalty for  violation of any of the  foregoing,  or (c) has no liability
for any payment to any trust or other fund  governed by or  maintained  by or on
behalf of any  Government  Agency,  with  respect to  unemployment  compensation
benefits, social security or other benefits or obligations for Company Employees
(other  than  routine  payments  to be made in the  ordinary  course of business
consistent with past practice).

     Section 4.25 Labor  Relations.  The Company is not party to any  collective
bargaining agreements.  The Company is not negotiating any collective bargaining
agreements  relating to any of the Company  Employees.  No union  organizational
campaign or representation petition is currently pending or, to the Knowledge of
the  Company,  threatened  with  respect to any Company  Employees.  There is no
pending or, to the  Knowledge  of the  Company,  threatened,  strike,  slowdown,
lock-out,  work-stoppage,  union organizing effort or other labor dispute, labor
board proceeding,  labor  arbitration  proceeding,  or  administrative  tribunal
proceeding,  involving any Company  Employees.  To the Knowledge of the Company,
there are no complaints filed with any Government Agency by any Company Employee
against the Company claiming that it has violated any applicable Law relating to
employee  or  human  rights.  To the  Knowledge  of the  Company,  there  are no
complaints or  proceedings  of any kind  involving the Company  before any labor
relations  board.  There are no outstanding  orders or charges in respect of any
Company Employee against the Company under any applicable Law relating to health



                                       16

<PAGE>

and  safety.  All  Company  Employees  are  lawfully  authorized  to work in the
jurisdictions  in which they are working  according  to  applicable  immigration
laws.  No  material  grievance,  arbitration  or other  proceeding  arising,  or
asserted to arise, out of or under a collective bargaining  agreement,  relating
to an Company Employee is pending. The Company is not subject to any unsatisfied
or pending settlement agreement,  conciliation agreement,  letter of commitment,
deficiency  letter or consent decree with any Company  Employee or applicant for
employment,  labor union or other  representative,  or any Government  Agency or
arbitrator   relating   to  claims  of  unfair   labor   practices,   employment
discrimination,  or other claims with respect to employment and labor  practices
and policies.  No Government Agency,  administrative  tribunal or arbitrator has
issued a judgment,  order, decree,  injunction,  decision, award or finding with
respect to the  employment  and labor  practices  or  policies  of the  Company.
Notwithstanding any other provisions of this Agreement,  the representations and
warranties  set  forth in  Section  4.23,  Section  4.24 and this  Section  4.25
constitute the exclusive  representations and warranties of the Company relating
to  Company  Employees,  employment  Laws,  labor  relations,  or other  matters
described herein or therein.

     Section 4.26  Environmental  Matters.  Except for matters  disclosed in the
environmental  reports  described  in  Section  4.26 of the  Company  Disclosure
Schedule, and solely with respect to the time any applicable property was leased
by the Company, (a) the Company has not transported, stored, used, manufactured,
disposed  of, or  released a  reportable  quantity  of  Hazardous  Materials  in
violation of applicable Environmental Laws or disposed of, transported, sold, or
manufactured  any product  containing  a  Hazardous  Material  in  violation  of
applicable Environmental Laws, (b) the Company currently holds all environmental
Material  Permits  necessary  for the  operation  of the  Company's  business as
currently  conducted,  (c) no Action is  pending  or,  to the  Knowledge  of the
Company,  threatened  against  the  Company  concerning  its  violation  of  any
environmental  Permit or applicable  Environmental Laws, and (d) the Company has
not been named by any Government  Agency as  potentially  liable for the cost of
cleanup of any of the Company  Leased Real  Property,  (e) the operations of the
Company are, and have been, in compliance with all applicable Environmental Laws
and permits issued  thereunder,  (f) the Company does not reasonably expect that
material  expenditures are or will be necessary for the Company to maintain full
compliance with  Environmental Laws currently in effect, (g) to the Knowledge of
the Company,  no Hazardous  Material has come to be located on, at, beneath,  or
near any real property currently or formerly owned, operated, leased, or used by
the Company,  (h) no real property currently or formerly owned,  leased, or used
by the Company  contains or formerly  contained any  underground  or aboveground
storage tank, surface impoundment, landfill, land disposal area, polychlorinated
biphenyls,  asbestos or urea formaldehyde insulation, and (i) in connection with
the  operation  of its  businesses,  the  Company has not  committed  any act or
omission which could give rise to liability under any Environmental  Law, except
for liabilities that would not reasonably be expected to have a Company Material
Adverse Effect.  Notwithstanding  any other  provisions of this  Agreement,  the
representations  and  warranties  set forth in this Section 4.26  constitute the
exclusive  representations  and  warranties  relating  to  Hazardous  Materials,
Environmental Laws, or other matters described herein.

     Section  4.27  Customers  and  Suppliers.   Section  4.27  of  the  Company
Disclosure  Schedule sets forth a complete and correct list of (a) all customers
whose purchases from the Company  exceeded 5% of the  consolidated  net sales of
the  Company in 2001 and 2002 and (b) the 10 largest  suppliers  to the  Company
during 2001 and 2002.  None of such  customers,  distributors  or suppliers  has
delivered  written  notice  to the  Company  of such  customer,  distributor  or
supplier's intent to terminate or materially  adversely change its business with
the Company.



                                       17


<PAGE>

     Section 4.28 Brokers' and Finders' Fees.  Except as to Allen & Company LLC,
the  Company  has not  incurred,  directly  or  indirectly,  any  liability  for
brokerage  or finders'  fees or agents'  commissions  or any similar  charges in
connection with this Agreement or any transaction contemplated hereby.

     Section 4.29 Affiliate Transactions.  Except as relates to WizKids Games or
Wizkids  Ohio or as  recorded  in the books and  records of the  Company,  since
December  31,  2001,  the Company has not  engaged in any  transaction  with any
Affiliate  thereof that was material to the business of the Company,  taken as a
whole,  and  the  Company  is not  party  to any  Material  Contracts  with  any
Affiliates  that will  continue in effect after the Closing Date or that are not
terminable by the Company.

     Section 4.30 Illegal or Unauthorized  Payments;  Political  Contributions .
Neither the Company nor, to the Knowledge of the Company, its manager,  officers
or Affiliates  has,  directly or  indirectly,  made or  authorized  any payment,
contribution  or  gift  of  money,  property,  or  services,  whether  or not in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b)
except for personal political contributions not involving the direct or indirect
use of funds of the Company,  to any political  organization or to the holder of
or any aspirant to any elective or appointive public office.

     Section 4.31 Only Representations and Warranties . The only representations
and  warranties of the Company are contained in this Article 4. No due diligence
materials  or  other   information  or  documents  (such  as  the   Confidential
Information  Memorandum or other  materials  distributed by Allen & Company LLC,
anything  reviewed in any data room, or otherwise) shall be deemed to constitute
express or implied representations or warranties.


                                   ARTICLE 5.
                       REPRESENTATIONS AND WARRANTIES OF
                 THE ACQUIROR PARTIES AND THE MERGER SUBSIDIARY


     The Acquiror Parties hereby jointly and severally  represent and warrant to
the  Company and the  Members as  follows,  except as set forth in the  Acquiror
Disclosure Schedule attached hereto:

     Section 5.01  Organization.  Each of the Acquiror  Parties is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Delaware,  and has all requisite  corporate power and authority to own,
lease and  operate  its  properties  and to carry on its  business  as now being
conducted.

     Section 5.02 Authority and Enforceability. Each of the Acquiror Parties has
all  requisite  entity power and  authority to enter into this  Agreement and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this Agreement,  the Merger,  the performance of the obligations of the Acquiror
Parties hereunder, and the consummation of the transactions  contemplated hereby
have been duly authorized by all requisite  entity action on the part of each of
the Acquiror  Parties.  This  Agreement  has been duly executed and delivered by
each of the Acquiror Parties,  and assuming that this Agreement  constitutes the
valid and binding  agreement of the Company,  constitutes  the valid and binding
obligation of each of the Acquiror  Parties,  enforceable in accordance with its
terms, except as may be limited by the Bankruptcy Exception.



                                       18

<PAGE>

     Section 5.03 No Violation. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by each of the Acquiror
Parties do not (a) result in any  Violation of any  provision  of the  Governing
Documents  of any of the  Acquiror  Parties,  (b)  except as to which  requisite
waivers or consents can be obtained by Closing,  result in a Violation under any
material Contract to which any of the Acquiror Parties is a party, (c) result in
a Violation under any law or Government  Order applicable to any of the Acquiror
Parties, or (d) result in the creation or imposition of any Lien upon any of the
assets, properties or rights of any of the Acquiror Parties, except, in the case
of  clauses  (b),  (c),  and (d),  for  conflicts,  Violations,  or Liens  that,
individually  or in the  aggregate,  would not reasonably be expected to prevent
the consummation of the Merger.

     Section 5.04 Consents. No consent, waiver, approval, order or authorization
of, or  registration,  declaration or filing with any  Government  Agency or any
other  Person,  including  a party  to any  material  Contract  with  any of the
Acquiror  Parties (so as not to trigger any  Violation),  is required by or with
respect to any of the Acquiror  Parties in  connection  with the  execution  and
delivery of this Agreement or the consummation of the transactions  contemplated
hereby,  except for (a)  applicable  filings,  if any, as may be required  under
applicable securities laws, (b) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware,  and (c) such filings and approvals
as may be required by any applicable state takeover or state securities laws.

     Section 5.05  Litigation.  There is no Action  pending  against,  or to the
knowledge of any of the Acquiror Parties, threatened against any of the Acquiror
Parties before any court or arbitrator or any Government Agency,  which seeks to
prevent, enjoin, alter or materially delay the Merger.

     Section 5.06 Due Diligence  Investigation.  The Acquiror  Parties and their
respective  representatives  have been  permitted  access to books and  records,
facilities,  and documents of the Company, they otherwise have been given a full
and  complete  opportunity  to  perform  such due  diligence  investigation  and
inquiries of the Company as they have  required,  and they have completed all of
their due diligence  investigation.  Except to the extent expressly  provided in
Article 4 hereof,  the Acquiror  Parties are acquiring  the Company  without any
warranties,  express or implied,  by operation of law or  otherwise.  Nothing in
this Section  5.06 in any way  qualifies  or modifies  the  representations  and
warranties  of the Company made in Section 4.01 through  Section 4.30 or has any
effect on the  Acquiror  Parties'  right to  assert a claim for  indemnification
pursuant to Section 10.02 hereof.

     Section 5.07 Brokers' and Finders' Fees. Neither the Acquiror,  the Holding
Company, Finance, nor any of their respective Affiliates has incurred,  directly
or  indirectly,  any  liability  for  brokerage  or  finders'  fees  or  agents'
commissions  or any similar  charges in  connection  with this  Agreement or any
transaction contemplated hereby.



                                       19


<PAGE>

     Section  5.08  Funding.  Finance  has, on the date  hereof,  and the Merger
Subsidiary  will have,  at Closing,  unrestricted  cash on hand greater than the
Initial Consideration and as needed to consummate the transactions  contemplated
hereby. None of the Acquiror Parties is aware of any facts or circumstances that
could cause it to believe  that the Merger  Subsidiary  will not, on the Closing
Date, have unrestricted cash on hand greater than the Initial  Consideration and
as needed to  consummate  the  transactions  contemplated  hereby.

     Section 5.09 Pre-Merger Notification. No filing is required with respect to
the Merger or  transactions  contemplated  herein  under the Hart  Scott  Rodino
Antitrust  Improvements  Act of 1976, as amended,  or the rules and  regulations
promulgated thereunder.

     Section 5.10 The Merger Subsidiary. Upon formation of the Merger Subsidiary
and at Closing,  the Acquiror Parties and the Merger Subsidiary will jointly and
severally  represent  and warrant as  follows:

          (a)  The  Merger  Subsidiary  is  a  limited  liability  company  duly
     organized,  validly  existing  and in good  standing  under the laws of the
     State of Delaware,  and has all requisite  limited  liability company power
     and authority to own,  lease and operate its properties and to carry on its
     business as now being  conducted.  The Merger  Subsidiary was formed solely
     for the purpose of engaging in the transactions contemplated hereby and has
     engaged in no  business  other  than in  connection  with the  transactions
     contemplated by this Agreement.

          (b)  All  of  the  representations  and  warranties  in  Section  5.02
     (Authority  and   Enforceability)   through  and  including   Section  5.09
     (Pre-Merger  Notification)  apply to the Merger  Subsidiary  as though each
     reference  therein  to an  Acquiror  Party were a  reference  to the Merger
     Subsidiary.


                                   ARTICLE 6.
                       CONDUCT PRIOR TO THE EFFECTIVE TIME

     Section 6.01 Affirmative  Covenants of the Company.  During the period from
the date of this  Agreement  and  continuing  until the Closing  Date or earlier
termination of this Agreement,  except as expressly contemplated or permitted by
this  Agreement or to the extent that the Acquiror  shall  otherwise  consent in
writing, (a) the Company shall carry on its businesses in the usual, regular and
ordinary  course  in  substantially  the same  manner  as  heretofore  conducted
(including  collection  of  receivables  and payment of  payables),  and (b) the
Company  shall use all  reasonable  efforts to (i)  preserve  intact its present
business  organization and goodwill,  maintain its material assets,  properties,
rights and  franchises,  retain the  services  of its current  officers  and key
employees,  and preserve its relationships with customers,  suppliers and others
having  business  dealings with it, (ii) maintain  supplies and  inventories  in
quantities consistent with its customary business practice, (iii) keep in effect
insurance  comparable  in  amount  and  scope  of  coverage  to  that  currently
maintained,  (iv) maintain in effect all existing Material Permits, and (v) keep
its books of account, files and records in the ordinary course and in accordance
with existing practice.

     Section 6.02  Negative  Covenants of the Company.  Between the date of this
Agreement and the Closing Date or earlier termination of this Agreement,  except
as expressly  contemplated by this Agreement (including the Member Escrow Rights
Transaction)  or to the extent  that the  Acquiror  shall  otherwise  consent in
writing, the Company shall not do any of the following:



                                       20

<PAGE>

          (a) (i) Split,  combine or  reclassify  any of its  limited  liability
     company  interests,  or issue,  authorize  or propose  the  issuance of any
     additional Company Interests or any other securities in respect of, in lieu
     of or in substitution  for, its limited liability company interests or (ii)
     repurchase  or  otherwise  acquire  any of its  limited  liability  company
     interests, or set aside funds therefor.

          (b) Amend or propose to amend its Governing Documents.

          (c) (i) Merge or consolidate  with, or acquire any equity interest in,
     any corporation,  partnership,  association or other business organization,
     or enter into an agreement with respect  thereto,  (ii) acquire or agree to
     acquire any  material  assets,  except for the  purchase of  inventory  and
     supplies  in the  ordinary  course  of  business  and  except  for  capital
     expenditures  otherwise  permitted  hereunder,  or  (iii)  make any loan or
     advance to, or otherwise  make any  investment  in, any Person,  other than
     trade or  employee  loans or advances  in the  ordinary  course of business
     consistent with past practice in an amount not to exceed $25,000.

          (d) Sell, lease,  license,  encumber or otherwise dispose of, or agree
     to sell,  lease  (whether  such lease is an  operating  or capital  lease),
     license, encumber or otherwise dispose of, any of its Intellectual Property
     or other  assets,  except as  listed  in  Section  6.02(h)  of the  Company
     Disclosure  Schedule,  and other  than (i) sales of  inventory  or sales or
     returns of obsolete or surplus equipment in the ordinary course of business
     consistent  with past  practice,  and (ii) other sales of assets  which are
     immaterial, individually or in the aggregate, to the Company.

          (e) Authorize, recommend, propose, or announce an intention to adopt a
     plan of complete or partial liquidation or dissolution.

          (f) Except as may be required  by Law,  pursuant to any of the Benefit
     Plans or employee agreements existing on the date of this Agreement, in the
     ordinary course of business consistent with past practice,  or as necessary
     to comply with the  affirmative  covenants and  agreements in Section 6.01,
     (i) grant any increases in the compensation  (including  salary,  bonus and
     other benefits) of any of its directors,  officers, management employees or
     key employees,  (ii) pay or agree to pay any pension,  retirement allowance
     or other employee benefit to any director,  officer, management employee or
     key  employee,  whether  past or  present,  (iii)  enter  into any new,  or
     materially amend any existing, Benefit Plan or any employment, severance or
     termination  agreement  with  any  person,  other  than  standard  forms of
     non-disclosure or work-for-hire agreements, (iv) become obligated under any
     new Benefit Plan or employee  agreement,  which was not in existence on the
     date hereof, or amend any such plan or arrangement in existence on the date
     hereof if such amendment would have the effect of materially  enhancing any
     benefits  thereunder,  (v)  grant  any  general  increase  in  compensation
     (including  salary,  bonus and other benefits) to employees,  except as set
     forth on Section 6.02(f) of the Company Disclosure Schedule, or (vi) extend
     any  loans  or  advances  to  any of its  directors,  officers,  management
     employees or key employees, except for ordinary course of business advances
     for business related expenses.



                                       21


<PAGE>

          (g) (i) Assume or incur any  indebtedness  for borrowed  money (except
     for drawdowns by the Company under its existing  credit  facilities made in
     the  ordinary  course of  business  consistent  with past  practice),  (ii)
     guarantee  any  indebtedness,  (iii) issue or sell any debt  securities  or
     warrants or rights to acquire any debt securities,  (iv) guarantee any debt
     obligations  of  any  other  person  (except  obligations  of  the  Company
     otherwise  permitted  hereunder),  or  (v)  create  any  Lien  (other  than
     Permitted Exceptions) on the property of the Company.

          (h) Enter  into any  Material  Contracts  or Real  Property  Leases or
     modify,  rescind,  terminate,  waive,  release  or  otherwise  amend in any
     material  respect any of the terms or provisions of any Material  Contract,
     Real Property Lease, or Insurance Policy, except as contemplated in Section
     6.02(h) of the Company Disclosure Schedule.

          (i) Make or  commit  to make any  capital  expenditure  in  excess  of
     $25,000.

          (j) Except as required  by GAAP or  applicable  Law,  make any changes
     with respect to accounting policies,  procedures and practices or write off
     as uncollectible  any accounts  receivable except in the ordinary course of
     business consistent with past practice.

          (k) Enter  into any  closing or other  agreement  or  settlement  with
     respect to Taxes affecting or relating to the Company.

          (l) Settle,  release or forgive any claim or  litigation  or waive any
     right thereto.

          (m) Terminate any executive Company Employee.

          (n) Enter into any Contract with WizKids Games.

          (o) Enter into any  legally  binding  commitment  to take any  actions
     prohibited by this Section 6.02.

     Section 6.03 Product  Releases.  Between the date of this Agreement and the
Closing  Date or earlier  termination  of this  Agreement,  except as  expressly
contemplated  by  this  Agreement  or to the  extent  that  the  Acquiror  shall
otherwise  consent in  writing,  the  Company  shall not release any new product
lines,  except  for  those  listed in  Section  6.03 of the  Company  Disclosure
Schedule.

     Section 6.04 Authorized Distributions . Notwithstanding Section 6.02 or any
other provision of this Agreement, the Company shall have the express authority,
without any approval of any the Acquiror  Parties or Merger  Subsidiary,  to pay
any cash distribution permitted by law.

     Section 6.05 Consents and Approvals.

          (a) The Company shall use  reasonable  efforts to obtain all necessary
     consents, waivers, authorizations and approvals of all Government Agencies,
     and of all  other  Persons,  required  in  connection  with the  execution,
     delivery and  performance  by the Company of this  Agreement.  The Acquiror
     Parties shall diligently assist and cooperate with the Company in obtaining
     such  governmental  consents,  waivers,  authorizations or approvals (which
     assistance and cooperation  shall include timely  furnishing to the Company
     all information concerning the Acquiror Parties that counsel to the Company
     determines is required).



                                       22


<PAGE>

          (b) The Acquiror Parties shall (and shall cause the Merger  Subsidiary
     to) use  reasonable  efforts to obtain  all  necessary  consents,  waivers,
     authorizations and approvals of all Government  Agencies,  and of all other
     Persons,   required  in  connection   with  the  execution,   delivery  and
     performance  by  the  Acquiror  Parties  and  Merger   Subsidiary  of  this
     Agreement.  The Company  shall  diligently  assist and  cooperate  with the
     Acquiror  Parties and Merger  Subsidiary  in  obtaining  such  governmental
     consents,  waivers,  authorizations  or  approvals  (which  assistance  and
     cooperation shall include timely furnishing to the Acquiror all information
     concerning  the  Company  that  counsel  to  the  Acquiror   determines  is
     required).

     Section 6.06 No  Solicitation.  Between the date of this  Agreement and the
Outside  Date or earlier  termination  of this  Agreement,  except as  expressly
contemplated  by  this  Agreement  or to the  extent  that  the  Acquiror  shall
otherwise  consent  in  writing,  the  Company  agrees  that  neither it nor its
Affiliates,  manager, officers, or agents shall solicit, encourage or respond to
any  inquiries  or proposals by or enter into any  discussions  or  negotiations
with,  or disclose,  directly or  indirectly,  any  information  concerning  the
Company  to, or afford any access to the  properties,  books and  records of the
Company to, any Person in connection  with any proposal for (a) the  acquisition
(whether  by  purchase,   merger,   consolidation   or   otherwise)  of  all  or
substantially  all  of  the  assets,  or  ownership,  of the  Company,  (b)  the
acquisition of equity  interests  representing  more than 20% of the outstanding
equity interests of the Company or (c) any other business combination  involving
the Company.  In the event that during such period any such offers are received,
the Company will promptly communicate to the Acquiror their existence and terms,
and the identity of the party making such offer.

     Section  6.07  Further  Assurances.  Upon  the  terms  and  subject  to the
conditions  of  this  Agreement,  each  of the  parties  hereto  shall  use  its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done,  all things  necessary,  proper or advisable  consistent  with
applicable law to consummate and make effective in the most  expeditious  manner
practicable the transactions contemplated hereby.

     Section 6.08 Notice of Breach.  Between the date of this  Agreement and the
Closing Date or earlier  termination  of this  Agreement,  (a) the Company shall
promptly give written  notice with  particularity  upon having  Knowledge of any
matter that is reasonably  likely to constitute a breach of any  representation,
warranty, agreement or covenant contained in this Agreement and (b) the Acquiror
Parties  shall  promptly  give  written  notice with  particularity  upon having
knowledge of any matter that is reasonably  likely to constitute a breach of any
representation, warranty, agreement or covenant contained in this Agreement.


                                   ARTICLE 7.
                              ADDITIONAL COVENANTS


     Section 7.01 Access to Information.  Between the date of this Agreement and
the Closing Date or earlier  termination  of this  Agreement,  the Company shall
afford the  Acquiror  and its  accountants,  counsel  and other  representatives
reasonable  access  to  all  of  the  Company's  properties,  books,  contracts,
commitments  and  records,  all  other  information   concerning  its  business,
properties and personnel (subject to restrictions  imposed by applicable law) as
the  Acquiror  may  reasonably  request for the purpose of  determining  actions
necessary to consummate the Merger and determine  satisfaction  of conditions to
Closing set forth in Article 8 hereof.



                                       23


<PAGE>

     Section 7.02 Public Disclosure.

          (a) No party hereto shall issue any statement or  communication to any
     third party,  including  customers (but excluding any legal,  accounting or
     financial  advisors of the parties),  regarding the subject  matter of this
     Agreement  or  the  transactions   contemplated   hereby,   including,   if
     applicable,  the  termination of this  Agreement and the reasons  therefor,
     without the consent of the Company and the  Acquiror,  which  consent shall
     not be unreasonably conditioned,  withheld or delayed;  provided,  however,
     that the Acquiror  may make any public  disclosure  required by  applicable
     securities law or any listing or trading agreement  concerning its publicly
     traded  securities  (in which  case the  Acquiror  shall  consult  with the
     Company  prior to making  any such  disclosure  and,  with  respect  to any
     required  government  filings,   shall  make  such  confidential  treatment
     requests as are reasonably requested by the Company).

          (b)  Notwithstanding  anything to the contrary,  each party hereto has
     been and is permitted to disclose the federal tax treatment and federal tax
     structure of the Merger.  This permission to disclose  includes the ability
     of each party hereto to consult,  without  limitation of any kind,  any tax
     advisor  (including  a tax  advisor  independent  from all  other  entities
     involved in the Merger)  regarding the federal tax treatment or federal tax
     structure  of the  Merger.  Any  information  relating  to the  federal tax
     treatment  or  federal  tax   structure   shall   remain   subject  to  the
     confidentiality  provisions  hereof (and the foregoing  sentence  shall not
     apply) to the extent  reasonably  necessary  to enable the parties  hereto,
     their  affiliates,  directors  and  employees  to  comply  with  applicable
     securities  laws.  This  provision  is  intended  to  comply  with  Section
     1.6011-4(b)(3)(ii)(B)  of the Treasury Regulations and shall be interpreted
     consistently  therewith.  The parties hereto  acknowledge that this written
     authorization  does not  constitute a waiver by any party of any  privilege
     held  by  such  party  pursuant  to the  attorney-client  privilege  or the
     confidentiality privilege of Code Section 7525(a).

          Section 7.03  Members'  Meeting.  After the date  hereof,  the Company
     shall call a meeting of its Members (the "Members'  Meeting") to be held as
     promptly as  practicable  for the purpose of voting upon this Agreement and
     the Merger and related  matters.  The Company  will,  through its  Manager,
     recommend  to the Members  adoption of this  Agreement  and approval of the
     Merger.  Notwithstanding  the  foregoing,  on the date hereof,  the Company
     shall cause to be delivered to the Acquiror the executed  Voting  Agreement
     representing  the  requisite  Member  Approval to approve  this  Agreement,
     consummation  of the Merger and the  transactions  contemplated  herein and
     thereby.

          Section 7.04 Allocation.  The parties have jointly  determined and set
     forth  in  Exhibit  H  the  proper   allocation  of  the  Aggregate  Merger
     Consideration  (and other  relevant  items) among the assets of the Company
     based upon their fair market values on the Closing Date in accordance  with
     Section  1060  of  the  Code  and  the  Treasury  Regulations   promulgated
     thereunder  (the  "Allocation").  The Allocation  shall be binding upon the
     Acquiror Parties,  the Company, and the Surviving Company, and none of them
     shall file, or cause to be filed, any Tax Return,  Internal Revenue Service
     Form 8594 or other form, or take a position with any Government Agency that
     is inconsistent with the Allocation.  None of the parties shall be required
     to engage any appraiser or other Person in connection  with the Allocation,
     and the fees and  disbursements of any appraiser or other Person engaged by
     or on behalf of any party in connection  with the Allocation  shall be paid
     by the party engaging such appraiser or other Person.



                                       24

<PAGE>

     Section 7.05 Payments to Third Parties at Closing. At Closing, the Acquiror
shall pay the following amounts on behalf of the Company:

          (a) The Acquiror shall deliver the Bank Prepayment  Amount (if any) to
     the Bank in accordance with its payment instructions.

          (b) The Acquiror shall deliver the FASA Payment to FASA Corporation in
     accordance with its payment instructions.

          (c) The Acquiror  shall deliver  Applicable  Transaction  Costs to the
     Persons owed such amounts, to the extent not paid prior to Closing, by wire
     transfer  in  immediately  available  funds  to  the  account  or  accounts
     designated by the applicable Persons prior to Closing.

     Section 7.06 Payments of Deferred  Compensation.  The Acquiror  Parties and
the Surviving Company shall pay all Deferred  Compensation  within 60 days after
the Closing Date.

     Section 7.07 Transfer  Taxes.  The Acquiror  shall be liable for and pay to
the  applicable  Government  Agencies of the State of Washington  all applicable
sales  and use  taxes  (if any)  resulting  from the  transactions  contemplated
hereby.  The Acquiror shall be liable for and pay to the  applicable  Government
Agencies all other applicable sales, use, transfer,  recording,  deed, stamp and
other similar  taxes,  including  any real property  transfer or gains taxes (if
any), resulting from the transactions  contemplated hereby;  provided,  however,
that half of the amount by which  such  taxes  exceed  $5,000  shall  constitute
current  liabilities  of the Company  for  purposes  of the  calculation  of Net
Working Capital under Section 3.04.

     Section 7.08 Tax Matters.

          (a) The parties shall cooperate fully, as and to the extent reasonably
     requested by the other party,  in connection with the filing of Tax Returns
     and any audit,  litigation or other proceeding with respect to Taxes.  Such
     cooperation  shall  include  the  retention  and (upon  the  other  party's
     request) the  provision  of records and  information  which are  reasonably
     relevant  to any such  audit,  litigation  or other  proceeding  and making
     employees  available on a mutually  convenient basis to provide  additional
     information and explanation of any material provided hereunder. The parties
     further agree, upon request,  that they and the Member  Representative will
     use their best efforts to obtain any certificate or other document from any
     Tax Authority or any other person as may be necessary to mitigate,  reduce,
     or eliminate any Tax that could be imposed  (including  with respect to the
     transactions contemplated hereby).

          (b)  The  Member   Representative   shall  have  sole   authority  and
     responsibility  for the  preparation  and  filing,  at the  expense  of the
     Company Interestholders, of (i) all Tax Returns for the Company for all tax
     periods (or portions thereof) ending on or before the Closing Date and (ii)
     all final Tax Returns for the Company due to the transactions  contemplated
     herein.



                                       25


<PAGE>

          (c) The Acquiror  shall  prepare or cause to be prepared,  and file or
     cause to be filed,  any Tax  Returns  of the  Company  for all Tax  periods
     beginning before the Closing Date but ending after the Closing Date (each a
     "Straddle Period").  The Acquiror shall permit the Member Representative to
     review each such Tax Return  sufficiently  in advance of filing  thereof to
     allow the Member  Representative to propose  revisions,  which the Acquiror
     shall not unreasonably refuse to accept. For purposes of this Section 7.08,
     in the case of any  Taxes  that are  imposed  on a  periodic  basis and are
     payable for a Straddle Period, the portion of such Tax which relates to the
     portion of such Straddle Period ending on the Closing Date shall (i) in the
     case of any Taxes  other  than  Taxes  based  upon or  related to income or
     receipts,  be deemed to be the amount of such Tax for the  entire  Straddle
     Period  multiplied  by a fraction  the  numerator of which is the number of
     days in the Straddle  Period ending on the Closing Date and the denominator
     of which is the number of days in the entire Straddle  Period,  and (ii) in
     the case of any Tax based upon or related to income or receipts,  be deemed
     equal to the amount which would be payable if the relevant  Straddle Period
     ended on the Closing Date. All  determinations  necessary to give effect to
     the foregoing  allocations  shall be made in a manner consistent with prior
     practice of the Company.

     Section 7.09 Directors' and Officers' Indemnification and Insurance.

          (a) For the period of six years after the Closing, the Acquiror shall,
     to the extent  permitted  by  applicable  law,  ensure  that the  Governing
     Documents  of the  Surviving  Company  shall  contain  provisions  no  less
     favorable  with  respect to the  elimination  of  liability  of members and
     managers  and the  indemnification  of (and  advancement  of  expenses  to)
     members, managers, officers, employees and agents that are set forth in the
     Governing Documents of the Company, as in effect on the date hereof.

          (b) Without  limiting  Section  7.09(a),  from and after the Effective
     Time, the Surviving Company shall indemnify,  defend and hold harmless each
     person  who is now,  or has  been at any  time  prior  to the  date of this
     Agreement or who becomes  prior to the Effective  Time, a member,  manager,
     officer,  employee or agent of the Company  (collectively,  the  "Surviving
     Company  Indemnified  Parties")  against  all losses,  reasonable  expenses
     (including  reasonable  attorneys' fees), claims,  damages,  liabilities or
     amounts that are paid in settlement of, or otherwise in connection with any
     Claim,  based in whole or in part on or  arising in whole or in part out of
     the fact  that the  Surviving  Company  Indemnified  Party  (or the  person
     controlled by the Surviving Company  Indemnified Party) is or was a member,
     manager,  officer,  employee or agent of the Company and  pertaining to any
     matter  existing or arising  out of actions or  omissions  occurring  at or
     prior to the Effective  Time,  whether  asserted or claimed prior to, at or
     after the  Effective  Time,  in each case to the fullest  extent  permitted
     under the Delaware Act, and shall pay any expenses, as incurred, in advance
     of the final disposition of any such action or proceeding to each Surviving
     Company  Indemnified  Party  to the  fullest  extent  permitted  under  the
     Delaware Act. Without  limiting the foregoing,  in the event any such Claim
     is brought against any of the Surviving Company  Indemnified  Parties,  (i)
     such Surviving Company  Indemnified  Parties may retain counsel  (including
     local  counsel)   satisfactory  to  them  and  which  shall  be  reasonably
     satisfactory  to Acquiror  and the  Surviving  Company,  and the  Surviving
     Company shall pay, jointly and severally,  all reasonable fees and expenses
     of such counsel for such Surviving Company  Indemnified  Parties;  and (ii)
     the  Surviving  Company shall use all  reasonable  efforts to assist in the
     defense of any such Claim, provided that the Surviving Company shall not be



                                       26


<PAGE>

     liable for any settlement  effected  without their written  consent,  which
     consent  shall  not  be  unreasonably  conditioned,  withheld  or  delayed.
     Notwithstanding the foregoing, nothing contained in this Section 7.09 shall
     be deemed to grant any right to any  Surviving  Company  Indemnified  Party
     which is not  permitted to be granted to a member,  officer,  employee,  or
     agent of the Company  under the Delaware  Law,  assuming for such  purposes
     that  the   Company's   Governing   Documents   provide   for  the  maximum
     indemnification  permitted  by law.  Notwithstanding  the  foregoing,  this
     Section  7.09(b) shall not apply to any Claim arising out of this Agreement
     or any of the transactions contemplated hereby.

          (c) For a period of six years  from the  Closing  Date,  the  Acquiror
     shall, or the Acquiror shall cause the Surviving  Company to, maintain,  to
     the extent commercially  available,  the following directors' and officers'
     insurance and indemnification policies ("D&O Insurance"):

          (i) D&O Insurance  which provides  coverage in the same amounts and on
     terms no less advantageous than the Acquiror's then existing  directors and
     officers for events  occurring  during the Claim Period for all persons who
     are  managers  or  officers  of the  Company on the date of this  Agreement
     (naming the  managers  and  officers  listed in Section 4.02 of the Company
     Disclosure  Schedule);  provided,  however,  that the Acquiror shall not be
     required to expend in order to maintain or procure such D&O  Insurance  any
     amount  per annum in excess of 150  percent  of the  aggregate  of the last
     annual premiums for such D&O Insurance, but if the cost of maintaining such
     D&O Insurance (or providing  such new policies)  would but for this proviso
     exceed such aggregate amount,  then the Acquiror or Surviving Company shall
     purchase as much coverage as possible for such amount; and

          (ii) Extended  reporting (i.e.,  run-off or tail)  endorsements to the
     Insurance  Policies  that  provide  directors'  and  officers',  employment
     practices,  and/or fiduciary  coverage,  providing coverage for all persons
     who are  managers or officers of the Company on the date of this  Agreement
     and for all former  managers or officers  of the  Company  with  respect to
     events  occurring  prior to the  Effective  Time  (with the same  coverage,
     limits and  deductibles as the  corresponding  Insurance  Policies,  unless
     otherwise  agreed  by the  Member  Representative),  without  any  gaps  in
     coverage.

          (d) The  provisions  of this  Section  7.09 are intended to be for the
     benefit  of,  and  will  be  enforceable   by,  each  person   entitled  to
     indemnification hereunder and the heirs and representatives of such person.
     The  Acquiror  will not  permit  the  Surviving  Company  to be  merged  or
     consolidated with any other person unless the surviving or resulting entity
     assumes the obligations imposed by this Section 7.09.

     Section 7.10 Insurance Policies. From and after the Closing Date, and until
the expiration of the Claim Period, except with the prior written consent of the
Member Representative, which consent may be withheld in his sole discretion, the
Acquiror shall,  or the Acquiror shall cause the Surviving  Company to, maintain
substantially  similar coverage as provided under the Insurance  Policies (other
than  the D&O  Insurance)  (with  substantially  similar  coverage,  limits  and
deductibles to the Insurance Policies, covering the assets, business, equipment,
properties,  operations,  employees,  and  officers of the  Surviving  Company),
without any gaps in coverage;  provided, however, that the Acquiror shall not be
required to expend in order to maintain or procure  insurance  coverage pursuant
to this paragraph any amount per annum in excess of $300,000, but if the cost of
maintaining  such insurance (or providing such new policies)  would but for this
proviso exceed such  aggregate  amount,  then the Acquiror or Surviving  Company
shall purchase as much coverage as possible for such amount.



                                       27


<PAGE>

     Section 7.11 Topps  Credit  Facility.  The  Acquiror  Parties will take all
actions necessary for the Surviving Company (a) to replace at Closing the letter
of credit from the Bank to Lucky Yeh  International  Ltd.  (Hong  Kong),  (b) to
replace  at  Closing  the  letter of  credit  from the Bank to  Electronic  Arts
Seattle,  Inc. under that certain sublease between Electronic Arts Seattle, Inc.
as sublandlord and the Company as tenant,  and (c) to become a guarantor  within
ten  business  days of the  Closing  Date as  required  by Section  5.14 of that
certain  Credit  Agreement  dated as of June 26,  2000 (as  amended by the First
Amendment  dated as of April 11, 2001, the Second  Amendment dated as of October
19, 2001 and the Third  Amendment  dated as of June 1, 2002) among the Acquiror,
the Holding Company, Finance and the Chase Manhattan Bank, as agent.

     Section  7.12  Employee  Benefits  and  Bonus  Plans.  From and  after  the
Effective Time, until February 28, 2004, the Acquiror Parties shall ensure that:

          (a) The  Surviving  Company shall  maintain  both (i) a  discretionary
     employee bonus plan of $50,000 in the aggregate per fiscal year,  available
     for payment to any employee of the Surviving Company at the sole discretion
     of the  Manager,  and  (ii)  the  five-plus-five  employee  incentive  plan
     described in Section  4.23 of the Company  Disclosure  Schedule,  unless in
     each case the  Acquiror  obtains  the prior  written  consent of the Member
     Representative, which consent may be withheld in his sole discretion.

          (b)The  Surviving  Company shall provide its employees with health and
     welfare benefits substantially similar, in the aggregate, to those provided
     as of the Closing  Date under the Benefit  Plans  listed in Section 4.23 of
     the  Company  Disclosure  Schedule  in terms of the scope of  coverage  of,
     access to, and the cost to employees of, such Benefit Plan.

          (c) The  Surviving  Company  shall  maintain  the Wizkids  401(k) Plan
     listed in Schedule 4.23 of the Company  Disclosure  Schedule in its current
     form, pursuant to the transition rule in Code Section  410(b)(6)(C),  shall
     take any actions  needed to maintain its qualified  status,  and shall make
     employer  matching  contributions  in  accordance  with the Plan (except as
     limited by applicable nondiscrimination rules).

     Section  7.13  Certain  Employment  Agreements.  Between  the  date of this
Agreement and the Closing Date or earlier  termination  of this  Agreement,  the
Company and the Acquiror Parties will use their respective reasonable efforts to
obtain the following  agreements,  each to be effective at the  Effective  Time:
amended employment agreements with certain executive Company Employees to narrow
the  scope  of  permitted  activities  under  their  agreements  and  to  remove
references to status as a Member of the Company.



                                       28

<PAGE>

                                   ARTICLE 8.
                            CONDITIONS TO THE MERGER


     Section 8.01  Conditions  to Each Party's  Obligation to Effect the Merger.
The  respective  obligations of each party to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of the following conditions:

          (a) Member  Approval.  This  Agreement  shall have been adopted by the
     Members by the requisite vote at the Members' Meeting.

          (b) No  Injunctions  or Restraints.  No temporary  restraining  order,
     preliminary  or permanent  injunction or other order issued by any court or
     other   Government   Agency  of  competent   jurisdiction   preventing  the
     consummation  of the  Merger  shall  be  pending  or in  effect;  provided,
     however, that prior to invoking this condition, each party hereto shall use
     all  commercially  reasonable  efforts to have any such injunction or other
     order vacated.

          (c)  Statutes.  No  Law  shall  have  been  enacted,  promulgated,  or
     otherwise  issued by any  Government  Agency with authority to enforce such
     Law, which would make consummation of the Closing illegal.

          (d) Bank Approval. The Company shall have received a payoff or similar
     letter from the Bank,  including  (i) its  approval as necessary to avoid a
     Violation  of  material  terms of the  Loan  Agreement  as a result  of the
     Merger,  including  agreement of the Bank (to the extent required under the
     Loan Agreement) to receive payment of the Bank Prepayment  Amount, and (ii)
     such other  documents as are  necessary to release of all Liens of the Bank
     on the assets of the Company.

          (e) FASA  Payoff  Letter.  The  Company  shall have  received  written
     confirmation from FASA as to the amount of the FASA Payment.

          (f) Material Consents of the Company.  The Company shall have received
     the consents listed on Section 8.01(f) of the Company Disclosure  Schedule;
     provided,  however, that, notwithstanding anything to the contrary, neither
     the Company nor any member of the Company  Group shall have any  obligation
     whatsoever to pay any fee or other charge  imposed or demanded with respect
     to any such consents.

     Section 8.02  Conditions to the  Obligations of the Acquiror and the Merger
Subsidiary.  The obligations of the Acquiror and the Merger Subsidiary to effect
the Merger  shall be subject to the  satisfaction  at or prior to the  Effective
Time of each of the following conditions,  any of which may be waived, solely in
writing, and exclusively by the Acquiror:

          (a) Representations and Warranties. The representations and warranties
     of the Company  contained  in Article 4 hereof (i) shall have been true and
     correct  when  made  and  (ii)  except  for  changes  contemplated  by this
     Agreement and except to the extent that such representations and warranties
     relate to a  particular  date,  shall be true and correct as of the Closing
     Date as though  made on that date.  For  purposes of this  Section  8.02(a)
     only,  all such  representations  and  warranties (x) shall be read without
     regard to any  materiality or Company  Material  Adverse Effect  qualifiers
     contained  therein and (y) after taking clause (x) into  account,  shall be
     deemed to be true and  correct  unless  breaches or  inaccuracies  thereof,
     individually or in the aggregate, result or would reasonably be expected to
     result in a Company Material Adverse Effect.



                                       29

<PAGE>

          (b)  Covenants.  The Company shall have  performed and complied in all
     material  respects with all covenants and obligations  under this Agreement
     required  to be  performed  and  complied  with  by the  Company  as of the
     Closing.

          (c)  Closing  Certificate  of the  Company.  The  Acquiror  shall have
     received  a  certificate  executed  on  behalf  of  the  Company  by a duly
     authorized  officer of the Company and dated as of the Closing  Date (i) to
     the effect,  as of the  Closing,  of Section  8.02(a)  and Section  8.02(b)
     (unless  otherwise  waived in accordance  with the terms  thereof) and (ii)
     that  attached to such  certificate  is a true copy of a resolution  of the
     members of the Company, which resolutions authorize the execution, delivery
     and performance of this Agreement and the transactions contemplated herein.

          (d) No Company  Material  Adverse  Effect.  During the period from the
     date hereof to the Closing  Date,  there shall not have  occurred any event
     which has had or is reasonably  likely to have a Company  Material  Adverse
     Effect.

          (e) Legal  Opinion.  Acquiror  and the  Merger  Subsidiary  shall have
     received  the opinion of Davis  Wright  Tremaine  LLP in the form  attached
     hereto as Exhibit I.

          (f) Jordan Weisman Employment Agreement.  Jordan K. Weisman shall have
     entered into the Jordan Weisman Employment Agreement.

          (g) Certain  Employment  Arrangements.  The Company shall have entered
     into an  independent  contractor  agreement  with  the  President,  WizKids
     Media/Licensing   Division,  and  they  shall  have  terminated  all  other
     agreements between them.

     Section 8.03  Conditions to Obligations of the Company.  The obligations of
the  Company  to  consummate  and  effect  the  Merger  shall be  subject to the
satisfaction  at or  prior  to the  Effective  Time  of  each  of the  following
conditions,  any of which may be waived,  solely in writing,  and exclusively by
the Company:

          (a) Representations and Warranties. The representations and warranties
     contained  in Article 5 hereof (i) shall  have been true and  correct  when
     made and (ii) except for changes  contemplated by this Agreement and except
     to  the  extent  that  such  representations  and  warranties  relate  to a
     particular date, shall be true and correct as of the Closing Date as though
     made on that date.  For purposes of this  Section  8.03(a)  only,  all such
     representations  and  warranties  (x) shall be read  without  regard to any
     materiality or Company Material Adverse Effect qualifiers contained therein
     and (y) after taking  clause (x) into  account,  shall be deemed to be true
     and correct unless breaches or inaccuracies thereof, individually or in the
     aggregate,  result or would  reasonably  be expected to result in a Company
     Material Adverse Effect.

          (b)  Covenants.  The  Acquiror  and the Merger  Subsidiary  shall have
     performed  and complied in all material  respects  with all  covenants  and
     obligations under this Agreement required to be performed and complied with
     by the Acquiror or the Merger Subsidiary as of the Closing.



                                       30

<PAGE>

          (c) Closing  Certificate  of the Acquiror  Parties.  The Company shall
     have  received a  certificate  executed  on behalf of each of the  Acquiror
     Parties  and the Merger  Subsidiary  by their  respective  duly  authorized
     officers or  representatives  and dated as of the  Closing  Date (i) to the
     effect,  as of the Closing,  of Section 8.03(a) and Section 8.03(b) (unless
     otherwise  waived  in  accordance  with the  terms  thereof)  and (ii) that
     attached to such certificate is a true copy of a resolution of the board of
     directors of each of the Acquiror Parties and the sole member of the Merger
     Subsidiary,  which  resolutions  authorize  the  execution,   delivery  and
     performance of this Agreement and the transactions contemplated herein.

          (d) Closing Payments. (i) The Acquiror and the Merger Subsidiary shall
     have   delivered   by  wire   transfer  the  full  amount  of  the  Initial
     Consideration,  the Bank shall have received the Bank Prepayment Amount (if
     any), and FASA Corporation  shall have received the FASA Payment,  and (ii)
     the  Company  shall  have  satisfactory  evidence  of the  receipt  of such
     amounts.

          (e) Legal Opinion.  The Member  Representative shall have received the
     opinion of Willkie Farr & Gallagher in the form attached  hereto as Exhibit
     J.

          (f) Manager and CEO. Jordan K. Weisman shall be the duly appointed and
     acting Manager and Chief Executive  Officer of the Surviving  Company,  and
     the Acquiror and the  Surviving  Company shall have entered into the Jordan
     Weisman Employment Agreement.


                                   ARTICLE 9.
                       TERMINATION, AMENDMENT AND WAIVER

     Section 9.01  Termination.  This Agreement may be terminated and the Merger
abandoned at any time prior to the Closing, only in one of the following ways:

          (a) By mutual agreement of the Company and the Acquiror.

          (b) By the  Acquiror  or the  Company  if the  Closing  shall not have
     occurred by July 15, 2003 (the "Outside Date").

          (c) By the  Acquiror  or the  Company  if (i)  there  shall be a final
     non-appealable  order of a  Federal  or state  court in  effect  preventing
     consummation  of the  Merger  or  (ii)  there  shall  be any  Law  enacted,
     promulgated or issued or deemed applicable to the Closing by any Government
     Agency with authority to enforce such Law, which would make consummation of
     the Closing illegal.

          (d) By the  Acquiror  if (i)  it is  not  in  material  breach  of its
     obligations  under this Agreement,  (ii) all other  conditions to close set
     forth in Section 8.01 and Section 8.02 have been  satisfied or waived as of
     the date of termination of this Agreement (or are to be satisfied or waived
     at  Closing),   and  (iii)  there  has  been  a  material   breach  of  any
     representation, warranty, covenant or agreement of the Company contained in
     this Agreement  such that the  conditions  set forth in Section  8.02(a) or
     Section  8.02(b)  would not be satisfied and such breach has not been cured
     within  ten  calendar  days after  written  notice  thereof to the  Company
     promptly  after the  occurrence  of such breach by the  Company;  provided,
     however,  that no cure period  shall be required  for a breach which by its
     nature cannot be cured.


                                       31


<PAGE>

          (e)  By the  Company  if (i)  it is  not  in  material  breach  of its
     obligations  under this Agreement,  (ii) all other  conditions to close set
     forth in Section 8.01 and Section 8.03 have been  satisfied or waived as of
     the date of termination of this Agreement (or are to be satisfied or waived
     at  Closing),   and  (iii)  there  has  been  a  material   breach  of  any
     representation,  warranty,  covenant or agreement of the Acquiror contained
     in this Agreement such that the conditions set forth in Section  8.03(a) or
     Section  8.03(b)  would not be satisfied and such breach has not been cured
     within ten  calendar  days after  written  notice  thereof to the  Acquiror
     promptly  after the  occurrence of such breach by the  Acquiror;  provided,
     however,  that no cure period  shall be required  for a breach which by its
     nature cannot be cured.

          (f) By the  Company  if there has been a breach in any  respect of any
     representation or warranty by the Acquiror  contained in Section 5.08 as if
     such  representation or warranty were made as of the date of termination of
     this Agreement.

     Section 9.02 Effect of  Termination.  In the event of  termination  of this
Agreement as provided in Section 9.01,  this Agreement  shall  forthwith  become
void and there shall be no  liability  or  obligation  on the part of any of the
parties hereto;  provided,  however,  that each party hereto shall remain liable
for any  breaches  of this  Agreement  prior to its  termination;  and  provided
further,  that the provisions of Section 7.02, this Section 9.02, Section 11.09,
and  all  provisions  of  that  certain  Non-Disclosure  Agreement  dated  as of
September   4,  2002,   by  and  between  the  Acquiror  and  the  Company  (the
"Confidentiality Agreement"),  shall remain in full force and effect and survive
any termination of this Agreement.

     Section 9.03  Amendment.  This  Agreement may be amended by execution of an
instrument only in a writing signed (a) at any time on or prior to the Effective
Time,  by each of the  Acquiror  and the  Company  and (b) at any time after the
Effective Time, by each of the Acquiror,  the Surviving Company,  and the Member
Representative.

     Section  9.04  Extension;  Waiver.  At any time prior to the  Closing,  the
Acquiror,  on behalf of  itself,  the other  Acquiror  Parties,  and the  Merger
Subsidiary,  may, and the Company may, to the extent legally allowed, (a) extend
the  time for the  performance  of any of the  obligations  of the  other  party
hereto, (b) waive any inaccuracies in the representations and warranties made to
such party contained herein or in any document  delivered  pursuant hereto,  and
(c) waive compliance with any of the agreements or conditions for the benefit of
such party contained herein.  Any agreement on the part of a party hereto to any
such  extension or waiver shall be valid only if set forth in an  instrument  in
writing  signed  on  behalf  of such  party.  Any  waiver  by any  party  of any
condition,  or the breach of any provision,  term,  covenant,  representation or
warranty contained in this Agreement, in any one or more instances, shall not be
deemed  to be nor  construed  as a  further  or  continuing  waiver  of any such
condition,   or  of  the  breach  of  any  other  provision,   term,   covenant,
representation or warranty of this Agreement.



                                       32

<PAGE>

                                  ARTICLE 10.
                                INDEMNIFICATION

     Section 10.01 Survival.  Notwithstanding  anything in this Agreement to the
contrary,  all representations,  warranties,  and covenants (including those set
forth in Section  10.02) made by the  Acquiror,  the Merger  Subsidiary,  or the
Company in this  Agreement,  or in any  certificate  delivered  pursuant to this
Agreement, shall survive the Closing and continue thereafter for the duration of
the   applicable   statute  of   limitations;   provided,   however,   that  all
representations,  warranties, and covenants made by the Company shall expire and
be terminated and  extinguished on the 18 month  anniversary of the Closing Date
(the  "Claim  Period");  provided,  further,  that a Claim  set forth in a Claim
Notice  delivered in accordance with this Agreement before the expiration of the
Claim Period shall survive until, but only for the purpose of, the resolution of
such Claim.

     Section 10.02 Indemnification on Behalf of the Company. Notwithstanding the
Closing and regardless of any  investigation at any time made by or on behalf of
the Acquiror or any of its representatives or affiliates, or of any knowledge or
information  that the Acquiror or any of its  representatives  or affiliates may
have,  commencing  at the  Effective  Time and upon the terms and subject to the
conditions  in this Article 10, the  Surviving  Company  shall  (solely by claim
against the balance of the Indemnification Escrow Funds, to the extent permitted
under Section 10.08) be indemnified  from and reimbursed for all Damages imposed
on or  reasonably  incurred  by the  Surviving  Company  as a result  of (a) any
breach,  inaccuracy or violation of any  representation  or warranty made by the
Company in Article 4 hereof or in the certificate  delivered pursuant to Section
8.02(c) and (b) any  violation  by the Company of any  covenant or  agreement in
this  Agreement or any other  agreement  delivered  hereunder to be performed or
complied with by the Company.  Solely for purposes of determining  whether there
was a breach,  inaccuracy or violation under clause (a) above,  and for purposes
of calculating the amount of any Damages  therefrom,  any and all qualifications
as to "Company Material Adverse Effect" and "material" in Article 4 hereof shall
be disregarded, except in Section 4.09 (No Company Material Adverse Effect).

     Section 10.03 Indemnification by the Acquiror Parties.  Notwithstanding the
Closing and regardless of any  investigation at any time made by or on behalf of
the  Company  Group or any of their  representatives  or  affiliates,  or of any
knowledge or information that the Company Group or any of their  representatives
or affiliates may have,  commencing at the Effective Time and upon the terms and
subject to the  conditions  in this  Article  10,  the  Acquiror  Parties  shall
indemnify the Company Group and their respective heirs,  successors and assigns,
and hold each of them harmless,  from and against any and all Damages imposed on
or reasonably incurred by any of them as a result of (a) any breach,  inaccuracy
or violation of any  representation  or warranty made by the Acquiror Parties in
Article 5 hereof or in the certificate delivered pursuant to Section 8.03(c) and
(b)  any  violation  by any of  the  Acquiror  Parties,  Merger  Subsidiary,  or
Surviving  Company of any covenant or  agreement in this  Agreement or any other
agreement  delivered  hereunder to be  performed or complied  with by any of the
Acquiror Parties, Merger Subsidiary, or Surviving Company.



                                       33

<PAGE>

     Section 10.04 Claim Notice.  Upon obtaining  knowledge of any Claim or item
of Damages  which has given rise to, or could  reasonably  give rise to, a claim
for  indemnification  or  reimbursement   hereunder,   the  Person  entitled  to
indemnification or reimbursement  hereunder (the "Indemnified  Party") shall, as
promptly as reasonably practicable after obtaining such knowledge,  give written
notice of such claim (a "Claim Notice") to the Person  responsible for providing
indemnification or reimbursement  hereunder or, solely for the purpose of claims
against the  Indemnification  Escrow Funds,  to the Member  Representative  (the
"Indemnifying  Party").  The Claim Notice  shall  include a  description  of the
Damages paid or incurred by the  Indemnified  Party,  the date when such Damages
were  paid  or  incurred,  the  nature  of  the  basis  for  indemnification  or
reimbursement therefor, a good faith estimate of the amount of the claim (or, if
it is not  practicable to determine such estimate,  the amount  proposed in good
faith to be reserved with respect to such claim), and all material facts related
to such Damages.  The Indemnified Party shall furnish to the Indemnifying  Party
in good faith and in reasonable detail such information as the Indemnified Party
may have with respect to such  indemnification or reimbursement claim (including
copies of any summons, complaint or other pleading which may have been served on
it and any written claim, demand, invoice,  billing or other document evidencing
or  asserting  the same).  No failure or delay by the  Indemnified  Party in the
performance   of  the   foregoing   shall   reduce  or   otherwise   affect  the
indemnification  or reimbursement  obligations  hereunder,  except to the extent
that such  failure  or delay  shall have  adversely  affected  the  Indemnifying
Party's  ability to defend  against,  settle or satisfy any  liability,  damage,
loss,  claim  or  demand  for  which  the  Indemnified   Party  is  entitled  to
indemnification or reimbursement hereunder.

     Section  10.05  Third-Party  Claims.  If any  claim  set forth in the Claim
Notice  pursuant  to Section  10.04 is a Claim  asserted by a third  party,  the
Indemnifying  Party shall have 30 days after the receipt of the Claim  Notice to
notify the Indemnified Party in writing of the Indemnifying  Party's election to
defend such Claim on behalf of the Indemnified  Party. If the Indemnifying Party
elects to defend such Claim,  the Indemnified  Party shall make available to the
Indemnifying Party and its agents and representatives  all witnesses,  pertinent
records,  materials and  information in the  Indemnified  Party's  possession or
under  the  Indemnified  Party's  control  as  is  reasonably  required  by  the
Indemnifying   Party  and  shall   otherwise   cooperate  with  and  assist  the
Indemnifying  Party in the  defense of such Claim.  So long as the  Indemnifying
Party is defending  such Claim in good faith,  the  Indemnified  Party shall not
pay, settle or compromise such Claim. If the Indemnifying Party elects to defend
such Claim, the Indemnified  Party shall have the right, but not the obligation,
to  participate  in the defense of such Claim,  at the  Indemnified  Party's own
expense.  In the event the  Indemnifying  Party  shall  assume the  defense,  no
compromise  or  settlement  of such claims may be  effected by the  Indemnifying
Party  without the  Indemnified  Party's  consent  (which  consent  shall not be
unreasonably  withheld,  conditioned,  or delayed,  provided,  however, that the
Indemnified  Party  may  withhold  such  consent  at its  discretion  if, in its
judgment,  such  compromise  or settlement  would have an adverse  impact on the
future  operations of the Indemnified  Party or the Surviving  Company).  If the
Indemnifying  Party  does not elect to  defend  such  Claim or does not  defend,
contest or otherwise  protect against such claim in good faith,  the Indemnified
Party shall have the full right, in addition to any other right or remedy it may
have  hereunder,  to defend  against such claim,  action or  proceeding  in such
manner as it may deem appropriate, including the right to make any compromise or
settlement  thereof  (subject to the consent of the  Indemnifying  Party,  which
consent shall not be unreasonably withheld),  and the Indemnified Party shall be
entitled  to recover  the  entire  cost  thereof  from the  Indemnifying  Party,
including  reasonable  attorneys'  fees,  disbursements  and amounts paid as the
result of such  Proceeding,  and the  Indemnifying  Party  shall be bound by any
determination  made in such Proceeding or any compromise or settlement  effected
by the Indemnified Party.



                                       34

<PAGE>

     Section 10.06 Cap and Deductible. Notwithstanding anything to the contrary:

          (a) No  member  of the  Acquiror  Group  shall  be  indemnified,  held
     harmless or  reimbursed,  for any Damages,  unless and until all Damages of
     the Acquiror  Group  otherwise  reimbursable  under Section  10.02,  in the
     aggregate, collectively exceed $250,000 (the "Deductible"), following which
     the  applicable  member of the Acquiror  Group shall be reimbursed for such
     Damages  (subject to the  provisions of this Article 10) only to the extent
     that such  Damages  exceed the  Deductible  (such  Damages in excess of the
     Deductible are referred to herein as "Covered Claims").

          (b) Any obligations to indemnify,  hold harmless, or reimburse members
     of the  Acquiror  Group under  Section  10.02 will be subject to a cap (the
     "Cap")  equal to the balance of the  Indemnification  Escrow  Funds.  In no
     event shall payment of Damages to the Acquiror Group exceed such Cap.

     Section 10.07  Determination  of Damages.  Notwithstanding  anything to the
contrary:

          (a) Prior to determining  whether there has been a Covered Claim,  the
     amount of any Damages shall first be reduced by (i) any condemnation  award
     or insurance  proceeds  which any member of the Acquiror  Group receives in
     connection  with such item of Damages and (ii) any  insurance  proceeds (in
     addition to, but not in duplication of, the insurance proceeds described in
     clause (i) hereof) that would be  available  under the D&O Policies and the
     Insurance  Policies if the Acquiror  Parties were to comply in all respects
     with the  covenants  under  Section  7.09(c) and Section 7.10  hereof.  The
     Acquiror Parties and Surviving Company shall pursue all such reimbursements
     or  insurance  proceeds  that may  reasonably  be  expected  to  reduce  or
     eliminate  any Damages.  If any member of the Acquiror  Group  receives any
     reimbursements or insurance  proceeds after a payment is made which relates
     thereto,  the Acquiror Parties shall promptly pay, pursuant to Section 3.03
     hereof, such amount of the  indemnification  payment as would not have been
     paid had the  reimbursements  or  insurance  proceeds  reduced the original
     payment (and any such  repayment  shall be a credit  against any applicable
     indemnification threshold or limitation set forth in Section 10.06) at such
     time or times as and to the  extent  that  such  amount  reimbursements  or
     insurance  proceeds is actually received.  In addition,  the Acquiror Group
     shall have  Damages  hereunder  only to the extent that  reserves  for such
     Claims (after the insurance  proceeds and  reimbursements  described in the
     first  sentence of this Section  10.07(a)) have not been accrued for in the
     financial statements of the Company as of the Closing Date.

          (b)  Except to the extent  that any of the  insurance  coverage  would
     thereby be reduced, each of the parties hereby waives any and all rights of
     recovery  against  any  other  party  thereto,  or  against  the  officers,
     employees,  agents or representatives of any party thereto,  for loss of or
     damage to its property or the property of others under its control,  if and
     to the extent  such loss or damage is covered  by any  insurance  policy in
     force applicable to such claim.



                                       35

<PAGE>

     Section 10.08 Exclusive Remedy. Notwithstanding anything to the contrary:

          (a) In the event the Acquiror or the Surviving Company delivers one or
     more Claim Notices  within the Claim Period,  the Acquiror may make a claim
     against the  Indemnification  Escrow Funds to the extent  permitted in this
     Section 10.08(a) and in the Indemnification Escrow Agreement. The amount of
     the claim shall equal the  estimate of the amount of the claim set forth in
     the Claim Notice in accordance  with Section 10.04,  but only to the extent
     such  amounts  constitute  Covered  Claims  under  this  Article  10.  Upon
     resolution  of  the  claim,  the  Acquiror  or  Member  Representative  may
     authorize the Escrow Agent to pay the Surviving  Company  and/or the former
     holders of Company Interests  accordingly from the  Indemnification  Escrow
     Funds.

          (b)  Notwithstanding  anything  to the  contrary,  absent  fraud,  the
     provisions  of this  Article  10 shall be the  sole  and  exclusive  remedy
     available  to any  member of the  Acquiror  Group in  connection  with this
     Agreement, the Merger, or any of the transactions  contemplated hereby. The
     sole and exclusive  source of recovery by any member of the Acquiror  Group
     shall be, to the extent provided in Section 10.08(a),  by claim against the
     Indemnification  Escrow  Funds.  Once  amounts  have  been  identified  and
     collected in accordance therewith, the rights, if any, of any member of the
     Acquiror Group under this Article 10 shall terminate absolutely. All claims
     by any  member of the  Acquiror  Group for  reimbursement  shall be made in
     accordance with this Article 10. Notwithstanding  anything to the contrary,
     if,  despite  the  provisions  of this  Article  10, any of the  Members or
     Company  Interestholders  is  obligated  to pay any member of the  Acquiror
     Group, then the Indemnified  Parties shall be required to seek satisfaction
     of applicable Damages from the balance of the Indemnification  Escrow Funds
     prior  to  seeking   recourse   against  any  of  the  Members  or  Company
     Interestholders.

     Section 10.09  Treatment for Tax Purposes.  All payments by an Indemnifying
Party under this Article 10 shall be treated as an  adjustment  to the Aggregate
Merger  Consideration  for all  foreign,  federal,  state,  and local income tax
purposes.


                                  ARTICLE 11.
                               GENERAL PROVISIONS

     Section 11.01 Member Representative.

          (a) Each of the Company  Interestholders  (by virtue of their approval
     of this  Agreement  and the  transactions  contemplated  hereby,  and their
     receipt  of their pro rata  portions  of the  consideration  for the Merger
     under  Article 2 hereof)  hereby  appoints  Jordan K.  Weisman as agent and
     attorney-in-fact,   with  full  power  of  substitution,   as  the  "Member
     Representative" for and on behalf of such holders:  (i) to give and receive
     consents,  notices and  communications,  (ii) to object to any payments due
     and owing by or to such holders  under this  Agreement,  (iii) to negotiate
     and resolve disputes relating to this Agreement, including the negotiation,
     resolution and settlement of any and all claims for  indemnification  under
     and disputes  relating to Article 10, (iv) to agree to, negotiate and enter
     into  settlements  and compromises of, and comply with orders of courts and
     awards of arbitrators with respect to this Agreement and the Merger, (v) to
     agree to,  negotiate and enter into amendments or waivers of a non-material
     term or  provision  of this  Agreement,  (vi) to execute  and  deliver  all
     documents,  such  as  amendments  or  waivers  of a  non-material  term  or
     provision hereof,  (vii) to take all other actions required or permitted to
     be taken by the Member  Representative under this Agreement,  and (viii) to
     take all actions  necessary  or  appropriate  in the judgment of the Member
     Representative  for the  accomplishment  of the  foregoing,  including  the
     execution   and  delivery  of  all  documents  on  behalf  of  the  Company
     Interestholders.



                                       36

<PAGE>

          (b)  Jordan  K.  Weisman  hereby  accepts  his  appointment  as Member
     Representative.

          (c) The Member  Representative  may be removed and replaced  after the
     Effective  Time, from time to time upon not less than 90 days prior written
     notice  to  the  Acquiror  and  the  then-serving  Member   Representative;
     provided,  however,  that the  Member  Representative  may not be  removed,
     except upon the  affirmative  vote of at least 75% of the  Percentages  (as
     defined in the Wizkids  Operating  Agreement)  held by Members  immediately
     prior to the Effective Time  (excluding  Members who participate as sellers
     in the  Member  Escrow  Rights  Transaction)  to  such  removal  and to the
     identity  of the  substituted  Member  Representative.  Any  vacancy in the
     position  of  Member  Representative  may be  filled  solely  by one of the
     following  persons  by the vote of at least 51% of such  Percentages:  Lynn
     Soohoo  Garbarini,  Donald Gorski,  Marc Sachnoff,  or Thomas J. Virgin. No
     bond  shall  be  required  of the  Member  Representative,  and the  Member
     Representative shall not receive compensation for his or her services.  All
     expenses  incurred by the Member  Representative  in performing  his duties
     (including   fees  and   expenses  of   professional   advisors)   and  any
     indemnification to be provided to the Member  Representative shall be borne
     by  each   Company   Interestholder   to  the   extent   of  such   Company
     Interestholder's pro rata portion of the Aggregate Merger Consideration and
     may, at the discretion of the Member  Representative,  be withheld from any
     amount otherwise payable to any Company Interestholder.

          (d) After the Closing Date, the Member  Representative  shall have the
     absolute  right to exercise or refrain from  exercising any right or rights
     that such  Member  Representative  may have by  reason  of this  Agreement,
     including  the right to  consent  to the  waiver of any  obligation  of the
     Acquiror  under  this  Agreement  and to enter into an  agreement  with the
     Acquiror  for the purpose of amending or  modifying  this  Agreement or any
     agreement  effecting any such waiver,  amendment or modification,  and such
     Member  Representative  shall  not  incur  any  liability  to  any  Company
     Interestholder with respect to exercising or refraining from exercising any
     such right or rights.

          (e) The power of  attorney  granted  to the Member  Representative  is
     irrevocable and coupled with an interest.

          (f) After the Closing Date, (i) the Acquiror shall be entitled to rely
     exclusively upon any communications given by the Member  Representative and
     shall not be liable in any manner  whatsoever  for any action  taken or not
     taken in  reliance  upon the actions  taken or not taken or  communications
     made by the Member  Representative  and (ii) the Acquiror shall be entitled
     to  disregard  any notices or  communications  given or made by the Company
     Interestholders unless given or made through the Member Representative.



                                       37

<PAGE>

     Section 11.02 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
messenger or courier service,  or mailed by registered or certified mail (return
receipt  requested)  or sent via  facsimile  (with  acknowledgment  of  complete
transmission)  to the  parties  at the  following  addresses  (or at such  other
address for a party as shall be specified by like  notice);  provided,  however,
that notices sent by mail will not be deemed given until received:

                If to the Company or the        Wizkids, LLC
                Member Representative, to:      11040 Main Street, Suite 100
                                                Bellevue, WA  98004
                                                Attention:  CEO
                                                Facsimile No.: (425) 641-6071

                With a copy to:                 David Wright Tremaine LLP
                                                2600 Century Square
                                                1501 Fourth Avenue
                                                Seattle, WA 98101
                                                Attention:  A. Peter Parsons &
                                                            Jason A. Farber
                                                Facsimile No.: (206) 628-7699


                If to any of the Acquiror       The Topps Company, Inc.
                Parties or the Merger           One Whitehall Street, 5th Floor
                Subsidiary, to:                 New York, NY 10004
                                                Attention: CEO & General Counsel
                                                Facsimile No.: (212) 376-0573

                With a copy to:                 Willkie Farr & Gallagher
                                                787 Seventh Avenue
                                                New York, NY 10019
                                                Attention:  Steven J. Gartner
                                                Facsimile No.: (212) 728-8111


     Section  11.03   Interpretation.   The  words  "include,"   "includes"  and
"including"  when used herein shall be deemed in each case to be followed by the
words "without limitation." The words "hereof," "herein," "hereby," "hereunder,"
and similar terms in this  Agreement  refer to this Agreement as a whole and not
to any particular  provision of this Agreement.  Article,  section,  subsection,
exhibit,  and  schedule  references  are  to  this  Agreement  unless  otherwise
specified.  The table of contents and headings  contained in this  Agreement are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation  of this  Agreement.  Whenever used herein,  the singular  number
shall include the plural, the plural shall include the singular,  and the use of
any gender shall be  applicable  to both  genders.  All  references  to monetary
amounts  are to  currency  of the  United  States  of  America.  If  performance
hereunder  is due on any date  which  falls on a  Saturday,  Sunday or a bank or
legal  holiday,  such  due date  shall be  extended  until  the next  succeeding
business day. The Acquiror Parties are jointly and severally responsible for the
performance and compliance of each other hereunder;  every covenant or agreement
of an Acquiror  Party  herein  includes  the  obligation  of the other  Acquiror
Parties  to cause  the  performance  of and  compliance  with the  terms of such
covenant or agreement.



                                       38

<PAGE>

     Section 11.04  Disclosure  Schedules.  The Company has arranged the Company
Disclosure  Schedule in sections  corresponding  to the  numbered  and  lettered
sections  contained in Article 4 of this  Agreement,  but the disclosures in any
section of the Company  Disclosure  Schedule  shall qualify any other section in
Article 4 to the extent  such  disclosure  relates to such  other  section.  The
Acquiror has arranged the Acquiror Disclosure Schedule in sections corresponding
to  the  numbered  and  lettered  sections  contained  in  Article  5,  but  the
disclosures in any section of the Acquiror Disclosure Schedule shall qualify any
other section in Article 5 to the extent such  disclosure  relates to such other
section.  The  Company  shall have the right,  at Closing or at any time  before
Closing,  to deliver to the Acquiror one or more certificates,  duly executed by
an Member Representative of the Company, which supplement the Company Disclosure
Schedule (the "Additional  Disclosures"),  which Additional Disclosures shall be
limited to events or matters  that arise or  otherwise  occur  after the date of
this  Agreement,  but not as a result of a material breach by the Company of any
of its covenants or agreements  contained herein. With respect to any Additional
Disclosure,  the  Acquiror  may  refuse  to close  only if an  event  or  matter
disclosed  in such  Additional  Disclosure  has had a Company  Material  Adverse
Effect that causes the  condition in Section  8.02(a)  (with  respect to certain
breaches  of  the  representations  and  warranties  of the  Company)  not to be
satisfied as of the Closing Date.  Disclosure of any fact or item in the Company
Disclosure Schedule or any Additional Disclosure shall not necessarily mean that
such item or fact,  individually or in the aggregate,  is material or adverse to
the business,  results of operations,  or financial  condition of the Company or
any of its  subsidiaries,  or that such item or fact has had or is  expected  to
have a Company Material Adverse Effect.

     Section   11.05   Entire   Agreement;   No   Assignment;   No  Third  Party
Beneficiaries.  This  Agreement,  the Exhibits  hereto,  the Company  Disclosure
Schedule, the Acquiror Disclosure Schedule, the Confidentiality  Agreement,  and
the documents and  instruments  and other  agreements  among the parties  hereto
referenced  herein (a)  constitute the entire  agreement  among the parties with
respect to the subject  matter  hereof and supersede  all prior  agreements  and
understandings  both  written and oral,  among the parties  with  respect to the
subject  matter  hereof,  (b)  shall  not be  assigned  by  operation  of law or
otherwise (except in connection with the Member Escrow Rights Transaction),  and
(c) shall be binding upon and inure solely to the benefit of each party  hereto,
and  nothing  herein or  therein,  express or  implied,  is intended to or shall
confer upon any other  person any other  right,  benefit or remedy of any nature
whatsoever under or by reason of this Agreement,  other than Section 7.09, which
is intended to be for the benefit of the Surviving Company  Indemnified  Parties
covered  thereby  and may be  enforced  by such  Surviving  Company  Indemnified
Parties, and Section 11.01, relating to the Member Representative.

     Section  11.06  Severability.  In the  event  that  any  provision  of this
Agreement  or the  application  thereof,  becomes or is  declared  by a court of
competent  jurisdiction to be illegal,  void or unenforceable,  the remainder of
this  Agreement  will continue in full force and effect and the  application  of
such  provision to other  persons or  circumstances  will be  interpreted  so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or  unenforceable  provision of this Agreement with a valid
and  enforceable  provision  that will  achieve,  to the  extent  possible,  the
economic, business and other purposes of such void or unenforceable provision.



                                       39

<PAGE>

     Section 11.07 Specific Performance. The parties recognize that in the event
that a party should refuse to perform any provisions of this Agreement, monetary
damages alone will not be adequate.  The parties shall therefore be entitled, in
addition to any other remedies that may be available,  including  money damages,
to obtain specific  performance of the terms of this Agreement.  In the event of
any action to enforce this  Agreement  specifically,  all of the parties  hereby
waive the defense  that there is an adequate  remedy at law and any  requirement
for bond or other security in connection therewith.

     Section  11.08  Dispute  Resolution.  This  Section  11.08  applies  to all
disputes relating to this Agreement and any agreement or instrument delivered at
Closing,  but it does not apply to disputes  relating to the resolution of third
party claims under Section 10.05.

          (a) The  parties  will  exercise  good faith  efforts  to resolve  any
     dispute  arising out of this Agreement.  If a dispute  arises,  the parties
     will meet in person or by telephone  within ten business days of receipt of
     written notice thereof. If the parties do not resolve the matter within ten
     business days after the initial meeting, or following such longer period as
     the parties may agree in writing,  the parties  shall submit the dispute to
     binding arbitration.

          (b) The parties will choose a mutually  agreeable  arbitrator.  If the
     parties do not agree  within  five  business  days from the date demand for
     arbitration  is made,  the parties will submit the dispute to an arbitrator
     designated by Judicial  Arbitration & Mediation Services,  Inc. (JAMS). The
     arbitration  will  commence  within 30 calendar days after an arbitrator is
     selected, unless the parties agree to extend this time period.  Arbitration
     will comply with JAMS arbitration rules, except to the extent they conflict
     with this Section 11.08.  The arbitrator  will have full power to give such
     directions  and  make  such  orders  as the  arbitrator  deems  just.  This
     authority will include authority to hear and rule on pre-hearing  disputes,
     set deadlines,  and hold pre-hearing  conferences,  as the arbitrator deems
     necessary.  However, the arbitrator will not have the authority,  power, or
     right to alter, change,  amend, modify, add, or subtract from any provision
     of any of this  Agreement.  The  arbitrator  will issue a written  decision
     within 30 days after  conclusion of arbitration  hearing.  The agreement to
     arbitrate  will  be  specifically   enforceable.   During  any  arbitration
     proceeding,   the  parties  will  continue  to  perform  their   respective
     obligations under this Agreement. The award rendered by arbitration will be
     final and binding,  and any  arbitration  award may be enforced by judgment
     entered in any court of competent  jurisdiction.  The Acquiror,  on the one
     hand, and the Company  Interestholders,  on the other hand,  shall each pay
     one-half the fees of the arbitrator.

     Section 11.09 Expenses. If the transactions  contemplated by this Agreement
are not  consummated,  all legal and other  costs and  expenses  incurred by the
Company in connection with the transactions contemplated by this Agreement shall
be paid by the Company,  and all legal and other costs and expenses  incurred by
the Acquiror in connection with the transactions  contemplated by this Agreement
shall be paid by the Acquiror.

     Section  11.10  Governing  Law.  This  Agreement  shall be  governed by and
construed in  accordance  with the laws of the State of Delaware,  regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.



                                       40

<PAGE>

     Section 11.11 Representation. The parties hereto acknowledge and agree that
they have been  represented by counsel during the  negotiation,  execution,  and
performance of this Agreement and, therefore,  waive the application of any law,
regulation,  holding,  or rule of construction  providing that ambiguities in an
agreement or other  document will be construed  against the party  drafting such
agreement or document. The language used in this Agreement shall be deemed to be
the language chosen by the parties hereto to express their mutual agreement, and
this  Agreement  shall not be deemed to have been  prepared by any single  party
hereto.

     Section 11.12 Post-Closing  Representation.  The parties hereto acknowledge
and agree  that (a) the  Acquiror,  on the  behalf of itself  and the  Surviving
Company,  hereby consents to  representation by Davis Wright Tremaine LLP of any
of the Members, or any of their Affiliates,  heirs,  successor or assigns in any
matter,  before or after the Closing,  that is or may be adverse to the Acquiror
or the Surviving  Company,  including any matter arising out of this  Agreement,
and (b) the attorney-client  privilege between Davis Wright Tremaine LLP and the
Company with respect to  communications  with respect to this  Agreement and the
transactions  contemplated  hereby  prior to and through the Closing  Date shall
belong to the Members after the Closing Date and not to the Surviving Company.

     Section 11.13 No Personal  Liability.  The Acquiror  Parties and the Merger
Subsidiary acknowledge that the Company and its affiliates,  members,  managers,
officers,  employees,  agents and  representatives,  and the trustees  under the
Benefit Plans, and the Member  Representative,  have performed,  or may perform,
acts  in  connection  with  this  Agreement  on  behalf  of  the  Company,   its
Subsidiaries,  and their  respective  affiliates,  or on behalf of the  Acquiror
Parties  or the  Merger  Subsidiary,  to  facilitate  the  Merger  and the other
transactions  contemplated  by this Agreement.  Notwithstanding  anything to the
contrary, no such Member  Representative,  trustee,  member,  manager,  officer,
employee,  agent or  representative  shall have,  as a result of serving in such
capacity,  and the Acquiror Parties and the Merger Subsidiary hereby absolve all
such persons from, any personal  liability or obligation for any matter relating
to or  arising  out of this  Agreement,  the  Merger or any  other  transactions
contemplated by this Agreement.

     Section 11.14  Payments to the Paying Agent.  Any amounts  delivered by the
Acquiror  Parties or any of their Affiliates to the Payment Fund for the account
of the Company Interestholders in accordance with this Agreement shall be deemed
to  have   been  paid  to  the   Company   Interestholders,   and  the   Company
Interestholders  shall have no recourse to the Acquiror  Parties or any of their
Affiliates for any such delivered amounts.

     Section 11.15  Counterparts.  This Agreement may be executed in one or more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and  delivered  to the other  party,  it being  understood  that all
parties  need not sign the same  counterpart.


                     [Signature lines are on the next page.]



                                       41

<PAGE>

     Each party has caused this Agreement and Plan of Merger to be duly executed
by its  duly  authorized  officer  or  representative  on the date  first  above
written.

                                        WIZKIDS, LLC

                                        By:  _____________________________
                                        Jordan K. Weisman, Manager and CEO


                                        THE TOPPS COMPANY, INC.

                                        By:  _____________________________
                                        Name  ____________________________
                                        Title  ___________________________


                                        TOPPS ENTERPRISES, INC.

                                        By:  _____________________________
                                        Name  ____________________________
                                        Title  ___________________________


                                        TOPPS FINANCE, INC.

                                        By:  _____________________________
                                        Name  ____________________________
                                        Title  ___________________________



                                        THE MEMBER REPRESENTATIVE

                                        By:  ______________________________
                                        Jordan K. Weisman, solely for purposes
                                        of accepting his appointment as Member
                                        Representative under Section 11.01(b)




                                       42

<PAGE>

INDEX OF EXHIBITS AND SCHEDULES

EXHIBITS

A. Glossary of Defined Terms
B. Form of Voting Agreement
C. Form of Jordan Weisman Employment Agreement
D. Form of Certificate of Merger
E. Form of Joinder Agreement
F. Form of Indemnification Escrow Agreement
G. Form of Working Capital Escrow Agreement
H. Methodology of Allocation of the Aggregate Merger
      Consideration among the Assets of the Company
I. Form of Opinion of Davis Wright Tremaine LLP
J. Form of Opinion of Willkie Farr & Gallagher








                                       43

<PAGE>

SCHEDULES

4.01      Organization
4.02      Capital Structure
4.03      Authority and Enforceability
4.04      No Violation
4.05      Consents
4.06      Subsidiaries
4.07      Financial Statements
4.08      No Undisclosed Liabilities
4.09      No Company Material Adverse Effect
4.10      No Changes
4.11      Conduct of the Company Business
4.12      Real Property
4.13      Tangible Property
4.14      Inventory
4.15      Accounts Receivable
4.16      Intellectual Property
4.17      Material Contracts
4.18      Compliance with Law
4.19      Material Permits
4.20      Insurance
4.21      Litigation
4.22      Taxes
4.23      Employee Benefits
4.24      Employment Matters
4.25      Labor Relations
4.26      Environmental Matters
4.27      Customers and Suppliers
4.28      Brokers' and Finders' Fees
4.29      Affiliate Transactions
4.30      Illegal or Unauthorized Payments;
             Political Contributions
4.31      Only Representations and Warranties

6.02(h)   Negative Covenants (Material Contracts)
6.02(f)   Negative Covenants (Promotions and Increases in Compensation)
6.03      New Product Release Schedule
8.01(f)   Conditions to the Merger (Material Consents of the Company)


The Company  agrees to furnish  supplementally  to the  Commission a copy of any
omitted  schedule  or  exhibit  to the  Merger  Agreement  upon  request  by the
Commission.




                                       44

<PAGE>


                                   SCHEDULE I

           PAYMENTS TO BE MADE TO COMPANY INTERESTHOLDERS AT CLOSING

     (a) To each holder of Class A Interests,  such holder's  Class A Percentage
times the sum of (i) 40% times the Book-Up  Amount,  and (ii)  36.11%  times the
result of the Closing Date Payment, minus the Book-Up Amount.

     (b) To each holder of Class B Interests,  such holder's  Class B Percentage
times the sum of (i) 60% times the Book-Up  Amount,  and (ii) 54.165%  times the
result of the Closing Date Payment, minus the Book-Up Amount.

     (c) To each holder of Class C Interests,  such holder's  Class C Percentage
times  9.725% times the result of the Closing  Date  Payment,  minus the Book-Up
Amount.



























                                      I-1

<PAGE>

                                  SCHEDULE II

 DISTRIBUTION PERCENTAGES FOR POST-CLOSING PAYMENTS TO COMPANY INTERESTHOLDERS

     The percentage of any post-Closing payments to Company Interestholders will
be in accordance with the following:

     (a) To each holder of Class A Interests,  such holder's  Class A Percentage
times 36.11% times the amount being paid.

     (b) To each holder of Class B Interests,  such holder's  Class B Percentage
times 54.165% times the amount being paid.

     (c) To each holder of Class C Interests,  such holder's  Class C Percentage
times 9.725% times the amount being paid.


























                                      II-1

<PAGE>

                                   EXHIBIT A

                           GLOSSARY OF DEFINED TERMS


     In addition to the terms defined in the Agreement and Plan of Merger by and
between the Acquiror and the Company,  the  following  terms have the  following
meanings throughout the Agreement and Plan of Merger:

     "Accounting  Policy  Exceptions"  has the  meaning  set  forth  in  Section
3.04(b)(iv) hereof.

     "Acquiror" has the meaning set forth in the introductory  paragraph to this
Agreement.

     "Acquiror  Disclosure  Schedule" means the disclosure  schedule attached to
this Agreement by the Acquiror and the Merger Subsidiary and incorporated herein
by reference.

     "Acquiror Group" means the Acquiror,  the Merger Subsidiary,  the Surviving
Company,  and  anyone  claiming  by or on behalf  of the  Acquiror,  the  Merger
Subsidiary, or the Surviving Company.

     "Acquiror Parties" has the meaning set forth in the introductory  paragraph
to this Agreement.

     "Action" means any action, suit, claim, arbitration,  grievance, complaint,
charge proceeding or investigation commenced by or pending before any Government
Agency.

     "Additional Disclosures" has the meaning set forth in Section 11.04 hereof.

     "Adjustment" has the meaning set forth in Section 3.04(a) hereof.

     "Adjustment Statement" has the meaning set forth in Section 3.04(c) hereof.

     "Affiliate"  means,  with  respect to any  Person,  any other  Person  that
directly, or through one or more intermediaries, controls or is controlled by or
is under common control with such first person or entity, and, if an individual,
any member of the immediate family (including  parents,  spouse and children) of
such individual and any trust whose principal  beneficiary is such individual or
one or more  members  of such  immediate  family and any person or entity who is
controlled by any such member or trust.  As used in this  definition,  "control"
(including, with correlative meanings, "controlled by" and "under common control
with")  shall mean  possession,  directly or  indirectly,  of power to direct or
cause the  direction of  management or policies  (whether  through  ownership of
securities  or  partnership  or  other  ownership  interests,   by  contract  or
otherwise).

     "Aggregate Merger  Consideration" has the meaning set forth in Section 3.01
hereof.

     "Agreement"  means this Agreement and Plan of Merger (including the Company
Disclosure   Schedule,   the  Acquiror  Disclosure   Schedule,   any  Additional
Disclosures,  and the Exhibits hereto,  all of which are incorporated  herein by
this reference), as it may be amended under Section 9.03 hereof.



                                      A-1

<PAGE>

     "Allocation" has the meaning set forth in Section 7.04 hereof.

     "Applicable  Transaction Costs" means (a) the fees and commissions of Allen
& Company LLC, plus (b) that amount of attorney and accounting  fees incurred by
the  Company as of the  Closing  Date in order to  prepare  and  negotiate  this
Agreement  and close the Merger (as  opposed to  attorney  and  accounting  fees
incurred in the ordinary course of business or otherwise  incurred in connection
with  transactions  not  related  to  the  Merger,  including  any  transactions
involving FASA  Corporation,  FASA  Interactive  Technologies,  Inc.,  Iron Wind
Metals, LLC, Ral Partha Technologies, Inc., WizKids Games, or Wizkids Ohio).

     "Bank" means Washington Trust Bank.

     "Bank Prepayment  Amount" means the amount necessary to pay off in full all
principal,  interest,  fees and other charges due under the Loan Agreement as of
the Closing Date.

     "Bankruptcy   Exception"   means   applicable    bankruptcy,    insolvency,
reorganization,  moratorium,  fraudulent conveyance or other similar Laws now or
hereafter  in  effect  relating  to  creditors'  rights  generally  and  general
principles of equity  (regardless of whether  enforceability  is considered in a
proceeding at law or in equity).

     "Benefit  Plan" means an  "employee  pension  benefit  plan" (as defined in
Section  3(2) of ERISA),  an  "employee  welfare  benefit  plan" (as  defined in
Section 3(l) of ERISA),  and each other plan,  arrangement or policy relating to
stock  options,  stock  purchases,  deferred  compensation,   severance,  fringe
benefits or other  employee  benefits,  in each case  benefiting  any present or
former  officers,  employees,  agents,  directors,  consultants  or  independent
contractors  of the  Company,  whether or not  subject to ERISA,  including  the
Wizkids Deferred Bonus Plan.

     "Book-Up Amount" means $8,042,491,  which was the total amount allocated to
Class A Interests  and Class B  Interests  under  Section  3.6(c) of the Wizkids
Operating Agreement.

     "Cap" has the meaning set forth in Section 10.06(b) hereof.

     "Certificate of Merger" has the meaning set forth in Section 1.03 hereof.

     "Claim" means a threatened or actual claim,  Action, suit,  proceeding,  or
investigation.

     "Claim Notice" has the meaning set forth in Section 10.04 hereof.

     "Claim Period" has the meaning set forth in Section 10.01 hereof.

     "Class A  Interest"  means a  limited  liability  company  interest  in the
Company  designated as a Class A limited  liability  company  interest under the
Wizkids Operating Agreement.

     "Class A Merger  Consideration"  means the sum of all  amounts  payable  to
holders of Class A Interests under Section 3.02 and Section 3.03 hereof.



                                      A-2

<PAGE>

     "Class  A  Percentage"  means,  with  respect  to a Class A  Interest,  the
fraction in which the  numerator is the  Percentage  (as such term is defined in
the Wizkids Operating  Agreement)  represented  thereby,  and the denominator is
50%.

     "Class B  Interest"  means a  limited  liability  company  interest  in the
Company  designated as a Class B limited  liability  company  interest under the
Wizkids Operating Agreement.

     "Class B Merger  Consideration"  means the sum of all  amounts  payable  to
holders of Class B Interests under Section 3.02 and Section 3.03 hereof.

     "Class  B  Percentage"  means,  with  respect  to a Class B  Interest,  the
fraction in which the numerator is the Percentage  represented  thereby, and the
denominator is 50%.

     "Class C  Interest"  means a  limited  liability  company  interest  in the
Company  designated as a Class C limited  liability  company  interest under the
Wizkids Operating Agreement.

     "Class C Merger  Consideration"  means the sum of all  amounts  payable  to
holders of Class C Interests under Section 3.02 and Section 3.03 hereof.

     "Class  C  Percentage"  means,  with  respect  to a Class C  Interest,  the
percentage set forth in Section 4.02 of the Company Disclosure Schedule.

     "Closing" has the meaning set forth in Section 1.02 hereof.

     "Closing  Balance  Sheet"  has the  meaning  set forth in  Section  3.04(c)
hereof.

     "Closing Date" has the meaning set forth in Section 1.02 hereof.

     "Closing Date Payment" has the meaning set forth in Section 3.02(c) hereof.

     "COBRA" means the continuation coverage requirements of Section 601 et seq.
of ERISA and Section 4980B of the Code.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Combat  Dial"  means the  following  intellectual  property  rights in the
record-keeping  mechanism in the base of the  collectible  miniature game pieces
sold by the Company:  the configuration of such  record-keeping  mechanism,  the
inventions  (whether or not patentable)  therein,  and those patent applications
filed through the date of this Agreement.

     "Company" has the meaning set forth in the  introductory  paragraph of this
Agreement.

     "Company Audited Financial Statements" has the meaning set forth in Section
4.07 hereof.

     "Company  Disclosure  Schedule" means the disclosure  schedule  attached to
this Agreement by the Company and incorporated herein by this reference.



                                      A-3

<PAGE>

     "Company  Employees"  means  employees  of the Company,  including  current
employees  who are on  vacation,  leave of absence,  sick leave,  or  disability
leave.

     "Company Group" means the holders and former holders of Company  Interests,
the Manager,  the officers of the Company, and (prior to the Effective Time) the
Company.

     "Company  Interest"  means a  limited  liability  company  interest  in the
Company and,  depending on the  context,  refers to a Class A Interest,  Class B
Interest, Class C Interest, or a combination thereof.

     "Company  Interestholders"  means each of the holders of a Company Interest
immediately prior to the Effective Time.

     "Company Interim Financial Statements" has the meaning set forth in Section
4.07 hereof.

     "Company  Leased Real  Property"  has the meaning set forth in Section 4.12
hereof.

     "Company Material Adverse Effect" means an event, occurrence,  or condition
of any character  that,  individually  or in the  aggregate,  has had a material
adverse effect on the business, assets,  liabilities,  results of operations, or
condition  (financial or otherwise) of the Company,  taken as a whole.  However,
none of the following,  either alone or in combination,  shall  constitute or be
taken into  account in  determining  whether  there has been a Company  Material
Adverse  Effect:  (a) a change in  general  business,  economic,  regulatory  or
political  conditions,  (b) a general  change in  regional  business,  economic,
regulatory  or political  conditions  affecting one or more regions in which the
Company  operates,  (c) a change  affecting  one or more  industries  or  market
sectors  in  which  the  Company  operates,  unless  expressly  directed  at  or
disproportionately  affecting  the  Company,  or (d) any act of terrorism or war
(whether or not declared), wherever occurring, including the events of September
11, 2001 and any subsequent terrorist,  military, diplomatic or political action
(other than an act expressly directed at the Company).

     "Confidentiality  Agreement"  has the  meaning  set forth in  Section  9.02
hereof.

     "Contracts" means all oral and written contracts, agreements,  instruments,
commitments,  understandings, and binding arrangements, including leases of real
and personal property,  licenses,  purchase orders,  sales orders,  distribution
agreements, and partnership or joint venture agreements.

     "Covered Claims" has the meaning set forth in Section 10.06(a) hereof.

     "Customer Contracts" has the meaning set forth in Section 4.17 hereof.

     "D&O Insurance" has the meaning set forth in Section 7.09(c) hereof.

     "Damages"  means  any  and  all  losses,  claims,   demands,   liabilities,
obligations,   actions,  suits,  orders,   statutory  or  regulatory  compliance
requirements,  or proceedings  asserted by any Person,  and all damages,  costs,
expenses,  assessments,   judgments,  recoveries  and  deficiencies,   including
interest, penalties,  investigatory expenses,  consultants' fees, and reasonable
attorneys'  fees  and  costs,  of  every  kind and  description,  contingent  or
otherwise, incurred by or awarded against an Indemnified Party, but specifically
excluding any consequential, punitive, or special damages of any kind.



                                      A-4


<PAGE>

     "Deductible" has the meaning set forth in Section 10.06(a) hereof.

     "Deferred Compensation" means (a) the amount of $550,000, as accrued by the
Company  as of the  Closing  Date for the  Wizkids  deferred  compensation  plan
described in Section 4.23 of the Company Disclosure  Schedule and (b) the amount
of  $400,000,  as accrued by the Company as of the Closing Date for payments due
Donald J. Gorski under Section  16(d) of the  Employment  Agreement  between the
Company and Donald J. Gorski dated October 1, 2001, or such lesser amount as the
Company and Donald J. Gorski may agree.

     "Delaware  Act" means the  Limited  Liability  Company  Act of the State of
Delaware, as amended.

     "Effective Time" has the meaning set forth in Section 1.03 hereof.

     "Environmental  Law" means any Law  relating  to the  environment,  health,
safety or Hazardous Materials in force and effect on the date hereof,  including
the Comprehensive  Environmental  Response,  Compensation,  and Liability Act of
1980,  as  amended;  the  Resource  Conservation  and  Recovery  Act of 1986 and
Hazardous  and Solid  Waste  Amendments  of 1984,  42 U.S.C.  6901 et seq.;  the
Hazardous Materials  Transportation Act, 49 U.S.C. 6901 et seq.; the Clean Water
Act, 33 U.S.C. 1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C.
2601 et seq.; the Clean Air Act of 1966, as amended, 42 U.S.C. 7401 et seq.; the
Safe  Drinking  Water Act,  42 U.S.C.  300f et seq.;  the Atomic  Energy Act, 42
U.S.C. 2011 et seq.; the Federal  Insecticide,  Fungicide and Rodenticide Act, 7
U.S.C. 136 et seq.; and the Emergency  Planning and Community  Right-to-Know Act
of 1986, 42 U.S.C. 1101 et seq.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     "Escrow Agent" has the meaning set forth in Section 3.02(a) hereof.

     "Escrow Amount" has the meaning set forth in Section 3.02(a) hereof.

     "Estimated Adjustment" has the meaning set forth in Section 3.04(a) hereof.

     "Estimated  Net  Working  Capital"  has the  meaning  set forth in  Section
3.04(a) hereof.

     "FASA" means FASA Corporation.

     "FASA Payment" means the dollar amount due to FASA in the event of a change
of control  pursuant  to that  certain  Royalty  Agreement  dated March 14, 2001
between  FASA and the Company,  less any offset  taken by the  Company.  If paid
prior to July 15,  2003,  the FASA  Payment (i) is expected to be  approximately
$1,661,185, and (ii) for purposes of this Agreement shall not exceed $1,800,000.



                                      A-5

<PAGE>

     "Finance" has the meaning set forth in the  introductory  paragraph to this
Agreement.

     "Financial Statements" has the meaning set forth in Section 4.07 hereof.

     "GAAP" means generally accepted accounting principles in the United States,
applied on a consistent  basis,  as in effect on the date at which an applicable
report or statement is made.

     "Governing Documents" means articles of incorporation,  bylaws, certificate
of  formation,   limited  liability  company  agreement,  or  similar  governing
documents of an entity.

     "Government  Agency"  means any Federal,  state or local  government or any
foreign,  national,  provincial,  or  local  government,  or  any  governmental,
regulatory,  legislative,  executive,  or  administrative  authority,  agency or
commission, or any court, tribunal, or judicial body.

     "Government Order" means any order,  writ,  judgment,  injunction,  decree,
stipulation,  determination,  or award entered by or with any Government Agency.
"Government Orders" shall not include Permits, Assigned Contracts, Contracts, or
Leases.

     "Hazardous  Material"  means  any  substance  that has been  designated  as
radioactive,  toxic, or hazardous under applicable Environmental Laws, including
PCBs,  asbestos,  petroleum,  and  urea-formaldehyde,  but excluding  office and
janitorial  supplies  properly and safely maintained and excluding any hazardous
materials released but properly and timely remediated.

     "Holding  Company" has the meaning set forth in the introductory  paragraph
to this Agreement.

     "Indemnification  Escrow  Account"  has the  meaning  set forth in  Section
3.02(a) hereof.

     "Indemnification  Escrow  Agreement"  has the  meaning set forth in Section
3.02(a) hereof.

     "Indemnification Escrow Funds" has the meaning set forth in Section 3.02(a)
hereof.

     "Indemnified Party" has the meaning set forth in Section 10.04 hereof.

     "Indemnifying Party" has the meaning set forth in Section 10.04 hereof.

     "Initial Consideration" has the meaning set forth in Section 3.01 hereof.

     "Insurance Policies" has the meaning set forth in Section 4.20 hereof.

     "Intellectual  Property"  means all of the following,  owned or used in the
current business of the Company:  patents,  copyrights,  mask works, trademarks,
service marks,  domain names, trade names,  business names, and all applications
and registrations  for any of the foregoing;  Internet Web sites, Web pages, and
all  intellectual  property used in connection with or contained in all versions
of the  Company's  Web  sites;  logos,  trade  dress,  and all rights in product
configurations;  trade secrets, and all other proprietary processes, technology,
manufacturing information, inventions (whether or not patentable),  discoveries,
improvements,  know  how,  formula  methodology,  business  methods,  processes,
drawings,  and designs;  in all cases together with all goodwill associated with
trademarks,  service marks, domain names, trade names, business names, and trade
dress;  and, with respect to any of the  foregoing,  all rights under  licenses,
technology  transfer  agreements and other  agreements or  instruments  relating
thereto.



                                      A-6

<PAGE>

     "Jordan Weisman Employment  Agreement" has the meaning set forth in Recital
D to this Agreement.

     "Knowledge"  means,  when  modifying  a  representation,  warranty or other
statement of the Company, the knowledge of the following  individuals (and shall
include the assurance that such knowledge is based upon reasonable investigation
by such  individuals):  Donald Gorski,  Jim Long,  Mark Pearson,  Marc Sachnoff,
Martin Stever, Thomas J. Virgin, Dawne Weisman, and Jordan K. Weisman.

     "Law" means the common law and any federal,  provincial,  state,  local, or
foreign statute, law, ordinance, code, rule, regulation, or other requirement or
rule of law.

     "Lien"  means  any  pledge,  lien,  charge,  security  interest,  mortgage,
restriction,  defect of title or other claim, or other  encumbrance of any kind,
including any  restriction on the use,  voting,  transfer,  receipt of income or
other exercise of any attributes of ownership.

     "Loan  Agreement"  means that certain  Business Loan Agreement  dated as of
July 1, 2002, as amended, between the Bank as lender and the Company as borrower
(including all promissory notes,  security  agreements,  and other documents and
instruments relating thereto).

     "Manager"  means the manager of the Company or, after Closing,  the manager
of the Surviving Company.

     "Material Contracts" has the meaning set forth in Section 4.17 hereof.

     "Material Liabilities" has the meaning set forth in Section 4.08 hereof.

     "Material  Permits"  means  all  material  licenses,  franchises,  permits,
certificates, approvals or other similar authorizations granted or issued by any
Government  Agency  necessary  for the Company to owns its assets or operate its
business (other than local business licenses and immaterial licenses).

     "Member" means a Person duly admitted as a member of the Company.

     "Member Approval" means the approval of the Merger, this Agreement, and the
other transactions contemplated herein as described in Section 7.03 hereof.

     "Member  Escrow  Rights  Transaction"  means  the  purchase,  or  offer  to
purchase,  by JKW Enterprises LLC of rights of Members to distributions from the
Indemnification Escrow Account, subject to the Closing hereunder.

     "Member Representative" has the meaning set forth in Section 11.01 hereof.

     "Members' Meeting" has the meaning set forth in Section 7.03 hereof.



                                      A-7

<PAGE>

     "Merger"  means  the  merger  of the  Merger  Subsidiary  with and into the
Company pursuant to this Agreement.

     "Merger  Subsidiary"  means  a  single  member  limited  liability  company
organized by the Acquiror under the laws of the State of Delaware.

     "Minimum Net Working  Capital" has the meaning set forth in Section 3.04(a)
hereof.

     "Net Working Capital" has the meaning set forth in Section 3.04(b) hereof.

     "Neutral Accountant" means an independent  nationally recognized accounting
firm that has not provided  audit services to the Company or any of the Acquiror
Parties or any of their respective  Affiliates in connection with this Agreement
or the Merger,  and that is mutually  agreeable  to the  Acquiror and the Member
Representative,  for purposes of resolving  disputes relating to the calculation
of the Net Working Capital under Section 3.04.

     "Neutral  Accountant  Fees" has the  meaning  set forth in Section  3.04(d)
hereof.

     "Outside Date" has the meaning set forth in Section 9.01(b) hereof.

     "Paying Agent" has the meaning set forth in Section 3.02 hereof.

     "Payment Fund" has the meaning set forth in Section 3.02(c) hereof.

     "Permitted   Exceptions"   means  (a)  Liens  for  Taxes,   assessments  or
governmental  charges or levies not yet due or delinquent  and being  diligently
contested  in  good  faith,  (b)  statutory  Liens  of  carriers,  warehousemen,
mechanics,  materialmen  and the like arising in the ordinary course of business
and  for  obligations  not  yet  due and  payable,  (c)  easements,  restrictive
covenants,  rights of way and other similar  imperfections of title, (d) zoning,
building and other similar  restrictions,  (e) temporary  security  interests in
favor of  suppliers  of goods  for  which  payment  has not yet been made in the
ordinary  course of business  consistent  with past  practice,  (f) Liens on the
interests  of lessors  (but not the Company as tenant or lessee),  and (g) Liens
listed in Section A of the Company Disclosure Schedule.

     "Person,"  whether or not such term is  capitalized,  means any individual,
partnership, firm, corporation,  limited liability company, association,  trust,
unincorporated organization, or other entity.

     "Real Property Leases" has the meaning set forth in Section 4.12 hereof.

     "Registered  Intellectual  Property"  has the  meaning set forth in Section
4.16 hereof.

     "Release"  means  disposing,  discharging,  injecting,  spilling,  leaking,
leaching, dumping, emitting,  escaping, emptying, seeping, placing, and the like
into  or  upon  any  land  or  water  or  air or  otherwise  entering  into  the
environment.



                                      A-8

<PAGE>

     "Schedule of Members" means a written list of the Members  indicating Class
A,  Class  B, or  Class C,  their  Percentages,  and  their  respective  capital
contributions  and  bookup  adjustments  under  Section  3.6(c)  of the  Wizkids
Operating Agreement.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Straddle Period" has the meaning set forth in Section 7.08 hereof.

     "Surviving  Company" means the Company,  as the surviving limited liability
company that will remain in existence after the Merger.

     "Surviving  Company  Indemnified  Parties"  has the  meaning  set  forth in
Section 7.09(b) hereof.

     "Tax" means (a) any Federal, state, local or foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities, including taxes
based upon or  measured  by gross  receipts,  income,  profits,  sales,  use and
occupation,  and value  added,  ad valorem,  transfer,  franchise,  withholding,
payroll,  employment,  recapture,  excise and property taxes,  together with all
interest,  penalties and additions imposed with respect to such amounts, and (b)
any  liability  for the payment of any amounts of the type  described in clauses
(a) as a result of any  express or implied  obligation  to  indemnify  any other
Person.

     "Tax Authority" means any Government  Agency having  jurisdiction  over the
assessment, determination, collection, or other imposition of Tax.

     "Tax  Return"  means any report,  return,  document,  declaration  or other
information or filing  required to be supplied to any Tax Authority with respect
to Taxes,  including  information  returns,  any  documents  with  respect to or
accompanying  payments of estimated  Taxes,  or with respect to or  accompanying
requests for the  extension  of time in which to file any such  report,  return,
document, declaration or other information.

     "Violation" has the meaning set forth in Section 4.04 hereof.

     "Voting  Agreement"  has  the  meaning  set  forth  in  Recital  C to  this
Agreement.

     "WizKids  Games" means  WizKids Games LLC, a Washington  limited  liability
company.

     "Wizkids  Ohio"  means  Wizkids  Ohio LLC,  a  Delaware  limited  liability
company, which was dissolved and liquidated in 2002.

     "Wizkids  Operating  Agreement"  means that  certain  Amended and  Restated
Limited Liability Company Agreement of Wizkids,  LLC, effective as of August 21,
2001.

     "Working  Capital  Escrow  Account"  has the  meaning  set forth in Section
3.02(b) hereof.

     "Working Capital Escrow Funds" has the meaning set forth in Section 3.02(b)
hereof.

     "Works" has the meaning set forth in Section 4.16 hereof.



                                      A-9


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