SEC Filing | JAKKS Pacific Inc.

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Toymax International, SC 13D

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. __)

Toymax International, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

892268 10 3

(CUSIP Number)

Murray L. Skala, Esq.
Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP
750 Lexington Avenue
New York, New York 10022
(212) 888-8200

(Name, address and telephone number of person authorized to receive notices and communications)

March 11, 2002

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check the following box .

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

(Continued on following pages)
(Page 1 of 10 Pages)


CUSIP No. 892268 10 3		13D		Pages 2 of 10 Pages



1.	NAME OF REPORTING PERSONS JAKKS PACIFIC, INC. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS 95-4527222

2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP			(a)
				(b)

3.	SEC USE ONLY

4.	SOURCE OF FUNDS WC

5.	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

6.	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware

NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER 8,232,819 shares

		8.	SHARED VOTING POWER 0 shares

		9.	SOLE DISPOSITIVE POWER 8,232,819 shares

		10.	SHARED DISPOSITIVE POWER 0 shares

11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,232,819 shares

12.	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 66.8%

14.	TYPE OF REPORTING PERSON CO


CUSIP No. 892268 10 3		13D		Pages 3 of 10 Pages

Item 1. Security and Issuer.

This statement relates to the common stock, par value $.01 per share, of Toymax International, Inc., a Delaware corporation (“Toymax”). The address of Toymax’s principal executive offices is c/o JAKKS Pacific, Inc., 22619 Pacific Coast Highway, Malibu, California 90265.

Item 2. Identity and Background.

The filing person is JAKKS Pacific, Inc. (“JAKKS”), which is a corporation organized under the laws of the State of Delaware. JAKKS’ principal business is the design, development, production and marketing of toys and related products, including without limitation action figures, toy vehicles, role play toys and accessories, dolls, arts and crafts playsets, play compounds, writing instruments and stationery. The address of JAKKS’ principal business and principal office is 22619 Pacific Coast Highway, Malibu, California 90265.

Certain information with respect to JAKKS’ directors and executive officers is set forth below:

Jack Friedman


		Position: chairman of the board of directors; chief executive officer
		Address: 22619 Pacific Coast Highway, Malibu, California 90265
		Principal occupation or employment: chief executive officer of JAKKS
		Citizenship: United States of America

Stephen G. Berman


		Position: director; president and secretary; chief operating officer
		Address: 22619 Pacific Coast Highway, Malibu, California 90265
		Principal occupation or employment: chief operating officer of JAKKS
		Citizenship: United States of America

Joel M. Bennett


		Position: executive vice president; chief financial officer
		Address: 22619 Pacific Coast Highway, Malibu, California 90265
		Principal occupation or employment: chief financial officer of JAKKS
		Citizenship: United States of America

Michael L. Bianco, Jr.


		Position: executive vice president; chief merchandising officer
		Address: 22619 Pacific Coast Highway, Malibu, California 90265
		Principal occupation or employment: chief merchandising officer of JAKKS
		Citizenship: United States of America


CUSIP No. 892268 10 3		13D		Pages 4 of 10 Pages

David C. Blatte


		Position: director
		Address: c/o Catterton Partners, 7 Greenwich Office Park, Suite 200, 599 West Putnam Avenue, Greenwich, Connecticut 06830
		Principal occupation or employment: principal of Catterton Partners, 7 Greenwich Office Park, Suite 200, 599 West Putnam Avenue, Greenwich, Connecticut 06830, a private equity investment fund
		Citizenship: United States of America

Robert E. Glick


		Position: director
		Address: c/o Jessica Howard, 1400 Broadway, 19th Floor, New York, New York 10018
		Principal occupation or employment: principal of Jessica Howard, 1400 Broadway, 19th Floor, New York, New York 10018, which manufactures and markets ladies’ apparel
		Citizenship: United States of America

Michael G. Miller


		Position: director
		Address: c/o JAMI Charity Brands, 140 West 57th Street, New York, New York 10019
		Principal occupation or employment: president of JAMI Charity Brands, 140 West 57th Street, New York, New York 10019, an advertising company
		Citizenship: United States of America

Murray L. Skala


		Position: director
		Address: c/o Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP, 750 Lexington Avenue, 23rd Floor, New York, New York 10022
		Principal occupation or employment: partner of Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP, 750 Lexington Avenue, 23rd Floor, New York, New York 10022, a law firm
		Citizenship: United States of America

None of JAKKS nor any of the foregoing directors or executive officers has, during the last five years, been convicted in a criminal proceeding.

None of JAKKS nor any of the foregoing directors or executive officers was, during the last five years, a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order


CUSIP No. 892268 10 3		13D		Pages 5 of 10 Pages

enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration.

In connection with JAKKS’ acquisition of Toymax (see also Items 4, 5 and 6 below), JAKKS has purchased 8,232,819 shares of Toymax common stock for total consideration consisting of cash in the amount of $24,527,203 and 646,384 shares of JAKKS common stock. The cash portion of the consideration paid was drawn from JAKKS’ working capital/cash accounts. JAKKS expects to pay in connection with the Merger (as defined in Item 6 below) consideration, subject to certain conditions and contingent adjustments, in respect of the shares of Toymax common stock outstanding immediately prior to the effective time of the Merger (other than shares held by or for JAKKS or Toymax), consisting of cash in the approximate amount of $11,750,000 and approximately 312,500 shares of JAKKS common stock. In addition, as a result of JAKKS’ purchase of the Toymax shares, JAKKS expects to be required to fund the repayment of Toymax’s outstanding indebtedness under its commercial financing facilities (which indebtedness was approximately $4,300,000 as of March 18, 2002). JAKKS currently intends to fund the cash portion of the consideration to be paid in the Merger and any indebtedness of Toymax required to be repaid in connection with the acquisition from JAKKS’ working capital/cash accounts. JAKKS may also fund the payment of all or any part of such amounts from proceeds drawn under JAKKS’ credit facility with Bank of America, N.A. and the other banks party to JAKKS’ loan agreement dated as of October 12, 2001, as amended.

Item 4. Purpose of Transaction.

The purpose of the transaction is for JAKKS to acquire Toymax. On March 11, 2002 (the “First Closing Date”), JAKKS purchased 8,100,065 shares of Toymax common stock, and thereby became the owner of a majority of the outstanding shares of Toymax common stock; three of Toymax’s incumbent directors resigned and two directors designated by JAKKS were appointed to Toymax’s board; and certain executive officers of JAKKS were installed as the executive officers of Toymax. On March 16, 2002, Toymax’s board was reconfigured to consist of six directors designated by JAKKS and two incumbent directors who were serving prior to the First Closing Date. Accordingly, JAKKS has achieved control of Toymax as its majority-owned subsidiary. To complete the acquisition, the parties propose to effect the Merger, pursuant to which Toymax will become a wholly-owned subsidiary of JAKKS. As a result, at the effective time of the Merger (or as soon as practicable thereafter), Toymax common stock will cease to be quoted on the Nasdaq National Market and the registration of Toymax common stock pursuant to Section 12(g) of the Securities Exchange Act of 1934 will be terminated.

Item 5. Interest in Securities of the Issuer.

(a) On the date hereof, JAKKS owns beneficially and of record 8,232,819 shares of Toymax common stock, representing approximately 66.8% of the outstanding shares of Toymax common stock. None of the directors or executive officers of JAKKS identified in Item 2 own of record any shares of Toymax common stock and they disclaim beneficial ownership of any shares of Toymax common stock.


CUSIP No. 892268 10 3		13D		Pages 6 of 10 Pages

(b) JAKKS has sole power to vote (or to direct the vote) and to dispose (or to direct the disposition) of all the shares of Toymax common stock owned by it.

(c) On the First Closing Date, JAKKS purchased 8,100,065 shares of Toymax common stock from the Principal Stockholders (identified in Item 6 below). The purchase price per share of Toymax common stock consisted of $3.00 in cash and 0.0798 share of JAKKS common stock.

(d) No person, other than JAKKS, has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any shares of Toymax common stock beneficially owned by JAKKS.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

On February 10, 2002, JAKKS entered into a Stock Purchase Agreement with Toymax and four of its stockholders, Best Phase Limited, Hargo (Barbados) Limited, Steven A. Lebensfeld and Harvey Goldberg (the “Principal Stockholders”) which provided for JAKKS’ purchase of 8,100,065 shares of Toymax common stock from the Principal Stockholders at a purchase price per share consisting of $3.00 in cash and 0.0798 share of JAKKS common stock, subject to certain contingent adjustments (which were not called into effect). The Stock Purchase Agreement also provided that on the First Closing Date, (i) each Option (as defined) held by David Chu or any of the Principal Stockholders would immediately terminate and (ii) each other Option outstanding on the First Closing Date would remain in full force and effect and then vest on the earliest to occur of the date of termination of the Stock Purchase Agreement (if the Merger were abandoned after the First Closing Date), the effective date of the Merger or September 30, 2002, and that each such continuing Option would remain exercisable during the succeeding six-month period and terminate at the end of such period.

Pursuant to the Stock Purchase Agreement, as amended by a letter agreement entered into on the First Closing Date, on the First Closing Date, three directors of Toymax resigned and two directors designated by JAKKS were appointed to Toymax’s board; and, on March 16, 2002, two additional Toymax directors who had been serving prior to the First Closing Date resigned and four additional directors designated by JAKKS were appointed to Toymax’s board. Until the effective date of the Merger, Toymax’s board is required to consult with Toymax’s prior directors and officers with respect to matters significantly affecting Toymax and its business or assets.

The Stock Purchase Agreement requires JAKKS to use its commercially reasonable efforts to register under the Securities Act of 1933 the shares of JAKKS common stock issued to the Principal Stockholders as part of the purchase price. Also, the Principal Stockholders agreed not to sell, short-sell or otherwise dispose of any of such shares prior to the effective date of the Merger and not to sell, short-sell or otherwise dispose of more than 25% of such shares during any quarterly period in the year following the effective date of the Merger.


CUSIP No. 892268 10 3		13D		Pages 7 of 10 Pages

As required by the Stock Purchase Agreement, prior to the First Closing Date, Toymax received an opinion of an independent investment banking firm that the merger consideration payable in the Merger is fair, from a financial point of view.

On the First Closing Date, in accordance with the Stock Purchase Agreement, JAKKS entered into new employment or consulting agreements with certain Toymax executives, whose prior employment agreements with Toymax were terminated, and Toymax entered into agreements with certain of its affiliates with respect to Toymax’s manufacturing and agency agreements.

The Stock Purchase Agreement also provides for the parties to indemnify each other against certain liabilities, subject to certain limitations described therein.

On February 10, 2002, JAKKS entered into an Agreement of Merger with JP/TII Acquisition Corp., JAKKS’ wholly-owned subsidiary (“Newco”), and Toymax (the “Merger Agreement”) pursuant to which the parties agreed that, subject to the conditions set forth therein, including, among others, the approval of the Merger by Toymax’s stockholders at a meeting to be convened for such purpose, Newco will merge into Toymax in a transaction (the “Merger”) in which the surviving corporation will become a wholly-owned subsidiary of JAKKS and the stockholders of Toymax, other than JAKKS, Newco or Toymax or a subsidiary thereof, will receive merger consideration consisting of $3.00 in cash and 0.0798 share of JAKKS common stock (subject to certain contingent adjustments). Pursuant to the Merger Agreement, at the effective time of the Merger, each outstanding Option will terminate and the holder thereof will receive a corresponding option to purchase shares of JAKKS common stock or, under certain circumstances, a cash payment in accordance with the formula prescribed in the Agreement. The Agreement prohibits Toymax from responding to certain proposals from third parties with respect to an Alternative Transaction (as defined), unless certain specified conditions are met.

On December 14, 2001, Toymax entered into an agreement with ACG International Inc. (“ACG”) pursuant to which Toymax engaged ACG to advise and assist Toymax in structuring, negotiating and effecting a transaction involving the sale of Toymax. Under this agreement, as compensation for its services, ACG will earn an advisory fee equal to 2% of the Total Transaction Value (as defined), if a transaction is consummated, or, if not, $100,000. Pursuant to a letter agreement dated February 8, 2002, it was agreed that the amount of the advisory fee with respect to the acquisition of Toymax by JAKKS will be $1,089,000, of which 70% will be payable on the First Closing Date and the balance will be payable upon the closing of the Merger.

The foregoing description of the agreements and transactions discussed above is a summary only and is qualified in its entirety by reference to the applicable agreements, copies of which are included as exhibits to this statement.


CUSIP No. 892268 10 3		13D		Pages 8 of 10 Pages

Item 7. Material to be Filed as Exhibits.


1.		Stock Purchase Agreement dated as of February 10, 2002 among JAKKS, Toymax and the Shareholders named therein.

2.		Agreement of Merger dated as of February 10, 2002 among JAKKS, JP/TII Acquisition Corp. and Toymax.

3.		Letter Agreement dated March 11, 2002 among Toymax, JAKKS and the selling stockholders named therein.

4.		Termination and Replacement of Manufacturing Agreement dated March 11, 2002 among Toymax, Toymax (H.K.) Limited, Jauntiway Investments Limited, et al.

5.		Termination of Agency Agreements and Stock Options dated March 11, 2002 among Tai Nam Industrial Company Limited, David Ki Kwan Chu, Frances Shuk Kuen Leung, Toymax, et al.

6.		Registration Rights Agreement dated as of March 11, 2002 among JAKKS, Best Phase Limited, Hargo (Barbados) Limited, Harvey Goldberg and Steven A. Lebensfeld.

7.		Termination of Employment Agreement dated March 11, 2002 among Steven Lebensfeld, Toymax and JAKKS.

8.		Employment Agreement dated as of March 11, 2002 between JAKKS and Steven Lebensfeld.

9.		Termination of Employment Agreement dated March 11, 2002 among Harvey Goldberg, 1515037 Ontario Ltd., Toymax and JAKKS.

10.		Consulting Agreement dated as of March 11, 2002 among JAKKS, 1515037 Ontario Ltd. and Harvey Goldberg.

11.		Employment Agreement dated March 11, 2002 between JAKKS and Kenneth N. Price.

12.		Employment Agreement dated March 11, 2002 between JAKKS and Carmine Russo.

13.		Employment Agreement dated March 11, 2002 between JAKKS and Michael Sabatino.

14(A).		Letter Agreement dated December 14, 2001 between Toymax and ACG International Inc.


CUSIP No. 892268 10 3		13D		Pages 9 of 10 Pages


14(B).		Letter dated February 8, 2002 from Joel M. Handel to Murray Skala.

15(A).		Loan Agreement dated as of October 12, 2001 among JAKKS, certain other Borrowers, the Lenders named therein and Bank of America, N.A., as Administrative Agent.

15(B).		First Amendment to Loan Agreement and Consent and Waiver dated as of March 8, 2002.

15(C).		Security Agreement (Borrowers) dated as of October 12, 2001 among JAKKS, certain other Grantors, Bank of America, as Administrative Agent, and the Lenders referred to therein.

15(D).		Trademark Security Agreement dated as of October 12, 2001 among JAKKS, certain other Grantors, Bank of America, as Administrative Agent, and the Lenders referred to therein.

15(E).		Patent Security Agreement dated as of October 12, 2001 among JAKKS, certain other Grantors, Bank of America, as Administrative Agent, and the Lenders referred to therein.

15(F).		Pledge Agreement dated as of October 12, 2001 among JAKKS, certain other Grantors, Bank of America, as Administrative Agent, and the Lenders referred to therein.

15(G).		Lock Box Agreement dated as of October 12, 2001 among JAKKS, certain other Customers, Bank of America, as Administrative Agent, and the Lenders referred to therein.

15(H).		Guaranty dated as of October 12, 2001 among the Domestic Subsidiaries named therein, Bank of America, as Administrative Agent, and the Lenders referred to therein.

15(I).		Security Agreement dated as of October 12, 2001 among the Grantors named therein, Bank of America, N.A., as Administrative Agent, and the Lenders referred to therein.


CUSIP No. 892268 10 3		13D		Pages 10 of 10 Pages

SIGNATURE

After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Date: March 20, 2002


	JAKKS PACIFIC, INC.



	By:	/s/ JOEL M. BENNETT
		Name: Joel M. Bennett Title: Executive Vice President


                                                                       EXHIBIT 1

                            STOCK PURCHASE AGREEMENT

         THIS STOCK PURCHASE AGREEMENT dated as of February 10, 2002 by and
among JAKKS Pacific, Inc., a Delaware corporation ("JAKKS"), Toymax
International, Inc., a Delaware corporation ("Toymax"), and the shareholders of
Toymax listed on Schedule I (the "Shareholders").


                              W I T N E S S E T H:

         WHEREAS, JAKKS desires to acquire Toymax; and

         WHEREAS, the parties hereto intend that such acquisition be effected in
two stages, in the first of which JAKKS shall purchase all of the outstanding
capital stock of Toymax owned by the Shareholders, and, in the second of which a
subsidiary of JAKKS will merge with and into Toymax, and the stockholders of
Toymax other than JAKKS will receive merger consideration consisting of cash and
securities of JAKKS, so that JAKKS will become the sole stockholder of Toymax,
all on the terms and subject to the conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:

1. Certain Definitions.

         In addition to other capitalized terms defined elsewhere herein, the
following capitalized terms are used herein as follows:

         1.1 "Acquisition" means the purchase of the Shares and the related
transactions contemplated by the Acquisition Agreements.

         1.2 "Acquisition Agreement" means any of this Agreement and each
agreement to be executed and delivered at the Closing pursuant to this
Agreement, including without limitation the Registration Rights Agreement, the
Employment Agreements and the Employment Termination Agreements.

         1.3 "Affiliate" of a Person means another Person directly or indirectly
controlling, controlled by, or under common control with, such Person; for this
purpose, "control" of a Person means the power (whether or not exercised) to
direct the policies, operations or activities of such Person by virtue of the
ownership of, or right to vote or direct the manner of voting of, securities of
such Person, or pursuant to agreement or Law or otherwise.

         1.4 "Agreement" means this Stock Purchase Agreement, as amended or
supplemented.

         1.5 "Amendments" means the Termination and Replacement of Manufacturing
Agreement among Toymax, Tai Nam and certain other parties, substantially in the
form of Exhibit A, and the Termination of Agency Agreements among Toymax, Tai
Nam and certain other parties, as amended or

supplemented to date, substantially in the form of Exhibit B.

         1.6 "Assets" means the assets of Toymax and the Subsidiaries, other
than any Assets of Candy Planet, Co. (a division of Toymax, Inc.) and Monogram
International, Inc.

         1.7 "Business" means the business operated by Toymax and the
Subsidiaries, which consists of creating, designing and marketing innovative and
technologically advanced toys and leisure products, but excluding any business
operated by Candy Planet Co. (a division of Toymax Inc.) or Monogram
International, Inc.

         1.8 "Cash Payment" means the portion of the Purchase Price payable in
cash.

         1.9 "Closing" means the closing of the Acquisition as provided in
Article 7.

         1.10 "Closing Date" means the date of the Closing.

         1.11 "Code" means the Internal Revenue Code of 1986, as amended, and
the treasury regulations promulgated thereunder.

         1.12 "Consent" means any approval, authorization, consent or
ratification by or on behalf of any Person that is not a party to this
Agreement, or any waiver of, or exemption or variance from, any Contract, Permit
or Order that is required to be obtained in connection with the consummation of
the transactions contemplated by this Agreement.

         1.13 "Contract" means any material contract (including without
limitation any purchase, sale, supply or service order or agreement, equipment
lease, License Agreement or Lease) to which Toymax or any of the Subsidiaries is
a party. For the purposes hereof, a Contract is "material" if (a) it relates to
a transaction or series of transactions involving the expenditure or receipt by
Toymax or a Subsidiary of an amount in excess of $500,000 (or the transfer of
property with a fair market value in excess of $500,000), (b) a breach or
default thereunder would reasonably be expected to have a Material Adverse
Effect, (c) it relates to any transaction not in the ordinary course of the
Business, or (d) it (i) is a License Agreement relating to a Trade Right that is
material to the Business or is an employment contract, (ii) prohibits or
materially limits Toymax's or a Subsidiary's use of a Trade Right of another
Person or (iii) provides for any other Person to use, or prohibits or limits any
other Person's use of, a Trade Right of Toymax or a Subsidiary.

         1.14 "Effective Date" means the effective date of the Merger.

         1.15 "Employment Agreements" means the employment agreements,
substantially in the forms of Exhibits C-1 and C-2, to be entered into at the
Closing pursuant to Section 7.7.

         1.16 "Employment Termination Agreements" means the employment
termination agreements, substantially in the forms of Exhibits D-1 and D-2, to
be entered into at the Closing pursuant to Section 7.7.

         1.17 "Exchange Factor" means .0798 or, if the Value of JAKKS Stock on
the Closing Date is less than $16.9173, the quotient obtained by dividing $1.35
by the Value of JAKKS Stock on the


                                      -2-

Closing Date.

         1.18 "Fairness Opinion" means an opinion of Morgan Lewis Gethens & Ahn,
Inc., or another investment banking or financial advisory firm reasonably
satisfactory to JAKKS and Toymax, to the effect that the Purchase Price and the
merger consideration contemplated to be paid pursuant to the Merger Agreement
are, on the date hereof, fair, from a financial point of view, to the holders of
outstanding shares of Stock.

         1.19 "Fractional Share Payment" means an amount in cash payable in lieu
of any fractional share of JAKKS Stock that would, but for the provisions of
Section 2.2(b), be included in the Stock Payment.

         1.20 "GAAP" means generally accepted accounting principles in the
United States.

         1.21 "Governmental Authority" means any United States or foreign
federal, state or local government or governmental authority, agency or
instrumentality, any court or arbitration panel of competent jurisdiction or the
Nasdaq Stock Market, Inc.

         1.22 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.

         1.23 "HSR Form" means a Notification and Report Form for Certain
Mergers and Acquisitions required to be filed pursuant to the HSR Act in
connection with the Acquisition.

         1.24 "JAKKS Stock" means the common stock, par value $.001 per share,
of JAKKS.

         1.25 "Law" means common law and any statute, rule, regulation or
ordinance of any Governmental Authority and includes any judicial decision
applying or interpreting common law or any other Law.

         1.26 "License Agreement" means a license or other agreement pursuant to
which Toymax has the right to use or exploit any Trade Right of another Person,
which Trade Right is material to the Business.

         1.27 "Lien" means any security interest, conditional sale or other
title retention agreement, mortgage, pledge, lien, charge, encumbrance or other
adverse claim or interest.

         1.28 "Lien Report" means a report in customary form of a lien search or
survey, covering security interests and other notice filings under the Uniform
Commercial Code and tax liens and judgment liens of record in each jurisdiction
where Toymax conducts the Business, upon, against or affecting the Assets.

         1.29 "Material Adverse Effect" means a material adverse effect on the
Business, the Assets or the operations, financial condition or results of
operations of Toymax and the Subsidiaries, taken as a whole.

         1.30 "Merger" means the statutory merger of TI Subsidiary with and into
Toymax,


                                      -3-

as contemplated under the Merger Agreement.

         1.31 "Merger Agreement" means the Agreement of Merger providing for the
merger of TI Subsidiary with and into Toymax, as amended or supplemented, which
Merger Agreement is being executed concurrent with the execution of this
Agreement.

         1.32 "Monogram Transaction" means the transaction consisting of the
sale of all or substantially all of the assets of Candy Planet, Co. (a division
of Toymax Inc.) and of Monogram International Inc. and related transactions.

         1.33 "Notice" means any notice given to, or any declaration, filing,
registration or recordation made with, any Person.

         1.34 "Order" means any judgment, order, writ, decree, award, directive,
ruling or decision of any Governmental Authority.

         1.35 "Permit" means any permit, license, certification, qualification,
franchise or similar privilege issued or granted by any Governmental Authority.

         1.36 "Permitted Lien" means any of the following: (i) statutory
landlord's liens and liens for current taxes, assessments and governmental
charges not yet due and payable (or being contested in good faith); (ii) zoning
laws and ordinances and similar legal requirements; (iii) rights reserved to any
Governmental Authority to regulate the affected property and restrictions of
general applicability imposed by federal or state securities Laws; (iv) license
transfer fees; (v) Liens to which JAKKS has consented; (vi) Liens that will be
released or terminated at or prior to Closing; and (vii) other Liens set forth
on Schedule 1.36.

         1.37 "Person" means any natural person, corporation, joint stock
company, limited liability company, partnership, joint venture, association,
trust, Governmental Authority or other entity, or any group of the foregoing
acting in concert.

         1.38 "Proceeding" means any action, suit, arbitration, audit,
investigation or other proceeding, at law or in equity, before or by any
Governmental Authority.

         1.39 "Purchase Price" means the aggregate of the Cash Payment and the
Stock Payment.

         1.40 "Real Property" means any real property owned by Toymax or in
which Toymax holds a leasehold interest.

         1.41 "Registration Rights Agreement" means the registration rights
agreement, substantially in the form of Exhibit E, to be entered into at the
Closing pursuant to Section 7.5.

         1.42 "Shares" means shares of Stock owned by a Shareholder.

         1.43 "Stock" means the common stock, par value $.01 per share, of
Toymax.

         1.44 "Stock Payment" means the portion of the Purchase Price payable by
delivery of


                                      -4-

shares of JAKKS Stock.

         1.45 "Subsidiary" means each subsidiary of Toymax, or any of them, as
dictated by the context.

         1.46 "Tai Nam" means Tai Nam Industrial Company Limited.

         1.47 "Tax" means any United States or foreign federal, state or local
income, excise, sales, property, withholding, social security or franchise tax
or assessment, and any interest, penalty or fine due thereon or with respect
thereto.

         1.48 "TI Subsidiary" means JP/TII Acquisition Corp., a Delaware
corporation.

         1.49 [Intentionally Omitted.]

         1.50 "Toymax Accountants" means BDO Seidman, LLP, Toymax's independent
certified public accountants and auditors.

         1.51 "Trade Right" means a patent, claim of copyright, trademark, trade
name, brand name, service mark, logo, symbol, trade dress or design, or
representation or expression of any thereof, or registration or application for
registration thereof, or any other invention, trade secret, technical
information, know-how or other proprietary right or intellectual property.

         1.52 "Value of JAKKS Stock" on any date means the average of the
closing sale price per share of JAKKS Stock as reported on the Nasdaq National
Market over the last ten trading days preceding (but not including) the last
trading day preceding such date.

         2. Purchase of the Toymax Shares; Escrow.

         2.1 At the Closing, subject to the terms and conditions of this
Agreement, each Shareholder shall sell, assign, transfer and deliver to JAKKS
the Shares then owned by such Shareholder.

         2.2 At the Closing, subject to the terms and conditions of this
Agreement, JAKKS shall pay the Purchase Price to the respective Shareholders, as
follows:

                  (a) the Cash Payment payable to each Shareholder, in an amount
equal to the product of $3.00 and the number of Shares owned by such Shareholder
on the Closing Date, plus the Fractional Share Payment payable to such
Shareholder, if any, and

                  (b) subject to Sections 2.3 and 2.4, the Stock Payment payable
to each Shareholder, in a number of shares of JAKKS Stock equal to the product
of the Exchange Factor and the number of Shares owned by such Shareholder on the
Closing Date; provided that no fractional shares of JAKKS Stock shall be issued
as part of the Stock Payment, but in lieu thereof, the Fractional Share Payment
shall be paid in an amount equal to the product of the fraction of the Share
that, but for this provision, would have been issued and $18.797 or, if the
Value of JAKKS Stock on the Closing Date is less than $16.9173, the Value of
JAKKS Stock on the Closing Date.


                                      -5-

         2.3 If the Value of JAKKS Stock on the Closing Date exceeds $20.6767,
JAKKS, at its option, shall be entitled to pay the Purchase Price entirely in
cash, in which case, JAKKS shall pay to each Shareholder a cash amount equal to
the sum of (i) the Cash Payment and (ii) in lieu of the Stock Payment and the
Fractional Share Payment, if any, that would otherwise be payable to such
Shareholder (but for this provision), cash in the amount of $1.65 per share of
Stock being acquired from such Shareholder hereunder.

         2.4 Any other provision hereof notwithstanding, if the determination of
the Stock Payment in accordance with Section 2.2 (without regard to this Section
2.4) would result in a number of shares of JAKKS Stock which, together with the
number of shares of JAKKS Stock which would be issuable on the Effective Date
pursuant to Section 5.2 of the Merger Agreement (assuming that, for the purpose
of determining such number of shares of JAKKS Stock, the Value of JAKKS Stock on
the Effective Date would equal the Value of JAKKS Stock on the Closing Date),
would exceed the maximum number of shares of JAKKS Stock which could be issued
without obtaining stockholder approval if and as required pursuant to Nasdaq
Stock Market Rule 4350(i)(C) or (D) (the "Nasdaq Rule"), then the number of
shares of JAKKS Stock constituting the aggregate Stock Payment under this
Agreement shall equal the product of (a) the number of shares of JAKKS Stock
which, after giving effect to the limitation imposed by the Nasdaq Rule, are to
be included in the aggregate Stock Payment under this Agreement and the Stock
Payment under the Merger Agreement, and (b) a fraction, the numerator of which
is the number of Shares and the denominator of which is the total number of
shares of Stock outstanding immediately prior to the Closing. In such case,
JAKKS shall deliver to each Shareholder a pro rata portion of the aggregate
Stock Payment based on the number of Shares owned by such Shareholder on the
Closing Date, and shall pay to each Shareholder an amount in cash equal to the
product of (A) the Value of JAKKS Stock on the Closing Date and (B) the excess
of the number of shares of JAKKS Stock which, but for the provisions of this
Section 2.4 would have been included in the Stock Payment to such Shareholder
over the number of shares of JAKKS Stock to be included in the Stock Payment to
such Shareholder after giving effect to the limitation imposed by this Section
2.4.

         2.5      (a) Concurrent with the execution of this Agreement, (i) JAKKS
is delivering to Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP
("FKIWSB&R") cash in an amount equal to the aggregate Cash Payment that would be
payable to the Shareholders pursuant to Section 2.2(a), calculated based on the
number of Shares owned by each Shareholder on the date of this Agreement, to be
held in escrow by FKIWSB&R pending the Closing or earlier termination of this
Agreement; and (ii) the Shareholders are delivering to Brown Raysman Millstein
Felder & Steiner LLP ("BRMF&S" and, together with FKIWSB&R, the "Escrow Agents")
stock certificates representing the Shares owned by the Shareholders as of the
date hereof, to be held in escrow by BRMF&S pending the Closing or the earlier
termination of this Agreement.

                  (b) JAKKS and the Shareholders hereby appoint the Escrow
Agents to serve as escrow agents hereunder in accordance with the terms hereof,
and the Escrow Agents hereby accept such appointment. Each of the Escrow Agents
agrees to hold and disburse the funds or stock certificates deposited with it
hereunder and to not disburse or deliver any of such funds or stock certificates
except at the Closing (in accordance with Section 7.4) or otherwise upon three
days' prior Notice: (i) signed by JAKKS and delivered to FKIWSB&R and all of the
Shareholders, the case of FKIWSB&R, or (ii) signed by all of the Shareholders
and delivered to BRMF&S and JAKKS, in the case of BRMF&S.


                                      -6-

                  (c) The Escrow Agents shall have no obligations hereunder
except as expressly set forth herein. Neither Escrow Agent shall incur any
liability with respect to (a) any action taken or omitted in good faith upon the
advice of its counsel given with respect to any questions relating to the duties
and responsibilities of the Escrow Agents under this Agreement, or (b) any
action taken or omitted in reliance upon any instrument which such Escrow Agent
shall in good faith believe to be genuine (including the execution of such
instrument, the identity or authority of any Person executing such instrument,
its validity and effectiveness, and the truth and accuracy of any information
contained therein), to have been signed by a proper Person or Persons and to
conform to the provisions of this Agreement. In addition, neither Escrow Agent
shall be liable to any Person by reason of any loss of any portion of the funds
or the stock certificates deposited with it hereunder other than any such loss
that results from such Escrow Agent's gross negligence of willful misconduct,
and neither Escrow Agent shall be bound in any way by any contract or agreement
between or among the other parties hereto, regardless of whether such Escrow
Agent has knowledge of such contract or agreement or of its terms or condition.

                  (d) If this Agreement is terminated, (i) JAKKS shall be
entitled to the release of all funds then held by FKIWSB&R hereunder upon three
days' prior Notice signed by JAKKS and delivered to FKIWSB&R and all of the
Shareholders; and (ii) the Shareholders shall be entitled to the release of all
stock certificates then held by BRMF&S hereunder upon three days' prior Notice
signed by the Shareholders and delivered to BRMF&S and JAKKS.

                  (e) Each Escrow Agent's respective obligations hereunder shall
terminate upon the earliest to occur of (a) disbursement or release, in
accordance with the terms hereof, of all of the funds or stock certificates
deposited with it hereunder, (b) written consent signed by JAKKS and all of the
Shareholders, and (c) delivery of all funds or stock certificates then held by
its hereunder into a court of competent jurisdiction upon commencement of an
interpleader action or other Proceeding with respect to such funds or stock
certificates.

2.6      At the Closing:

                  (a) each Option (as defined in the Merger Agreement) held by
David Chu or any Shareholder on the Closing Date shall immediately terminate in
accordance with the applicable Amendment or Employment Termination Agreement, as
the case may be; and

                  (b) each Option outstanding on the Closing Date, other than
any Option then held by David Chu or any Shareholder, shall be deemed amended by
this provision, without any other act or deed by Toymax or the holder of such
Option, to provide that such Option shall remain in full force and effect
(subject to the provisions hereof), and that on the earliest of the date of
termination of this Agreement (if the Merger is abandoned after the Closing
Date), the Effective Date or September 30, 2002 (such earliest date, the
"Acceleration Date"), such Option shall be fully exercisable with respect to all
shares of Stock covered thereby, notwithstanding that pursuant to the provisions
thereof (including any provision of any Option Plan (as defined in the Merger
Agreement) incorporated by reference therein or otherwise applicable thereto)
such Option, but for this provision, would terminate prior to, or would not be
vested or exercisable with respect to any shares covered thereby on, the
Acceleration Date; and such Option shall remain exercisable during the six-month
period following the Acceleration Date (the "New Exercise Period"),
notwithstanding that, but for this provision, such Option would, pursuant to the
provisions thereof (including any provision of any Option Plan incorporated by


                                      -7-

reference therein or otherwise applicable thereto) terminate or cease to be
exercisable with respect to any shares covered thereby prior to the expiration
of the New Exercise Period. Upon the expiration of the New Exercise Period, each
such Option shall terminate.

3. Representations and Warranties of the Shareholders.

         The Shareholders, jointly and severally, hereby represent and warrant
to JAKKS as follows:

         3.1 Toymax is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware and has full corporate
power and authority to own the Assets and carry on the Business as and in the
places where such Assets are now located or such Business is now being
conducted. Complete and correct copies of Toymax's Certificate of Incorporation,
including all amendments thereto as of the date hereof, and Toymax's Bylaws,
including all amendments thereto as of the date hereof, have been delivered or
made available to JAKKS. Toymax and each of the Subsidiaries is duly authorized
or qualified to transact business as a foreign corporation in each jurisdiction
where such authorization or qualification is required under applicable Law in
light of the location or character of the Assets or the operation of the
Business (except where the failure to be so authorized or qualified would not
reasonably be expected to have a Material Adverse Effect), and each such
jurisdiction is listed on Schedule 3.1. Toymax's authorized capital stock
consists of 5,000,000 shares of Preferred Stock, par value $.01 per share, none
of which is outstanding, and 50,000,000 shares of Stock, of which 12,214,678
shares are outstanding. Except as set forth on Schedule I, each Shareholder owns
beneficially and of record all of the Shares set forth opposite such
Shareholder's name on Schedule I, free and clear of all Liens or any restriction
with respect to the voting or disposition thereof (other than Permitted Liens).
All of the Shares are duly authorized, validly issued, fully paid and
non-assessable. Except as set forth on Schedule 3.1, no shares of capital stock
of Toymax are held as treasury stock or reserved for issuance, and there are no
agreements, commitments or arrangements providing for the issuance or sale of
any thereof, or any issued or outstanding options, warrants or other rights to
purchase, or securities or instruments convertible into or exchangeable for, any
capital stock of Toymax.

         3.2 Toymax has full corporate power and authority, and each Shareholder
has the legal capacity, power and authority, to execute and deliver this
Agreement and each other Acquisition Agreement to which it is a party and to
perform its respective obligations hereunder and thereunder. The execution and
delivery by Toymax of this Agreement and each other Acquisition Agreement to
which it is a party and the performance of its obligations hereunder and
thereunder have been duly authorized by all requisite corporate action on its
part. This Agreement has been, and each other Acquisition Agreement to which it
is a party will be, duly executed and delivered by Toymax and each of the
Shareholders that is a party thereto, and this Agreement is, and each other
Acquisition Agreement to which it is a party, when so executed and delivered,
will be, a legally valid and binding obligation of Toymax and each of the
Shareholders that is a party thereto, enforceable against each of them in
accordance with their respective terms, subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and (b) equitable principles limiting
the availability of specific performance, injunctive relief and other equitable
remedies. Subject to obtaining the Toymax Consents (as defined in Section 3.3)
and compliance with Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14f-1 promulgated thereunder, to the
Shareholders' knowledge, the execution and delivery of this Agreement by Toymax
and the Shareholders do not, and the execution and delivery of


                                      -8-

each other Acquisition Agreement by Toymax and the Shareholders and the
performance by Toymax and the Shareholders of their respective obligations
hereunder and thereunder will not, violate any provision of Toymax's Certificate
of Incorporation or Bylaws and do not and will not conflict with or result in
any breach of any condition or provision of, or constitute a default under, or
create or give rise to any adverse right of termination or cancellation by, or
excuse the performance of, any other Person under, any Contract, or result in
the creation or imposition of any Lien upon any of the Assets by reason of the
terms of, any Contract, Lien or Order relating to the Business to which Toymax,
or any Shareholder is a party or is subject or which is binding upon any of them
or the Assets.

         3.3 Except for the filing by Toymax of an HSR Form and the expiration
or early termination of the applicable waiting period under the HSR Act and
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and except as set forth on Schedule 3.3, to the Shareholders'
knowledge, no Consent of, or Notice to, any Person is required to be obtained or
made by Toymax or any Shareholder in connection with its execution and delivery
of this Agreement or any other Acquisition Agreement to which it is a party, or
the performance of its obligations hereunder or thereunder (such Consents and
Notices set forth on Schedule 3.3 are referred to herein as "Toymax Consents").

         3.4 Except as set forth on Schedule 3.4, to the Shareholders'
knowledge, no Proceeding in which Toymax, a Subsidiary or any of the
Shareholders is a named party is pending, threatened against or affecting the
Business, the Assets or the operations of Toymax or any Subsidiary in which an
unfavorable Order would reasonably be expected to have a Material Adverse
Effect, or would prohibit, invalidate, or make unlawful, in whole or in part,
the Acquisition, this Agreement or any other Acquisition Agreement, or the
carrying out of the provisions hereof or thereof. To the Shareholders'
knowledge, neither Toymax nor any Subsidiary is in default in respect of any
Order, nor is there any Order enjoining Toymax, any Subsidiary or any
Shareholder in respect of, or the effect of which is to prohibit or restrict
Toymax's, any Subsidiary's or any Shareholder's performance of, its obligations
hereunder or under any Acquisition Agreement to which it is a party.

         3.5 The Shareholders have delivered to JAKKS Toymax's consolidated
balance sheet at December 31, 2001 (the "Balance Sheet") and the related
consolidated statements or operations and cash flows for Toymax's fiscal period
then ended (collectively, the "Financial Statements"), all of which Financial
Statements have been prepared in accordance with GAAP, and present fairly in all
material respects the consolidated financial position of Toymax and the
Subsidiaries at such date and the results of their operations for the period
then ended, subject in each case to normal recurring year-end adjustments and to
the absence of notes. To the Shareholders' knowledge, Toymax and the
Subsidiaries have no material liabilities or obligations of any kind, contingent
or otherwise, relating to the Business or the Assets which are not reflected on
the Balance Sheet, except as set forth on Schedule 3.5.

         3.6 Each of the Shareholders is acquiring the shares of JAKKS Stock
constituting the Stock Payment for its own account, for investment and not with
a view to, or in connection with, or with any present intention of, any resale
or other disposition thereof.

         3.7 Each Shareholder (a) is an informed and sophisticated investor, (b)
possesses such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of its investment under this
Agreement, (c) has engaged and consulted with expert legal,


                                      -9-

accounting and tax advisors experienced in the evaluation of transactions such
as the Acquisition, and (d) has conducted a review and examination of
information provided to it regarding JAKKS, JAKKS Stock, the Acquisition
Agreements and the transactions contemplated thereby, including information
which such Shareholder considers necessary or advisable to enable it to make an
informed decision concerning its acquisition of JAKKS Stock.

         3.8 Except as set forth on Schedule 3.8, none of Toymax, any Subsidiary
or the Shareholders has employed or engaged any Person to act as a broker,
finder or other intermediary in connection with the Acquisition, and no Person
is entitled to any fee, commission or other compensation relating to any such
employment or engagement by Toymax, a Subsidiary or a Shareholder. Any fee,
commission or other compensation payable to any Person is solely the obligation
of the Shareholders (and not Toymax or any Subsidiary) and shall be promptly
paid in full by the Shareholders (and not Toymax or any Subsidiary).

         3.9 No representation or warranty by any Shareholder in this Agreement,
any other Acquisition Agreement or any certificate being delivered at the
Closing pursuant to Section 7.2(d) contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.

4. Representations and Warranties of JAKKS.

         JAKKS hereby represents and warrants to the Shareholders as follows:

         4.1 JAKKS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate power
and authority to own its assets and carry on its business as and in the places
where such assets are now owned or such business is now being conducted.
Complete and correct copies of JAKKS' Certificate of Incorporation, including
all amendments thereto as of the date hereof, and Bylaws, including all
amendments thereto as of the date hereof, have been delivered or made available
to the Shareholders. JAKKS' authorized capital stock consists of 1,000,000
shares of preferred stock, par value $.001 per share, none of which is
outstanding, and 25,000,000 shares of JAKKS Stock, of which 18,826,574 shares
are outstanding. Approximately 1,493,600 shares of capital stock of JAKKS are
held as treasury stock, and approximately 2,578,940 shares of capital stock of
JAKKS are reserved for issuance under agreements, commitments or arrangements
providing for the issuance or sale of any thereof, including outstanding options
and warrants to purchase JAKKS Stock. When issued in accordance with the terms
of this Agreement, the shares of JAKKS Stock constituting the Stock Payment will
be duly authorized, validly issued, fully-paid and non-assessable.

         4.2 JAKKS has full corporate power and authority to execute and deliver
this Agreement and each other Acquisition Agreement to which it is a party and
to perform its obligations hereunder and thereunder. The execution and delivery
by JAKKS of this Agreement and each other Acquisition Agreement to which it is a
party and the performance of its obligations hereunder and thereunder have been
duly authorized by all requisite corporate action on its part. This Agreement
has been, and each other Acquisition Agreement to which it is a party will be,
duly executed and delivered by JAKKS, and this Agreement is, and each other
Acquisition Agreement to which it is a party, when so executed and delivered,
will be, a legally valid and binding obligation of JAKKS, enforceable against it
in accordance with their respective terms, subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other


                                      -10-

similar Laws now or hereafter in effect relating to creditors' rights generally,
and (b) equitable principles limiting the availability of specific performance,
injunctive relief and other equitable remedies. The execution and delivery of
this Agreement by JAKKS do not, and the execution and delivery of each other
Acquisition Agreement by JAKKS and, subject to obtaining the Consent required
under the Loan Agreement among JAKKS, Bank of America, N.A. and the other banks
party thereto, dated October 12, 2001 (the "JAKKS Loan Agreement"), the
performance by JAKKS of its obligations hereunder and thereunder will not,
violate any provision of its Certificate of Incorporation or Bylaws and do not
and will not conflict with or result in any breach of any condition or provision
of, or constitute a default under, or create or give rise to any adverse right
of termination or cancellation by, or excuse the performance of, any other
Person under, any material agreement to which JAKKS is a party or is subject, or
result in the creation or imposition of any Lien upon it or any of its assets or
the acceleration of the maturity or date of payment or other performance of any
of its obligations or have a material adverse effect on JAKKS' business, assets,
operations or financial condition by reason of the terms of, any material
agreement, license, lease, indenture, instrument, Lien or Order to which it is a
party or is subject or which relates to or is binding upon it or its assets.

         4.3 Except for the filing of an HSR Form and the expiration or early
termination of the waiting period under the HSR Act, and except for the Consent
required under the JAKKS Loan Agreement, to JAKKS' knowledge, no Consent of, or
Notice to, any Person is required to be obtained or made by JAKKS in connection
with its execution and delivery of this Agreement or any other Acquisition
Agreement to which it is a party, or the performance of its obligations
hereunder or thereunder.

         4.4 No Proceeding is pending, or, to the best of JAKKS' knowledge,
threatened, against or affecting its business, assets, operations or financial
or other condition in which an unfavorable Order would reasonably be expected to
have a material adverse effect on JAKKS' business or assets or to prohibit,
invalidate, or make unlawful, in whole or in part, the Acquisition, this
Agreement or any other Acquisition Agreement, or the carrying out of the
provisions hereof or thereof. JAKKS is not in default in respect of any Order
nor is there any Order enjoining it in respect of, or the effect of which is to
prohibit or curtail its performance of, its obligations hereunder or thereunder.

         4.5 JAKKS is acquiring the Shares for its own account, for investment
and not with a view to, or in connection with, or with any present intention of,
any resale or other disposition thereof.

         4.6 JAKKS (a) is an informed and sophisticated investor, (b) possesses
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment under this
Agreement, (c) has engaged and consulted with expert legal, accounting and tax
advisors experienced in the evaluation of transactions such as the Acquisition,
and (d) has conducted a review and examination of information provided to it
regarding the Shareholders, Toymax, the Business, the Assets, the Shares, the
Acquisition Agreements and the transactions contemplated thereby, including
information which JAKKS considers necessary or advisable to enable it to make an
informed decision concerning its purchase of the Shares.

         4.7 JAKKS has delivered to the Shareholders a draft of JAKKS' balance
sheet as of December 31, 2001, and the related statements of operations and cash
flows for JAKKS' fiscal period then ended (collectively, "JAKKS Financial
Statements"), all of which JAKKS Financial Statements have been prepared in
accordance with GAAP and present fairly in all material respects the financial


                                      -11-

position of JAKKS at such date and the results of its operations for the period
then ended, subject to normal recurring year-end adjustments and to other
adjustments that are not material in the aggregate. JAKKS has no material
liabilities or obligations of any kind, contingent or otherwise, that are
required by GAAP to be reflected on the balance sheet included in the JAKKS
Financial Statements that are not so reflected thereon, except for any such
liabilities and obligations that have arisen in the ordinary course of business.

         4.8 JAKKS has timely filed all reports, forms, statements and documents
required to be filed by it under the Securities Act of 1933, as amended (the
"Securities Act"), the Securities and Exchange Act of 1934, as amended, and any
applicable rules of the Nasdaq Stock Market, Inc., all of which reports, forms,
statements and other documents were, when filed, in material compliance with
applicable Laws. When filed, none of such reports, forms, statements and other
documents contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

         4.9 JAKKS has not employed or engaged any Person to act as a broker,
finder or other intermediary in connection with the Acquisition, and no Person
is entitled to any fee, commission or other compensation relating to any such
employment or engagement by JAKKS. Any fee, commission or other compensation
payable to any Person claiming to have been employed or engaged by JAKKS in such
capacity is solely the obligation of JAKKS and shall be promptly paid in full by
JAKKS.

         4.10 No representation or warranty by JAKKS in this Agreement or in any
other Acquisition Agreement or in the certificate being delivered at the Closing
pursuant to Section 7.3(b) contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements or facts
contained herein or therein not misleading.

5. Certain Covenants.

         5.1 From and after the date hereof and until the Closing, the parties
hereto shall use their respective commercially reasonable efforts, and shall
cooperate with each other, to cause the consummation of the Acquisition in
accordance with the terms and conditions hereof, including obtaining the Consent
of any Governmental Authority (and including the expiration or earlier
termination of the waiting period under the HSR Act), or of any other Person
with respect to any Contract or otherwise. Without limiting the generality of
the foregoing, promptly after the date of this Agreement, each party shall
prepare and give (or cause to be prepared and given) any required Notices under
any applicable Laws or otherwise to the extent reasonably necessary to
consummate the Acquisition. In particular, Toymax and JAKKS shall each use
commercially reasonable efforts to file HSR Forms under the HSR Act as soon as
practicable after the date hereof and shall file such additional documents and
furnish such additional information as the Federal Trade Commission or the
Antitrust Division of the Department of Justice may request; provided that no
provision hereof shall require JAKKS or Toymax to divest any business or assets
or to hold any business or assets separate. Each party hereto shall cooperate
and consult with the other parties with regard to, and provide any necessary
information and reasonable assistance to each other party in connection with,
all Notices given and other information supplied by such party to any
Governmental Authority or other Person in connection with obtaining any Consents
or giving any Notices in connection with this Agreement or the Acquisition. The
filing fees payable in respect of filing all HSR Forms required hereunder shall
be


                                      -12-

payable by JAKKS.

         5.2 From and after the date hereof and until the Closing, without the
prior written consent of JAKKS:

                  (a) no Shareholder shall sell, assign, transfer (including
without limitation by gift) or otherwise dispose of any Shares owned of record
by such Shareholder, or any interest therein or right thereto; or pledge,
hypothecate or otherwise create, incur or suffer to exist any Lien thereon
(other than any Permitted Lien); or agree or otherwise become legally obligated
to do any thereof; and, unless JAKKS otherwise consents, no such transfer or
disposition of Shares to any Person shall be valid or effective as between such
Shareholder and such Person unless such Person executes and becomes a party to
this Agreement and each other Acquisition Agreement to which the Shareholder (as
such) transferring such Shares is a party (and Schedule I hereto shall thereupon
be amended accordingly); and

                  (b) no Shareholder shall acquire any Stock, including without
limitation by or through the exercise of any option, warrant or other right to
purchase, or the conversion of exchange of any security or instrument
convertible or exchangeable for, any Stock.

         5.3 From and after the date hereof and until the Closing, except as
otherwise provided on Schedule 5.3 or elsewhere herein or as contemplated by the
Monogram Transaction, or as JAKKS may otherwise consent (which consent shall not
be unreasonably withheld), Toymax shall:

                  (a) conduct the Business in its ordinary course;

                  (b) use commercially reasonable efforts to preserve the
Business and the Assets and maintain its relationships with customers and other
Persons with which it has material business dealings;

                  (c) not (i) sell, lease, transfer or dispose of any material
Asset, other than in the ordinary course of business or the disposal of
defective, obsolete or otherwise unusable Assets, or (ii) terminate any
Contract, except upon expiration of the term thereof as provided therein and
except for any Contract that ceases to be necessary in connection with the
operation of the Business;

                  (d) use commercially reasonable efforts to maintain all
material Permits and Consents, other than any such Permits or Consents that
cease to be necessary in connection with the operation of the Business;

                  (e) use its commercially reasonable efforts to maintain in
full force and effect (or to replace the same on substantially equivalent terms)
all currently applicable insurance relating to the Business or Assets;

                  (f) except as required under a Contract, Permit, Law or
otherwise by any Governmental Authority, or in the ordinary course of business
consistent with Toymax's past practices, not increase the compensation or other
employment benefits payable to or for the benefit of any employee of Toymax;

                  (g) except as required under a Contract, Permit, Law or
otherwise by any


                                      -13-

Governmental Authority, or in the ordinary course of business consistent with
Toymax's past practices, not create, incur, assume or suffer any liability or
obligation to any Shareholder or any Affiliate thereof;

                  (h) not amend its Certificate of Incorporation or Bylaws;

                  (i) not merge or consolidate with any other Person or effect
any capital reorganization;

                  (j) not acquire any business or material assets of any other
Person or make any capital expenditure in excess of $500,000, other than in the
ordinary course of business;

                  (k) not issue or reserve for issuance any shares of its
capital stock or issue or grant any options, warrants or other rights to
purchase, or securities or instruments convertible into or exchangeable for, any
capital stock of Toymax, except upon the exercise of options, warrants or rights
to purchase or the conversion or exchange of securities outstanding on the date
hereof, or agree or otherwise become legally obligated to issue or to grant any
thereof;

                  (l) not declare, set aside or pay any dividends; and

                  (m) not redeem, repurchase or otherwise reacquire any Shares
or retire or cancel any capital stock.

         5.4 From and after the date hereof and until the Closing, Toymax shall
furnish to JAKKS such information with respect to the Business and Assets as
JAKKS may from time to time reasonably request and shall permit JAKKS and its
authorized representatives access, at a mutually-agreeable time and during
regular business hours and upon reasonable prior Notice to Toymax, to conduct,
at JAKKS' sole expense and in a manner that does not interfere with Toymax's
operations, a physical inventory of the Assets, to inspect the Real Property, to
examine the books and records of Toymax and to make inquiries of responsible
Persons designated by Toymax with respect thereto; provided that any information
so disclosed or otherwise made available or accessible to JAKKS shall not
constitute an additional representation or warranty of Toymax or any Shareholder
beyond those expressly set forth in Article 3, and provided further that all
such information shall be subject to Section 5.8.

         5.5 From and after the date hereof and until the Closing, except for
press releases describing the Acquisition to be made by JAKKS and Toymax,
respectively, promptly after the execution of this Agreement, each substantially
in the form of Exhibit G, no party hereto shall make any press release or other
public announcement with respect to this Agreement or the Acquisition without
the prior written consent of the other parties (which consent shall not be
unreasonably withheld), unless such announcement is required by Law, in which
case the other party or parties hereto shall be given Notice of such requirement
prior to such announcement and the parties shall consult with each other as to
the scope and substance of such disclosure.

         5.6 From and after the date hereof and until this agreement is
terminated, none of Toymax, any Shareholder, any Affiliate thereof, or any
director, officer, employee or other agent or representative of any of them,
shall, directly or indirectly, solicit, entertain or consummate any transaction
pursuant to any offer or proposal for, affirmatively respond to any inquiry
regarding, or


                                      -14-

enter into any substantive negotiations or discussions with any Person other
than JAKKS with respect to, any transaction involving the sale or other
disposition (including without limitation by or through the merger or
consolidation of Toymax with any other Person) any of the capital stock of
Toymax or of the Business or any of the Assets (other than in the ordinary
course of business and other than the Monogram Transaction). The Shareholders
shall promptly advise JAKKS of the receipt of any such inquiry, offer or
proposal and the material terms thereof.

         5.7 JAKKS acknowledges that certain information relating to or
concerned with the Business and affairs of Toymax, including without limitation
all non-publicly available Trade Rights, product information, customer and
supplier lists, marketing and sales data, personnel and financing and Tax
matters is proprietary to Toymax, and that its confidentiality is absolutely
essential to the operation of the Business. Until the Closing, all of such
information shall be subject to that certain Confidentiality and Non-Disclosure
Agreement dated as of January 10, 2002, between Toymax and JAKKS and in favor of
Toymax (the "Toymax Confidentiality Agreement"), to which the parties hereby
agree to be bound and which is incorporated herein by this reference.

         5.8 Toymax and the Shareholders acknowledge that certain information
relating to or concerned with the business and affairs of JAKKS, including
without limitation all non-publicly available Trade Rights, product information,
customer and supplier lists, marketing and sales data, personnel and financing
and Tax matters is proprietary to JAKKS, and that its confidentiality is
absolutely essential to the operation of JAKKS' business. Until the Closing, all
of such information shall be subject to that certain Confidentiality and
Non-Disclosure Agreement dated as of January 10, 2002, between JAKKS and Toymax
and in favor of JAKKS (the "JAKKS Confidentiality Agreement"), to which the
parties hereby agree to be bound and which is incorporated herein by this
reference.

         5.9 As soon as practicable following the date of this Agreement, JAKKS
shall prepare and file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-3 covering the shares of JAKKS Stock
constituting the Stock Payment (the "Registrable Stock") (or other form suitable
for the registration of such shares under the Securities Act), which Form S-3 or
other applicable form ("Registration Statement") will comply with the applicable
provisions of the Securities Act and the applicable rules promulgated
thereunder. JAKKS shall use commercially reasonable efforts to file with the SEC
such additional documents and furnish the SEC such additional information as the
SEC may request or otherwise respond to the SEC's comments, if any, on the
Registration Statement and any such other documents or information. JAKKS shall
make such changes in the Registration Statement as are appropriate based on the
SEC's comments, if any, and shall use commercially reasonable efforts to cause
the Registration Statement to become effective under the Securities Act on the
Effective Date. JAKKS shall provide to the Shareholders a draft of the
Registration Statement, and shall advise them of any information to be furnished
to the SEC, at a reasonably sufficient time in advance in order to allow the
Shareholders to review the same and give to JAKKS any comments or suggestions
they may have thereon. JAKKS shall also furnish to the Shareholders copies of
any correspondence to or from the SEC relating to the Registration Statement and
advise Toymax of the SEC's comments, if any, thereon, and shall confer with the
Shareholders as to the appropriate response thereto. The Shareholders shall
cooperate with JAKKS in connection with the preparation and filing of the
Registration Statement and in responding to any SEC comments thereon, and shall
provide to JAKKS, at JAKKS' request, any information required to be included in
the Registration Statement (including in any amendment or supplement thereto) in
accordance with the Securities Act and so that the Registration Statement shall
not at any time prior to or at the time it becomes effective contain any


                                      -15-

misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. JAKKS shall also use commercially reasonable efforts to
register and qualify the Registrable Stock, and to maintain such registration or
qualification for so long as the Registration Statement remains effective, under
applicable state legal requirements, including state blue-sky laws, for offer
and resale to the public. JAKKS shall pay the filing fee(s), if any, applicable
to the filing of the Registration Statement with the SEC and obtaining any other
registrations or qualifications hereunder. At the Closing, JAKKS and the
Shareholders shall enter into the Registration Rights Agreement in order to
implement the provisions of this Section 5.9.

         5.10 The Shareholders shall cause five members of Toymax's board of
directors holding office immediately prior to the Closing to resign, effective
upon the later of the Closing or upon compliance with the applicable
requirements of Section 14(f) of the Exchange Act. The Shareholders shall cause
the remaining directors to (i) cause the number of directors constituting the
entire board to be increased to eight, and (ii) elect the then-existing members
of JAKKS' board of directors (or their designees) to serve as the remaining six
members of Toymax's board of directors. As soon as practicable following the
date of this Agreement, Toymax shall prepare and shall file with the SEC, and
shall deliver to the holders of Stock who are entitled to receive the same, an
information statement, pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.

         5.11 In the event that JAKKS does not obtain the consent required under
the JAKKS Loan Agreement prior to Closing, or that prior to Closing JAKKS is in
default under the JAKKS Loan Agreement or the JAKKS Loan Agreement terminates,
JAKKS shall use commercially reasonable efforts to cure any such default, if
possible, or, if the JAKKS Loan Agreement is terminated, to obtain comparable
alternative financing prior to the Closing; provided that nothing in this
provision shall be construed as or imply any condition to JAKKS' obligation to
consummate the transactions contemplated hereby.

         5.12 Prior to the Closing, each of the Shareholders shall transfer to
Toymax any securities of MaxVerse Interactive, Inc. or any other Subsidiary that
are held by such Shareholder, without receiving any consideration therefor other
than the Purchase Price.

         5.13 The Shareholders shall use their respective commercially
reasonable efforts to cause each of Steven Lebensfeld and Harvey Goldberg to
enter into the applicable Employment Agreement and the applicable Employment
Termination Agreement. 5.14 The Shareholders shall use commercially reasonable
efforts to cause Tai Nam and its Affiliates to, and Toymax shall and shall cause
its applicable Affiliates to, enter into the Amendments.

         5.15 Toymax shall deliver or cause to be delivered to JAKKS a Lien
Report or Reports, dated not earlier than ten business days prior to the Closing
Date, disclosing no material liens (of the type covered by the Lien Report) on
the Assets other than Permitted Liens and other Liens disclosed in the Financial
Statements, other than such liens that are cured on or prior to the Closing
Date.

6. Conditions to Closing.

         6.1 The obligation of JAKKS to consummate the Acquisition in accordance
herewith shall


                                      -16-

be subject to the satisfaction (or waiver) prior to the Closing of each of the
following conditions:

                  (a) the representations and warranties made by the
Shareholders herein shall be true in all material respects on and as of the
Closing Date;

                  (b) Toymax and the Shareholders shall have, in all material
respects, performed and complied with all obligations and conditions to be
performed or complied with by them on or prior to the Closing Date hereunder;

                  (c) no Order or Law shall be in effect which prohibits
consummation of the Acquisition or the Merger, other than any such Order or Law
that results from a Proceeding initiated by JAKKS;

                  (d) each Toymax Consent that is listed on Schedule 6.1 shall
have been obtained;

                  (e) JAKKS and Toymax shall have filed their respective HSR
Forms in accordance with the HSR Act and the waiting period thereunder shall
have expired or been terminated;

                  (f) there shall not have occurred, since the date of this
Agreement, any Material Adverse Effect, other than as disclosed or contemplated
hereunder;

                  (g) Toymax shall have received the Fairness Opinion, which
shall not have been withdrawn, rescinded or adversely updated or modified; and

                  (h) Toymax, the Shareholders and the other parties thereto
(other than JAKKS) shall have executed and/or delivered at the Closing all the
documents so to be executed and/or delivered by them and shall have taken all
other actions at the Closing so to be taken by them, pursuant to Article 7.

         6.2 The obligation of the Shareholders to consummate the Acquisition in
accordance herewith shall be subject to the satisfaction (or waiver) prior to or
at the Closing of each of the following conditions:

                  (a) the representations and warranties made by JAKKS herein
shall be true in all material respects on and as of the Closing Date;

                  (b) JAKKS shall have, in all material respects, performed and
complied with all obligations and conditions to be performed or complied with by
it on or prior to the Closing Date hereunder;

                  (c) no Order or Law shall be in effect which prohibits the
consummation of the Acquisition or the Merger, other than any such Order or Law
that results from a Proceeding initiated by JAKKS;

                  (d) JAKKS and Toymax shall have filed their respective HSR
Forms in accordance with the HSR Act and the waiting period thereunder shall
have expired or been terminated;


                                      -17-

                  (e) Toymax shall have received the Fairness Opinion, which
shall not have been withdrawn, rescinded or adversely updated or modified;

                  (f) each Toymax Consent of a Governmental Authority that is
listed on Schedule 6.1 shall have been obtained;

                  (g) the Merger Agreement shall be in full force and effect;
and

                  (h) JAKKS and the other parties thereto (other than Toymax and
the Shareholders) shall have executed and/or delivered at the Closing all the
documents and monies so to be executed and/or delivered by it, and JAKKS shall
have taken all other actions at the Closing so to be taken by it, pursuant to
Article 7.

7. Closing.

         7.1 The Closing shall be held at the offices of Feder, Kaszovitz,
Isaacson, Weber, Skala, Bass & Rhine LLP, 750 Lexington Avenue, New York, New
York 10022-1200 on the earliest practicable date, and in any event within five
days, after the satisfaction (or waiver) of all conditions to the Closing
provided in Article 6 (other than any condition that, by its terms, is to be
satisfied at the Closing), or at such other place or on such other date, and at
such time, as the parties hereto may agree. The execution and/or delivery of
each document to be executed and/or delivered at the Closing and each other
action to be taken at the Closing shall be subject to the condition that every
other document to be executed and/or delivered at the Closing is so executed
and/or delivered and every other action to be taken at the Closing is so taken,
and all such documents and actions shall be deemed to be executed and/or
delivered or taken, as the case may be, simultaneously.

         7.2 At the Closing, the Shareholders shall deliver or cause to be
delivered to JAKKS:

                  (a) certificates representing the Shares, each duly endorsed
for transfer to JAKKS or together with a duly executed stock power in favor of
JAKKS, and with any required stock transfer stamps affixed thereto;

                  (b) copies of any Toymax Consents listed on Schedule 6.1 that
have been obtained and that have not theretofore been delivered to JAKKS;

                  (c) the resignations of five of Toymax's directors holding
office immediately prior to the Closing, which resignations shall be effective
upon the later of the Closing and compliance by Toymax with the applicable
provisions of Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder; and

                  (d) a certificate of Toymax's Chief Executive Officer or Chief
Financial Officer to the effect that all the conditions to Closing set forth in
Sections 6.1(b) (insofar as related to Toymax) and (f) have been satisfied; and
a certificate of each of the Shareholders to the effect that all of the
conditions to Closing set forth in Sections 6.1(a), (b) (insofar as related to
the Shareholders) and (c) have been satisfied, and setting forth any
circumstances that exist as of the Closing Date, and any events that have
occurred between the date hereof and the Closing Date, that result in any of the
Shareholders' representations or warranties contained in Article 3 hereof being
untrue in any material


                                      -18-

respect; provided that the execution and delivery of such certificate by a
Shareholder, by itself, shall not constitute a basis for any liability of a
Shareholder for breach of any representation or warranty hereunder, other than
as expressly set forth in this Agreement; and

                  (e) true and correct copies of the resolutions adopted by the
board of directors of Toymax approving this Agreement and the Merger Agreement.

         7.3 At the Closing, JAKKS shall:

                  (a) pay and deliver, or cause to be paid and delivered, the
Purchase Price to the Shareholders, as set forth in Sections 2.2 and 7.4 and in
the manner instructed by the Shareholders in a Notice given to JAKKS prior to
the Closing Date; and

                  (b) deliver to Toymax and the Shareholders a Certificate of
JAKKS' Chief Executive Officer to the effect that all the conditions to Closing
set forth in Sections 6.2(a), (b) and (c) have been satisfied, and setting forth
any circumstances that exist as of the Closing Date, and any events that have
occurred between the date hereof and the Closing Date, that result in any of
JAKKS' representations or warranties contained in Article 4 hereof being untrue
in any material respect.

         7.4 At the Closing:

                  (a) JAKKS and the Shareholders shall give written notice to
FKIWSB&R and BRMF&S, signed by JAKKS and each of the Shareholders, (i)
instructing BRMF&S to release to JAKKS the stock certificates being held by it
in respect of the Shares being acquired by JAKKS pursuant to Section 2.1, and
(ii) instructing FKIWSB&R to release to each Shareholder (in the manner set
forth in a Notice given by the Shareholders pursuant to Section 7.3(a)) such
amount of cash being held by it in respect of the Cash Payment and, if
sufficient funds are then available in the escrow account, any Fractional Share
Payment payable to such Shareholder; and the Escrow Agents shall promptly comply
with such instructions.

                  (b) If the amount of funds held in escrow by FKIWSB&R pursuant
to Section 2.5 is insufficient to pay the Cash Payment or the Fractional Share
Payment, if any, JAKKS shall cause FKIWSB&R to pay to each Shareholder that
portion of the amount of funds held in escrow on the Closing Date in the same
proportion as the number of Shares owned by such Shareholder on the Closing Date
bears to the total number of Shares on the Closing Date, and JAKKS shall pay
cash in an amount equal to the difference between the amount such Shareholder is
entitled to receive on account of the Cash Payment and Fractional Share Payment,
if any, and the amount paid to such Shareholder by FKIWSB&R from the escrowed
funds.

                  (c) If, pursuant to Section 2.3, JAKKS has elected to pay the
entire Purchase Price in cash or for any other reason, JAKKS is paying all or
any portion of the Purchase Price, in addition to the Cash Payment and the
Fractional Share Payment, if any, in cash or if JAKKS is required to make any
other payment at the Closing to the Shareholders, JAKKS shall cause FKIWSB&R to
pay to the Shareholders out of the escrowed funds available therefor (after the
payment of the Cash Payment and the Fractional Share Payment, if any) such
amounts to which they may be entitled and, if the amount of escrowed funds so
available for such payment is insufficient to make such payment, JAKKS shall pay
to each Shareholder the balance of the amount to which such Shareholder may be
entitled.


                                      -19-

                  (d) Any escrowed funds remaining after all payments are made
to the Shareholders pursuant to the foregoing provisions of this Section 7.4
shall be released from escrow and paid over to JAKKS.

         7.5 At the Closing, JAKKS and the Shareholders shall each execute and
deliver to the others the Registration Rights Agreement.

         7.6 [Intentionally omitted.]

         7.7 At the Closing JAKKS and, each of Steven Lebensfeld and Harvey
Goldberg shall each execute and deliver to the other the applicable Employment
Agreement and Employment Termination Agreement.

         7.8 At the Closing, Toymax shall, and the Shareholders shall cause Tai
Nam to, execute and deliver the Amendments.

8. Additional Covenants.

         8.1 No party hereto shall, at any time after the date hereof, directly
or indirectly knowingly disparage or demean, or make, encourage, support or
concur in any statement (written or oral) which disparages or demeans in any
manner, whether for a commercial purpose or otherwise, any other party hereto or
any Affiliate thereof, or any stockholder, director, officer, employee or agent
of any of them; provided that no provision of this Section 8.1 shall be
construed to prohibit or restrict any statement by any Person made in
furtherance or defense of any claim or in the course of any Proceeding or the
resolution of any dispute pursuant to Section 8.4.

         8.2 From and after the Closing Date and until the Effective Date, JAKKS
shall use its commercially reasonable efforts to take, and to cause Toymax to
take, all such actions as are reasonably necessary to cause the Merger to become
effective and to consummate the Merger as provided in the Merger Agreement.

         8.3 Prior to the Effective Date, none of the Shareholders shall sell,
short-sell or otherwise dispose of any of the shares of JAKKS Stock constituting
the Stock Payment; and, during the one-year period following the Effective Date,
no Shareholder shall sell, short-sell or otherwise dispose of more than 25% of
the shares of JAKKS Stock constituting the Stock Payment received by it
hereunder during any quarterly period.

         8.4 From and after the Closing Date and until the Effective Date, the
newly-constituted board of directors of Toymax (as set forth in Section 5.10)
and the officers of Toymax ("JAKKS Management") shall, in accordance with this
provision, consult with the officers and directors of Toymax holding office
immediately prior to the Closing ("Toymax Management") with respect to any
matter significantly affecting Toymax, the Business or the Assets that arises,
occurs, has an effect on Toymax, the Business or the Assets or that is otherwise
addressed by Toymax's board of directors during such period ("Material Business
Matters"). During the period referred to above, JAKKS Management shall: (i)
promptly inform the appropriate members of the Toymax Management of any Material
Business Matter that comes to its attention, (ii) shall provide to the Toymax
Management all material facts and information relating thereto and keep the
Toymax Management fully informed


                                      -20-

regarding the status of any such Toymax Business Matters and (iii) consult and
confer with, and entertain the recommendations and suggestions made by the
Toymax Management, regarding any Material Business Matters and shall keep the
Toymax Management fully informed regarding the status of any such Toymax
Business Matters.

         8.5 If JAKKS and the Shareholders, or any of them, at any time,
disagree with the determination of any amount made or certified by another party
hereto, such party shall, within thirty (30) days of delivery of such
determination or certificate, give written Notice (the "Dispute Notice") to the
other parties to such effect, setting forth therein any change proposed by it
and, in reasonable detail, its objections to such determination and the reasons
for such dispute. In such event, unless the parties involved promptly, and, in
any event, within thirty (30) days of the giving of the Dispute Notice, resolve
all such objections and agree upon the determination of the amount in dispute,
the determination thereof shall be promptly referred to their respective regular
independent certified public accountants, who shall confer and attempt in good
faith to resolve the objections as to such determination set forth in or arising
as a consequence of the Dispute Notice. If, within thirty (30) days of such
referral, such accountants resolve such dispute and determine the amount, they
shall give Notices to the parties involved to such effect, setting forth therein
the amount as so determined and the basis therefor, and such determination shall
be final and binding on the parties involved. If such accountants do not make
such determination within such thirty (30) day period, the parties involved
shall refer such dispute to a mutually agreeable nationally-recognized
accounting firm that is "independent" with respect to the parties hereto (the
"Neutral Accountants"). Unless the Neutral Accountants expressly determine
otherwise, each of the parties involved shall submit to the Neutral Accountants
(a) within ten (10) days of the engagement thereof, and in such form and manner
as they may prescribe, a statement setting forth such party's position with
respect to each of the objections or other issues set forth in or arising as a
consequence of the Dispute Notice, together with any exhibits or other
supporting documents relating thereto, and send a copy thereof to each other
party involved, and (b) within ten (10) days thereafter, and in such form and
manner as the Neutral Accountants may prescribe, a rebuttal statement responding
to the initial statement of each other party, together with any exhibits or
other supporting documents relating thereto, and send a copy thereof to each
other party involved. The Neutral Accountants shall conduct a hearing, if all
the parties involved so request in their respective statements, and may conduct
a hearing, whether or not any (but fewer than all) the parties involved so
request, if the Neutral Accountants reasonably deem it necessary for the
performance of their engagement; provided that any such hearing shall be held
only upon reasonable prior written Notice to all parties involved and only if
all such parties have an opportunity to appear and present evidence at such
hearing. The Neutral Accountants may require any party hereto (whether or not a
party to the dispute) to submit or produce additional statements, documents or
information, to appear and testify at any hearing or other proceeding, or
otherwise to produce tangible or oral evidence to the extent such Neutral
Accountants reasonably deem necessary or appropriate for them to determine the
amount in dispute. Based on such submissions and the evidence presented at any
hearing, the Neutral Accountants shall resolve all obligations and other issues
set forth in or arising as a consequence of the Dispute Notice and determine the
amount in dispute, and give Notice to the parties involved, setting forth
therein such amount and the basis of determination thereof, such determination
to be final and binding on the parties involved. Upon the determination of the
amount, any payment or adjustment based thereon shall be promptly made in the
manner provided herein. The fees and expenses of a party's independent certified
public accountants incurred in the determination of such amount as provided
herein shall be separately borne by such party. The fees and expenses of the
Neutral Accountants incurred, if required pursuant to this Section 8.4, shall be
borne and promptly paid equally by JAKKS,


                                      -21-

on the one hand, and the Shareholders, on the other.

         8.6 JAKKS agrees and acknowledges that it has agreed to the
arrangements set forth in Exhibits H-1 and H-2, respectively, with respect to
Carmine Russo and Kenneth Price, and that it is anticipated that at the Closing
JAKKS and such persons will enter into appropriate agreements reflecting such
terms.

9. Termination.

         9.1 This Agreement may be terminated at any time prior to the Closing:

                  (a) by the mutual agreement of JAKKS and the Shareholders;

                  (b) by any party if the Merger Agreement is terminated;
provided that JAKKS shall not be entitled to terminate this Agreement if the
Merger Agreement is terminated or abandoned by JAKKS in violation of the terms
thereof, and the Shareholders shall not be entitled to terminate this Agreement
if the Merger Agreement is terminated or abandoned by Toymax in violation of the
terms thereof.

                  (c) by any party (if such party is not then in breach or
default of any of its representations, warranties, covenants or other
obligations under this Agreement) by giving written Notice to such effect to the
other parties if the Closing shall not have occurred on or before March 31,
2002, or such later date as the parties shall have agreed upon prior to the
giving of such Notice;

                  (d) by JAKKS (if JAKKS is not then in breach or default of any
of its representations, warranties, covenants or other obligations under this
Agreement), upon written Notice to such effect to the Shareholders in the event
of a material breach by or default of any party hereto other than JAKKS, or by
any party hereto other than JAKKS (if such party is not then in breach or
default of any of its representations, warranties, covenants or other
obligations under this Agreement), upon written notice to such effect to JAKKS
in the event of a material breach by or default of JAKKS, provided that written
Notice of such breach or default is theretofore given to the breaching or
defaulting party, and such breach or default is not cured within thirty (30)
days of such Notice; or

                  (e) by any party if any Governmental Authority issues an Order
or takes any other action restraining, enjoining or otherwise prohibiting, or
seeking material damages in respect of, any transaction contemplated by any
Acquisition Agreement, and such Order becomes final and non-appealable, or any
Law having the same effect becomes applicable to any party hereto.

         9.2 Upon termination of this Agreement pursuant to Section 9.1, all
obligations of the parties shall terminate except those under Sections 5.7, 5.8,
8.1 and 9.3, Article 10 and the applicable provisions of Article 11; provided
that no such termination shall relieve any party of any liability to another
party by reason of any breach of or default under this Agreement, subject to all
applicable limitations contained in this Agreement.

         9.3 (a) If the Closing does not occur, or does not occur with respect
to any Shareholder, as a result of the Shareholders' or such Shareholder's
failure to transfer its Shares at the Closing in violation of the terms of this
Agreement, or as a result of a breach by the Shareholders or


                                      -22-

such Shareholder of any of the representations and warranties contained in the
last four sentences of Section 3.1 or in Sections 3.2 through 3.4 (to the extent
that a breach of such representation or warranty would result in an impairment
of JAKKS' ownership rights in the Shares), the Shareholders (or any Shareholder
with respect to which the closing does not occur) shall pay to JAKKS a
termination fee (the "Termination Fee") in the amount of the sum of (i)
$1,000,000 for each Shareholder with respect to which the Closing does not
occur, which shall be payable by wire transfer of immediately available funds to
an account designated by JAKKS within five days after the termination of this
Agreement or, if the Closing occurs as to any Shareholder, within five days
after the Closing; and (ii) if the non-transferring Shareholder(s) sell their
Shares to a third party within six months following the termination of this
Agreement (or the termination with respect to such Shareholder, if applicable),
the amount of 20% of the difference between the total purchase price received
for the Shares in such third party sale and the product of $4.50 and the number
of Shares sold, which amount shall be payable by wire transfer of immediately
available funds to an account designated by JAKKS within five days after the
consummation of such sale.

                  (b) The Termination Fee shall constitute liquidated damages to
JAKKS in respect of all losses, liabilities, damages and expenses suffered or
incurred by JAKKS by reason of the termination of this Agreement (or the
termination with respect to any Shareholder) pursuant to Section 9.3(a), and,
notwithstanding any other provision hereof, shall be in lieu of any other remedy
or relief otherwise available to JAKKS by reason thereof. The parties hereto
acknowledge that it would be impracticable to ascertain the amount of all
losses, liabilities, damages and expenses that would be suffered or incurred by
JAKKS under the circumstances described in Section 9.3(a) and that the amount of
the Termination Fee is a fair and reasonable estimate of such losses,
liabilities, damages and expenses and provides a reasonable and certain amount
to compensate JAKKS therefor.

10. Indemnification.

         10.1 Following the Closing, subject to Sections 10.4, 10.5 and 11.1,
the Shareholders, jointly and severally, shall indemnify and defend JAKKS and,
after the Closing, Toymax and each stockholder, director, officer, employee and
agent of JAKKS and, after the Closing, Toymax against, and hold each of them
harmless from, any loss, liability, obligation, damage or expense (including
reasonable attorneys' fees and disbursements) which any of them may suffer or
incur incidental to any claim or any Proceeding against any of them based upon
or resulting from the failure of any of the representations and warranties made
by the Shareholders in the last four sentences of Section 3.1 and in Sections
3.2 through 3.4 (to the extent that a breach of such representation or warranty
would result in an impairment of JAKKS' ownership rights in the Shares), to be
true in all material respects on the date hereof and on the Closing Date.

         10.2 JAKKS shall indemnify and defend each Shareholder and, prior to
the Closing, Toymax and each director, officer, employee or agent thereof
against, and hold each of them harmless from, any loss, liability, obligation,
damage or expense (including reasonable attorneys' fees and disbursements) which
any of them may suffer or incur incidental to any claim or any Proceeding
against any of them based upon or resulting from:

                  (a) the failure of any representation or warranty made by
JAKKS to be true in all material respects on the date hereof and on the Closing
Date; or


                                      -23-

                  (b) JAKKS' failure, in all material respects, to perform or to
comply with any covenant or condition required hereunder to be performed or
complied with by JAKKS.

         10.3 JAKKS shall indemnify each Shareholder and each other Person who
was an officer or director of Toymax on or after the date of this Agreement
against, and hold each of them harmless from, any loss, liability, obligation,
damage or expense (including reasonable attorneys' fees and disbursements) which
any of them may suffer or incur incidental to any claim or any Proceeding
against any of them based on or resulting from:

                  (a) their approval, execution and delivery of this Agreement
and the Merger Agreement and consummation of the Acquisition and the Merger in
accordance with the terms hereof and of the Merger Agreement and in accordance
with applicable law, but excluding any action constituting fraud or willful
misconduct; and

                  (b) actions taken from and after the Closing with respect to
the management and operation of Toymax and the Business by the board of
directors of Toymax or by any officer of Toymax at the request or direction of
the board.

It is expressly understood and agreed that any Person who may be entitled to
indemnification under this Section 10.3 but who is not a party to this Agreement
is intended to be a third party beneficiary of the rights created under this
Section 10.3.

         10.4 Promptly after an indemnified party receives Notice of or
otherwise becomes aware of any claim or potential claim, or the commencement or
potential commencement of any Proceeding by a third party, involving any loss,
liability, obligation, damage or expense referred to in Section 10.1, 10.2 or
10.3, such indemnified party shall, if a claim for indemnification in respect
thereof is to be made against an indemnifying party, give written Notice to the
latter of the commencement or possibility of such claim or Proceeding, setting
forth in reasonable detail the nature thereof and the basis upon which such
party seeks or may seek indemnification hereunder; provided that the failure of
any indemnified party to give such Notice shall not relieve the indemnifying
party of its obligations under such Section, except to the extent that the
indemnifying party is actually prejudiced by the failure to give such Notice. In
case any such Proceeding is brought against an indemnified party, and provided
that proper Notice is duly given, the indemnifying party shall assume and
control the defense thereof insofar as such Proceeding involves any loss,
liability, obligation, damage or expense in respect of which indemnification may
be sought hereunder, with counsel selected by the indemnifying party (and
reasonably satisfactory to such indemnified party), and, after Notice from the
indemnifying party to such indemnified party of its assumption of the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof (but the indemnified party shall have the
right, but not the obligation, to participate at its own cost and expense in
such defense by counsel of its own choice) or for any amounts paid or foregone
by the indemnified party as a result of the settlement or compromise thereof
(without the written consent of the indemnifying party), except that, if both
the indemnifying party and the indemnified party are named as parties or subject
to such Proceeding and either such party reasonably determines with advice of
counsel that a material conflict of interest between such parties may exist in
respect of such Proceeding, the indemnifying party may decline to assume the
defense on behalf of the indemnified party or the indemnified party may retain
the defense on its own behalf, and, in either such case, after Notice to such
effect is duly given hereunder to the


                                      -24-

other party, the indemnifying party shall be relieved of its obligation to
assume the defense on behalf of the indemnified party, but shall be required to
pay any legal or other expenses, including without limitation reasonable
attorneys' fees and disbursements incurred by the indemnified party in such
defense; provided, however, that the indemnifying party shall not be liable for
such expenses on account of more than one separate firm of attorneys (and, if
necessary, local counsel) at any time representing such indemnified party in
connection with any Proceeding or separate Proceedings in the same jurisdiction
arising out of or based upon substantially the same allegations or
circumstances. If the indemnifying party shall assume the defense of any such
Proceeding, the indemnified party shall cooperate with the indemnifying party as
reasonably requested by it and shall appear and give testimony, produce
documents and other tangible evidence, allow the indemnifying party access to
the books and records of the indemnified party and otherwise assist the
indemnifying party in conducting such defense. No indemnifying party shall,
without the consent of the indemnified party, which consent shall not be
unreasonably withheld, consent to entry of any judgment or enter into any
settlement or compromise in respect of any claim or Proceeding unless: (i) such
judgment, settlement or compromise includes as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or Proceeding, and (ii) such judgment,
settlement or compromise involves solely monetary damages (and not injunctive or
other equitable relief or any admission of guilt or fault). Provided that proper
Notice is duly given, if the indemnifying party shall fail promptly and
diligently to assume the defense thereof, if and in the manner required
hereunder, the indemnified party may respond to, contest and defend against such
Proceeding (but the indemnifying party shall have the right to participate at
its own cost and expense in such defense by counsel of its own choice) and may
make in good faith any compromise or settlement with respect thereto, and
recover the entire cost and expense thereof, including, without limitation,
reasonable attorneys' fees and disbursements and all amounts paid or foregone as
a result of such Proceeding, or the settlement or compromise thereof, from the
indemnifying party. Any indemnification required to be made hereunder shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills or invoices are received or loss,
liability, obligation, damage or expense is actually suffered or incurred.

         10.5 Any other provision hereof notwithstanding:

                  (a) no indemnifying party shall be required to indemnify any
Person pursuant to Section 10.1 or 10.2(a) (as the case may be) unless and
until, and to the extent that, the aggregate amount of all losses, liabilities,
obligations, damages and expenses as to which indemnification would be required
from all the Shareholders, collectively, under Section 10.1, or JAKKS, under
Section 10.2(a), as the case may be, but for the provisions of this Section
10.5, exceeds $350,000;

                  (b) the aggregate amount required to be paid by the
Shareholders under Section 10.1 pursuant to this Article 10 shall not exceed
$15,000,000;

                  (c) if the Closing shall occur, the indemnification
obligations provided herein shall terminate with respect to any claim for
indemnification arising under Section 10.1 or Section 10.2(a) that is not made
prior to the first anniversary of the Closing Date; and

                  (d) no indemnified party shall be entitled to any
indemnification under this Article 10 to the extent that it actually receives or
is entitled to receive any amount in respect of any loss, liability, obligation,
damage or expense from other sources, including without limitation insurance or


                                      -25-

third-party indemnity; provided that such indemnified party shall not be
required to commence any Proceeding to collect any such amount.

11. Miscellaneous.

         11.1 Survival of Representations and Warranties. No representation or
warranty of any party hereto shall survive the Closing or the termination of
this Agreement for any reason, except that the representations and warranties of
the Shareholders set forth in the last four sentences of Section 3.1, and the
representations and warranties of JAKKS set forth in the last three sentences of
Section 4.1, shall survive the Closing until, and no party shall be entitled to
seek indemnification with respect thereto pursuant to Section 10.1 or 10.2(a)
following, the first anniversary of the Closing Date.

         11.2 Limitation of Authority. Except as expressly provided herein, no
provision hereof shall be deemed to create any partnership, joint venture or
joint enterprise or association among the parties hereto, or to authorize or to
empower any party hereto to act on behalf of, obligate or bind any other party
hereto.

         11.3 Fees and Expenses. Each party hereto shall bear such fees,
foregone opportunities and expenses as may be incurred by it in connection with
this Agreement and the Acquisition.

         11.4 Notices. Any Notice or demand required or permitted to be given or
made hereunder to or upon any party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or
reputable overnight courier service against receipt, or (ii) certified or
registered mail, postage paid, return receipt requested, or (b) sent by
facsimile, provided that the sender receives a printed confirmation of receipt,
to such party at the following address:

to JAKKS:                           22619 Pacific Coast Highway
                                    Malibu, California 90265
                                    Attn:   President
                                    Fax:    (310) 456-7099

                                    with a copy to:

                                    Feder, Kaszovitz, Isaacson, Weber, Skala,
                                    Bass & Rhine LLP
                                    750 Lexington Avenue
                                    New York, New York 10022
                                    Attn:   Murray L. Skala, Esq.
                                    Fax:    (212) 888-7776

to Toymax (prior to the
Closing) or any
Shareholder at:                     Steven A. Lebensfeld
                                    c/o Toymax International, Inc.
                                    125 East Bethpage Road
                                    Plainview, New York  11803
                                    Fax: (516) 391-9151


                                      -26-

with a copy to:                     Brown Raysman Millstein Felder & Steiner LLP
                                    900 Third Avenue
                                    New York, New York 10022
                                    Attn:   Joel M. Handel, Esq.
                                    Fax:    (212) 812-3310

to an Escrow Agent:                 at its respective address set forth herein

or such other address as any party hereto may at any time, or from time to time,
direct by Notice given to the other parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a)(i) or (a)(ii), the
date of the receipt, or in the case of clause (b), the business day next
following the date such Notice or demand is sent.

         11.5 Amendment. Except as otherwise expressly provided herein, no
amendment of this Agreement shall be valid or effective, unless in writing and
signed by or on behalf of the parties hereto.

         11.6 Waiver. No course of dealing or omission or delay on the part of
any party hereto in asserting or exercising any right hereunder shall constitute
or operate as a waiver of any such right. No waiver of any provision hereof
shall be effective, unless in writing and signed by or on behalf of the party to
be charged therewith. No waiver shall be deemed a continuing waiver or waiver in
respect of any other or subsequent breach or default, unless expressly so stated
in writing.

         11.7 Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of New York
without regard to principles of choice of law or conflict of laws.

         11.8 Arbitration. Any claim, dispute or controversy between or among
any of the parties hereto (other than a claim, dispute or controversy subject to
Section 8.4), shall be submitted to arbitration in New York, New York in
accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association. JAKKS, on the one hand, and the Shareholders and, prior
to the Closing, Toymax, on the other, shall each pay one-half of any filing fees
or other administrative costs to be paid in advance of or during such
Proceeding. There shall be a single arbitrator. The arbitrator shall render a
reasoned decision with respect to such Proceeding which shall include, in
addition to the imposition of monetary damages or any other remedy or relief
available hereunder, an allocation of the costs thereof. The decision of the
arbitrator shall be final and binding upon the parties to such Proceeding, and
judgment thereon may be entered in any court of competent jurisdiction. No party
hereto shall be liable for punitive damages, unless such party is found to have
committed fraud or willful malfeasance against another party hereto.

         11.9 Remedies. Notwithstanding the provisions of Section 11.8, in the
event of any actual or prospective breach or default by any party hereto, any
other party hereto shall be entitled to equitable relief from any court of
competent jurisdiction, including remedies in the nature of rescission,
injunction and specific performance. Subject to the provisions of Sections 8.4,
9.3 and 11.8 and Article 10, all remedies hereunder are cumulative and not
exclusive, and nothing herein shall be deemed to prohibit or limit any party
from pursuing any other remedy or relief available at law or in equity for


                                      -27-

such actual or prospective breach or default, including the recovery of damages;
provided, however, that the indemnification provisions of Article 10 and, if
applicable, the Termination Fee set forth in Section 9.3(a), shall be the sole
and exclusive remedies, as among the parties hereto, with respect to any claim
for monetary damages under this Agreement.

         11.10 Severability. The provisions hereof are severable and in the
event that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

         11.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and which together shall constitute
one and the same agreement.

         11.12 Further Assurances. Each party hereto agrees to cooperate fully
with the other parties in connection with preparing and filing any Notices or
documents in connection with the Acquisition. Each party hereto shall promptly
execute, deliver, file or record such agreements, instruments, certificates and
other documents and perform such other and further acts as any other party
hereto may reasonably request or as may otherwise be reasonably necessary or
proper, to consummate and perfect the Acquisition.

         11.13 Binding Effect. Subject to Section 11.14, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not intended, and shall not
be deemed, to create or confer any right or interest for the benefit of any
Person not a party hereto.

         11.14 Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned by any party hereto without the prior
written consent of the other parties hereto, and any purported assignment
without such consent shall be void and without effect; provided that any
Shareholder may assign its right to receive all or any portion of the Purchase
Price without the consent of any other party hereto.

         11.15 Titles and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.

         11.16 Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.

         11.17 Knowledge. The qualification or limitation of any statement made
herein to a Shareholder's "knowledge" or to a matter "known" to a Shareholder
refers to such Shareholder's actual knowledge (but not imputed or constructive
knowledge), after reasonable inquiry.

         11.18 References. The terms "herein," "hereto," "hereof," "hereby" and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Article, Section


                                      -28-

or other part hereof.

         11.19 No Presumptions. Each party hereto acknowledges that it has
participated, with the advice of counsel, in the preparation of this Agreement.
No party hereto is entitled to any presumption with respect to the
interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that any other party hereto drafted or
controlled the drafting of this Agreement.

         11.20 Exhibits and Schedules. The Exhibits and Schedules hereto are an
integral part of this Agreement and are incorporated in their entirety herein by
this reference.

         11.21 Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, commitments or arrangements relating thereto, other than the
Toymax Confidentiality Agreement and the JAKKS Confidentiality Agreement, as set
forth in Sections 5.7 and 5.8.


                                      -29-

         IN WITNESS WHEREOF, JAKKS and Toymax, by their respective duly
authorized officers, and the other parties hereto have duly executed this
Agreement as of the date set forth in the Preamble hereto.

                                           JAKKS PACIFIC, INC.


                                           By:  /s/ STEPHEN G. BERMAN
                                                --------------------------------
                                           Name:  Stephen G. Berman
                                           Title:  President

                                           TOYMAX INTERNATIONAL, INC.


                                           By:  /s/ STEVEN A. LEBENSFELD
                                                --------------------------------
                                           Name:  Steven A. Lebensfeld
                                           Title:  CEO

                                           SHAREHOLDERS:

                                           BEST PHASE LIMITED

                                           By:  /s/ CHU KI KWAN
                                                --------------------------------
                                           Name:  Chu Ki Kwan
                                           Title:  President

                                           HARGO BARBADOS LIMITED

                                           By:  /s/ GREGORY A. HINKSON
                                                --------------------------------
                                           Name:  Gregory A. Hinkson
                                           Title:  Director

                                           By:  CIBC BANK AND TRUST COMPANY
                                                    (CAYMAN) LIMITED

                                                    Secretary

                                                    By:  /s/ NEAL GRIFFITH
                                                         -----------------------
                                                    Name:  Neal Griffith
                                                    Title:  Authorized Signatory


                   [Signatures continued on following page.]


                                      -30-

                                                    By:  /s/ SHERENE BLACKETT
                                                          ---------------------
                                                    Name:  Sherene Blackett
                                                    Title:  Authorized Signatory

                                           /s/ STEVEN A. LEBENSFELD
                                               ---------------------------------
                                           STEVEN A. LEBENSFELD




                                           /s/ HARVEY GOLDBERG
                                               ---------------------------------
                                           HARVEY GOLDBERG

                                           Solely for purposes of Section 2.3:

                                           FEDER, KASZOVITZ, ISAACSON, WEBER,
                                           SKALA, BASS & RHINE LLP

                                           By:  /s/ GEOFFREY A. BASS
                                               ---------------------------------
                                           Name:  Geoffrey A. Bass
                                           Title:  Partner

                                           BROWN RAYSMAN MILLSTEIN FELDER &
                                           STEINER LLP


                                           By:  /s/ JOEL M. HANDEL
                                               ---------------------------------
                                           Name:  Joel M. Handel
                                           Title:  Partner

          [Continuation of Signature Page to Stock Purchase Agreement.]


                                      -31-

                         INDEX TO EXHIBITS AND SCHEDULES

                                   
Exhibit A                             Form of Termination and Replacement of Manufacturing
                                      Agreement
Exhibit B                             Form of Termination of Agency Agreements
Exhibits C-1, C-2                     Forms of Employment Agreements
Exhibits D-1, D-2                     Forms of Employment Termination Agreements
Exhibit E                             Form of Registration Rights Agreement
Exhibit F                             Intentionally Omitted.
Exhibit G                             Form of Press Release
Exhibits H-1, H-2                     Term Sheets for Carmine Russo and Kenneth Price

Schedule I                            Shareholders, Etc.
Schedule 1.36                         Permitted Liens
Schedule 3.1                          Foreign Qualifications; Options, Etc.
Schedule 3.3                          Toymax Consents
Schedule 3.4                          Proceedings; Orders
Schedule 3.5                          Certain Liabilities of Toymax
Schedule 3.8                          Brokers, Etc.
Schedule 6.1                          Closing Condition Toymax Consents




                                      -32-

                                   SCHEDULE I

                                       TO

                            STOCK PURCHASE AGREEMENT

                                  SHAREHOLDERS



    SHAREHOLDER                                     NUMBER OF SHARES
    -----------                                     ----------------
                                                 
Best Phase Limited                                      5,730,335

Harvey Goldberg                                           137,333

Hargo Barbados Limited                                  1,116,833

Steven A. Lebensfeld                                    1,115,567

TOTAL                                                   8,100,068


                                                                       EXHIBIT 2




                               AGREEMENT OF MERGER

                                       OF

                            JP/TII ACQUISITION CORP.

                                  WITH AND INTO

                           TOYMAX INTERNATIONAL, INC.

                          DATED AS OF FEBRUARY 10, 2002

                               AGREEMENT OF MERGER

                                       OF

                            JP/TII ACQUISITION CORP.

                                  WITH AND INTO

                           TOYMAX INTERNATIONAL, INC.



      THIS AGREEMENT OF MERGER dated as of February 10, 2002, by and among JAKKS
Pacific, Inc., a Delaware corporation ("JAKKS"), JP/TII Acquisition Corp., a
Delaware corporation ("Newco"), and Toymax International Inc., a Delaware
corporation ("Toymax")

                              W I T N E S S E T H :

      WHEREAS, concurrently herewith, JAKKS is entering into a Stock Purchase
Agreement with certain stockholders of Toymax named therein, pursuant to which,
upon the terms and subject to the conditions set forth therein, JAKKS shall
acquire a majority of Toymax's outstanding capital stock; and

      WHEREAS, subject to the consummation of the transactions provided in the
Stock Purchase Agreement, JAKKS desires to become the sole stockholder of Toymax
through the merger of Newco with and into Toymax, in which Toymax shall survive
as a wholly-owned subsidiary of JAKKS and the other stockholders of Toymax shall
receive merger consideration consisting of cash and securities of JAKKS, all on
the terms and subject to the conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

1.    Certain Definitions.

      1.1   "Account" means any account receivable or other right to payment
arising from the sale of merchandise or services in the Business, any loan or
other extension of credit or any other sale, lease, exchange or other
disposition of any Assets by, or for the account of, Toymax or a Subsidiary,
whether or not in the ordinary course of business.

      1.2   "Affiliate" of a Person means another Person directly or indirectly
controlling, controlled by, or under common control with, such Person; for this
purpose, "control" of a Person means the power (whether or not exercised) to
direct the policies, operations or activities of such Person by virtue of the
ownership of, or right to vote or direct the manner of voting of, securities of
such Person, or pursuant to agreement or Law or otherwise.

      1.3   "Agreement" means this Agreement of Merger, as amended or
supplemented.

      1.4   "Alternative Action" means any action (a) by Toymax's Board of
Directors (i) to withdraw its approval or recommendation of the Merger or (ii)
to modify or to qualify such approval or recommendation in a manner materially
adverse to JAKKS or which would prevent, impede or


1

materially delay the consummation of the Merger or (iii) to accept or recommend
an Alternative Proposal; or (b) by Toymax or any Principal Stockholder to enter
into any Alternative Agreement.

      1.5   "Alternative Agreement" means any written contract, letter of
intent, agreement in principal or similar agreement relating to any Alternative
Transaction.

      1.6   "Alternative Proposal" means any bona fide bid, offer or other
proposal relating to an Alternative Transaction.

      1.7   "Alternative Transaction" means (a) any merger, consolidation or
other business combination or reorganization pursuant to which a substantial
portion of the Business or the Assets (including without limitation any portion
that accounts for, or is reasonably expected to generate over the ensuing
12-month period, 10% or more of Toymax's Accounts) is sold or otherwise
transferred to, or combined with that or those of, another Person; (b) a
transaction as a result of which any Person (other than JAKKS, Toymax or a
Subsidiary) becomes the holder, directly or indirectly, of securities of Toymax
having 10% or more of the voting power of all voting securities of Toymax; or
(c) the acquisition, directly or indirectly, by another Person (other than
JAKKS) of control of Toymax, in each case, other than the Merger.

      1.8   "Assets" means the assets of Toymax or a Subsidiary, other than any
assets of Candy Planet, Co. (a division of Toymax Inc.) and of Monogram
International, Inc.

      1.9   "Business" means the business operated by Toymax and the
Subsidiaries, which consists of creating, designing and marketing innovative and
technologically advanced toys and leisure products, but excluding any business
operated by Candy Planet, Co. (a division of Toymax Inc.) or Monogram
International, Inc.

      1.10  "Cash Payment" means the portion of the Merger Consideration payable
in cash, in the amount of $3.00 per share of Toymax Common Stock.

      1.11  "Certificate" means a certificate that, immediately prior to the
Effective Time, shall represent outstanding shares of Toymax Common Stock.

      1.12  "Certificate of Merger" means the certificate of merger,
substantially in the form of Exhibit A, to be filed pursuant to Section 3.1.

      1.13  "Closing" means the closing of the Merger as provided in Section
3.1.

      1.14  "Closing Date" means the date of the Closing.

      1.15  "Code" means the Internal Revenue Code of 1986, as amended, and the
treasury regulations promulgated thereunder.

      1.16  "Consent" means any approval, authorization, consent or ratification
by or on behalf of any Person that is not a party to this Agreement, or any
waiver of, or exemption or variance from, any Material Contract, Permit or
Order, that is required to be obtained in connection with the consummation of
the transactions contemplated by this Agreement.



                                       2

      1.17  "Constituent Corporation" means Newco or Toymax.

      1.18  "DGCL" means the Delaware General Corporation Law, as amended.

      1.19  "Dissenting Shares" is defined in Section 5.5.

      1.20  "Effective Time" is defined in Section 3.1.

      1.21  [Intentionally omitted.]

      1.22  "Employee Plan" means an employee benefit plan (including a
multi-employer plan) as defined in Section 3(3) of ERISA.

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

      1.24  "ERISA Affiliate" means Toymax, a Subsidiary and any other Person
that is a trade or business that would be deemed to be, together with Toymax and
the Subsidiaries, a "single employer" within the meaning of Section 414 of the
Code.

      1.25  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

      1.26  "Fairness Opinion" means an opinion of Morgan Lewis Gethens & Ahn,
Inc., or another investment banking or financial advisory firm reasonably
satisfactory to JAKKS and Toymax, to the effect that the Merger Consideration
and the consideration being paid under the Stock Purchase Agreement are, on the
date hereof, fair, from a financial point of view, to the holders of outstanding
shares of Toymax Common Stock.

      1.27  "First Closing" means the closing of the purchase of Toymax Common
Stock pursuant to the Stock Purchase Agreement.

      1.28  "Fractional Share Payment" means an amount in cash payable in lieu
of any fractional share of JAKKS Stock that would, but for the provisions of
Section 6.2, be included in the Stock Payment.

      1.29  "GAAP" means generally accepted accounting principles in the United
States.

      1.30  "Governmental Authority" means any United States or foreign federal,
state or local government or governmental authority, agency or instrumentality,
any court or arbitration panel of competent jurisdiction or the Nasdaq Stock
Market, Inc.

      1.31  "Hazardous Material" means any contaminant, pollutant or toxic or
hazardous waste, effluent or other substance or material, including without
limitation any radioactive, explosive, flammable, corrosive or infectious
substance or material, or any substance or material containing friable asbestos,
polychlorinated biphenyls or urea formaldehyde or which is otherwise subject to
any Law, Permit or Order relating to the protection of the environment or human
health or safety.

      1.32  "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as


                                       3

amended.

      1.33  "HSR Form" means a Notification and Report Form for Certain Mergers
and Acquisitions required to be filed pursuant to the HSR Act in connection with
the Merger.

      1.34  "Indebtedness" means, as to Toymax and the Subsidiaries on a
consolidated basis (without duplication), (a) indebtedness for borrowed money or
the deferred purchase price of property or services in respect of which any such
Person is liable as obligor; (b) all obligations evidenced by notes, bonds,
debentures or similar instruments; (c) indebtedness secured by any Lien on any
Assets regardless of whether Toymax or any Subsidiary shall have assumed or is
liable as obligor for such indebtedness; (d) obligations of any such Person
under any capital lease; (e) license transfer fees; and (f) any other obligation
or liability which would be required under GAAP to be recorded as indebtedness
on a consolidated balance sheet of Toymax and the Subsidiaries.

      1.35  "JAKKS Option" means an option to purchase shares of JAKKS Stock to
be granted pursuant to Section 5.4.

      1.36  "JAKKS Stock" means the common stock, par value $.001 per share, of
JAKKS.

      1.37  "Law" means common law and any statute, rule, regulation or
ordinance of any Governmental Authority and includes any judicial decision
applying or interpreting common law or any other Law.

      1.38  "Lease" means a lease pursuant to which Toymax or a Subsidiary holds
a leasehold interest in any Real Property.

      1.39  "License Agreement" means a license, royalty agreement or other
agreement pursuant to which Toymax or a Subsidiary has the right to use or
exploit any Trade Right of another Person, which Trade Right is material to the
Business.

      1.40  "Lien" means any security interest, conditional sale or other title
retention agreement, mortgage, pledge, lien, charge, encumbrance or other
adverse claim or interest.

      1.41  "Material Adverse Effect" means a material adverse effect on the
Business, the Assets, or the operations, financial condition or results of
operations of Toymax and the Subsidiaries, taken as a whole.

      1.42  "Material Contract" means any material contract to which Toymax or a
Subsidiary is a party. For the purposes hereof, a contract is "material" if (a)
it is a License Agreement or an employment contract; (b) any such contract that
provides for any Person, other than Toymax or a Subsidiary, to use or exploit,
or prohibits or limits such other Person's use of, a Trade Right of Toymax or a
Subsidiary; (c) any Restrictive Agreement; (d) any such contract that prohibits
any Person, other than Toymax or a Subsidiary, from engaging, or curtails or
restricts the nature or scope of such other Person's activities, in any line of
business or geographic territory; or (e) any such contract (i) that relates to
(A) a transaction or series of related transactions involving the expenditure or
receipt by Toymax and the Subsidiaries of an amount in excess of $500,000 or the
transfer of property with a fair market value in excess $500,000, (B) any
Indebtedness in an amount in excess of $500,000, (C) any Lien on any Assets with
a fair market value in excess of $500,000 or (D) a transaction not in


                                       4

the ordinary course of the Business, or (ii) as to which any breach or default
thereunder would reasonably be expected to have a Material Adverse Effect.

      1.43  "Merger" means the statutory merger of Newco with and into Toymax
and the related transactions provided for herein.

      1.44  "Merger Consideration" means the consideration, consisting of
(subject to Section 5.2) the Cash Payment and the Stock Payment (or any cash
payable in lieu thereof, including the Fractional Share Payment), to be paid on
account of the Merger in respect of the shares of Toymax Common Stock
outstanding at the Effective Time.

      1.45  "Merger Document" means this Agreement, the Certificate of Merger
and each other agreement, instrument, certificate or other document to be
delivered at the Closing pursuant to this Agreement.

      1.46  "Monogram Transaction" means the transaction consisting of the sale
of all or substantially all of the assets of Candy Planet, Co. (a division of
Toymax Inc.) and of Monogram International, Inc., and related transactions.

      1.47  "Notice" means any notice given to, or any declaration, filing,
registration or recordation made with, any Person.

      1.48  "Option" means an option or stock appreciation right granted under
any Option Plan or an Other Option.

      1.49  "Option Plan" means one of Toymax's stock option plans listed on
Schedule 1.49.

      1.50  "Order" means any judgment, order, writ, decree, award, directive,
ruling or decision of any Governmental Authority.

      1.51  "Other Option" means an option, warrant or other right to purchase,
or an outstanding security or instrument convertible into or exchangeable for,
Toymax Common Stock, listed on Schedule 7.7.

      1.52  "Paying Agent" means the Person appointed by JAKKS, as set forth in
Section 6.1, to collect and cancel certificates representing shares of Toymax
Common Stock outstanding at the Effective Time and to disburse the Merger
Consideration.

      1.53  "Payment Fund" is defined in Section 6.1.

      1.54  "Permit" means any permit, license, certification, qualification,
franchise or similar privilege issued or granted by any Governmental Authority.

      1.55  "Permitted Lien" means any of the following: (i) statutory
landlord's liens and liens for current taxes, assessments and governmental
charges not yet due and payable (or being contested in good faith); (ii) zoning
laws and ordinances and similar legal requirements; (iii) rights reserved to any
Governmental Authority to regulate the affected property and restrictions of
general applicability imposed by federal or state securities Laws; (iv) license
transfer fees; (v) Liens to which JAKKS has


                                       5

consented; (vi) Liens that will be released or terminated at or prior to
Closing; and (vii) other Liens set forth on Schedule 1.55.

      1.56  "Person" means any natural person, corporation, joint stock company,
limited liability company, partnership, joint venture, association, trust,
Governmental Authority or other entity, or any group of the foregoing acting in
concert.

      1.57  "Principal Stockholder" means a stockholder of Toymax who is a party
to the Stock Purchase Agreement.

      1.58  "Proceeding" means any action, suit, arbitration, audit,
investigation or other proceeding, at law or in equity, before or by any
Governmental Authority.

      1.59  "Real Property" means any real property owned by Toymax or in which
Toymax holds a leasehold interest.

      1.60  "Restrictive Agreement" means an agreement to which Toymax or any
Subsidiary is a party that prohibits or limits Toymax's or a Subsidiary's use of
a Trade Right of another Person, which Trade Right is material to the operation
of the Business, or prohibits Toymax or a Subsidiary from engaging, or
materially curtails or restricts the nature or scope of Toymax's or a
Subsidiary's activities, in any line of business or geographic territory.

      1.61  "SEC" means the U.S. Securities and Exchange Commission.

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

      1.63  "Stock Payment" means the portion of the Merger Consideration
payable by delivery of shares of JAKKS Stock, at the rate of .0798 share of
JAKKS Stock per share of Toymax Common Stock or, if the Value of JAKKS Stock on
the Effective Date is less than $16.9173, at the rate obtained by dividing $1.35
by the Value of JAKKS Stock on the Effective Date.

      1.64  "Stock Purchase Agreement" means the Stock Purchase Agreement of
even date herewith among JAKKS, Toymax and the Principal Stockholders.

      1.65  "Stockholder Approval" means the adoption, by the affirmative vote
of the holders of a majority of shares of Toymax Common Stock outstanding on the
record date for the Stockholders' Meeting, of resolutions, in form and substance
satisfactory to Toymax, ratifying the Stock Purchase Agreement and adopting this
Agreement and approving the Merger and ratifying the transactions contemplated
by the Stock Purchase Agreement.

      1.66  "Stockholders' Meeting" means a special meeting of Toymax's
stockholders (including any postponement or adjournment thereof) to be held,
pursuant to Notice, to consider and vote upon adoption of the Stock Purchase
Agreement and this Agreement and approval of the Merger and the transactions
contemplated by the Stock Purchase Agreement.

      1.67  "Subsidiary" means a Person listed on Schedule 1.67.



                                       6

      1.68  "Superior Proposal" is defined in Section 9.6.

      1.69  "Surviving Corporation" means, from and after the Effective Time,
Toymax, as the surviving corporation of the Merger.

      1.70  "Tax" means any United States or foreign federal, state or local
income, excise, sales, property, withholding, social security or franchise tax
or assessment, and any interest, penalty or fine due thereon or with respect
thereto.

      1.71  "Toymax Common Stock" means the common stock, par value $.01 per
share, of Toymax.

      1.72  "Trade Right" means a patent, claim of copyright, trademark, trade
name, brand name, service mark, logo, symbol, trade dress or design, or
representation or expression of any thereof, or registration or application for
registration thereof, or any other invention, trade secret, technical
information, know-how or other proprietary right or intellectual property.

      1.73  "Value of JAKKS Stock" on any date means the average of the closing
sale price per share of JAKKS Stock as reported on the Nasdaq National Market
over the last ten trading days preceding (but not including) the last trading
day preceding such date.

2.    The Constituent Corporations.

      The name and the jurisdiction of incorporation of each Constituent
Corporation are as follows:



      Name                         Place of Incorporation
      ----                         ----------------------
                                

      Toymax International, Inc.   Delaware

      JP/TII Acquisition Corp.     Delaware



The surviving corporation is Toymax.



                                       7

3.    The Merger.

      3.1   Subject to the satisfaction of the conditions set forth in Article
10, Toymax, as the surviving corporation of the Merger, shall file the
Certificate of Merger in accordance with DGCL Section 251(c), and the Merger
shall be effective as of the date and time set forth therein (the "Effective
Time").

      3.2   At the Effective Time, Newco shall be merged with and into Toymax,
and the Constituent Corporations shall thereupon become and constitute a single
corporation. Toymax shall be the surviving corporation of the Merger and the
separate existence of Newco shall cease. Except as otherwise provided by Law,
the Surviving Corporation shall thereupon, without further act or deed, succeed
to all the rights, privileges, immunities, powers and purposes of each of the
Constituent Corporations; acquire all the business, property, franchises, claims
and causes of action and every other asset of each of the Constituent
Corporations; and assume and be subject to all the debts and liabilities of each
of the Constituent Corporations.

      3.3   The directors, officers, employees and agents of Newco and the
Surviving Corporation shall be authorized, at and after the Effective Time, to
execute and deliver, in the name of Toymax or Newco, any assignments, bills of
sale, deeds or other instruments and to take such other actions as are
reasonably necessary or appropriate to vest in the Surviving Corporation, as a
result of, or in connection with, the Merger, all right, title and interest in
and to the Assets and to perfect and to confirm the same.

4.    Certificate of Incorporation; Bylaws; and Directors and Officers of the
Surviving Corporation.

      4.1   From and after the Effective Time, the Certificate of Incorporation
of Newco shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation, unless and until amended or restated
in the manner provided by applicable Law.

      4.2   From and after the Effective Time, the Bylaws of Newco shall
continue in full force and effect as the Bylaws of the Surviving Corporation,
unless and until revoked or amended in the manner provided by applicable Law,
the Surviving Corporation's Certificate of Incorporation or such Bylaws.

      4.3   From and after the Effective Time, the number of Persons
constituting the entire Board of Directors of the Surviving Corporation shall be
two, and the incumbent directors of Newco immediately prior to the Effective
Time shall thereupon become the directors of the Surviving Corporation.

      4.4   At the Effective Time, all the incumbent officers of Toymax shall
resign (or be removed) and the incumbent officers of Newco immediately prior to
the Effective Time shall become the officers of the Surviving Corporation
effective as of the Effective Time, it being expressly understood that no such
resignation shall constitute a breach under any applicable employment contract
or arrangement.

5.    Merger Consideration; Conversion of Shares.

      5.1   At the Effective Time, by virtue of the Merger and without any
further act or deed by


                                       8

any Person, each share of common stock of Newco then outstanding shall be
converted into one share of Toymax Common Stock, all of which shares shall be
validly issued, fully paid and nonassessable and shall thereafter constitute all
of the issued and outstanding capital stock of the Surviving Corporation.

      5.2   Subject to Sections 5.5 and 5.6, at the Effective Time, by virtue of
the Merger and without any further act or deed by any Person, each share of
Toymax Common Stock then outstanding (other than any such share then owned by
Toymax, a Subsidiary, JAKKS or Newco) shall cease to be outstanding and shall be
retired and cancelled, and the holder of each such share immediately prior to
the Effective Time shall cease forthwith to have any right with respect to any
capital stock of the Surviving Corporation, or any interest therein or in the
Assets, but shall thereupon become entitled to receive the Merger Consideration
in respect of such share. Notwithstanding anything contained herein to the
contrary, if the Value of JAKKS Stock on the Effective Date exceeds $20.6767,
JAKKS, at its option, shall be entitled to pay the Merger Consideration entirely
in cash, in which case, JAKKS shall pay to each holder of Toymax Common Stock at
the Effective Time a cash amount equal to the sum of (i) the Cash Payment and
(ii) in lieu of the Stock Payment and the Fractional Share Payment, if any, that
would otherwise be payable to such holder (but for this provision), cash in the
amount of $1.65 per share of Toymax Common Stock.

      5.3   At the Effective Time, by virtue of the Merger and without any
further act or deed by any Person, each share of Toymax Common Stock then
outstanding owned by Toymax, a Subsidiary, JAKKS or Newco shall cease to be
outstanding and shall be retired and cancelled, and no Merger Consideration
shall be payable in respect thereof.

      5.4   At the Effective Time, by virtue of the Merger and without any
further act or deed by any Person, each Option outstanding at the Effective Time
shall expire and terminate, and the holder thereof immediately prior to the
Effective Time shall cease forthwith to have any right with respect to any
capital stock of the Surviving Corporation, or any interest therein or in the
Assets, except that the holder of each Option on the Effective Date shall be
entitled to receive a JAKKS Option or cash payment, based on the formula set
forth on Schedule 5.4.

      5.5   Any other provision of this Article 5 notwithstanding, any
outstanding shares of Toymax Common Stock, the holder of which asserts and
perfects the right to receive payment for shares pursuant to DGCL Section 262
(the "Dissenting Shares"), shall not be subject to the foregoing provisions of
this Article, and the holder thereof shall have only such rights as are granted
to dissenting stockholders under said DGCL Section 262; provided, however, that
Dissenting Shares as to which the holder thereof subsequently withdraws his
demand for payment or fails to perfect his dissenter's rights before payment
thereof shall thereupon be subject to Section 5.2 in the same manner as provided
herein for other outstanding shares of Toymax Common Stock (except as to the
time of payment, which shall be as promptly as practicable after withdrawal of
such demand or failure to perfect his dissenter's rights). Toymax shall give to
JAKKS prompt notice of any demands received from holders of Dissenting Shares
for payment of the value of such shares, and JAKKS shall have the exclusive
right to conduct all negotiations and proceedings with respect to any such
demands. Toymax shall not, except with the prior written consent of JAKKS,
voluntarily make any payment with respect to, or compromise or settle, or offer
to compromise or settle, any such demand for payment. The assertion of any
demand for payment by a holder of Dissenting Shares shall not prevent, interfere
with or delay the consummation of the Merger and the other transactions
contemplated hereby, except as provided by DGCL Section 262 or as a court of
competent jurisdiction may otherwise Order.



                                       9

      5.6   Any other provision hereof notwithstanding, if the determination of
the Stock Payment in accordance with Section 1.63 (without regard to this
Section 5.6) would result in a number of shares of JAKKS Stock which, together
with the number of shares of JAKKS Stock issued at the First Closing pursuant to
the Stock Purchase Agreement, would exceed the maximum number of shares of JAKKS
Stock which could be issued without obtaining stockholder approval if and as
required pursuant to Nasdaq Stock Market Rule 4350(i)(C) or (D) (the "Nasdaq
Rule"), then, unless such stockholder approval shall have been obtained prior to
the Effective Date, the number of shares of JAKKS Stock constituting the
aggregate Stock Payment under this Agreement shall equal the excess of the
maximum number of shares of JAKKS Stock that could be issued in connection with
the Merger (including for this purpose the purchase of shares of Toymax Common
Stock pursuant to the Stock Purchase Agreement) without obtaining stockholder
approval pursuant to the Nasdaq Rule over the number of shares of JAKKS Stock
issued at the First Closing pursuant to the Stock Purchase Agreement. In such
case, each holder of Toymax Common Stock immediately prior to the Effective Date
shall be entitled to receive, in respect of each such share, the fraction of a
share of JAKKS Stock equal to the quotient of the number of shares of JAKKS
Stock then so issuable pursuant to the Nasdaq Rule divided by the total number
of shares of Toymax Common Stock outstanding immediately prior to the Effective
Date. JAKKS shall pay to each holder of Toymax Common Stock immediately prior to
the Effective Date an amount in cash equal to the product of (A) the Value of
JAKKS Stock on the Effective Date and (B) the excess of the number of shares of
JAKKS Stock which, but for the provisions of this Section 5.6, would have been
included in the Stock Payment to such holder over the number of shares of JAKKS
Stock to be included in the Stock Payment to such holder after giving effect to
the limitation imposed by this Section 5.6.

6.    Payment Procedures.

      6.1   Prior to the Closing Date, JAKKS shall appoint American Stock
Transfer and Trust Company or another Person (reasonably acceptable to Toymax),
to act as the Paying Agent. Prior to or at the Closing, JAKKS shall deposit with
the Paying Agent, in trust for the benefit of the holders of Toymax Common Stock
outstanding at the Effective Time, cash in an amount sufficient to pay the Cash
Payment, the Fractional Share Payment, any payment required pursuant to Section
5.6 or, if applicable, pursuant to Section 5.2, the total Merger Consideration
(the "Payment Fund"), and shall enter into a written agreement with the Paying
Agent under which (i) the Paying Agent shall be required to invest the Payment
Fund as directed by JAKKS; (ii) any interest, dividends or other income thereon
shall be added to and constitute a portion of the Payment Fund; (iii) if at any
time the amount of the Payment Fund shall exceed the amount of the Cash Payment
remaining to be paid, the Paying Agent shall be required to, upon request by
JAKKS, remit to JAKKS cash in an amount less than or equal to the amount of such
excess; and (iv) if at any time the amount of the Payment Fund shall be less
than the amount of the Cash Payment remaining to be paid, the Paying Agent shall
promptly give to JAKKS Notice to such effect and JAKKS shall promptly deliver to
the Paying Agent funds in an amount equal to or greater than the amount of such
deficiency. At, or as promptly as practicable after, the Effective Time, JAKKS
shall authorize and direct the Paying Agent, as transfer agent and registrar for
the JAKKS Stock, to issue certificates representing the Stock Payment to be made
to each holder of Toymax Common Stock outstanding at the Effective Time.

      6.2   JAKKS shall cause the Paying Agent, promptly after the Effective
Time, to mail to each holder of Toymax Common Stock at the Effective Time, at
such holder's address as shown on Toymax's regular stockholders list, (a) a
letter of transmittal, in customary form reasonably acceptable to Toymax and the
Paying Agent, which shall state that (i) such holder is entitled to receive the
Merger


                                       10

Consideration in respect of the shares of Toymax Common Stock so held by such
holder upon surrender of his Certificate or Certificates, as specified therein,
including the amount of the Cash Payment, the amount of the Fractional Share
Payment, any payment required pursuant to Section 5.6 and the number of whole
shares of JAKKS Stock comprising the Stock Payment, and (ii) such surrender
shall be effected, and risk of loss and title to such Certificate or
Certificates shall pass only upon proper delivery thereof to the Paying Agent,
and (b) instructions specifying the place at which and the manner in which such
Certificate or Certificates are so to be delivered. No fractional share of JAKKS
Stock shall be issued as part of the Merger Consideration, but in lieu thereof,
the Fractional Share Payment shall be paid in an amount equal to the product of
the fraction of the share that, but for this provision, would have been issued
and $18.797 or, if the Value of JAKKS Stock on the Effective Date is less than
$16.9173, the Value of JAKKS Stock on the Effective Date. Upon such surrender of
any such Certificate, together which such letter of transmittal, duly completed
and executed in accordance with the instructions thereto, and the delivery of
such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive the Merger Consideration
payable in respect of the shares of Toymax Common Stock represented by such
Certificate. JAKKS shall thereupon cause the Paying Agent to promptly mail to
such holder at such holder's address as shown on Toymax's regular stockholders
list or, if a different address is indicated on the letter of transmittal, such
other address (i) a check payable to the order of the holder or, if a different
Person is indicated in the letter of transmittal, such other Person, in an
amount equal to the sum of the Cash Payment, the Fractional Share Payment and
any payment required pursuant to Section 5.6, or, if applicable in accordance
with Section 5.2, the total Merger Consideration, and (ii) a certificate
representing the whole number of shares of JAKKS Stock included in the Stock
Payment registered in the name of the holder or, if a different Person is
indicated in the letter of transmittal and there is delivered to the Paying
Agent such additional documents as the Paying Agent may reasonably request to
evidence compliance with applicable securities and other Law and the payment in
full of any applicable stock transfer Taxes, such other Person. No interest
shall accrue for the benefit of, or be payable to, any such holder on account of
the Merger Consideration payable in respect of such shares of Toymax Common
Stock. In the event of a transfer of ownership of any share of Toymax Common
Stock which is not registered in the stock transfer records for the Toymax
Common Stock, the Paying Agent shall be entitled to, and JAKKS shall cause the
Paying Agent to, pay the Merger Consideration and mail a check and stock
certificate therefor to the transferee thereof, if the Certificate representing
such shares is presented to the Paying Agent, together with such documents as
the Paying Agent may reasonable request to evidence such transfer and the
payment in full of any applicable stock transfer Taxes.

      6.3   Notwithstanding the failure of any Certificate to be surrendered as
hereinabove provided, each such Certificate, from and after the Effective Time,
shall not represent any interest in the Surviving Corporation, or any Assets
thereof, but shall represent only the right of the holder thereof at the
Effective Time to receive the Merger Consideration payable in respect thereof
upon surrender of such Certificate pursuant hereto. The stock transfer books of
Toymax shall be closed immediately at the Effective Time and no transfer of
shares of Toymax Common Stock shall be effective or registered thereafter.

      6.4   If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit to such effect by the Person claiming to be the
holder of such Certificate and, if required by JAKKS, the posting by such Person
of a bond as an indemnity against any claim that may be made against it with
respect to such Certificate, JAKKS shall cause the Paying Agent to pay to such
Person the Merger Consideration with respect to the shares represented by such
Certificate.



                                       11

      6.5   Promptly after the Effective Time, JAKKS shall grant to each holder
of an Eligible Option a JAKKS Option payable in respect thereof and issue and
mail to such holder, at the address shown in the option agreement or certificate
relating to such Eligible Option, a stock option agreement covering such JAKKS
Option.

      6.6   The Paying Agent shall be entitled to deduct and withhold from the
amount of the Merger Consideration otherwise payable pursuant to this Agreement
to any holder of shares of Toymax Common Stock at the Effective Time or any
holder of an Eligible Option such amounts as it is required to deduct and
withhold with respect to the payment of the Merger Consideration or the issuance
of the JAKKS Option under the Code or any corresponding provision of any other
Law relating to Taxes. To the extent that any amount is so withheld, such amount
shall be deemed for all purposes of this Agreement to have been paid as part of
the Merger Consideration to the holder of the shares of Toymax Common Stock at
the Effective Time or to have been paid to the holder of the Eligible Option
that would otherwise have been entitled actually to receive such amount.

      6.7   None of JAKKS, the Surviving Corporation, or the Paying Agent, or
any officer, employee or agent thereof, shall be liable to any Person in respect
of any Merger Consideration that is delivered to a public official pursuant to
and in accordance with any applicable abandoned property, escheat or similar
Law.

      6.8   If any portion of the Payment Fund remains undistributed six months
after the Effective Time, JAKKS shall ensure that the balance thereof shall be
delivered to JAKKS or to the Person designated by JAKKS, and any holder of a
Certificate that shall not have theretofore complied with the provisions of this
Article for the surrender of such Certificate and that shall not have received
the Merger Consideration payable in respect thereof shall thereafter look only
to JAKKS for the payment of such Merger Consideration. Any portion of the Merger
Consideration remaining unclaimed by holders of shares of Toymax Common Stock at
the Effective Time five years after the Effective Time (or such earlier date as
such amount would otherwise escheat to or become the property of any
Governmental Authority) shall, to the fullest extent permitted by Law, become
the property of the Surviving Corporation, free and clear of any claims or
interests of any Person previously entitled thereto.

7.    Representations and Warranties of Toymax.

      Toymax hereby represents and warrants to JAKKS as follows:

      7.1   Toymax is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has the full corporate
power and authority to own its Assets and carry on the Business as and in the
places where such Assets are now located or such Business is now conducted.
Complete and correct copies of Toymax's Certificate of Incorporation, including
all amendments thereto as of the date hereof, and Toymax's Bylaws, including all
amendments thereto as of the date hereof, have been delivered or made available
to JAKKS. Toymax is duly authorized or qualified to transact business as a
foreign corporation in each jurisdiction where such authorization or
qualification is required under applicable Law in light of the location or
character of its Assets or the operation of the Business (except where the
failure to be so authorized or qualified would not reasonably be expected to
have a Material Adverse Effect), and each such jurisdiction is listed on
Schedule 7.1.

      7.2   Toymax has full corporate power and authority to execute and deliver
this Agreement


                                       12

and each other Merger Document to which it is a party and to assume and perform
its obligations hereunder and thereunder; provided that Toymax cannot consummate
the Merger unless and until it receives the requisite shareholder approval. The
execution and delivery of this Agreement and each other Merger Document to which
it is a party by Toymax and the performance of its obligations hereunder and
thereunder have been duly authorized by all requisite corporate action on the
part of Toymax, except for the Stockholder Approval. This Agreement has been,
and each other Merger Document to which it is a party will be, duly executed and
delivered by Toymax, and this Agreement is, and each other Merger Document to
which it is a party, when so executed and delivered, will be, a legally valid
and binding obligation of Toymax, enforceable against it in accordance with
their respective terms, subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to
creditors' rights generally and (b) equitable principles limiting the
availability of specific performance, injunctive relief and other equitable
remedies. Subject to obtaining the Stockholder Approval, the filing by Toymax of
an HSR Form and the expiration or early termination of the waiting period under
the HSR Act, the filing by Toymax of the proxy materials relating to the
Stockholders' Meeting with the SEC pursuant to Section 14 of the Exchange Act,
the filing of the Certificate of Merger with the Secretary of State of Delaware,
and to obtaining any Toymax Consents (as defined in Section 7.5), the execution
and delivery of this Agreement by Toymax do not, and the execution and delivery
of each other Merger Document by Toymax and the performance by Toymax of its
obligations hereunder and thereunder will not, violate any applicable Law or any
provision of Toymax's Certificate of Incorporation or Bylaws, and do not and
will not conflict with or result in any breach of any condition or provision of,
or constitute a default under, or create or give rise to any adverse right of
termination or cancellation by, or excuse the performance of, any other Person
under, any Material Contract, or result in the creation or imposition of any
Lien upon any of the Assets, other than any violation, conflict, breach,
default, right of termination or cancellation, excuse of performance or Lien
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.

      7.3   As of the date hereof Toymax has engaged Morgan Lewis Gethens & Ahn,
Inc. to render a Fairness Opinion.

      7.4   Toymax's Board of Directors has unanimously (a) determined that this
Agreement and the Merger are advisable and in the best interests of Toymax and
its stockholders, (b) approved this Agreement and the Merger and (c) adopted
resolutions recommending that Toymax's stockholders adopt this Agreement and
approve the Merger and directing that this Agreement and the Merger be submitted
for consideration by, and to the vote of, Toymax's stockholders at the
Stockholders' Meeting, to be duly called pursuant to Notice for such purpose, in
each case, subject to its receipt of a Fairness Opinion, and none of the
foregoing actions has been rescinded or amended as of the date hereof. The
holders of record of Toymax Common Stock on the record date for the
Stockholders' Meeting shall be the only Persons entitled under applicable Law
and Toymax's Certificate of Incorporation and Bylaws to notice of, and to vote
at, the Stockholders' Meeting.

      7.5   Except for the filing by Toymax of an HSR Form and the expiration or
early termination of the waiting period under the HSR Act; the filing by Toymax
of the proxy materials relating to the Stockholders' Meeting with the SEC
pursuant to Section 14 of the Exchange Act; and the filing of the Certificate of
Merger with the Secretary of State of Delaware, and except as set forth on
Schedule 7.5, and to Toymax's knowledge, no Consent of, or Notice to, any Person
is required as to Toymax in connection with its execution and delivery of this
Agreement or any other Merger Document to which it is a party, or the
performance of its obligations hereunder or thereunder, or the


                                       13

consummation of the Merger (such Consents and Notices set forth on Schedule 7.5
are referred to herein as "Toymax Consents"), except where the failure to give
such Notices or obtain such consents would not reasonably be expected to have a
Material Adverse Effect.

      7.6   Except as set forth on Schedule 7.6, no Proceeding in which Toymax
or a Subsidiary is a named party is pending or, to Toymax's knowledge,
threatened against or affecting the Business, the Assets or Toymax's or any
Subsidiary's operations in which an unfavorable Order would reasonably be
expected to have a Material Adverse Effect, or would prohibit, invalidate or
make unlawful, in whole or in part, this Agreement, or the carrying out of the
provisions hereof or thereof or the transactions contemplated hereby. None of
Toymax or any Subsidiary is in default in respect of any Order, which default
would reasonably be expected to have a Material Adverse Effect, nor is there any
Order enjoining Toymax in respect of, or the effect of which is to prohibit or
restrict Toymax's performance of, its obligations under this Agreement.

      7.7   The entire authorized capital stock of Toymax consists of 50,000,000
shares of Toymax Common Stock, of which 12,214,678 shares are outstanding (and
no shares are held in treasury), and 5,000,000 shares of series preferred stock,
par value $.01 per share, none of which have been issued. All outstanding shares
of Toymax Common Stock are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 7.7, and except for the Stock
Purchase Agreement or as contemplated hereby, Toymax is not a party to any
voting agreement or trust or other agreement, commitment or arrangement with
respect to the voting or disposition of its capital stock, nor, to Toymax's
knowledge, is there any such trust, agreement, commitment or arrangement. Except
as set forth on Schedule 7.7, Toymax is not prohibited or restricted from paying
any dividend upon or making any other distribution in respect of its capital
stock (other than compliance with the applicable provisions of the DGCL), nor is
Toymax obligated to redeem, purchase or otherwise acquire, or to pay any
dividend upon or make any distribution in respect of, any of its outstanding
capital stock. Except for the Option Plans (and the Options granted thereunder)
and the Other Options, there are no (a) agreements, commitments or arrangements
providing for the issuance or sale of any of Toymax's capital stock, or (b) any
options, warrants or rights to purchase, or securities or instruments
convertible into or exchangeable for, any of Toymax's capital stock. The Option
Plans were duly authorized and adopted by Toymax (including the approval of
Toymax's Board of Directors and stockholders) and all Options granted under any
such Option Plan were properly granted in accordance therewith and with
applicable Law. All Other Options currently unexercised were duly authorized and
granted by all requisite corporate action on the part of Toymax and in
accordance with applicable Law. A sufficient number of shares of Toymax Common
Stock have been duly reserved for issuance upon the exercise of Options granted
under the Option Plans or Other Options, and no other shares of Toymax's capital
stock are reserved for issuance. Schedule 7.7 sets forth a complete and correct
list of all Options, including, as to each, the holder thereof, the date of
grant thereof, the total number of shares of Toymax Common Stock subject
thereto, the dates on which and the number of such shares as to which such
Option becomes exercisable, and the exercise price thereof. All shares of Toymax
Common Stock issuable upon the exercise of Options, if and when issued and
delivered in accordance with the terms thereof, will be duly authorized, validly
issued, fully paid and nonassessable.

      7.8   The entities set forth on Schedule 1.67 constitute all subsidiaries
of Toymax. Each Subsidiary is a corporation duly organized, validly existing and
in good standing under the Laws of its jurisdiction of incorporation, and has
full corporate power and authority to own its Assets and carry on its business
as and in the places where such Assets are located or such business is
conducted. Complete and correct copies of the certificate or articles of
incorporation or organization of each Subsidiary,


                                       14

including all amendments thereto as of the date hereof, and the Bylaws of each
Subsidiary, have been delivered or made available to JAKKS. Each Subsidiary is
duly authorized or qualified to transact business as a foreign corporation in
each jurisdiction where required under applicable Law in light of the location
or character of its Assets or the operation of its business (except where the
failure to be so authorized or qualified would not reasonably be expected to
have a Material Adverse Effect), and each such jurisdiction is listed on
Schedule 7.8. Except as set forth on Schedule 7.8, Toymax owns beneficially and
of record all of the outstanding shares of capital stock of each Subsidiary free
and clear of all Liens or any restriction with respect to the voting or
disposition thereof (other than Permitted Liens), and all such shares are duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
this Agreement or on Schedule 7.8, no Subsidiary is prohibited or restricted
from paying any dividend upon or making any other distribution in respect of its
capital stock (other than compliance with the applicable provisions of the
DGCL), nor is any Subsidiary obligated to redeem, purchase or otherwise acquire,
or to pay any dividend upon or make any distribution in respect of, any of its
outstanding capital stock. As of the date hereof, there are no (a) agreements,
commitments or arrangements providing for the issuance or sale of any capital
stock or any Subsidiary, or (b) any options, warrants or rights to purchase, or
securities or instruments convertible into or exchangeable for, any capital
stock of any Subsidiary. No shares of capital stock of any Subsidiary are
reserved for issuance. None of Toymax or any Subsidiary owns or has subscribed
for, or is subject to any obligation to purchase or otherwise acquire, directly
or indirectly, (a) any capital stock of, or other equity interest or
participation in, or (b) any option, warrant or other right to purchase, or any
security or instrument convertible into or exchangeable for, any capital stock
of, any Person, other than a Subsidiary.

      7.9   Toymax is required to file reports pursuant to Section 13 of the
Exchange Act, and Toymax has timely filed all reports, forms, statements and
documents required to be filed by it under the Securities Act, the Exchange Act
and any applicable rules of the Nasdaq Stock Market, Inc., all of which reports,
forms, statements and other documents are in material compliance with applicable
Laws. When filed, none of such reports, forms, statements and other documents
(including related notes and schedules) contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Each of the
consolidated financial statements for the past three years contained in such
reports, forms, statements and other documents were prepared in accordance with
GAAP applied on a consistent basis, and each such financial statement presented
fairly in all material respects the consolidated financial position of Toymax
and the Subsidiaries at the dates and their consolidated results of operations
and cash flows for each of the respective periods indicated, subject, in the
case of interim financial statements, to normal recurring year-end adjustments
and the absence of notes. To Toymax's knowledge, none of Toymax or any
Subsidiary has any material liability or obligation of any kind, contingent or
otherwise, relating to the Business or its Assets, but which is not reflected on
Toymax's consolidated balance sheet at December 31, 2001 or the notes thereto or
set forth on Schedule 7.9.

      7.10  Except as set forth on Schedule 7.10, and other than in connection
with the Monogram Transaction, since December 31, 2001, there has been no
material adverse change in the Business or the Assets or Toymax's or any
Subsidiary's operations, financial condition or results of operations, nor has
there been commenced any Proceeding in which an unfavorable Order would
reasonably be expected to have a Material Adverse Effect, and none of Toymax or
any Subsidiary has:

            (a)   incurred any material damage, destruction or similar loss,
whether or not


                                       15

covered by insurance, materially affecting the Business or the Assets;

            (b)   other than in the ordinary course of business, sold, assigned
or transferred a material portion of the Assets or any interest therein, other
than the disposal of defective, obsolete or otherwise unusable Assets;

            (c)   incurred any Indebtedness or other material obligation or
liability relating to the Business or the Assets, except in the ordinary course
of business, or paid, satisfied or discharged any material obligation or
liability relating to the Business or the Assets prior to the due date or
maturity thereof, except current obligations and liabilities in the ordinary
course of business;

            (d)   other than in the ordinary course of business, created,
incurred, assumed, granted or suffered to exist any Lien on any material Asset
(other than any Permitted Lien);

            (e)   other than in the ordinary course of business, waived any
right of material value or cancelled, forgiven or discharged any material debt
owed to it or material claim in its favor; or

            (f)   effected any material transaction relating to the Business or
the Assets other than in the ordinary course of business.

      7.11  Toymax or a Subsidiary, as the case may be, owns all of the Assets
free and clear of all Liens, except for Permitted Liens and the Liens listed on
Schedule 7.11, all of which were created in the ordinary course of business. The
Assets consisting of equipment and other tangible property are in sufficiently
good operating condition (normal wear and tear excepted) to be used to conduct
the Business.

      7.12  Except as set forth on Schedule 7.12, there is no breach or default
by Toymax or a Subsidiary or, to Toymax's knowledge, by any other party under
any Material Contract, each of which is in full force and effect, other than any
breach or default that would not reasonably be expected to have a Material
Adverse Effect. True and complete copies of all Material Contracts have been
delivered or made available to JAKKS.

      7.13  Except as set forth on Schedule 7.13, inventory included in the
Assets consists solely of merchandise usable or saleable in the ordinary course
of business. Since December 31, 2001, there has been no material change in the
inventory reflected in Toymax's consolidated balance sheet at December 31, 2001,
except in the ordinary course of business.

      7.14  Except as set forth on Schedule 7.14, the Accounts result from bona
fide sales to non-Affiliate customers of Toymax or a Subsidiary in the ordinary
course of business.

      7.15  Other than any Toymax Consents, each of Toymax and each Subsidiary
has all Permits and all Consents of Governmental Authorities required for it to
conduct the Business as presently conducted or which it is otherwise required to
have under applicable Law, except such Permits or Consents which the failure to
have would not reasonably be expected to have a Material Adverse Effect. All
such Permits and Consents are in full force and effect and no cancellation or
suspension of any thereof is pending or, to Toymax's knowledge, threatened.
Except as set forth on Schedule 7.15, and subject to obtaining any applicable
Toymax Consents, the applicability and validity of each such Permit or Consent
will not be adversely affected by the consummation of the transactions
contemplated


                                       16

by this Agreement. To Toymax's knowledge, Toymax and each Subsidiary is in
compliance with each Law applicable to it and the Business, including without
limitation with respect to occupational safety, environmental protection and
employment practices, except for such noncompliance which would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect, and none of
them has received any written Notice alleging or asserting any material
violation of or noncompliance with any such Law.

      7.16  Schedule 7.16 is a complete and correct list and a brief description
(including, if applicable, date of application, filing or registration, as the
case may be, and the registration and application number) of each Trade Right
that is a patent or registered trademark, trade name, service mark or copyright
or any currently pending application therefor, in which Toymax or a Subsidiary
has any right or interest, whether through any License Agreement or otherwise.
Except as otherwise listed on Schedule 7.16, none of Toymax or any Subsidiary is
a licensor or a licensee in respect of any such Trade Right. Except as otherwise
set forth on Schedule 7.16, to Toymax's knowledge, no Trade Right of Toymax or a
Subsidiary relating to the Business conflicts with or infringes on, and there
has been no misappropriation or unauthorized use by Toymax or a Subsidiary of,
any Trade Right of any other Person, and, to Toymax's knowledge, no Trade Right
of any other Person conflicts with or infringes on, and there has been no
misappropriation or unauthorized use by any other Person of, any Trade Right of
Toymax or a Subsidiary.

      7.17  Schedule 7.17 sets forth a brief description of the Real Property,
including the location or address and the current uses thereof by Toymax. Each
Lease is legal, valid and binding as between Toymax or a Subsidiary, as the case
may be, and each other party thereto, and Toymax or the applicable Subsidiary,
as the case may be, is a tenant in good standing thereunder, free of any
material breach or default whatsoever and quietly enjoys the Real Property
subject thereto. None of Toymax or any Subsidiary has assigned any interest in
any Lease or sublet any Real Property, nor is any Real Property used or occupied
by any other Person. Toymax or a Subsidiary, as the case may be, has legal and
valid occupancy Permits for the Real Property to the extent required under
applicable Law. No improvement, fixture or equipment on the Real Property, nor
the lease, use or occupancy thereof, is in violation of any applicable Law,
other than any such violation that does not materially impair the lease, use or
occupancy of such Real Property. No Real Property (a) is subject to any Law,
Order or Lien which would materially adversely affect its use or value for the
purposes now made of it or (b) has been condemned or otherwise taken, and, to
Toymax's knowledge, no condemnation or other taking of any Real Property is
pending or threatened.

      7.18  Except as set forth on Schedule 7.18, no Hazardous Material has been
generated, used, stored, treated, released or disposed of at, or transported to
or from, the Real Property or in connection with the Business by Toymax, other
than in substantial compliance with applicable Law, and, to Toymax's knowledge,
no Law, License, Order or Proceeding applicable to Toymax or any Subsidiary or
any Assets requires any clean-up or remediation or participation in or
contribution to any such clean-up or remediation.

      7.19  Toymax has duly filed all Tax returns and reports required to have
been filed by it to the date hereof, each of which is complete and correct in
all material respects, and Toymax has paid all Taxes due to any Governmental
Authority required to have been paid by it on or prior to the date hereof and
has created sufficient reserves or made provision for all Taxes accrued but not
yet due and payable by it. Toymax has paid to the proper Governmental
Authorities all customs, duties and similar or related charges required to be
paid by it on or prior to the date hereof with respect to the importation


                                       17

of goods into the United States. No Governmental Authority is now asserting or,
to Toymax's knowledge, threatening to assert, any deficiency or assessment for
additional Taxes with respect to Toymax, nor, to Toymax's knowledge, is there
any basis for any such deficiency or assessment. Except as set forth on Schedule
7.19, Toymax has not been audited by any Governmental Authority with respect to
any fiscal year for which Toymax has filed a Tax return and for which the
applicable statute of limitations has not expired, and, to Toymax's knowledge,
no such audit has been threatened or proposed. Toymax has not waived or
consented to any tolling of any limitation period with respect to any Tax
liability. Toymax and the Subsidiaries are, for federal income tax purposes,
members of an affiliated group, which includes no other Person, and no
Subsidiary files any separate return with respect to any Tax. Toymax has
delivered or made available to JAKKS complete and correct copies of the Tax
returns of Toymax for each of its three most recently ended fiscal years for
which Tax returns have been filed and any subsequent period for which a return
was filed.

      7.20  Schedule 7.20 sets forth a complete and correct list of all Employee
Plans either maintained by or to which contributions have been made by any ERISA
Affiliate. Except as set forth on Schedule 7.20, no ERISA Affiliate has any
outstanding material liability on account of any such Employee Plan for (a)
delinquent contributions owed under any such Employee Plan with respect to
periods prior to the date hereof; (b) fiduciary breaches by any ERISA Affiliate
under ERISA or any other applicable Law; or (c) income Taxes by reason of
non-qualification of any such Employee Plan which is intended by Toymax to be
tax-qualified under Section 401(a) of the Code. With respect to each such
Employee Plan, Toymax has delivered or made available to JAKKS copies of (i) the
plan, related trust documents and amendments thereto, (ii) the most recent
summary plan description and, as applicable, annual report, and (iii) as
applicable, the most recent actuarial valuation. No event has occurred for
which, and there exists no condition or set of circumstances under which, any
ERISA Affiliate or any such Employee Plan could reasonably be expected to be
subject to any material liability under Section 502(i) of ERISA or Section 4975
of the Code. With respect to each such Employee Plan, (I) such Employee Plan is
in substantial compliance in all material respects with the requirements
prescribed by all applicable Laws, including without limitation ERISA and the
Code, and Orders, and (II) there is no Proceeding (other than routine claims for
benefits) pending or, to Toymax's knowledge, threatened, with respect to any
such Employee Plan or against the assets of any such Employee Plan. No ERISA
Affiliate has any currently outstanding material liability under Title IV of
ERISA (other than for the payment of Pension Benefit Guaranty Corporation
premiums) or Section 412(f) or (n) of the Code.

      7.21  Except as set forth on Schedule 7.21, none of Toymax or any
Subsidiary is a party to any collective bargaining, union representation or
other labor contract; none of Toymax or any Subsidiary has received any Notice
from any labor union that such union represents or intends to represent any of
the employees of Toymax or any Subsidiary; and, to Toymax's knowledge, no strike
or work interruption by any of its or any Subsidiary's employees is planned,
threatened or imminent. At no time during the past five years has Toymax or any
Subsidiary experienced any strikes, work stoppages or demands for collective
bargaining by any union or labor organization, or been involved in or the
subject of any grievance, dispute or controversy by or with any union or labor
organization or, to Toymax's knowledge, any pending or threatened Proceedings
based on or related to any employment grievance, dispute or controversy or
received any Notice of any of the foregoing.

      7.22  Except as set forth on Schedule 7.22, no director, officer or
employee of Toymax or a Subsidiary is or will become entitled to receive any
severance pay or any additional compensation or benefit on account of this
Agreement or the Merger, nor shall entering into this Agreement or the


                                       18

consummation of the Merger result in the acceleration of the time of vesting or
payment of any compensation or benefit, except as provided in Section 5.4.
Except as set forth on Schedule 7.22, no Affiliate of Toymax or any Subsidiary
or any relative, associate or agent thereof has any interest in any Assets,
including without limitation any contract for the furnishing of services by, or
rental of real or personal property from or to, or requiring payments to, any
such Affiliate.

      7.23  Schedule 7.23 is a complete and correct list of the names and
addresses of the five largest customers of Toymax and the Subsidiaries during
Toymax's fiscal year ended March 31, 2001 and the total sales to or purchases
from such customers or suppliers made by Toymax and the Subsidiaries during such
fiscal year. As of the date hereof, no customer of Toymax and the Subsidiaries
representing in excess of 5% of their aggregate sales during such fiscal year
has advised Toymax or any Subsidiary that it intends to terminate, discontinue
or substantially reduce its business with Toymax or any Subsidiary.

      7.24  All insurance maintained by Toymax or any Subsidiary is in full
force and effect. To Toymax's knowledge, no insurer intends to cancel or refuse
to renew any such insurance and, to Toymax's knowledge, there is no basis for
any such cancellation or non-renewal. No insurer has disputed any claim made
under any policy and, to Toymax's knowledge, no event has occurred and no
circumstance exists which would excuse the performance by any insurer of any of
its obligations under any such policy with respect to such claim. Since December
31, 1999, none of Toymax or any Subsidiary has been refused any insurance for
which it has applied, nor has any insurance carried by Toymax or any Subsidiary
been cancelled (other than at the request of Toymax or a Subsidiary or upon the
normal expiration of the applicable policy).

      7.25  Except as set forth on Schedule 7.25, (a) none of Toymax or any
Subsidiary, or any Affiliate thereof, has employed or engaged any Person to act
as a broker, finder or other intermediary in connection with the transactions
contemplated hereby, and (b) no Person is entitled to any fee, commission or
other compensation relating to any such employment or engagement by Toymax or
any Subsidiary.

      7.26  No representation or warranty by Toymax in this Agreement, the
Certificate of Merger or the certificate being delivered at Closing by Toymax
pursuant to Section 11.2(b) contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.

8.    Representations and Warranties of JAKKS.

      JAKKS hereby represents and warrants to Toymax as follows:

      8.1   Each of JAKKS and Newco is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and each
has full corporate power and authority to own its assets and carry on its
business as and in the places where such assets are located or such business is
conducted. Complete and correct copies of JAKKS' and Newco's respective
Certificates of Incorporation, including all amendments thereto as of the date
hereof, and their respective Bylaws, including all amendments thereto as of the
date hereof, have been delivered or made available to Toymax. Newco has not
conducted any business to date (other than in connection with its organization
and entering into this Agreement) and is not required to have a Permit to
transact business as a foreign


                                       19

corporation in any jurisdiction. JAKKS owns beneficially and of record all of
the outstanding shares of Newco's capital stock free and clear of all Liens or
any restriction with respect to the voting or disposition thereof (other than
restrictions of general applicability imposed by federal or state securities
Laws), and all such shares are duly authorized, validly issued, fully paid and
nonassessable.

      8.2   Each of JAKKS and Newco has full corporate power and authority to
execute and deliver this Agreement and each other Merger Document to which it is
a party and to assume and perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each other Merger Document to which
it is a party by JAKKS and Newco and the performance of their respective
obligations hereunder and thereunder have been duly authorized by all requisite
corporate action on the part of each of them (including without limitation the
adoption of this Agreement and the approval of the Merger by JAKKS, as the sole
stockholder of Newco). This Agreement has been, and each other Merger Document
to which it is a party will be, duly executed and delivered by JAKKS and Newco,
respectively, and this Agreement is, and each other Merger Document to which it
is a party, when so executed and delivered, will be, a legally valid and binding
obligation of JAKKS and Newco, respectively, enforceable against each of them in
accordance with their respective terms, subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally, and (b) equitable principles limiting
the availability of specific performance, injunctive relief and other equitable
remedies. Subject to the filing by JAKKS of an HSR Form and the expiration or
early termination of the waiting period under the HSR Act; the filing of a
statement on Schedule 13D under the Exchange Act; the filing of a Current Report
on Form 8-K under the Exchange Act; the filing of a Transaction Statement on
Schedule 13E-3 under the Exchange Act; the filing and effectiveness under the
Securities Act of a registration statement on Form S-4 (or other form suitable
for the registration under such Act of the JAKKS Stock included in the Stock
Payment); and the filing of the Certificate of Merger with the Secretary of
State of Delaware, the execution and delivery of this Agreement by JAKKS and
Newco do not, and the execution and delivery of each other Merger Document by
JAKKS and Newco and, subject to obtaining the Consent required under the Loan
Agreement among JAKKS, Bank of America, N.A. and the other banks party thereto,
dated October 12, 2001 (the "JAKKS Loan Agreement"), the performance by JAKKS
and Newco of their respective obligations hereunder and thereunder will not,
violate any applicable Law or any provision of their respective Certificates of
Incorporation or Bylaws and do not and will not conflict with or result in any
breach of any condition or provision of, or constitute a default under, or
create or give rise to any adverse right of termination or cancellation by, or
excuse the performance of, any other Person, or result in the creation or
imposition of any Lien upon either of them or any of their respective assets or
the acceleration of the maturity or date of payment or other performance of any
obligation of either of them, other than any violation, conflict, breach,
default, right of termination or cancellation, excuse of performance, Lien or
acceleration that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on JAKKS, its business, assets or
financial condition.

      8.3   Except for the filing by JAKKS of an HSR Form and the expiration or
early termination of the waiting period under the HSR Act; the filing of a
statement on Schedule 13D under the Exchange Act; the filing of a Current Report
on Form 8-K under the Exchange Act; the filing of a Transaction Statement on
Schedule 13E-3 under the Exchange Act; the filing and effectiveness under the
Securities Act of a registration statement on Form S-4 (or other form suitable
for the registration under such Act of the JAKKS Stock included in the Stock
Payment), obtaining the Consent required under the JAKKS Loan Agreement and the
filing of the Certificate of Merger with the Secretary of State of Delaware, no
Consent of, or Notice to, any Person is required as to JAKKS or Newco in
connection with its execution and delivery of this Agreement or any other Merger
Document to which it


                                       20

is a party, or the performance of its respective obligations hereunder or
thereunder, or the consummation of the Merger.

      8.4   No Proceeding is pending, or, to JAKKS' knowledge, threatened
against or affecting the business, assets or operations of JAKKS or Newco in
which an unfavorable Order would prohibit, invalidate or make unlawful, in whole
or in part, this Agreement or any other Merger Document, or the carrying out of
the provisions hereof or thereof or the transactions contemplated hereby or
thereby. There is no Order enjoining JAKKS or Newco in respect of, or the effect
of which is to prohibit or curtail their performance of, their respective
obligations under this Agreement or any other Merger Document.

      8.5   JAKKS has delivered to the Shareholders a draft of JAKKS' balance
sheet as of December 31, 2001, and of the related statements of operations and
cash flows for JAKKS' fiscal period then ended (collectively, "JAKKS Financial
Statements"), all of which JAKKS Financial Statements have been prepared in
accordance with GAAP, and present fairly in all material respects the financial
position of JAKKS at such date and the results of its operations for the period
then ended, subject to normal recurring year-end adjustments and other
adjustments that are not material in the aggregate. JAKKS has no material
liabilities or obligations of any kind, contingent or otherwise, that are
required by GAAP to be reflected on the balance sheet included in the JAKKS
Financial Statements that are not so reflected thereon, except for any such
liabilities or obligations that have arisen in the ordinary course of business.

      8.6   JAKKS has timely filed all reports, forms, statements and documents
required to be filed by it under the Securities Act of 1933, as amended, the
Securities and Exchange Act of 1934, as amended, and any applicable rules of the
Nasdaq Stock Market, Inc., all of which reports, forms, statements and other
documents were, when filed, in material compliance with applicable Laws. When
filed, none of such reports, forms, statements and other documents contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.

      8.7   Neither JAKKS nor Newco has employed or engaged any Person to act as
a broker, finder or other intermediary in connection with the transactions
contemplated hereby, and no Person is entitled to any fee, commission or other
compensation relating to any such employment or engagement by JAKKS or Newco.

      8.8   The shares of JAKKS Stock included in the Merger Consideration have
been duly authorized and, when issued in accordance with the provisions hereof,
shall be validly issued, fully paid and nonassessable.

      8.9   No representation or warranty by JAKKS in this Agreement, the
Certificate of Merger or the certificate being delivered at Closing by JAKKS
pursuant to Section 11.3(c) contains or will contain any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.

9.    Certain Covenants.

      9.1   From and after the date hereof and until the Closing or the
termination of this


                                       21

Agreement, the parties hereto shall use their respective commercially reasonable
efforts, and shall cooperate with each other, to cause the consummation of the
Merger in accordance with the terms and conditions hereof, including without
limitation giving any Notice to or obtaining the Consent of any Governmental
Authority, or any other Person with respect to any Material Contract or
otherwise. In particular, Toymax and JAKKS shall use their respective
commercially reasonable efforts to file HSR Forms under the HSR Act as soon as
practicable after the date hereof and to obtain early termination of the waiting
period, including without limitation filing such additional documents and
furnishing such additional information as the Federal Trade Commission or the
Antitrust Division of the Department of Justice may request; provided that no
provision hereof shall require JAKKS or Toymax to divest any business or assets
or to hold any business or assets separate. The filing fees payable in respect
of the filing of all HSR Forms required hereunder shall be payable by JAKKS.

      9.2   As soon as practicable after the First Closing, Toymax shall prepare
and file with the SEC preliminary proxy materials relating to the Stockholders'
Meeting, including the Notice of such meeting, proxy statement and form of
proxy, in accordance with the applicable provisions of the Exchange Act, shall
use commercially reasonable efforts to file with the SEC such additional
documents and furnish to the SEC such additional information as the SEC may
request and otherwise respond to the SEC's comments, if any, on the preliminary
proxy materials and any such other documents or information. Toymax shall make
such changes in the proxy materials as are appropriate based on the SEC's
comments, if any, and shall cause the proxy materials to comply as to form in
all material respects with the requirements of the Exchange Act and shall
prepare and file definitive proxy materials in accordance with the applicable
provisions of the Exchange Act. Toymax shall provide to JAKKS a draft of any
proxy materials or other document to be filed with the SEC in connection with
the Stockholders' Meeting or the Merger and advise it of any information to be
furnished to the SEC at a reasonably sufficient time in advance in order to
allow JAKKS to review the same and give to Toymax any comments or suggestions it
may have thereon. Toymax shall also furnish to JAKKS copies of any
correspondence to or from the SEC relating to the proxy materials and advise
JAKKS of the SEC's comments, if any, thereon, and shall confer with JAKKS as to
the appropriate response thereto. Toymax shall pay the filing fee, if any,
applicable to the filing of the proxy materials with the SEC. JAKKS shall
cooperate with Toymax in connection with the preparation and filing of the proxy
materials and in responding to any SEC comments thereon, and shall provide to
Toymax, at Toymax's request, any information required to be included in the
proxy materials (including in any amendment or supplement thereto) in accordance
with the Exchange Act and so that the definitive proxy materials shall not at
any time prior to or at the Effective Time contain any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

      9.3   As soon as practicable after the First Closing, JAKKS shall prepare
and file with the SEC a statement on Schedule 13D and a Current Report on Form
8-K with respect to its purchase of Toymax Common Stock at the First Closing, in
accordance with the applicable provisions of the Exchange Act; a Transaction
Statement on Schedule 13E-3 relating to the Merger, in accordance with the
applicable provisions of the Exchange Act; and a registration statement on Form
S-4 covering the shares of JAKKS Stock included in the Merger Consideration (or
other form suitable for the registration of such shares under the Securities
Act), which Form S-4 or other applicable form will include the proxy statement
to be prepared by Toymax pursuant to Section 9.2, in accordance with the
applicable provisions of the Securities Act. JAKKS shall use commercially
reasonable efforts to file with the SEC such additional documents and furnish to
the SEC such additional information as the SEC may request and otherwise respond
to the SEC's comments, if any, on the registration statement and any such other


                                       22

documents or information. JAKKS shall make such changes in the registration
statement as are appropriate based on the SEC's comments, if any, and shall use
its best efforts to cause the registration statement to become effective under
the Securities Act. JAKKS shall provide to Toymax a draft of the registration
statement or other document to be filed with the SEC in connection with the
Merger and advise it of any information to be furnished to the SEC at a
reasonably sufficient time in advance in order to allow Toymax to review the
same and give to JAKKS any comments or suggestions it may have thereon. JAKKS
shall also furnish to Toymax copies of any correspondence to or from the SEC
relating to the registration statement and advise Toymax of the SEC's comments,
if any, thereon, and shall confer with Toymax as to the appropriate response
thereto. JAKKS shall pay the filing fee, if any, applicable to the filing of the
registration statement with the SEC. Toymax shall cooperate with JAKKS in
connection with the preparation and filing of the registration statement and in
responding to any SEC comments thereon, and shall provide to JAKKS, at JAKKS'
request, any information required to be included in the registration statement
(including in any amendment or supplement thereto) in accordance with the
Securities Act and so that the registration statement shall not at any time
prior to or at the Effective Time contain any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

      9.4   Toymax shall take all actions required to call, give Notice of, and
hold the Stockholders' Meeting as soon as reasonably practicable after the date
hereof, including printing and mailing definitive proxy materials. Toymax shall
also use commercially reasonable efforts to solicit the Stockholder Approval,
including without limitation including in the definitive proxy materials the
recommendation of Toymax's Board of Directors in favor of the adoption of this
Agreement, the approval of the Merger and the ratification of the Stock Purchase
Agreement, unless such recommendation or the inclusion thereof in the definitive
proxy materials would cause any of Toymax's directors to breach his fiduciary
duty or cause Toymax or any of its directors, officers, employees or agents to
violate any applicable Law.

      9.5   Except as may be required pursuant to Section 9.6, from and after
the date hereof and until this Agreement is terminated, none of Toymax, any
Subsidiary, any Principal Stockholder, any Affiliate thereof, or any director,
officer, employee or other agent or representative of any of them, shall,
directly or indirectly, solicit any inquiry, offer or proposal from any Person
other than JAKKS with respect to any transaction involving any sale or other
disposition of the Business or of all or substantially all of the Assets (other
than in the ordinary course of business) or of all or substantially all of the
capital stock of Toymax or any Subsidiary. Toymax shall promptly advise JAKKS of
the receipt of any such inquiry, offer or proposal and the material terms
thereof.

      9.6   Toymax shall not take any Alternative Action, except, subject to the
provisions of this Section and the payment of the Termination Fee, if
applicable, with respect to any Alternative Proposal that (a) is made in
writing, (b) Toymax's Board of Directors determines in good faith in the
exercise of its business judgment is reasonably capable of being completed on
the terms proposed and if so completed would result in an Alternative
Transaction that, from a financial point of view, would be superior and more
beneficial to Toymax's stockholders than the Merger, and (c) Toymax's Board of
Directors determines in good faith that its failure to consider such Alternative
Proposal or to withdraw, modify or qualify its approval or recommendation of the
Merger would cause it to violate its fiduciary duties under applicable Law (a
"Superior Proposal"). Prior to entering into any negotiations or discussions
with any other Person with respect to, or furnishing confidential information or
otherwise responding to, any Superior Proposal, Toymax shall enter into a
confidentiality agreement with such


                                       23

Person (which agreement may not include any provision granting to such Person an
exclusive right to negotiate with Toymax with respect to an Alternative
Transaction). No provision hereof shall preclude Toymax or its Board of
Directors from complying with the requirements of Rule 14d-9 or Rule 14e-2 under
the Exchange Act with regard to the Merger or any Alternative Proposal. Subject
to Toymax's compliance with the conditions of this Section 9.6, prior to
obtaining the Stockholder Approval, Toymax's Board of Directors may withdraw its
approval or recommendation of the Merger, or modify or qualify such approval or
recommendation, or approve or recommend a Superior Proposal if Toymax shall give
to JAKKS written Notice thereof at least five (5) business days prior thereto.
Unless this Agreement is terminated in accordance with Article 12 prior to the
Stockholders' Meeting, notwithstanding Toymax's receipt of any Alternative
Proposal or any Alternative Action, Toymax shall hold the Stockholders' Meeting
and call for a vote of its stockholders for the adoption of this Agreement and
the approval of the Merger.

      9.7   Except as set forth on Schedule 9.7, from and after the date hereof
and until the Closing, except as otherwise provided elsewhere herein or as
contemplated by the Monogram Transaction, or as JAKKS may otherwise consent
(which consent may not be unreasonably withheld), Toymax and each Subsidiary
shall:

            (a)   conduct the Business in its ordinary course;

            (b)   use commercially reasonable efforts to preserve the Business
and Assets and maintain their respective relationships with customers and other
Persons with which they have material business dealings;

            (c)   not enter into any Restrictive Agreement that would materially
adversely affect the operation of the Business;

            (d)   not (i) sell, lease, transfer or dispose of any material
Asset, other than sales in the ordinary course of business or the disposal of
defective, obsolete or otherwise unusable Assets or (ii) terminate any Material
Contract, except upon expiration of the term thereof as provided therein and
except for any Material Contract that ceases to be necessary in connection with
the operation of the Business;

            (e)   use commercially reasonable efforts to maintain all material
Permits and Consents, other than any such Permits or Consents that cease to be
necessary in connection with the operation of the Business, and to comply in all
material respects with all applicable Orders;

            (f)   use commercially reasonable efforts to maintain in full force
and effect (or to replace on substantially equivalent terms) all currently
applicable material insurance relating to the Business or the Assets;

            (g)   except as required under any Material Contract, Permit or Law
applicable to Toymax or a Subsidiary or otherwise by a Governmental Authority,
or in the ordinary course of business consistent with its past practices, not
increase the compensation or other employment benefits payable to or for the
benefit of any employee, or enter into, adopt or materially modify any Employee
Plan or other agreement, plan, commitment or arrangement to provide to any
employee or other Person any deferred compensation, retirement, severance or
other similar payment or benefit;



                                       24

            (h)   not make any loan or advance or otherwise extend any credit to
any director or officer of Toymax or a Subsidiary or any Affiliate of any such
director or officer;

            (i)   not amend its certificate or articles of incorporation or
organization or Bylaws;

            (j)   not merge or consolidate with any other Person or purchase or
otherwise acquire any securities of, or other equity interest or participation
in, any Person (other than a Subsidiary) or create any joint venture;

            (k)   other than pursuant to Toymax's current credit facility and
other than advances by Affiliates, not incur or assume any Indebtedness in an
amount in excess of $500,000;

            (l)   not acquire (other than in the ordinary course of business)
the business or assets, substantially as a whole, of any other Person, or make
any capital expenditure in excess of $500,000;

            (m)   not declare, set aside or pay any dividend or make any other
distribution in cash, securities or other property, on or in respect of any
capital stock (other than a cash dividend or distribution by any Subsidiary to
Toymax or any other Subsidiary);

            (n)   not split or reverse-split any capital stock or effect any
other recapitalization or capital reorganization, or issue or reserve for
issuance any capital stock, other than upon the exercise of an Option
outstanding on the date hereof in accordance with the terms thereof, or issue or
grant any option, warrant or right to purchase, or security or instrument
convertible into or exercisable for, any capital stock; and

            (o)   not enter into, adopt or assume any agreement, commitment or
arrangement which obligates Toymax or any Subsidiary to act or to refrain from
acting in violation of, or in a manner inconsistent with, any of the foregoing.

      9.8   From and after the date hereof and until the Closing, Toymax shall
furnish to JAKKS such information with respect to the Business and Assets as
JAKKS may from time to time reasonably request and shall permit JAKKS and its
authorized representatives access, at a mutually-agreeable time during regular
business hours and upon reasonable prior Notice to Toymax, to conduct, at JAKKS'
sole expense and in a manner that does not interfere with Toymax's operations, a
physical inventory of the Assets, to inspect the Real Property, to examine the
books and records of Toymax or any Subsidiary and to make inquiries of
responsible Persons designated by Toymax with respect thereto; provided that any
information so disclosed or otherwise made available or accessible to JAKKS
shall not constitute an additional representation or warranty of Toymax beyond
those expressly set forth in Article 7; and provided further that all such
information shall be subject to Section 9.10.

      9.9   From and after the date hereof and until the Closing, no party
hereto shall make any press release or other public announcement with respect to
this Agreement or the Merger, without the prior written consent of the other
parties (which consent shall not be unreasonably withheld), unless such
announcement is required by Law, in which case the other parties shall be given
Notice of such requirement prior to such announcement and the parties shall
consult with each other as to the scope and substance of such disclosure.



                                       25

      9.10  JAKKS and Newco acknowledge that certain information relating to or
concerned with the Business and the affairs of Toymax and the Subsidiaries,
including without limitation all non-publicly available Trade Rights, product
information, customer and supplier lists, marketing and sales data, personnel
and financing and Tax matters is proprietary to Toymax and/or its subsidiaries
and that its confidentiality is absolutely essential to the operation of the
Business. Until the Closing, all of such information shall be subject to that
certain Confidentiality and Non-Disclosure Agreement dated as of January 10,
2002, between Toymax and JAKKS (the "Confidentiality Agreement") to which the
parties hereby agree to be bound and which is incorporated herein by this
reference.

      9.11  From and after the Effective Time, JAKKS shall:

            (a)   cause the Surviving Corporation to, and the Surviving
Corporation shall, subject to any condition or limitation provided by DGCL
Section 145 or other applicable Law, at all times during the period of the
longer of six years following the Closing Date and the statute of limitations
applicable to any matter for which indemnification may be made hereunder,
indemnify each Person who at any time prior to the Effective Time shall have
been a director or officer of Toymax or a Subsidiary and hold each such Person
harmless from and against any loss, liability, obligation, damage or expense,
including reasonable attorneys' fees and disbursements, which any of them may
suffer or incur in connection with any claim or Proceeding against any of them
based upon or resulting from any act or omission occurring at or prior to the
Effective Time, including any acts or omissions in connection with this
Agreement or the Merger, in the same manner and to the same extent as is
provided in the certificate or articles of incorporation or organization, Bylaws
and any indemnification agreement of Toymax or the applicable Subsidiary, on the
date hereof;

            (b)   cause the Surviving Corporation's Bylaws at all times during
the six-year period following the Closing Date to include provision for such
indemnification and a provision regarding the elimination or limitation of
liability of all such Persons in the manner and to the extent provided in the
certificate or articles of incorporation or organization, or the Bylaws of
Toymax or the applicable Subsidiary; and

            (c)   cause to be maintained throughout such six-year period
directors' and officers' liability insurance substantially equivalent to that
provided to such Persons by Toymax on the date hereof and otherwise consistent
with the requirements of this provision.

10.   Conditions to Closing.

      10.1  The obligation of the parties hereto to consummate the Merger in
accordance herewith shall be subject to the satisfaction (or waiver) at or prior
to the Closing of each of the following conditions:

            (a)   Toymax shall have received a Fairness Opinion, which shall not
have been withdrawn, rescinded or adversely updated or modified;

            (b)   JAKKS' purchase of Toymax Common Stock from the Principal
Stockholders pursuant to the Stock Purchase Agreement shall have been
consummated;

            (c)   the Stockholder Approval shall have been obtained and be in
effect;



                                       26

            (d)   the waiting period under the HSR Act shall have expired or
been terminated;

            (e)   no Order or Law shall be in effect which (i) makes illegal or
prohibits consummation of the Merger or (ii) would reasonably be expected to
have a Material Adverse Effect, and no Proceeding which could result in the
enactment or adoption of any such Law or the issuance of any such Order shall be
pending; and

            (f)   except for the filing of the Certificate of Merger, each
Consent of, or Notice to, any Governmental Authority required for the
consummation of the Merger and for the Surviving Corporation to conduct the
Business that is set forth on Schedule 10.1 shall have been obtained or made, as
the case may be.

      10.2  The obligations of JAKKS and Newco to consummate the Merger in
accordance herewith shall also be subject to the satisfaction (or waiver) at the
Closing of each of the following conditions:

            (a)   each of the representations and warranties made by Toymax
herein that is qualified by "materiality" or "Material Adverse Effect" shall be
true, and each of the representations and warranties made by Toymax herein that
is not so qualified shall be true in all material respects, at and as of the
Closing Date;

            (b)   Toymax shall have, in all material respects, performed and
complied with all obligations and conditions contained herein that are to be
performed or complied with by it at or prior to the Closing;

            (c)   since the date of this Agreement, no event shall have occurred
and no circumstances shall have existed which has had or would have a Material
Adverse Effect;

            (d)   each holder of an Option that does not by its terms or
pursuant to the Option Plan under which it is granted or Section 5.4 terminate
at the Effective Time shall have executed and delivered to JAKKS an agreement
terminating such Option effective as of the Effective Time; and

            (e) Toymax and the Subsidiaries shall have executed and/or delivered
at the Closing all the documents so to be executed and/or delivered by them and
shall have taken all other actions at the Closing required to be taken by them
pursuant to Article 11.

      10.3  The obligation of Toymax to consummate the Merger in accordance
herewith shall also be subject to the satisfaction (or waiver) at the Closing of
each of the following conditions:

            (a)   each of the representations and warranties made by JAKKS
herein that is qualified by "materiality" or "Material Adverse Effect" shall be
true, and each of the representations and warranties made by JAKKS herein that
is not so qualified shall be true in all material respects, at and as of the
Closing Date;

            (b)   JAKKS and Newco shall have, in all material respects,
performed and complied with all obligations and conditions contained herein that
are to be performed or complied with by them at or prior to the Closing; and



                                       27

            (c)   JAKKS and Newco shall have executed and/or delivered at the
Closing all the documents so to have been executed and/or delivered by them and
shall have taken all other actions at the Closing required to have been taken by
them pursuant to Article 11.

11.   Closing.

      11.1  The Closing shall be held at the offices of Feder, Kaszovitz,
Isaacson, Weber, Skala & Bass LLP, 750 Lexington Avenue, New York, New York
10022 on the earliest practicable date, and in any event on or before the second
business day, after the satisfaction (or waiver) or all conditions to closing
provided in Article 10 (other than any condition which, by its terms, is to be
satisfied at the Closing), or at such other place or on such other date, and at
such time, as the parties hereto may agree. The execution and/or delivery of
each document to be executed and/or delivered at the Closing and each other
action to be taken at the Closing shall be subject to the condition that every
other document to be executed and/or delivered at the Closing is so executed
and/or delivered and every other action to be taken at the Closing is so taken,
and all such documents and actions shall be deemed to be executed and/or
delivered or taken, as the case may be, simultaneously.

      11.2  At the Closing, Toymax shall:

            (a)   deliver to JAKKS the resignations, effective at the Effective
Time, of all of the respective directors and officers immediately prior to the
Effective Time of Toymax and each Subsidiary (it being expressly understood that
no such resignation shall constitute a breach under any applicable employment
contract or arrangement);

            (b)   deliver to JAKKS a certificate of Toymax's chief executive
officer or chief financial officer to the effect that the conditions set forth
in Sections 10.2(a), (b) and (c) have been satisfied, and setting forth any
circumstances that exist as of the Closing Date, and events that have occurred
between the date hereof and the Closing Date, that result in any of Toymax's
representations or warranties contained in Article 7 hereof being untrue in any
material respect;

            (c)   deliver to JAKKS the agreements referred to in Section
10.2(d); and

            (d)   deliver to JAKKS such other agreements, instruments,
certificates and documents as JAKKS may reasonably request to effect the
consummation of the Merger.

      11.3  At the Closing, JAKKS shall:

            (a)   cause the Certificate of Merger to be filed with the Secretary
of State of Delaware;

            (b)   deliver to the Paying Agent written Notice of the
effectiveness of the Merger, authorizing the Paying Agent to pay the Merger
Consideration;

            (c)   deliver to Toymax a certificate of JAKKS' chief executive
officer or chief financial officer to the effect that the conditions set forth
in Sections 10.3(a) and (b) have been satisfied, and setting forth any facts or
circumstances that exist as of the Closing Date, and events that have occurred
between the date hereof and the Closing Date, that result in any of JAKKS'
representations


                                       28

or warranties contained in Article 8 hereof being untrue in any material
respect; and

            (d)   deliver to Toymax such other agreements, instruments,
certificates and documents as Toymax may reasonably request to effect the
consummation of the Merger.

12.   Termination.

      12.1  This Agreement may be terminated at any time prior to the Closing:

            (a)   by the mutual agreement of JAKKS and Toymax;

            (b)   by Toymax, if Toymax shall not have received a Fairness
Opinion on or before March 31, 2002, or if the Fairness Opinion is withdrawn,
rescinded or adversely updated or modified;

            (c)   if the Closing shall not have occurred on or before September
30, 2002, or such later date to which JAKKS and Toymax may agree, by JAKKS or
Toymax, upon written Notice to such effect to the other;

            (d)   if the Stock Purchase Agreement shall have been terminated for
any reason;

            (e)   by JAKKS or Toymax at any time after the Stockholders'
Meeting, if the Stockholder Approval is not obtained;

            (f)   by JAKKS (if JAKKS is not then in breach or default of any of
its representations, warranties, covenants or other obligations under this
Agreement), if (i) there shall be any material breach of any representation or
warranty by, or any failure to perform any material covenant or other obligation
of, Toymax, and, unless such breach or failure is incapable of being cured
within a period of 30 days after the giving of written Notice thereof to Toymax,
JAKKS gives such Notice to Toymax and such breach or failure shall not be cured
within 30 days of the giving of such Notice, upon written Notice of termination
to Toymax; or (ii) an Alternative Action shall have been taken;

            (g)   by Toymax (if Toymax is not then in breach or default of any
of its representations, warranties, covenants or other obligations under this
Agreement), if (i) there shall be any material breach of any representation or
warranty by, or any failure to perform any material covenant or other obligation
of, JAKKS or Newco, and, unless such breach or failure is incapable of being
cured within a period of 30 days after the giving of written Notice thereof to
the breaching or defaulting party, Toymax gives such Notice to such party and
such breach or failure shall not be cured within 30 days of the giving of such
Notice, upon written Notice of termination to JAKKS; or (ii) an Alternative
Action shall have been taken with respect to a Superior Proposal.

      12.2  Subject to the rights of the other parties hereto, either
Constituent Corporation may, by resolution of its Board of Directors, abandon
the Merger prior to the Effective Time notwithstanding that the stockholders of
either Constituent Corporation shall have approved and authorized the same;
provided that no abandonment of the Merger by a party in violation of the terms
of this Agreement shall constitute a basis on which JAKKS (in the case of
abandonment by JAKKS or Newco) or the Principal Stockholders (in the case of
abandonment by Toymax) shall be entitled to terminate the Stock Purchase


                                       29

Agreement.

      12.3  Upon termination of this Agreement pursuant to Section 12.1, all
obligations of the parties shall terminate except those under the applicable
provisions of Article 13; provided that no such termination shall relieve any
party hereto of any liability to any other party by reason of any breach of or
default under this Agreement.

13.   Miscellaneous.

      13.1  Termination of Representations and Warranties. No representation or
warranty of any party hereto shall survive the Effective Time or the termination
of this Agreement.

      13.2  Limitation of Authority. Except as expressly provided herein, no
provision hereof shall be deemed to create any partnership, joint venture or
joint enterprise or association among the parties hereto, or to authorize or to
empower any party hereto to act on behalf of, obligate or bind any other party
hereto.

      13.3  Fees and Expenses. Except as otherwise expressly provided herein,
each party hereto shall bear such fees and expenses as may be incurred by it in
connection with this Agreement and the Merger.

      13.4  Notices. Any Notice or demand required or permitted to be given or
made hereunder to or upon any party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or
reputable overnight courier service against receipt, or (ii) certified or
registered mail, postage paid, return receipt requested, or (b) sent by
facsimile, provided that the sender receives a printed confirmation of receipt,
to such party at the following address:

to JAKKS or Newco at: 22619 Pacific Coast Highway
                      Malibu, California 90265
                      Attn: President
                      Fax:  (310) 317-8527

with a copy to:       Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP
                      750 Lexington Avenue
                      New York, New York 10022
                      Attn: Murray L. Skala, Esq.
                      Fax:  (212) 888-7776

to Toymax at:         Toymax International, Inc.
                      125 East Bethpage Road
                      Plainview, New York  11803
                      Attn: Michael Sabatino
                      Fax:  (516) 391-9151



                                       30

with copies to:       Brown Raysman Millstein Felder & Steiner LLP
                      900 Third Avenue
                      New York, New York 10022
                      Attn: Joel M. Handel, Esq.
                      Fax:  (212) 812-3310

or such other address as any party hereto may at any time, or from time to time,
direct by Notice given to the other parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a)(i) or (a)(ii), the
date of the receipt; and in the case of clause (b), upon the sender's receipt of
printed confirmation of receipt.

      13.5  Amendment. At any time prior to the Effective Time and
notwithstanding that the Stockholder Approval has been obtained, JAKKS and
Toymax may amend this Agreement, if such amendment is authorized and approved by
the respective Boards of Directors of the Constituent Corporations; provided
that, after the Stockholder Approval is obtained, no such amendment may be made
which is prohibited or which would require further action by Toymax's
stockholders, pursuant to DGCL Section 251(d) or other applicable Law; and
provided further that no such amendment shall, unless each Principal Stockholder
agrees or otherwise consents in writing thereto, impose any additional
obligation on such Principal Stockholder, as such, or deprive such Principal
Stockholder of any right, power or privilege, other than as provided herein
prior to such amendment. No amendment of this Agreement shall be valid or
effective, unless in writing and signed by or on behalf JAKKS and Toymax.

      13.6  Waiver. No course of dealing or omission or delay on the part of any
party hereto in asserting or exercising any right hereunder shall constitute or
operate as a waiver of any such right. No waiver of any provision hereof shall
be effective, unless in writing and signed by or on behalf of the party to be
charged therewith. No waiver shall be deemed a continuing waiver or waiver in
respect of any other or subsequent breach or default, unless expressly so stated
in writing.

      13.7  Governing Law. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the Laws of the State of Delaware without
regard to principles of choice of Law or conflict of Laws.

      13.8  Jurisdiction. Each of the parties hereto hereby irrevocably consents
and submits to the jurisdiction of the Supreme Court of the State of New York
and the United States District Court for the Southern District of New York in
connection with any Proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby, waives any objection to venue in the
County of New York, State of New York, or such District, and agrees that service
of any summons, complaint, Notice or other process relating to such Proceeding
may be effected in the manner provided by clause (a) (ii) of Section 13.4.

      13.9  Remedies. In the event of any actual or prospective breach or
default by any party hereto, any other party hereto shall be entitled to
equitable relief, including remedies in the nature of rescission, injunction and
specific performance from any court of competent jurisdiction. All remedies
hereunder are cumulative and not exclusive, and nothing herein shall be deemed
to prohibit or limit any party from pursuing any other remedy or relief
available at law or in equity for such actual or


                                       31

prospective breach or default, including the recovery of damages.

      13.10 Severability. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

      13.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute one and
the same agreement.

      13.12 Further Assurances. Each party hereto shall cooperate with the other
parties hereto and shall promptly execute, deliver, file or record such
agreements, instruments, certificates and other documents and perform such other
and further acts as any other party hereto may reasonably request or as may
otherwise be reasonably necessary or proper, to consummate and perfect the
transactions contemplated hereby.

      13.13 Binding Effect. Subject to Section 13.14, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not intended, and shall not
be deemed, to create or confer any right or interest for the benefit of any
Person not a party hereto.

      13.14 Assignment. This Agreement, and each right, interest and obligation
hereunder, may not be assigned by any party hereto without the prior written
consent of the other parties hereto, and any purported assignment without such
consent shall be void and without effect.

      13.15 Titles and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.

      13.16 Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.

      13.17 Knowledge. The qualification or limitation of any statement made
herein to a party's "knowledge" or to a matter "known" to a party refers to the
actual knowledge (but not imputed or constructive knowledge) of the directors,
officers and operational managers of such party, after reasonable due inquiry.

      13.18 References. The terms "herein," "hereto," "hereof," "hereby" and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Article, Section or other part hereof.

      13.19 No Presumptions. Each party hereto acknowledges that it has
participated, with the advice of counsel, in the preparation of this Agreement.
No party hereto is entitled to any presumption with respect to the
interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that any other party hereto drafted or
controlled the drafting of this


                                       32

Agreement.

      13.20 Incorporation by Reference. The Exhibits and Schedules hereto are an
integral part of this Agreement and are incorporated in their entirety herein by
this reference.

      13.21 Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes any
prior agreement, commitment or arrangement relating thereto, other than the
Confidentiality Agreement, as set forth in Section 9.10.







                                       33

            IN WITNESS WHEREOF, JAKKS and the Constituent Corporations, by their
respective duly authorized officers, have duly executed this Agreement as of the
date set forth in the Preamble hereto.



TOYMAX INTERNATIONAL INC.                 JAKKS PACIFIC, INC.


By:   /s/ STEVEN A. LEBENSFELD            By:   /s/ STEPHEN G. BERMAN
      ------------------------------            ------------------------------
      Name:  Steven A. Lebensfeld               Name:  Stephen G. Berman
      Title: CEO                                Title: President


                                          JP/TII ACQUISITION CORP.


                                          By:   /s/ STEPHEN G. BERMAN
                                                ------------------------------
                                                Name:  Stephen G. Berman
                                                Title: Vice President





                                       34

                         INDEX TO EXHIBITS AND SCHEDULES

Exhibit A                  Form of Certificate of Merger

               
Schedule 1.49     Option Plans
Schedule 1.55     Permitted Liens
Schedule 1.67     Subsidiaries
Schedule 5.4      Option Conversion
Schedule 7.1      Foreign Qualification
Schedule 7.5      Consents and Notices
Schedule 7.6      Proceedings
Schedule 7.7      Capitalization
Schedule 7.8      Subsidiaries
Schedule 7.9      Liabilities
Schedule 7.10     Material Adverse Changes
Schedule 7.11     Liens
Schedule 7.12     Significant Contracts
Schedule 7.13     Inventory - Exceptions
Schedule 7.14     Accounts
Schedule 7.15     Permits and Consents - Exceptions
Schedule 7.16     Trade Rights
Schedule 7.17     Real Property
Schedule 7.18     Hazardous Material
Schedule 7.19     Taxes, Customs and Duties
Schedule 7.20     Employee Plans
Schedule 7.21     Labor
Schedule 7.22     Employees, Etc.
Schedule 7.23     Customers
Schedule 7.25     Brokers - Exceptions
Schedule 9.7      Exceptions from Ordinary Course
Schedule 10.1     Consents and Notices Required for Closing




                                       35

                                                                       EXHIBIT A


                              CERTIFICATE OF MERGER

                                       OF

                            JP/TII ACQUISITION CORP.

                                  WITH AND INTO

                           TOYMAX INTERNATIONAL, INC.

            Under Section 251 of the Delaware General Corporation Law

      The undersigned DOES HEREBY CERTIFY as follows:

      1.    The name and state of incorporation of each of the constituent
corporations are:



            Name                               State of Incorporation
            ----                               ----------------------
                                            

      JP/TII Acquisition Corp.                        Delaware

      Toymax International, Inc.                      Delaware


      2.    An Agreement of Merger relating to the merger of the constituent
corporations has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with Section 251 of the
Delaware General Corporation Law.

      3.    The name of the surviving corporation is Toymax International, Inc.

      4.    The Certificate of Incorporation of JP/TII Acquisition Corp. shall
continue as the Certificate of Incorporation of the surviving corporation.

      5.    The executed Agreement of Merger is on file at an office of the
surviving corporation located at 22619 Pacific Coast Highway, Malibu, California
90265.

      6.    A copy of the Agreement of Merger will be furnished by the surviving
corporation, on request and without cost, to any stockholder of either
constituent corporation.

      7.    The merger of the constituent corporations shall be effective at
4:00 p.m., New York City time, on the date of filing of this Certificate of
Merger with the Secretary of State of Delaware.

      IN WITNESS WHEREOF, the undersigned has, by its duly authorized officer,
executed this Certificate of Merger on this ____ day of __________, 2002.


                              TOYMAX INTERNATIONAL, INC.


                              By: ____________________________
                                  Name:  Stephen G. Berman
                                  Title: Vice President


                                       2

                                  SCHEDULE 5.4
                                       TO
                                MERGER AGREEMENT

                                OPTION CONVERSION


(I)   The exercise price and number of shares of JAKKS Stock subject to each
      JAKKS Option shall be determined in accordance with the following:

       V =  lower of (1) the Value of JAKKS Stock on the Closing Date with
            respect to the Stock Purchase Agreement and (2) the Value of JAKKS
            Stock on the Closing Date with respect to this Agreement


       R =   V
            ----
            4.50


       E =  exercise price of JAKKS Option =  R x exercise price of
                                                  corresponding Toymax Option

                                                            Number of shares
       N =  number of shares subject to JAKKS Option =  subject to corresponding
                                                             Toymax Option
                                                        ------------------------
                                                                    R


(II)  Notwithstanding the foregoing, if the aggregate number of shares of JAKKS
      Stock subject to JAKKS Options being granted as a result of the
      calculation set forth in (I), above, together with the aggregate number of
      shares of JAKKS Stock issued as part of the Purchase Price under the Stock
      Purchase Agreement and as part of the Merger Consideration under this
      Merger Agreement, would exceed the maximum number of shares of JAKKS Stock
      which could be issued without obtaining stockholder approval if and as
      required pursuant to the Nasdaq Rule (such maximum number, "M"), then the
      total number of shares of JAKKS Stock to be subject to JAKKS Options, the
      total number of shares of JAKKS Stock subject to each JAKKS Option to be
      granted pursuant to Section 5.4, and the exercise price of such JAKKS
      Options, shall each be subject to adjustment, in accordance with the
      following:

      (A)   The total number of shares of JAKKS Stock to be subject to JAKKS
            Options (T) shall be the excess of M over the aggregate number of
            shares of JAKKS Stock issued as part of the Purchase Price under the
            Stock Purchase Agreement and as part of the Merger Consideration
            under this Merger Agreement.

      (B)   The number of shares subject to a JAKKS Option (N') shall be
            determined by multiplying the number of shares subject to the JAKKS
            Option, calculated as set forth in (I), above, by F, where:

                                      T
                    --------------------------------------
               F =    Aggregate number of shares of JAKKS
                     Stock that would be subject to JAKKS
                    Options, calculated as set forth in(I)

                     N' = N x F

      (C)   Subject to (III), below, the adjusted exercise price of each JAKKS
            Option (E') shall be calculated in accordance with the following
            formula:

                            E' = V - (N/N' x (V - E))


(III) Notwithstanding the foregoing, if the value of E' with respect to a JAKKS
      Option calculated as set forth in (II)(C), is less than $0.01, then: (i)
      E' shall be deemed to equal $0.01, (ii) the holder of the Toymax Option
      shall be entitled to receive N' JAKKS Options with an exercise price of
      $0.01, and (iii) JAKKS shall be required to pay to the holder of the
      applicable JAKKS Option cash in an amount calculated as follows:

                Cash Payment = N' x ($0.01 - actual value of E')


                                                                       EXHIBIT 3


                           TOYMAX INTERNATIONAL, INC.
                             125 EAST BETHPAGE ROAD
                               NEW YORK, NY 11803



                                                March 11, 2002


JAKKS Pacific, Inc.
22619 Pacific Coast Highway
Malibu, CA  90265


            Re:   Stock Purchase Agreement


Ladies and Gentlemen:

            Reference is made to the Stock Purchase Agreement (the "Stock
Purchase Agreement"), dated as of February 10, 2002, by and among JAKKS Pacific,
Inc., a Delaware corporation ("JAKKS"), Toymax International, Inc., a Delaware
corporation (the "Company") and the shareholders of the Company listed on
Schedule I thereto (the "Shareholders"). All capitalized terms that are used but
not otherwise defined herein shall have the meanings ascribed to them in the
Stock Purchase Agreement.

            This letter shall confirm the understanding and agreement of the
parties to the Stock Purchase Agreement with respect to the following matters:

      1.    JAKKS hereby waives the requirements of Section 5.15 of the Stock
Purchase Agreement and the Company shall not be required to deliver or cause to
be delivered to JAKKS a Lien Report or Reports on or prior to the Closing Date
or at any time thereafter, notwithstanding anything to the contrary contained in
the Stock Purchase Agreement.

      2.    Notwithstanding the provisions of Sections 5.10 and 7.2(c) of the
Stock Purchase Agreement: (A) each of David Ki Kwan Chu, Steven A. Lebensfeld
and Harvey Goldberg shall resign as directors of the Company, effective upon
Closing; and (B) the remaining directors shall elect two of the then-existing
members of JAKKS' board of directors (or their designees) to fill such
vacancies.

      3.    Effective upon compliance with the applicable requirements of
Section 14(f) of the Exchange Act: (A) the Shareholders shall deliver at Closing
the resignations of two additional members of the Company's board of directors
(other than any JAKKS directors elected in accordance with the preceding
paragraph); (B) the number of directors constituting the entire board of
directors of the Company shall be increased to eight (8); and (C) the board of

directors shall elect the remaining four members of JAKKS' then-existing board
of directors (or their designees) who have not been elected to serve as
directors of the Company to serve as the remaining four directors of the
Company.

      Except as amended hereby, all of the terms and provisions of the Stock
Purchase Agreement shall remain unchanged and continue in full force and effect.
If the foregoing correctly sets forth our agreement and understanding, please so
indicate by signing and dating this letter in the space provided below.

                                          Sincerely,

                                          /s/ Steven A. Lebensfeld

                                          Steven A. Lebensfeld
                                          Chief Executive Officer


Accepted and Agreed to
as of the date set forth above,

BEST PHASE LIMITED                              JAKKS PACIFIC, INC.


By:   /s/ DAVID KI KWAN CHU               By:   /s/ JOEL M. BENNETT
    --------------------------                --------------------------
    David Ki Kwan Chu                         Name:  Joel M. Bennett
    Title:  President                         Title: Executive Vice President


HARGO (BARBADOS) LIMITED                  /s/ STEVEN A. LEBENSFELD
                                          ------------------------------
                                          Steven A. Lebensfeld
By:   /s/ GREGORY HINKSON
    --------------------------
    Name:  Gregory Hinkson                /s/ HARVEY GOLDBERG
    Title: Director                       ------------------------------
                                          Harvey Goldberg

By: CIBC BANK AND TRUST COMPANY (CAYMAN) LIMITED
    Secretary


    By:  /s/ NEAL GRIFFITH
        -----------------------
        Neal Griffith
        Authorized Signatory


    By:  /s/ SHERENE BLACKETT
        -----------------------
        Sherene Blackett
        Authorized Signatory


                                                                       EXHIBIT 4


             TERMINATION AND REPLACEMENT OF MANUFACTURING AGREEMENT

Agreement dated March 11, 2002 entered into between and among JAUNTIWAY
INVESTMENTS LIMITED, a Hong Kong private limited company with its offices at
Units D-F, 26th Floor, CDW Building, 388 Castle Peak Road, Tsuen Wan, N.T, Hong
Kong ("JI"), TAI NAM INDUSTRIAL COMPANY LIMITED, a Hong Kong private limited
company with its offices at Units D-F, 26th Floor, CDW Building, 388 Castle Peak
Road, Tsuen Wan, N.T., Hong Kong ("TN") and DAVID KI KWAN CHU and FRANCES SHUK
KUEN LEUNG, individuals with their address at Units D-F, 26th Floor, CDW
Building, 388 Castle Peak Road, Tsuen Wan, N.T, Hong Kong, (collectively
referred to as the "Principals");

and

TOYMAX INTERNATIONAL, INC., a Delaware corporation with its offices at 125 E.
Bethpage Road, Plainview, New York 11803, U.S.A., ("Toymax International"),
TOYMAX (H.K.) LIMITED, a Hong Kong private limited company, with its offices at
Units D-F, 26th Floor, CDW Building, 388 Castle Peak Road, Tsuen Wan, N.T., Hong
Kong ("Toymax HK"); hereafter Toymax International and Toy Max HK are referred
to collectively as the "Toymax Companies");

and

JAKKS PACIFIC, INC., a Delaware corporation with its offices at 22619 Pacific
Coast Highway, Malibu, California , U.S.A. ("JAKKS"). The parties to this
Agreement may also sometimes be referred to collectively as the "Parties" or
single as a "Party."


                              W I T N E S S E T H :


WHEREAS, JI and TN, which are owned by the Principals, and the Toymax Companies
are parties to a Manufacturing Agreement dated as of September 22, 1997, as
amended by an Amendment dated as of April 1, 1999 that recites that it is an
agreement between JI, TN and Toymax International and its subsidiaries (such
Agreement as amended is referred to as the "Existing Manufacturing Agreement")
pursuant to which JI agreed to manufacture products for the Toymax Companies
ordered by TN as Agent for the Toymax Companies under certain Agency Agreements
between TN and the Toymax Companies and their affiliates (the "Agency
Agreements");

WHEREAS, concurrently herewith JAKKS has acquired a majority of the outstanding
shares of capital stock of Toymax International, which is the parent company of
the other Toymax Companies, from certain shareholders of Toymax International,
including Best Phase Limited, a British Virgin Islands corporation owned by the
Principals, pursuant to a Stock Purchase Agreement dated February __, 2002 (the
"Stock Purchase Agreement");

WHEREAS, as a condition to such acquisition, JI, TN and the Toymax Companies
agreed to terminate the Existing Manufacturing Agreement and enter into this
Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged receipt of which is hereby acknowledged, the
Parties hereto hereby agree as follows:



                                       1

      1.    Termination of Existing Manufacturing Agreement. The Existing
            Manufacturing Agreement is hereby terminated as of the date hereof
            and replaced in its entirety by this Agreement. JI, the Principals
            and each of the Toymax Companies represents and warrants to JAKKS
            that there are no other agreements, understandings or undertakings
            between or among JI and any of the Toymax Companies or any of their
            respective Affiliates (as defined below) that provide for JI to
            manufacture products for the Toymax Companies or their respective
            Affiliates or for TN under the Agency Agreements, or otherwise as
            agent for the Toymax Companies, or with any other Person acting as
            agent for the Toymax Companies, and, to the extent that any such
            agreements, understandings or undertakings exist, they are hereby
            terminated. JI and the Toymax Companies agree that with the
            exception of open purchase orders issued to TN by the Toymax
            Companies under the Agency Agreements, which are deemed assigned by
            TN to Toymax International upon termination of the Agency Agreements
            under the agreement being executed concurrently herewith by JAKKS,
            TN and certain Toymax Companies, they have no claims against one
            another under the Existing Manufacturing Agreement.

      2.    Definitions. As used in this Agreement, the following terms shall
            have the meanings set forth below:

            a.    "Affiliate" of a Person means another Person directly or
            indirectly controlling, controlled by, or under common control with,
            such Person; for this purpose, "control" of a Person means the power
            (whether or not exercised) to direct the policies, operations or
            activities of such Person by virtue of the ownership of, or right to
            vote or direct the manner of voting of, securities of such Person,
            or pursuant to agreement or law or otherwise.

            b.    "Current Toymax Product Line" means the Existing Toymax
            Products and any Modified Toymax Product.

            c.    "Books and Records" means all customer lists, account records,
            pricing information, sales literature, promotional literature and
            all other books and records, files, invoices, supplier lists, and
            contracts relating to the Products that JI produced for the Toymax
            Companies under the Manufacturing Agreement, including all
            documents, computer software or other tangible expression of the
            Tools, Molds and Specifications (subject to Section 10 of this
            Agreement) or the Trade Rights.

            d.    "Competitive Product" means any product that is substantially
            identical to (i) a product sold by the Toymax Companies within the
            three (3) year period prior to the date hereof (with the exception
            of products known as "Snapshots" and products sold by Toymax
            International's Candy Planet and Monogram divisions), or (ii) a
            product sold by the Toymax Companies after the date hereof through
            the end of the term of this Agreement, or (iii) a product sold or
            marketed by JAKKS or its other Affiliates after the date hereof
            through the end of the term of this Agreement.

            e.    "Existing JAKKS Products" means the products being sold or
            marketed by JAKKS and its Affiliates as of the date hereof and any
            extension, adaptation, redesign, or reconfiguration of an Existing
            JAKKS Product.

            f.    "Existing Toymax Products" means the products identified on
            the


                                       2

            Product and Price List manufactured by JI for the Toymax Companies
            as of the date hereof.

            g.    "JI & TN Manufacturing Trade Right" means a patent, or
            know-how, inventions, trade secrets, technical process or
            proprietary right relating to manufacturing processes employed by JI
            and TN in its business and that (A) were conceived or invented by JI
            or TN independently of the Toymax Companies prior to the date hereof
            and which have not become generally known in the industry or are not
            otherwise in the public domain, or (B) are conceived or invented by
            JI or TN after the date hereof independently of JAKKS and its
            Affiliates (including the Toymax Companies) and are not and do not
            become generally known in the industry or otherwise become part of
            the public domain.

            h.    "Modified Toymax Product" means an Existing Toymax Product the
            Specifications for which are modified by the Toymax Companies, JAKKS
            or its other Affiliates (provided such modification is agreed to by
            JI) after the date hereof, and any extension, adaptation, redesign,
            or reconfiguration of an Existing Toymax Product.

            i.    "New Product Manufacturing Terms" has the meaning provided for
            in Section 3(c) of this Agreement.

            j.    "New Products" means products other than the Existing Toymax
            Products and the Existing JAKKS Products, first proposed to be
            manufactured by the Toymax Companies, JAKKS or its other Affiliates
            after the date hereof.

            k.    "Person" includes without limitation a natural person,
            corporation, joint stock company, limited liability company,
            partnership, joint venture, association, trust, Governmental
            Authority, or any group of the foregoing acting in concert.

            l.    "Product and Price List" means the list attached as Exhibit A
            identifying all Existing Toymax Products that are currently being
            manufactured by JI for the Toymax Companies or for TN under the
            Existing Manufacturing Agreement and the prices being charged for
            such Products by JI.

            m.    "Product Vendee" means the Toymax Company or JAKKS or its
            other Affiliate ordering a Product from JI under this Agreement.

            n.    "Products" means New Products, Existing Toymax Products,
            Modified Toymax Products and the Existing JAKKS Products.

            o.    "Significant Amount" with respect to a New Product means at
            least twenty (20%) percent of the aggregate production of such New
            Product.

            p.    "Specifications" means descriptive, quantitative and
            qualitative criteria agreed to in writing prior to production by JI
            and JAKKS or a Product Vendee for the manufacture of Products.

            q.    "Tools, Molds and Specifications" means any tools, molds,
            designs, prototypes, blueprints, drawings, Specifications, and the
            like developed or


                                       3

            otherwise produced in connection with the design, manufacture and
            marketing of the Products.

            r.    "Trade Right" means a patent, claim of copyright, trademark,
            trade name, brand name, service mark, logo, symbol, trade dress or
            design, or representation or expression of any thereof, or
            registration or application for registration thereof, or any other
            invention, trade secret, technical information, know-how,
            proprietary right or intellectual property developed, conceived of,
            invented or otherwise produced in connection with the design,
            manufacture and marketing of the Products.


      3.    Manufacture of Products.

            a.    JI shall use its commercially reasonable efforts to conduct
            such preparations, validations, testing and analyses, as shall
            enable it to manufacture Products pursuant to this Agreement
            according to the Specifications agreed to in writing by the Parties.

            b.    JAKKS and the Toymax Companies shall continue to use JI to
            manufacture the Existing Toymax Products in accordance with the
            Specifications in effect for the Existing Toymax Products and the
            prices identified in the Product and Price List, subject to the
            provisions of Section 4. The quantity of Existing Toymax Products
            ordered by the Toymax Companies or JAKKS shall be determined by
            JAKKS in its discretion, provided, however, that JAKKS agrees that
            JI shall have the exclusive right to manufacture all Products in the
            Current Toymax Product Line provided that JI meets JAKKS delivery
            requirements (and JI agrees to use reasonable commercial efforts to
            comply with JAKKS' delivery requirements, provided that JI shall not
            be required to agree to deliver Products in less than 28 days, and
            (i) for Products incorporating computer chips or Integrated
            circuits, such longer period as is reasonably required to obtain
            such chips or integrated circuits, but no longer than prevailing
            industry availability for such component, and (ii) for Products
            incorporating other components from dedicated third party suppliers,
            such longer lead time as reasonably required to obtain such
            components, but no longer than prevailing industry availability for
            such component), and that JI is otherwise in accordance with the
            provisions of this Agreement. In the event that JAKKS or the Product
            Vendee desires to manufacture a Modified Toymax Product, then such
            commitment is subject to agreement between JI and JAKKS or the
            Product Vendee, as the case may be, upon the price, Specifications,
            quantities and delivery dates for such Modified Toymax Product.

            c.    After the date hereof, JAKKS agrees to use commercially
            reasonable efforts to order from JI or arrange for the Toymax
            Companies or other of JAKKS' Affiliates to order from JI a
            Significant Amount of New Products, provided that (i) agreement can
            be reached with JI on the prices, Specifications, quantities, and
            delivery dates (collectively referred to as the "New Product
            Manufacturing Terms") for such New Products, and (ii) that the
            quality of Products delivered by JI after the date hereof is at
            least equal to the quality of Existing Toymax Products manufactured
            by JI under the Existing Manufacturing


                                       4

            Agreement prior to the date hereof. If JI and JAKKS or its Affiliate
            do not reach agreement on the price for such New Product, and JAKKS
            or one of its Affiliates obtains a more favorable price for such New
            Product from another third party manufacturer, then, provided that
            JI has previously manufactured that generic type of product for
            JAKKS or its Affiliates (including the Toymax Companies), then JAKKS
            or an Affiliate shall give notice to JI of such competitive price
            and the other New Product Manufacturing Terms on which such third
            party manufacturer was willing to manufacture the New Product, and
            if JI advises JAKKS or its Affiliate within one (1) business day
            that JI agrees to manufacture such New Product on such New Product
            Manufacturing Terms, then JAKKS will place such order for such New
            Product with JI (and the amount so ordered shall be included in the
            calculation of Significant Amount); the rights conferred upon JI in
            this sentence shall not in any way be deemed to expand, modify, or
            otherwise affect the obligations of JAKKS undertaken in the first
            sentence of this paragraph.

      4.    Purchase Prices.

            a.    PAYMENT. Payment for Products shall be made within thirty (30)
            days after shipment by JI of such Product to the Product Vendee, at
            the purchase price identified on the Product and Price List, if an
            Existing Toymax Product, or the purchase price agreed to in
            accordance with this Agreement for any Modified Toymax Product or
            New Product, subject to the provisions of paragraph (b) of this
            Section 4.

            b.    COMPETITIVE AND MOST FAVORED CUSTOMER PRICING.

                  i.    JI agrees that if any of the prices for the Existing
                  Toymax Products are not competitive with the prices for the
                  same products, quality and quantity that could be arranged by
                  JAKKS with other third party manufacturers on an arms-length
                  basis, such prices shall be adjusted to reflect such
                  competitive price, provided JAKKS gives notice to JI and
                  evidence of such other competitive price.

                  ii.   JI agrees that the prices for any Products (including
                  Modified Toymax Product and New Products) ordered by JAKKS or
                  its Affiliates or the Toymax Companies after the date hereof
                  shall be no greater than the prices charged by JI to the
                  Toymax Companies or TN under the Agency Agreements for the
                  same or substantially the same products prior to the date
                  hereof.

                  iii.  JI agrees that in connection with setting and adjusting
                  all pricing and other terms (including quantity) for any
                  Products (including Modified Toymax Products and New Products)
                  ordered by the Toymax Companies or JAKKS and its other
                  Affiliates after the date hereof, such pricing and terms shall
                  be no less favorable than the prices charged and terms given
                  by JI to its most credit-worthy, largest and favored customers
                  for similar products and terms, including quantity.

                  iv.   After a purchase order placed by a Product Vendee has
                  been


                                       5

                  accepted by JI, such purchase order and the Specifications for
                  the Product covered by such purchase order may not be changed
                  without the approval of JI and the Product Vendee.

            c.    ADJUSTMENT OF CURRENT PRICES. JI's prices for the Existing
            Products shall remain in effect for the balance of 2002, and
            thereafter JI may give ninety (90) days prior written notice to
            JAKKS of an increase in any such price resulting from increases in
            JI's cost of materials, provided, however that if JAKKS thereafter
            gives notice to JI that such increased price is not competitive with
            the price for such Product that could be arranged by JAKKS with
            other third party manufacturers on an arms-length basis, and JI does
            not agree to meet such competitive price within one (1) business day
            after notice from JAKKS of such competitive price, JAKKS shall have
            the right to terminate this Agreement with respect to such Existing
            Product.

      5.    Delivery of Products.

            a.    Products shall be delivered to the Product Vendee F.O.B. the
            ports of Yien Tien (PRC) or Hong Kong or as otherwise agreed by JI
            and the Product Vendee. JI shall arrange with a common carrier to
            ship the quantity of Product covered by such order to the location
            selected by the Product Vendee.

            b.    Upon delivery of a Product in accordance with an order, JI
            shall present the Product Vendee with an invoice for the quantity of
            the Product covered thereby, in each case at a purchase price
            determined pursuant to the terms of Section 4.

            c.    Payments to JI shall be made in U.S. Dollars. The Product
            Vendee shall not be required to provide a letter of credit or any
            other security to JI in connection with this Agreement or any
            purchase order.

            d.    Any foreign, federal, state, county or municipal sales or use
            tax, excise or similar charge, or any other tax assessment (other
            than that assessed against income), or other charge lawfully
            assessed or charged by any governmental agency or authority on the
            sale, use or transportation of any Product delivered to a Product
            Vendee pursuant to this Agreement shall be immediately paid by the
            Product Vendee at the time of payment of the related invoice for
            such Product or when required by applicable law.

      6.    Confidentiality.

            a.    During the term of this Agreement, any disclosure to JI or the
            Principals and their respective Affiliates (a "recipient") of
            proprietary know how and other data and information concerning each
            and all of the Products ("Confidential Information") by the Toymax
            Companies, JAKKS or its other Affiliates (a "disclosing party") is
            made on the following terms:

                  i.    The recipient will receive, maintain and hold
                  Confidential Information in strict confidence and will use the
                  same level of care in safeguarding it that it uses with its
                  own confidential material of a similar


                                       6

                  nature;

                  ii.   The recipient will take all such steps as may be
                  reasonably necessary to prevent the disclosure of Confidential
                  Information; and

                  iii.  The recipient will not utilize Confidential Information,
                  other than strictly for meeting its obligations hereunder, and
                  other than JI & TN Manufacturing Trade Rights, without first
                  having obtained the disclosing party's written consent to such
                  utilization.

            b.    The commitments set forth in paragraph 6(a) shall not extend
            to any portion of Confidential Information:

                  i.    which was or becomes (through no fault of the recipient
                  in breach of its obligations under this Agreement) generally
                  available to the public;

                  ii.   which is known to the recipient prior to disclosure or
                  was independently developed by the recipient (excluding
                  information regarding the Toymax Companies which would
                  otherwise be Confidential Information that was disclosed to JI
                  or the Principals under the Existing Manufacturing Agreement,
                  or that was disclosed to either of the Principals in
                  connection with their acting as a director, shareholder, or
                  employee of any of the Toymax Companies or their predecessors
                  or respective Affiliates and excluding any other non-public
                  information concerning Existing Toymax Products or New
                  Products under development by or for the Toymax Companies,
                  JAKKS or its other Affiliates);

                  iii.  which was not acquired, directly or indirectly and/or in
                  any manner, from the disclosing party or any of its Affiliates
                  and which the recipient lawfully had in its possession prior
                  to the date of this Agreement;

                  iv.   which, hereafter, through no act or omission on the part
                  of the recipient, becomes information generally available to
                  the public.

            c.    At any time upon written request by the disclosing party, (i)
            the Confidential Information, including any copies, shall be
            returned to the disclosing party, and (ii) all Books and Records and
            Tools, Molds and Specifications (subject to the provisions of
            Section 10 of this Agreement) and any other material whatsoever
            developed by the recipient which relates to such Confidential
            Information, including all copies and/or any other form of
            reproduction and/or description thereof made by the recipient,
            shall, at the disclosing party's option, be returned to the
            disclosing party or destroyed.

            d.    In the event that a recipient or any of its employees,
            directors, or representatives become legally compelled (by
            deposition, interrogatory, request of documents, subpoena, civil
            investigative demand or similar process) to disclose any of the
            Confidential Information, the recipient or other such person
            referred to above from whom such Confidential Information is being
            sought shall provide JAKKS and the disclosing party with prompt
            prior written notice of such requirement so that it may seek a
            protective order or other appropriate remedy


                                       7

            and/or waive compliance with the terms of this Agreement. In the
            event that such protective order or other remedy is not obtained, or
            JAKKS waives compliance with the provisions hereof, the person
            required to provide such information agrees to furnish only such
            portion of the Confidential Information which is legally required to
            be furnished.

      7.    Manufacturing Standards and Quality Assurance.

            a.    Prior to commencement of manufacture of a New Product or a
            Modified Toymax Product, JI shall provide a sample or prototype of
            each Product for approval by JAKKS, the Toymax Company, or JAKKS'
            other Affiliate ordering such Product, and the entity ordering the
            Product shall notify JI of its approval, or the reasons for its
            disapproval, within a reasonable period of time after delivery of
            the sample or prototype. Prior to any initial shipment of a Product
            by JI, or as otherwise requested by JAKKS or the Product Vendee, JI
            shall provide the Product Vendee with samples of such Product for
            inspection and approval. In addition, JI shall have each of the
            Products tested in accordance with the testing procedures described
            in the applicable Specifications and shall provide JAKKS or the
            Product Vendee, at JAKKS or the Product Vendee's expense, with a
            certificate of compliance from an independent certified testing
            laboratory approved by JAKKS or the Product Vendee.

            b.    JAKKS or the Product Vendee shall provide to JI written notice
            of rejection of any shipment of Products if the subject Products do
            not meet the Specifications. In order to permit a timely and
            accurate investigation by JI, JAKKS or the Product Vendee shall
            provide supporting evidence in its possession on which JAKKS or the
            Product Vendee has based such belief.

            c.    If the Parties disagree with respect to whether a shipment of
            Product does not conform to the Specifications (a "Non-Conforming
            Product"), the Parties agree that the Product in question shall be
            submitted for testing to an independent testing laboratory
            acceptable to JI and JAKKS or the Product Vendee. The determination
            of such independent laboratory as to whether such Product meets and
            will continue to meet all Specifications will be binding on both
            parties with respect to the Product Vendee's right to return the
            shipment hereunder and refusal to pay the applicable Purchase Price.
            The cost related to such testing will be paid by the party who was
            in error with respect to whether the Product was a Non-Conforming
            Product.

            d.    Within a reasonable period of time after a determination that
            a Product is a Non-Conforming Product by (i) the mutual consent of
            the Parties, or (ii) an independent testing laboratory as provided
            above, JI shall issue a credit to the Product Vendee in an amount
            equal to the sum of (x) the amount invoiced to and paid by the
            Product Vendee for the manufacturing and processing of such
            Non-Conforming Product, unless such Product is replaced, (y) any
            applicable freight charges invoiced to and paid by the Product
            Vendee for the shipment of such Non-Conforming Product, and (z) any
            applicable transit, insurance premium, taxes, duties or other
            similar costs related to the Non-Conforming Product. If there is any
            outstanding credit to the Product Vendee upon the termination or
            expiration of this Agreement, JI shall reimburse the Product Vendee
            in the


                                       8

            amount of such credit within thirty (30) calendar days after such
            termination or expiration. EXCEPT AS OTHERWISE PROVIDED IN THIS
            AGREEMENT, THE ONLY WARRANTY PROVIDED BY JI TO THE PRODUCT VENDEE
            WITH RESPECT TO THE PRODUCTS SHIPPED UNDER THIS AGREEMENT IS THAT
            THE PRODUCT CONFORMS IN ALL RESPECTS TO THE SPECIFICATIONS ON THE
            DATE OF SHIPMENT, AND THE PRODUCT VENDEE EXPRESSLY WAIVES ANY
            EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
            PARTICULAR PURPOSE. In the event that a Product does not conform to
            the Specifications, then other than the rights to terminate this
            Agreement as provided in this Agreement, the sole remedy of the
            Product Vendee is the credit or replacement provided for in this
            paragraph. In the event of repeated instances of non-conformance of
            Products to the Specifications, the Product Vendee shall have the
            right to require a credit rather than replacement. If JI determines
            that repair or replacement of a Non-Conforming Product is not
            commercially feasible, then, at its option, JI shall provide the
            Product Vendee the credit provided for in this paragraph rather than
            repair or replacement.

            e.    The Product Vendee shall have the right, at reasonable times,
            and on reasonable prior notice, to inspect and arrange for its
            licensees or representatives to inspect, JI's manufacturing
            facilities, provided the frequency of such inspection by Persons
            other than JAKKS or the Product Vendee does not unreasonably
            interfere with JI's business or operations.


      8.    Term and Termination.

            a.    This Agreement shall have a term commencing on the date hereof
            and ending on the close of business in New York, NY on the third
            anniversary hereof. JAKKS shall have the right to terminate this
            Agreement with respect to a particular Product, upon twenty (20)
            days' prior written notice to JI, in the case of non-electronic
            Products, and thirty (30) days prior written notice to JI, in the
            case of electronic Products, in the event JI shall fail to supply
            the Product Vendee that particular Product within twenty (20) days
            of the requested supply date set forth in the purchase order for
            non-electronic Products and thirty (30) days of the requested supply
            date set forth in the purchase order for electronic Products,
            provided, however, that in the exercise of its discretion JAKKS or
            the Product Vendee may determine to accept such late shipment.

            b.    JI or JAKKS may terminate this Agreement by giving written
            notice thereof to the other Party in the event that the other Party
            shall have breached or defaulted in any material respect in the
            performance of an obligation imposed on such other Party hereunder
            (including non-payment by the Product Vendee in accordance with
            paragraph 4(a) above and failure to comply with the pricing
            requirements of paragraph 4(b)); provided that the non-breaching
            Party shall have notified the breaching Party in writing of such
            breach or default, advising of the nature of the breach or default,
            and within ten (10) calendar days after the date of such notice in
            the case of monetary defaults and thirty (30) calendar days after
            the date of such notice in the case of non-monetary defaults, the
            breaching Party shall not have cured such breach or default. For
            purposes of this paragraph,


                                       9

            notices may be given or received by JAKKS on behalf of the Toymax
            Companies.

            c.    If this Agreement is terminated pursuant to the provisions of
            this Article 8, the Parties shall be bound by the following
            provisions:

                  i.    Except with respect to Non-Conforming Products, all
                  pending orders placed by the Product Vendee on or before
                  receipt of a notice of termination for the Products shall be
                  fulfilled by JI and delivered on the supply dates requested by
                  the Product Vendee, be paid for in accordance with the terms
                  and provisions hereof and with respect to quality remain
                  subject to the provisions hereof, except where this Agreement
                  has been terminated by JI as a result of a material breach by
                  JAKKS or the Product Vendee such as non-payment, in which
                  event fulfillment of such purchase orders shall be at the
                  option of JI, and if such purchase orders are not fulfilled in
                  accordance with their terms, the Product Vendee shall have no
                  further obligation to make payment for such pending orders.

                  ii.   After this Agreement is terminated, all Confidential
                  Information shall be returned by the recipients to the
                  disclosing parties as set forth in Section 6 of this
                  Agreement.

      9.    Restrictive Covenant. From and after the date hereof and the later
            of December 31, 2004 or one (1) year following the termination or
            expiration of this Agreement, neither JI nor the Principals shall,
            directly or indirectly through any Affiliate or other intermediary
            (a) manufacture, produce, sell, market or otherwise promote any
            Competitive Product or serve as a partner, member, manager,
            director, officer or employee of, or consultant or advisor to, or in
            any manner own, control, manage, operate or otherwise participate or
            invest in, or be connected with any Person that engages in the
            marketing or sale of Competitive Products, or authorize the use of
            its or their name in connection therewith, or (b) for itself, or
            himself or herself, or on behalf of any other Person, employ, engage
            or retain any Person who at any time during the preceding 12-month
            period shall have been an employee of any of the Toymax Companies or
            JAKKS or its other Affiliates, or contact any supplier within the
            United States, Hong Kong or People's Republic of China, or any
            customer or employee of the Toymax Companies, JAKKS or its other
            Affiliates for the purpose of soliciting customers for the sale of
            Competitive Products or persuading any such supplier or customer to
            cease doing or reduce the amount of business being done with, or
            persuading such employee to cease being employed by a Toymax
            Company, JAKKS or its other Affiliates. The foregoing provisions
            notwithstanding, JI or the Principals may invest its or his funds in
            securities of an issuer if the securities of such issuer are listed
            for trading on a registered securities exchange or actively traded
            in the over-the-counter market and JI's and the Principals' and
            their Affiliates aggregate holdings therein represent less than 1%
            of the total number of shares or principal amount of the securities
            of such issuer then outstanding.

      JI and each of the Principals acknowledges that the provisions of this
      Section, and the period of time, lack of any specific geographic area
      given the international nature of the business of JAKKS and its
      Affiliates, and the scope and type of restrictions on their activities set
      forth herein, are reasonable and necessary for the protection of JAKKS and
      its Affiliates are an essential inducement to JAKKS entering into this
      Agreement and the Stock Purchase Agreement and


                                       10

      acquiring shares of common stock of Toymax International from Best Phase
      Limited and the other shareholders selling their shares to JAKKS pursuant
      to the Stock Purchase Agreement. The Principals, JI & TN each acknowledges
      that the type of services that they and it have performed for Toymax
      International and its Affiliates were of an intellectual and technical
      character that required the disclosure of confidential and proprietary
      information of Toymax International and its Affiliates to them and
      resulted in the creation by them of information which is confidential and
      proprietary to Toymax International and its Affiliates, and accordingly
      that the restrictive covenants contained herein are necessary in order to
      protect and maintain the business and assets and goodwill of Toymax
      International, whose shares are being purchased by JAKKS. The Principals,
      JI & TN each acknowledges that the business of Toymax International and
      its Affiliates extends beyond the geographic area of the State of New
      York, U.S.A. and of Hong Kong and accordingly, it is reasonable that the
      restrictive covenants set forth above are not limited by specific
      geographic area but by the location of the suppliers and customers of
      Toymax International and its Affiliates. The Principals, JI, and TN each
      acknowledges that the remedy at law for any breach of this agreement by
      them will be inadequate and that, accordingly, Toymax International shall,
      in addition to all other available remedies (including without limitation
      seeking such damages as it can show it has sustained by reason of such
      breach), be entitled to injunctive relief without being required to post
      bond or other security and without having to prove the inadequacy of the
      available remedies at law.


      10.   Ownership of Trade Rights, and Tools, Molds, Designs, etc.

            a.    ACKNOWLEDGMENT BY JI, TN AND THE PRINCIPALS. JI, TN and the
            Principals acknowledges and agrees that (i) all of the Trade Rights
            (subject to the provisions of paragraph 10(b) regarding the JI & TN
            Manufacturing Trade Rights) are the sole property of the Toymax
            Companies or the Product Vendee, as the case may be, and (ii) they
            have no interest in or claim to any of the Tools, Molds and
            Specifications (other than tools and molds relating to the Existing
            Toymax Products in an immaterial amount not exceeding $100,000.00 in
            the aggregate now owned by JI and TN), developed, conceived and
            produced in connection with the design, manufacture and marketing of
            the Products by them prior to and after the date hereof subject to
            payment by the Toymax Companies or the Product Vendee of any
            outstanding invoice for tools and molds as reflected on the books
            and records of the Toymax Companies prior to or after the date
            hereof. JI, TN and the Principals represent and warrant to JAKKS and
            the Toymax Companies that they have received payment in full of all
            amounts due to them for all of the Tools, Molds and Specifications
            used by JI or TN in connection with the manufacture of the Existing
            Toymax Products and all other products manufactured by JI or TN for
            the Toymax Companies and their Affiliates within the past five (5)
            years (other than tools and molds relating to the Existing Toymax
            Products in an immaterial amount not exceeding $100,000.00 in the
            aggregate now owned by JI and TN.)

            b.    "WORKS FOR HIRE". JI and the Principals each acknowledges and
            agrees that for all purposes of U.S. and foreign Copyright Laws the
            Trade Rights and any inventions, discoveries, enhancements or
            improvements to any tangible or intangible property, with respect to
            the Products manufactured by JI for the Toymax Companies or TN under
            the Existing Manufacturing Agreement and this Manufacturing
            Agreement (for the purposes of this paragraph all of the foregoing


                                       11

            is collectively referred to as the "Work", but excluding therefrom
            any JI & TN Manufacturing Trade Right), and any and all elements
            thereof, shall be deemed to constitute "works for hire", belonging
            to the Toymax Companies, JAKKS or its other Affiliates acting as the
            Product Vendee, within the meaning of Title 17, United States Code,
            Section 101, and any comparable provisions of the law of any other
            jurisdiction, such that all right, title and interest therein,
            including, without limitation, copyrights and exclusive rights under
            copyright, vest in the Toymax Companies, JAKKS or its other
            Affiliates acting as the Product Vendee. JI and the Principals each
            hereby transfers and conveys to the Toymax Companies the exclusive,
            world-wide, royalty-free, paid-up right to exploit, use, develop,
            license the Work, and any improvements thereto or derivatives
            thereof; and the exclusive right, title and interest in and to all
            inventions, improvements, patent applications and letters patent,
            "know-how", and all intellectual property and other rights, tangible
            or intangible, which relate to or are based upon or derived from the
            Work; and to all information, documents, and specifications that
            relate to the Work. If the Work or any of the elements thereof is
            deemed not to be "works for hire" within the meaning of Title 17,
            United States Code, Section 101, then by its signature below JI and
            each of the Principals hereby assigns and transfers to the Toymax
            Companies, JAKKS or its other Affiliates acting as the Product
            Vendee with respect to any Product or prospective Product to which
            the Work relates all right, title and interest in and to the Work,
            including rights throughout the world for good and valuable
            consideration, receipt of which JI and each of the Principals hereby
            acknowledges. Notwithstanding the foregoing, (i) if any
            manufacturing process used by JI in the manufacture of any Product
            under this Agreement or the Existing Manufacturing Agreement that
            would otherwise constitute part of the Work, becomes part of the
            public domain, JI shall have a perpetual, non-exclusive,
            royalty-free right to use such process in its manufacturing
            operations commencing one (1) year after it first becomes part of
            the public domain, and (ii) subject to the restrictive covenants in
            Section 9 of this Agreement, as between or among the Parties, no
            Party shall have any claim to any other manufacturing process not
            described in clause (i) or other intellectual property right
            generally known in the toy industry or otherwise in the public
            domain.

            c.    GRANT OF LICENSE TO JI & TN MANUFACTURING TRADE RIGHT. JI and
            TN hereby grant to JAKKS and its Affiliates, including the Toymax
            Companies, a perpetual, non-exclusive, royalty-free right to
            exploit, use, and sub-license in their respective businesses any JI
            & TN Manufacturing Trade Right invented or conceived prior to the
            date hereof.


      11.   Miscellaneous.

            a.    LIMITATION OF AUTHORITY. No provision hereof shall be deemed
            to create any partnership, joint venture or joint enterprise or
            association among the parties hereto, or to authorize or to empower
            any party hereto to act on behalf of, obligate or bind any other
            party hereto.

            b.    FEES AND EXPENSES. Each party hereto shall bear such fees and
            expenses as may be incurred by it in connection with this Agreement.



                                       12

            c.    FORCE MAJEURE. Any delay in or failure of the performance of
            any of the duties or obligations of a Party hereto (except the
            payment of money owed) shall not be considered a breach of this
            Agreement and the time required for performance shall be extended
            for a period equal to the period of such delay, provided that such
            delay has been caused by or is the result of any acts of God; act of
            the public enemy; insurrections; war; riots; embargoes; labor
            disputes, including strikes, lockouts, job actions or boycotts;
            fires; explosions; floods; shortages of material or energy; delay in
            transportation; any discontinuance of the manufacture, distribution,
            sale; or other unforeseeable causes beyond the control and without
            the fault or negligence of the Party so affected. The Party so
            affected shall give prompt notice to the other Party of such cause,
            and shall take whatever steps are necessary to relieve the effect of
            such cause as rapidly as possible. Notwithstanding the foregoing, if
            such period of delay exceeds thirty (30) days, then such delay may
            be considered a breach of this Agreement and the extension of time
            for performance shall cease at the end of such thirty (30) day
            period.

            d.    NOTICES. Any Notice or demand required or permitted to be
            given or made hereunder to or upon any party hereto shall be deemed
            to have been duly given or made for all purposes if (a) in writing
            and sent by (i) messenger or an overnight courier service against
            receipt, or (ii) certified or registered mail, postage paid, return
            receipt requested, or (b) sent by telegram, telecopy (confirmed
            orally), telex or similar electronic means, provided that a written
            copy thereof is sent on the same day by postage-paid first-class
            mail, to such party at the following address:

      to JAKKS or the Toymax Companies:

                  22619 Pacific Coast Highway
                  Malibu, California 90265
                  Attn: President
                  Fax:  (310) 456-7099

      with a copy to:

                  Feder, Kaszovitz, Isaacson,
                  Weber, Skala, Bass & Rhine LLP
                  750 Lexington Avenue
                  New York, New York 10022
                  Attn: Murray L. Skala, Esq.
                  Fax:  (212) 888-7776

      to JI, or TN, or the Principals, at:

                  Units D-F, 26th Floor, CDW Building
                  388 Castle Peak Road
                  Tsuen Wan, N.T, Hong Kong
                  Attn: David Chu
                  Fax:  852-2415-8107


                                       13

      with a copy to:

                  Ettelman  & Hochheiser, P.C.
                  100 Quentin Roosevelt Boulevard
                  Garden City, New York 11530
                  Attn: Gary Ettelman, Esq.
                  Fax:  (516) 227-6307

            or such other address as any party hereto may at any time, or from
            time to time, direct by Notice given to the other parties in
            accordance with this Section. Except as otherwise expressly provided
            herein, the date of giving or making of any such Notice or demand
            shall be, in the case of clause (a) (i), the date of the receipt; in
            the case of clause (a) (ii), three business days after such Notice
            or demand is sent domestically within the United States of America
            and seven business days after such Notice or demand is sent
            internationally; and, in the case of clause (b), the business day
            next following the date such Notice or demand is sent.

            e.    AMENDMENT. Except as otherwise expressly provided herein, no
            amendment of this Agreement shall be valid or effective, unless in
            writing and signed by or on behalf of the parties hereto.

            f.    WAIVER. No course of dealing or omission or delay on the part
            of any party hereto in asserting or exercising any right hereunder
            shall constitute or operate as a waiver of any such right. No waiver
            of any provision hereof shall be effective, unless in writing and
            signed by or on behalf of the party to be charged therewith. No
            waiver shall be deemed a continuing waiver or waiver in respect of
            any other or subsequent breach or default, unless expressly so
            stated in writing. Any additional or different terms stated by a
            Party in any proposal, quotation, purchase order, confirmation,
            sales order, invoice, acceptance document, acknowledgment or other
            document, and any terms that are inconsistent with or in variance
            with the terms and conditions in this Agreement, shall be of no
            force and effect. No course of dealing, usage of trade or course of
            performance shall be relevant to explain, supplement or modify any
            express provisions of this Agreement. A Party's failure to object to
            any such provision contained in any communication from the other
            Party shall not be deemed to be an acceptance thereof or a waiver of
            that party's rights and remedies hereunder.

            g.    GOVERNING LAW. The parties acknowledge and agree that this
            Agreement shall be a contract made in the United States, State of
            New York. All questions pertaining to the validity, construction,
            execution and performance of this Agreement shall be construed and
            governed in accordance with the domestic laws of the State of New
            York (including, without limitation, the UCC), without giving effect
            to principles of (i) comity of nations or (ii) conflicts of law, and
            this Agreement shall not be governed by the provisions of the U.N.
            Convention on Contracts for the International Sale of Goods. Each
            party to this Agreement submits to the jurisdiction of the courts of
            the State of New York, located in New York County, New York, United
            States of America, and to the jurisdiction of the United States
            District Court for the Southern District of New York, New York, New
            York, United States of America with respect to any matter arising
            out of this Agreement, waives any objection to venue in the Counties
            of New York,


                                       14

            State of New York, or such District, and agrees that service of any
            summons, complaint, Notice or other process relating to such
            proceeding may be effected in the manner provided by Paragraph 10(d)
            hereof. If service of process is required to be made within the
            United States of America, JI, TN, and each of the Principals appoint
            as their agent for service of any process the firm of Ettelman &
            Hochheiser, P.C., 100 Quentin Roosevelt Boulevard, Garden City, New
            York 11530.

            h.    DAMAGE LIMITATION. No Party shall be liable to the other for
            punitive, exemplary or special damages, with the exception of
            damages for breach of the provisions of Section 6, Section 9 and
            Section 10, as to which no such limitation shall apply.

            h.    REPRESENTATION REGARDING TOYMAX (BERMUDA) LIMITED. JI
            represent and warrant that Toymax (Bermuda) Limited, an exempted
            company organized under the laws of Bermuda and a party to the
            Existing Manufacturing Agreement, has been dissolved.

            i.    SEVERABILITY. The provisions hereof are severable and in the
            event that any provision of this Agreement shall be determined to be
            invalid or unenforceable in any respect by a court of competent
            jurisdiction, the remaining provisions hereof shall not be affected,
            but shall, subject to the discretion of such court, remain in full
            force and effect, and any invalid or unenforceable provision shall
            be deemed, without further action on the part of the parties hereto,
            amended and limited to the extent necessary to render the same valid
            and enforceable.

            j.    COUNTERPARTS. This Agreement may be executed in counterparts,
            each of which shall be deemed an original and which together shall
            constitute one and the same agreement.

            k.    FURTHER ASSURANCES. Each party hereto shall promptly execute,
            deliver, file or record such agreements, instruments, certificates
            and other documents and perform such other and further acts as any
            other party hereto may reasonably request or as may otherwise be
            reasonably necessary or proper, to carry out the provisions of this
            Agreement.

            l.    BINDING EFFECT. This Agreement shall be binding upon and inure
            to the benefit of the parties hereto and their respective successors
            and permitted assigns. This Agreement is not intended, and shall not
            be deemed, to create or confer any right or interest for the benefit
            of any Person not a party hereto.

            m.    ASSIGNMENT. JI's obligations under this Agreement may not be
            assigned without the prior written consent of JAKKS, and any
            purported assignment without such consent shall be void and without
            effect.

            n.    TITLES AND CAPTIONS. The titles and captions of the Articles
            and Sections of this Agreement are for convenience of reference only
            and do not in any way define or interpret the intent of the parties
            or modify or otherwise affect any of the provisions hereof.



                                       15

            o.    GRAMMATICAL CONVENTIONS. Whenever the context so requires,
            each pronoun or verb used herein shall be construed in the singular
            or the plural sense and each capitalized term defined herein and
            each pronoun used herein shall be construed in the masculine,
            feminine or neuter sense.

            p.    REFERENCES. The terms "herein," "hereto," "hereof," "hereby"
            and "hereunder," and other terms of similar import, refer to this
            Agreement as a whole, and not to any Article, Section or other part
            hereof.

            q.    NO PRESUMPTIONS. Each party hereto acknowledges that it has
            participated, with the advice of counsel, in the preparation of this
            Agreement. No party hereto is entitled to any presumption with
            respect to the interpretation of any provision hereof or the
            resolution of any alleged ambiguity herein based on any claim that
            any other party hereto drafted or controlled the drafting of this
            Agreement.

            r.    EXHIBITS AND SCHEDULES. Any Exhibits and Schedules hereto are
            an integral part of this Agreement and are incorporated in their
            entirety herein by this reference.

            s.    ENTIRE AGREEMENT. This Agreement embodies the entire agreement
            of the parties hereto with respect to the subject matter hereof and
            supersedes all prior agreements, commitments or arrangements
            relating thereto.





                                       16

IN WITNESS WHEREOF, the parties by their respective duly authorized officers,
have duly executed this Agreement as of the date set forth in the Preamble
hereto.


JAUNTIWAY INVESTMENTS LIMITED           TAI NAM INDUSTRIAL COMPANY LIMITED

By:   /s/ DAVID KI KWAN CHU             By:   /s/ DAVID KI KWAN CHU
      ----------------------                  ---------------------
      Name:  David Ki Kwan Chu                Name:  David Ki Kwan Chu
      Title:                                  Title:

TOYMAX INTERNATIONAL INC.               JAKKS PACIFIC, INC.

By:   /s/ MICHAEL SABATINO              By:   /s/ JOEL M. BENNETT
      ----------------------                  ---------------------
      Name:  Michael Sabatino                 Name:  Joel M. Bennett
      Title: CFO                              Title: Exec. V.P./C.F.O.

                                        TOYMAX (H.K.) LIMITED

                                        By:   /s/ DAVID KI KWAN CHU
                                              ---------------------
                                              Name:  David Ki Kwan Chu
                                              Title:

David Ki Kwan Chu and Frances Shuk Kuen Leung sign the foregoing Agreement for
the purpose of agreeing to the provisions of Sections 1, 6, 9,10 and 11 thereof.


/s/ DAVID KI KWAN CHU
- ---------------------
David Ki Kwan Chu


/s/ FRANCES SHUK KUEN LEUNG
- ---------------------------
Frances Shuk Kuen Leung



                                       17

                                    EXHIBIT A

                             PRODUCT AND PRICE LIST
                           of Existing Toymax Products








                                       18


                                                                       EXHIBIT 5

               TERMINATION OF AGENCY AGREEMENTS AND STOCK OPTIONS

Agreement dated March 11, 2002 entered into between and among TAI NAM INDUSTRIAL
COMPANY LIMITED, a Hong Kong private limited company with its offices at Units
D-F, 26th Floor, CDW Building, 388 Castle Peak Road, Tsuen Wan, N.T., Hong Kong
("TN") and DAVID KI KWAN CHU and FRANCES SHUK KUEN LEUNG, individuals with their
address at Units D-F, 26th Floor, CDW Building, 388 Castle Peak Road, Tsuen Wan,
N.T., Hong Kong (collectively referred to as the "Principals");

and

TOYMAX INTERNATIONAL, INC., a Delaware corporation with its offices at 125 E.
Bethpage Road, Plainview, New York 11803, U.S.A. ("Toymax International"), TOY
MAX (H.K.) LIMITED, a Hong Kong private limited company, with its offices at
Units D-F, 26th Floor, CDW Building, 388 Castle Peak Road, Tsuen Wan, N.T., Hong
Kong ("Toymax HK"), TOYMAX INC., a New York corporation ("Toymax NY") with its
offices at 125 E. Bethpage Road, Plainview, New York 11803, U.S.A., FUNNOODLE
INC., a Delaware corporation with its offices at 125 E. Bethpage Road,
Plainview, New York 11803, U.S.A., U.S.A., ("FN"), FUNNOODLE (HK) LIMITED, a
Hong Kong private limited company, with its offices at Units D-F, 26th Floor,
CDW Building, 388 Castle Peak Road, Tsuen Wan, N.T, Hong Kong ("FN HK"), GO FLY
A KITE, INC. a Delaware corporation with its offices at Box AA. Route 151, East
Haddam, CT 06423, U.S.A., ("GFK,"), and GO FLY A KITE (HK) LIMITED, a Hong Kong
private limited company, with its offices at Units D-F, 26th Floor, CDW
Building, 388 Castle Peak Road, Tsuen Wan, N.T, Hong Kong ("GFK HK"), MONOGRAM
INTERNATIONAL, INC. a Delaware corporation with its offices at 12395 75th
Street, Key Largo, Florida 33773-3090, U.S.A., ("MG"), and MONOGRAM PRODUCTS
(HK) LIMITED, a Hong Kong private limited company, with its offices at Units
D-F, 26th Floor, CDW Building, 388 Castle Peak Road, Tsuen Wan, N.T, Hong Kong
("MG HK"); hereafter Toymax International, Toymax HK, Toymax NY, FN, FN HK, GFK,
GFK HK, MG, and MG HK are referred to collectively as the "Toymax Companies";

and

JAKKS PACIFIC, INC., a Delaware corporation with its offices at 22619 Pacific
Coast Highway, Malibu, California , U.S.A. ("JAKKS"). The parties to this
Agreement may also sometimes be referred to collectively as the "Parties" or
singly as a "Party."


                              W I T N E S S E T H :
                               - - - - - - - - - -


WHEREAS, the Toymax Companies and TN, which is owned by the Principals, are
parties to the Agency Agreements identified on Schedule A annexed hereto
(collectively referred to as the "Agency Agreements"), pursuant to which TN
provided certain services to the Toymax Companies in connection with the
manufacturing of the Toymax Companies' products (the "Products");

WHEREAS, concurrently herewith JAKKS has acquired a majority of the outstanding
shares of capital stock of Toymax International, which is the parent company of
the other Toymax Companies, from certain shareholders of Toymax International,
including Best Phase Limited, a British Virgin Islands

corporation owned by the Principals, pursuant to a Stock Purchase Agreement
dated February 10, 2002 (the "Stock Purchase Agreement"); and

WHEREAS, as a condition to such acquisition, TN and the Toymax Companies agreed
to terminate the Agency Agreements.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties hereto hereby agree as follows:

1.       Termination of Agency Agreements and Stock Options.

         a.       The Agency Agreements are hereby terminated as of the date
                  hereof. TN, the Principals and each of the Toymax Companies
                  represents and warrants to JAKKS that there are no other
                  agreements, understandings or undertakings between or among
                  TN, the Principals, and any of the Toymax Companies or any of
                  their respective Affiliates (as defined below) that provide
                  for TN or any other Affiliate of TN or the Principals to act
                  as agent for any of the Toymax Companies or provide services
                  to any of the Toymax Companies similar to the services
                  provided by TN under the Agency Agreements to any of the
                  Toymax Companies, and, to the extent that any such agreements,
                  understandings or undertakings exist, they are hereby
                  terminated. TN confirms that all Agency Fees due or payable to
                  TN have been fully paid as of the date hereof (except for
                  valid outstanding invoices for Products shipped as of the date
                  hereof owed by the Toymax Companies as of the date hereof) and
                  that all payment and other obligations of the Toymax Companies
                  to TN under the Agency Agreements have been fully performed as
                  of the date hereof. The confidentiality provisions of the
                  Agency Agreements shall survive the termination of the Agency
                  Agreements, except that the Principals acknowledges that the
                  exception referred to therein permitting disclosure by him in
                  his capacity as Chairman or a member of the Board of Directors
                  of Toymax International is of no further force and effect. In
                  consideration for the termination of the Agency Agreements and
                  the other undertakings made by TN hereunder, JAKKS shall pay
                  or cause the Toymax Companies to pay TN the sum of
                  US$800,000.00, payable in six (6) equal monthly installments,
                  the first such installment payable on the date hereof, and
                  each succeeding installment payable on the last day of each
                  calendar month following the month in which this Agreement is
                  executed and delivered by the parties.

         b.       David Ki Kwan Chu agrees that in order to induce JAKKS to
                  enter into the Stock Purchase Agreement and purchase the
                  shares of Toymax International pursuant thereto, all stock
                  options, including options granted to David Ki Kwan Chu under
                  Toymax International's Stock Option Plan and any other rights
                  to acquire shares of stock or other securities of Toymax
                  International and its Affiliates, and each of the Principals
                  represents and warrants that neither of them nor their
                  Affiliates have any rights to acquire shares of stock or other
                  securities of Toymax International and its Affiliates, and
                  each of the Principals further agrees that any rights to
                  compensation, salary, fees, and benefits, written or oral,
                  that either or them or their Affiliates may be entitled to
                  from Toymax International and its Affiliates are hereby
                  terminated as of the date hereof.

2.       Definitions. As used in this Agreement, the following terms shall have
         the meanings set forth below:

         a.       "Affiliate" of a Person means another Person directly or
                  indirectly controlling, controlled by, or under common control
                  with, such Person; for this purpose, "control" of a Person
                  means the power (whether or not exercised) to direct the
                  policies, operations or activities of such Person by virtue of
                  the ownership of, or right to vote or direct the manner of
                  voting of, securities of such Person, or pursuant to agreement
                  or Law or otherwise.

         b.       "Books and Records" means all customer lists, account records,
                  pricing information, sales literature, promotional literature
                  and all other books and records, files, invoices, supplier
                  lists, and contracts relating to the Products for which TN
                  provided services to the Toymax Companies under the Agency
                  Agreements, including all documents, computer software or
                  other tangible expression of the Tools, Molds and
                  Specifications (subject to Section 4 of this Agreement) or the
                  Trade Rights.

         c.       "Competitive Product" means any product that is substantially
                  identical to (i) a product sold by the Toymax Companies within
                  the three (3) year period prior to the date hereof (with the
                  exception of products known as Snapshots and products sold by
                  Toymax International's Candy Planet and Monogram divisions),
                  or (ii) a product sold by the Toymax Companies after the date
                  hereof, or (iii) a product sold or marketed by JAKKS or its
                  other Affiliates after the date hereof through the end of the
                  term of this Agreement.

         d.       "JI & TN Manufacturing Trade Right" means a patent, or
                  know-how, inventions, trade secrets, technical process or
                  proprietary right relating to manufacturing processes employed
                  by JI and TN in its business and that was conceived or
                  invented by JI or TN independently of the Toymax Companies
                  prior to the date hereof and which has not become generally
                  known in the industry or are not otherwise in the public
                  domain.

         e.       "Person" includes without limitation a natural person,
                  corporation, joint stock company, limited liability company,
                  partnership, joint venture, association, trust, Governmental
                  Authority, or any group of the foregoing acting in concert.

         f.       "Specifications" means descriptive, quantitative and
                  qualitative criteria for the manufacture of Products.

         g.       "Tools, Molds and Specifications" means any tools, molds,
                  designs, prototypes, blueprints, drawings, Specifications, and
                  the like developed or otherwise produced in connection with
                  the design, manufacture and marketing of the Products.

         h.       "Trade Right" means a patent, claim of copyright, trademark,
                  trade name, brand name, service mark, logo, symbol, trade
                  dress or design, or representation or expression of any
                  thereof, or registration or application for registration
                  thereof, or any other invention, trade secret, technical
                  information, know-how, proprietary right or intellectual
                  property developed, conceived of, invented or otherwise
                  produced in connection with the design, manufacture and
                  marketing of the Products.

3.       Transition Period. During the six month period following the date
         hereof, TN shall assist JAKKS and the Toymax companies in transferring
         to JAKKS' Hong Kong affiliates the responsibilities previously
         performed by TN under the Agency Agreements. TN shall deliver all
         Tools, Molds and Specifications (subject to Section 4 of this
         Agreement) in its possession to JAKKS or such other Person as JAKKS
         directs. TN shall respond to reasonable requests made by JAKKS and

         the Toymax Companies for information regarding its activities, and
         shall promptly provide JAKKS or such other Person as JAKKS directs with
         copies of all Books and Records (as such term is defined above) in TN's
         or the Principals' possession. TN and the Principals shall cause those
         of its employees with information regarding its activities under the
         Agency Agreements to meet with representatives of JAKKS and the Toymax
         Companies to assist in such transition activities. Any outstanding
         purchase orders for any Products ordered by TN for the Toymax Companies
         shall be assigned to the Toymax Company without recourse for which such
         purchase order was arranged and governed by the provisions of this
         Agreement, and to the extent that any such purchase order is not or
         cannot be assigned, then TN shall be deemed to be acting as the nominee
         for and on behalf of such Toymax Company and shall arrange for delivery
         of the finished goods to the Toymax Company for which the Products were
         ordered.

4.       Ownership of Trade Rights, and Tools, Molds, Designs, etc.

         a.       ACKNOWLEDGMENT BY TN AND THE PRINCIPALS. TN and the Principals
                  each acknowledges and agrees that (i) all of the Trade Rights
                  (subject to the provisions of Section 4(b) regarding the JI &
                  TN Manufacturing Trade Rights) are the sole property of the
                  Toymax Companies, and (ii) they have no interest in or claim
                  to any of the Tools, Molds and Specifications (other than
                  tools and molds relating to the Products manufactured by TN or
                  Jauntiway Investments Limited for the Toymax Companies prior
                  to the date hereof in an immaterial amount not now exceeding
                  $100,000.00 in the aggregate now owned by TN or Jauntiway
                  Investments Limited), developed, conceived and produced in
                  connection with the design, manufacture and marketing of the
                  Products by them prior to and after the date hereof, subject
                  to payment by the Toymax Companies or the Product Vendee of
                  any outstanding invoice for tools and molds as reflected on
                  the books and records of the Toymax Companies prior to or
                  after the date hereof. TN and the Principals represent and
                  warrant to JAKKS and the Toymax Companies that they have
                  received payment in full of all amounts due to them for all of
                  the Tools, Molds and Specifications used by TN in connection
                  with the manufacture of the Products and all other Products
                  manufactured by TN for the Toymax Companies and their
                  Affiliates within the past five (5) years (other than tools
                  and molds relating to the Products manufactured by TN or
                  Jauntiway Investments Limited for the Toymax Companies prior
                  to the date hereof in an immaterial amount not now exceeding
                  $100,000.00 in the aggregate now owned by TN or Jauntiway
                  Investments Limited.)

         b.       "WORKS FOR HIRE". TN and the Principals each acknowledges and
                  agrees that for all purposes of U.S. and foreign Copyright
                  Laws the Trade Rights and any inventions, discoveries,
                  enhancements or improvements to any tangible or intangible
                  property, with respect to the Products that TN or the
                  Principals ordered for the Toymax Companies under the Agency
                  Agreements or developed or invented by David Ki Kwan Chu in
                  his capacity as Chairman and director of Toymax International
                  or its predecessors and their respective Affiliates (for the
                  purposes of this paragraph all of the foregoing is
                  collectively referred to as the "Work", but excluding
                  therefrom any JI &TN Manufacturing Trade Right), and any and
                  all elements thereof, shall be deemed to constitute "works for
                  hire" belonging to the Toymax Companies within the meaning of
                  Title 17, United States Code, Section 101, and any comparable
                  provisions of the law of any other jurisdiction, such that all
                  right, title and interest therein, including, without
                  limitation, copyrights and exclusive rights under copyright,
                  vest in the Toymax Companies. TN and the Principals each
                  hereby transfers and conveys to the Toymax Companies the
                  exclusive, world-wide, royalty-free, paid-up right to exploit,
                  use, develop, license the Work, and improvements

                  thereto or derivatives thereof; and the exclusive right, title
                  and interest in and to all inventions, improvements, patent
                  applications and letters patent, "know-how", and all
                  intellectual property and other rights, tangible or
                  intangible, which relate to or are based upon or derived from
                  the Work; and to all information, documents, and
                  specifications that relate to the Work. If the Work or any of
                  the elements thereof is deemed not to be "works for hire"
                  within the meaning of Title 17, United States Code, Section
                  101, then by their signatures below TN and the Principals each
                  hereby assigns and transfers to the Toymax Companies all
                  right, title and interest in and to the Work, including rights
                  throughout the world for good and valuable consideration,
                  receipt of which TN and the Principals each hereby
                  acknowledges. Notwithstanding the foregoing, (i) if any
                  manufacturing process used by TN in the manufacture of any
                  Product under the Agency Agreements that would otherwise
                  constitute part of the Work, becomes part of the public
                  domain, TN shall have a perpetual, non-exclusive, royalty-free
                  right to use such process in its manufacturing operations
                  commencing one (1) year after it first becomes part of the
                  public domain, and (ii) subject to the restrictive covenants
                  in Section 5 of this Agreement, as between or among the
                  Parties, no Party shall have any claim to any other
                  manufacturing process not described in clause (i) or other
                  intellectual property right generally known in the toy
                  industry or otherwise in the public domain.

                  c.       GRANT OF LICENSE TO JI & TN MANUFACTURING TRADE
                           RIGHT. TN hereby grants to JAKKS and its Affiliates,
                           including the Toymax Companies, a perpetual,
                           non-exclusive, royalty-free right to use in their
                           respective businesses any JI & TN Manufacturing Trade
                           Right invented or conceived by TN prior to the date
                           hereof.

5.       Restrictive Covenant. From and after the date hereof and until the
         later of December 31, 2004 or one (1) year following the termination or
         expiration of the manufacturing agreement of even date herewith among
         TN, Jauntiway Investments Limited, the Principals, Toymax
         International, Toymax HK, and JAKKS, neither TN nor the Principals
         shall, directly or indirectly through any Affiliate or other
         intermediary (a) manufacture, produce, sell, market or otherwise
         promote any Competitive Product or serve as a partner, member, manager,
         director, officer or employee of, or consultant or advisor to, or in
         any manner own, control, manage, operate or otherwise participate or
         invest in, or be connected with any Person that engages in the
         marketing or sale of Competitive Products, or authorize the use of its
         name in connection therewith, or (b) for itself or himself or on behalf
         of any other Person, employ, engage or retain any Person who at any
         time during the preceding 12-month period shall have been an employee
         of any of the Toymax Companies or JAKKS or its other Affiliates or
         contact any supplier within the United States, Hong Kong or People's
         Republic of China, or any customer or employee of the Toymax Companies,
         JAKKS or its other Affiliates the purpose of soliciting customers for
         the sale of Competitive Products or persuading any such supplier or
         customer to cease doing or reduce the amount of business being done
         with, or persuading such employee to cease being employed by a Toymax
         Company, JAKKS or its other Affiliates. The foregoing provisions
         notwithstanding, TN and the Principals may invest its or his funds in
         securities of an issuer if the securities of such issuer are listed for
         trading on a registered securities exchange or actively traded in the
         over-the-counter market and TN's and the Principals' and their
         respective Affiliates' aggregate holdings therein represent less than
         1% of the total number of shares or principal amount of the securities
         of such issuer then outstanding. JI and each of the Principals
         acknowledges that the provisions of this Section, and the period of
         time, lack of specific geographic area given the international nature
         of the business of JAKKS and its Affiliates, including the Toymax
         Companies, and scope and type of restrictions on their activities set
         forth herein, are reasonable and necessary for the protection of JAKKS
         and its Affiliates and are an essential inducement to JAKKS entering
         into this Agreement and the

         Stock Purchase Agreement and acquiring shares of common stock of Toymax
         International from Best Phase Limited and the other shareholders
         selling their shares to JAKKS pursuant to the Stock Purchase Agreement.

         The Principals and TN each acknowledges that the type of services that
         they and it have performed for Toymax International and its Affiliates
         were of an intellectual and technical character that required the
         disclosure of confidential and proprietary information of Toymax
         International and its Affiliates to them and resulted in the creation
         by them of information which is confidential and proprietary to Toymax
         International and its Affiliates, and accordingly that the restrictive
         covenants contained herein are necessary in order to protect and
         maintain the business and assets and goodwill of Toymax International,
         whose shares are being purchased by JAKKS. The Principals and TN each
         acknowledges that the business of Toymax International and its
         Affiliates extends beyond the geographic area of the State of New York,
         U.S.A. and of Hong Kong and accordingly, it is reasonable that the
         restrictive covenants set forth above are not limited by specific
         geographic area but by the location of the suppliers and customers of
         Toymax International and its Affiliates. The Principals and TN each
         acknowledges that the remedy at law for any breach of this agreement by
         them will be inadequate and that, accordingly, Toymax International
         shall, in addition to all other available remedies (including without
         limitation seeking such damages as it can show it has sustained by
         reason of such breach), be entitled to injunctive relief without being
         required to post bond or other security and without having to prove the
         inadequacy of the available remedies at law.

6.       Miscellaneous.

         a.       LIMITATION OF AUTHORITY. No provision hereof shall be deemed
                  to create any partnership, joint venture or joint enterprise
                  or association among the parties hereto, or to authorize or to
                  empower any Party hereto to act on behalf of, obligate or bind
                  any other Party hereto.

         b.       FEES AND EXPENSES. Each Party hereto shall bear such fees and
                  expenses as may be incurred by it in connection with this
                  Agreement.

         c.       NOTICES. Any Notice or demand required or permitted to be
                  given or made hereunder to or upon any Party hereto shall be
                  deemed to have been duly given or made for all purposes if (a)
                  in writing and sent by (i) messenger or an overnight courier
                  service against receipt, or (ii) certified or registered mail,
                  postage paid, return receipt requested, or (b) sent by
                  telegram, telecopy (confirmed orally), telex or similar
                  electronic means, provided that a written copy thereof is sent
                  on the same day by postage-paid first-class mail, to such
                  Party at the following address:
                  to JAKKS or Toymax Companies:

                           22619 Pacific Coast Highway
                           Malibu, California 90265
                           Attn:    President
                           Fax:     (310) 456-7099

                                            with a copy to:

                           Feder, Kaszovitz, Isaacson,
                           Weber, Skala, Bass & Rhine LLP
                           750 Lexington Avenue
                           New York, New York 10022
                           Attn:    Murray L. Skala, Esq.
                           Fax:     (212) 888-7776

to TN or the Principals, at:

                           Units D-F, 26th Floor, CDW Building
                           388 Castle Peak Road
                           Tsuen Wan, N.T., Hong Kong
                           Attn:    David Ki Kwan Chu
                           Fax:     852-2415-8107

with a copy to:            Ettelman  & Hochheiser, P.C.
                           100 Quentin Roosevelt Boulevard
                           Garden City, New York 11530
                           Attn:    Gary Ettelman, Esq.
                           Fax:     (516) 227-6307

                  or such other address as any Party hereto may at any time, or
                  from time to time, direct by Notice given to the other parties
                  in accordance with this Section. Except as otherwise expressly
                  provided herein, the date of giving or making of any such
                  Notice or demand shall be, in the case of clause (a) (i), the
                  date of the receipt; in the case of clause (a) (ii), three
                  business days after such Notice or demand is sent is sent
                  domestically within the United States of America and seven
                  business days after such Notice or demand is sent
                  internationally; and, in the case of clause (b), the business
                  day next following the date such Notice or demand is sent.

         d.       AMENDMENT. Except as otherwise expressly provided herein, no
                  amendment of this Agreement shall be valid or effective,
                  unless in writing and signed by or on behalf of the parties
                  hereto.

         e.       WAIVER. No course of dealing or omission or delay on the part
                  of any Party hereto in asserting or exercising any right
                  hereunder shall constitute or operate as a waiver of any such
                  right. No waiver of any provision hereof shall be effective,
                  unless in writing and signed by or on behalf of the Party to
                  be charged therewith. No waiver shall be deemed a continuing
                  waiver or waiver in respect of any other or subsequent breach
                  or default, unless expressly so stated in writing.

         f.       GOVERNING LAW. The parties acknowledge and agree that this
                  Agreement shall be a contract made in the United States, State
                  of New York. All questions pertaining to the validity,
                  construction, execution and performance of this Agreement
                  shall be construed and governed in accordance with the
                  domestic laws of the State of New York (including, without
                  limitation, the UCC), without giving effect to principles of
                  (i) comity of nations or (ii) conflicts of law, and this
                  Agreement shall not be governed by the provisions of the U.N.
                  Convention on Contracts for the International Sale of Goods.
                  Each Party to this Agreement submits to the jurisdiction of
                  the courts of the State of New York, located in New York
                  County, New York, United States of America, and to the
                  jurisdiction of the United States District Court for the
                  Southern District of New York, New York, New York, United
                  States of America with respect to any matter arising out of
                  this Agreement, waives any objection to venue in the Counties
                  of New York, State of New York, or such District, and agrees
                  that service of any summons, complaint, Notice or other
                  process

                  relating to such proceeding may be effected in the manner
                  provided by Paragraph 6(c) hereof. If service of process is
                  required to be made within the United States of America, TN
                  and each of the Principals appoint as their agent for service
                  of any process the firm of Ettelman & Hochheiser, P.C., 100
                  Quentin Roosevelt Boulevard, Garden City, New York 11530.

         g.       SEVERABILITY. The provisions hereof are severable and in the
                  event that any provision of this Agreement shall be determined
                  to be invalid or unenforceable in any respect by a court of
                  competent jurisdiction, the remaining provisions hereof shall
                  not be affected, but shall, subject to the discretion of such
                  court, remain in full force and effect, and any invalid or
                  unenforceable provision shall be deemed, without further
                  action on the part of the parties hereto, amended and limited
                  to the extent necessary to render the same valid and
                  enforceable.

         h.       COUNTERPARTS. This Agreement may be executed in counterparts,
                  each of which shall be deemed an original and which together
                  shall constitute one and the same agreement.

         i.       FURTHER ASSURANCES. Each Party hereto agrees to cooperate
                  fully with the other parties in connection with preparing and
                  filing any Notices or documents in connection with the
                  Acquisition. Each Party hereto shall promptly execute,
                  deliver, file or record such agreements, instruments,
                  certificates and other documents and perform such other and
                  further acts as any other Party hereto may reasonably request
                  or as may otherwise be reasonably necessary or proper, to
                  carry out the provisions of this Agreement.

         j.       BINDING EFFECT. This Agreement shall be binding upon and inure
                  to the benefit of the parties hereto and their respective
                  successors and permitted assigns. This Agreement is not
                  intended, and shall not be deemed, to create or confer any
                  right or interest for the benefit of any Person not a Party
                  hereto.

         k.       ASSIGNMENT. TN's obligations under this Agreement may not be
                  assigned without the prior written consent of JAKKS, and any
                  purported assignment without such consent shall be void and
                  without effect.

         l.       TITLES AND CAPTIONS. The titles and captions of the Articles
                  and Sections of this Agreement are for convenience of
                  reference only and do not in any way define or interpret the
                  intent of the parties or modify or otherwise affect any of the
                  provisions hereof.

         m.       GRAMMATICAL CONVENTIONS. Whenever the context so requires,
                  each pronoun or verb used herein shall be construed in the
                  singular or the plural sense and each capitalized term defined
                  herein and each pronoun used herein shall be construed in the
                  masculine, feminine or neuter sense.

         n.       REFERENCES. The terms "herein," "hereto," "hereof," "hereby"
                  and "hereunder," and other terms of similar import, refer to
                  this Agreement as a whole, and not to any Article, Section or
                  other part hereof.

         o.       NO PRESUMPTIONS. Each Party hereto acknowledges that it has
                  participated, with the advice of counsel, in the preparation
                  of this Agreement. No Party hereto is entitled to any
                  presumption with respect to the interpretation of any
                  provision hereof or the resolution of any alleged ambiguity
                  herein based on any claim that any other Party hereto drafted
                  or controlled the drafting of this Agreement.

         p.       EXHIBITS AND SCHEDULES. Any Exhibits and Schedules hereto are
                  an integral part of this Agreement and are incorporated in
                  their entirety herein by this reference.

         q.       ENTIRE AGREEMENT. This Agreement embodies the entire agreement
                  of the parties hereto with respect to the subject matter
                  hereof and supersedes all prior agreements, commitments or
                  arrangements relating thereto.

IN WITNESS WHEREOF, the individual parties and each of the corporate parties by
their respective duly authorized officers, have duly executed this Agreement as
of the date set forth in the Preamble hereto.

                                        
TAI NAM INDUSTRIAL COMPANY LIMITED



By:      /s/ DAVID KI KWAN CHU
         -----------------------------
         Name:  David Ki Kwan Chu
         Title:

TOYMAX INTERNATIONAL INC.                  JAKKS PACIFIC, INC.

By:      /s/ SANFORD B . FRANK             By:      /s/ JOEL M. BENNETT
         -----------------------------              ----------------------------
         Name:    Sanford B. Frank                  Name:    Joel M. Bennett
         Title:   Secretary                         Title:   Exec. V.P./C.F.O.


TOYMAX (H.K.) LIMITED                      TOYMAX, INC.

By:      /s/ DAVID KI KWAN CHU             By:      /s/ SANFORD B . FRANK
         -----------------------------              ----------------------------
         Name:  David Ki Kwan Chu                   Name:    Sanford B. Frank
         Title:                                     Title:   Secretary


FUNNOODLE INC.                             FUNNOODLE (HK) LIMITED

By:      /s/ SANFORD B . FRANK             By:
         -----------------------------              ----------------------------
         Name:    Sanford B. Frank                  Name:
         Title:   Secretary                         Title:


GO FLY A KITE, INC.                        GO FLY A KITE (HK) LIMITED

By:      /s/ SANFORD B . FRANK             By:      /s/ DAVID KI KWAN CHU
         -----------------------------              ----------------------------
         Name:    Sanford B. Frank                  Name:  David Ki Kwan Chu
         Title:   Secretary                         Title:


MONOGRAM INTERNATIONAL, INC.               MONOGRAM PRODUCTS (HK) LIMITED

By:      /s/ SANFORD B . FRANK             By:      /s/ DAVID KI KWAN CHU
         -----------------------------              ----------------------------
         Name:    Sanford B. Frank                  Name:  David Ki Kwan Chu
         Title:   Secretary                         Title:

/s/ DAVID KI KWAN CHU                      /s/ FRANCES SHUK KUEN LEUNG
- -----------------------------              ----------------------------
David Ki Kwan Chu                          Frances Shuk Kuen Leung



                                   SCHEDULE A

                                AGENCY AGREEMENTS


1.       Agency Agreement dated April 1, 1997 between Tai Nam and Toymax
         International, as amended by an Amendment dated as of September 22,
         1997, and an amendment dated April 1, 1999

2.       Agency Agreement dated April 1, 1997 between Tai Nam and Toymax HK
         Limited

3.       Agency Agreement dated April 1, 2000 between and among Tai Nam and
         Funnoodle Inc. and Funnoodle (HK) Limited

4.       Agency Agreement dated September 1, 2000 between and among Tai Nam and
         Go Fly A Kite, Inc. and Go Fly A Kite (HK) Limited

5.       Agency Agreement dated March, 2000 among Tai Nam and Monogram
         International Inc. and Monogram Products (HK) Limited


                                                                       EXHIBIT 6

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT dated as of March 11, 2002 by and
among JAKKS Pacific, Inc., a Delaware corporation ("JAKKS "), and those Persons
identified on Schedule I hereto (each, a "Shareholder").

                              W I T N E S S E T H :
                              - - - - - - - - - -


         WHEREAS, pursuant to a Stock Purchase Agreement dated as of February 8,
2002 among JAKKS, Toymax International, Inc., a Delaware corporation ("Toymax"),
and the Shareholders (the "Purchase Agreement"), JAKKS has agreed to issue and
deliver to the Shareholders 646,384 shares of JAKKS' common stock, par value
$.001 per share (the "JAKKS Common Stock"), in the aggregate, as payment, in
part, for certain shares of Toymax' common stock, par value $.01 per share (the
"Toymax Common Stock") to be sold and delivered to JAKKS by the Shareholders
(the "Toymax Shares"); and

         WHEREAS, upon its purchase of the Toymax Shares, JAKKS will become the
owner of a majority of the outstanding shares of Toymax Common Stock; and

         WHEREAS, concurrently with their entering into the Stock Purchase
Agreement, JAKKS and Toymax, together with JP/TII Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of JAKKS (the "Subsidiary") entered
into an Agreement of Merger (the "Merger Agreement") providing for a merger of
the Subsidiary into Toymax (the "Merger") in which Toymax will become a
wholly-owned subsidiary of JAKKS and the holders of Toymax Common Stock
immediately prior to the effective date of the Merger (the "Effective Date"),
other than JAKKS, will receive merger consideration consisting of cash and JAKKS
Common Stock; and

         WHEREAS, the Shareholders desire to provide for the possible sale of
their shares of JAKKS Common Stock subject hereto in the public market after the
Effective Date and have required, as a condition to their entering into the
Purchase Agreement, that JAKKS commit to register such shares under the
applicable securities law; and

         WHEREAS, to induce the Shareholders to enter into the Purchase
Agreement and to sell the Toymax Shares to JAKKS, JAKKS has agreed to enter into
this Agreement with the Shareholders, subject to and concurrently with the
closing of JAKKS' purchase of the Toymax Shares (the "First Closing");

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:

1. Certain Definitions.

         In addition to other capitalized terms defined elsewhere herein, the
following capitalized terms are used herein as follows:

         1.1 Agreement" means this Registration Rights Agreement, as amended or
supplemented.

         1.2 "Blue Sky Filing" means any registration statement, notification or
other Notice required

to be filed, given or made pursuant to any Blue Sky Law in connection with any
offering of the Registrable Securities

         1.3. "Blue Sky Laws" means the laws of any state, the District of
Columbia, or any territory or other jurisdiction in the United States governing
the purchase and/or sale of securities in such jurisdiction.

         1.4. "Commission" means the U.S. Securities and Exchange Commission.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.

         1.5. "Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.

         1.6. "Governmental Authority" means any United States or foreign,
federal, state or local government or governmental authority, agency,
instrumentality, any court or arbitration panel of competent jurisdiction or the
Nasdaq Stock Market, Inc.

         1.7. "JAKKS' Securities Claims" has the meaning provided for in Section
4.2 below.

         1.8. "Notice" means any notice given to, or any declaration, filing,
registration or recordation made, with any Person.

         1.9. "Order" means any judgment, order, writ, decree, award, directive,
ruling or decision of any Governmental Authority.

         1.10. "Person" means any natural person, corporation, joint stock
company, limited liability company, partnership, joint venture, association,
trust, Governmental Authority or other entity, or any group of the foregoing
acting in concert.

         1.11. "Proceeding" means any action, suit, arbitration, audit,
investigation or other proceeding, at law or in equity, before or by any
Governmental Authority.

         1.12. "Register," "registered," "registration" and "registration
statement" shall refer to a registration of securities to be offered and sold
under a registration statement filed with the Commission pursuant to the
Securities Act or the Exchange Act and the applicable rules and regulations
under either such Act.

         1.13. "Registrable Securities" means the shares of JAKKS Common Stock
issued and delivered to the Shareholders at the First Closing, as set forth on
Schedule I hereto (or any securities into which such shares are convertible or
for which such shares are exchangeable pursuant to any capital reorganization or
reclassification of JAKKS).

         1.14. "Securities Act" means the U.S. Securities Act of 1933, as
amended.

         1.15. "Shareholders' Securities Claims" has the meaning provided for in
Section 4.1 below.

2. Registration Rights.

         2.1. Registration Statement. JAKKS shall use commercially reasonable
efforts to prepare and file with the Commission, as soon as practicable after
the date hereof, a Registration Statement on Form S-3 covering the Registrable
Securities (or, if Form S-3 is not then available, on such form of registration
statement as is then available to effect a registration of the Registrable
Securities) and shall use commercially reasonable efforts to cause such
registration statement to be declared effective by the

Commission on the Effective Date, or as soon as practicable thereafter, so as to
permit, when such registration statement becomes effective, the sale of the
Registrable Securities in conformity with Section 5 of the Securities Act.
JAKKS, in its sole discretion, may include in the registration statement
covering the Registrable Securities any issued or authorized but unissued
securities of JAKKS for sale by JAKKS or its security holders.

         2.2 Preparation and Filing of Registration Statement. With respect to
the registration statement to be prepared by JAKKS under this Agreement, JAKKS
shall, at its sole expense, as expeditiously as practicable:

                  i. prepare and file with the Commission a registration
statement necessary to permit the sale of the Registrable Securities in the
public securities markets upon the effectiveness of such registration statement,
and such amendments and supplements to such registration statement and the
prospectus included therein as may be necessary, to the extent reasonably
practicable, to cause such registration statement to be declared effective by
the Commission;

                  ii. furnish to each Shareholder such number of conformed
copies of such registration statement and of each amendment or supplement
thereto (in each case including all exhibits and documents incorporated therein
by reference), such number of copies of any prospectus included in such
registration statement and such other documents, in each case, as such
Shareholder may reasonably request in order to facilitate the sale of the
Registrable Securities in the public securities markets;

                  iii. register or qualify the Registrable Securities under the
Blue Sky Laws of each state governing the purchase or sale of securities as each
Shareholder may reasonably request, keep such registration or qualification in
effect for so long as such registration statement remains in effect and take any
other action that may be reasonably necessary or advisable to enable the
Shareholders to consummate the disposition in such states of the Registrable
Securities; provided that JAKKS shall not be required to keep such registration
or qualification in effect at any time after (a) the disposition of the
Registrable Securities in accordance with the manner of disposition set forth in
the registration statement relating thereto, or (b) [nine months] after the date
such registration statement becomes effective; and provided, further, that JAKKS
shall not be required (A) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify or (B) subject
itself to taxation in any such jurisdiction;

                  iv. notify each Shareholder promptly when the registration
statement or any amendment thereto has been filed and when it has become
effective; and

                  v. cause all of the Registrable Securities covered by the
registration statement to be listed on each securities exchange, or designated
for inclusion in each automated interdealer quotation system, on which the JAKKS
Common Stock is then listed or included.

         2.3 Limitations on Registrations. JAKKS may delay the filing, or the
making of a request for the acceleration of effectiveness, of a registration
statement pursuant to this Section 2 or withdraw or suspend the effectiveness of
a registration statement covering the Registrable Securities that has become
effective if, in the good faith and reasonable judgment of JAKKS' board of
directors, JAKKS would be required to include in such registration statement or
the prospectus included therein (or in an amendment or supplement thereto)
material information that at that time could not be publicly disclosed without
materially interfering with any financing, acquisition, corporate reorganization
or other material development or transaction then pending or as to which JAKKS
has taken substantive steps to structure or negotiate. JAKKS shall promptly make
such filing or amendment as is reasonably necessary to complete, restore or
reinstate such registration statement when the conditions leading to such delay,
suspension or


withdrawal no longer apply.

         2.4 Shareholders' Obligations. It is a condition precedent to JAKKS'
obligation to register any Registrable Securities pursuant hereto that (a) the
Shareholders cooperate with JAKKS in the preparation of the Registration
Statement (or any amendment thereto), including providing any information with
respect to the Shareholders required to be included therein, and (b) in the case
of an underwritten public offering, the terms and conditions of the underwriting
agreement or any related agreement applicable to or any related agreement
applicable to or affecting JAKKS shall be reasonably acceptable to JAKKS.

3. Preparation; Reasonable Investigation. In connection with the preparation and
filing of the registration statement and any amendments thereto and any Blue Sky
Filing, JAKKS shall give each Shareholder and its counsel, accountant and other
advisors the opportunity to review, in each case, a reasonable time prior to its
filing, the registration statement, each prospectus included therein or filed
with the Commission, each document incorporated by reference therein and each
amendment thereof or supplement thereto and any related Blue Sky Filing in order
to verify the accuracy of any factual information concerning the Shareholders.
JAKKS shall pay for all registration and filing fees, printing expenses and fees
and disbursements of JAKKS' counsel and JAKKS' accountants in connection with
the preparation, review and filing of the registration statement or any related
Blue Sky Filing pursuant to this Agreement; provided, however, that the
Shareholders shall pay underwriting discounts and commissions applicable to the
sale of the Registrable Securities and any advisory or professional fees
incurred on their own behalf.

4. Indemnification.

         4.1 Shareholders' Indemnity. Each Shareholder, jointly and severally,
shall indemnify and defend JAKKS and each stockholder, director, officer,
employee and agent of JAKKS against, and hold each of them harmless from, any
loss, liability, obligation, damage or expense (including reasonable attorneys'
fees and disbursements) which any of them may suffer or incur incidental to any
claim or any Proceeding against any of them arising out of, based upon or
resulting from an untrue statement or alleged untrue statement of a material
fact contained in, or omission or alleged omission of a material fact from, the
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or any document incidental to
the registration or qualification of the Registrable Securities that is required
to be stated therein or necessary to make the statements therein not misleading
or, with respect to any prospectus, necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, which
statement or omission is made in reliance upon and in conformity with written
information furnished to JAKKS by the Shareholders solely for use in the
preparation thereof, or any violation by any Shareholder or its Affiliates of
the Securities Act or Blue Sky Laws applicable to them and relating to action or
inaction required of such Shareholder or its Affiliates in connection with such
registration or qualification under such Blue Sky Laws ("Shareholders'
Securities Claims").

         4.2 JAKKS' Indemnity. JAKKS shall indemnify and defend each Shareholder
and hold each of them harmless from, any loss, liability, obligation, damage or
expense (including reasonable attorneys' fees and disbursements) which any of
them may suffer or incur incidental to any claim or any Proceeding against any
of them arising out of, based upon or resulting from an untrue statement or
alleged untrue statement of a material fact contained in, or omission or alleged
omission of a material fact from, the registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or any document prepared and/or furnished by JAKKS incidental to the
registration or qualification of the Registrable Securities that is required to
be stated therein or

necessary to make the statements therein not misleading or, with respect to any
prospectus, necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or any violation by
JAKKS or its Affiliates of the Securities Act or Blue Sky Laws applicable to
them and relating to action or inaction required of JAKKS or its Affiliates in
connection with such registration or qualification under such Blue Sky Laws
("JAKKS' Securities Claims"); provided, however, that JAKKS shall not be liable
in any such case to the extent that such Securities Claims arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in, or omission or alleged omission of a material fact from, the
registration statement, such preliminary prospectus or such prospectus or such
amendment or supplement or any document incident to the registration or
qualification of the Registrable Securities in reliance upon and in conformity
with written information furnished to it by the Shareholders or any other holder
of such Registrable Securities or their respective agents solely for use in the
preparation thereof.

         4.3 Claims Procedure. Promptly after Notice to an indemnified party of
any claim or the commencement of any Proceeding by a third party involving any
loss, liability, obligation, damage or expense referred to in Section 4.1 or
4.2, such indemnified party shall, if a claim for indemnification in respect
thereof is to be made against an indemnifying party, give written Notice to the
latter of the commencement of such claim or Proceeding, setting forth in
reasonable detail the nature thereof and the basis upon which such party seeks
indemnification hereunder; provided that the failure of any indemnified party to
give such Notice shall not relieve the indemnifying party of its obligations
under such Section, except to the extent that the indemnifying party is actually
prejudiced by the failure to give such Notice. In case any such Proceeding is
brought against an indemnified party, and provided that proper Notice is duly
given, the indemnifying party shall assume and control the defense thereof
insofar as such Proceeding involves any loss, liability, obligation, damage or
expense in respect of which indemnification may be sought hereunder, with
counsel selected by the indemnifying party (and reasonably satisfactory to such
indemnified party), and, after Notice from the indemnifying party to such
indemnified party of its assumption of the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof (but the indemnified party shall have the right, but not the
obligation, to participate at its own cost and expense in such defense by
counsel of its own choice) or for any amounts paid or foregone by the
indemnified party as a result of the settlement or compromise thereof (without
the written consent of the indemnifying party), except that, if both the
indemnifying party and the indemnified party are named as parties or subject to
such Proceeding and either such party reasonably determines with advice of
counsel that a material conflict of interest between such parties may exist in
respect of such Proceeding, the indemnifying party may decline to assume the
defense on behalf of the indemnified party or the indemnified party may retain
the defense on its own behalf, and, in either such case, after Notice to such
effect is duly given hereunder to the other party, the indemnifying party shall
be relieved of its obligation to assume the defense on behalf of the indemnified
party, but shall be required to pay any legal or other expenses, including
without limitation reasonable attorneys' fees and disbursements incurred by the
indemnified party in such defense; provided, however, that the indemnifying
party shall not be liable for such expenses on account of more than one separate
firm of attorneys (and, if necessary, local counsel) at any time representing
such indemnified party in connection with any Proceeding or separate Proceedings
in the same jurisdiction arising out of or based upon substantially the same
allegations or circumstances. If the indemnifying party shall assume the defense
of any such Proceeding, the indemnified party shall cooperate fully with the
indemnifying party and shall appear and give testimony, produce documents and
other tangible evidence, allow the indemnifying party access to the books and
records of the indemnified party and otherwise assist the indemnifying party in
conducting such defense. No indemnifying party shall, without the consent of the
indemnified party, which consent shall not be unreasonably withheld, consent to
entry of any judgment or enter into any settlement or compromise in respect of
any claim or Proceeding which (i) does not include as an

unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
Proceeding and (ii) involves solely monetary damages (and not injunctive or
other equitable relief or any admission of guilt or fault). Provided that proper
Notice is duly given, if the indemnifying party shall fail promptly and
diligently to assume the defense thereof, if and in the manner required
hereunder, the indemnified party may respond to, contest and defend against such
Proceeding (but the indemnifying party shall have the right to participate at
its own cost and expense in such defense by counsel of its own choice) and may
make in good faith any compromise or settlement with respect thereto, and
recover the entire cost and expense thereof, including without limitation
reasonable attorneys' fees and disbursements and all amounts paid or foregone as
a result of such Proceeding, or the settlement or compromise thereof, from the
indemnifying party. Any indemnification required to be made hereunder shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills or invoices are received or loss,
liability, obligation, damage or expense is actually suffered or incurred.

         4.4  Limitations.

                  i. Any other provision hereof notwithstanding, no indemnified
party shall be entitled to any indemnification under this Agreement to the
extent that it actually receives or is entitled to receive any amount in respect
of any loss, liability, obligation, damage or expense from other sources,
including without limitation insurance or third-party indemnity; provided that
such indemnified party shall not be required to commence any Proceeding to
collect any such amount.

                  ii. The indemnification obligations under this Agreement are
independent of any other indemnification obligations that any of the parties
hereto may have to one another under any other agreement between or among them,
and, in particular, none of the limitations upon the indemnification obligations
of the parties to the Stock Purchase Agreement shall apply to the
indemnification obligations of the parties under this Agreement.

5. Miscellaneous.

         5.1 Limitation of Authority. Except as expressly provided herein, no
provision hereof shall be deemed to create any partnership, joint venture or
joint enterprise or association among the parties hereto, or to authorize or to
empower any party hereto to act on behalf of, obligate or bind any other party
hereto.

         5.2 Fees and Expenses. Each party hereto shall bear such fees and
expenses as may be incurred by it in connection with this Agreement and the
Acquisition.

         5.3 Notices. Any Notice or demand required or permitted to be given or
made hereunder to or upon any party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or
reputable overnight courier service against receipt, or (ii) certified or
registered mail, postage paid, return receipt requested, or (b) sent by
facsimile, provided that the sender receives a printed confirmation of receipt,
to such party at the following address:

to JAKKS:                           22619 Pacific Coast Highway
                                    Malibu, California 90265
                                    Attn:   President
                                    Fax:    (310) 456-7099

with a copy to:

                                    Feder, Kaszovitz, Isaacson, Weber,
                                    Skala, Bass & Rhine LLP
                                    750 Lexington Avenue
                                    New York, New York 10022
                                    Attn:   Murray L. Skala, Esq.
                                    Fax:    (212) 888-7776

to any Shareholder at its address on Schedule I

with a copy to:                     Brown Raysman Millstein Felder & Steiner LLP
                                    900 Third Avenue
                                    New York, New York 10022
                                    Attn:   Joel M. Handel, Esq.
                                    Fax:    (212) 812-3310

or such other address as any party hereto may at any time, or from time to time,
direct by Notice given to the other parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a)(i) or (a)(ii), the
date of the receipt, or in the case of clause (b), the business day next
following the date such Notice or demand is sent.

         5.4  Amendment. Except as otherwise expressly provided herein, no
amendment of this Agreement shall be valid or effective, unless in writing and
signed by or on behalf of the parties hereto.

         5.5  Waiver. No course of dealing or omission or delay on the part of
any party hereto in asserting or exercising any right hereunder shall constitute
or operate as a waiver of any such right. No waiver of any provision hereof
shall be effective, unless in writing and signed by or on behalf of the party to
be charged therewith. No waiver shall be deemed a continuing waiver or waiver in
respect of any other or subsequent breach or default, unless expressly so stated
in writing.

         5.6  Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of New York
without regard to principles of choice of law or conflict of laws.

         5.7  Arbitration. Any claim, dispute or controversy between or among
any of the parties hereto shall be submitted to arbitration in New York, New
York in accordance with the then current Commercial Arbitration Rules of the
American Arbitration Association. JAKKS, on the one hand, and the Shareholders,
on the other, shall each pay one_half of any filing fees or other administrative
costs to be paid in advance of or during such Proceeding. There shall be a
single arbitrator. The arbitrator shall render a reasoned decision with respect
to such Proceeding which shall include, in addition to the imposition of
monetary damages or any other remedy or relief available hereunder, an
allocation of the costs thereof. The decision of the arbitrator shall be final
and binding upon the parties to such Proceeding, and judgment thereon may be
entered in any court of competent jurisdiction. No party hereto shall be liable
for punitive damages, unless such party is found to have committed fraud or
willful malfeasance against another party hereto.

         5.8  Remedies. Notwithstanding the provisions of Section 7.7, in the
event of any actual or prospective breach or default by any party hereto, any
other party hereto shall be entitled to equitable relief from any court of
competent jurisdiction, including remedies in the nature of rescission,
injunction

and specific performance. Subject to the provisions of Section 7.7, all remedies
hereunder are cumulative and not exclusive, and nothing herein shall be deemed
to prohibit or limit any party from pursuing any other remedy or relief
available at law or in equity for such actual or prospective breach or default,
including the recovery of damages; provided, however, that the indemnification
provisions of Section 4 shall be the sole and exclusive remedy, as among the
parties hereto, with respect to any claim for monetary damages under this
Agreement.

         5.9  Severability. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

         5.10  Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and which together shall constitute
one and the same agreement.

         5.11  Further Assurances. Each party hereto agrees to cooperate fully
with the other parties in connection with preparing and filing any Notices or
documents in connection with any registration hereunder. Each party hereto shall
promptly execute, deliver, file or record such agreements, instruments,
certificates and other documents and perform such other and further acts as any
other party hereto may reasonably request or as may otherwise be reasonably
necessary or proper, to effect any such registration.

         5.12  Binding Effect. Subject to Section 11.13, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not intended, and shall not
be deemed, to create or confer any right or interest for the benefit of any
Person not a party hereto.

         5.13  Assignment. This Agreement, and each right, interest and
obligation hereunder, may not be assigned by any party hereto without the prior
written consent of the other parties hereto, and any purported assignment
without such consent shall be void and without effect.

         5.14  Titles and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.

         5.15 Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.

         5.16  References. The terms "herein," "hereto," "hereof," and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Section or other part hereof.

         5.17  No Presumptions. Each party hereto acknowledges that it has
participated, with the advice of counsel, in the preparation of this Agreement.
No party hereto is entitled to any presumption with respect to the
interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that any other party hereto drafted or
controlled the drafting of this Agreement.

         5.18  Exhibits and Schedules. The Exhibits and Schedules hereto are an
integral part of this Agreement and are incorporated in their entirety herein by
this reference.

         5.19  Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, commitments or arrangements relating thereto.

         IN WITNESS WHEREOF, JAKKS, by its duly authorized officers, and the
Shareholders have duly executed this Agreement as of the date first above
written.

                                        
JAKKS PACIFIC, INC.                        /s/ HARVEY GOLDBERG
                                           -------------------------------------
                                           Harvey Goldberg

By: /s/ JOEL M. BENNETT                    /s/ STEVEN A. LEBENSFELD
    ---------------------------            -------------------------------------
     Name:  Joel M. Bennett                Name:  Steven A. Lebensfeld
       Title:    Exec VP/CFO               Title:

                                           BEST PHASE LIMITED

                                           By:  /s/ DAVID KI KWAN CHU
                                           -------------------------------------
                                                Name:   David Ki Kwan Chu
                                                Title:  President

                                           HARGO BARBADOS LIMITED

                                           By:  /s/ GREGORY HINKSON
                                           -------------------------------------
                                                Name:   Gregory Hinkson
                                                Title:  Director

                                           By:  CIBC BANK AND TRUST CO. (CAYMAN)
                                                LIMITED

                                                Secretary

                                           By:  /s/ NEAL GRIFFITH
                                           -------------------------------------
                                                Name:  Neal Griffith

                                           By:  /s/ SHERENE BLACKETT
                                           -------------------------------------
                                                Name:  Sherene Blackett


                                                                       EXHIBIT 7

                       TERMINATION OF EMPLOYMENT AGREEMENT

Agreement dated March 11, 2002 entered into between STEVEN LEBENSFELD, an
individual with his address at 45 Wildwood Drive, Laurel Hollow, New York
11791 ("Executive" or "SL"), TOYMAX INTERNATIONAL, INC., a Delaware corporation
with its offices at 125 E. Bethpage Road, Plainview, New York 11803, U.S.A.,
("Toymax International" or the "Company") and JAKKS PACIFIC, INC., a Delaware
corporation with its offices at 22619 Pacific Coast Highway, Malibu, California,
U.S.A. ("JAKKS"). The parties to this Agreement may also sometimes be referred
to collectively as the "Parties" or singly as a "Party."

                              W I T N E S S E T H :
                              - - - - - - - - - -

WHEREAS, Toymax International and Executive are parties to an employment
agreement dated as of January 1, 2000 providing for Executive's employment by
the Company as Executive Vice President (the "Employment Agreement").

WHEREAS, concurrently herewith JAKKS has acquired a majority of the outstanding
shares of capital stock of Toymax International from certain shareholders of
Toymax International, including Executive, pursuant to a Stock Purchase
Agreement dated February 10, 2002 (the "Stock Purchase Agreement"); and

WHEREAS, as a condition to such acquisition, Executive and Toymax International
agreed to terminate the Employment Agreement and Stock Options described herein.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the Parties hereto hereby agree as follows:


1.       Termination of Employment Agreement and Stock Options. Executive and
         the Company agree that the Employment Agreement and all stock options,
         including options granted to Executive under the Company's Stock Option
         Plan referred to in the Employment Agreement, and any other rights to
         acquire shares of stock or other securities of the Company and its
         Affiliates, are hereby terminated as of the date hereof. The Company
         agrees to pay and the Executive agrees to accept US$350,000.00 in full
         and final settlement of all claims for salary, bonus, vacation pay or
         any other form of compensation or benefit due to him from the Company
         or any of its Affiliates or any equity or other interest in the Company
         or any of its Affiliates, including but not limited to the payments
         under the Executive Bonus Plan and Stock Appreciation Bonus referred to
         in the Employment Agreement. Executive acknowledges that the Company
         shall terminate forthwith the life insurance, disability and accident
         insurance and health insurance benefits referred to in the Employment
         Agreement. Such $350,000.00 payment shall be paid in twelve (12)
         substantially equal monthly installments on the last day of each month
         commencing with the month in which this Agreement is executed, less
         required tax withholding.

2.       Definitions. As used in this Agreement, the following terms shall have
         the meanings set forth below:

         a.       "Affiliate" of a Person means another Person directly or
                  indirectly controlling, controlled by, or under common control
                  with, such Person; for this purpose, "control" of a Person
                  means the power (whether or not exercised) to direct the
                  policies, operations or activities of such Person by virtue of
                  the ownership of, or right to vote or direct the manner of
                  voting of, securities of such Person, or pursuant to agreement
                  or Law or otherwise.

         b.       "Competitive Product" means any product that is substantially
                  similar to a Product.

         c.       "Product" means any product developed, manufactured, sold or
                  marketed by the Company or its Affiliates during the period of
                  Executive's employment by the Company or its predecessors and
                  their respective Affiliates.

         d.       "Person" includes without limitation a natural person,
                  corporation, joint stock company, limited liability company,
                  partnership, joint venture, association, trust, Governmental
                  Authority, or any group of the foregoing acting in concert.

         e.       "Trade Right" means a patent, claim of copyright, trademark,
                  trade name, brand name, service mark, logo, symbol, trade
                  dress or design, or representation or expression of any
                  thereof, or registration or application for registration
                  thereof, or any other improvement, development or discovery,
                  invention, trade secret, process, system, technical
                  information, know-how, proprietary right or intellectual
                  property conceived, developed, created or made by Executive,
                  alone or with others, during the period of his employment by
                  the Company or its predecessors or their respective Affiliates
                  in connection with the design, manufacture and marketing of
                  the Products or otherwise in connection with the Company's
                  operations and conduct of its business.

3.       Ownership of Trade Rights

         a.       ACKNOWLEDGMENT BY EXECUTIVE. Executive acknowledges and agrees
                  that all of the Trade Rights are the sole property of Toymax
                  International.


         b.       "WORKS FOR HIRE". Executive acknowledges and agrees that for
                  all purposes of U.S. and foreign Copyright Laws the Trade
                  Rights and any inventions, discoveries, enhancements or
                  improvements to any tangible or intangible property, resulting
                  from the services performed by Executive for the Company or
                  its predecessors and their respective Affiliates (for the
                  purposes of this paragraph all of the foregoing is
                  collectively referred to as the "Work"), and any and all
                  elements thereof, shall be deemed to constitute "works for
                  hire" belonging to the Company within the meaning of Title 17,
                  United States Code, Section 101, and any comparable provisions
                  of the law of any other jurisdiction, such that all right,
                  title and interest therein, including, without limitation,
                  copyrights and exclusive rights under copyright, vest in
                  Toymax International. Executive hereby transfers and conveys
                  to Toymax International the exclusive, world-wide,
                  royalty-free, paid-up right to exploit, use, develop, license,
                  and sell products and services relating to or derived from the
                  Work; and the exclusive right, title and interest in and to
                  all inventions, improvements, patent applications and letters
                  patent, "know-how", and all intellectual property and other
                  rights, tangible or intangible, which relate to or are based
                  upon or derived from the Work; and to all information,
                  documents, and specifications that relate to the Work. If the
                  Work or any of the elements thereof is deemed not to be "works
                  for hire" within the meaning of Title 17, United States Code,
                  Section 101, then Executive hereby assigns and transfers to
                  Toymax International all right, title and interest in and to
                  the Work, including rights throughout the world for good and
                  valuable consideration, receipt of which Executive hereby
                  acknowledges. For the sole and exclusive purpose of perfecting
                  and documenting such limited assignment and transfer,
                  Executive hereby grants to JAKKS and Toymax International an
                  irrevocable power of attorney.


                                       2

4.       Restrictive Covenants.


         a.       From and after the date hereof and until the first anniversary
                  of the date hereof, Executive shall not, directly or
                  indirectly through any Affiliate or other intermediary (a)
                  manufacture, produce, sell, market or otherwise promote any
                  Competitive Product or serve as a partner, member, manager,
                  director, officer or employee of, or consultant or advisor to,
                  or in any manner own, control, manage, operate or otherwise
                  participate or invest in, or be connected with any Person that
                  engages in the marketing or sale of Competitive Products, or
                  authorize the use of its name in connection therewith, or (b)
                  for himself or on behalf of any other Person, employ, engage
                  or retain any Person who at any time during the preceding
                  12-month period shall have been an employee of Toymax
                  International or JAKKS or their respective Affiliates, or
                  contact any supplier, customer or employee of Toymax
                  International, JAKKS or their respective Affiliates for the
                  purpose of soliciting or diverting any such supplier, customer
                  or employee from Toymax International, JAKKS or their
                  respective Affiliates. The foregoing provisions
                  notwithstanding, Executive may invest his funds in securities
                  of an issuer if the securities of such issuer are listed for
                  trading on a registered securities exchange or actively traded
                  in the over-the-counter market and Executive's and his
                  Affiliates' aggregate holdings therein represent less than 1%
                  of the total number of shares or principal amount of the
                  securities of such issuer then outstanding. Executive
                  acknowledges that the provisions of this Section 4, and the
                  period of time, lack of any specific geographic area given the
                  international nature of the business of JAKKS and its
                  Affiliates, including Toymax International and its Affiliates
                  and the scope and type of restrictions on his activities set
                  forth herein, are reasonable and necessary for the protection
                  of the Company and JAKKS and are an essential inducement to
                  JAKKS entering into the Stock Purchase Agreement and acquiring
                  shares of common stock of Toymax International from Executive
                  and the other shareholders selling their shares to JAKKS
                  pursuant to the Stock Purchase Agreement.

                  Executive acknowledges that the type of services that he has
                  performed for Toymax International and its Affiliates were of
                  an intellectual and technical character required the
                  disclosure of confidential and proprietary information of
                  Toymax International and its Affiliates to him and resulted in
                  the creation by him of information which is confidential and
                  proprietary to Toymax International and its Affiliates, and
                  accordingly that the restrictive covenants contained herein
                  are necessary in order to protect and maintain the business
                  and assets and goodwill of Toymax International whose shares
                  are being purchased by JAKKS. Executive acknowledges that the
                  business of Toymax International and its Affiliates extends
                  beyond the geographic area of the State of New York and
                  accordingly, it is reasonable that the restrictive covenants
                  set forth above are not limited by specific geographic area
                  but by the location of the customers of Toymax International
                  and its Affiliates. Executive acknowledges that the remedy at
                  law for any breach of this agreement by him will be inadequate
                  and that, accordingly, JAKKS and Toymax International shall,
                  in addition to all other available remedies (including without
                  limitation seeking such damages as it can show it has
                  sustained by reason of such breach), be entitled to injunctive
                  relief without being required to post bond or other security
                  and without having to prove the inadequacy of the available
                  remedies at law.

         b.       Executive acknowledges that he has received from the Company
                  and its Affiliates (a "disclosing party") during the period of
                  his employment by the Company information regarding the
                  Company's Products and its business and affairs which
                  constitutes confidential and proprietary information belonging
                  to the Company ("Confidential Information"), and he shall not,
                  at any time hereafter, use or disclose any Confidential
                  Information to any Person other than to the Company or its
                  designees or except as may


                                       3

                  otherwise be required in connection with the business and
                  affairs of the Company, and in furtherance of the foregoing
                  Executive agrees that:

                  i.       Executive will receive, maintain and hold
                           Confidential Information in strict confidence and
                           will use the same level of care in safeguarding it
                           that it uses with his own confidential material of a
                           similar nature;

                  ii.      Executive will take all such steps as may be
                           reasonably necessary to prevent the disclosure of
                           Confidential Information; and

                  iii.     Executive will not utilize Confidential Information
                           without first having obtained the disclosing party's
                           written consent to such utilization.

         c.       The commitments set forth in paragraph 4(b) above shall not
                  extend to any portion of Confidential Information:

                  i.       that is generally available to the public;

                  ii.      that was known to Executive prior to disclosure
                           (excluding information regarding Toymax International
                           and its Affiliates which would otherwise be
                           Confidential Information that was disclosed to
                           Executive during the period of his employment by the
                           Company or its predecessors or their respective
                           Affiliates or that was disclosed to Executive in
                           connection with his acting as a director of the
                           Company or its predecessors or their respective
                           Affiliates, and excluding any other non-public
                           information concerning Products under development by
                           or for the Company or its Affiliates;

                  iii.     that was not acquired, directly or indirectly and/or
                           in any manner, from Toymax International or any of
                           its Affiliates and which Executive lawfully had in
                           his possession prior to the date of this Agreement;

                  iv.      that, hereafter, through no act or omission on the
                           part of the Executive, becomes information generally
                           available to the public.

         d.       At any time upon written request by JAKKS or the disclosing
                  party, (i) the Confidential Information, including any copies,
                  shall be returned to JAKKS or the disclosing party, and (ii)
                  all documents, drawings, specifications and any other material
                  whatsoever in the possession of the Executive that relates to
                  such Confidential Information, including all copies and/or any
                  other form of reproduction and/or description thereof made by
                  Executive shall, at the disclosing party's or JAKKS' option,
                  be returned to the disclosing party or JAKKS or destroyed.

         e.       In the event that Executive becomes legally compelled (by
                  deposition, interrogatory, request of documents, subpoena,
                  civil investigative demand or similar process) to disclose any
                  of the Confidential Information, the Executive shall provide
                  JAKKS with prompt prior written notice of such requirement so
                  that it or the disclosing party may seek a protective order or
                  other appropriate remedy and/or waive compliance with the
                  terms of this Agreement. In the event that such protective
                  order or other remedy is not obtained, or JAKKS waives
                  compliance with the provisions hereof, the Executive agrees to
                  furnish only such portion of the Confidential Information
                  which is legally required to be furnished.

5.       Miscellaneous.

                                       4

         a.       FEES AND EXPENSES. Each Party hereto shall bear such fees and
                  expenses as may be incurred by it in connection with this
                  Agreement.

         b.       NOTICES. Any Notice or demand required or permitted to be
                  given or made hereunder to or upon any Party hereto shall be
                  deemed to have been duly given or made for all purposes if (a)
                  in writing and sent by (i) messenger or an overnight courier
                  service against receipt, or (ii) certified or registered mail,
                  postage paid, return receipt requested, or (b) sent by
                  telegram, telecopy (confirmed orally), telex or similar
                  electronic means, provided that a written copy thereof is sent
                  on the same day by postage-paid first-class mail, to such
                  Party at the following address:

                  to JAKKS:                  22619 Pacific Coast Highway
                                             Malibu, California 90265
                                             Attn:    President
                                             Fax:     (310) 456-7099

                  with a copy to:            Feder, Kaszovitz, Isaacson,
                                               Weber, Skala, Bass & Rhine LLP
                                             750 Lexington Avenue
                                             New York, New York 10022
                                             Attn:    Murray L. Skala, Esq.
                                             Fax:     (212) 888-7776

                  to Executive at:
                                             45 Wildwood Drive
                                             Laurel Hollow, New York 11791
                                             Fax:     516-367-3463

                  with a copy to:            Ettelman & Hochheiser
                                             100 Quentin Roosevelt Blvd.
                                             Garden City, New York 10530
                                             Attn:    Gary Ettelman, Esq.
                                             Fax:     (516) 227-6307

                  or such other address as any Party hereto may at any time, or
                  from time to time, direct by Notice given to the other parties
                  in accordance with this Section. Except as otherwise expressly
                  provided herein, the date of giving or making of any such
                  Notice or demand shall be, in the case of clause (a) (i), the
                  date of the receipt; in the case of clause (a) (ii), three
                  business days after such Notice or demand is sent; and, in the
                  case of clause (b), the business day next following the date
                  such Notice or demand is sent.

         c.       AMENDMENT. Except as otherwise expressly provided herein, no
                  amendment of this Agreement shall be valid or effective,
                  unless in writing and signed by or on behalf of the parties
                  hereto.

         d.       WAIVER. No course of dealing or omission or delay on the part
                  of any Party hereto in asserting or exercising any right
                  hereunder shall constitute or operate as a waiver of any such
                  right. No waiver of any provision hereof shall be effective,
                  unless in writing and signed by or on behalf of the Party to
                  be charged therewith. No waiver shall be deemed a continuing
                  waiver or waiver in respect of any other or subsequent breach
                  or default, unless expressly so stated in writing.


                                       5

         e.       GOVERNING LAW. This Agreement shall be governed by, and
                  interpreted and enforced in accordance with, the laws of the
                  State of New York without regard to principles of choice of
                  law or conflict of laws. Each Party to this Agreement submits
                  to the jurisdiction of the courts of the State of New York,
                  located in New York and Nassau County, New York, United States
                  of America, and to the jurisdiction of the United States
                  District Court for the Southern and Eastern Districts of New
                  York, New York, New York, United States of America with
                  respect to any matter arising out of this Agreement, waives
                  any objection to venue in the Counties of New York or Nassau,
                  State of New York, or such District, and agrees that service
                  of any summons, complaint, Notice or other process relating to
                  such proceeding may be effected in the manner provided by
                  Paragraph 5(b) hereof.

         f.       SEVERABILITY. The provisions hereof are severable and in the
                  event that any provision of this Agreement shall be determined
                  to be invalid or unenforceable in any respect by a court of
                  competent jurisdiction, the remaining provisions hereof shall
                  not be affected, but shall, subject to the discretion of such
                  court, remain in full force and effect, and any invalid or
                  unenforceable provision shall be deemed, without further
                  action on the part of the parties hereto, amended and limited
                  to the extent necessary to render the same valid and
                  enforceable.

         g.       COUNTERPARTS. This Agreement may be executed in counterparts,
                  each of which shall be deemed an original and which together
                  shall constitute one and the same agreement.

         h.       FURTHER ASSURANCES. Each Party hereto shall promptly execute,
                  deliver, file or record such agreements, instruments,
                  certificates and other documents and perform such other and
                  further acts as any other Party hereto may reasonably request
                  or as may otherwise be reasonably necessary or proper, to
                  carry out the provisions of this Agreement.

         i.       BINDING EFFECT. This Agreement shall be binding upon and inure
                  to the benefit of the parties hereto and their respective
                  successors and permitted assigns. This Agreement is not
                  intended, and shall not be deemed, to create or confer any
                  right or interest for the benefit of any Person not a Party
                  hereto.

         j.       ASSIGNMENT. The Executive's obligations under this Agreement
                  may not be assigned without the prior written consent of
                  JAKKS, and any purported assignment without such consent shall
                  be void and without effect.

         k.       TITLES AND CAPTIONS. The titles and captions of the Articles
                  and Sections of this Agreement are for convenience of
                  reference only and do not in any way define or interpret the
                  intent of the parties or modify or otherwise affect any of the
                  provisions hereof.

         l.       GRAMMATICAL CONVENTIONS. Whenever the context so requires,
                  each pronoun or verb used herein shall be construed in the
                  singular or the plural sense and each capitalized term defined
                  herein and each pronoun used herein shall be construed in the
                  masculine, feminine or neuter sense.

         m.       REFERENCES. The terms "herein," "hereto," "hereof," "hereby"
                  and "hereunder," and other terms of similar import, refer to
                  this Agreement as a whole, and not to any Article, Section or
                  other part hereof.


                                       6

         n.       NO PRESUMPTIONS. Each Party hereto acknowledges that it has
                  participated, with the advice of counsel, in the preparation
                  of this Agreement. No Party hereto is entitled to any
                  presumption with respect to the interpretation of any
                  provision hereof or the resolution of any alleged ambiguity
                  herein based on any claim that any other Party hereto drafted
                  or controlled the drafting of this Agreement.

         o.       ENTIRE AGREEMENT. This Agreement embodies the entire agreement
                  of the parties hereto with respect to the subject matter
                  hereof and supersedes all prior agreements, commitments or
                  arrangements relating thereto.


                                       7

IN WITNESS WHEREOF, the individual parties and each of the corporate parties by
their respective duly authorized officers, have duly executed this Agreement as
of the date set forth in the Preamble hereto.

TOYMAX INTERNATIONAL, INC.


By:      /s/ SANFORD B. FRANK
         ---------------------------
         Name:  Sanford B. Frank
         Title:  Secretary

JAKKS PACIFIC, INC.

By:      /s/ JOEL M. BENNETT
         ---------------------------
         Name:  Joel M. Bennett
         Title:  EVP/CFO

/s/ STEVEN LEBENSFELD
- ------------------------------------
Steven Lebensfeld


                                       8


                                                                       EXHIBIT 8

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT dated as of March 11, 2002 by and between JAKKS
Pacific, Inc., a Delaware corporation ("JAKKS" or the "Company") with its
offices at 22619 Pacific Coast Highway, Malibu, CA 90265 and Steven Lebensfeld,
an individual residing at 45 Wildwood Drive, Laurel Hollow, New York 11791
("Executive"). The parties to the Agreement are sometimes referred to
collectively as the "Parties" or simply as a "Party".

                              W I T N E S S E T H :
                              - - - - - - - - - -


         WHEREAS, the Company desires to employ Executive on the terms and
subject to the conditions hereinafter set forth, and Executive desires so to be
employed;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the Company and Executive agree as follows:

         1. Offices and Duties. The Company hereby employs Executive during the
Term (as hereinafter defined) to serve as Senior Vice President for Product
Development of the Company, responsible for product development for the Company
and its Affiliates, and to perform such executive and supervisory duties in
connection therewith on behalf of the Company as the Board of Directors of the
Company or a senior executive officer of the Company may from time to time
direct that are consistent with Executive's position. The Board of Directors of
the Company may elect or designate Executive to serve in such other corporate
offices of the Company or a subsidiary thereof as they may from time to time
deem necessary, proper or advisable, with the consent of the Executive which
shall not be unreasonably withheld or delayed. Executive hereby accepts such
employment and agrees that throughout the Term he shall faithfully, diligently
and to the best of his ability, in furtherance of the business of the Company,
perform the duties assigned to him or incidental to the offices assumed by him
pursuant to this Section. Executive shall devote all of his business time and
attention to the business and affairs of the Company. Executive shall at all
times be subject to the direction and control of the Board of Directors of the
Company and observe and comply with such rules, regulations, policies and
practices as the Board of Directors of the Company may from time to time
reasonably establish in the exercise of their good faith discretion.

         2. Term. The employment of Executive hereunder shall commence on the
date hereof and continue for a term ending on the first anniversary of the date
hereof (the "Term"), subject to earlier termination upon the terms and
conditions provided elsewhere herein. As used herein, "Termination Date" means
the last day of the Term.

         3. Compensation.

                  (a) As compensation for his services hereunder, the Company
shall pay to Executive during the Term a base salary at the rate of $250,000.00
per annum (the "Base Salary"), such Base Salary to be paid in substantially
equal installments no less often than monthly in accordance with the Company's
normal payroll practices, subject to required tax withholding.

                  (b) In addition to his Base Salary provided herein, Executive
shall be entitled to participate, to the extent he is eligible under the terms
and conditions thereof, in any stock, stock option or


                                       1

other equity participation plan and any profit-sharing, pension, retirement,
insurance, medical service or other employee benefit plan and to receive any
other benefits or perquisites generally available to all executives of the
Company pursuant to any employment policy or practice, which may be in effect
from time to time during the Term. The Company shall be under no obligation
hereunder to institute or to continue any such employee benefit plan or
employment policy or practice.

                  (c) The Executive may receive such bonus as the Board of
Directors of the Company shall determine in its sole discretion.

                  (d) As used in this Agreement, the term "Affiliate" of a
Person means another Person directly or indirectly controlling, controlled by,
or under common control with, such Person; for this purpose, "control" of a
Person means the power (whether or not exercised) to direct the policies,
operations or activities of such Person by virtue of the ownership of, or right
to vote or direct the manner of voting of, securities of such Person, or
pursuant to agreement or law or otherwise.

                  (e) As used in this Agreement, the term "Person" includes
without limitation a natural person, corporation, joint stock company, limited
liability company, partnership, joint venture, association, trust, governmental
authority, or any group of the foregoing acting in concert.

         4. Expenses. The Company shall provide Executive with a monthly
automobile allowance equal to US$600.00 per month to reimburse Executive for the
cost of leasing or purchasing an automobile, use of the automobile for Company
business, and expenses of repair, maintenance, parking and other expenses
incidental to such use. The Company shall pay directly, or advance funds to
Executive or reimburse Executive for, all expenses reasonably incurred by him in
connection with the performance of his duties hereunder and the business of the
Company, upon the submission to the Company of itemized expense reports,
receipts or vouchers in accordance with its then customary policies and
practices.

         5. Location. Except for travel and temporary accommodation reasonably
required to perform his services hereunder and travel as may reasonably be
requested by JAKKS to its principal office in the United States (currently in
Malibu, California, USA) or to its offices in New York, New York, USA, Executive
shall not be required to perform his services hereunder at any location other
than an office he maintains at the offices of Toymax International in Plainview,
New York, or, if requested to do so by the Company, at the offices of the
Company in New York, New York. The Parties acknowledge and agree that any
permanent relocation of the Executive's regular office to the Company's offices
in Malibu, California shall require the mutual agreement of the Company and the
Executive on such terms as the Parties agree to in connection therewith, but any
failure to agree on such relocation shall not affect the continued effectiveness
and enforceability of this Agreement, it being understood and agreed that
neither Party has made any commitment or representation to the other regarding
such relocation. JAKKS may request Executive's attendance at meetings at JAKKS'
offices in Malibu, California or New York, New York, or to participate in other
activities relating to the Company and its business in Malibu, California or New
York, New York, provided that the Executive shall not be required to stay at
such locations for more than seven (7) working days in any one (1) calendar
month.

         6. Office. The Company shall provide Executive with suitable office
space, furnishings and equipment, secretarial and clerical services and such
other facilities and office support as are reasonably necessary for the
performance of his services hereunder.

         7. Vacation. Executive shall be entitled to four (4) weeks paid
vacation during each year of his employment hereunder, such vacation to be taken
at such time or times as shall be agreed upon by


                                       2

Executive and the Company. Vacation time shall be cumulative from year to year,
except that Executive shall not be entitled to take more than six (6) weeks
vacation during any consecutive 12-month period during the Term.

         8. Key-Man Insurance. JAKKS shall have the right from time to time to
purchase, increase, modify or terminate insurance policies on the life of
Executive for the benefit of JAKKS in such amounts as JAKKS may determine in its
sole discretion. In connection therewith, Executive shall, at such time or times
and at such place or places as JAKKS may reasonably direct, submit himself to
such physical examinations and execute and deliver such documents as JAKKS may
deem necessary or appropriate.

         9. Confidential Information.

                  (a) Executive shall hold in a fiduciary capacity for the
benefit of the Company all confidential or proprietary information relating to
or concerned with the Company and its Affiliates or their products, prospective
products, operations, business and affairs ("Confidential Information"), and he
shall not, at any time hereafter, use or disclose any Confidential Information
to any person other than to the Company or its designees or except as may
otherwise be required in connection with the business and affairs of the
Company, and in furtherance of the foregoing Executive agrees that:

                           (i) Executive will receive, maintain and hold
Confidential Information in strict confidence and will use the same level of
care in safeguarding it that he uses with his own confidential material of a
similar nature;

                           (ii) Executive will take all such steps as may be
reasonably necessary to prevent the disclosure of Confidential Information; and

                           (iii) Executive will not utilize Confidential
Information without first having obtained the Company's consent to such
utilization.

                  (b) The commitments set forth in paragraph 9(a) shall not
extend to any portion of Confidential Information:

                           (i) that is generally available to the public;

                           (ii) that was known to the Executive prior to
disclosure (excluding information regarding the Company or its Affiliates which
would otherwise be Confidential Information that was disclosed to Executive
during the period of his employment by the Company or its predecessors or their
respective Affiliates (including Toymax International Inc. and its Affiliates)
or that was disclosed to Executive in connection with his acting as a director
of Toymax International Inc. or its predecessors or their respective Affiliates,
and excluding any other non-public information concerning products under
development by or for the Company or its Affiliates (including Toymax
International Inc. and its Affiliates);

                           (iii) that was not acquired, directly or indirectly
and/or in any manner, from the Company or any of its Affiliates (including
Toymax International Inc. and its Affiliates) and which Executive lawfully had
in his possession prior to the date of this Agreement;

                           (iv) that, hereafter, through no act or omission on
the part of the Executive, becomes information generally available to the
public.


                                       3

                  (c) At any time upon written request by the Company (i) the
Confidential Information, including any copies, shall be returned to the
Company, and (ii) all documents, drawings, specifications, computer software,
and any other material whatsoever in the possession of the Executive that
relates to such Confidential Information, including all copies and/or any other
form of reproduction and/or description thereof made by Executive shall, at the
Company's option, be returned to the Company or destroyed.

                  (d) In the event that Executive becomes legally compelled (by
deposition, interrogatory, request of documents, subpoena, civil investigative
demand or similar process) to disclose any of the Confidential Information, the
Executive shall provide the Company with prompt prior written notice of such
requirement so that it may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement. In the event that such
protective order or other remedy is not obtained, or the Company waives
compliance with the provisions hereof, the Executive agrees to furnish only such
portion of the Confidential Information which is legally required to be
furnished.

         10. Intellectual Property.

                  (a) Any patent, claim of copyright, trademark, trade name,
brand name, service mark, logo, symbol, trade dress or design, or representation
or expression of any thereof, or registration or application for registration
thereof, or any other improvement, development or discovery, invention, trade
secret, process, system, technical information, know-how, proprietary right or
intellectual property developed, conceived of, invented or otherwise produced by
Executive, alone or with others in connection with the design, manufacture and
marketing of the products of the Company and its Affiliates, or conceived,
developed, created or made by Executive, alone or with others, during the Term
and applicable to the business of the Company or its Affiliates, whether or not
patentable or registrable (collectively referred to as "Trade Rights") shall
become the sole and exclusive property of the Company.

                  (b) Executive shall disclose all Trade Rights promptly and
completely to the Company and shall, during the Term or thereafter, (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and procuring such applications for patents,
trademarks, service marks or copyrights as the Company, in its sole discretion,
may desire to prosecute, and (iii) give the Company all assistance it may
reasonably require, including the giving of testimony in any Proceeding (as
hereinafter defined), in other to obtain, maintain and protect the Company's
right therein and thereto; provided that the Company shall bear the entire cost
and expense of such assistance, including without limitation paying the
Executive reasonable compensation for any time or effort expended by him in
connection with such assistance after the Termination Date. In furtherance of
the foregoing, Executive acknowledges and agrees that for all purposes of U.S.
and foreign Copyright Laws, the Trade Rights and any inventions, discoveries,
enhancements or improvements to any tangible or intangible property, resulting
from the services performed by Executive for the Company or its Affiliates (for
the purposes of this paragraph all of the foregoing is collectively referred to
as the "Work"), and any and all elements thereof, shall be deemed to constitute
"works for hire" belonging to the Company within the meaning of Title 17, United
States Code, Section 101, and any comparable provisions of the law of any other
jurisdiction, such that all right, title and interest therein, including,
without limitation, copyrights and exclusive rights under copyright, vest in the
Company. Executive hereby transfers and conveys to the Company the exclusive,
world-wide, royalty-free, paid-up right to exploit, use, develop, license, and
sell products and services relating to or derived from the Work; and the
exclusive right, title and interest in and to all inventions, improvements,
patent applications and letters patent, "know-how", and all


                                       4

intellectual property and other rights, tangible or intangible, which relate to
or are based upon or derived from the Work; and to all information, documents,
and specifications that relate to the Work. If the Work or any of the elements
thereof is deemed not to be "works for hire" within the meaning of Title 17,
United States Code, Section 101, then Executive hereby assigns and transfers to
the Company all right, title and interest in and to the Work, including rights
throughout the world for good and valuable consideration, receipt of which
Executive hereby acknowledges. For the sole and exclusive purpose of perfecting
and documenting such limited assignment and transfer, Executive hereby grants to
the Company an irrevocable power of attorney.

         11. Restrictive Covenants.

                  (a) During the Term, and unless his employment terminates
pursuant to Section 14, for a further period of one (1) year after the
Termination Date, Executive shall not, directly or indirectly through any
Affiliate or other intermediary (a) manufacture, produce, sell, market or
otherwise promote any Competitive Product or serve as a partner, member,
manager, director, officer or employee of, or consultant or advisor to, or in
any manner own, control, manage, operate or otherwise participate or invest in,
or be connected with any Person that engages in the marketing or sale of
Competitive Products, or authorize the use of its name in connection therewith,
or (b) for himself or on behalf of any other Person, employ, engage or retain
any Person who at any time during the preceding 12-month period shall have been
an employee of the Company or its Affiliates, or contact any supplier, customer
or employee of the Company or its Affiliates for the purpose of soliciting or
diverting any such supplier, customer or employee from the Company or its
Affiliates. The foregoing provisions notwithstanding, Executive may invest his
funds in securities of an issuer if the securities of such issuer are listed for
trading on a registered securities exchange or actively traded in the
over-the-counter market and Executive's and his Affiliates' aggregate holdings
therein represent less than 1% of the total number of shares or principal amount
of the securities of such issuer then outstanding. Executive acknowledges that
the provisions of this Section 11, and the period of time, lack of specific
geographic area given the international nature of the business of the Company
and its Affiliates and the scope and type of restrictions on his activities set
forth herein, are reasonable and necessary for the protection of the Company and
are an essential inducement to JAKKS entering into this Agreement and acquiring
shares of common stock of Toymax International Inc. from Executive and the other
shareholders selling their shares to JAKKS pursuant to a Stock Purchase
Agreement dated February 10, 2002.

                  (b) As used herein, the term "Competitive Product" means any
product or service that is substantially similar to a product or service
developed, marketed, sold by the Company or its Affiliates during the period of
Executive's employment by the Company.

                  (c) Executive acknowledges that the type of services the
Company will require from him are of an intellectual and technical character
which will require the disclosure of confidential and proprietary information of
the Company to him and may result in the creation by him of information which is
confidential and proprietary to the Company, and accordingly that the
restrictive covenants contained herein are necessary in order to protect and
maintain the business and assets and goodwill of the Company. Executive also
acknowledges that the type of services that he has performed for Toymax
International and its Affiliates as an employee of Toymax International were of
an intellectual and technical character and required the disclosure of
confidential and proprietary information of Toymax International and its
Affiliates to him and resulted in the creation by him of information which is
confidential and proprietary to Toymax International and its Affiliates, and
accordingly that the restrictive covenants contained herein are necessary in
order to protect and maintain the business and assets and goodwill of Toymax
International whose shares are being purchased by JAKKS. Executive acknowledges
that the business of the Company and its Affiliates, including Toymax
International and its

                                       5

Affiliates, extends beyond the geographic area of the State of New York and
accordingly, it is reasonable that the restrictive covenants set forth above are
not limited by specific geographic area but by the location of the customers of
the Company and its Affiliates. Executive acknowledges that the remedy at law
for any breach of this agreement by him will be inadequate and that,
accordingly, the Company shall, in addition to all other available remedies
(including without limitation seeking such damages as it can show it has
sustained by reason of such breach), be entitled to injunctive relief without
being required to post bond or other security and without having to prove the
inadequacy of the available remedies at law.

         12. Termination Upon Death or Disability. Executive's employment
hereunder shall terminate immediately upon his death. In the event that
Executive is unable to perform his duties hereunder by reason of any disability
or incapacity (due to any physical or mental injury, illness or defect) for an
aggregate of 90 days in any consecutive 12-month period, the Company shall have
the right to terminate Executive's employment hereunder within 60 days after the
90th day of his disability or incapacity by giving Executive notice to such
effect at least 30 days prior to the date of termination set forth in such
notice, and on such date such employment shall terminate.

         13. Termination by the Company with or without Cause.

                  (a) In addition to any other rights or remedies provided by
law or in this Agreement, the Company may terminate Executive's employment for
"cause" under this Agreement if:

                           (i) Executive is convicted of, or enters a plea of
guilty or nolo contendere (which plea is not withdrawn prior to its approval by
the court) to a felony or other crime, a criminal offense involving the acts
identified in paragraph (ii) below; or

                           (ii) the Company's Board of Directors determines,
after due inquiry, that Executive has:

                           (A) committed fraud against, or embezzled or
misappropriated funds or other assets of, the Company (or any subsidiary
thereof);

                           (B) violated, or caused the Company (or any
subsidiary thereof) or any officer, employee or other agent thereof, or any
other Person to violate, any material law, regulation or ordinance, which
violation has or would reasonably be expected to have a significant detrimental
effect on the Company or its Affiliates, or any material rule, regulation,
policy or practice established by the Board of Directors of the Company;

                           (C) on a persistent or recurring basis, (A) failed
properly to perform his duties hereunder or (B) acted in a manner detrimental
to, or adverse to the interests of, either the Company or its Affiliates.

                  (b) The Company may effect such termination for cause under
paragraph (a) of this Section by giving Executive notice to such effect, setting
forth in reasonable detail the factual basis for such termination, at least
thirty (30) days prior to the date of termination set forth therein; provided
however that Executive may avoid such termination if Executive, prior to the
date of termination set forth in such notice, cures or explains to the
reasonable satisfaction of the Company's Board of Directors the factual basis
for termination set forth therein.

         14. Termination by Executive for Good Reason. In addition to any other
rights or remedies provided by law or in this Agreement, Executive may terminate
his employment hereunder if (a) the


                                       6

Company violates, or fails to perform or satisfy any material covenant,
condition or obligation required to be performed or satisfied by it hereunder
or, (b) as a result of any action or failure to act by the Company, there is a
material change in the nature or scope of the duties, obligations, rights or
powers of Executive's employment, or (c) relocation without Executive's consent
from the location set forth in Section 5 hereof, by giving the Company notice to
such effect, setting forth in reasonable detail the factual basis for such
termination, at least thirty (30) days prior to the date of termination set
forth therein; provided however that the Company may avoid such termination if
it, prior to the date of termination set forth in such notice, cures or explains
to the reasonable satisfaction of Executive the factual basis for termination
set forth therein. The termination by Executive of his employment pursuant to
this Section 14 shall not constitute or be deemed to constitute for any purpose
a "voluntary resignation" of his employment.

         15. Compensation upon Termination.

                  (a) Upon termination of Executive's employment hereunder, he
shall be entitled to receive, in any case, any compensation or other amount due
to him pursuant to Section 3 or 4 in respect of his employment prior to the
Termination Date, and from and after the Termination Date, except as otherwise
provided in Section 15(b), the Company shall have no further obligation to
Executive hereunder. Any amount payable to Executive pursuant to this Section
15(a) upon termination of his employment hereunder shall be paid promptly, and
in any event within 10 days, after the Termination Date.

                  (b) If Executive terminates his employment hereunder for Good
Reason pursuant to Section 14 or if the Company terminates his employment
hereunder other than upon his disability or incapacity pursuant to Section 12
and other than for cause pursuant to Section 13(a) through (c), the Company
shall make to Executive payments at the times and in the amounts provided herein
for the payment of his Base Salary during the period, if any, beginning on the
day after the Termination Date and ending on the first anniversary of the date
of this Agreement.

                  (c) If Executive shall die prior to Executive's receipt of all
payments required under this Agreement, the Company shall pay Executive's
designated beneficiary or, if there is no designated beneficiary, his estate all
such amounts that would have otherwise been payable to Executive under this
Agreement as of the date of his death.

         16. Other Consequences of Termination.

                  (a) Upon the termination of his employment (for whatever
reason and howsoever arising) the Executive shall:

                           (i) at the request of the Board of Directors of the
Company immediately resign without claim for compensation from any office held
by him in the Company or any Affiliate (but without prejudice to any claim for
damages for breach of this Agreement or for any compensation which otherwise may
be due and owing or which may thereafter come due pursuant to this Agreement or
otherwise) and in the event of his failure to do so the Company is hereby
irrevocably authorised to appoint some person in his name and on his behalf to
sign and deliver such resignations to the Board; and

                           (ii) immediately repay all outstanding debts or loans
due to the Company or any Affiliate.


                                       7

         17. Limitation of Authority. Except as otherwise expressly provided, no
provision hereof shall be deemed to authorize or empower either party hereto to
act on behalf of, obligate or bind the other party hereto.

         18. Notices. Any Notice or demand required or permitted to be given or
made hereunder to or upon any Party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, telecopy
(confirmed orally), telex or similar electronic means, provided that a written
copy thereof is sent on the same day by postage-paid first-class mail, to such
Party at the following address:

                  to JAKKS:                  22619 Pacific Coast Highway
                                             Malibu, California 90265
                                             Attn:    President
                                             Fax:     (310) 456-7099

                  with a copy to:            Feder, Kaszovitz, Isaacson,
                                             Weber, Skala, Bass & Rhine LLP
                                             750 Lexington Avenue
                                             New York, New York 10022
                                             Attn:    Murray L. Skala, Esq.
                                             Fax:     (212) 888-7776

                  to Executive:              45 Wildwood Drive
                                             Laurel Hollow, New York 11791
                                             Fax:     516-367-3463

                  with a copy to:            Ettelman & Hochheiser
                                             100 Quentin Roosevelt Blvd.
                                             Garden City, New York 10530
                                             Attn: Gary Ettelman, Esq.
                                             Fax:     (516) 227-6307


or such other address as any Party hereto may at any time, or from time to time,
direct by Notice given to the other Parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a) (i), the date of
the receipt; in the case of clause (a) (ii), three business days after such
Notice or demand is sent; and, in the case of clause (b), the business day next
following the date such Notice or demand is sent.

         19. Amendment. Except as otherwise provided herein, no amendment of
this Agreement shall be valid or effective, unless in writing and signed by or
on behalf of the parties hereto.

         20. Waiver. No course of dealing or omission or delay on the part of
either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.


                                       8

         21. Governing Law. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the laws of the State of New York without
regard to principles of choice of law or conflict of laws. Each Party to this
Agreement submits to the jurisdiction of the courts of the State of New York,
located in New York and Nassau County, New York, United States of America, and
to the jurisdiction of the United States District Court for the Southern and
Eastern Districts of New York, New York, New York, United States of America with
respect to any matter arising out of this Agreement, waives any objection to
venue in the Counties of New York or Nassau, State of New York, or such
District, and agrees that service of any summons, complaint, Notice or other
process relating to such proceeding may be effected in the manner provided by
Section 18 hereof.

         22. Severability. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

         23. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute one and
the same agreement.

         24. Further Assurances. Each Party hereto shall promptly execute,
deliver, file or record such agreements, instruments, certificates and other
documents and perform such other and further acts as any other Party hereto may
reasonably request or as may otherwise be reasonably necessary or proper, to
carry out the provisions of this Agreement.

         25. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and shall not be deemed, to create or
confer any right or interest for the benefit of any Person not a Party hereto.

         26. Assignment. Executive's obligations under this Agreement may not be
assigned without the prior written consent of the Company, and any purported
assignment without such consent shall be void and without effect.

         27. Titles and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.

         28. Remedies. In the event of any actual or prospective breach or
default under this Agreement by either Party hereto, the other Party shall be
entitled to equitable relief, including remedies in the nature of rescission,
injunction and specific performance. All remedies hereunder are cumulative and
not exclusive, and nothing herein shall be deemed to prohibit or limit either
party from pursuing any other remedy or relief available at law or in equity for
such actual or prospective breach or default, including the recovery of damages.

         29. Assignment. This Agreement, and each right, interest and obligation
hereunder, may not be assigned by either party hereto without the prior written
consent of the other party hereto, and any purported assignment without such
consent shall be void and without effect, except that this Agreement shall be
assigned to, and assumed by, any Person with or into which the Company merges or
consolidates,


                                       9

or which acquires all or substantially all of its assets, or which otherwise
succeeds to and continues the Company's business substantially as an entirety.
Except as otherwise expressly provided herein or required by law, Executive
shall not have any power of anticipation, assignment or alienation of any
payments required to be made to him hereunder, and no other Person may acquire
any right or interest in any thereof by reason of any purported sale, assignment
or other disposition thereof, whether voluntary or involuntary, any claim in a
bankruptcy or other insolvency Proceeding against Executive, or any other
ruling, judgment, order, writ or decree.

         30. Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.

         31. References. The terms "herein," "hereto," "hereof," "hereby," and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Section or other part hereof.

         32. No Presumptions. Each Party hereto acknowledges that it has had an
opportunity to consult with counsel and has participated in the preparation of
this Agreement. No Party hereto is entitled to any presumption with respect to
the interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other Party hereto drafted or
controlled the drafting of this Agreement.

         33. Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, commitments or arrangements relating thereto.


                                       10

         IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the day and year first above written.

                                        JAKKS PACIFIC, INC.


                                        By:  /s/ JOEL M. BENNETT
                                             -----------------------------------
                                             Name:   Joel M. Bennett
                                                     --------------------------
                                             Title:  EVP/CFO
                                                     --------------------------


                                        /s/ STEVEN LEBENSFELD
                                        ----------------------------------------
                                        Steven Lebensfeld


                                       11


                                                                       EXHIBIT 9


                       TERMINATION OF EMPLOYMENT AGREEMENT

Agreement dated March 11, 2002 entered into between and among HARVEY GOLDBERG,
an individual ("Executive"), 1515037 ONTARIO LTD., a corporation organized under
the law of Ontario, Canada with their addresses at 8 North Bank Court,
Thornhill, Ontario Canada L3T757 ("Ontario Ltd."), TOYMAX INTERNATIONAL, INC., a
Delaware corporation with its offices at 125 East Bethpage Road, Plainview, New
York 11803, U.S.A., ("Toymax International" or the "Company") and JAKKS PACIFIC,
INC., a Delaware corporation with its offices at 22619 Pacific Coast Highway,
Malibu, California , U.S.A. ("JAKKS"). The parties to this Agreement may also
sometimes be referred to collectively as the "Parties" or singly as a "Party."

                              W I T N E S S E T H :

WHEREAS, Toymax International and Executive are parties to an employment
agreement dated as of January 1, 2000 providing for Executive's employment by
the Company as Executive Vice President (the "Employment Agreement").

WHEREAS, concurrently herewith JAKKS has acquired a majority of the outstanding
shares of capital stock of Toymax International from certain shareholders of
Toymax International, including Executive, pursuant to a Stock Purchase
Agreement dated February 10, 2002 (the "Stock Purchase Agreement"); and

WHEREAS, as a condition to such acquisition, Executive and Toymax International
agreed to terminate the Employment Agreement and Stock Options described herein.

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the Parties hereto hereby agree as follows:

1.    Termination of Employment Agreement and Stock Options. Executive and the
Company agree that the Employment Agreement and all stock options, including
options granted to Executive under the Company's Stock Option Plan referred to
in the Employment Agreement, and any other rights to acquire shares of stock or
other securities of the Company and its Affiliates, are hereby terminated as of
the date hereof. The Executive agrees that payment by the Company of
US$200,000.00 to Ontario Ltd. shall constitute full and final settlement of all
claims for salary, bonus, vacation pay or any other form of compensation or
benefit due to him from the Company or any of its Affiliates or any equity or
other interest in the Company or any of its Affiliates, including but not
limited to the payments under the Executive Bonus Plan and Stock Appreciation
Bonus referred to in the Employment Agreement. Executive represents and warrants
to the Company that he is the sole stockholder, officer and director of Ontario
Ltd. Executive acknowledges that the Company and Toymax International shall
terminate forthwith the life insurance, disability and accident insurance and
health insurance benefits referred to in the Employment Agreement. Such
$200,000.00 payment shall be paid in twelve (12) substantially equal monthly
installments on the last day of each month commencing with the month in which
this Agreement is executed.

2.    Definitions. As used in this Agreement, the following terms shall have the
      meanings set forth below:

      a.    "Affiliate" of a Person means another Person directly or indirectly
            controlling, controlled by, or under common control with, such
            Person; for this purpose, "control" of a Person means the power
            (whether or not exercised) to direct the policies, operations or
            activities of such Person by virtue of the ownership of, or right to
            vote or direct the manner of voting of, securities of such Person,
            or pursuant to agreement or Law or otherwise.

      b.    "Competitive Product" means any product that competes with a
            Product.

      c.    "Product" means any product developed, manufactured, sold or
            marketed by the Company or its Affiliates during the period of
            Executive's employment by the Company or its predecessors and their
            respective Affiliates.

      d.    "Person" includes without limitation a natural person, corporation,
            joint stock company, limited liability company, partnership, joint
            venture, association, trust, Governmental Authority, or any group of
            the foregoing acting in concert.

      e.    "Trade Right" means a patent, claim of copyright, trademark, trade
            name, brand name, service mark, logo, symbol, trade dress or design,
            or representation or expression of any thereof, or registration or
            application for registration thereof, or any other improvement,
            development or discovery, invention, trade secret, process, system,
            technical information, know-how, proprietary right or intellectual
            property conceived, developed, created or made by Executive, alone
            or with others, during the period of his employment by the Company
            or its predecessors or their respective Affiliates in connection
            with the design, manufacture and marketing of the Products or
            otherwise in connection with the Company's operations and conduct of
            its business.


3.    Ownership of Trade Rights

      a.    ACKNOWLEDGMENT BY EXECUTIVE. Executive and Ontario Ltd. each
            acknowledges and agrees that all of the Trade Rights are the sole
            property of Toymax International.

      b.    "WORKS FOR HIRE". Executive and Ontario Ltd. each acknowledges and
            agrees that for all purposes of U.S. and foreign Copyright Laws the
            Trade Rights and any inventions, discoveries, enhancements or
            improvements to any tangible or intangible property, resulting from
            the services performed by Executive for the Company or its
            predecessors and their respective Affiliates (for the purposes of
            this paragraph all of the foregoing is collectively referred to as
            the "Work"), and any and all elements thereof, shall be deemed to
            constitute "works for hire" belonging to the Company within the
            meaning of Title 17, United States Code, Section 101, and any
            comparable provisions of the law of any other jurisdiction, such
            that all right, title and interest therein, including, without
            limitation, copyrights and exclusive rights under copyright, vest in
            Toymax International. Executive and Ontario Ltd. each hereby
            transfers and conveys to Toymax International the exclusive,
            world-wide, royalty-free, paid-up right to exploit, use, develop,
            license, and sell products and services relating to or derived from
            the Work; and the exclusive right, title and interest in and to all
            inventions, improvements, patent applications and letters patent,
            "know-how", and all intellectual property and other rights, tangible
            or intangible, which relate to or are based upon or derived from the
            Work; and to all information, documents, and specifications that
            relate to the Work. If the Work or any of the elements thereof is
            deemed not to be "works for hire" within the meaning of Title 17,
            United States Code, Section 101, then Executive and Ontario Ltd.
            each hereby assigns and transfers to Toymax International all right,
            title and interest in and to the Work, including rights throughout
            the world for good and valuable consideration, receipt of which
            Executive hereby acknowledges. For the sole and exclusive purpose of
            perfecting and documenting such limited assignment and transfer,
            Executive and Ontario Ltd. each hereby grants to JAKKS and Toymax
            International an irrevocable power of attorney.


                                       2

4.    Restrictive Covenants.

      a.    From and after the date hereof and until the first anniversary of
            the date hereof, Executive and Ontario Ltd. shall not, directly or
            indirectly through any Affiliate or other intermediary (a)
            manufacture, produce, sell, market or otherwise promote any
            Competitive Product or serve as a partner, member, manager,
            director, officer or employee of, or consultant or advisor to, or in
            any manner own, control, manage, operate or otherwise participate or
            invest in, or be connected with any Person that engages in the
            marketing or sale of Competitive Products, or authorize the use of
            its name in connection therewith, or (b) for himself or itself or on
            behalf of any other Person, employ, engage or retain any Person who
            at any time during the preceding 12-month period shall have been an
            employee of Toymax International or JAKKS or their respective
            Affiliates, or contact any supplier, customer or employee of Toymax
            International, JAKKS or their respective Affiliates for the purpose
            of soliciting or diverting any such supplier, customer or employee
            from Toymax International, JAKKS or their respective Affiliates. The
            foregoing provisions notwithstanding, Executive and Ontario Ltd. may
            invest their funds in securities of an issuer if the securities of
            such issuer are listed for trading on a registered securities
            exchange or actively traded in the over-the-counter market and
            Executive's and his Affiliates' (including Ontario Ltd.) aggregate
            holdings therein represent less than 1% of the total number of
            shares or principal amount of the securities of such issuer then
            outstanding. Executive and Ontario Ltd. each acknowledges that the
            provisions of this Section 4, and the period of time, the lack of
            any specific geographic area given the international nature of the
            business of the Company and its Affiliates, and scope and type of
            restrictions on his activities set forth herein, are reasonable and
            necessary for the protection of the Company and JAKKS and are an
            essential inducement to JAKKS entering into the Stock Purchase
            Agreement and acquiring shares of common stock of Toymax
            International from Executive and the other shareholders selling
            their shares to JAKKS pursuant to the Stock Purchase Agreement.

      b.    Executive acknowledges that the type of services that he has
            performed for Toymax International and its Affiliates were of an
            intellectual and technical character required the disclosure of
            confidential and proprietary information of Toymax International and
            its Affiliates to him and resulted in the creation by him of
            information which is confidential and proprietary to Toymax
            International and its Affiliates, and accordingly that the
            restrictive covenants contained herein are necessary in order to
            protect and maintain the business and assets and goodwill of Toymax
            International whose shares are being purchased by JAKKS. Executive
            and Ontario Ltd. each acknowledges that the business of Toymax
            International and its Affiliates extends beyond the geographic area
            of the State of New York and accordingly, it is reasonable that the
            restrictive covenants set forth above are not limited by specific
            geographic area but by the location of the customers of Toymax
            International and its Affiliates. Executive and Ontario Ltd. each
            acknowledges that the remedy at law for any breach of this agreement
            by him will be inadequate and that, accordingly, JAKKS and Toymax
            International shall, in addition to all other available remedies
            (including without limitation seeking such damages as it can show it
            has sustained by reason of such breach), be entitled to injunctive
            relief without being required to post bond or other security and
            without having to prove the inadequacy of the available remedies at
            law.

      c.    Executive acknowledges that he has received from the Company and its
            Affiliates (a "disclosing party") during the period of his
            employment by the Company information regarding the Company's
            Products and its business and affairs which constitutes confidential
            and proprietary information belonging to the Company ("Confidential
            Information"), and he and Ontario Ltd. shall not, at any time
            hereafter, use or disclose


                                       3

            any Confidential Information to any Person other than to the Company
            or its designees or except as may otherwise be required in
            connection with the business and affairs of the Company, and in
            furtherance of the foregoing Executive and Ontario Ltd. each agrees
            that:

            i.    Executive and Ontario Ltd. will receive, maintain and hold
                  Confidential Information in strict confidence and will use the
                  same level of care in safeguarding it that it uses with his
                  own confidential material of a similar nature;

            ii.   Executive and Ontario Ltd. will take all such steps as may be
                  reasonably necessary to prevent the disclosure of Confidential
                  Information; and

            iii.  Executive and Ontario Ltd. will not utilize Confidential
                  Information without first having obtained the disclosing
                  party's written consent to such utilization.

      d.    The commitments set forth in paragraph 4(b) above shall not extend
            to any portion of Confidential Information:

            i.    that is generally available to the public;

            ii.   that was known to Executive or Ontario Ltd prior to disclosure
                  (excluding information regarding Toymax International and its
                  Affiliates which would otherwise be Confidential Information
                  that was disclosed to Executive during the period of his
                  employment by the Company or its predecessors or their
                  respective Affiliates or that was disclosed to Executive in
                  connection with his acting as a director of the Company or its
                  predecessors or their respective Affiliates, and excluding any
                  other non-public information concerning Products under
                  development by or for the Company or its Affiliates;

            iii.  that was not acquired, directly or indirectly and/or in any
                  manner, from Toymax International or any of its Affiliates and
                  which Executive or Ontario Ltd. lawfully had in his or its
                  possession prior to the date of this Agreement;

            iv.   that, hereafter, through no act or omission on the part of the
                  Executive or Ontario Ltd., becomes information generally
                  available to the public.

      e.    At any time upon written request by JAKKS or the disclosing party,
            (i) the Confidential Information, including any copies, shall be
            returned to JAKKS or the disclosing party, and (ii) all documents,
            drawings, specifications and any other material whatsoever in the
            possession of the Executive or Ontario Ltd. that relates to such
            Confidential Information, including all copies and/or any other form
            of reproduction and/or description thereof made by Executive or
            Ontario Ltd. shall, at the disclosing party's or JAKKS' option, be
            returned to the disclosing party or JAKKS or destroyed.

      f.    In the event that Executive or Ontario Ltd. becomes legally
            compelled (by deposition, interrogatory, request of documents,
            subpoena, civil investigative demand or similar process) to disclose
            any of the Confidential Information, the Executive shall provide
            JAKKS with prompt prior written notice of such requirement so that
            it or the disclosing party may seek a protective order or other
            appropriate remedy and/or waive compliance with the terms of this
            Agreement. In the event that such protective order or other remedy
            is not obtained, or JAKKS waives compliance with the provisions
            hereof, the Executive and Ontario Ltd. agrees to furnish only such
            portion of the Confidential Information which is legally required to
            be furnished.




                                       4

5.    Miscellaneous.

      a.    FEES AND EXPENSES. Each Party hereto shall bear such fees and
            expenses as may be incurred by it in connection with this Agreement.

      b.    NOTICES. Any Notice or demand required or permitted to be given or
            made hereunder to or upon any Party hereto shall be deemed to have
            been duly given or made for all purposes if (a) in writing and sent
            by (i) messenger or an overnight courier service against receipt, or
            (ii) certified or registered mail, postage paid, return receipt
            requested, or (b) sent by telegram, telecopy (confirmed orally),
            telex or similar electronic means, provided that a written copy
            thereof is sent on the same day by postage-paid first-class mail, to
            such Party at the following address:


            to JAKKS:         22619 Pacific Coast Highway
                              Malibu, California 90265
                              Attn: President
                              Fax:  (310) 456-7099

            with a copy to:   Feder, Kaszovitz, Isaacson,
                              Weber, Skala, Bass & Rhine LLP
                              750 Lexington Avenue
                              New York, New York 10022
                              Attn: Murray L. Skala, Esq.
                              Fax:  (212) 888-7776


            to Executive or Ontario Ltd. at:

                              8 North Bank Court
                              Thornhill, Ontario, Canada L3T757
                              Fax:  905-731-1570

            with a copy to:   Brown Raysman Millstein
                              Felder & Steiner LLP
                              900 Third Avenue
                              New York, New York 10022
                              Attn: Joel M. Handel, Esq.
                              Fax:  (212) 812-3310

            or such other address as any Party hereto may at any time, or from
            time to time, direct by Notice given to the other parties in
            accordance with this Section. Except as otherwise expressly provided
            herein, the date of giving or making of any such Notice or demand
            shall be, in the case of clause (a) (i), the date of the receipt; in
            the case of clause (a) (ii), three business days after such Notice
            or demand is sent; and, in the case of clause (b), the business day
            next following the date such Notice or demand is sent.

      c.    AMENDMENT. Except as otherwise expressly provided herein, no
            amendment of this Agreement shall be valid or effective, unless in
            writing and signed by or on behalf of the
            parties hereto.



                                       5

      d.    WAIVER. No course of dealing or omission or delay on the part of any
            Party hereto in asserting or exercising any right hereunder shall
            constitute or operate as a waiver of any such right. No waiver of
            any provision hereof shall be effective, unless in writing and
            signed by or on behalf of the Party to be charged therewith. No
            waiver shall be deemed a continuing waiver or waiver in respect of
            any other or subsequent breach or default, unless expressly so
            stated in writing.

      e.    GOVERNING LAW. This Agreement shall be governed by, and interpreted
            and enforced in accordance with, the laws of the State of New York
            without regard to principles of choice of law or conflict of laws.
            Each Party to this Agreement submits to the jurisdiction of the
            courts of the State of New York, located in New York County, New
            York, United States of America, and to the jurisdiction of the
            United States District Court for the Southern District of New York,
            New York, New York, United States of America with respect to any
            matter arising out of this Agreement, waives any objection to venue
            in the County of New York, State of New York, or such District, and
            agrees that service of any summons, complaint, Notice or other
            process relating to such proceeding may be effected in the manner
            provided by Paragraph 5(b) hereof.

      f.    SEVERABILITY. The provisions hereof are severable and in the event
            that any provision of this Agreement shall be determined to be
            invalid or unenforceable in any respect by a court of competent
            jurisdiction, the remaining provisions hereof shall not be affected,
            but shall, subject to the discretion of such court, remain in full
            force and effect, and any invalid or unenforceable provision shall
            be deemed, without further action on the part of the parties hereto,
            amended and limited to the extent necessary to render the same valid
            and enforceable.

      g.    COUNTERPARTS. This Agreement may be executed in counterparts, each
            of which shall be deemed an original and which together shall
            constitute one and the same agreement.

      h.    FURTHER ASSURANCES. Each Party hereto shall promptly execute,
            deliver, file or record such agreements, instruments, certificates
            and other documents and perform such other and further acts as any
            other Party hereto may reasonably request or as may otherwise be
            reasonably necessary or proper, to carry out the provisions of this
            Agreement.

      i.    BINDING EFFECT. This Agreement shall be binding upon and inure to
            the benefit of the parties hereto and their respective successors
            and permitted assigns. This Agreement is not intended, and shall not
            be deemed, to create or confer any right or interest for the benefit
            of any Person not a Party hereto.

      j.    ASSIGNMENT. The Executive's obligations under this Agreement may not
            be assigned without the prior written consent of JAKKS, and any
            purported assignment without such consent shall be void and without
            effect.

      k.    TITLES AND CAPTIONS. The titles and captions of the Articles and
            Sections of this Agreement are for convenience of reference only and
            do not in any way define or interpret the intent of the parties or
            modify or otherwise affect any of the provisions hereof.

      l.    GRAMMATICAL CONVENTIONS. Whenever the context so requires, each
            pronoun or verb used herein shall be construed in the singular or
            the plural sense and each capitalized


                                       6

            term defined herein and each pronoun used herein shall be construed
            in the masculine, feminine or neuter sense.

      m.    REFERENCES. The terms "herein," "hereto," "hereof," "hereby" and
            "hereunder," and other terms of similar import, refer to this
            Agreement as a whole, and not to any Article, Section or other part
            hereof.

      n.    NO PRESUMPTIONS. Each Party hereto acknowledges that it has
            participated, with the advice of counsel, in the preparation of this
            Agreement. No Party hereto is entitled to any presumption with
            respect to the interpretation of any provision hereof or the
            resolution of any alleged ambiguity herein based on any claim that
            any other Party hereto drafted or controlled the drafting of this
            Agreement.

      o.    ENTIRE AGREEMENT. This Agreement embodies the entire agreement of
            the parties hereto with respect to the subject matter hereof and
            supersedes all prior agreements, commitments or arrangements
            relating thereto.

IN WITNESS WHEREOF, the individual parties and each of the corporate parties by
their respective duly authorized officers, have duly executed this Agreement as
of the date set forth in the Preamble hereto.

TOYMAX INTERNATIONAL, INC.


By:   /s/ SANFORD B. FRANK
      --------------------------
      Name:  Sanford B. Frank
      Title: Secretary

JAKKS PACIFIC, INC.

By:   /s/ JOEL M. BENNETT
      --------------------------
      Name:  Joel M. Bennett
      Title: Exec. VP/CFO

/s/ HARVEY GOLDBERG
- --------------------------------
Harvey Goldberg


1515037 ONTARIO LTD.


By:   /s/ HARVEY GOLDBERG
      --------------------------
      Name:  Harvey Goldberg
      Title: President



                                       7


                                                                      EXHIBIT 10



                              CONSULTING AGREEMENT


THIS CONSULTING AGREEMENT dated as of March 11, 2002 by and between JAKKS
Pacific, Inc., a Delaware corporation ("JAKKS" or the "Company") with its
offices at 22619 Pacific Coast Highway, Malibu, CA 90265 and 1515037 Ontario
Ltd., a corporation organized under the law of Ontario, Canada ("Consultant")
and Harvey Goldberg ("Goldberg"), an individual residing at 8 North Bank Court,
Thornhill, Ontario, Canada L3T757. The parties to the Agreement are sometimes
referred to collectively as the "Parties" or simply as a "Party".


                              W I T N E S S E T H :


      WHEREAS, the Company desires to retain Consultant to provide consulting
services to the Company on the terms and subject to the conditions hereinafter
set forth, and Consultant desires so to be retained;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the Company and Consultant agree as follows:

      1.    Offices and Duties. The Company hereby retains Consultant during the
Term (as hereinafter defined) to consult with the Company regarding
international sales and marketing of the products of the Company and its
Affiliates, and to perform such duties in connection therewith on behalf of the
Company as the Board of Directors of the Company or a senior executive officer
of the Company may from time to time direct. Consultant hereby accepts such
retention and agrees that throughout the Term it shall faithfully, diligently
and to the best of its ability, in furtherance of the business of the Company,
perform the duties assigned to it or incidental to its acting as a consultant to
the Company pursuant to this Section. Consultant shall not be required to
perform such services on a particular schedule provided that Consultant's
schedule does not adversely affect the performance of its responsibilities and
provided that any other activities of Consultant do not materially interfere
with or compromise its ability to perform its responsibilities hereunder.
Consultant shall at all times be subject to the direction and control of the
Board of Directors of the Company and observe and comply with such lawful rules,
regulations, policies and practices as the Board of Directors of the Company may
from time to time establish.

      2.    Term. The retention of Consultant as a consultant hereunder shall
commence on the date hereof and continue for a term ending on the first
anniversary of the date hereof (the "Term"), subject to earlier termination upon
the terms and conditions provided elsewhere herein. As used herein, "Termination
Date" means the last day of the Term.

      3.    Compensation.

            (a)   As compensation for its consulting services hereunder, the
Company shall pay to Consultant during the Term:

                  (i)   a consulting fee at the rate of $325,000.00 per annum
(the "Base Consulting Fee"), such Base Consulting Fee to be paid in
substantially equal installments no less often than monthly in accordance with
the Company's normal payment practices regarding such fees.

                  (ii)  an Incentive Consulting Bonus as defined in paragraph
(b) of this Section 3.

            (b)   The "Incentive Consulting Bonus" shall be equal to one (1%)
percent of Covered International Net Sales; provided that the annual rate of the
Incentive Consulting Bonus payable to the Consultant during the Term shall not
exceed US$200,000.00. The term "Covered International Net Sales" means gross
sales of the Company and its Affiliates during the Term outside of the United
States, its territories and possessions and outside of Canada, Mexico and the
United Kingdom, and excluding any gross sales in South America of products using
the World Wrestling Federation properties licensed by the Company and its
Affiliates, less returns, discounts, rebates and allowances for markdowns and
defective merchandise. Covered International Net Sales shall be calculated by
the Chief Financial Officer of the Company consistent with the methods used to
calculate Net Sales in the financial statements issued by the Company as part of
its periodic reporting under the United States Securities and Exchange Act of
1934, as amended. The Incentive Consulting Bonus shall be payable quarterly on a
provisional basis within thirty (30) days after the end of the fiscal quarters
of the Company ending March 31, June 30, and September 30 during the Term and on
a final adjusted basis within ninety (90) days after the end of the Company's
fiscal year occurring during the Term, and each payment shall be accompanied by
a report certified by the Chief Financial Officer of the Company setting forth
the calculation of the Incentive Consulting Bonus. If the Termination Date
occurs prior to the end of a fiscal quarter of the Company, then Net Sales
through the Termination Date shall be calculated by the Company, and the
Incentive Consulting Bonus shall be paid at the same time it would have been
paid had this Agreement not terminated, except as otherwise provided in Section
15 of this Agreement.

            (c)   In addition to the Consulting Fee and the Incentive Consulting
Bonus provided herein, Consultant shall be entitled to participate, to the
extent it is eligible under the terms and conditions thereof, in any stock,
stock option or other equity participation plan generally available to other
Consultants to, and employees of the Company. The Company shall be under no
obligation hereunder to institute or to continue any such stock, stock option or
equity participation plan, and Consultant shall not be entitled to any other
benefits provided to consultants or employees of the Company, including any
profit-sharing, pension, retirement, insurance, medical service or other
employee benefit plan and any other benefits or perquisites generally available
to any other consultants or executives or employees of the Company pursuant to
any employment or other policy or practice, which may be in effect from time to
time during the Term.

            (d)   As used in this Agreement, the term "Affiliate" of a Person
means another Person directly or indirectly controlling, controlled by, or under
common control with, such Person; for this purpose, "control" of a Person means
the power (whether or not exercised) to direct the policies, operations or
activities of such Person by virtue of the ownership of, or right to vote or
direct the manner of voting of, securities of such Person, or pursuant to
agreement or law or otherwise.

            (e)   As used in this Agreement, the term "Person" includes without
limitation a natural person, corporation, joint stock company, limited liability
company, partnership, joint venture, association, trust, governmental authority,
or any group of the foregoing acting in concert.

      4.    Expenses. The Company shall pay directly, or advance funds to
Consultant or reimburse Consultant for, all expenses reasonably incurred by it
in connection with the performance of its duties hereunder and the business of
the Company, upon the submission to the Company of itemized expense reports,
receipts or vouchers in accordance with the Company's then customary policies
and practices.

      5.    Services of Goldberg. Consultant agrees that unless otherwise agreed
by the Company in its sole and absolute discretion, all of Consultant's services
under this Agreement shall be provided only by Goldberg. The Company
acknowledges that Goldberg may, however, be unavailable from time to time during
the Term as a result of vacations taken by him, not to exceed four (4) weeks
during the Term. Goldberg agrees that throughout the Term he shall faithfully,
diligently and to the best of his ability, in furtherance of the business of the
Company, carry out on behalf of Consultant the duties assigned to


                                       2

Consultant or incidental to its acting as a consultant to the Company pursuant
to this Agreement. Goldberg shall devote a substantial portion of his business
time and attention to the business and affairs of the Company in carrying out
the duties of Consultant, provided that any other activities to which Goldberg
devotes his business time and attention do not materially interfere with or
compromise his ability to perform his responsibilities to Consultant in carrying
out Consultant's duties hereunder.

      6.    Location. Except for travel and temporary accommodation reasonably
required for Goldberg to perform Consultant's services hereunder and travel as
may reasonably be requested by JAKKS to its principal office in the United
States (currently in Malibu, California, USA) or to its offices in New York, New
York, USA, Consultant shall not be required to perform its services hereunder at
any location other than an office it maintains in Thornhill, Ontario, Canada.
JAKKS may request Goldberg's attendance at meetings at JAKKS' offices in Malibu,
California or New York, New York, or to participate in other activities relating
to the Company and its business in Malibu, California or New York, New York,
provided that Goldberg shall not be required to stay at such locations for more
than seven (7) working days in any one (1) calendar month.

      7.    Clerical Support. The Company shall provide Consultant with
secretarial and clerical services at the Company's offices in Malibu, California
as are reasonably necessary for the performance of its services hereunder.

      8.    Confidential Information.

            (a)   Consultant and Goldberg (sometimes collectively referred to
hereafter as "Consultant") shall hold in a fiduciary capacity for the benefit of
the Company all confidential or proprietary information relating to or concerned
with the Company and its Affiliates or their products, prospective products,
operations, business and affairs ("Confidential Information"), and Consultant
shall not, at any time hereafter, use or disclose any Confidential Information
to any person other than to the Company or its designees or except as may
otherwise be required in connection with the business and affairs of the
Company, and in furtherance of the foregoing Consultant agrees that:

                  (i)   Consultant will receive, maintain and hold Confidential
Information in strict confidence and will use the same level of care in
safeguarding it that Consultant uses with its own confidential material of a
similar nature;

                  (ii)  Consultant will take all such steps as may be reasonably
necessary to prevent the disclosure of Confidential Information; and

                  (iii) Consultant will not utilize Confidential Information
without first having obtained the Company's consent to such utilization.

            (b)   The commitments set forth in paragraph 8(a) shall not extend
to any portion of Confidential Information:

                  (i)   that is generally available to the public;

                  (ii)  that was known to the Consultant prior to disclosure
(excluding information regarding the Company or its Affiliates which would
otherwise be Confidential Information that was disclosed to Consultant or
Goldberg during the period of Goldberg's employment by Toymax International Inc.
and its Affiliates) or that was disclosed to Consultant or Goldberg in
connection with his acting as an officer or a director of Toymax International
Inc. or its predecessors or their respective Affiliates, and excluding any other
non-public information concerning products under development by or for the
Company or its Affiliates (including Toymax International Inc. and its
Affiliates);



                                       3

                  (iii) that was not acquired, directly or indirectly and/or in
any manner, from the Company or any of its Affiliates (including Toymax
International Inc. and its Affiliates) and which Consultant lawfully had in his
or its possession prior to the date of this Agreement;

                  (iv)  that, hereafter, through no act or omission on the part
of the Consultant, becomes information generally available to the public.

            (c)   At any time upon written request by the Company (i) the
Confidential Information, including any copies, shall be returned to the
Company, and (ii) all documents, drawings, specifications, computer software,
and any other material whatsoever in the possession of the Consultant that
relates to such Confidential Information, including all copies and/or any other
form of reproduction and/or description thereof made by Consultant shall, at the
Company's option, be returned to the Company or destroyed.

            (d)   In the event that Consultant becomes legally compelled (by
deposition, interrogatory, request of documents, subpoena, civil investigative
demand or similar process) to disclose any of the Confidential Information, the
Consultant shall provide the Company with prompt prior written notice of such
requirement so that it may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement. In the event that such
protective order or other remedy is not obtained, or the Company waives
compliance with the provisions hereof, the Consultant agrees to furnish only
such portion of the Confidential Information which is legally required to be
furnished.

      9.    Intellectual Property.

            (a)   Any patent, claim of copyright, trademark, trade name, brand
name, service mark, logo, symbol, trade dress or design, or representation or
expression of any thereof, or registration or application for registration
thereof, or any other improvement, development or discovery, invention, trade
secret, process, system, technical information, know-how, proprietary right or
intellectual property developed, conceived of, invented or otherwise produced by
Consultant or Goldberg, alone or with others in connection with the design,
manufacture and marketing of the products of the Company and its Affiliates, or
conceived, developed, created or made by Consultant or Goldberg, alone or with
others, during the Term and applicable to the business of the Company or its
Affiliates, whether or not patentable or registrable (collectively referred to
as "Trade Rights") shall become the sole and exclusive property of the Company.

            (b)   Consultant and Goldberg shall disclose all Trade Rights
promptly and completely to the Company and shall, during the Term or thereafter,
(i) execute all documents requested by the Company for vesting in the Company
the entire right, title and interest in and to the same, (ii) execute all
documents requested by the Company for filing and procuring such applications
for patents, trademarks, service marks or copyrights as the Company, in its sole
discretion, may desire to prosecute, and (iii) give the Company all assistance
it may reasonably require, including the giving of testimony in any proceeding,
in other to obtain, maintain and protect the Company's right therein and
thereto; provided that the Company shall bear the entire cost and expense of
such assistance, including without limitation paying the Consultant reasonable
compensation for any time or effort expended by it in connection with such
assistance after the Termination Date. In furtherance of the foregoing,
Consultant and Goldberg each acknowledges and agrees that for all purposes of
U.S. and foreign Copyright Laws, the Trade Rights and any inventions,
discoveries, enhancements or improvements to any tangible or intangible
property, resulting from the services performed by Consultant for the Company or
its Affiliates (for the purposes of this paragraph all of the foregoing is
collectively referred to as the "Work"), and any and all elements thereof, shall
be deemed to constitute "works for hire" belonging to the Company within the
meaning of Title 17, United States Code, Section 101, and any comparable
provisions of the law of any other jurisdiction, such that all right, title and
interest therein, including, without limitation, copyrights and


                                       4

exclusive rights under copyright, vest in Toymax International. Consultant and
Goldberg each hereby transfers and conveys to the Company the exclusive,
world-wide, royalty-free, paid-up right to exploit, use, develop, license, and
sell products and services relating to or derived from the Work; and the
exclusive right, title and interest in and to all inventions, improvements,
patent applications and letters patent, "know-how", and all intellectual
property and other rights, tangible or intangible, which relate to or are based
upon or derived from the Work; and to all information, documents, and
specifications that relate to the Work. If the Work or any of the elements
thereof is deemed not to be "works for hire" within the meaning of Title 17,
United States Code, Section 101, then Consultant and Goldberg each hereby
assigns and transfers to the Company all right, title and interest in and to the
Work, including rights throughout the world for good and valuable consideration,
receipt of which Consultant hereby acknowledges. For the sole and exclusive
purpose of perfecting and documenting such limited assignment and transfer,
Consultant and Goldberg each hereby grants to the Company an irrevocable power
of attorney.

      10.   Restrictive Covenants.

            (a)   During the Term, and unless its retention as a consultant
terminates pursuant to Section 13, for a further period of one (1) year after
the Termination Date, neither Consultant nor Goldberg shall, directly or
indirectly through any Affiliate or other intermediary (a) manufacture, produce,
sell, market or otherwise promote any Competitive Product or serve as a partner,
member, manager, director, officer or employee of, or consultant or advisor to,
or in any manner own, control, manage, operate or otherwise participate or
invest in, or be connected with any Person that engages in the marketing or sale
of Competitive Products, or authorize the use of its or his name in connection
therewith, or (b) for itself or himself or on behalf of any other Person,
employ, engage or retain any Person who at any time during the preceding
12-month period shall have been an employee of the Company or its Affiliates, or
contact any supplier, customer or employee of the Company or its Affiliates for
the purpose of soliciting or diverting any such supplier, customer or employee
from the Company or its Affiliates. The foregoing provisions notwithstanding,
Consultant or Goldberg may invest its or his funds in securities of an issuer if
the securities of such issuer are listed for trading on a registered securities
exchange or actively traded in the over-the-counter market and Consultant's and
its Affiliates' (including Goldberg) aggregate holdings therein represent less
than 1% of the total number of shares or principal amount of the securities of
such issuer then outstanding. Consultant and Goldberg each acknowledges that the
provisions of this Section 10, and the period of time, lack of specific
geographic area given the international nature of the business of the Company
and its Affiliates, and the scope and type of restrictions on his activities set
forth herein, are reasonable and necessary for the protection of the Company and
are an essential inducement to JAKKS entering into this Agreement and acquiring
shares of common stock of Toymax International Inc. from Goldberg and the other
shareholders selling their shares to JAKKS pursuant to a Stock Purchase
Agreement dated February 9, 2002.

            (b)   As used herein, the term "Competitive Product" means any
product or service that is substantially similar to a product or service
developed, marketed, sold by the Company or its Affiliates during the period of
Consultant's retention by the Company.

            (c)   Consultant and Goldberg each acknowledges that the type of
services the Company will require from them are of an intellectual and technical
character which will require the disclosure of confidential and proprietary
information of the Company to them and may result in the creation by them of
information which is confidential and proprietary to the Company, and
accordingly that the restrictive covenants contained herein are necessary in
order to protect and maintain the business and assets and goodwill of the
Company. Consultant and Goldberg each also acknowledges that the type of
services that it and he has performed for Toymax International and its
Affiliates as a consultant or employee of Toymax International and it affiliates
were of an intellectual and technical character and required the disclosure of
confidential and proprietary information of Toymax International and its
Affiliates to them and resulted in the creation by them of information which is
confidential and


                                       5

proprietary to Toymax International and its Affiliates, and accordingly that the
restrictive covenants contained herein are necessary in order to protect and
maintain the business and assets and goodwill of Toymax International whose
shares are being purchased by JAKKS. Consultant and Goldberg each acknowledges
that the business of the Company and its Affiliates, including Toymax
International and its Affiliates, extends beyond the geographic area of the
State of New York and accordingly, it is reasonable that the restrictive
covenants set forth above are not limited by specific geographic area but by the
location of the customers of the Company and its Affiliates. Consultant and
Goldberg each acknowledges that the remedy at law for any breach of this
agreement by him will be inadequate and that, accordingly, the Company shall, in
addition to all other available remedies (including without limitation seeking
such damages as it can show it has sustained by reason of such breach), be
entitled to injunctive relief without being required to post bond or other
security and without having to prove the inadequacy of the available remedies at
law.

      11.   Termination Upon Death or Disability. Consultant's retention
hereunder shall terminate immediately upon the death of Goldberg. In the event
that Goldberg is unable to furnish services to Consultant in carrying out
Consultant's duties hereunder by reason of any disability or incapacity (due to
any physical or mental injury, illness or defect) for an aggregate of 90 days in
any consecutive 12-month period, the Company shall have the right to terminate
Consultant's retention hereunder within 60 days after the 90th day of Goldberg's
disability or incapacity by giving Consultant notice to such effect at least 30
days prior to the date of termination set forth in such notice, and on such date
such retention shall terminate.

      12.   Termination by the Company with or without Cause.

            (a)   In addition to any other rights or remedies provided by law or
in this Agreement, the Company may terminate Consultant's retention as a
Consultant for "cause" under this Agreement if:

                  (i)   Consultant or Goldberg is convicted of, or enters a plea
of guilty or nolo contendere (which plea is not withdrawn prior to its approval
by the court) to, a criminal offense, except minor road traffic offenses; or

                  (ii)  the Company's Board of Directors determines, after due
inquiry, that Consultant or Goldberg has:

                  (A)   committed fraud against, or embezzled or misappropriated
            funds or other assets of, the Company (or any subsidiary thereof);

                  (B)   violated, or caused the Company (or any subsidiary
            thereof) or any officer, employee or other agent thereof, or any
            other Person to violate, any material law, regulation or ordinance,
            which violation has or would reasonably be expected to have a
            significant detrimental effect on the Company or its Affiliates, or
            any material rule, regulation, policy or practice established by the
            Board of Directors of the Company;

                  (C)   on a persistent or recurring basis, (A) failed properly
            to perform Consultant's duties hereunder or (B) acted in a manner
            detrimental to, or adverse to the interests of, either the Company
            or its Affiliates.

            (b)   The Company may effect such termination for cause under
paragraph (a) of this Section by giving Consultant notice to such effect,
setting forth in reasonable detail the factual basis for such termination, at
least 20 days prior to the date of termination set forth therein; provided
however that Consultant may avoid such termination if Consultant, prior to the
date of termination set forth in such notice, cures or explains to the
reasonable satisfaction of the Company's Board of Directors the factual basis
for termination set forth therein.



                                       6

            (c)   In making any determination pursuant to Section 12(a) as to
the occurrence of any act or event described in clauses (A) to (D) of paragraph
(ii) thereof (each, a "For Cause Event"), each of the following shall constitute
convincing evidence of such occurrence:

                  (i)   if Consultant or Goldberg is made a party to, or target
of, any proceeding arising under or relating to any For Cause Event, Consultant
or Goldberg's knowing failure to defend against such proceeding or to answer any
complaint filed against him therein, or to deny any claim, charge, averment or
allegation thereof asserting or based upon the occurrence of a For Cause Event;

                  (ii)  any judgment, award, order, decree or other adjudication
or ruling in any such proceeding finding or based upon the occurrence of a For
Cause Event; or

                  (iii) any settlement or compromise of, or consent decree
issued in, any such proceeding in which Consultant or Goldberg expressly admits
the occurrence of a For Cause Event; provided that none of the foregoing shall
be dispositive or create an irrefutable presumption of the occurrence of such
For Cause Event; and provided further that the Company's Board of Directors may
rely on any other factor or event as convincing evidence of the occurrence of a
For Cause Event.

      13.   Termination by Consultant for Good Reason. In addition to any other
rights or remedies provided by law or in this Agreement, Consultant may
terminate its retention hereunder if (a) the Company violates, or fails to
perform or satisfy any material covenant, condition or obligation required to be
performed or satisfied by it hereunder or, (b) as a result of any action or
failure to act by the Company, there is a material change in the nature or scope
of Consultant's duties or obligations, or (c) relocation without Consultant's
consent from the location set forth in Section 6 hereof, by giving the Company
notice to such effect, setting forth in reasonable detail the factual basis for
such termination, at least 20 days prior to the date of termination set forth
therein; provided however that the Company may avoid such termination if it,
prior to the date of termination set forth in such notice, cures or explains to
the reasonable satisfaction of Consultant the factual basis for termination set
forth therein. The termination by Consultant of its retention as a consultant
pursuant to this Section 13 shall not constitute or be deemed to constitute for
any purpose a "voluntary resignation" of such retention as a consultant.

      14.   Compensation upon Termination.

            (a)   Upon termination of Consultant's retention as a consultant
hereunder, it shall be entitled to receive, in any case, any compensation or
other amount due to it pursuant to Section 3 or 4 in respect of its retention
prior to the Termination Date, and from and after the Termination Date, except
as otherwise provided in Section 14(b), the Company shall have no further
obligation to Consultant or Goldberg hereunder. Any amount payable to Consultant
pursuant to this Section 14(a) upon the termination of the retention hereunder
shall be paid promptly, and in any event within 10 days, after the Termination
Date.

            (b)   If prior to the first anniversary of the date of this
Agreement, Consultant terminates its retention hereunder for Good Reason
pursuant to Section 13, or if the Company terminates Consultant's retention
hereunder other than upon Goldberg's disability or incapacity pursuant to
Section 11 and other than for cause pursuant to Section 12(a) through (c), the
Company shall make to Consultant payments at the times and in the amounts
provided herein for the payment of the Base Consulting Fee and Incentive
Consulting Bonus in effect as of the Termination Date during the period, if any,
beginning on the day after the Termination Date and ending on the first
anniversary of the date of this Agreement.



                                       7

      15.   Other Consequences of Termination.

            (a)   Upon the termination of its retention as a Consultant (for
whatever reason and howsoever arising) the Consultant shall immediately repay
all outstanding debts or loans due to the Company or any Affiliate by the
Consultant or Goldberg, and the Company is hereby authorised to deduct from the
Base Consulting Fee or the Incentive Consulting Bonus payments due to the
Consultant a sum in repayment of all or any part of any such debts or loans.

      16.   Limitation of Authority. Except as expressly provided herein, no
provision hereof shall be deemed to authorize or empower either party hereto to
act on behalf of, obligate or bind the other party hereto.

      17.   Notices. Any Notice or demand required or permitted to be given or
made hereunder to or upon any Party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, telecopy
(confirmed orally), telex or similar electronic means, provided that a written
copy thereof is sent on the same day by postage-paid first-class mail, to such
Party at the following address:

            to JAKKS:         22619 Pacific Coast Highway
                              Malibu, California 90265
                              Attn: President
                              Fax:  (310) 456-7099

            with a copy to:   Feder, Kaszovitz, Isaacson,
                              Weber, Skala, Bass & Rhine LLP
                              750 Lexington Avenue
                              New York, New York 10022
                              Attn: Murray L. Skala, Esq.
                              Fax:  (212) 888-7776

            to Consultant or Goldberg:

                              8 North Bank Court
                              Thornhill, Ontario, Canada L3T757
                              Fax:  905-731-1570

            with a copy to:   Brown Raysman Millstein
                              Felder & Steiner LLP
                              900 Third Avenue
                              New York, New York 10022
                              Attn: Joel M. Handel, Esq.
                              Fax:  (212) 812-3310

or such other address as any Party hereto may at any time, or from time to time,
direct by Notice given to the other Parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a) (i), the date of
the receipt; in the case of clause (a) (ii), three business days after such
Notice or demand is sent; and, in the case of clause (b), the business day next
following the date such Notice or demand is sent.

      18.   Amendment. Except as otherwise provided herein, no amendment of this
Agreement shall be valid or effective, unless in writing and signed by or on
behalf of the parties hereto.



                                       8

      19.   Waiver. No course of dealing or omission or delay on the part of
either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.

      20.   Governing Law. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the laws of the State of New York without
regard to principles of choice of law or conflict of laws. Each Party to this
Agreement submits to the jurisdiction of the courts of the State of New York,
located in New York County, New York, United States of America, and to the
jurisdiction of the United States District Court for the Southern District of
New York, New York, New York, United States of America with respect to any
matter arising out of this Agreement, waives any objection to venue in the
Counties of New York, State of New York, or such District, and agrees that
service of any summons, complaint, Notice or other process relating to such
proceeding may be effected in the manner provided by Section 18 hereof. If
service of process is required to be made within the United States of America,
Consultant or Goldberg each appoints as its agent for service of any process the
firm of Brown, Raysman, Millstein, Felder & Steiner LLP.

      21.   Severability. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

      22.   Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute one and
the same agreement.

      23.   Further Assurances. Each Party hereto shall promptly execute,
deliver, file or record such agreements, instruments, certificates and other
documents and perform such other and further acts as any other Party hereto may
reasonably request or as may otherwise be reasonably necessary or proper, to
carry out the provisions of this Agreement.

      24.   Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and shall not be deemed, to create or
confer any right or interest for the benefit of any Person not a Party hereto.

      25.   Assignment. Consultant's and Goldberg's obligations under this
Agreement may not be assigned without the prior written consent of the Company,
and any purported assignment without such consent shall be void and without
effect.

      26.   Titles and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.

      27.   Remedies. In the event of any actual or prospective breach or
default under this Agreement by either Party hereto, the other Party shall be
entitled to equitable relief, including remedies in the nature of rescission,
injunction and specific performance. All remedies hereunder are cumulative and
not exclusive, and nothing herein shall be deemed to prohibit or limit either
party from pursuing any other remedy or relief available at law or in equity for
such actual or prospective breach or default, including the recovery of damages.



                                       9

      28.   Assignment. This Agreement, and each right, interest and obligation
hereunder, may not be assigned by either party hereto without the prior written
consent of the other party hereto, and any purported assignment without such
consent shall be void and without effect, except that this Agreement shall be
assigned to, and assumed by, any Person with or into which the Company merges or
consolidates, or which acquires all or substantially all of its assets, or which
otherwise succeeds to and continues the Company's business substantially as an
entirety. Except as otherwise expressly provided herein or required by law,
Consultant shall not have any power of anticipation, assignment or alienation of
any payments required to be made to it hereunder, and no other Person may
acquire any right or interest in any thereof by reason of any purported sale,
assignment or other disposition thereof, whether voluntary or involuntary, any
claim in a bankruptcy or other insolvency proceeding against Consultant, or any
other ruling, judgment, order, writ or decree.

      29.   Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.

      30.   References. The terms "herein," "hereto," "hereof," "hereby," and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Section or other part hereof.

      31.   No Presumptions. Each Party hereto acknowledges that it has had an
opportunity to consult with counsel and has participated in the preparation of
this Agreement. No Party hereto is entitled to any presumption with respect to
the interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other Party hereto drafted or
controlled the drafting of this Agreement.

      32.   Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, commitments or arrangements relating thereto.



                                       10

      IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the day and year first above written.

                              JAKKS PACIFIC, INC.


                              By;   /s/ JOEL M. BENNETT
                                    --------------------
                                    Name:  Joel M. Bennett
                                           ---------------
                                    Title: Exec. V.P./C.F.O.
                                           -----------------



                              /s/ HARVEY GOLDBERG
                              -------------------
                              Harvey Goldberg


                              1515037 ONTARIO LTD.


                              By:   /s/ HARVEY GOLDBERG
                                    --------------------
                                    Name:  Harvey Goldberg
                                           ---------------
                                    Title: President
                                           ---------



                                       11


                                                                      EXHIBIT 11


                              EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT executed on March 11, 2002 by and between JAKKS
Pacific, Inc., a Delaware corporation ("JAKKS" or the "Company") with its
offices at 22619 Pacific Coast Highway, Malibu, CA 90265 and Kenneth N. Price,
an individual residing at 205 East 22nd Street, Apt. 4E, New York, New York
10010 ("Executive").


                              W I T N E S S E T H :


      WHEREAS, concurrently herewith JAKKS has acquired a majority of the
outstanding shares of capital stock of Toymax International Inc., a Delaware
corporation ("Toymax International") from certain shareholders of Toymax
International (the "Toymax Shares"), and

      WHEREAS, Executive and Toymax International are parties to an employment
agreement dated January 1, 2000 (the "Toymax Employment Agreement") and in
consideration for JAKKS agreement to enter into this Agreement Executive has
agreed to terminate the Toymax Employment Agreement and replace it with this
employment agreement effective simultaneously with JAKKS' acquisition of the
Toymax Shares pursuant to the Stock Purchase Agreement (the "Effective Date"),
and

      WHEREAS, simultaneously with the Effective Date, JAKKS desires to employ
Executive on the terms and subject to the conditions hereinafter set forth, and
Executive desires so to be employed;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the Company and Executive agree as follows:

      1.    Offices and Duties. Commencing with the Effective Date, the Company
hereby employs Executive during the Term (as hereinafter defined) to serve as a
Senior Vice President Sales-Toymax Division of the Company, responsible for
managing sales of the Company's Toymax division (including the product lines
produced by Toymax International as part of the Toymax, Funnoodle and Go Fly A
Kite lines) and to perform such duties in connection therewith on behalf of the
Company as the Board of Directors of the Company or a senior executive officer
of the Company may from time to time direct that are consistent with Executive's
position. The Board of Directors of the Company may elect or designate Executive
to serve in such other corporate offices of the Company or a subsidiary thereof
as they may from time to time deem necessary, proper or advisable with the
consent of Executive, which shall not be unreasonably withheld or delayed.
Executive hereby accepts such employment and agrees that throughout the Term he
shall faithfully, diligently and to the best of his ability, in furtherance of
the business of the Company, perform the duties assigned to him or incidental to
the offices assumed by him pursuant to this Section. Executive shall devote all
of his business time and attention to the business and affairs of the Company.
Executive shall at all times be subject to the direction and control of the
Board of Directors of the Company and observe and comply with such rules,
regulations, policies and practices as the Board of Directors of the Company may
from time to time reasonably establish in the exercise of their good faith
discretion.

      2.    Term. The employment of Executive hereunder shall commence on the
Effective Date and continue for a term ending on December 31, 2002 (the "Term"),
subject to earlier termination upon the terms and conditions provided elsewhere
herein. As used herein, "Termination Date" means the last day of the Term.

      3.    Compensation.

            (a)   As compensation for his services hereunder, the Company shall
pay to Executive during the Term a base salary at the rate of $338,214.62 per
annum (the "Base Salary"), such Base Salary to be paid in substantially equal
installments no less often than monthly in accordance with the Company's normal
payroll practices, subject to required tax withholding.

            (b)   The Executive may also receive such bonus during the Term as
the Board of Directors of the Company may determine in its discretion, provided,
however, that unless Executive's employment is terminated by the Company with
cause (as defined in Section 13 below) or by Executive without Good Reason (as
defined in Section 14 below), the Executive shall be entitled to receive (i) a
bonus of not less than $100,000.00 (payable not later than January 7, 2003), and
(ii) if Net Sales in North America of the Toy Max, Go Fly A Kite and Funnoodle
product lines by the Company and Toymax International and its Affiliates for the
twelve (12) month period ended December 31, 2002 is at least $85,000,000.00, an
additional bonus(payable not later than February 28, 2003), of not less than
$50,000.00 and, if the senior executive officers and the Board of Directors of
the Company determine in their sole discretion that his overall performance
merits a higher amount, such additional bonus may be up to $100,000.00. "Net
Sales" shall mean gross sales less returns, discounts, rebates and allowances
for markdowns and defective merchandise. Net Sales shall be calculated by the
Chief Financial Officer of the Company consistent with the methods used to
calculate Net Sales in the financial statements issued by the Company as part of
its periodic reporting under the United States Securities and Exchange Act of
1934, as amended. The obligation to pay the bonuses provided for under this
paragraph (b) shall survive the termination of this Agreement.

            (c)   In addition to his Base Salary and the bonuses provided above,
Executive shall be entitled to participate, to the extent he is eligible under
the terms and conditions thereof, in any stock, stock option or other equity
participation plan and any profit-sharing, pension, retirement, insurance,
medical service or other employee benefit plan generally available to other
executive officers of the Company and to receive any other benefits or
perquisites generally available to the executive officers of the Company
pursuant to any employment policy or practice, which may be in effect from time
to time during the Term. The Company shall be under no obligation hereunder to
institute or to continue any such employee benefit plan or employment policy or
practice.

            (d)   As used in this Agreement, the term "Affiliate" of a Person
means another Person directly or indirectly controlling, controlled by, or under
common control with, such Person; for this purpose, "control" of a Person means
the power (whether or not exercised) to direct the policies, operations or
activities of such Person by virtue of the ownership of, or right to vote or
direct the manner of voting of, securities of such Person, or pursuant to
agreement or law or otherwise.

            (e)   As used in this Agreement, the term "Person" includes without
limitation a natural person, corporation, joint stock company, limited liability
company, partnership, joint venture, association, trust, governmental authority,
or any group of the foregoing acting in concert.

      4.    Expenses. The Company shall provide Executive with a monthly
automobile allowance equal to US$600.00 per month to reimburse Executive for the
cost of leasing or purchasing an automobile, use of the automobile for Company
business, and expenses of repair, maintenance, parking and other expenses
incidental to such use. The Company shall pay directly, or advance funds to
Executive or reimburse Executive for, all expenses reasonably incurred by him in
connection with the performance of his duties hereunder and the business of the
Company, upon the submission to the Company of itemized expense reports,
receipts or vouchers in accordance with its then customary policies and
practices.


                                       2

      5.    Location. Except for travel and temporary accommodation reasonably
required to perform his services hereunder and travel as may reasonably be
requested by JAKKS to its principal office in the United States (currently in
Malibu, California, USA) or to its offices in New York, New York, USA, Executive
shall not be required to perform his services hereunder at any location other
than an office he maintains at the offices of Toymax International in Plainview,
New York, or, if requested to do so by the Company, at the offices of the
Company in New York, New York. The Parties acknowledge and agree that any
permanent relocation of the Executive's regular office to the Company's offices
in Malibu, California shall require the mutual agreement of the Company and the
Executive on such terms as the Parties agree to in connection therewith, but any
failure to agree on such relocation shall not affect the continued effectiveness
and enforceability of this Agreement, it being understood and agreed that
neither Party has made any commitment or representation to the other regarding
such relocation. JAKKS may request Executive's attendance at meetings at JAKKS'
offices in Malibu, California or New York, New York, or to participate in other
activities relating to the Company and its business in Malibu, California or New
York, New York, provided that the Executive shall not be required to stay at
such locations for more than seven (7) working days in any one (1) calendar
month.

      6.    Office. The Company shall provide Executive with suitable office
space, furnishings and equipment, secretarial and clerical services and such
other facilities and office support as are reasonably necessary for the
performance of his services hereunder.

      7.    Vacation. Executive shall be entitled to four (4) weeks paid
vacation during each year of his employment hereunder, such vacation to be taken
at such time or times as shall be agreed upon by Executive and the Company. The
Company acknowledges that Executive would like to take one week of vacation
during October 2002, and the Company agrees to use reasonable efforts to honor
such request, subject to the business needs of the Company as determined by the
senior executive officers of the Company. Vacation time shall not be cumulative
from year to year.

      8.    Key-Man Insurance. JAKKS shall have the right from time to time to
purchase, increase, modify or terminate insurance policies on the life of
Executive for the benefit of JAKKS in such amounts as JAKKS may determine in its
sole discretion. In connection therewith, Executive shall, at such time or times
and at such place or places as JAKKS may reasonably direct, submit himself to
such physical examinations and execute and deliver such documents as JAKKS may
deem necessary or appropriate.

      9.    Confidential Information.

            (a)   Executive shall hold in a fiduciary capacity for the benefit
of the Company all confidential or proprietary information relating to or
concerned with the Company and its Affiliates or their products, prospective
products, operations, business and affairs ("Confidential Information"), and he
shall not, at any time hereafter, use or disclose any Confidential Information
to any person other than to the Company or its designees or except as may
otherwise be required in connection with the business and affairs of the
Company, and in furtherance of the foregoing Executive agrees that:

                  (i)   Executive will receive, maintain and hold Confidential
Information in strict confidence and will use the same level of care in
safeguarding it that he uses with his own confidential material of a similar
nature;

                  (ii)  Executive will take all such steps as may be reasonably
necessary to prevent the disclosure of Confidential Information; and

                  (iii) Executive will not utilize Confidential Information
without first having obtained the Company's consent to such utilization.


                                       3

            (b)   The commitments set forth in paragraph 9(a) shall not extend
to any portion of Confidential Information:

                  (i)   that is generally available to the public;

                  (ii)  that was known to the Executive prior to disclosure
(excluding information regarding the Company or its Affiliates which would
otherwise be Confidential Information that was disclosed to Executive during the
period of his employment by the Company or its predecessors or their respective
Affiliates (including Toymax International Inc. and its Affiliates) or that was
disclosed to Executive in connection with his acting as a director of Toymax
International Inc. or its predecessors or their respective Affiliates, and
excluding any other non-public information concerning products under development
by or for the Company or its Affiliates (including Toymax International Inc. and
its Affiliates);

                  (iii) that was not acquired, directly or indirectly and/or in
any manner, from the Company or any of its Affiliates (including Toymax
International Inc. and its Affiliates) and which Executive lawfully had in his
possession prior to the date of this Agreement;

                  (iv)  that, hereafter, through no act or omission on the part
of the Executive, becomes information generally available to the public.

            (c)   At any time upon written request by the Company (i) the
Confidential Information, including any copies, shall be returned to the
Company, and (ii) all documents, drawings, specifications, computer software,
and any other material whatsoever in the possession of the Executive that
relates to such Confidential Information, including all copies and/or any other
form of reproduction and/or description thereof made by Executive shall, at the
Company's option, be returned to the Company or destroyed.

            (d)   In the event that Executive becomes legally compelled (by
deposition, interrogatory, request of documents, subpoena, civil investigative
demand or similar process) to disclose any of the Confidential Information, the
Executive shall provide the Company with prompt prior written notice of such
requirement so that it may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement. In the event that such
protective order or other remedy is not obtained, or the Company waives
compliance with the provisions hereof, the Executive agrees to furnish only such
portion of the Confidential Information which is legally required to be
furnished.

      10.   Intellectual Property.

            (a)   Any patent, claim of copyright, trademark, trade name, brand
name, service mark, logo, symbol, trade dress or design, or representation or
expression of any thereof, or registration or application for registration
thereof, or any other improvement, development or discovery, invention, trade
secret, process, system, technical information, know-how, proprietary right or
intellectual property developed, conceived of, invented or otherwise produced by
Executive, alone or with others in connection with the design, manufacture and
marketing of the products of the Company and its Affiliates, or conceived,
developed, created or made by Executive, alone or with others, during the Term
and applicable to the business of the Company or its Affiliates, whether or not
patentable or registrable (collectively referred to as "Trade Rights") shall
become the sole and exclusive property of the Company.

            (b)   Executive shall disclose all Trade Rights promptly and
completely to the Company and shall, during the Term or thereafter, (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and procuring such applications for patents,
trademarks, service


                                       4

marks or copyrights as the Company, in its sole discretion, may desire to
prosecute, and (iii) give the Company all assistance it may reasonably require,
including the giving of testimony in any Proceeding (as hereinafter defined), in
other to obtain, maintain and protect the Company's right therein and thereto;
provided that the Company shall bear the entire cost and expense of such
assistance, including without limitation paying the Executive reasonable
compensation for any time or effort expended by him in connection with such
assistance after the Termination Date. In furtherance of the foregoing,
Executive acknowledges and agrees that for all purposes of U.S. and foreign
Copyright Laws, the Trade Rights and any inventions, discoveries, enhancements
or improvements to any tangible or intangible property, resulting from the
services performed by Executive for the Company or its Affiliates (for the
purposes of this paragraph all of the foregoing is collectively referred to as
the "Work"), and any and all elements thereof, shall be deemed to constitute
"works for hire" belonging to the Company within the meaning of Title 17, United
States Code, Section 101, and any comparable provisions of the law of any other
jurisdiction, such that all right, title and interest therein, including,
without limitation, copyrights and exclusive rights under copyright, vest in the
Company. Executive hereby transfers and conveys to the Company the exclusive,
world-wide, royalty-free, paid-up right to exploit, use, develop, license, and
sell products and services relating to or derived from the Work; and the
exclusive right, title and interest in and to all inventions, improvements,
patent applications and letters patent, "know-how", and all intellectual
property and other rights, tangible or intangible, which relate to or are based
upon or derived from the Work; and to all information, documents, and
specifications that relate to the Work. If the Work or any of the elements
thereof is deemed not to be "works for hire" within the meaning of Title 17,
United States Code, Section 101, then Executive hereby assigns and transfers to
the Company all right, title and interest in and to the Work, including rights
throughout the world for good and valuable consideration, receipt of which
Executive hereby acknowledges. For the sole and exclusive purpose of perfecting
and documenting such limited assignment and transfer, Executive hereby grants to
the Company an irrevocable power of attorney.

      11.   Restrictive Covenants.

            (a)   During the Term, and unless Executive terminates his
employment for "good reason" pursuant to Section 14, for a further period ending
one (1) year after the Termination Date, Executive shall not, directly or
indirectly through any Affiliate or other intermediary (a) manufacture, produce,
sell, market or otherwise promote any Competitive Product or serve as a partner,
member, manager, director, officer or employee of, or consultant or advisor to,
or in any manner own, control, manage, operate or otherwise participate or
invest in, or be connected with any Person that engages in the marketing or sale
of Competitive Products, or authorize the use of its name in connection
therewith, or (b) for himself or on behalf of any other Person, employ, engage
or retain any Person who at any time during the preceding 12 month period shall
have been an employee of the Company or its Affiliates, or contact any supplier,
customer or employee of the Company or its Affiliates for the purpose of
soliciting or diverting any such supplier, customer or employee from the Company
or its Affiliates. The foregoing provisions notwithstanding, Executive may
invest his funds in securities of an issuer if the securities of such issuer are
listed for trading on a registered securities exchange or actively traded in the
over-the-counter market and Executive's and his Affiliates' aggregate holdings
therein represent less than 1% of the total number of shares or principal amount
of the securities of such issuer then outstanding. Executive acknowledges that
the provisions of this Section 11, and the period of time, lack of specific
geographic area given the international nature of the business of the Company
and its Affiliates and the scope and type of restrictions on his activities set
forth herein, are reasonable and necessary for the protection of the Company and
are an essential inducement to JAKKS entering into this Agreement.

            (b)   As used herein, the term "Competitive Product" means any
product or service that is substantially similar to a product or service
developed, marketed, sold by the Company or its Affiliates during the period of
Executive's employment by the Company.

            (c)   Executive acknowledges that the type of services the Company
will require from him are of an intellectual and technical character which will
require the disclosure of confidential and


                                       5

proprietary information of the Company to him and may result in the creation by
him of information which is confidential and proprietary to the Company, and
accordingly that the restrictive covenants contained herein are necessary in
order to protect and maintain the business and assets and goodwill of the
Company. Executive also acknowledges that the type of services that he has
performed for Toymax International and its Affiliates as an employee of Toymax
International were of an intellectual and technical character and required the
disclosure of confidential and proprietary information of Toymax International
and its Affiliates to him and resulted in the creation by him of information
which is confidential and proprietary to Toymax International and its
Affiliates, and accordingly that the restrictive covenants contained herein are
necessary in order to protect and maintain the business and assets and goodwill
of Toymax International whose shares are being purchased by JAKKS. Executive
acknowledges that the business of the Company and its Affiliates, including
Toymax International and its Affiliates, extends beyond the geographic area of
the State of New York and accordingly, it is reasonable that the restrictive
covenants set forth above are not limited by specific geographic area but by the
location of the customers of the Company and its Affiliates. Executive
acknowledges that the remedy at law for any breach of this agreement by him will
be inadequate and that, accordingly, the Company shall, in addition to all other
available remedies (including without limitation seeking such damages as it can
show it has sustained by reason of such breach), be entitled to injunctive
relief without being required to post bond or other security and without having
to prove the inadequacy of the available remedies at law.

      12.   Termination Upon Death or Disability. Executive's employment
hereunder shall terminate immediately upon his death. In the event that
Executive is unable to perform his duties hereunder by reason of any disability
or incapacity (due to any physical or mental injury, illness or defect) for an
aggregate of 90 days in any consecutive 12-month period, the Company shall have
the right to terminate Executive's employment hereunder within 60 days after the
90th day of his disability or incapacity by giving Executive notice to such
effect at least 30 days prior to the date of termination set forth in such
notice, and on such date such employment shall terminate.

      13.   Termination by the Company with or without Cause.

            (a)   In addition to any other rights or remedies provided by law or
in this Agreement, the Company may terminate Executive's employment for "cause"
under this Agreement if:

                  (i)   Executive is convicted of, or enters a plea of guilty or
nolo contendere (which plea is not withdrawn prior to its approval by the court)
to a felony or other crime, a criminal offense, involving the acts identified in
paragraph (ii) below; or

                  (ii)  the Company's Board of Directors determines, after due
inquiry, that Executive has:

                  (A)   committed fraud against, or embezzled or misappropriated
            funds or other assets of, the Company (or any subsidiary thereof);

                  (B)   violated, or caused the Company (or any subsidiary
            thereof) or any officer, employee or other agent thereof, or any
            other Person to violate, any material law, regulation or ordinance,
            which violation has or would reasonably be expected to have a
            significant detrimental effect on the Company or its Affiliates, or
            any material rule, regulation, policy or practice established by the
            Board of Directors of the Company;

                  (C)   on a persistent or recurring basis, (A) failed properly
            to perform his duties hereunder or (B) acted in a manner detrimental
            to, or adverse to the interests of, either the Company or its
            Affiliates; or

                  (D)   violated, or failed to perform or satisfy any material
            covenant, condition or obligation required to be performed or
            satisfied by Executive hereunder.



                                       6

            (b)   The Company may effect such termination for cause under
paragraph (a) of this Section by giving Executive notice to such effect, setting
forth in reasonable detail the factual basis for such termination, at least
thirty (30) days prior to the date of termination set forth therein; provided
however that Executive may avoid such termination if Executive, prior to the
date of termination set forth in such notice, cures or explains to the
reasonable satisfaction of the Company's Board of Directors the factual basis
for termination set forth therein.

            (c)   In addition to any other rights provided in this Agreement,
the Company may terminate Executive's employment under this Agreement without
cause and for no reason or any reason upon six (6) months prior notice given at
any time after the six month anniversary of the date of this Agreement.

      14.   Termination by Executive for Good Reason. In addition to any other
rights or remedies provided by law or in this Agreement, Executive may terminate
his employment hereunder if (a) the Company violates, or fails to perform or
satisfy any material covenant, condition or obligation required to be performed
or satisfied by it hereunder or, (b) as a result of any action or failure to act
by the Company, there is a material change in the nature or scope of the duties,
obligations, rights or powers of Executive's employment, or (c) relocation
without Executive's consent from the location set forth in Section 5 hereof, by
giving the Company notice to such effect, setting forth in reasonable detail the
factual basis for such termination, at least 20 days prior to the date of
termination set forth therein; provided however that the Company may avoid such
termination if it, prior to the date of termination set forth in such notice,
cures or explains to the reasonable satisfaction of Executive the factual basis
for termination set forth therein. The termination by Executive of his
employment pursuant to this Section 14 shall not constitute or be deemed to
constitute for any purpose a "voluntary resignation" of his employment.

      15.   Compensation upon Termination.

            (a)   Upon termination of Executive's employment hereunder, he shall
be entitled to receive, in any case, any compensation or other amount due to him
pursuant to Section 3 or 4 in respect of his employment prior to the Termination
Date, and from and after the Termination Date, except as otherwise provided in
Section 15(b), the Company shall have no further obligation to Executive
hereunder. Any amount payable to Executive pursuant to this Section 15(a) upon
termination of his employment hereunder shall be paid promptly, and in any event
within 10 days, after the Termination Date.

            (b)   If prior to December 31, 2002, Executive terminates his
employment hereunder for Good Reason pursuant to Section 14 or if the Company
terminates his employment hereunder other than upon his disability or incapacity
pursuant to Section 12 and other than for cause pursuant to Section 13(a)
through (c, the Company shall make to Executive payments at the times and in the
amounts provided herein for the payment of his Base Salary during the period, if
any, beginning on the day after the Termination Date and ending on December 31,
2003 (such Base Salary payments, however, to be at the rate of $355,125.35 as of
January 1, 2003), and the minimum bonuses payable at the times and in the
amounts provided under paragraph 3(b).

            (c)   If Executive and the Company are unable to agree upon terms
for the continuation of Executive's employment for the one (1) year period
commencing January 1, 2003 and ending December 31, 2003 and Executive's
employment terminates at any time after December 31, 2002 other than by reason
of termination for cause by the Company, the Company shall make to Executive
payments at the times and in the amounts provided herein for the payment of his
Base Salary (but at the increased annual rate of $355,125.35) during the period,
if any, beginning on the day after the Termination Date and ending on December
31, 2003.



                                       7

            (d)   If Executive shall die prior to Executive's receipt of all
payments required under this Agreement, the Company shall pay Executive's
designated beneficiary or, if there is no designated beneficiary, his estate all
such amounts that would have otherwise been payable to Executive under this
Agreement as of the date of his death.

      16.   Other Consequences of Termination.

            (a)   Upon the termination of his employment (for whatever reason
and howsoever arising) the Executive shall:

                  (i)   at the request of the Board of Directors of the Company
immediately resign without claim for compensation from any office held by him in
the Company or any Affiliate (but without prejudice to any claim for damages for
breach of this Agreement or for any compensation which otherwise may be payable
pursuant to this Agreement or otherwise) and in the event of his failure to do
so the Company is hereby irrevocably authorized to appoint some person in his
name and on his behalf to sign and deliver such resignations to the Board; and

                  (ii)  immediately repay all outstanding debts or loans due to
the Company or any Affiliate, and the Company is hereby authorized to deduct
from Base Salary payments due to the Executive a sum in repayment of all or any
part of any such debts or loans.

      17.   Limitation of Authority. Except as expressly provided herein, no
provision hereof shall be deemed to authorize or empower either party hereto to
act on behalf of, obligate or bind the other party hereto.

      18.   Termination of Employment Agreement with Toymax International, Inc.
Executive, JAKKS and Toymax International, by its signature at the end of this
Agreement, agree that the Toymax Employment Agreement is hereby terminated as of
the date hereof. Executive acknowledges that upon the Effective Date, he shall
have no further claim for salary, bonus, vacation pay or any other form of
compensation or benefit due to him from Toymax International or any of its
Affiliates or any equity or other interest in the Company or any of its
Affiliates (other than stock options granted to Executive prior to the date
hereof under Toymax International's stock option plan), including but not
limited to the payments under the Executive Bonus Plan referred to in the
Employment Agreement. Executive acknowledges that upon the Effective Date the
life insurance, disability and accident insurance and health insurance benefits
referred to in the Toymax Employment Agreement shall be terminated, provided
that Executive may arrange for continuation of such coverage and his assumption
of all liability with respect thereto in accordance with the provisions of such
policies at his sole cost and expense.

      19.   Notices. Any Notice or demand required or permitted to be given or
made hereunder to or upon any Party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, telecopy
(confirmed orally), telex or similar electronic means, provided that a written
copy thereof is sent on the same day by postage-paid first-class mail, to such
Party at the following address:

to JAKKS:         22619 Pacific Coast Highway
                  Malibu, California 90265
                  Attn: President
                  Fax:  (310) 456-7099

with a copy to:   Feder, Kaszovitz, Isaacson,
                  Weber, Skala, Bass & Rhine LLP
                  750 Lexington Avenue


                                       8

                  New York, New York 10022
                  Attn: Murray L. Skala, Esq.
                  Fax:  (212) 888-7776


to Executive:
                  Kenneth N. Price
                  205 E. 22nd Street, Apt. 4E
                  New York, New York 10010

or such other address as any Party hereto may at any time, or from time to time,
direct by Notice given to the other Parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a) (i), the date of
the receipt; in the case of clause (a) (ii), three business days after such
Notice or demand is sent; and, in the case of clause (b), the business day next
following the date such Notice or demand is sent.

      20.   Amendment. Except as otherwise provided herein, no amendment of this
Agreement shall be valid or effective, unless in writing and signed by or on
behalf of the parties hereto.

      21.   Waiver. No course of dealing or omission or delay on the part of
either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.

      22.   Governing Law. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the laws of the State of New York without
regard to principles of choice of law or conflict of laws. Each Party to this
Agreement submits to the jurisdiction of the courts of the State of New York,
located in New York County, New York, United States of America, and to the
jurisdiction of the United States District Court for the Southern District of
New York, New York, New York, United States of America with respect to any
matter arising out of this Agreement, waives any objection to venue in the
Counties of New York, State of New York, or such District, and agrees that
service of any summons, complaint, Notice or other process relating to such
proceeding may be effected in the manner provided by Section 19 hereof.

      23.   Severability. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

      24.   Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute one and
the same agreement.

      25.   Further Assurances. Each Party hereto shall promptly execute,
deliver, file or record such agreements, instruments, certificates and other
documents and perform such other and further acts as any other Party hereto may
reasonably request or as may otherwise be reasonably necessary or proper, to
carry out the provisions of this Agreement.

      26.   Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and


                                       9

shall not be deemed, to create or confer any right or interest for the benefit
of any Person not a Party hereto.

      27.   Assignment. Executive's obligations under this Agreement may not be
assigned without the prior written consent of the Company, and any purported
assignment without such consent shall be void and without effect.

      28.   Titles and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.

      29.   Remedies. In the event of any actual or prospective breach or
default under this Agreement by either Party hereto, the other Party shall be
entitled to equitable relief, including remedies in the nature of rescission,
injunction and specific performance. All remedies hereunder are cumulative and
not exclusive, and nothing herein shall be deemed to prohibit or limit either
party from pursuing any other remedy or relief available at law or in equity for
such actual or prospective breach or default, including the recovery of damages.

      30.   Assignment. This Agreement, and each right, interest and obligation
hereunder, may not be assigned by either party hereto without the prior written
consent of the other party hereto, and any purported assignment without such
consent shall be void and without effect, except that this Agreement shall be
assigned to, and assumed by, any Person with or into which the Company merges or
consolidates, or which acquires all or substantially all of its assets, or which
otherwise succeeds to and continues the Company's business substantially as an
entirety. Except as otherwise expressly provided herein or required by law,
Executive shall not have any power of anticipation, assignment or alienation of
any payments required to be made to him hereunder, and no other Person may
acquire any right or interest in any thereof by reason of any purported sale,
assignment or other disposition thereof, whether voluntary or involuntary, any
claim in a bankruptcy or other insolvency Proceeding against Executive, or any
other ruling, judgment, order, writ or decree.

      31.   Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.

      32.   References. The terms "herein," "hereto," "hereof," "hereby," and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Section or other part hereof.

      33.   No Presumptions. Each Party hereto acknowledges that it has had an
opportunity to consult with counsel and has participated in the preparation of
this Agreement. No Party hereto is entitled to any presumption with respect to
the interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other Party hereto drafted or
controlled the drafting of this Agreement.

      34.   Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, commitments or arrangements relating thereto.



                                       10

      IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the day and year first above written.

JAKKS PACIFIC, INC.


By:   /s/ JOEL M. BENNETT
      -------------------
      Name:  Joel M. Bennett
      Title: Exec. V.P./C.F.O.


/s/ KENNETH N. PRICE
- --------------------
Kenneth N. Price


By its signature below, Toymax International Inc. consents to the termination of
the Toymax Employment Agreement as provided in Section 18 of the within
agreement.

TOYMAX INTERNATIONAL INC.


By:   /s/ MICHAEL SABATINO
      --------------------
      Name:  Michael Sabatino
      Title: CFO



                                       11


                                                                      EXHIBIT 12


                              EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT executed on March 11, 2002 by and between JAKKS
Pacific, Inc., a Delaware corporation ("JAKKS" or the "Company") with its
offices at 22619 Pacific Coast Highway, Malibu, CA 90265 and Carmine Russo, an
individual residing at 4 Anna Court, West Islip, New York 11795 ("Executive").


                              W I T N E S S E T H :


      WHEREAS, concurrently herewith JAKKS has acquired a majority of the
outstanding shares of capital stock of Toymax International Inc., a Delaware
corporation ("Toymax International") from certain shareholders of Toymax
International (the "Toymax Shares"), and

      WHEREAS, Executive and Toymax International are parties to an employment
agreement dated January 1, 2000, as amended by a written agreement dated
February 16, 2000 (the "Toymax Employment Agreement") and in consideration for
JAKKS agreement to enter into this Agreement Executive has agreed to terminate
the Toymax Employment Agreement and replace it with this employment agreement
effective simultaneously with JAKKS' acquisition of the Toymax Shares pursuant
to the Stock Purchase Agreement (the "Effective Date"), and

      WHEREAS, simultaneously with the Effective Date, JAKKS desires to employ
Executive on the terms and subject to the conditions hereinafter set forth, and
Executive desires so to be employed;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the Company and Executive agree as follows:

      1.    Offices and Duties. Commencing with the Effective Date, the Company
hereby employs Executive during the Term (as hereinafter defined) to serve as a
Senior Vice President--Toymax Division of the Company, responsible for
performing executive and managerial functions regarding the operations of the
Company's Toymax division (including the product lines produced by Toymax
International as part of the Toymax, Funnoodle and Go Fly A Kite lines) and to
perform such duties in connection therewith on behalf of the Company as the
Board of Directors of the Company or the Company's Chairman Jack Friedman or
President Stephen Berman may from time to time direct. The Board of Directors of
the Company may elect or designate Executive to serve in such other corporate
offices of the Company or a subsidiary thereof as they may from time to time
deem necessary, proper or advisable. Executive hereby accepts such employment
and agrees that throughout the Term he shall faithfully, diligently and to the
best of his ability, in furtherance of the business of the Company, perform the
duties assigned to him or incidental to the offices assumed by him pursuant to
this Section. Executive shall devote all of his business time and attention to
the business and affairs of the Company. Executive shall at all times be subject
to the direction and control of the Board of Directors of the Company and
observe and comply with such rules, regulations, policies and practices as the
Board of Directors of the Company may from time to time reasonably establish in
the exercise of their good faith discretion.

      2.    Term. The employment of Executive hereunder shall commence on the
Effective Date and continue for a guaranteed minimum term ending on September
30, 2002 (the "Term"), and subject to earlier termination upon the terms and
conditions provided elsewhere herein. As used herein, "Termination Date" means
the last day of the Term.

      3.    Compensation.

            (a)   As compensation for his services hereunder, the Company shall
pay to Executive during the Term a base salary at the rate of $322,107.15 per
annum (the "Base Salary"), such Base Salary to be paid in substantially equal
installments no less often than monthly, subject to required tax withholding.

            (b)   The Executive may also receive such bonus during the Term as
the Board of Directors of the Company may determine in its discretion.

            (c)   In addition to his Base Salary and any bonus determined as
provided above, Executive shall be entitled to participate, to the extent he is
eligible under the terms and conditions thereof, in any stock, stock option or
other equity participation plan and any profit-sharing, pension, retirement,
insurance, medical service or other employee benefit plan generally available to
other executive officers of the Company and to receive any other benefits or
perquisites generally available to the executive officers of the Company
pursuant to any employment policy or practice, which may be in effect from time
to time during the Term. The Company shall be under no obligation hereunder to
institute or to continue any such employee benefit plan or employment policy or
practice.

            (d)   As used in this Agreement, the term "Affiliate" of a Person
means another Person directly or indirectly controlling, controlled by, or under
common control with, such Person; for this purpose, "control" of a Person means
the power (whether or not exercised) to direct the policies, operations or
activities of such Person by virtue of the ownership of, or right to vote or
direct the manner of voting of, securities of such Person, or pursuant to
agreement or law or otherwise.

            (e)   As used in this Agreement, the term "Person" includes without
limitation a natural person, corporation, joint stock company, limited liability
company, partnership, joint venture, association, trust, governmental authority,
or any group of the foregoing acting in concert.

      4.    Expenses. The Company shall provide Executive with a monthly
automobile allowance equal to US$600.00 per month to reimburse Executive for the
cost of leasing or purchasing an automobile, use of the automobile for Company
business, and expenses of repair, maintenance, parking and other expenses
incidental to such use. The Company shall pay directly, or advance funds to
Executive or reimburse Executive for, all expenses reasonably incurred by him in
connection with the performance of his duties hereunder and the business of the
Company, upon the submission to the Company of itemized expense reports,
receipts or vouchers in accordance with its then customary policies and
practices, pursuant to which expenses for which employees are entitled to
reimbursement are paid in the next succeeding payroll period after submission of
such documentation.

      5.    Location. Except for travel and temporary accommodation reasonably
required to perform his services hereunder and travel as may reasonably be
requested by JAKKS to its principal office in the United States (currently in
Malibu, California, USA) or to its offices in New York, New York, USA, Executive
shall not be required to perform his services hereunder at any location other
than an office he maintains at the offices of Toymax International in Plainview,
New York, or, if requested to do so by the Company, at the offices of the
Company in New York, New York. JAKKS may request Executive's attendance at
meetings at JAKKS' offices in Malibu, California or New York, New York, or to
participate in other activities relating to the Company and its business in
Malibu, California or New York, New York, provided that the Executive shall not
be required to stay at the offices in Malibu, California for more than four (4)
working days in any one (1) calendar month.


                                       2

      6.    Office. The Company shall provide Executive with suitable office
space, furnishings and equipment, secretarial and clerical services and such
other facilities and office support as are reasonably necessary for the
performance of his services hereunder.

      7.    Vacation. Executive shall be entitled to four (4) weeks paid
vacation during each year of his employment hereunder, such vacation to be taken
at such time or times as shall be agreed upon by Executive and the Company; such
vacation shall be pro-rated according to the relationship that the number of
months in the Term bears to twelve (12). Vacation time shall not be cumulative
from year to year.

      8.    Key-Man Insurance. JAKKS shall have the right from time to time to
purchase, increase, modify or terminate insurance policies on the life of
Executive for the benefit of JAKKS in such amounts as JAKKS may determine in its
sole discretion. In connection therewith, Executive shall, at such time or times
and at such place or places as JAKKS may reasonably direct, submit himself to
such physical examinations and execute and deliver such documents as JAKKS may
deem necessary or appropriate.

      9.    Confidential Information.

            (a)   Executive shall hold in a fiduciary capacity for the benefit
of the Company all confidential or proprietary information relating to or
concerned with the Company and its Affiliates or their products, prospective
products, operations, business and affairs ("Confidential Information"), and he
shall not, at any time hereafter, use or disclose any Confidential Information
to any person other than to the Company or its designees or except as may
otherwise be required in connection with the business and affairs of the
Company, and in furtherance of the foregoing Executive agrees that:

                  (i)   Executive will receive, maintain and hold Confidential
Information in strict confidence and will use the same level of care in
safeguarding it that he uses with his own confidential material of a similar
nature;

                  (ii)  Executive will take all such steps as may be reasonably
necessary to prevent the disclosure of Confidential Information; and

                  (iii) Executive will not utilize Confidential Information
without first having obtained the Company's consent to such utilization.

            (b)   The commitments set forth in paragraph 9(a) shall not extend
to any portion of Confidential Information:

                  (i)   that is generally available to the public;

                  (ii)  that was known to the Executive prior to disclosure
(excluding information regarding the Company or its Affiliates which would
otherwise be Confidential Information that was disclosed to Executive during the
period of his employment by the Company or its predecessors or their respective
Affiliates (including Toymax International Inc. and its Affiliates) or that was
disclosed to Executive in connection with his acting as a director of Toymax
International Inc. or its predecessors or their respective Affiliates, and
excluding any other non-public information concerning products under development
by or for the Company or its Affiliates (including Toymax International Inc. and
its Affiliates);

                  (iii) that was not acquired, directly or indirectly and/or in
any manner, from the Company or any of its Affiliates (including Toymax
International Inc. and its Affiliates) and which Executive lawfully had in his
possession prior to the date of this Agreement;



                                       3

                  (iv)  that, hereafter, through no act or omission on the part
of the Executive, becomes information generally available to the public.

            (c)   At any time upon written request by the Company (i) the
Confidential Information, including any copies, shall be returned to the
Company, and (ii) all documents, drawings, specifications, computer software,
and any other material whatsoever in the possession of the Executive that
relates to such Confidential Information, including all copies and/or any other
form of reproduction and/or description thereof made by Executive shall, at the
Company's option, be returned to the Company or destroyed.

            (d)   In the event that Executive becomes legally compelled (by
deposition, interrogatory, request of documents, subpoena, civil investigative
demand or similar process) to disclose any of the Confidential Information, the
Executive shall provide the Company with prompt prior written notice of such
requirement so that it may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Agreement. In the event that such
protective order or other remedy is not obtained, or the Company waives
compliance with the provisions hereof, the Executive agrees to furnish only such
portion of the Confidential Information which is legally required to be
furnished.

      10.   Intellectual Property.

            (a)   Any patent, claim of copyright, trademark, trade name, brand
name, service mark, logo, symbol, trade dress or design, or representation or
expression of any thereof, or registration or application for registration
thereof, or any other improvement, development or discovery, invention, trade
secret, process, system, technical information, know-how, proprietary right or
intellectual property developed, conceived of, invented or otherwise produced by
Executive, alone or with others in connection with the design, manufacture and
marketing of the products of the Company and its Affiliates, or conceived,
developed, created or made by Executive, alone or with others, during the Term
and applicable to the business of the Company or its Affiliates, whether or not
patentable or registrable (collectively referred to as "Trade Rights") shall
become the sole and exclusive property of the Company.

            (b)   Executive shall disclose all Trade Rights promptly and
completely to the Company and shall, during the Term or thereafter, (i) execute
all documents requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all documents
requested by the Company for filing and procuring such applications for patents,
trademarks, service marks or copyrights as the Company, in its sole discretion,
may desire to prosecute, and (iii) give the Company all assistance it may
reasonably require, including the giving of testimony in any Proceeding (as
hereinafter defined), in other to obtain, maintain and protect the Company's
right therein and thereto; provided that the Company shall bear the entire cost
and expense of such assistance, including without limitation paying the
Executive reasonable compensation for any time or effort expended by him in
connection with such assistance after the Termination Date. In furtherance of
the foregoing, Executive acknowledges and agrees that for all purposes of U.S.
and foreign Copyright Laws, the Trade Rights and any inventions, discoveries,
enhancements or improvements to any tangible or intangible property, resulting
from the services performed by Executive for the Company or its Affiliates (for
the purposes of this paragraph all of the foregoing is collectively referred to
as the "Work"), and any and all elements thereof, shall be deemed to constitute
"works for hire" belonging to the Company within the meaning of Title 17, United
States Code, Section 101, and any comparable provisions of the law of any other
jurisdiction, such that all right, title and interest therein, including,
without limitation, copyrights and exclusive rights under copyright, vest in the
Company. Executive hereby transfers and conveys to the Company the exclusive,
world-wide, royalty-free, paid-up right to exploit, use, develop, license, and
sell products and services relating to or derived from the Work; and the
exclusive right, title and interest in and to all inventions, improvements,
patent applications and letters patent, "know-how", and all


                                       4

intellectual property and other rights, tangible or intangible, which relate to
or are based upon or derived from the Work; and to all information, documents,
and specifications that relate to the Work. If the Work or any of the elements
thereof is deemed not to be "works for hire" within the meaning of Title 17,
United States Code, Section 101, then Executive hereby assigns and transfers to
the Company all right, title and interest in and to the Work, including rights
throughout the world for good and valuable consideration, receipt of which
Executive hereby acknowledges. For the sole and exclusive purpose of perfecting
and documenting such limited assignment and transfer, Executive hereby grants to
the Company an irrevocable power of attorney.

      11.   Restrictive Covenants.

            (a)   During the Term, and unless Executive terminates his
employment for "good reason" pursuant to Section 14, for a further period ending
on the later of one (1) year after the Termination Date and the second
anniversary of the date of this Agreement, Executive shall not, directly or
indirectly through any Affiliate or other intermediary (a) manufacture, produce,
sell, market or otherwise promote any Competitive Product or serve as a partner,
member, manager, director, officer or employee of, or consultant or advisor to,
or in any manner own, control, manage, operate or otherwise participate or
invest in, or be connected with any Person that engages in the marketing or sale
of Competitive Products, or authorize the use of its name in connection
therewith, or (b) for himself or on behalf of any other Person, employ, engage
or retain any Person who at any time during the preceding 12 month period shall
have been an employee of the Company or its Affiliates, or contact any supplier,
customer or employee of the Company or its Affiliates for the purpose of
soliciting or diverting any such supplier, customer or employee from the Company
or its Affiliates. The foregoing provisions notwithstanding, Executive may
invest his funds in securities of an issuer if the securities of such issuer are
listed for trading on a registered securities exchange or actively traded in the
over-the-counter market and Executive's and his Affiliates' aggregate holdings
therein represent less than 1% of the total number of shares or principal amount
of the securities of such issuer then outstanding. Executive acknowledges that
the provisions of this Section 11, and the period of time, lack of specific
geographic area given the international nature of the business of the Company
and its Affiliates and the scope and type of restrictions on his activities set
forth herein, are reasonable and necessary for the protection of the Company and
are an essential inducement to JAKKS entering into this Agreement.

            (b)   As used herein, the term "Competitive Product" means any
product or service that is substantially similar to a product or service
developed, marketed, sold by the Company or its Affiliates during the period of
Executive's employment by the Company.

            (c)   Executive acknowledges that the type of services the Company
will require from him are of an intellectual and technical character which will
require the disclosure of confidential and proprietary information of the
Company to him and may result in the creation by him of information which is
confidential and proprietary to the Company, and accordingly that the
restrictive covenants contained herein are necessary in order to protect and
maintain the business and assets and goodwill of the Company. Executive also
acknowledges that the type of services that he has performed for Toymax
International and its Affiliates as an employee of Toymax International were of
an intellectual and technical character and required the disclosure of
confidential and proprietary information of Toymax International and its
Affiliates to him and resulted in the creation by him of information which is
confidential and proprietary to Toymax International and its Affiliates, and
accordingly that the restrictive covenants contained herein are necessary in
order to protect and maintain the business and assets and goodwill of Toymax
International whose shares are being purchased by JAKKS. Executive acknowledges
that the business of the Company and its Affiliates, including Toymax
International and its Affiliates, extends beyond the geographic area of the
State of New York and accordingly, it is reasonable that the restrictive
covenants set forth above are not limited by specific geographic area but by the
location of the customers of the Company and its Affiliates. Executive
acknowledges that the remedy at law for any breach of this agreement by him will
be inadequate and that, accordingly, the Company shall,


                                       5

in addition to all other available remedies (including without limitation
seeking such damages as it can show it has sustained by reason of such breach),
be entitled to injunctive relief without being required to post bond or other
security and without having to prove the inadequacy of the available remedies at
law.

      12.   Termination Upon Death or Disability. Executive's employment
hereunder shall terminate immediately upon his death. In the event that
Executive is unable to perform his duties hereunder by reason of any disability
or incapacity (due to any physical or mental injury, illness or defect) for an
aggregate of 90 days in any consecutive 12-month period, the Company shall have
the right to terminate Executive's employment hereunder within 60 days after the
90th day of his disability or incapacity by giving Executive notice to such
effect at least 30 days prior to the date of termination set forth in such
notice, and on such date such employment shall terminate.

      13.   Termination by the Company with or without Cause.

            (a)   In addition to any other rights or remedies provided by law or
in this Agreement, the Company may terminate Executive's employment for "cause"
under this Agreement if:

                  (i)   Executive is convicted of, or enters a plea of guilty or
nolo contendere (which plea is not withdrawn prior to its approval by the court)
to a felony or other crime, a criminal offense, involving the acts identified in
paragraph (ii) below; or

                  (ii)  the Company's Board of Directors determines, after due
inquiry, that Executive has:

                  (A)   committed fraud against, or embezzled or misappropriated
            funds or other assets of, the Company (or any subsidiary thereof);

                  (B)   violated, or caused the Company (or any subsidiary
            thereof) or any officer, employee or other agent thereof, or any
            other Person to violate, any material law, regulation or ordinance,
            which violation has or would reasonably be expected to have a
            significant detrimental effect on the Company or its Affiliates, or
            any material rule, regulation, policy or practice established by the
            Board of Directors of the Company;

                  (C)   on a persistent or recurring basis, (A) failed properly
            to perform his material duties hereunder or (B) acted in a manner
            detrimental to, or adverse to the interests of, either the Company
            or its Affiliates; or

                  (D)   violated, or failed to perform or satisfy any material
            covenant, condition or obligation required to be performed or
            satisfied by Executive hereunder.

            (b)   The Company may effect such termination for cause under
paragraph (a) of this Section by giving Executive notice to such effect, setting
forth in reasonable detail the factual basis for such termination, at least 20
days prior to the date of termination set forth therein; provided however that
Executive may avoid such termination if Executive, prior to the date of
termination set forth in such notice, cures or explains to the reasonable
satisfaction of the Company's Board of Directors the factual basis for
termination set forth therein.

            (c)   In making any determination pursuant to Section 13(a) as to
the occurrence of any act or event described in clauses (A) to (D) of paragraph
(ii) thereof (each, a "For Cause Event"), each of the following shall constitute
convincing evidence of such occurrence:

                  (i)   if Executive is made a party to, or target of, any
Proceeding arising under or relating to any For Cause Event, Executive's knowing
failure to defend against such Proceeding or to


                                       6

answer any complaint filed against him therein, or to deny any claim, charge,
averment or allegation thereof asserting or based upon the occurrence of a For
Cause Event;

                  (ii)  any judgment, award, order, decree or other adjudication
or ruling in any such Proceeding finding or based upon the occurrence of a For
Cause Event; or

                  (iii) any settlement or compromise of, or consent decree
issued in, any such Proceeding in which Executive expressly admits the
occurrence of a For Cause Event; provided that none of the foregoing shall be
dispositive or create an irrefutable presumption of the occurrence of such For
Cause Event; and provided further that the Company's Board of Directors may rely
on any other factor or event as convincing evidence of the occurrence of a For
Cause Event.

      14.   Termination by Executive for Good Reason. In addition to any other
rights or remedies provided by law or in this Agreement, Executive may terminate
his employment hereunder if (a) the Company violates, or fails to perform or
satisfy any material covenant, condition or obligation required to be performed
or satisfied by it hereunder or, (b) as a result of any action or failure to act
by the Company, there is a material change in the nature or scope of the duties,
obligations, rights or powers of Executive's employment, or (c) relocation
without Executive's consent from the location set forth in Section 5 hereof, by
giving the Company notice to such effect, setting forth in reasonable detail the
factual basis for such termination, at least 20 days prior to the date of
termination set forth therein; provided however that the Company may avoid such
termination if it, prior to the date of termination set forth in such notice,
cures or explains to the reasonable satisfaction of Executive the factual basis
for termination set forth therein. The termination by Executive of his
employment pursuant to this Section 14 shall not constitute or be deemed to
constitute for any purpose a "voluntary resignation" of his employment.

      15.   Compensation upon Termination.

            (a)   Upon termination of Executive's employment hereunder, he shall
be entitled to receive, in any case, any compensation or other amount due to him
pursuant to Section 3 or 4 in respect of his employment prior to the Termination
Date. Except as otherwise provided in Section 15(b) or 15 (c), the Company shall
have no further obligation to Executive hereunder. Any amount payable to
Executive pursuant to this Section 15(a) upon termination of his employment
hereunder shall be paid promptly, and in any event within 10 days, after the
Termination Date.

            (b)   If prior to September 30, 2002, Executive terminates his
employment hereunder for "good reason" pursuant to Section 14 or if the Company
terminates his employment hereunder other than upon his disability or incapacity
pursuant to Section 12 and other than for cause pursuant to Section 13(a)
through (c), the Company shall make to Executive payments at the times and in
the amounts provided herein for the payment of his Base Salary through May 31,
2004, payable monthly in accordance with the Company's normal payroll practices,
and the Company shall have no further obligations to Executive.

            (c)   If the Company and Executive are unable to agree for any
reason whatsoever upon terms for the continuation of Executive's employment
beyond September 30, 2002 (which failure shall not constitute "good reason"
pursuant to Section 14 above), the Company shall make to Executive payments at
the times and in the amounts provided herein for the payment of his Base Salary
during the period beginning on the day after the Termination Date and ending on
the twenty (20) month anniversary thereof, payable monthly in accordance with
the Company's normal payroll practices (payments under this paragraph are in
lieu of, and not in addition to the payments described in paragraph 15(b)
above), and the Company shall have no further obligations to Executive.

            (d)   If Executive shall die prior to Executive's receipt of all
payments required under this Agreement, the Company shall pay Executive's
designated


                                       7

beneficiary or, if there is no designated beneficiary, his estate all such
amounts that would have otherwise been payable to Executive under this Agreement
as of the date of his death.

      16.   Other Consequences of Termination.

            (a)   Upon the termination of his employment (for whatever reason
and howsoever arising) the Executive shall:

                  (i)   at the request of the Board of Directors of the Company
immediately resign without claim for compensation from any office held by him in
the Company or any Affiliate (but without prejudice to any claim for damages for
breach of this Agreement) and in the event of his failure to do so the Company
is hereby irrevocably authorized to appoint some person in his name and on his
behalf to sign and deliver such resignations to the Board; and

                  (ii)  immediately repay all outstanding debts or loans due to
the Company or any Affiliate, and the Company is hereby authorized to deduct
from Base Salary payments due to the Executive a sum in repayment of all or any
part of any such debts or loans.

      17.   Limitation of Authority. Except as expressly provided herein, no
provision hereof shall be deemed to authorize or empower either party hereto to
act on behalf of, obligate or bind the other party hereto.

      18.   Termination of Employment Agreement with Toymax International, Inc.
Executive, JAKKS and Toymax International, by its signature at the end of this
Agreement, agree that the Toymax Employment Agreement is hereby terminated as of
the date hereof. Executive acknowledges that upon the Effective Date, he shall
have no further claim for salary, bonus, vacation pay or any other form of
compensation or benefit due to him from Toymax International or any of its
Affiliates or any equity or other interest in the Company or any of its
Affiliates (other than stock options granted to Executive prior to the date
hereof under Toymax International's stock option plan), including but not
limited to the payments under the Executive Bonus Plan referred to in the
Employment Agreement. Executive acknowledges that upon the Effective Date the
life insurance, disability and accident insurance and health insurance benefits
referred to in the Toymax Employment Agreement shall be terminated.

      19.   Notices. Any Notice or demand required or permitted to be given or
made hereunder to or upon any Party hereto shall be deemed to have been duly
given or made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, telecopy
(confirmed orally), telex or similar electronic means, provided that a written
copy thereof is sent on the same day by postage-paid first-class mail, to such
Party at the following address:

            to JAKKS:         22619 Pacific Coast Highway
                              Malibu, California 90265
                              Attn: President
                              Fax:  (310) 456-7099

            with a copy to:   Feder, Kaszovitz, Isaacson,
                              Weber, Skala, Bass & Rhine LLP
                              750 Lexington Avenue
                              New York, New York 10022
                              Attn: Murray L. Skala, Esq.
                              Fax:  (212) 888-7776

            to Executive:     4 Anna Court


                                       8

                              West Islip, New York 11795
                              Fax:  (516) 587-6808

            with a copy to:   Steven Mitchell Sack, Esq.
                              135 E. 57th Street, 12th Floor
                              New York, New York 10022
                              Fax:  (212) 702-9702

or such other address as any Party hereto may at any time, or from time to time,
direct by Notice given to the other Parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a) (i), the date of
the receipt; in the case of clause (a) (ii), three business days after such
Notice or demand is sent; and, in the case of clause (b), the business day next
following the date such Notice or demand is sent.

      20.   Amendment. Except as otherwise provided herein, no amendment of this
Agreement shall be valid or effective, unless in writing and signed by or on
behalf of the parties hereto.

      21.   Waiver. No course of dealing or omission or delay on the part of
either party hereto in asserting or exercising any right hereunder shall
constitute or operate as a waiver of any such right. No waiver of any provision
hereof shall be effective, unless in writing and signed by or on behalf of the
party to be charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.

      22.   Governing Law. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the laws of the State of New York without
regard to principles of choice of law or conflict of laws. Each Party to this
Agreement submits to the jurisdiction of the courts of the State of New York,
located in New York County, New York, United States of America, and to the
jurisdiction of the United States District Court for the Southern District of
New York, New York, New York, United States of America with respect to any
matter arising out of this Agreement, waives any objection to venue in the
Counties of New York, State of New York, or such District, and agrees that
service of any summons, complaint, Notice or other process relating to such
proceeding may be effected in the manner provided by Section 19 hereof.

      23.   Severability. The provisions hereof are severable and in the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

      24.   Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and which together shall constitute one and
the same agreement.

      25.   Further Assurances. Each Party hereto shall promptly execute,
deliver, file or record such agreements, instruments, certificates and other
documents and perform such other and further acts as any other Party hereto may
reasonably request or as may otherwise be reasonably necessary or proper, to
carry out the provisions of this Agreement.

      26.   Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and shall not be deemed, to create or
confer any right or interest for the benefit of any Person not a Party hereto.



                                       9

      27.   Assignment. Executive's obligations under this Agreement may not be
assigned without the prior written consent of the Company, and any purported
assignment without such consent shall be void and without effect.

      28.   Titles and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.

      29.   Remedies. In the event of any actual or prospective breach or
default under this Agreement by either Party hereto, the other Party shall be
entitled to equitable relief, including remedies in the nature of rescission,
injunction and specific performance. All remedies hereunder are cumulative and
not exclusive, and nothing herein shall be deemed to prohibit or limit either
party from pursuing any other remedy or relief available at law or in equity for
such actual or prospective breach or default, including the recovery of damages.

      30.   Assignment. This Agreement, and each right, interest and obligation
hereunder, may not be assigned by either party hereto without the prior written
consent of the other party hereto, and any purported assignment without such
consent shall be void and without effect, except that this Agreement shall be
assigned to, and assumed by, any Person with or into which the Company merges or
consolidates, or which acquires all or substantially all of its assets, or which
otherwise succeeds to and continues the Company's business substantially as an
entirety. Except as otherwise expressly provided herein or required by law,
Executive shall not have any power of anticipation, assignment or alienation of
any payments required to be made to him hereunder, and no other Person may
acquire any right or interest in any thereof by reason of any purported sale,
assignment or other disposition thereof, whether voluntary or involuntary, any
claim in a bankruptcy or other insolvency Proceeding against Executive, or any
other ruling, judgment, order, writ or decree.

      31.   Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular or the plural
sense and each capitalized term defined herein and each pronoun used herein
shall be construed in the masculine, feminine or neuter sense.

      32.   References. The terms "herein," "hereto," "hereof," "hereby," and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Section or other part hereof.

      33.   No Presumptions. Each Party hereto acknowledges that it has had an
opportunity to consult with counsel and has participated in the preparation of
this Agreement. No Party hereto is entitled to any presumption with respect to
the interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other Party hereto drafted or
controlled the drafting of this Agreement.

      34.   Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, commitments or arrangements relating thereto.



                                       10

      IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the day and year first above written.

JAKKS PACIFIC, INC.


By:   /s/ JOEL M. BENNETT
      -------------------
      Name:  Joel M. Bennett
      Title: EVP/CFO


/s/ CARMINE RUSSO
- -----------------
Carmine Russo



By its signature below, Toymax International Inc. consents to the termination of
the Toymax Employment Agreement as provided in Section 18 of the within
agreement.

TOYMAX INTERNATIONAL INC.


By:   /s/ MICHAEL SABATINO
      --------------------
      Name:  Michael Sabatino
      Title: CFO



                                       11


                                                                      EXHIBIT 13


                              EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT executed on March 11, 2002 by and between JAKKS
Pacific, Inc., a Delaware corporation ("JAKKS" or the "Company") with its
offices at 22619 Pacific Coast Highway, Malibu, CA 90265 and Michael Sabatino,
an individual residing at 5 Edwards Lane, Glen Cove, NY 11542("Executive").


                              W I T N E S S E T H :


      WHEREAS, concurrently herewith JAKKS has acquired a majority of the
outstanding shares of capital stock of Toymax International Inc., a Delaware
corporation ("Toymax International") from certain shareholders of Toymax
International (the "Toymax Shares"), and

      WHEREAS, Executive and Toymax International are parties to an employment
agreement dated December 1, 2001, as amended by a Supplement dated January 26,
2002 (the "Toymax Employment Agreement") and in consideration for JAKKS
agreement to enter into this Agreement Executive has agreed to terminate the
Toymax Employment Agreement and replace it with this employment agreement
effective simultaneously with JAKKS' acquisition of the Toymax Shares pursuant
to the Stock Purchase Agreement (the "Effective Date"), and

      WHEREAS, simultaneously with the Effective Date, JAKKS desires to employ
Executive on the terms and subject to the conditions hereinafter set forth, and
Executive desires so to be employed;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the Company and Executive agree as follows:

1.    Offices and Duties. Commencing with the Effective Date, the Company hereby
employs Executive during the Term (as hereinafter defined) to serve as a Senior
Vice President-Finance of the Company, responsible for coordinating the merger
of the operations of Toymax International and its Affiliates with the operations
of the Company and its other Affiliates, and for management of the Company and
its Affiliates' banking, accounts receivable, and international financial
functions, and to perform such executive and supervisory duties in connection
therewith on behalf of the Company as the Board of Directors of the Company or a
senior executive officer of the Company may from time to time direct that are
consistent with Executive's position. The Board of Directors of the Company may
elect or designate Executive to serve in such other corporate offices of the
Company or a subsidiary thereof as they may from time to time deem necessary,
proper or advisable with the consent of the Executive, which shall not be
unreasonably withheld or delayed. Executive hereby accepts such employment and
agrees that throughout the Term he shall faithfully, diligently and to the best
of his ability, in furtherance of the business of the Company, perform the
duties assigned to him or incidental to the offices assumed by him pursuant to
this Section. Executive shall devote all of his business time and attention to
the business and affairs of the Company. Executive shall at all times be subject
to the direction and control of the Board of Directors of the Company and
observe and comply with such rules, regulations, policies and practices as the
Board of Directors of the Company may from time to time reasonably establish in
the exercise of their good faith discretion.

2.    Term. The employment of Executive hereunder shall commence on the
Effective Date and continue for a term ending on the second anniversary of the
date hereof (the "Term"), subject, at the option of the Company, to extension
for an additional twelve (12) month period by notice given to Executive by the
Company not less than ninety (90) days prior to the end of the Term, and subject
to

earlier termination upon the terms and conditions provided elsewhere herein. As
used herein, "Termination Date" means the last day of the Term.

3.    Compensation.

(a)   As compensation for his services hereunder, the Company shall pay to
Executive during the Term:

(i)   a base salary at the rate of $225,000.00 per annum (the "Base Salary"),
subject to such increases as the Company's Board of Directors may determine from
time to time; such Base Salary will be paid in substantially equal installments
no less often than monthly in accordance with the Company's normal payroll
practices, subject to required tax withholding; and

(ii)  a signing bonus of $25,000.00 payable concurrently herewith.

(b)   The Executive may also receive an additional annual bonus in such amount
as the Board of Directors of the Company may determine in its discretion,
provided that such annual bonus shall be a minimum of $100,000.00, unless the
Executive's employment is terminated for cause (as such term is defined in
Section 13 of this Agreement.) The Board of Directors may also determine in its
discretion to award additional bonuses to Executive. Executive shall also be
entitled to participate in the Company's stock option plan, and, subject to the
approval of the Board of Directors and the Stock Option Committee of the Board
of Directors in their discretion, receive options to purchase between 15,000 and
20,000 shares of the Company's common stock pursuant to such plan and such terms
as the Board of Directors and Stock Option Committee shall approve.

(c)   In addition to his Base Salary and the bonuses and stock options provided
above, Executive shall be entitled to participate, to the extent he is eligible
under the terms and conditions thereof, in any stock, stock option or other
equity participation plan and any profit-sharing, pension, retirement,
insurance, medical service or other employee benefit plan generally available to
other executive officers of the Company and to receive any other benefits or
perquisites generally available to the executive officers of the Company
pursuant to any employment policy or practice, which may be in effect from time
to time during the Term. The Company shall be under no obligation hereunder to
institute or to continue any such employee benefit plan or employment policy or
practice.

(d)   As used in this Agreement, the term "Affiliate" of a Person means another
Person directly or indirectly controlling, controlled by, or under common
control with, such Person; for this purpose, "control" of a Person means the
power (whether or not exercised) to direct the policies, operations or
activities of such Person by virtue of the ownership of, or right to vote or
direct the manner of voting of, securities of such Person, or pursuant to
agreement or law or otherwise.

(e)   As used in this Agreement, the term "Person" includes without limitation a
natural person, corporation, joint stock company, limited liability company,
partnership, joint venture, association, trust, governmental authority, or any
group of the foregoing acting in concert.

4.    Expenses. The Company shall provide Executive with a monthly automobile
allowance equal to US$600.00 per month to reimburse Executive for the cost of
leasing or purchasing an automobile, use of the automobile for Company business,
and expenses of repair, maintenance, parking and other expenses incidental to
such use. The Company shall pay directly, or advance funds to Executive or
reimburse Executive for, all expenses reasonably incurred by him in connection
with the performance of his duties hereunder and the business of the Company,
upon the submission to the Company of itemized expense reports, receipts or
vouchers in accordance with its then customary policies and practices.


                                       2

5.    Location. Except for travel and temporary accommodation reasonably
required to perform his services hereunder and travel as may reasonably be
requested by JAKKS to its principal office in the United States (currently in
Malibu, California, USA) or to its offices in New York, New York, USA, Executive
shall not be required to perform his services hereunder at any location other
than an office he maintains at the offices of Toymax International in Plainview,
New York, or, if requested to do so by the Company, at the offices of the
Company in New York, New York. The Parties acknowledge and agree that any
permanent relocation of the Executive's regular office to the Company's offices
in Malibu, California shall require the mutual agreement of the Company and the
Executive on such terms as the Parties agree to in connection therewith, but any
failure to agree on such relocation shall not affect the continued effectiveness
and enforceability of this Agreement, it being understood and agreed that
neither Party has made any commitment or representation to the other regarding
such relocation. JAKKS may request Executive's attendance at meetings at JAKKS'
offices in Malibu, California or New York, New York, or to participate in other
activities relating to the Company and its business in Malibu, California or New
York, New York, provided that the Executive shall not be required to stay at
such locations for more than seven (7) working days in any one (1) calendar
month.

6.    Office. The Company shall provide Executive with suitable office space,
furnishings and equipment, secretarial and clerical services and such other
facilities and office support as are reasonably necessary for the performance of
his services hereunder.

7.    Vacation. Executive shall be entitled to four (4) weeks paid vacation
during each year of his employment hereunder, such vacation to be taken at such
time or times as shall be agreed upon by Executive and the Company. Vacation
time shall not be cumulative from year to year.

8.    Key-Man Insurance. JAKKS shall have the right from time to time to
purchase, increase, modify or terminate insurance policies on the life of
Executive for the benefit of JAKKS in such amounts as JAKKS may determine in its
sole discretion. In connection therewith, Executive shall, at such time or times
and at such place or places as JAKKS may reasonably direct, submit himself to
such physical examinations and execute and deliver such documents as JAKKS may
deem necessary or appropriate.

9.    Confidential Information.

(a)   Executive shall hold in a fiduciary capacity for the benefit of the
Company all confidential or proprietary information relating to or concerned
with the Company and its Affiliates or their products, prospective products,
operations, business and affairs ("Confidential Information"), and he shall not,
at any time hereafter, use or disclose any Confidential Information to any
person other than to the Company or its designees or except as may otherwise be
required in connection with the business and affairs of the Company, and in
furtherance of the foregoing Executive agrees that:

(i)   Executive will receive, maintain and hold Confidential Information in
strict confidence and will use the same level of care in safeguarding it that he
uses with his own confidential material of a similar nature;

(ii)  Executive will take all such steps as may be reasonably necessary to
prevent the disclosure of Confidential Information; and

(iii) Executive will not utilize Confidential Information without first having
obtained the Company's consent to such utilization.

(b)   The commitments set forth in paragraph 9(a) shall not extend to any
portion of Confidential Information:

(i)   that is generally available to the public;



                                       3

(ii)  that was known to the Executive prior to disclosure (excluding information
regarding the Company or its Affiliates which would otherwise be Confidential
Information that was disclosed to Executive during the period of his employment
by the Company or its predecessors or their respective Affiliates (including
Toymax International Inc. and its Affiliates) or that was disclosed to Executive
in connection with his acting as a director of Toymax International Inc. or its
predecessors or their respective Affiliates, and excluding any other non-public
information concerning products under development by or for the Company or its
Affiliates (including Toymax International Inc. and its Affiliates);

(iii) that was not acquired, directly or indirectly and/or in any manner, from
the Company or any of its Affiliates (including Toymax International Inc. and
its Affiliates) and which Executive lawfully had in his possession prior to the
date of this Agreement;

(iv)  that, hereafter, through no act or omission on the part of the Executive,
becomes information generally available to the public.

(c)   At any time upon written request by the Company (i) the Confidential
Information, including any copies, shall be returned to the Company, and (ii)
all documents, drawings, specifications, computer software, and any other
material whatsoever in the possession of the Executive that relates to such
Confidential Information, including all copies and/or any other form of
reproduction and/or description thereof made by Executive shall, at the
Company's option, be returned to the Company or destroyed.

(d)   In the event that Executive becomes legally compelled (by deposition,
interrogatory, request of documents, subpoena, civil investigative demand or
similar process) to disclose any of the Confidential Information, the Executive
shall provide the Company with prompt prior written notice of such requirement
so that it may seek a protective order or other appropriate remedy and/or waive
compliance with the terms of this Agreement. In the event that such protective
order or other remedy is not obtained, or the Company waives compliance with the
provisions hereof, the Executive agrees to furnish only such portion of the
Confidential Information which is legally required to be furnished.

10.   Intellectual Property.

(a)   Any patent, claim of copyright, trademark, trade name, brand name, service
mark, logo, symbol, trade dress or design, or representation or expression of
any thereof, or registration or application for registration thereof, or any
other improvement, development or discovery, invention, trade secret, process,
system, technical information, know-how, proprietary right or intellectual
property developed, conceived of, invented or otherwise produced by Executive,
alone or with others in connection with the design, manufacture and marketing of
the products of the Company and its Affiliates, or conceived, developed, created
or made by Executive, alone or with others, during the Term and applicable to
the business of the Company or its Affiliates, whether or not patentable or
registrable (collectively referred to as "Trade Rights") shall become the sole
and exclusive property of the Company.

(b)   Executive shall disclose all Trade Rights promptly and completely to the
Company and shall, during the Term or thereafter, (i) execute all documents
requested by the Company for vesting in the Company the entire right, title and
interest in and to the same, (ii) execute all documents requested by the Company
for filing and procuring such applications for patents, trademarks, service
marks or copyrights as the Company, in its sole discretion, may desire to
prosecute, and (iii) give the Company all assistance it may reasonably require,
including the giving of testimony in any Proceeding (as hereinafter defined), in
other to obtain, maintain and protect the Company's right therein and thereto;
provided that the Company shall bear the entire cost and expense of such
assistance, including without limitation paying the Executive reasonable
compensation for any time or effort expended by him in connection with such
assistance after the Termination Date. In furtherance of the foregoing,
Executive acknowledges and


                                       4

agrees that for all purposes of U.S. and foreign Copyright Laws, the Trade
Rights and any inventions, discoveries, enhancements or improvements to any
tangible or intangible property, resulting from the services performed by
Executive for the Company or its Affiliates (for the purposes of this paragraph
all of the foregoing is collectively referred to as the "Work"), and any and all
elements thereof, shall be deemed to constitute "works for hire" belonging to
the Company within the meaning of Title 17, United States Code, Section 101, and
any comparable provisions of the law of any other jurisdiction, such that all
right, title and interest therein, including, without limitation, copyrights and
exclusive rights under copyright, vest in the Company. Executive hereby
transfers and conveys to the Company the exclusive, world-wide, royalty-free,
paid-up right to exploit, use, develop, license, and sell products and services
relating to or derived from the Work; and the exclusive right, title and
interest in and to all inventions, improvements, patent applications and letters
patent, "know-how", and all intellectual property and other rights, tangible or
intangible, which relate to or are based upon or derived from the Work; and to
all information, documents, and specifications that relate to the Work. If the
Work or any of the elements thereof is deemed not to be "works for hire" within
the meaning of Title 17, United States Code, Section 101, then Executive hereby
assigns and transfers to the Company all right, title and interest in and to the
Work, including rights throughout the world for good and valuable consideration,
receipt of which Executive hereby acknowledges. For the sole and exclusive
purpose of perfecting and documenting such limited assignment and transfer,
Executive hereby grants to the Company an irrevocable power of attorney.

11.   Intentionally omitted.

12.   Termination Upon Death or Disability. Executive's employment hereunder
shall terminate immediately upon his death. In the event that Executive is
unable to perform his duties hereunder by reason of any disability or incapacity
(due to any physical or mental injury, illness or defect) for an aggregate of 90
days in any consecutive 12-month period, the Company shall have the right to
terminate Executive's employment hereunder within 60 days after the 90th day of
his disability or incapacity by giving Executive notice to such effect at least
30 days prior to the date of termination set forth in such notice, and on such
date such employment shall terminate.

13.   Termination by the Company with or without Cause.

(a)   In addition to any other rights or remedies provided by law or in this
Agreement, the Company may terminate Executive's employment for "cause" under
this Agreement if:

(i)   Executive is convicted of, or enters a plea of guilty or nolo contendere
(which plea is not withdrawn prior to its approval by the court) to a felony or
other crime, a criminal offense, involving the acts identified in paragraph (ii)
below; or

(ii)  the Company's Board of Directors determines, after due inquiry, that
Executive has:

      (A)   committed fraud against, or embezzled or misappropriated funds or
      other assets of, the Company (or any subsidiary thereof);

      (B)   violated, or caused the Company (or any subsidiary thereof) or any
      officer, employee or other agent thereof, or any other Person to violate,
      any material law, regulation or ordinance, which violation has or would
      reasonably be expected to have a significant detrimental effect on the
      Company or its Affiliates, or any material rule, regulation, policy or
      practice established by the Board of Directors of the Company;

      (C)   on a persistent or recurring basis, (A) failed properly to perform
      his duties hereunder or (B) acted in a manner detrimental to, or adverse
      to the interests of, either the Company or its Affiliates; or



                                       5

      (D)   violated, or failed to perform or satisfy any material covenant,
      condition or obligation required to be performed or satisfied by Executive
      hereunder.

(b)   The Company may effect such termination for cause under paragraph (a) of
this Section by giving Executive notice to such effect, setting forth in
reasonable detail the factual basis for such termination, at least thirty (30)
days prior to the date of termination set forth therein; provided however that
Executive may avoid such termination if Executive, prior to the date of
termination set forth in such notice, cures or explains to the reasonable
satisfaction of the Company's Board of Directors the factual basis for
termination set forth therein.

(c)   In addition to any other rights provided in this Agreement, the Company
may terminate Executive's employment under this Agreement without cause and for
no reason or any reason upon six (6) months prior notice given at any time after
the six month anniversary of the date of this Agreement.

14.   Termination by Executive for Good Reason. In addition to any other rights
or remedies provided by law or in this Agreement, Executive may terminate his
employment hereunder if (a) the Company violates, or fails to perform or satisfy
any material covenant, condition or obligation required to be performed or
satisfied by it hereunder or, (b) as a result of any action or failure to act by
the Company, there is a material change in the nature or scope of the duties,
obligations, rights or powers of Executive's employment, or (c) relocation
without Executive's consent from the location set forth in Section 5 hereof, by
giving the Company notice to such effect, setting forth in reasonable detail the
factual basis for such termination, at least 20 days prior to the date of
termination set forth therein; provided however that the Company may avoid such
termination if it, prior to the date of termination set forth in such notice,
cures or explains to the reasonable satisfaction of Executive the factual basis
for termination set forth therein. The termination by Executive of his
employment pursuant to this Section 14 shall not constitute or be deemed to
constitute for any purpose a "voluntary resignation" of his employment.

15.   Compensation upon Termination.

(a)   Upon termination of Executive's employment hereunder, he shall be entitled
to receive, in any case, any compensation or other amount due to him pursuant to
Section 3 or 4 in respect of his employment prior to the Termination Date, and
from and after the Termination Date, except as otherwise provided in Section
15(b), the Company shall have no further obligation to Executive hereunder. Any
amount payable to Executive pursuant to this Section 15(a) upon termination of
his employment hereunder shall be paid promptly, and in any event within 10
days, after the Termination Date.

(b)   If Executive terminates his employment hereunder for Good Reason pursuant
to Section 14 or if the Company terminates his employment hereunder other than
upon his disability or incapacity pursuant to Section 12 and other than for
cause pursuant to Section 13(a) through (c), the Company shall make to Executive
payments at the times and in the amounts provided herein for the payment of his
Base Salary, and the minimum Bonus required under paragraph 3(c), during the
period, if any, beginning on the day after the Termination Date and ending on
the second anniversary of the date of this Agreement.

(c)   If Executive shall die prior to Executive's receipt of all payments
required under this Agreement, the Company shall pay Executive's designated
beneficiary or, if there is no designated beneficiary, his estate all such
amounts that would have otherwise been payable to Executive under this Agreement
as of the date of his death.



                                       6

16.   Other Consequences of Termination.

(a)   Upon the termination of his employment (for whatever reason and howsoever
arising) the Executive shall:

(i)   at the request of the Board of Directors of the Company immediately resign
without claim for compensation from any office held by him in the Company or any
Affiliate (but without prejudice to any claim for damages for breach of this
Agreement or for any compensation which otherwise may be payable pursuant to
this Agreement or otherwise) and in the event of his failure to do so the
Company is hereby irrevocably authorized to appoint some person in his name and
on his behalf to sign and deliver such resignations to the Board; and

(ii)  immediately repay all outstanding debts or loans due to the Company or any
Affiliate, and the Company is hereby authorized to deduct from Base Salary
payments due to the Executive a sum in repayment of all or any part of any such
debts or loans.

17.   Limitation of Authority. Except as expressly provided herein, no provision
hereof shall be deemed to authorize or empower either party hereto to act on
behalf of, obligate or bind the other party hereto.

18.   Termination of Employment Agreement with Toymax International, Inc.
Executive, JAKKS and Toymax International, by its signature at the end of this
Agreement, agree that the Toymax Employment Agreement is hereby terminated as of
the date hereof. Executive acknowledges that upon the Effective Date, he shall
have no further claim for salary, bonus, vacation pay or any other form of
compensation or benefit due to him from Toymax International or any of its
Affiliates or any equity or other interest in the Company or any of its
Affiliates(other than stock options granted to Executive prior to the date
hereof under Toymax International's stock option plan), including but not
limited to the payments under the Executive Bonus Plan referred to in the
Employment Agreement. Executive acknowledges that upon the Effective Date the
life insurance, disability and accident insurance and health insurance benefits
referred to in the Toymax Employment Agreement shall be terminated.

19.   Notices. Any Notice or demand required or permitted to be given or made
hereunder to or upon any Party hereto shall be deemed to have been duly given or
made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service against receipt, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by telegram, telecopy
(confirmed orally), telex or similar electronic means, provided that a written
copy thereof is sent on the same day by postage-paid first-class mail, to such
Party at the following address:

            to JAKKS:         22619 Pacific Coast Highway
                              Malibu, California 90265
                              Attn: President
                              Fax:  (310) 456-7099

            with a copy to:   Feder, Kaszovitz, Isaacson,
                              Weber, Skala, Bass & Rhine LLP
                              750 Lexington Avenue
                              New York, New York 10022
                              Attn: Murray L. Skala, Esq.
                              Fax:  (212) 888-7776

            to Executive:     5 Edwards Lane
                              Glen Cove, NY 11542
                              Fax:  (516) 674-7023


                                       7

or such other address as any Party hereto may at any time, or from time to time,
direct by Notice given to the other Parties in accordance with this Section.
Except as otherwise expressly provided herein, the date of giving or making of
any such Notice or demand shall be, in the case of clause (a) (i), the date of
the receipt; in the case of clause (a) (ii), three business days after such
Notice or demand is sent; and, in the case of clause (b), the business day next
following the date such Notice or demand is sent.

20.   Amendment. Except as otherwise provided herein, no amendment of this
Agreement shall be valid or effective, unless in writing and signed by or on
behalf of the parties hereto.

21.   Waiver. No course of dealing or omission or delay on the part of either
party hereto in asserting or exercising any right hereunder shall constitute or
operate as a waiver of any such right. No waiver of any provision hereof shall
be effective, unless in writing and signed by or on behalf of the party to be
charged therewith. No waiver shall be deemed a continuing waiver or waiver in
respect of any other or subsequent breach or default, unless expressly so stated
in writing.

22.   Governing Law. This Agreement shall be governed by, and interpreted and
enforced in accordance with, the laws of the State of New York without regard to
principles of choice of law or conflict of laws. Each Party to this Agreement
submits to the jurisdiction of the courts of the State of New York, located in
New York County, New York, United States of America, and to the jurisdiction of
the United States District Court for the Southern District of New York, New
York, New York, United States of America with respect to any matter arising out
of this Agreement, waives any objection to venue in the Counties of New York,
State of New York, or such District, and agrees that service of any summons,
complaint, Notice or other process relating to such proceeding may be effected
in the manner provided by Section 19 hereof.

23.   Severability. The provisions hereof are severable and in the event that
any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions hereof shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect, and any invalid or unenforceable
provision shall be deemed, without further action on the part of the parties
hereto, amended and limited to the extent necessary to render the same valid and
enforceable.

24.   Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and which together shall constitute one and
the same agreement.

25.   Further Assurances. Each Party hereto shall promptly execute, deliver,
file or record such agreements, instruments, certificates and other documents
and perform such other and further acts as any other Party hereto may reasonably
request or as may otherwise be reasonably necessary or proper, to carry out the
provisions of this Agreement.

26.   Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and shall not be deemed, to create or
confer any right or interest for the benefit of any Person not a Party hereto.

27.   Assignment. Executive's obligations under this Agreement may not be
assigned without the prior written consent of the Company, and any purported
assignment without such consent shall be void and without effect.

28.   Titles and Captions. The titles and captions of the Articles and Sections
of this Agreement are for convenience of reference only and do not in any way
define or interpret the intent of the parties or modify or otherwise affect any
of the provisions hereof.



                                       8

29.   Remedies. In the event of any actual or prospective breach or default
under this Agreement by either Party hereto, the other Party shall be entitled
to equitable relief, including remedies in the nature of rescission, injunction
and specific performance. All remedies hereunder are cumulative and not
exclusive, and nothing herein shall be deemed to prohibit or limit either party
from pursuing any other remedy or relief available at law or in equity for such
actual or prospective breach or default, including the recovery of damages.

30.   Assignment. This Agreement, and each right, interest and obligation
hereunder, may not be assigned by either party hereto without the prior written
consent of the other party hereto, and any purported assignment without such
consent shall be void and without effect, except that this Agreement shall be
assigned to, and assumed by, any Person with or into which the Company merges or
consolidates, or which acquires all or substantially all of its assets, or which
otherwise succeeds to and continues the Company's business substantially as an
entirety. Except as otherwise expressly provided herein or required by law,
Executive shall not have any power of anticipation, assignment or alienation of
any payments required to be made to him hereunder, and no other Person may
acquire any right or interest in any thereof by reason of any purported sale,
assignment or other disposition thereof, whether voluntary or involuntary, any
claim in a bankruptcy or other insolvency Proceeding against Executive, or any
other ruling, judgment, order, writ or decree.

31.   Grammatical Conventions. Whenever the context so requires, each pronoun or
verb used herein shall be construed in the singular or the plural sense and each
capitalized term defined herein and each pronoun used herein shall be construed
in the masculine, feminine or neuter sense.

32.   References. The terms "herein," "hereto," "hereof," "hereby," and
"hereunder," and other terms of similar import, refer to this Agreement as a
whole, and not to any Section or other part hereof.

33.   No Presumptions. Each Party hereto acknowledges that it has had an
opportunity to consult with counsel and has participated in the preparation of
this Agreement. No Party hereto is entitled to any presumption with respect to
the interpretation of any provision hereof or the resolution of any alleged
ambiguity herein based on any claim that the other Party hereto drafted or
controlled the drafting of this Agreement.

34.   Entire Agreement. This Agreement embodies the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, commitments or arrangements relating thereto.



                                       9

      IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the day and year first above written.

JAKKS PACIFIC, INC.


By:  /s/ JOEL M. BENNETT
     -------------------
         Name:  Joel M. Bennett
         Title: Exec. V.P./C.F.O.


/s/ MICHAEL SABATINO
- --------------------
Michael Sabatino


By its signature below, Toymax International Inc. consents to the termination of
the Toymax Employment Agreement as provided in Section 18 of the within
agreement.

TOYMAX INTERNATIONAL INC.


By:  /s/ SANFORD B. FRANK
     --------------------
         Name:  Sanford B. Frank
         Title: Secretary



                                       10


                                                                   EXHIBIT 14(A)



                                                DAN ALMAGOR
                                                CHAIRMAN AND
                                                EXECUTIVE PARTNER

PERSONAL AND CONFIDENTIAL

December 14, 2001

Mr. David Ki Kwan Chu
Chairman of the Board
Toymax International, Inc.
125 East Bethpage Road
Plainview, New York 11803

Dear David:

This Agreement confirms that ACG International Inc. (including affiliated,
subsidiaries and all other entities, collectively and individually, ("ACG") has
been engaged by Toymax International, Inc. (including affiliated, subsidiaries
and all other entities, collectively and individually, the "Company") as an
advisor whose assignment is to assist with the Company's desire to execute a
transaction (or a combination of transactions) to Sell an/or to merge the
Company.

I. SERVICES PROVIDED BY ACG:

In accepting the engagement, ACG agrees to:

- -  advise about the Company's strategy for selling the Company, as well as about
   the Transaction's possible structure and terms;

- -  Assist with the identification of potential prospective buyers and advise in
   the process of selecting the buyer

- -  Coordinate and advise about preparing presentation materials concerning the
   Company, as well as about making effective presentations to Potential buyers;

- -  Advise about structuring, negotiating, and closing the Transaction on
   favorable terms.

ACG agrees to keep and maintain all material and nonpublic information, which it
receives, concerning the Company confidential and to disclose only that
information as contemplated for the execution of this Agreement or as required
by law.

II. DEFINITIONS:

EXPIRATION AND TERMINATION DATES: For purposes of this Agreement, this Agreement
expires three years from the date of approval of this Agreement by the Company
(the "Expiration Date"). Each party has the right to terminate this Agreement
upon thirty (30) days notice. Any termination will not relieve the Company's
obligation to compensate and indemnify ACG as well as to comply with its other
agreements hereunder.

POTENTIAL BUYERS: For purposes of this Agreement, prospective potential buyers
include but not limited to, e.g., strategic buyers, investors, lenders, banks,
private equity funds, joint venture or strategic corporate partners, merger
partners, intermediaries, investment bankers, merchant bankers, and/or sources
- -- are individually and collectively defined as "Potential Buyer" or "Buyer."

TRANSACTION: For purposes of this Agreement, "Transaction" shall mean a
transaction (or combination of transactions) whereby the Company accepts a bid
offer from a Potential Buyer.

CLOSING AND CLOSING DATE: For purposes of this Agreement, a "Closing" is defined
as an event at which all or part of the Transaction is consummated; a "Closing
Date" is defined as the day on which a Closing occurs or is chiefly completed.

III. COMPENSATION FOR SERVICES PROVIDED BY ACG:

A. Fees - For ACG's efforts, ACG's compensation would consist of cash advisory
fees whose payment schedule is designed to minimize costs to the Company while
ACG's work is being done, and to reward ACG's efforts when a transaction closes.

ACG will earn advisory fees totaling 2% of the Total Transaction Value,
including but not limited to any stock, cash and any other remuneration
consideration. Prior to closing, a fee at the rate of $7,500 per month should be
payable in monthly installments, with the first payment starting with the
execution of this Agreement. The balance of the advisory fees would be payable
in full in a single cash installment at the closing. If no closing occurs, the
balance maximum total is $100,000.

B. Method of Payment - The Company agrees to pay ACG its such fee by wire
transfer to the bank account so designated by ACG or to an ACG Affiliate and to
provide evidence that irrevocable instructions have been issued to the
institution accepting funds on behalf of the Company.

IV. OTHER ISSUES:

(A) EXPENSES: In addition to any fees that may be payable to ACG hereunder and
    regardless of whether any Transaction is consummated, the Company agrees to
    reimburse ACG promptly for all reasonable out-of-pocket expenses incurred by
    ACG hereunder including, but not limited to, long-distance telephone,
    facsimile, legal, copying, travel, word processing, internet communication,
    document binding, and mailing costs.

(B) SURVIVABILITY: All terms and conditions of this Agreement not modified by
    expiration or termination or closing (including, for example, but not
    limited to, money owed to ACG, arbitration, and indemnification) will
    survive the Expiration or Termination or Closing Dates.

V. REPRESENTATIONS AND WARRANTIES:

The undersigned represents and warrants to ACG that he is duly authorized and
has full power and authority to execute this and to enter into and consummate
the Transaction, and has no reason to believe that this Agreement or the
Transaction may violate any laws, rules, or regulations of any government,
government agency, or court of law, or any bylaws of the Company.

In addition, the Company agrees:

(A) to make available to ACG all information relating to the Transaction which
    ACG reasonably requests as well as any other information relating to the
    Transaction prepared by the Company or any of the Company's advisors;

(B) to notify ACG of all communications between the Company and Potential Buyer,
    and provide ACG with copies of all direct correspondence between the Company
    and any Potential Buyers;

(C) that if the Company elects to consummate any transaction contemplated by
    this Agreement under the form of another or new entity, then the Company
    shall cause the other entity to ratify all the terms and conditions of this
    Agreement; and the Company shall continue to be liable for the performance
    of the terms, covenants, and conditions herein.

VI. ACKNOWLEDGEMENTS

The Company acknowledges:

(A) That ACG shall be entitled to rely upon all information supplied to ACG by
    the Company or its advisors and shall not in any respect be responsible for
    the accuracy or completeness of such information.

(B) that ACG does not guarantee that any transaction will be consummated, and
    that the Company will have no claim whatsoever against ACG if any
    transaction (including the Transaction) is not consummated;

(C) That ACG does not perform legal or accounting or tax services or render
    legal or accounting or tax advice on any aspect of any transaction
    contemplated by this Agreement.



                                       2

(D) That ACG is purely an independently contracting advisor to the Company and
    is neither retained nor authorized to act as an exclusive or nonexclusive
    agent in arranging any placement of any securities of the Company.

VII. ACG REPRESENTATIONS AND WARRANTIES

ACG represents and warrants that it is duly authorized and has full power and
authority to execute this Agreement, and agrees to promptly make available to
the Company all information relating to the Transaction which the Company
reasonably requests.

(A) To notify the Company of all communications between ACG and Potential
Buyers, and provide the Company with copies of all direct correspondence between
ACG and any Potential Buyers.

VIII. INDEMNIFICATION BY THE COMPANY:

   In connection with the engagement of ACG to advise and assist with matters
set forth in this Agreement, the Company hereby agrees to indemnify and hold
harmless ACG and its affiliates, the respective directors, officers, partners,
agents and employees of ACG and its affiliates, and each other person, if any,
controlling ACG or any of its affiliates (all of which are hereinafter called
the "Indemnified Person") to the full extent permitted by law, from and against
all losses, claims, damages, liabilities, and expenses incurred by them as they
are incurred (including but not limited to reasonable fees and disbursements of
counsel), which; (a) are related to or arise out of actions taken or omitted to
be taken (including statements made or omitted to be made) by the company or by
an Indemnified Person; (i) with the Company's consent, or (ii) in conformity
with the Company's actions or omission in connection with the engagement of ACG
pursuant to this Agreement; or, (b) are otherwise related to or arise out of
ACG's activities on the Company's behalf under ACG's engagement pursuant to this
Agreement.

IX. Miscellaneous Conditions:

(A) GOVERNING LAW: This Agreement shall be governed by and construed solely and
exclusively in accordance with the laws of the State of New York. This Agreement
supersedes all prior agreements and can only be amended in writing as mutually
agreed to by the Company and ACG.

(B) DISPUTES: Should any dispute, controversy, or claim arise out of or in
connection with this Agreement, or the breach, termination, or invalidity
thereof, and reasonable efforts to resolve it have failed, ACG and the Company
specifically and irrevocably agree that it will be promptly submitted to
American Mediation Council LLC ("AMC") under its Mediation Rules. If in AMC's
sole judgement, good faith efforts to resolve the dispute have failed, then ACG
and the Company agree that the dispute will be promptly submitted to resolution
by binding arbitration in New York City in accordance with the rules of
commercial procedure of the American Arbitration Association. A judgment upon
any award rendered by the arbitrators shall be entered by a court having subject
matter jurisdiction therein and all parties expressly waive any challenge to the
use of arbitration in accordance with this paragraph.

ACG and the Company agree that jurisdiction and venue for the entry of judgment
upon said arbitration award shall be solely and exclusively in New York County.
The arbitrators are directed to award the expenses of the arbitration --
including required travel and other expenses of the arbitrators and any
representatives of the arbitrators, the costs and charges of the American
Arbitration Association, and all reasonable attorney's fees and costs -- to the
prevailing party in the arbitration. In such event, no action shall be
entertained if filed more than one year subsequent to the date the cause(s) of
action actually occurred regardless of whether damages were otherwise as of said
time calculable. The arbitrator shall not have the authority to amend this
Agreement.

(C) ASSIGNMENT: No interest of any party under this Agreement may be assigned or
otherwise transferred except with the written consent of the other party. This
Agreement shall bind and inure to the benefit of the successors, assigns,
personal representatives, heirs, and legatees of the parties hereto, as their
interests shall appear.

(D) NOTICES: All notices, consents, and other communications (except where
otherwise indicated) relating to this Agreement must be in writing and shall be
deemed to have been duly given at the time when received by the addressee at its
principal place of business or to whatever new address has been communicated by
a notice given under the terms of this paragraph.

(E) WAIVER AND SEVERABILITY: Failure by a party to this Agreement to insist upon
strict compliance by another party to this Agreement with any of the terms of
this Agreement will not be deemed a waiver by such party of strict compliance
with any other instance of the same term or of any other term contained in this
Agreement. No waiver of any provisions of this Agreement shall be effective
unless it is in writing, signed by the party against whom it is asserted. The
unenforceability or invalidity of any article,


                                       3

subarticle, section, or provision of this Agreement shall not affect the
enforceability or validity of the remaining provisions, or portions thereof, of
this Agreement, and effect shall give rise to the intent manifested by the
remaining provisions, or portions thereof.

(F) COUNTERPARTS: This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute but one and the same instrument. Counterpart copies may be executed
by telefax.

(G) ENTIRE AGREEMENT: This Agreement constitutes and contains the entire
agreement between ACG and the Company with respect to the subject matter hereof,
and supersedes any and all prior agreements, arrangements, and understandings
between the parties hereof and thereof relating to the subject matter hereof and
thereof. No modification, amendment, or waiver of the provisions of this
Agreement shall be effective unless made in writing specifically referring to
this Agreement and signed by each of the parties hereto. Both parties hereby
disclaim specific authorship of this Agreement.

(H) Confidentiality: The Company agrees that any information or advice rendered
by ACG or its representatives or agents in connection with this Agreement are
for the sole confidential use of the Company, and the Company will not, and will
not permit any third party, to disclose or otherwise refer to such advice or
information in any manner without ACG's prior written consent.

XII. SIGNATURES:

If the foregoing correctly sets forth the agreement and understanding between
ACG and the Company, please sign the acknowledgement below, whereupon this
letter shall constitute a binding agreement, and return the executed letter to
ACG.

Very cordially,

For ACG International INC.

By: /s/ DAN ALMAGOR
Dan Almagor, Chairman and Executive Partner

Agreed and Accepted:

Date: December 14, 2001

For Toymax International, Inc.

by: /s/ CHU KI KWAN
David Chu, Chairman of the Board





                                       4


                                                                   EXHIBIT 14(B)

                             B R O W N R A Y S M A N

                  BROWN RAYSMAN MILLSTEIN FELDER & STEINER LLP





                                                    JOEL M. HANDEL
                                                    (212) 702-5728 (direct dial)
                                                    (212) 812-3263 (desktop fax)
                                                    jhandel@brownraysman.com



                                     February 8, 2002




Murray Skala, Esq.
Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP
750 Lexington Avenue
New York, New York 10022

      Re:   Datex Consulting International

Dear Murray:

            This will confirm the understanding we reached (which I have
confirmed with Dan Almagor) relating to the Investment Advisor Agreement between
Toymax International, Inc. (the "Company") and Datex Consulting Group ("Datex").
It has been agreed that in connection with the consummation of the agreement by
Jakks Pacific and the Company, Datex will have earned a fee of $1,089,000. The
fee shall be payable 70% immediately upon the closing of the Stock Purchase
Agreement between Jakks and the shareholders of the Company who are a party
thereto, and the balance of 30% immediately upon the closing of the merger of
the Company with the Jakks subsidiary. Upon the payment in full of such fees,
all obligations pursuant to the agreement between the Company and Datex shall
terminate.

                                            Very truly yours,

                                            /s/ JOEL M. HANDEL

                                            Joel M. Handel


JMH:mvm




BROWN RAYSMAN MILLSTEIN FELDER & STEINER LLP 805 THIRD AVENUE NEW YORK NY 10022
                          T 212-702-5700 F 212-702-594


                                       j


                                                                   EXHIBIT 15(A)


          ------------------------------------------------------------
          ------------------------------------------------------------


                                 LOAN AGREEMENT


                          Dated as of October 12, 2001


                                      among


                               JAKKS PACIFIC, INC.
                            FLYING COLORS TOYS, INC.
                             ROAD CHAMPS, INC. and
                           PENTECH INTERNATIONAL INC.

                       as joint and several co-Borrowers


                       the Lenders and the Issuing Lenders
                               referred to herein


                                       and


                              BANK OF AMERICA, N.A.
                             as Administrative Agent
                      for itself and for the other Lenders

                         BANC OF AMERICA SECURITIES LLC
                      Lead Arranger and Sole Book Manager

          ------------------------------------------------------------
          ------------------------------------------------------------

                                TABLE OF CONTENTS



                                                                         Page
                                                                         ----
                                                                      

ARTICLE 1
    DEFINITIONS AND ACCOUNTING TERMS .................................     1
    1.1   Defined Terms ..............................................     1
    1.2   Use of Defined Terms .......................................    26
    1.3   Accounting Terms ...........................................    26
    1.4   Rounding ...................................................    26
    1.5   Exhibits and Schedules .....................................    27
    1.6   Miscellaneous Terms ........................................    27

ARTICLE 2
    LOANS AND LETTERS OF CREDIT ......................................    28
    2.1   Loans-General ..............................................    28
    2.2   Base Rate Loans ............................................    29
    2.3   Eurodollar Loans ...........................................    29
    2.4   Redesignation of Loans .....................................    29
    2.5   Letters of Credit ..........................................    30
    2.6   Voluntary Reduction of the Commitment ......................    33
    2.7   Rights to Assume Funds Available for Advances ..............    33
    2.8   Collateral .................................................    34

ARTICLE 3
    PAYMENTS AND FEES ................................................    35
    3.1   Principal and Interest .....................................    35
    3.2   Commitment Fees ............................................    36
    3.3   Letter of Credit Fees ......................................    36
    3.4   Upfront Fees ...............................................    36
    3.5   Capital Adequacy ...........................................    37
    3.6   Eurodollar Fees and Costs ..................................    37
    3.7   Post Default Interest and Late Payments ....................    39
    3.8   Right to Assume Payments Will be Made by the Borrowers .....    40
    3.9   Computation of Interest and Fees ...........................    40
    3.10  Non-Business Days ..........................................    40
    3.11  Manner and Treatment of Payments ...........................    40
    3.12  Funding Sources ............................................    41
    3.13  Failure to Charge Not Subsequent Waiver ....................    41
    3.14  Authority to Charge Account ................................    41
    3.15  Survivability ..............................................    41


                                       i-

                                                                      
ARTICLE 4
    REPRESENTATIONS AND WARRANTIES ...................................    42
    4.1   Accounts Receivable and Inventory ..........................    42
    4.2   Existence and Qualification; Power; Compliance With Laws ...    42
    4.3   Authority; Compliance With Other Agreements and Instruments
          and Government Regulations .................................    42
    4.4   No Governmental Approvals Required .........................    43
    4.5   Subsidiaries ...............................................    43
    4.6   Financial Statements .......................................    44
    4.7   No Other Liabilities; No Material Adverse Effect ...........    44
    4.8   Title to and Location of Property ..........................    44
    4.9   Intangible Assets ..........................................    44
    4.10  Governmental Regulation ....................................    45
    4.11  Litigation .................................................    45
    4.12  Binding Obligations ........................................    45
    4.13  No Default .................................................    45
    4.14  ERISA ......................................................    45
    4.15  Regulations T, U and X .....................................    46
    4.16  Disclosure .................................................    47
    4.17  Tax Liability ..............................................    47
    4.18  Projections ................................................    47
    4.19  Security Interests .........................................    47
    4.20  Hazardous Materials ........................................    47
    4.21  Material Contracts .........................................    48

ARTICLE 5
    AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION
    AND REPORTING REQUIREMENTS) ......................................    49
    5.1   Payment of Taxes and Other Potential Liens .................    49
    5.2   Preservation of Existence ..................................    49
    5.3   Maintenance of Properties ..................................    49
    5.4   Maintenance of Insurance ...................................    49
    5.5   Compliance With Laws .......................................    50
    5.6   Inspection Rights ..........................................    50
    5.7   Keeping of Records and Books of Account ....................    50
    5.8   Compliance With Agreements .................................    50
    5.9   Use of Proceeds ............................................    51
    5.10  Hazardous Materials Laws ...................................    51
    5.11  Acquisition Covenants ......................................    51
    5.12  Further Assurances .........................................    52
    5.13  Future Subsidiaries ........................................    53
    5.14  Deposit Accounts ...........................................    53





                                      ii-

                                                                      
ARTICLE 6
    NEGATIVE COVENANTS ...............................................    54
    6.1   Prepayment of Indebtedness .................................    54
    6.2   Disposition of Property ....................................    54
    6.3   Mergers ....................................................    54
    6.4   Acquisitions ...............................................    54
    6.5   Distributions ..............................................    54
    6.6   ERISA ......................................................    55
    6.7   Change in Name; Nature of Business .........................    56
    6.8   Indebtedness and Contingent Obligations ....................    56
    6.9   Liens; Negative Pledges; Sales and Leasebacks ..............    56
    6.10  Transactions with Affiliates ...............................    56
    6.11  Investments ................................................    57
    6.12  Leverage Ratio .............................................    57
    6.13  Quick Ratio ................................................    57
    6.14  Fixed Charge Coverage Ratio ................................    57
    6.15  Net Worth ..................................................    58
    6.16  Change of Location .........................................    58
    6.17  Use of Hazardous Materials .................................    58
    6.18  Clean Down .................................................    58
    6.19  The Lockbox Accounts .......................................    58

ARTICLE 7
    INFORMATION AND REPORTING REQUIREMENTS ...........................    59
    7.1   Financial and Business Information .........................    59
    7.2   Compliance Certificates ....................................    61

ARTICLE 8
    CONDITIONS .......................................................    62
    8.1   Conditions to the Initial Loans and Letters of Credit ......    62
    8.2   Any Increasing Loan ........................................    64

ARTICLE 9
    EVENTS OF DEFAULT AND REMEDIES ...................................    66
    9.1   Events of Default ..........................................    66
    9.2   Remedies Upon Event of Default .............................    68

ARTICLE 10
   THE ADMINISTRATIVE AGENT ..........................................    71
   10.1   Appointment and Authorization ..............................    71
   10.2   Delegation of Duties .......................................    71
   10.3   Liability of the Administrative Agent ......................    71




                                      iii-

                                                                      
   10.4   Reliance by Administrative Agent ...........................    72
   10.5   Notice of Default ..........................................    72
   10.6   Credit Decision ............................................    73
   10.7   Indemnification ............................................    73
   10.9   Successor Agents ...........................................    74
   10.10  Action by the Administrative Agent; Collateral Matters .....    75
   10.11  Proportionate Interest of the Lenders in Collateral ........    75

ARTICLE 11
   MISCELLANEOUS .....................................................    77
   11.1   Cumulative Remedies; No Waiver .............................    77
   11.2   Amendments; Consents .......................................    77
   11.3   Costs, Expenses and Taxes ..................................    78
   11.4   Nature of Lenders' Obligations .............................    79
   11.5   Survival of Representations and Warranties .................    79
   11.6   Notices ....................................................    79
   11.7   Execution of Loan Documents ................................    79
   11.8   Binding Effect; Assignment .................................    80
   11.9   Foreign Lenders and Participants ...........................    81
   11.10  Right of Setoff ............................................    82
   11.11  Sharing of Setoffs .........................................    82
   11.12  Indemnity by the Borrowers .................................    83
   11.13  Nonliability of the Creditor Parties .......................    83
   11.14  No Third Parties Benefited .................................    84
   11.15  Further Assurances .........................................    84
   11.16  Confidentiality ............................................    84
   11.17  Integration ................................................    85
   11.18  Severability of Provisions .................................    85
   11.19  Independent Covenants ......................................    85
   11.20  Headings ...................................................    85
   11.21  Arbitration Reference ......................................    85
   11.22  Environmental Indemnity ....................................    86
   11.23  Jurisdiction ...............................................    87
   11.24  Joint Borrower Provisions ..................................    88
   11.25  GOVERNING LAW ..............................................    88
   11.26  PURPORTED ORAL AMENDMENTS ..................................    88
   11.27  WAIVER OF JURY TRIAL .......................................    89




                                      iv-

Exhibits

A     -    Assignment Agreement
B     -    Borrowing Base Certificate
C     -    Compliance Certificate
D     -    Request For Letter of Credit
E     -    Request For Loan
F     -    Request For Redesignation
G     -    Joint Borrower Provisions



Schedules

1.1   -    Inventory Locations
4.2   -    Options
4.5   -    Subsidiaries
4.8   -    Locations of Property
4.11  -    Litigation
4.14  -    Pension Plans
4.20  -    Hazardous Materials
4.21  -    Material Contracts
6.8   -    Existing Indebtedness
6.9   -    Existing Liens
6.10  -    Affiliate Transactions




                                       v-

                                 LOAN AGREEMENT

                          Dated as of October 12, 2001


            This LOAN AGREEMENT ("Agreement") is entered into by and among JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, the "Borrowers"), the
lenders named on the signature pages hereof or which hereafter become parties
hereto in accordance with Section 11.8, hereof, as the Lenders, and BANK OF
AMERICA, N.A., as Administrative Agent for itself and for the other Lenders.
While not a party hereto, BANC OF AMERICA SECURITIES LLC has acted as Lead
Arranger and Sole Book Manager for the credit facilities described herein.


                                    RECITALS

            A.    The Borrowers have requested the provision of certain credit
facilities pursuant to this Agreement.

            B.    The Borrowers are engaged in integrated operations that
require financing on a basis permitting the availability of credit from time to
time to each Borrower as required for the continued successful operation of each
of them separately and their integrated operations collectively. Each Borrower
expects to derive benefit, directly or indirectly, from such availability
because the successful operation of each Borrower is dependent on the continued
successful performance of the functions of the integrated group.

            In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:

                                    ARTICLE 1
                        DEFINITIONS AND ACCOUNTING TERMS

            1.1   Defined Terms. As used in this Agreement, the following terms
shall have the respective meanings set forth below:

                  "Acquisition" means any transaction, or any series of related
      transactions, by which any Borrower and/or any Subsidiary of such Borrower
      directly or indirectly (i) acquires any business or all or substantially
      all of the assets of any firm, partnership, joint venture, corporation or
      division thereof, whether through purchase of assets, merger or otherwise,
      or (ii) acquires (in one transaction or as the most recent transaction in
      a series of transactions) control of at least a majority in ordinary
      voting power of the Securities of a


                                       1-

      corporation which have ordinary voting power for the election of
      directors, or (iii) acquires control of a majority of the ownership
      interest in any partnership or joint venture.


                  "Administrative Agent" means Bank of America, when acting in
      its capacity as Administrative Agent under any of the Loan Documents, or
      any successor Administrative Agent.

                  "Administrative Agent's Office" means the Administrative
      Agent's address as set forth on the signature pages of this Agreement, or
      such other address as the Administrative Agent hereafter may designate by
      written notice to the Borrowers and the Lenders.

                  "Advance" means any advance made or to be made by any Lender
      under its Pro Rata Share, and includes each Base Rate Advance and each
      Eurodollar Rate Advance.

                  "Affiliate" means, as to any Person, any other Person which
      directly or indirectly controls, or is under common control with, or is
      controlled by, such Person. As used in this definition, "control" (and the
      correlative terms, "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); provided that, in any event, any Person that owns, directly or
      indirectly, 10% or more of the Securities having ordinary voting power for
      the election of directors or other governing body of a corporation (other
      than Securities having such power only by reason of the happening of a
      contingency), or 10% or more of the partnership or other ownership
      interests of any other Person (other than as a limited partner of such
      other Person), will be deemed to control such corporation or other Person.

                  "Agent Related Persons" means Bank of America and any
      successor Administrative Agent, together with their respective Affiliates,
      and the officers, directors, employees, agents and attorneys-in-fact of
      such Persons and Affiliates.

                  "Agreement" means this Loan Agreement, either as originally
      executed or as it may from time to time be supplemented, modified,
      amended, restated or extended.

                  "Approved Customers" means the following customers of the
      Borrowers, each of whom shall, for the period in which their senior
      unsecured debt securities are rated not lower than Ba1 by Moody's
      Investors Service, Inc. and BB+ by Standard & Poors Rating Service (a
      Division of McGraw, Hill, Inc.), have the following concentration limits
      (as described in clause (k) of the definition of "Eligible Accounts"):



                                       2-

                                                         
                  Walmart                                   30%
                  Dayton Hudson Corporation (Target)        30%
                  Kmart                                     20%
                  Toys-R-Us                                 20%




                  "Approved Swap Agreement" means each interest rate, currency
      or other similar swap or hedging agreement between any one or more of the
      Borrowers and any Lender, either as originally executed or as the same may
      from time to time be supplemented, modified, amended, renewed, extended,
      replaced or supplanted.

                  "Assignment Agreement" means an Assignment Agreement
      substantially in the form of Exhibit A.

                  "Availability Reserves" means such reserves against borrowing
      availability under the Commitment as the Administrative Agent or the
      Requisite Lenders may establish from time to time in the exercise of their
      reasonable credit judgment, including, without limitation, reserves for
      rent at leased locations subject to statutory or contractual landlord's
      liens, inventory shrinkage, dilution, custom charges, warehousemen's or
      bailee's charges, and for the amount of estimated maximum exposure, as
      determined by the Administrative Agent from time to time, under any
      interest rate contracts which Borrower enters into with any Lender
      (including interest rate swaps, caps, floors, options thereon,
      combinations thereof, or similar contracts).

                  "Bank of America" means Bank of America, N.A., its successors
      and assigns.

                  "Base Rate" means, as of any date of determination, the
      greater of (a) the Prime Rate or (b) the Federal Funds Rate plus .50%.

                  "Base Rate Advance" means each Advance made by a Lender
      designated as a Base Rate Advance in accordance with Article 2.

                  "Base Rate Loan" means a Loan made hereunder and designated as
      a Base Rate Loan in accordance with Article 2.

                  "Base Rate Margin" means (a) for the initial Pricing Period,
      0.25% per annum, and (b) for each subsequent Pricing Period, the interest
      rate per annum set forth in the matrix below opposite the Leverage Ratio
      in effect as of the last day of the Fiscal Quarter ending two months prior
      to the first day of such Pricing Period:


                                       3-


            Leverage Ratio                         Base Rate Margin
            --------------                         ----------------
                                                
            Less than or equal to 1.25:1.00              0.25%

            Greater than 1.25:1.00 but less than
            or equal to 1.50:1.00                        0.50%

            Greater than 1.50:1.00                       0.75%


                  "Borrower Security Agreement" means a security agreement in
      favor of the Administrative Agent for the benefit of the Lenders executed
      by the Borrowers on the Closing Date, either as originally executed or as
      the same may from time to time be supplemented, modified, amended,
      renewed, extended or supplanted.

                  "Borrowers" means the persons listed as such in the preamble
      to this Agreement, their successors and permitted assigns.

                  "Borrowers Quick Ratio" means, as of each date of
      determination thereof, the ratio of (a) the sum of (i) the market value of
      the Borrowers' combined Cash, Cash Equivalents and marketable Securities
      on that date, plus (ii) the gross amount of the Borrowers' trade accounts
      receivable on that date, to (b) the Borrowers' combined current
      liabilities, determined in accordance with Generally Accepted Accounting
      Principles, as of that date, plus the aggregate outstanding Obligations as
      of that date.

                  "Borrowing Base" means, as of each date of determination, the
      sum of:

            (a)   up to 70% times the balance due with respect to the Eligible
      Accounts as of that date, provided that the Administrative Agent or the
      Requisite Lenders may determine, in the exercise of their reasonable
      credit judgment, to reduce the advance rate against Eligible Accounts
      stated above from time to time in response to excess dilution of the
      Eligible Accounts or other factors that could reasonably be expected to
      impair collection of the full amount of the Eligible Accounts; and

            (b)   the Inventory Advance Rate times the value of Eligible
      Inventory as of that date, provided that the amount resulting from this
      clause (b) shall not be in excess of up to 20% of the aggregate Borrowing
      Base.

                  "Borrowing Base Certificate" means each Borrowing Base
      Certificate delivered by the Borrowers pursuant to Section 7.1(a), each of
      which shall be substantially in the form of Exhibit B.

                  "Business Day" means any Monday, Tuesday, Wednesday, Thursday
      or Friday, other than a day on which banks are authorized or required to
      be closed in California.



                                       4-

                  "Capital Expenditure" means any expenditure during any fiscal
      period that is considered a capital expenditure under Generally Accepted
      Accounting Principles, consistently applied, including any amount that is
      required to be treated as an asset subject to a Capital Lease.

                  "Capital Lease" means, as to any Person, a lease of any
      Property by that Person as lessee that is, or should be in accordance with
      Financial Accounting Standards Board Statement No. 13, recorded as a
      "capital lease" on the balance sheet of that Person prepared in accordance
      with Generally Accepted Accounting Principles.

                  "Cash" means, when used in connection with any Person, all
      monetary and non-monetary items owned by that Person that are treated as
      cash in accordance with Generally Accepted Accounting Principles,
      consistently applied.

                  "Cash Equivalents" means:

                  (a)   direct obligations of the United States government;

                  (b)   commercial paper that is rated P-1 or higher by Moody's
      Investors Service, Inc. or A-1 or higher by Standard and Poor's
      Corporation and that is issued by issuers whose long term unsecured debt
      rating is A1/A+ or better and that have not been identified by either
      rating agency as an issuer whose rating is likely to be downgraded;

                  (c)   banker's acceptances and certificates of deposit of any
      Lender or any United States bank whose total assets are at least
      $10,000,000,000 and whose senior long term debt is rated A2/A or higher by
      Moody's Investors Service, Inc. and Standard and Poor's Corporation; and

                  (d)   repurchase obligations, Dollar investments in money
      market funds, and tax exempt municipal notes, provided that the debt
      ratings and/or standings of the issuers thereof are comparable in quality
      to those set forth in clauses (b) and (c) above;

      provided that such Cash Equivalents that are not money market funds must
      have remaining maturities not in excess of 180 days, and such Cash
      Equivalents that are money market funds must have average remaining
      maturities not in excess of 180 days and be able to be withdrawn by the
      Borrowers upon demand.

                  "Cash Proceeds" means (a) the gross cash payments (including
      any cash received by way of deferred payment pursuant to a note receivable
      or otherwise, but only as and when so received) received from any sale,
      transfer, exchange or other disposition of assets and (b) the gross cash
      consideration received from or upon the sale or other disposition of any
      asset received, directly or indirectly, in exchange for the asset which is
      the subject of that sale, transfer, exchange or disposition.



                                       5-

                  "Certificate of a Responsible Official" means a certificate
      signed by a Responsible Official of the Person providing the certificate.

                  "Change in Control" means (a) any transaction or series of
      related transactions in which any Unrelated Person or two or more
      Unrelated Persons acting in concert acquire beneficial ownership (within
      the meaning of Rule 13d-3(a) under the Securities Exchange Act of 1934, as
      amended), directly or indirectly, of 25% or more of the outstanding common
      stock or any other class of stock of the Company having ordinary voting
      power, (b) the Company consolidates with or merges into another Person or
      conveys, transfers or leases its properties and assets substantially as an
      entirety to any Person or any Person consolidates with or merges into the
      Company pursuant to a transaction in which the outstanding common stock of
      the Company is changed into or exchanged for cash, Securities or other
      property, with the effect that any Unrelated Person becomes the beneficial
      owner, directly or indirectly, of 25% or more of Common Stock or that the
      Persons who were the holders of Common Stock immediately prior to the
      transaction hold less than 66 2/3% of the common stock of the surviving
      corporation after the transaction, (c) during any period of 24 consecutive
      months, individuals who at the beginning of such period were directors of
      the Company (together with any new or replacement directors whose election
      by the board of directors, or whose nomination for election, was approved
      by a vote of at least a majority of the directors then still in office who
      were either directors at the beginning of such period or whose election or
      nomination for reelection was previously so approved) cease for any reason
      to constitute a majority of the directors then in office or (d) a "change
      in control" as defined in any document governing Indebtedness of the
      Company or any of its Subsidiaries in excess of $5,000,000 which gives the
      holders of such Indebtedness the right to accelerate or otherwise require
      payment of such Indebtedness prior to the maturity date thereof.

                  "Clean Down Period" means a period of 30 consecutive days,
      beginning on or after January 1 and ending on or before March 31 in each
      year, during which the aggregate principal amount of the outstanding
      Obligations is to be reduced to an amount which is not greater than
      $30,000,000 and maintained below $30,000,000 for the entirety of such
      period.

                  "Closing Date" means the Business Day on which the
      consummation of all of the transactions contemplated in Section 8.1
      occurs.

                  "Code" means the Internal Revenue Code of 1986, as amended or
      replaced and as in effect from time to time.

                  "Collateral" means, collectively, all of the collateral
      subject to the Liens, or intended to be subject to the Liens, created by
      the Collateral Documents.



                                       6-

                  "Collateral Documents" means, collectively, the Borrower
      Security Agreement, the Guarantor Security Agreement, the Pledge
      Agreement, the Lockbox Account Agreement, and any other pledge agreement,
      hypothecation agreement, security agreement, assignment, deed of trust,
      mortgage or similar instrument executed by the Borrowers or any of their
      Subsidiaries to secure the Obligations.

                  "Commission" means the Securities and Exchange Commission.

                  "Commitment" means the commitment by Lenders to make revolving
      Loans to the Borrowers and to issue Letters of Credit in an aggregate
      principal amount, subject to Section 2.6, not to exceed $50,000,000.

                  "Commitment Fee Rate" means (a) for the initial Pricing
      Period, 0.375% per annum, and (b) for each subsequent Pricing Period, the
      rate per annum set forth in the matrix below opposite the Leverage Ratio
      in effect as of the last day of the Fiscal Quarter ending two months prior
      to the first day of such Pricing Period:



            Leverage Ratio                      Commitment Fee Rate
            --------------                      -------------------
                                             

            Less than or equal to 1.50:1.00           0.375%

            Greater than 1.50:1.00                    0.50%.



                  "Company" means JAKKS Pacific, Inc.

                  "Compliance Certificate" means a certificate in the form of
      Exhibit C, properly completed and signed by a Senior Officer of each of
      the Borrowers and delivered to the Administrative Agent.

                  "Consolidated Quick Ratio" means, as of each date of
      determination thereof, the ratio of (a) the sum of (i) the market value of
      the Company's consolidated Cash, Cash Equivalent and marketable Securities
      on that date, plus (ii) the gross amount of the Company's consolidated
      trade accounts receivable on that date, to (b) the Company's consolidated
      current liabilities, determined in accordance with Generally Accepted
      Accounting Principles, as of that date, plus the aggregate outstanding
      Obligations as of that date.

                  "Contingent Obligation" means, as to any Person, any (a)
      direct or indirect guarantee of Indebtedness of, or other obligation
      performable by, any other Person, including any endorsement (other than
      for collection or deposit in the ordinary course of business), co-making
      or sale with recourse of the obligations of any other Person,


                                       7-

      (b) contingent reimbursement obligations in respect of any letter of
      credit, including a Letter of Credit, or (c) assurance given to an obligee
      with respect to the performance of an obligation by, or the financial
      condition of, any other Person, whether direct, indirect or contingent,
      including any purchase or repurchase agreement covering such obligation or
      any collateral security therefor, any agreement to provide funds (by means
      of loans, capital contributions or otherwise) to such other Person, any
      agreement to support the solvency or level of any balance sheet item of
      such other Person, or any "keep-well", "take-or-pay", "through put" or
      other arrangement of whatever nature having the effect of assuring or
      holding harmless any obligee against loss with respect to any obligation
      of such other Person. The amount of any Contingent Obligation shall be
      deemed to be an amount equal to the stated or determinable amount of the
      related primary obligation (unless the Contingent Obligation is limited by
      its terms to a lesser amount, in which case to the extent of such amount)
      or, if not stated or determinable, the maximum reasonably anticipated
      liability in respect thereof as determined in good faith by the Person so
      obligated.

                  "Contractual Obligation" means, as to any Person, any
      provision of any outstanding Securities issued by that Person or of any
      material agreement, instrument or undertaking to which that Person is a
      party or by which it or any of its Property is bound.

                  "Creditor Parties" means, collectively the Administrative
      Agent, the Issuing Lenders, Bank of America, in its capacity as a party to
      the Approved Swap Agreement, and the Lenders.

                  "Debtor Relief Laws" means the Bankruptcy Code of the United
      States of America, as amended from time to time, and all other applicable
      liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
      receivership, insolvency, reorganization, or similar debtor relief Laws
      from time to time in effect affecting the rights of creditors generally.

                  "Default" means any event that, with the giving of any
      applicable notice or passage of time set forth in Section 9.1, or both,
      would be an Event of Default.

                  "Default Rate" means the rate of interest specified in Section
      3.7.

                  "Designated Eurodollar Market" means, with respect to any
      Eurodollar Loan, (a) the London Eurodollar Market, (b) if prime banks in
      the London Eurodollar Market are at the relevant time not accepting
      deposits of Dollars or if the Administrative Agent determines that the
      London Eurodollar Market does not represent at the relevant time the
      effective pricing to the Lenders for deposits of Dollars in the London
      Eurodollar Market, the Cayman Islands Eurodollar Market or (c) such other
      Eurodollar Market as may from time to time be selected by the
      Administrative Agent with the approval of the Requisite Lenders, provided
      that the Designated Eurodollar Market shall not be changed (i) without
      notice to the Borrowers from the Administrative Agent or (ii) with respect
      to any Eurodollar


                                       8-

      Loan requested by a Borrower, prior to the making of that Eurodollar Loan
      unless consented to by that Borrower.

                  "Disposition" means the sale, transfer or other disposition in
      any single transaction or series of related transactions (including by
      means of a sale-leaseback transaction) of any asset, or group of related
      assets, of any Borrower or of any Subsidiary of a Borrower (a) which asset
      or assets constitute a line of business or substantially all the assets of
      such Borrower or Subsidiary or (b) the aggregate amount of the Cash
      Proceeds of such assets is more than $500,000, other than (i) inventory or
      other assets sold or otherwise disposed of in the ordinary course of
      business of such Borrower or Subsidiary, (ii) equipment sold or otherwise
      disposed of where substantially similar equipment in replacement thereof
      has theretofore been acquired, or within 90 days thereafter is acquired,
      by such Borrower or Subsidiary and (iii) obsolete assets no longer useful
      in the business of such Borrower or Subsidiary whose carrying value on the
      books of such Borrower or Subsidiary is zero or de minimus.

                  "Distribution" means, (i) with respect to any shares of
      capital stock or any warrant or right to acquire shares of capital stock
      or any other equity Security issued by a Person (other than pursuant to
      the terms of Indebtedness which is convertible into or exchangeable for
      capital stock or any other equity Security), (a) the retirement,
      redemption, purchase, or other acquisition for value by such Person of any
      such Security, (b) the declaration or (without duplication) payment by
      such Person of any dividend in cash or in Property (other than common
      stock or any other equity Security of such Person) on or with respect to
      any such Security, (c) any Investment by such Person in the holder of any
      such Security, and (d) any other payment by such Person constituting a
      distribution under applicable Laws with respect to such Security, and (ii)
      any payment in respect of Indebtedness owed by any Borrower to any other
      Borrower, Affiliate or shareholder thereof, or Person not dealing at arm's
      length with any such Borrower, Affiliate or Person, which is not expressly
      permitted by this Agreement.

                  "Dollars" or the symbol "$" means United States dollars.

                  "Domestic Subsidiary" means each Subsidiary of the Company
      organized under the laws of the United States or any subdivision thereof.

                  "EBITDA" means, for any fiscal period, Net Income, plus to the
      extent deducted in arriving at Net Income, (i) income tax expense, (ii)
      gross interest expense, plus (iii) depreciation, plus (iv) amortization
      (or minus non-cash gains or reserve reversals), minus (v) extraordinary
      cash income/gains (except to the extent of any corresponding extraordinary
      cash losses incurred during the same period), minus (vi) gains (or plus
      losses) on sales of fixed assets.



                                       9-

                  "Eligible Accounts" means, as of any date of determination and
      as to each Borrower, the aggregate book value of the accounts receivable
      of that Borrower as to which the Administrative Agent holds a first
      priority perfected security interest, provided that such accounts
      receivable:

            (a)   arose in the ordinary course of business of that Borrower;

            (b)   represent amounts owed for services rendered or goods
            delivered;

            (c)   have been the subject of an invoice submitted to the relevant
            account debtor within five days of the date of shipment of the
            related goods or the rendering of the related services;

            (d)   are due and payable within 90 days of the issuance of the
            invoice;

            (e)   are not more than 60 days past due (nor more than 90 days from
            the issuance of the invoice);

            (f)   do not represent amounts owed to that Borrower for goods
            shipped on a consignment or "bill and hold" basis;

            (g)   do not have as the account debtor a Person that is the subject
            of any pending proceeding under any Debtor Relief Law;

            (h)   do not have as the account debtor any Governmental Agency or
            any Affiliate, officer or employee of the Borrowers or their
            Subsidiaries;

            (i)   do not have as the account debtor a Person located outside the
            United States and Canada, unless the payment of such accounts
            receivable are secured by an acceptable letter of credit issued to
            that Borrower by a bank reasonably acceptable to the Requisite
            Lenders;

            (j)   do not include any account receivable due from an account
            debtor or their Affiliates if 25% or more of the aggregate accounts
            receivable due from that account debtor do not qualify as "Eligible
            Accounts" hereunder;

            (k)   do not include any account receivable which, when added to all
            other accounts receivable owing from the respective account debtor,
            causes the total of all accounts receivable owing from that account
            debtor to exceed 10% of all accounts receivable from all account
            debtors, provided that as to the Approved Customers, the limit
            expressed in this clause (k) shall be increased to the amounts set
            forth in the definition thereof;



                                      10-

            (l)   do not include any account receivable which is subject to any
            known or asserted offset, counterclaim or defense, or with respect
            to which the account debtor has disputed its liability;

            (m)   do not include the amount of any contra accounts with respect
            to an account debtor as a result of amounts owing from the Borrowers
            to such account debtor;

            (n)   do not include any account receivable which is unenforceable
            unless a future condition is met, including any accounts receivable
            arising out of cash-on-delivery sales, consignments or guaranteed
            sales;

            (o)   do not include accounts receivable which are evidenced by any
            promissory note or other instrument;

            (p)   have not been the subject of a "rebilling" or any other
            re-invoicing of such account receivable submitted to the relevant
            account debtor on a date which is more than 30 days following the
            date upon which the initial invoice with respect to such account
            receivable was submitted to that account debtor;

            (q)   have not otherwise been objected to by the Requisite Lenders
            in the exercise of their reasonable discretion for a reason which is
            not the express subject matter of any of clauses (a) through (p)
            above.

                  "Eligible Assignee" means, as to each assignment by a Lender
      under Section 11.8, (a) another Lender, (b) with respect to any Lender,
      any Affiliate of that Lender, (c) any commercial bank having a combined
      capital and surplus of $100,000,000 or more, (d) any (i) savings bank,
      savings and loan association or similar financial institution or (ii)
      insurance company engaged in the business of writing insurance which, in
      either case (A) has a net worth of $200,000,000 or more, (B) is engaged in
      the business of lending money and extending credit under credit facilities
      substantially similar to those extended under this Agreement and (C) is
      operationally and procedurally able to meet the obligations of a Lender
      hereunder to the same degree as a commercial bank and (e) any other
      financial institution (including a mutual fund or other fund) having total
      assets of $250,000,000 or more which meets the requirements set forth in
      subclauses (B) and (C) of clause (d) above; provided that each Eligible
      Assignee must either (a) be organized under the Laws of the United States
      of America, any State thereof or the District of Columbia or (b) be
      organized under the Laws of the Cayman Islands or any country which is a
      member of the Organization for Economic Cooperation and Development, or a
      political subdivision of such a country, and (i) act hereunder through a
      branch, agency or funding office located in the United States of America
      and (ii) be exempt from withholding of tax on interest and deliver the
      documents related thereto pursuant to Section 11.9.



                                      11-

                  "Eligible Inventory" means, as of any date of determination
      and as to each Borrower, the value, as determined in accordance with
      Generally Accepted Accounting Principles based on the lesser of cost or
      market value, of the finished goods inventory of that Borrower, excluding:

                  (a) finished goods inventory that is subject to any Lien,
            other than any Lien in favor of the Administrative Agent;

                  (b) finished goods inventory that is damaged, defective,
            unsalable, slow-moving (being items that did not have any sales
            activity during the last six months) or otherwise unfit for use;

                  (c) inventory consisting of work-in-process, packaging
            materials, pallets, bags, boxes, capitalized depot freight and
            handling costs or supplies, or discontinued inventory;

                  (d) inventory which is (i) located at locations other than
            those described on Schedule 1.1 or such other locations of which the
            Borrowers have advised the Administrative Agent in writing;

                  (e) inventory covered by a negotiable document of title which
            has not been delivered to the Administrative Agent in pledge;

                  (f) inventory other than that which is held for sale or use in
            the ordinary course of such Borrower's business and is of good and
            merchantable quality;

                  (g) inventory which has been placed on consignment; and

                  (h) finished goods inventory that has otherwise been objected
            to by the Requisite Lenders in the exercise of their reasonable
            discretion for a reason which is not the express subject matter of
            any of clauses (a) through (g) above.

                  "Enforcement or Remedial Action" shall mean any step taken by
      any Person to enforce compliance with or to collect or impose penalties,
      fines or other sanctions provided by any Environmental Law.

                  "Environmental Claims" means all claims, however asserted, by
      any Governmental Agency or other Person alleging potential liability or
      responsibility for violation of any Environmental Law, or any Enforcement
      or Remedial Action or for release or injury to the environment or threat
      to public health, personal injury (including sickness, disease or death),
      property damage, natural resources damage, or otherwise alleging liability
      or responsibility for damages (punitive or otherwise), cleanup, removal,
      remedial or response costs, restitution, civil or criminal penalties,
      injunctive relief, or other type of relief, resulting


                                      12-

      from or based upon the presence, placement, discharge, emission or release
      (including intentional and unintentional, negligent and non-negligent,
      sudden or non-sudden, accidental or non-accidental, placement, spills,
      leaks, discharges, emissions or releases) of any Hazardous Material at,
      in, or from Property, whether or not owned by the Borrowers.

                  "Environmental Laws" means all federal, state or local laws,
      statutes, common law duties, rules, regulations, ordinances and codes
      together with all administrative orders, directed duties, policies,
      notices, decrees, requests, licenses, authorizations and permits of, and
      agreements with, any Governmental Agencies, in each case relating to,
      regulating or imposing liability or standards of conduct regarding
      environmental, health, safety, project liability and land use matters
      (including matters related to air and water quality, the handling,
      transportation, storage, treatment, usage or disposal of Hazardous
      Materials, air emissions, noise control, industrial hygiene, zoning, and
      land-use permits) including the Comprehensive Environmental Response,
      Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the
      Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act,
      the Federal Resource Conservation and Recovery Act, the Toxic Substances
      Control Act, the Emergency Planning and Community Right-to-Know Act, the
      California Hazardous Waste Control Law, the California Solid Waste
      Management, Resource, Recovery and Recycling Act, the California Water
      Code and the California Health and Safety Code.

                  "ERISA" means the Employee Retirement Income Security Act of
      1974, and any regulations issued pursuant thereto, as amended or replaced
      and as in effect from time to time.

                  "ERISA Affiliate" means, with respect to any Person, any
      Person (or any trade or business, whether or not incorporated) that is
      under common control with that Person within the meaning of Section 414 of
      the Code.

                  "Eurodollar Base Rate" means, with respect to any Eurodollar
      Loan, the average per annum interest rate at which Dollar deposits would
      be offered for the applicable interest period by major banks in the
      Designated Eurodollar Market, as shown on the Telerate Page 3750 (or such
      other page as may replace it) at approximately 11:00 a.m. London time two
      Eurodollar Business Days before the commencement of the interest period.
      If such rate does not appear on the Telerate Page 3750 (or such other page
      that may replace it), the rate for that interest period will be determined
      by such alternate method as reasonably selected by the Administrative
      Agent. The Administrative Agent's determination of the Eurodollar Base
      Rate shall be conclusive in the absence of manifest error.

                  "Eurodollar Business Day" means any Business Day on which
      dealings in Dollar deposits are conducted by and among banks in the
      Designated Eurodollar Market.



                                      13-

                  "Eurodollar Lending Office" means, as to each Lender, its
      office or branch so designated by written notice to the Borrowers and the
      Administrative Agent as its Eurodollar Lending Office. If no Eurodollar
      Lending Office is designated by a Lender, its Eurodollar Lending Office
      shall be its office at its address for purposes of notices hereunder.

                  "Eurodollar Loan" means a Loan made hereunder and designated
      as a Eurodollar Loan in accordance with Article 2.

                  "Eurodollar Market" means a regular, established market
      located outside the United States of America by and among banks for the
      solicitation, offer and acceptance of Dollar deposits in such banks.

                  "Eurodollar Period" means:

                  (a)   as to each Eurodollar Loan, the period commencing on the
      date specified by the Borrowers pursuant to Section 2.1(c) and ending one,
      two, three or six months thereafter, as specified by the Borrowers in the
      applicable Request for Loan; provided that:

                        (i)   The first day of any Eurodollar Period shall be a
            Eurodollar Business Day;

                        (ii)  Any Eurodollar Period that would otherwise end on
            a day that is not a Eurodollar Business Day shall be extended to the
            next succeeding Eurodollar Business Day unless such Eurodollar
            Business Day falls in another calendar month, in which case such
            Eurodollar Period shall end on the next preceding Eurodollar
            Business Day; and

                        (iii) No Eurodollar Period shall extend beyond the
            Maturity Date.

                  "Eurodollar Rate" means, with respect to any Eurodollar Loan,
      the interest rate (rounded upward to the next 1/16 of 1%) determined to be
      equal to the Eurodollar Base Rate divided by the sum of 1 minus the
      Eurodollar Reserve Percentage.

                  "Eurodollar Rate Advance" means each Advance made by a Lender
      designated as a Eurodollar Rate Advance in accordance with Article 2.

                  "Eurodollar Rate Margin" means (a) for the initial Pricing
      Period, 1.50% per annum, and (b) for each subsequent Pricing Period, the
      interest rate per annum set forth in the matrix below opposite the
      Leverage Ratio in effect as of the last day of the Fiscal Quarter ending
      two months prior to the first day of such Pricing Period:



                                      14-



            Leverage Ratio                         Eurodollar Rate Margin
            --------------                         ----------------------
                                                

            Less than or equal to 1.25:1.00                 1.50%

            Greater than 1.25:1.00 but less than
            or equal to 1.50:1.00                           1.75%

            Greater than 1.50:1.00                          2.00%.


                  "Eurodollar Reserve Percentage" means, with respect to any
      Eurodollar Loan, as of the date of determination of the Eurodollar Base
      Rate for that Eurodollar Loan, the total of the maximum reserve
      percentages for determining the reserves to be maintained, if any, by
      member banks of the Federal Reserve System for Eurocurrency Liabilities,
      as defined in Regulation D, having a term equal (or as nearly as
      practicable equal) to the Eurodollar Period of such Eurodollar Loan,
      rounded upward to the nearest 1/100 of 1%. The percentage will be
      expressed as a decimal, and will include, but not be limited to, marginal,
      emergency, supplemental, special, and other reserve percentages. The
      determination by the Administrative Agent of any applicable Eurodollar
      Reserve Percentage shall be conclusive in the absence of manifest error.

                  "Event of Default" shall have the meaning provided in Section
      9.1.

                  "Federal Funds Rate" means, as of any date of determination, a
      fluctuating interest rate per annum equal to the federal funds effective
      rate for the previous Business Day as quoted by the Federal Reserve Bank
      of New York or, if such rate is not so published for any day which is a
      Business Day, the average of the quotations for such day on such
      transactions received by the Administrative Agent from three Federal funds
      brokers of recognized standing selected by the Administrative Agent.

                  "Fiscal Quarter" means the fiscal quarter of the Borrowers
      ending on each March 31, June 30, September 30 and December 31.

                  "Fiscal Year" means the fiscal year of the Borrowers ending on
      each December 31.

                  "Fixed Charge Coverage Ratio" means, as of each date of
      determination, the ratio of (a) EBITDA for the twelve month period ending
      on that date minus Capital Expenditures made in cash during the same
      period (net of any portion thereof representing amounts expended using
      funds received from insurance proceeds, trade-in allowances or the sale of
      similar assets being replaced), and minus state and federal income taxes
      paid in cash during that period, to (b) Interest Expense paid in cash
      during that period, plus the amount of payments of principal scheduled to
      be made by the Company and its Subsidiaries with


                                      15-

      respect to Indebtedness during the twelve month period following the date
      of determination (other than any intercompany Indebtedness), plus an
      amount equal to 20% of the average principal amount of the Commitment
      during such period, plus any Distributions made by the Company during that
      period.

                  "Foreign Subsidiary" means each Subsidiary of the Company
      which is not organized under the laws of the United States or any
      subdivision thereof.

                  "Funded Debt" means, for any fiscal period, the sum without
      duplication of the Company's consolidated (i) liabilities for borrowed
      money (excluding all Subordinated Obligations), (ii) interest bearing
      obligations, (iii) obligations under Capital Leases, (iv) obligations to
      reimburse the issuer of any letter of credit (including any Letter of
      Credit issued by any Issuing Lender under this Agreement) for amounts
      drawn or which may be drawn under such letters of credit, other than
      Letters of Credit issued for the importation or purchase of goods, (v) any
      obligation to the extent secured by a Lien on the assets of the Company or
      any of its Subsidiaries, and (vi) all guaranties of financial obligations
      issued by the Company or any of its Subsidiaries.

                  "Funding Account" means account no. 14590-08406 maintained by
      the Borrowers with Bank of America, or any other account designated by the
      Borrowers and reasonably acceptable to the Administrative Agent.

                  "Generally Accepted Accounting Principles" means, as of any
      date of determination, accounting principles (a) set forth as generally
      accepted in then currently effective Opinions of the Accounting Principles
      Board of the American Institute of Certified Public Accountants, (b) set
      forth as generally accepted in then currently effective Statements of the
      Financial Accounting Standards Board or (c) that are then approved by such
      other entity as may be approved by a significant segment of the accounting
      profession in the United States of America. The term "consistently
      applied," as used in connection therewith, means that the accounting
      principles applied are consistent in all material respects to those
      applied at prior dates or for prior periods.

                  "Government Securities" means readily marketable direct full
      faith and credit obligations of the United States of America or
      obligations unconditionally guaranteed by the full faith and credit of the
      United States of America.

                  "Governmental Agency" means (a) any international, foreign,
      federal, state, county or municipal government, or political subdivision
      thereof, (b) any governmental or quasi-governmental agency, authority,
      board, bureau, commission, department, instrumentality or public body, or
      (c) any court, administrative tribunal or public utility.

                  "Guarantor" means, each now existing or hereafter acquired
      Domestic Subsidiary of the Company which is not a Borrower.



                                      16-

                  "Guarantor Security Agreement" means the security agreement to
      be executed and delivered on the Closing Date by each of the Guarantors,
      either as originally executed or as it may from time to time be
      supplemented, modified, amended, extended or supplanted.

                  "Guaranty" means the continuing guaranty of the Obligations to
      be executed and delivered pursuant to Article 8 by each of the Guarantors,
      either as originally executed or as it may from time to time be
      supplemented, modified, amended, extended or supplanted.

                  "Hazardous Materials" means all those substances which are
      regulated by, or which may form the basis of liability under, any
      Environmental Law, including all substances identified under any
      Environmental Law as a pollutant, contaminant, hazardous waste, hazardous
      constituent, special waste, hazardous substance, hazardous material, or
      toxic substance, or petroleum or petroleum derived substance or waste.

                  "Indebtedness" means, as to any Person, without duplication,
      (a) all indebtedness of such Person for borrowed money, (b) that portion
      of the obligations of such Person under Capital Leases which is properly
      recorded as a liability on a balance sheet of that Person prepared in
      accordance with Generally Accepted Accounting Principles, (c) any
      obligation of such Person that is evidenced by a promissory note or other
      instrument representing an extension of credit to such Person, whether or
      not for borrowed money, (d) any payment obligation of such Person for the
      deferred purchase price of Property or services (other than trade or other
      accounts payable in the ordinary course of business in accordance with
      customary industry terms), (e) any payment obligation of such Person that
      is secured by a Lien on assets of such Person, whether or not that Person
      has assumed such obligation or whether or not such obligation is
      non-recourse to the credit of such Person, but only to the extent of the
      fair market value of the assets so subject to the Lien, (f) payment
      obligations of such Person arising under acceptance facilities or under
      facilities for the discount of accounts receivable of such Person, (g) any
      direct or contingent obligations of such Person under letters of credit
      issued for the account of such Person and (h) any obligations of such
      Person under a Swap Agreement.

                  "Intangible Assets" means, as of any date of determination,
      the intangible assets of the Borrowers and their Subsidiaries, including
      goodwill, patents, trademarks, trade names, organization expense,
      capitalized acquisition expenses, deferred research and development costs
      and deferred marketing expense, deferred tax assets and money due from
      Affiliates, officers, directors or shareholders of the Borrowers and their
      Subsidiaries.

                  "Interest Expense" means, as of the last day of any fiscal
      period, the sum of (a) all interest, fees, charges and related expenses
      paid or payable (without duplication) for that fiscal period to a lender
      in connection with borrowed money or the deferred purchase price of assets
      that are considered "interest expense" under Generally Accepted Accounting


                                      17-

      Principles, plus (b) the portion of rent paid or payable (without
      duplication) for that fiscal period under Capital Lease Obligations that
      should be treated as interest in accordance with Financial Accounting
      Standards Board Statement No. 13, in each case determined for the Company
      and its Subsidiaries on a consolidated basis.

                  "Inventory Advance Rate" means 20% provided that (a) the
      Inventory Advance Rate shall be 30% for the determinations of the
      Borrowing Base made as of the last Business Days of April, May, September,
      October and November in each year, and (b) the Administrative Agent or the
      Requisite Lenders may determine, in the exercise of their reasonable
      credit judgment based upon their review of any audit or appraisal of the
      Inventory, to reduce the Inventory Advance Rate from time to time.

                  "Investment" means, when used in connection with any Person,
      any investment by or of that Person, whether by means of purchase or other
      acquisition of capital stock or other Securities of any other Person or by
      means of loan, advance, capital contribution, guaranty or other debt or
      equity participation or interest, or otherwise, in any other Person,
      including any partnership and joint venture interests of such Person in
      any other Person. The amount of any Investment shall be the amount
      actually invested, without adjustment for increases or decreases in the
      value of such Investment.

                  "Issuing Lenders" means Bank of America, BNP Paribas and any
      other Lender which expressly agrees to perform all of the obligations
      that, by the terms of this Agreement, are required to be performed by an
      Issuing Lender hereunder, in each case when acting in its capacity as
      issuer of any Letter of Credit.

                  "Laws" means, collectively, all international, foreign,
      federal, state, and local statutes, treaties, rules, regulations,
      ordinances, codes and administrative or judicial precedents.

                  "Lenders" means Bank of America, each of the banks, financial
      institutions or institutional lenders listed on the signature pages hereto
      and each other Lender which hereafter becomes a party hereto pursuant to
      Section 11.8.

                  "Letter of Credit" means a commercial letter of credit or
      standby letter of credit issued by an Issuing Lender for the account of a
      Borrower in the ordinary course of its business.

                  "Letter of Credit Usage" means, at any date of determination,
      the sum of (i) the maximum aggregate amount that is or at any time
      thereafter may become available for drawing or payment under issued and
      outstanding Letters of Credit issued pursuant to the Commitment, plus (ii)
      the aggregate amount of all drawings honored or payments made by the
      Issuing Lenders under such Letters of Credit and not reimbursed by the
      Borrowers.



                                      18-

                  "Leverage Ratio" means, as of each date of determination
      thereof, the ratio of (a) Funded Debt as of that date, to (b) EBITDA for
      the twelve month period ending on that date.

                  "Lien" means any mortgage, deed of trust, pledge,
      hypothecation, assignment for security, security interest, encumbrance,
      lien or charge of any kind, whether voluntarily incurred or arising by
      operation of Law or otherwise, affecting any Property, including any
      agreement to grant any of the foregoing, any conditional sale or other
      title retention agreement, any lease in the nature of a security interest,
      and/or the filing of or agreement to give any financing statement (other
      than a precautionary financing statement with respect to a lease that is
      not in the nature of a security interest) under the Uniform Commercial
      Code or comparable Law of any jurisdiction with respect to any Property.

                  "Loan" means any group of Advances made at any one time under
      the Commitment by the Lenders pursuant to Article 2.

                  "Loan Documents" means, collectively, this Agreement, the
      Collateral Documents, the Guaranty, each Request for Loan, each Request
      for Letter of Credit, each Request for Redesignation, each Letter of
      Credit, the Subordination Agreements, each Compliance Certificate, each
      Approved Swap Agreement, and any other certificates, documents or
      agreements to, with or for the benefit of the Creditor Parties, of any
      type or nature heretofore or hereafter executed and delivered by the
      Borrowers or any of their Subsidiaries or Affiliates to the Creditor
      Parties in any way relating to or in furtherance of this Agreement, in
      each case either as originally executed or as the same may from time to
      time be supplemented, modified, amended, restated, extended or supplanted.

                  "Lockbox Account" means, as to each Borrower, an account in
      the name of the Administrative Agent at Bank of America, into which the
      proceeds of all trade accounts receivable of that Borrower is to be
      deposited in accordance with Section 6.20.

                  "Lockbox Account Agreement" means the Lockbox Account
      Agreement executed by each of the Borrowers and the Guarantors on the
      Closing Date to govern the Lockbox Account, either as originally executed
      or as the same may from time to time be supplemented, modified, amended,
      restated, extended or supplanted.

                  "Material Adverse Effect" means any set of circumstances or
      events which (a) has or may reasonably be expected to have any material
      adverse effect whatsoever upon the validity or enforceability of any Loan
      Document, (b) has or may reasonably be expected to have a materially
      adverse effect on the condition (financial or otherwise) or business
      operations of the Borrowers and their Subsidiaries, taken as a whole, or
      the prospects of the Borrowers and their Subsidiaries, taken as a whole,
      (c) materially impairs or may reasonably be expected to materially impair
      the ability of the Borrowers and their Subsidiaries, to perform their
      Obligations or (d) materially impairs or may reasonably be expected to


                                      19-

      materially impair the ability of the Creditor Parties to enforce their
      legal remedies pursuant to the Loan Documents.

                  "Material Contract" means each agreement specified on Schedule
      4.21 and each other each other contract or agreement to which any Borrower
      is a party, contemplating annual payments or receipts of monies, or the
      exchange of Property having a value in excess of $500,000, other than
      supply contracts for which the amount shall be $10,000,000.

                  "Maturity Date" means October 10, 2004.

                  "Multiemployer Plan" means any employee benefit plan of the
      type described in Section 4001(a)(3) of ERISA.

                  "Negative Pledge" means any covenant binding on any Borrower
      or any current or future guarantor of the Obligations that prohibits the
      creation of Liens on any Property of any of the Borrowers or of any such
      guarantor to the Creditor Parties or prohibiting the granting of any such
      covenant to any of the Creditor Parties.

                  "Net Cash Proceeds" means, with respect to any sale, transfer
      or other disposition of Property, the Cash Proceeds received by any of the
      Borrowers or by any Subsidiary of any of the Borrowers upon such sale,
      transfer or other disposition minus, (a) the actual expenses of such sale
      paid or payable by any of the Borrowers or by any Subsidiary of any of the
      Borrowers in connection with such sale, transfer or other disposition
      (including any lease cancellation expenses, license termination fees,
      penalties or other costs associated therewith), (b) any amount paid or
      payable by the transferor to retire existing Liens on the Property sold,
      and (c) an amount representing the taxes (other than income taxes)
      reasonably estimated by the Borrowers to be payable by any of the
      Borrowers or Subsidiary thereof with respect to such sale, transfer or
      other disposition.

                  "Net Income" means, for any fiscal period, the consolidated
      net income of the Company and its Subsidiaries (for clarity, exclusive of
      the income of THQ and other joint venturers), determined in accordance
      with Generally Accepted Accounting Principles, consistently applied.

                  "Net Worth" means, as of each date of determination, the
      consolidated net worth of the Company as of that date, determined in
      accordance with Generally Accepted Accounting Principles, consistently
      applied.

                  "Obligations" means all present and future obligations of
      every kind or nature of the Borrowers or any Party at any time and from
      time to time owed to any of the Creditor Parties under any of the Loan
      Documents, whether due or to become due, matured or unmatured, liquidated
      or unliquidated, or contingent or noncontingent, including obligations


                                      20-

      of performance as well as obligations of payment, and including interest
      that accrues after the commencement of any proceeding under any Debtor
      Relief Law by or against any of the Borrowers or any Affiliate of any of
      the Borrowers.

                  "Party" means each party to the Loan Documents other than the
      Creditor Parties.

                  "PBGC" means the Pension Benefit Guaranty Corporation or any
      successor thereof established under ERISA.

                  "Pension Plan" means any "employee pension benefit plan" that
      is subject to Title IV of ERISA and which is maintained for employees (or
      former employees) of any of the Borrowers or of any ERISA Affiliate of any
      of the Borrowers, other than a Multiemployer Plan.

                  "Permitted Acquisition" means an Acquisition by the Company or
      any of its Domestic Subsidiaries (as applicable, the "Acquiror") of
      another Person which will be a Domestic Subsidiary engaged in the same or
      a similar line of business as that of the Company and its Subsidiaries
      (the "Target"), provided that: (i) such Acquisition shall have been
      approved by the board of directors of the Target (i.e., such Acquisition
      shall not be "hostile"); (ii) upon the closing of such Acquisition, the
      Administrative Agent shall be granted a first-priority security interest
      in all assets of the Target, subject only to Permitted Encumbrances; (iii)
      the Administrative Agent shall have received and been satisfied with its
      review of a completed Environmental Assessment and Questionnaire with
      respect to the real property of the Target not later than ten Business
      Days prior to the estimated date of the consummation of the Acquisition;
      (iv) upon the completion of the Acquisition, the Company and its Domestic
      Subsidiaries shall own not less than 80% of the voting stock of the Target
      (with the remaining voting stock owned by management of the Target or the
      former owners thereof), (v) not more than $5,000,000 in assets of all
      Targets, in the aggregate, shall be located outside of the United States
      of America, and (vi) no Default or Event of Default shall exist at the
      time of such Acquisition or after giving effect thereto.

                  "Permitted Encumbrances" means:

                  (a)   Inchoate Liens incident to construction or maintenance
      of real property, or Liens incident to construction or maintenance of real
      property, now or hereafter filed of record for which adequate reserves
      have been set aside and which are being or will be, within 30 days,
      contested in good faith by appropriate proceedings diligently pursued and
      have not proceeded to judgment, provided that, by reason of nonpayment of
      the obligations secured by such Liens, no such real property is subject to
      a material risk of loss or forfeiture;



                                      21-

                  (b)   Liens for taxes and assessments on real property which
      are not yet past due, or Liens for taxes and assessments on real property
      for which adequate reserves have been set aside and are being contested in
      good faith by appropriate proceedings diligently pursued and have not
      proceeded to judgment, provided that, by reason of nonpayment of the
      obligations secured by such Liens, no such real property is subject to a
      material risk of loss or forfeiture;

                  (c)   easements, exceptions, reservations, covenants,
      conditions, restrictions, and assessment Liens arising thereunder,
      operating agreements, or other agreements granted, reserved or entered
      into before or after the date hereof for the purpose of ingress, egress,
      parking, encroaching, pipelines, conduits, cables, wire communication
      lines, power lines and substations, streets, trails, walkways, drainage,
      irrigation, water and sewerage, dikes, canals, ditches, the removal of
      oil, gas, coal or other minerals, use, operation, repair, maintenance and
      reconstruction, and other like purposes affecting real property which in
      the aggregate do not materially burden or impair the fair market value or
      use of such real property for the purposes for which it is or may
      reasonably be expected to be held;

                  (d)   rights reserved to or vested in any Governmental Agency
      by Law to control or regulate, or obligations or duties under Law to any
      Governmental Agency with respect to, the use of any real property;

                  (e)   statutory Liens, other than those described in clauses
      (a) or (b) above, arising in the ordinary course of business with respect
      to obligations which are not delinquent or are being contested in good
      faith by appropriate proceedings diligently pursued, provided that, if
      delinquent, adequate reserves have been set aside with respect thereto
      and, by reason of nonpayment, no Property is subject to a material risk of
      loss or forfeiture;

                  (f)   Liens consisting of pledges or deposits to secure
      obligations under workers' compensation laws or similar legislation, that
      do not exceed $100,000 in the aggregate at any time outstanding, including
      Liens of judgments thereunder which are not currently dischargeable;

                  (g)   Liens consisting of deposits of Property to secure
      statutory obligations of any of the Borrowers or of any Subsidiary of any
      of the Borrowers in the ordinary course of its business;

                  (h)   Liens created by or resulting from any litigation or
      legal proceeding involving any of the Borrowers or any Subsidiary of any
      of the Borrowers in the ordinary course of its business which are
      currently being contested in good faith by appropriate proceedings
      diligently pursued, provided that adequate reserves have been set aside,
      and


                                      22-

      such Liens are discharged or stayed within 30 days of creation and no
      Property is subject to a material risk of loss or forfeiture.

                  "Permitted Joint Ventures" means Investments by the Company or
      any of its Domestic Subsidiaries in less than 67% of the voting stock of
      another Person engaged in the same or a similar line of business as that
      of the Company and its Subsidiaries.

                  "Person" means any entity, whether an individual, trustee,
      corporation, general partnership, limited partnership, limited liability
      company, joint stock company, trust, estate, unincorporated organization,
      business association, firm, joint venture, Governmental Agency, or
      otherwise.

                  "Pricing Period" means (a) the period beginning on the Closing
      Date and ending on November 30, 2001, and (b) each of the succeeding three
      month periods beginning on the first day of each June, September, December
      and March.

                  "Prime Rate" means the rate of interest publicly announced
      from time to time by Bank of America as its "Prime Rate." The Prime Rate
      is set by Bank of America based on various factors, including Bank of
      America's costs and desired returns, general economic conditions and other
      factors, and is used as a reference point for pricing some loans. Bank of
      America may price loans at, above or below its Prime Rate. Any change in
      the Prime Rate shall take effect on the day specified in the public
      announcement of such change.

                  "Pro Rata Share" means, with respect to each Lender, the
      percentage of the Commitment held by that Lender from time to time. The
      dollar amount of the Commitment which is equal to the Pro Rata Share of
      each Lender as of the Closing Date is set forth on that Lender's signature
      page to this Agreement.

                  "Projections" means the projected financial information
      prepared by the Borrowers and included in the Confidential Offering
      Memorandum dated April, 2001.

                  "Property" means any interest in any kind of property or
      asset, whether real, personal or mixed, or tangible or intangible.

                  "Regulations D, T, U and X" means Regulations D, T, U and X,
      as at any time amended, of the Board of Governors of the Federal Reserve
      System, or any other regulations in substance substituted therefor.

                  "Request for Letter of Credit" means a written request for a
      Letter of Credit, substantially in the form of Exhibit D, together with
      the standard form of application for letters of credit used by the
      relevant Issuing Lender, signed by a Responsible Official of each Borrower
      and properly completed to provide all information to be included therein.



                                      23-

                  "Request for Loan" means a written request for a Loan,
      substantially in the form of Exhibit E, signed by a Responsible Official
      of each Borrower and properly completed to provide all information
      required to be included therein.

                  "Request for Redesignation" means a written request to
      continue or redesignate a Loan substantially in the form of Exhibit F,
      signed by a Responsible Official of each Borrower and properly completed
      to provide all information required to be included therein.

                  "Requirement of Law" means, as to any Person, the articles or
      certificate of incorporation and by-laws or other organizational or
      governing documents of such Person, and any Law, or judgment, award,
      decree, writ or determination of a Governmental Agency, in each case
      applicable to or binding upon such Person or any of its Property or to
      which such Person or any of its Property is subject.

                  "Requisite Lenders" means as of any date of determination,
      Lenders having in the aggregate 66-2/3% or more of the Commitment then in
      effect or, following termination of the Commitment, owning or holding, in
      the aggregate, 66-2/3% of the aggregate principal amount of the Loans and
      the Letter of Credit Usage outstanding on such date, provided that when
      there are fewer than three Lenders, "Requisite Lenders" shall mean all of
      the Lenders.

                  "Responsible Official" means (a) when used with reference to a
      Person other than an individual, any corporate officer of such Person,
      general partner of such Person, corporate officer of a corporate general
      partner of such Person, or corporate officer of a corporate general
      partner of a partnership that is a general partner of such Person, or any
      other responsible official thereof duly acting on behalf thereof, and (b)
      when used with reference to a Person who is an individual, such Person.
      Any document or certificate hereunder that is signed or executed by a
      Responsible Official of a Person shall be conclusively presumed to have
      been authorized by all necessary corporate, partnership and/or other
      action on the part of that Person.

                  "Right of Others" means, as to any Property in which a Person
      has an interest, (a) any legal or equitable right, title or other interest
      (other than a Lien) held by any other Person in or with respect to that
      Property, and (b) any option or right held by any other Person to acquire
      any right, title or other interest in or with respect to that Property,
      including any option or right to acquire a Lien.

                  "Securities" means any capital stock, share, voting trust
      certificate, bonds, debentures, notes or other evidences of indebtedness
      (other than commercial obligations incurred in the ordinary course of
      business), limited partnership interests, limited liability company
      membership interests, or any warrant, option or other right to purchase or
      acquire any of the foregoing.



                                      24-

                  "Senior Officer" means the (a) President, (b) Vice President,
      (c) Chief Financial Officer, (d) Chief Executive Officer or (e) Treasurer
      of a Person or the persons performing the equivalent functions.

                  "Special Eurodollar Circumstance" means the application or
      adoption of any Law or interpretation, or any change therein or thereof,
      or any change in the interpretation or administration thereof by any
      Governmental Agency, central bank or comparable authority charged with the
      interpretation or administration thereof, or compliance by any Lender or
      its Eurodollar Lending Office with any request or directive (whether or
      not having the force of Law) of any such Governmental Agency, central bank
      or comparable authority, or the existence or occurrence of circumstances
      affecting the Designated Eurodollar Market generally that are beyond the
      reasonable control of that Lender.

                  "Standby Letter of Credit" means each Letter of Credit which
      is issued hereunder for a purpose other than the support of the purchase
      of goods by the Company and its Subsidiaries.

                  "Subordinated Obligations" means unsecured Indebtedness of the
      Company that is subordinated to the Obligations (and to any other
      Indebtedness which in form or substance refinances the Obligations), all
      of the provisions of which (including amount, maturity, amortization,
      interest rate, covenants, defaults, remedies and subordination), have been
      approved in writing as to form and substance by the Administrative Agent
      with the written consent of the Requisite Lenders, and in any event (and
      without limitation on the foregoing) having the following attributes:

                  (a)   such Indebtedness shall be the obligation solely of the
            Company, and no Subsidiary shall have any direct or contingent
            obligations with respect thereto;

                  (b)   the subordination provisions of such Indebtedness shall
            provide for a 180-day remedies standstill (which may be invoked by
            the Administrative Agent not more frequently than once each year);

                  (c)   the interest rate payable with respect to such
            Indebtedness shall not exceed 12% per annum;

                  (d)   no reductions to the principal balance thereof shall be
            required prior to maturity, and the maturity thereof shall not be
            earlier than six months following the Maturity Date; and

                  (e)   none of the representations, warranties, covenants,
            defaults or other provisions thereof shall be more onerous to the
            Company and its Subsidiaries than those provided for herein.



                                      25-

                  "Subsidiary" means, as of any date of determination and with
      respect to any Person, any corporation, partnership or joint venture,
      whether now existing or hereafter organized or acquired: (a) in the case
      of a corporation, of which a majority of the Securities having ordinary
      voting power for the election of directors or other governing body (other
      than Securities having such power only by reason of the happening of a
      contingency) are at the time beneficially owned by such Person and/or one
      or more Subsidiaries of such Person, or (b) in the case of a partnership
      or joint venture, of which such Person or a Subsidiary of such Person is a
      general partner or joint venturer and of which a majority of the
      partnership or other ownership interests are at the time beneficially
      owned by such Person and/or one or more of their Subsidiaries.

                  "Swap Agreements" means one or more written agreements between
      a Borrower and one or more financial institutions providing for "swap",
      "cap", "collar" or other interest rate or currency risk protection with
      respect to any Indebtedness.

                  "Target" means the Person which is the subject of any
      Permitted Acquisition.

                  "Target Adjusted EBITDA" means, in respect of any Target, the
      EBITDA of such Target (determined as if it were already a party hereto),
      after making adjustments thereto to eliminate excess owner compensation
      and other items permitted under Regulation S-X of the Commission.

                  "Termination Event" means (a) a "reportable event" as defined
      in Section 4043 of ERISA (other than a "reportable event" that is not
      subject to the provision for 30 day notice to the PBGC), (b) the
      withdrawal of either of the Borrowers or any of their ERISA Affiliates
      from a Pension Plan during any plan year in which it was a "substantial
      employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a
      notice of intent to terminate a Pension Plan or the treatment of an
      amendment to a Pension Plan as a termination thereof pursuant to Section
      4041 of ERISA, (d) the institution of proceedings to terminate a Pension
      Plan by the PBGC or (e) any other event or condition which, in any such
      case as aforesaid, might reasonably be expected to constitute grounds
      under ERISA for the termination of, or the appointment of a trustee to
      administer, any Pension Plan.

                  "to the best knowledge of" means, when modifying a
      representation, warranty or other statement of any Person, that the fact
      or situation described therein is known by the Person (or, in the case of
      a Person other than a natural Person, known by a Responsible Official of
      that Person) making the representation, warranty or other statement, or
      with the exercise of reasonable due diligence under the circumstances (in
      accordance with the standard of what a reasonable Person in similar
      circumstances would have done) should have been known by the Person (or,
      in the case of a Person other than a natural Person, should have been
      known by a Responsible Official of that Person).



                                      26-

                  "Trademark Security Agreement" means the Trademark Security
      Agreement executed by the Borrowers in favor of the Administrative Agent
      for the benefit of the Lenders on the Closing Date, either as originally
      executed or as the same may from time to time be supplemented, modified,
      amended, renewed, extended or supplanted.

                  "Unrelated Person" means any Person other than (a) Persons
      owning 10% or more of the common stock of the Company as of the Closing
      Date, and (b) any employee stock ownership plan or other employee benefit
      plan covering the employees of a member of the Company and its
      Subsidiaries.

                  "Wholly-Owned Subsidiary" means a Subsidiary of a Borrower,
      100% of the capital stock or other equity interest of which is owned,
      directly or indirectly, by such Borrower, except for director's qualifying
      shares required by applicable Laws.

            1.2   Use of Defined Terms. Any defined term used in the plural
shall refer to all members of the relevant class, and any defined term used in
the singular shall refer to any one or more of the members of the relevant
class.

            1.3   Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, Generally Accepted Accounting Principles applied on a
consistent basis, except as otherwise specifically prescribed herein. In the
event that Generally Accepted Accounting Principles change during the term of
this Agreement such that the financial covenants contained in Sections 6.10
through 6.15 would then be calculated in a different manner or with different
components, the Borrowers and the Lenders agree to amend this Agreement in such
respects as are necessary to conform those covenants as criteria for evaluating
the Borrowers' financial condition to substantially the same criteria as were
effective prior to such change in Generally Accepted Accounting Principles.

            1.4   Rounding. Any financial ratios required to be maintained by
the Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.

            1.5   Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified, amended or supplanted are incorporated herein by this
reference.

            1.6   Miscellaneous Terms. The term "or" is disjunctive; the term
"and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also


                                      27-

apply to females; feminine terms also apply to males. The term "including" is by
way of example and not limitation.



                                      28-

                                    ARTICLE 2
                           LOANS AND LETTERS OF CREDIT

            2.1   Loans-General.

                  (a)   Subject to the terms and conditions set forth in this
      Agreement, at any time and from time to time from the Closing Date through
      the Maturity Date, each Lender shall, pro rata according to that Lender's
      Pro Rata Share, make Advances to the Borrowers under the Commitment in
      such amounts as the Borrowers may request; provided that:

                  (i)   giving effect to the requested Loan, (A) the sum of the
            aggregate outstanding principal balance of the Loans plus the Letter
            of Credit Usage shall not exceed (B) the lesser of the Borrowing
            Base, less any Availability Reserves, or the Commitment; and

                  (ii)  no Loans may be requested which would result in the sum
            of the aggregate outstanding principal balance of the Loans plus the
            Letter of Credit Usage being in excess of $30,000,000 if the effect
            thereof would be to eliminate the possibility that a Clean Down
            Period would occur when required.

      Subject to the limitations set forth herein (including, without
      limitation, the requirements of Section 3.6(d)), the Borrowers may borrow,
      repay and reborrow under the Commitment without premium or penalty.

                  (b)   Each Loan shall be made pursuant to a written Request
      for Loan which shall specify (i) the requested date of such Loan, (ii)
      whether such Loan is to be a Base Rate Loan or a Eurodollar Loan, (iii)
      the amount of such Loan, and (iv) the Eurodollar Period for such Loan if
      such Loan is to be a Eurodollar Loan.

                  (c)   Promptly following receipt of a Request for Loan, the
      Administrative Agent shall notify each Lender thereof by telephone or
      telecopier of the date and type of the Loan, the applicable Eurodollar
      Period, and that Lender's Pro Rata Share of the Loan. Not later than 11:00
      a.m., Los Angeles time, on the date specified for each Loan, each Lender
      shall make its Pro Rata Share of that Loan available to the Administrative
      Agent at the Administrative Agent's Office in immediately available funds.
      Upon fulfilment of the applicable conditions set forth in Article 8, the
      Loan shall be credited in immediately available funds to the Funding
      Account.

                  (d)   Unless the Requisite Lenders otherwise consent, (i) each
      Base Rate Loan shall be in an integral multiple of $100,000 which is not
      less than $500,000 and (ii) each Eurodollar Loan shall be in an integral
      multiple of $100,000 which is not less than $1,000,000.



                                      29-

                  (e)   If no Request for Loan has been delivered within the
      requisite notice periods set forth in Sections 2.2 or 2.3 in connection
      with a Loan which, if made, would not increase the outstanding principal
      amount of the Obligations and would not result in the sum of the
      outstanding Loans plus the Letter of Credit Usage being in excess of the
      Borrowing Base, then the Borrowers shall be deemed to have requested, as
      of the date upon which the related then outstanding Loan is due pursuant
      to Section 3.1(d)(i) and not paid, a Base Rate Loan in an amount equal to
      the amount necessary to cause the outstanding principal amount of the
      Obligations to remain the same and the Lenders shall make the Advances
      necessary to make such Loan notwithstanding the Borrowers' failure to
      deliver a Request for Loan or other notice required by Sections 2.1(c),
      2.2 and 2.3.

                  (f)   Unless the Administrative Agent otherwise consents, no
      more than four Eurodollar Loans shall be outstanding at any one time.

                  (g)   A Request for Loan shall be irrevocable upon the
      Administrative Agent's first receipt thereof.

            2.2   Base Rate Loans. Each request by the Borrowers for a Base Rate
Loan shall be made pursuant to a Request for Loan received by the Administrative
Agent, at the Administrative Agent's Office, not later than 9:00 a.m., Los
Angeles time, on the Business Day prior to the Business Day of the requested
Base Rate Loan. All Loans shall constitute Base Rate Loans unless properly
designated as Eurodollar Loans pursuant to Section 2.3.

            2.3   Eurodollar Loans.

                  (a)   Each request by the Borrowers for a Eurodollar Loan
      shall be made pursuant to a Request for Loan received by the
      Administrative Agent, at the Administrative Agent's Office, not later than
      9:00 a.m., Los Angeles time, at least three Eurodollar Business Days
      before the first day of the applicable Eurodollar Period.

                  (b)   At or about 11:00 a.m., Los Angeles time, two Eurodollar
      Business Days before the first day of the applicable Eurodollar Period,
      the Administrative Agent shall determine the applicable Eurodollar Rate
      (which determination shall be conclusive in the absence of manifest error)
      and promptly shall give notice of the same to the Borrowers and the
      Lenders by telephone, telecopier or telex.

                  (c)   No Eurodollar Loan may be requested during the
      continuance of a Default or Event of Default or which would necessarily
      result in a failure of the Borrowers to comply with Section 6.18.

                  (d)   Nothing contained herein shall require any Lender to
      fund any Eurodollar Loan in the Designated Eurodollar Market.



                                      30-

            2.4   Redesignation of Loans. The Borrowers may redesignate a Base
Rate Loan, or any portion thereof subject to Section 2.1(c), as a Eurodollar
Loan by delivering a Request for Redesignation to the Administrative Agent
subject to the same time limitations and other conditions set forth in Sections
2.3 and 3.1(e)(iv) in the case of a Request for Loan. The Borrowers may
redesignate a Eurodollar Loan, or any portion thereof subject to Sections 2.1(c)
and 2.1(g), as a Base Rate Loan by delivering a Request for Redesignation to the
Administrative Agent subject to the same time limitations and other conditions
set forth in Sections 2.2 and 3.1(e)(iv); provided that such redesignation shall
not be effective prior to the end of the Eurodollar Period for that Eurodollar
Loan. If no timely Request for Redesignation is delivered to the Administrative
Agent prior to the end of the Eurodollar Period for any Eurodollar Loan, it
shall automatically be redesignated as a Base Rate Loan as of the end of such
Eurodollar Period.

            2.5   Letters of Credit.

                  (a)   Subject to the terms and conditions hereof, at any time
      and from time to time from the Closing Date through the day prior to the
      Maturity Date, the Issuing Lenders severally agree to issue such Letters
      of Credit as the Borrowers may request by a Request for Letter of Credit;
      provided that:

                  (i)   giving effect to the issuance of such Letter of Credit
            (A) the sum of the aggregate outstanding principal balance of the
            Loans plus the Letter of Credit Usage shall not exceed (B) the
            lesser of the Borrowing Base or the Commitment;

                  (ii)  no Letters of Credit may be requested which would result
            in the sum of the aggregate outstanding principal balance of the
            Loans plus the Letter of Credit Usage being in excess of $30,000,000
            if the effect thereof would be to eliminate the possibility that a
            Clean Down Period would occur when required;

                  (iii) the aggregate undrawn effective face amount of all
            Letters of Credit issued in support of the purchase of merchandise
            by the Borrowers and their Subsidiaries plus the amount drawn with
            respect thereto and not reimbursed as required herein shall not
            exceed $15,000,000 at any time; and

                  (iv)  the aggregate undrawn effective face amount of all
            Standby Letters of Credit plus the amount drawn and not reimbursed
            as required herein shall not exceed $2,000,000 at any time.

                  (b)   Unless all the Lenders otherwise consent in a writing
      delivered to the Administrative Agent, the term of a Letter of Credit
      shall not exceed one year and shall not extend beyond the Maturity Date,
      in the case of standby letters of credit, or the date which is 30 days
      prior to the Maturity Date, in the case of commercial letters of credit.



                                      31-

                  (c)   Each Request for Letter of Credit shall be submitted to
      the relevant Issuing Lender and the Administrative Agent at least five
      Business Days prior to the date when the issuance of a Letter of Credit is
      requested unless such Issuing Lender and the Administrative Agent
      otherwise agree in their discretion. Upon issuance of a Letter of Credit,
      the Issuing Lenders shall promptly notify the Administrative Agent.

                  (d)   Upon the issuance of a Letter of Credit, each Lender
      shall be deemed to have purchased a pro rata participation from the
      relevant Issuing Lender, in an amount equal to that Lender's Pro Rata
      Share of the Letter of Credit. Without limiting the scope and nature of
      each such Lender's participation in any Letter of Credit, to the extent
      that such Issuing Lender has not been reimbursed by the Borrowers for any
      payment required to be made by such Issuing Lender under any Letter of
      Credit, each such Lender shall reimburse the Administrative Agent for the
      account of such Issuing Lender in the case of each Letter of Credit,
      promptly upon demand for the amount of such payment in accordance with its
      Pro Rata Share. The obligation of each such Lender so to reimburse such
      Issuing Lender shall be absolute and unconditional and shall not be
      affected by the occurrence of an Event of Default or any other occurrence
      or event. Any such reimbursement shall not relieve or otherwise impair the
      obligation of the Borrowers to reimburse such Issuing Lender for the
      amount of any payment made by such Issuing Lender under any Letter of
      Credit together with interest as hereinafter provided.

                  (e)   After the making by an Issuing Lender of any payment
      with respect to any Letter of Credit issued for the account of the
      Borrowers, the Borrowers agree to pay to such Issuing Lender, within one
      Business Day after demand therefor, an amount equal to such payment made
      by such Issuing Lender under that Letter of Credit, together with interest
      on such amount at the rate applicable to Base Rate Loans from the date of
      such payment through the date which is one Business Day after demand and,
      thereafter, at the Default Rate through the date of payment by the
      Borrowers. The principal amount of any such payment made to such Issuing
      Lender shall be used to reimburse such Issuing Lender for the payment made
      by it under the Letter of Credit. Each Lender that has reimbursed an
      Issuing Lender pursuant to Section 2.5(d) for its Pro Rata Share of any
      payment made by such Issuing Lender under a Letter of Credit shall
      thereupon acquire a participation, to the extent of such reimbursement, in
      the claim of such Issuing Lender against the Borrowers under this Section
      2.5(e).

                  (f)   If the Borrowers fail to make the payment required by
      Section 2.5(e), the Administrative Agent may but is not required to,
      without notice to or the consent of the Borrowers, cause Advances (as Base
      Rate Loans) to be made by the Lenders in accordance with their respective
      Pro Rata Shares in an aggregate amount equal to the amount paid by the
      relevant Issuing Lender on that Letter of Credit and, for this purpose,
      the conditions precedent set forth in Article 8 shall not apply. The
      proceeds of such Advances shall be paid to such Issuing Lender to
      reimburse it for the payment made by it under the Letter of Credit.



                                      32-

                  (g)   The issuance of any supplement, modification, amendment,
      renewal, or extension to or of any Letter of Credit shall be treated in
      all respects the same as the issuance of a new Letter of Credit, and shall
      require the submission of a new Request for Letter of Credit; provided
      however that nothing contained in this clause (g) shall require the
      payment of any additional issuance fees in respect thereof by any Borrower
      other than with respect to any extension of the term thereof or renewal
      thereof or any increase in the amount of such Letter of Credit.

                  (h)   The obligation of the Borrowers to pay to an Issuing
      Lender the amount of any payment made by such Issuing Lender under any
      Letter of Credit issued for the account of that Borrower shall be
      absolute, unconditional, and irrevocable, subject only to performance by
      such Issuing Lender of its obligations to the Borrowers under California
      Commercial Code Section 5109. Without limiting the foregoing, the
      obligations of the Borrowers shall not be affected by any of the following
      circumstances:

                        (i)   any lack of validity or enforceability of the
            Letter of Credit, this Agreement, or any other agreement or
            instrument relating thereto;

                        (ii)  any amendment or waiver of or any consent to
            departure from the Letter of Credit, this Agreement, or any other
            agreement or instrument relating thereto;

                        (iii) the existence of any claim, setoff, defense, or
            other rights which the Borrowers may have at any time against any
            Lender, any beneficiary of the Letter of Credit (or any persons or
            entities for whom any such beneficiary may be acting) or any other
            Person, whether in connection with the Letter of Credit, this
            Agreement, or any other agreement or instrument relating thereto, or
            any unrelated transactions;

                        (iv)  any demand, statement, or any other document
            presented under the Letter of Credit proving to be forged,
            fraudulent, invalid, or insufficient in any respect or any statement
            therein being untrue or inaccurate in any respect whatsoever so long
            as any such document appears to comply with the terms of the Letter
            of Credit;

                        (v)   the solvency or financial responsibility of any
            party issuing any documents in connection with a Letter of Credit;

                        (vi)  any failure or delay in notice of shipments or
            arrival of any Property;



                                      33-

                        (vii) any error in the transmission of any message
            relating to a Letter of Credit not caused by such Issuing Lender, or
            any delay or interruption in any such message;

                        (viii) any error, neglect or default of any
            correspondent of such Issuing Lender in connection with a Letter of
            Credit;

                        (ix)  any consequence arising from acts of God, war,
            insurrection, disturbances, labor disputes, emergency conditions or
            other causes beyond the control of the Lenders;

                        (x)   so long as such Issuing Lender in good faith
            determines that the draft, contract or document appears to comply
            with the terms of the Letter of Credit, the form, accuracy,
            genuineness or legal effect of any contract or document referred to
            in any document submitted to such Issuing Lender in connection with
            a Letter of Credit; and

                        (xi)  where such Issuing Lender has acted in good faith
            and without gross negligence, any other circumstance whatsoever.

                  (i)   The Issuing Lenders shall be entitled to the protection
      accorded to the Administrative Agent pursuant to Article 10, mutatis
      mutandis.

            2.6   Voluntary Reduction of the Commitment. The Borrowers shall
have the right, at any time and from time to time, without penalty or charge,
upon at least five Business Days prior written notice to the Administrative
Agent, voluntarily to reduce, permanently and irrevocably, in aggregate
principal amounts in an integral multiple of $1,000,000, or to terminate, all or
a portion of the then undisbursed portion of the Commitment, provided that any
such reduction or termination shall be accompanied by payment of all accrued and
unpaid commitment fees with respect to the portion of the Commitment being
reduced or terminated.

            2.7   Rights to Assume Funds Available for Advances. Provided
Administrative Agent has notified Lenders in accordance with Section 2.1(c),
unless the Administrative Agent shall have been notified by any Lender no later
than 10:00 a.m. (Los Angeles time) on the Business Day prior to the Business Day
proposed for the funding by the Administrative Agent of any Loan that such
Lender does not intend to make available to the Administrative Agent such
Lender's portion of the total amount of such Loan, the Administrative Agent may
assume that such Lender has made such amount available to the Administrative
Agent on the date of the Loan and may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. If the Administrative Agent
has made funds available to the Borrowers based on such an assumption and such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not pay
such corresponding amount forthwith upon demand therefor,


                                      34-

the Administrative Agent promptly shall notify the Borrowers and the Borrowers
shall pay such corresponding amount to the Administrative Agent. The
Administrative Agent also shall be entitled to recover from such Lender interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrowers to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to the Federal Funds Rate.
Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its Pro Rata Share or to prejudice any rights which the Administrative
Agent and each Borrower may have against any Lender as a result of any default
by such Lender hereunder.

            2.8   Collateral. The Obligations shall be secured by a first
priority (subject to Liens permitted by Section 6.9) perfected Lien on the
Collateral pursuant to the Collateral Documents.








                                      35-

                                    ARTICLE 3
                                PAYMENTS AND FEES

            3.1   Principal and Interest.

                  (a)   Interest shall be payable on the outstanding daily
      unpaid principal amount of each Loan from the date thereof until payment
      in full is made and shall accrue and be payable at the rates set forth
      herein before and after default, before and after maturity, before and
      after judgment, and before and after the commencement of any proceeding
      under any Debtor Relief Law, with interest on overdue interest to bear
      interest at the Default Rate to the fullest extent permitted by applicable
      Laws.

                  (b)   Interest accrued on each Base Rate Loan shall be due and
      payable on the last Business Day of each calendar month. Except as
      otherwise provided in Section 3.7, the unpaid principal amount of each
      Base Rate Loan shall bear interest at a fluctuating rate per annum equal
      to the Base Rate plus the Base Rate Margin. Each change in the interest
      rate for Base Rate Loans shall take effect simultaneously with the
      corresponding changes in the Base Rate and the Base Rate Margin.

                  (c)   Interest on each Eurodollar Loan which is for a term of
      three months or less shall be due and payable on the last day of the
      related Eurodollar Period. Interest accrued on each other Eurodollar Loan
      shall be due and payable on the date which is three months after the date
      such Eurodollar Loan was made, every three months thereafter and, in any
      event, on the last day of the related Eurodollar Period. Except as
      otherwise provided in Section 3.7, the unpaid principal amount of any
      Eurodollar Loan shall bear interest at a rate per annum equal to the
      Eurodollar Rate for that Eurodollar Loan plus the Eurodollar Margin.

                  (d)   If not sooner paid, the principal Indebtedness under
      this Agreement shall be payable as follows:

                        (i)   The principal amount of each Eurodollar Loan shall
            be immediately payable in cash on the last day of the related
            Eurodollar Period.

                        (ii)  The Loans shall be immediately payable in cash in
            the amount by which the aggregate outstanding amount of the Loans
            plus the Letter of Credit Usage at any time exceeds the lesser of
            the Commitment or the Borrowing Base.

                        (iii) The Loans shall be immediately payable in cash in
            the amount by which the aggregate outstanding amount of the Loans
            plus the Letter of Credit Usage exceeds $30,000,000 on March 1 of
            each year unless a Clean Down Period has previously been completed
            in that year.



                                      36-

                        (iv)  The Loans shall be payable immediately in cash on
            the Maturity Date.

                  (e)   The Loans may, at any time and from time to time,
      voluntarily be paid or prepaid in whole or in part without premium or
      penalty and without prior notice, except that with respect to any
      voluntary prepayment under this Section 3.1(e), (i) each prepayment shall
      be in an integral multiple of $100,000, which is, in the case of any
      prepayment of any Eurodollar Loan, not less than $500,000 or, if less, the
      balance of the Loan, (ii) the Administrative Agent shall have received
      written notice of any prepayment at least one Business Day, in the case of
      a Base Rate Loan, or by 9:00 a.m. (California local time) three Business
      Days, in the case of a Eurodollar Loan, before the date of prepayment,
      which notice shall identify the date and amount of the prepayment and the
      Loan(s) being prepaid, (iii) each prepayment of principal in respect of a
      Eurodollar Loan shall be accompanied by payment of interest accrued
      through the date of payment on the amount of principal paid and (iv) in
      any event, any payment or prepayment of all or any part of any Eurodollar
      Loan on a day other than the last day of the applicable Eurodollar Period
      shall be subject to Section 3.6(d).

            3.2   Commitment Fees. From and after the Closing Date, the
Borrowers shall pay commitment fees to the Administrative Agent for the ratable
account of the Lenders in amount equal to the Commitment Fee Rate times the
average daily amount by which the Commitment exceeds the sum of the principal
amount of the outstanding Loans and the Letter of Credit Usage. These commitment
fees shall be payable quarterly in arrears on the last Business Day of each
Fiscal Quarter, upon any termination or reduction of the Commitment, and on the
Maturity Date.

            3.3   Letter of Credit Fees. With respect to each Letter of Credit
issued by an Issuing Lender, the Borrowers shall pay to such Issuing Lender the
following fees on a non-refundable basis prior to the issuance of such Letter of
Credit:

                        (i)   prior to the issuance of any Letter of Credit, a
            fronting fee in an amount set forth in a letter agreement with such
            Issuing Lender, which fee shall be for the sole account of such
            Issuing Lender, plus

                        (ii)  for the ratable account of the Lenders, a letter
            of credit fee equal to the then applicable Eurodollar Margin times
            the maximum face amount of each Letter of Credit for the tenor of
            the Letter of Credit, plus

                        (iii) for the sole account of such Issuing Lender, such
            standard payment, negotiation, processing, amendment and other
            similar charges as and when such Issuing Lender may from time to
            time advise the Borrowers are applicable to Letters of Credit.



                                      37-

            3.4   Upfront Fees. On the Closing Date, the Borrowers shall pay to
the Administrative Agent for the account of the Lenders upfront fees in the
amounts set forth in a fee letter of even date herewith between the
Administrative Agent and the Company. The Administrative Agent has advised each
Lender of the rate at which such fees shall be paid upon its allocated Pro Rata
Share. The upfront fees are fully earned when due and are not refundable under
any circumstances.

            3.5   Capital Adequacy. If any Lender determines that either (i) the
introduction of or any change in any law, order or regulation or in the
interpretation or administration of any law, order or regulation by any
Governmental Agency charged with the interpretation thereof or (ii) compliance
with any guideline or request issued or made from the date hereof from any such
Governmental Agency (whether or not having the force of law) has or would have
the effect of reducing the rate of return on the capital of that Lender or any
corporation controlling that Lender as a consequence of that Lender's Pro Rata
Share or the making or maintaining of Loans or Letters of Credit below the rate
at which that Lender or such other corporation could have achieved but for such
introduction, change or compliance (taking into account the policies of that
Lender or corporation with regard to capital), then the Borrowers shall from
time to time, upon demand by such Lender, pay to that Lender additional amounts
sufficient to compensate such Lender or other corporation for such reduction. A
certificate as to such amounts, submitted to the Borrowers by the relevant
Lender, shall be conclusive and binding for all purposes, absent manifest error.

            3.6   Eurodollar Fees and Costs.

                  (a)   If, after the date hereof, the existence or occurrence
      of any Special Eurodollar Circumstance:

                        (1)   shall subject any Lender or its Eurodollar Lending
            Office to any tax, duty or other charge or cost with respect to any
            Eurodollar Rate Advance, or its obligation to make Eurodollar Rate
            Advances, or shall change the basis of taxation of payments to any
            Lender of the principal of or interest on any Eurodollar Rate
            Advance or any other amounts due under this Agreement in respect of
            any Eurodollar Rate Advance or its obligation to make Eurodollar
            Rate Advances (except for changes in any tax, duty or other charge
            on the overall net income, gross income or gross receipts of such
            Lender or its Eurodollar Lending Office);

                        (2)   shall impose, modify or deem applicable any
            reserve (including any reserve imposed by the Board of Governors of
            the Federal Reserve System), special deposit or similar requirements
            against assets of, deposits with or for the account of, or credit
            extended by, any Lender or its Eurodollar Lending Office; or

                        (3)   shall impose on any Lender or its Eurodollar
            Lending Office or the Designated Eurodollar Market any other
            condition affecting any Eurodollar


                                      38-

            Loan, its obligation to make Eurodollar Rate Advances or this
            Agreement, or shall otherwise affect any of the same;

      and the result of any of the foregoing, as reasonably determined by such
      Lender, increases the cost to such Lender or its Eurodollar Lending Office
      of making or maintaining any Eurodollar Rate Advance or in respect of any
      Eurodollar Rate Advance, its obligation to make Eurodollar Rate Advances
      or reduces the amount of any sum received or receivable by such Lender or
      its Eurodollar Lending Office with respect to any Eurodollar Rate Advance
      or its obligation to make Eurodollar Rate Advances (assuming the Lender's
      Eurodollar Lending Office had funded 100% of its Eurodollar Rate Advance
      in the Designated Eurodollar Market), then, upon demand by such Lender
      (with a copy to the Administrative Agent), the relevant Borrower shall pay
      to such Lender such additional amount or amounts as will compensate such
      Lender for such increased cost or reduction (determined as though such
      Lender's Eurodollar Lending Office had funded 100% of its Eurodollar Rate
      Advance in the Designated Eurodollar Market). A statement of any Lender
      claiming compensation under this Section and setting forth the additional
      amount or amounts to be paid to it hereunder shall be conclusive in the
      absence of manifest error. Each Lender agrees to endeavour promptly to
      notify the relevant Borrower of any event of which it has actual knowledge
      (and, in any event, within one year from the date on which it obtained
      such knowledge), occurring after the Closing Date, which will entitle such
      Lender to compensation pursuant to this Section, and agrees to designate a
      different Eurodollar Lending Office if such designation will avoid the
      need for or reduce the amount of such compensation and will not, in the
      judgment of such Lender, otherwise be disadvantageous to such Lender.

                  (b)   If, after the date hereof, the existence or occurrence
      of any Special Eurodollar Circumstance shall, in the reasonable opinion of
      any Lender, make it unlawful, impossible or impracticable for such Lender
      or its Eurodollar Lending Office to make, maintain or fund any Eurodollar
      Loan, or materially restrict the authority of such Lender to purchase or
      sell, or to take deposits of, Dollars in the Designated Eurodollar Market,
      or to determine or charge interest rates based upon the Eurodollar Rate,
      and such Lender shall so notify the Administrative Agent and the
      Borrowers, then such Lender's obligation to make Eurodollar Rate Advances
      shall be suspended for the duration of such illegality, impossibility or
      impracticability and the Administrative Agent forthwith shall give notice
      thereof to the other Lenders and the Borrowers. Upon receipt of such
      notice, the outstanding principal amount of such Lender's Eurodollar Rate
      Advances, together with accrued interest thereon, automatically shall be
      converted to Base Rate Advances with Eurodollar Periods corresponding to
      the Eurodollar Loans of which such Eurodollar Rate Advances were a part on
      either (1) the last day of the Eurodollar Period(s) applicable to such
      Eurodollar Rate Advances if such Lender may lawfully continue to maintain
      and fund such Eurodollar Rate Advances to such day(s) or (2) immediately
      if such Lender may not lawfully continue to fund and maintain such
      Eurodollar Rate Advances to such day(s), provided that in such event the
      conversion shall not be subject to payment of a prepayment


                                      39-

      fee under Section 3.6(d). In the event that such Lender is unable, for the
      reasons set forth above, to make, maintain or fund any Eurodollar Loan,
      such Lender shall fund such amount as a Base Rate Advance for the same
      period of time, and such amount shall be treated in all respects as a Base
      Rate Advance.

                  (c)   If, with respect to any proposed Eurodollar Loan:

                        (1)   the Administrative Agent reasonably determines
            that, by reason of circumstances affecting the Designated Eurodollar
            Market generally that are beyond the reasonable control of the
            Lenders, deposits in Dollars (in the applicable amounts) are not
            being offered to the Lenders in the Designated Eurodollar Market for
            the applicable Eurodollar Period; or

                        (2)   the Requisite Lenders advise the Administrative
            Agent that the Eurodollar Rate as determined by the Administrative
            Agent (i) does not represent the effective pricing to such Lenders
            for deposits in Dollars in the Designated Eurodollar Market in the
            relevant amount for the applicable Eurodollar Period, or (ii) will
            not adequately and fairly reflect the cost to such Lenders of making
            the applicable Eurodollar Rate Advances;

      then the Administrative Agent forthwith shall give notice thereof to the
      Borrowers and the Lenders, whereupon until the Administrative Agent
      notifies the Borrowers that the circumstances giving rise to such
      suspension no longer exist, the obligation of the Lenders to make any
      future Eurodollar Rate Advances shall be suspended. If at the time of such
      notice there is then pending a Request for Loan that specifies a
      Eurodollar Loan, such Request for Loan shall be deemed to specify a Base
      Rate Loan.

                  (d)   Upon payment or prepayment of any Eurodollar Loan (other
      than as the result of a conversion required under Section 3.6(b)), on a
      day other than the last day in the applicable Eurodollar Period (whether
      voluntarily, involuntarily, by reason of acceleration, or otherwise), or
      upon the failure of a Borrower to borrow on the date or in the amount
      specified for a Eurodollar Loan in any Request for Loan, the relevant
      Borrower shall indemnify the Lenders against and reimburse each Lender on
      demand for all costs, expenses, penalties, losses, legal fees and damages
      incurred or sustained, or that would be incurred or sustained, by the
      Lenders, including loss of interest, as reasonably determined by the
      Lenders, to the extent that the same are a direct result of such payment,
      prepayment or failure to borrow. Each Lender's determination of the amount
      payable under this Section 3.6(d) shall be conclusive in the absence of
      manifest error. The Borrower shall also pay any customary administrative
      fees charged by such Lender in connection with the foregoing. For purposes
      of calculating amounts payable by Borrowers to the Lenders under this
      Section 3.6, each Lender shall be deemed to have funded each Eurodollar
      Loan made by it at the Eurodollar Rate for such Loan by a matching deposit
      or other borrowing in the


                                      40-

      Designated Eurodollar Market for a comparable amount and for a comparable
      period, whether or not such Eurodollar Rate Loan was in fact so funded.

            3.7   Post Default Interest and Late Payments. So long as any Event
of Default has occurred and is continuing, the Loans shall thereafter bear
interest, and, in any event if any installment of principal or interest or any
fee or cost or other amount payable under any Loan Document to any Creditor
Party is not paid when due, the Obligations shall thereafter bear interest until
any overdue amount is paid in full or the Event of Default is cured or waived,
at a fluctuating interest rate per annum at all times equal to 2% per annum
above the rate of interest that would otherwise be applicable pursuant to this
Agreement (the "Default Rate"), to the fullest extent permitted by applicable
Laws. Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be compounded quarterly, on the last day of each
calendar quarter, to the fullest extent permitted by applicable Laws.

            3.8   Right to Assume Payments Will be Made by the Borrowers. Unless
the Administrative Agent shall have been notified by the relevant Borrower prior
to the date on which any payment to be made by that Borrower hereunder is due
that such Borrower does not intend to remit such payment, the Administrative
Agent may, in its sole discretion, assume that such Borrower has remitted such
payment when so due and may, in its sole discretion and in reliance upon such
assumption, make available to each Lender on such payment date an amount equal
to such Lender's share of such assumed payment. If such Borrower has not in fact
remitted such payment to the Administrative Agent each Lender shall forthwith on
demand repay to the Administrative Agent the amount of such assumed payment made
available to such Lender, together with interest thereon in respect of each day
from and including the date such amount was made available by the Administrative
Agent to such Lender to the date such amount is repaid to the Administrative
Agent at the Federal Funds Rate.

            3.9   Computation of Interest and Fees. Computation of Base Rate
interest hereunder shall be made on the basis of a year of 365 days (or 366 days
for leap years) and the actual number of days elapsed. Calculation of all other
interest or fees under this Agreement shall be calculated on the basis of a year
of 360 days and the actual number of days elapsed. The Borrowers acknowledge
that such calculation method will result in a higher yield to the Lenders than a
method based on a year of 365 or 366 days.

            3.10  Non-Business Days. If any payment to be made by a Borrower or
any other Party under any Loan Document shall come due on a day other than a
Business Day, payment shall instead be considered due on the next succeeding
Business Day and the extension of time shall be reflected in computing interest.

            3.11  Manner and Treatment of Payments.

                  (a)   Each payment hereunder shall be made to the
      Administrative Agent, at the Administrative Agent's Office, for the
      account of the relevant Creditor Party in


                                      41-

      immediately available funds not later than 11:00 a.m., Los Angeles time,
      on the day of payment (which must be a Business Day). All payments
      received after these deadlines on any Business Day, shall be deemed
      received on the next succeeding Business Day. The amount of all payments
      received by the Administrative Agent for the account of any Lender shall
      be promptly paid by the Administrative Agent to that Lender in immediately
      available funds. All payments shall be made in Dollars.

                  (b)   Each Lender shall use its best efforts to keep a record
      of Advances made by it and payments received by it with respect to each of
      the Loans and such record shall, as against each Borrower, be presumptive
      evidence of the amounts owing. Notwithstanding the foregoing sentence, no
      Lender shall be liable to any Party for any failure to keep such a record.

                  (c)   Each payment of any amount payable by a Borrower or any
      other Party under this Agreement or any other Loan Document shall be made
      free and clear of, and without reduction by reason of, any taxes,
      assessments or other charges imposed by any Governmental Agency, central
      bank or comparable authority (other than taxes on overall net income,
      gross income or gross receipts of a Lender or its Eurodollar Lending
      Office). To the extent that a Borrower is obligated by applicable Laws to
      make any deduction or withholding on account of taxes, assessments or
      other charges imposed by any Governmental Agency from any amount payable
      to any Lender under this Agreement, such Borrower shall (i) make such
      deduction or withholding and pay the same to the relevant Governmental
      Agency and (ii) pay such additional amount to that Lender as is necessary
      to result in that Lender's receiving a net after-tax (or after-assessment
      or after-charge) amount equal to the amount to which that Lender would
      have been entitled under this Agreement absent such deduction or
      withholding.

            3.12  Funding Sources. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.

            3.13  Failure to Charge Not Subsequent Waiver. Any decision by any
Creditor Party not to require payment of any interest (including interest
arising under Section 3.7), fee, cost or other amount payable under any Loan
Document, or to calculate any amount payable by a particular method, on any
occasion shall in no way limit or be deemed a waiver of that Creditor Party's
right to require full payment of any interest (including interest arising under
Section 3.7), fee, cost or other amount payable under any Loan Document, or to
calculate an amount payable by another method, on any other or subsequent
occasion.



                                      42-

            3.14  Authority to Charge Account. The Borrowers hereby authorize
Bank of America upon notice from the Administrative Agent to charge the Funding
Account and thereafter to remit to the Administrative Agent, in such amounts as
may from time to time be necessary to cause timely payment of principal,
interest, fees and other charges payable by the Borrowers under the Loan
Documents.

            3.15  Survivability. All of the Borrowers' obligations under
Sections 3.5 and 3.6 shall survive the date on which all Loans hereunder are
fully paid.






                                      43-

                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

            Each Borrower represents and warrants to the Creditor Parties as
follows:

            4.1   Accounts Receivable and Inventory. Each account described on
any Borrowing Base Certificate delivered to the Administrative Agent as an
Eligible Account is fully earned and is the subject of an appropriate invoice to
the customer and otherwise fulfills the eligibility criteria set forth in the
definition of "Eligible Accounts." All inventory reported on any Borrowing Base
Certificate delivered to the Administrative Agent as Eligible Inventory is of
merchantable quality, is salable in the ordinary course of business of the
Borrower and its Subsidiaries and otherwise fulfills the eligibility criteria
set forth in the definition of "Eligible Inventory."

            4.2   Existence and Qualification; Power; Compliance With Laws. Each
Borrower is a corporation duly formed, validly existing and in good standing
under the laws of the state of its incorporation, as described in the preamble
to this Agreement. Each of the Borrowers is duly qualified to transact business,
is in good standing in its jurisdiction of incorporation and each other
jurisdiction, in which the conduct of its business or the ownership or leasing
of its properties makes such qualification or registration necessary, except
where the failure so to qualify or register and to be in good standing would not
constitute a Material Adverse Effect. The chief executive offices and principal
place of business of each Borrower are located at the addresses for notices set
forth for that Borrower in the signature pages to this Agreement. Each of the
Borrowers has all requisite corporate power and authority to conduct its
business, to own and lease its properties and to execute and deliver each Loan
Document to which it is a party and to perform the Obligations. All outstanding
shares of capital stock of each Borrower are duly authorized, validly issued,
fully paid, non-assessable and issued in compliance with all applicable state
and federal securities and other Laws. Except as set forth on Schedule 4.2, no
Person holds any material option, warrant or other right to acquire any shares
of capital stock of any Borrower. Each Borrower is in compliance with all Laws
and other legal requirements applicable to its business, has obtained all
authorizations, consents, approvals, orders, licenses and permits from, and has
accomplished all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental Agency that are
necessary for the transaction of its business, except where the failure so to
comply, file, register, qualify or obtain exemptions does not constitute a
Material Adverse Effect.

            4.3   Authority; Compliance With Other Agreements and Instruments
and Government Regulations. The execution, delivery and performance by each
Borrower and the Guarantors of each Loan Document to which it is a Party have
been duly authorized by all necessary corporate action, and do not:

                  (a)   Require any consent or approval of any partner,
      director, stockholder, security holder or creditor of such Party, except
      as heretofore obtained;



                                      44-

                  (b)   Violate or conflict with any provision of that such
      Party's charter, articles or certificate of incorporation or bylaws, as
      applicable;

                  (c)   Result in or require the creation or imposition of any
      Lien or right of others (other than pursuant to the Collateral Documents)
      upon or with respect to any Property now owned or leased or hereafter
      acquired by that Party;

                  (d)   Violate any Requirement of Law applicable to such Party;

                  (e)   Result in a breach of or constitute a default under, or
      cause or permit the acceleration of any obligation owed under, any
      indenture or loan or credit agreement or any other Contractual Obligation
      to which such Party is a party or by which such Party or any of its
      Property is bound;

and no Party is in violation of, or default under, any Requirement of Law or
Contractual Obligation, or any indenture, loan or credit agreement described in
Section 4.3(e), in any respect that constitutes a Material Adverse Effect.

            4.4   No Governmental Approvals Required. No authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is required to authorize or permit
under applicable Laws the execution, delivery and performance by any Borrowers
or Guarantor of any of the Loan Documents to which it is a Party.

            4.5   Subsidiaries.

                  (a)   As of the Closing Date, Schedule 4.5 hereto correctly
      sets forth the names, the form of legal entity, jurisdictions of
      organization, chief executive offices and principal place of business of
      all Subsidiaries of the Borrowers. Except as described in Schedule 4.5,
      none of the Borrowers owns as of the Closing Date any capital stock or
      equity interest in any Person. All of the outstanding shares of capital
      stock, or all of the units of equity interest, as the case may be, of each
      such Subsidiary which is wholly-owned by a Borrower are (and as to each
      partially owned Subsidiary, to the best knowledge of the Borrowers, are)
      owned of record and beneficially as indicated on Schedule 4.5, except as
      set forth thereon, and all such shares or equity interests so owned are
      duly authorized, validly issued, fully paid, nonassessable, and were
      issued in compliance with all applicable state, federal and other Laws,
      and are free and clear of all Liens.

                  (b)   Each such Subsidiary is a legal entity of the form
      described for that Subsidiary in Schedule 4.5, duly organized, validly
      existing, and in good standing under the Laws of its jurisdiction of
      organization, is duly qualified to do business as a foreign organization
      and is in good standing as such, and has filed fictitious business name
      statements, in each jurisdiction in which the conduct of its business or
      the ownership or leasing of its properties makes such qualification
      necessary (except where the failure to be


                                      45-

      so duly qualified and in good standing does not constitute a Material
      Adverse Effect), and has all requisite power and authority to conduct its
      business and to own and lease its properties.

                  (c)   Each such Subsidiary is in compliance with all Laws and
      other requirements applicable to its business and has obtained all
      authorizations, consents, approvals, orders, licenses, and permits from,
      and each such Subsidiary has accomplished all filings, registrations, and
      qualifications with, or obtained exemptions from any of the foregoing
      from, any Governmental Agency that are necessary for the transaction of
      its business, except where the failure to be in such compliance, obtain
      such authorizations, consents, approvals, orders, licenses, and permits,
      accomplish such filings, registrations, and qualifications, or obtain such
      exemptions, does not constitute a Material Adverse Effect.

            4.6   Financial Statements. The Borrowers have furnished to the
Administrative Agent (a) the audited consolidated and unaudited consolidating
financial statements of the Company and its Subsidiaries for the Fiscal Year
ended December 31, 2000 and (b) the internally prepared consolidated and
consolidating financial statements of the Company and its Subsidiaries for the
three month fiscal period ended June 30, 2001. Such financial statements fairly
present in all material respects the financial condition, results of operations
and changes in financial position of the Company and its Subsidiaries as of such
dates and for such periods in conformity with Generally Accepted Accounting
Principles consistently applied, subject only to normal year-end accruals and
audit adjustments.

            4.7   No Other Liabilities; No Material Adverse Effect. The
Borrowers and their Subsidiaries do not have any material liability or material
contingent liability required under Generally Accepted Accounting Principles to
be reflected or disclosed, and not reflected or disclosed, in the financial
statements described in Section 4.6, other than liabilities and contingent
liabilities arising in the ordinary course of business since the date of such
financial statements. As of the Closing Date, no circumstance or event has
occurred that constitutes a Material Adverse Effect since December 31, 2000.

            4.8   Title to and Location of Property. The Borrowers and their
Subsidiaries have valid title to the Property (other than assets which are the
subject of a Capital Lease) reflected in the financial statements described in
Section 4.6, other than items of Property or exceptions to title which are in
each case immaterial and Property subsequently sold or disposed of in the
ordinary course of business. Such Property of the Borrowers and the Subsidiaries
is free and clear of all Liens and Rights of Others, other than those permitted
under Section 6.9. All Property of the Borrowers and their Subsidiaries is
located at one of the locations described in Schedule 4.8.

            4.9   Intangible Assets. The Borrowers and their Subsidiaries own,
or possess the right to use to the extent necessary in their respective
businesses, all material trademarks, trade names, copyrights, patents, patent
rights, computer software, licenses and other intangible assets that are used in
the conduct of their businesses as now operated. None of the intangible assets


                                      46-

described in the first sentence of this Section, to the best knowledge of each
Borrower, conflicts with the valid trademark, trade name, copyright, patent,
patent right or intangible asset of any other Person to the extent that such
conflict constitutes a Material Adverse Effect.

            4.10  Governmental Regulation. Neither any of the Borrowers nor any
Subsidiary of any of the Borrowers is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, the Investment Company Act of 1940 or to any other Law limiting or
regulating its ability to incur Indebtedness for money borrowed.

            4.11  Litigation. Except for (a) any matter fully covered (subject
to applicable deductibles and retentions) by insurance for which the insurance
carrier has assumed full responsibility, (b) any matter, or series of related
matters, involving a claim against the Borrowers or any of their Subsidiaries of
less than $250,000, and (c) matters set forth in Schedule 4.11, as of the
Closing Date, there are no actions, suits, proceedings or investigations pending
as to which any of the Borrowers or any Subsidiary of any of the Borrowers has
been served or has received written notice or, to the best knowledge of the
Borrowers, threatened against or affecting any of the Borrowers, any Subsidiary
of any of the Borrowers or any Property of any of them before any Governmental
Agency. Except for matters set forth in Schedule 4.11, there is no reasonable
basis, to the best knowledge of the Borrowers, for any action, suit, proceeding
or investigation against or affecting any of the Borrowers, any Subsidiary of
any of the Borrowers or any Property of any of them before any Governmental
Agency which would constitute a Material Adverse Effect.

            4.12  Binding Obligations. Each of the Loan Documents to which the
Borrowers and the Guarantors are a party will, when executed and delivered by
such Party, constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies
and/or defenses as a matter of judicial discretion.

            4.13  No Default. No event has occurred and is continuing that is a
Default or Event of Default.

            4.14  ERISA.

                  (a)   Except as disclosed in Schedule 4.14, as of the Closing
      Date, neither any of the Borrowers nor any ERISA Affiliate of any of the
      Borrowers maintains, contributes to or is required to contribute to any
      "employee pension benefit plan" that is subject to Title IV of ERISA.

                  (b)   With respect to each Pension Plan disclosed in Schedule
      4.14:

                        (i)   such Pension Plan complies in all material
            respects with ERISA and any other applicable Laws;



                                      47-

                        (ii)  such Pension Plan has not incurred any material
            "accumulated funding deficiency", as that term is defined in Section
            302 of ERISA;

                        (iii) no "reportable event" (as defined in Section 4043
            of ERISA) has occurred that would subject any of the Borrowers or
            any Subsidiary of a Borrower to any liability with respect to such
            Pension Plan that would constitute a Material Adverse Effect;

                        (iv)  neither any of the Borrowers nor any Subsidiary of
            a Borrower has engaged in any non-exempt "prohibited transaction"
            (as defined in Section 4975 of the Code) that would subject any of
            the Borrowers or any Subsidiary of a Borrower to any penalty that
            would constitute a Material Adverse Effect;

                        (v)   no Termination Event has occurred or may
            reasonably be expected to occur; and

                        (vi)  no material unfunded vested liabilities exist
            under any Pension Plan and the present value of all benefit
            liabilities under each Pension Plan and each Pension Plan of a
            Subsidiary and of an ERISA Affiliate do not exceed by a material
            amount the value of the assets of such Plan.

                  (c)   As of the Closing Date, all contributions required to be
      made by the Borrowers or any of their Subsidiaries to a Multiemployer Plan
      described in Schedule 4.14 have been made except as may be described in
      Schedule 4.14. None of the Borrowers, any Subsidiary of any of the
      Borrowers, nor any ERISA Affiliate has incurred any withdrawal liability
      under Section 4201 of ERISA that could have a Material Adverse Effect.
      Neither any of the Borrowers nor any ERISA Affiliate of any of the
      Borrowers has received any notification that any Multiemployer Plan is in
      reorganization or has been terminated, within the meaning of Title IV of
      ERISA, and no Multiemployer Plan is reasonably expected to be in
      reorganization or to be terminated, where such reorganization has resulted
      or can reasonably be expected to result in an increase in the
      contributions required to be made to such plan that could have a Material
      Adverse Effect.

                  (d)   Each of the Borrowers, their Subsidiaries and their
      ERISA Affiliates are in compliance with those provisions of ERISA which
      are applicable to the Borrowers, their Subsidiaries and their ERISA
      Affiliates, the non-compliance with which would have a Material Adverse
      Effect.

            4.15  Regulations T, U and X. No part of the proceeds of any Loan
hereunder will be used to purchase or carry, or to extend credit to others for
the purpose of purchasing or carrying, any "margin stock" (as such term is
defined in Regulation U) in violation of Regulations T,


                                      48-

U or X. Neither any of the Borrowers nor any Subsidiary of a Borrower is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any such "margin stock."

            4.16  Disclosure. No written statement made by a Responsible
Official of any Borrower or any Guarantor to any Creditor Party in connection
with this Agreement, or in connection with any Loan, contains any untrue
statement of a material fact or omits a material fact (which fact is known to
such Borrower or Guarantor, in the case of materials not furnished by such
Borrower or Guarantor) necessary to make the statement made not misleading in
light of all the circumstances existing at the date the statement was made.
There is no fact known to any Borrower or Guarantor (other than facts generally
applicable to businesses of the types engaged in by the Borrowers) which would
constitute a Material Adverse Effect that has not been disclosed in writing to
the Lenders.

            4.17  Tax Liability. The Borrowers and their Subsidiaries have filed
all tax returns which are required to be filed, and have paid, withheld,
collected or remitted, all taxes, interest, penalties and installments of taxes
due and payable by them with respect to the periods, Property or transactions
covered by such returns, or pursuant to any assessment received by either any of
the Borrowers or any Subsidiary of a Borrower, except (a) taxes for which such
Borrower or Subsidiary has been fully indemnified and (b) such taxes, if any, as
are being contested in good faith by appropriate proceedings diligently pursued
and as to which adequate reserves have been established and maintained. To the
best knowledge of the Borrowers, there is no tax assessment contemplated or
proposed by any Governmental Agency against any Borrower or any Subsidiary of a
Borrower that would constitute a Material Adverse Effect.

            4.18  Projections. To the best knowledge of each Borrower, the
assumptions set forth in the Projections are reasonable and consistent with each
other and with all facts known to the Borrowers. No material assumption is
omitted as a basis for the Projections and the Projections are reasonably based
on such assumptions. Nothing in this Section shall be construed as a
representation or covenant that the Projections in fact will be achieved.

            4.19  Security Interests. The Collateral Documents create a valid
security interest in the Collateral described therein in favor of the
Administrative Agent securing the Obligations. Upon (a) the filing of UCC-1
financing statements delivered to the Administrative Agent pursuant to Section
8.1(a) with the appropriate Governmental Agencies, and (b) the filing of the
Trademark Security Agreement with the United States Patent and Trademark Office,
all action necessary to perfect the security interests so created by the
Collateral Documents described in this sentence, will have been taken and
completed (except for the requirement that continuation statements periodically
must be filed and/or recorded with respect to financing statements on file in
favor of the Administrative Agent). Such security interests are of first
priority except as otherwise permitted under this Agreement.



                                      49-

            4.20  Hazardous Materials.

                  (a)   Except as specifically disclosed in Schedule 4.20, the
      on-going operations of the Borrowers and their Subsidiaries, and to the
      best of their knowledge the on-going operations of all current tenants,
      subtenants or other occupants of all or any part of the real property
      described on Schedule 4.8 (the "Real Property"), are conducted in
      accordance with and comply in all respects with all Environmental Laws,
      except such non-compliance which would not (if enforced in accordance with
      applicable Law) result in liability in excess of $100,000 in the
      aggregate.

                  (b)   Except as specifically disclosed in Schedule 4.20, the
      Borrowers and each of their Subsidiaries have obtained all licenses,
      permits, authorizations and registrations required under any Environmental
      Law ("Environmental Permits") and necessary for their respective ordinary
      course operations, all such Environmental Permits are in good standing,
      and the Borrowers and each of their Subsidiaries are in compliance with
      all material terms and conditions of such Environmental Permits.

                  (c)   Except as specifically disclosed in Schedule 4.20,
      neither any of the Borrowers nor any Subsidiary of any of the Borrowers
      (nor to the best of their knowledge no current tenants, or other occupants
      of all or part of the Real Property) or any of their respective present
      Property or operations, is subject to any existing, pending, threatened or
      outstanding written order, suit, claim, proceeding, investigation, order,
      comment, injunction, writ, award, action or proceeding from or agreement
      with any Governmental Agency or third party, nor subject to any judicial
      or docketed administrative proceeding, respecting any Environmental Law,
      Environmental Claim or Hazardous Material.

                  (d)   Except as specifically disclosed in Schedule 4.20, there
      are no Hazardous Materials or other conditions or circumstances existing
      with respect to any Property, or arising from operations prior to the
      Closing Date, of the Borrowers or any of their Subsidiaries that could
      reasonably be expected to give rise to Environmental Claims with a
      potential liability of the Borrowers and their Subsidiaries in excess of
      $100,000 in the aggregate for any such condition, circumstance or
      Property. In addition, (i) neither any of the Borrowers nor any Subsidiary
      of any of the Borrowers has any underground storage tanks (x) that are not
      properly registered or permitted under applicable Environmental Laws, or
      (y) that are leaking or disposing of Hazardous Materials off-site, and
      (ii) the Borrowers and their Subsidiaries have notified all of their
      employees of the existence, if any, of any health hazard arising from the
      conditions of their employment and have met all notification requirements
      under Title III of CERCLA and all other Environmental Laws.

            4.21  Material Contracts. As of the Closing Date, except as
disclosed on Schedule 4.21, neither any of the Borrowers nor any Subsidiary of a
Borrower is a party to any Material Contract.



                                      50-

                                    ARTICLE 5
                              AFFIRMATIVE COVENANTS
                           (OTHER THAN INFORMATION AND
                             REPORTING REQUIREMENTS)

            So long as any Loan remains unpaid, any Letter of Credit remains
outstanding, any other Obligation remains unpaid, or any portion of the
Commitment remains in force, the Borrowers shall, and shall cause each of their
respective Subsidiaries to, unless the Requisite Lenders otherwise consent in
writing:

            5.1   Payment of Taxes and Other Potential Liens. Pay, collect,
withhold, remit and discharge promptly all taxes, assessments and governmental
charges or levies imposed upon any of them, upon their respective Property or
any part thereof, upon their respective income or profits or any part thereof or
upon any right or interest of the Creditor Parties under any Loan Document,
except that the Borrowers and their Subsidiaries shall not be required to pay or
cause to be paid (a) any income or gross receipts tax or any other tax on or
measured by income generally applicable to banks or their corporate parents or
(b) any tax, assessment, charge or levy that is not yet past due, or is being
contested in good faith by appropriate proceedings diligently pursued, so long
as the relevant entity has established and maintains adequate reserves for the
payment of the same and by reason of such nonpayment and contest there is no
material risk that any item or portion of Property of the Borrowers or their
Subsidiaries would be seized, levied upon or forfeited.

            5.2   Preservation of Existence. Preserve and maintain, or cause to
be maintained and preserved, their respective existences in the jurisdictions of
their formation and all authorizations, rights, franchises, privileges,
consents, approvals, orders, licenses, permits, or registrations from any
Governmental Agency that are necessary for the transaction of their respective
businesses, and qualify and remain qualified to transact business in each
jurisdiction in which such qualification is necessary in view of their
respective businesses or the ownership or leasing of their respective
properties, except where the failure to do so would not result in a Material
Adverse Effect.

            5.3   Maintenance of Properties. Maintain, preserve and protect, or
cause to be maintained, preserved and protected, all of their respective
depreciable properties in good order and condition, subject to wear and tear in
the ordinary course of business, or damage or destruction from casualties which
are fully covered by insurance (subject to customary deductibles and
retentions), and not permit any waste of their respective properties, except
that the failure to maintain, preserve and protect a particular item of
depreciable Property that is not of significant value, either intrinsically or
to the operations of the Borrowers and their Subsidiaries, taken as a whole,
shall not constitute a violation of this covenant.

            5.4   Maintenance of Insurance. Maintain, or cause to be maintained,
liability, casualty and other insurance (subject to customary deductibles and
retentions) in such amounts and against such risks as are customary for
similarly situated businesses, including public liability insurance, business
interruption insurance and all-risk casualty insurance with respect to all of
the


                                      51-

Borrowers' tangible personal property. Such insurance shall be maintained, in
amounts and with responsible insurance companies reasonably acceptable to the
Requisite Lenders. The Administrative Agent shall be named as additional insured
and loss payee as its interests may appear, with respect to casualty insurance
on all Collateral, and the Borrowers shall deliver to the Administrative Agent,
not less frequently than once in each calendar year, (a) an Accord Certificate
(or its equivalent) evidencing that insurance of the types required by this
Section and the Collateral Documents is in force and (b) a Lenders Loss Payable
Endorsement on Form 438-BFU (or its equivalent) evidencing that the
Administrative Agent is an additional insured and loss payee with respect to all
risk casualty insurance and other insurance requested by the Administrative
Agent.

            5.5   Compliance With Laws. Comply with, or cause to be complied
with, all Requirements of Laws, noncompliance with which could constitute a
Material Adverse Effect.

            5.6   Inspection Rights. Upon reasonable notice, at any time during
regular business hours and as often as requested (but not so as to materially
interfere with the business of the Borrowers or any of their Subsidiaries),
permit the Administrative Agent or any Lender, or any authorized employee, agent
or representative thereof, (a) to examine, audit and make copies and abstracts
from the records and books of account of, (b) to visit, and inspect the
Properties of, the Borrowers and their Subsidiaries, (c) to discuss the affairs,
finances and accounts of the Borrowers and their Subsidiaries with any of their
officers, key employees or accountants or with any relevant taxing authority,
and (d) in the case of the Administrative Agent, to discuss the accounts of the
Borrowers and their Subsidiaries with vendors upon the occurrence and during the
continuance of an Event of Default, and, upon request, furnish promptly to the
Administrative Agent true copies of all financial information made available to
the senior management of the Borrowers or any of their Subsidiaries. The
Administrative Agent may conduct audits of the Borrowers' books and records and
of the Collateral in its discretion at the sole expense of the Borrowers and,
while it is anticipated that these audits will be annual, the same may be
conducted more frequently if reasonably requested by the Administrative Agent or
the Requisite Lenders. The Administrative Agent may, at any time, either orally
or in writing, request confirmation from any account debtor, of the current
amount and status of the accounts receivable upon which such account debtor is
obligated to any of the Borrowers, provided that the Administrative Agent shall
use reasonable care to avoid undue interruption of the business of Borrowers and
their Subsidiaries.

            5.7   Keeping of Records and Books of Account. Keep adequate records
and books of account reflecting all financial transactions in conformity with
Generally Accepted Accounting Principles, consistently applied, and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over the Borrowers or any of their Subsidiaries.

            5.8   Compliance With Agreements. Promptly and fully comply with all
Contractual Obligations under all material agreements, indentures, leases and/or
instruments to which any one or more of them is a party, whether such material
agreements, indentures, leases or instruments are with a Creditor Party or
another Person, except that the Borrowers and their


                                      52-

Subsidiaries need not comply with Contractual Obligations (other than the Loan
Documents) under any such agreements, indentures, leases or instruments then
being contested by any of them in good faith by appropriate proceedings
diligently pursued provided that the failure to comply does not constitute a
Material Adverse Effect.

            5.9   Use of Proceeds. Use the proceeds of the Loans and the Letters
of Credit for Permitted Acquisitions, for working capital and general corporate
purposes of the Borrowers and their Subsidiaries and permitted Capital
Expenditures.

            5.10  Hazardous Materials Laws.

                  (a)   Conduct their operations and keep and maintain their
      Property in compliance with all Environmental Laws.

                  (b)   Notify the Administrative Agent in writing upon, but in
      no event later than 10 days after, becoming aware of (i) any and all
      enforcement, cleanup, removal or other governmental or regulatory actions
      instituted, completed or threatened against any Borrower or any Subsidiary
      of a Borrower or any of their respective Properties pursuant to any
      applicable Environmental Laws, (ii) all other Environmental Claims, and
      (iii) any environmental or similar condition on any real property
      adjoining or in the vicinity of the Property of such Borrowers or
      Subsidiary that could reasonably be anticipated to cause such Property or
      any part thereof to be subject to any restrictions on the ownership,
      occupancy, transferability or use of such Property under any Environmental
      Laws.

                  (c)   Upon the written request of the Administrative Agent or
      the Requisite Lenders, submit to the Administrative Agent with sufficient
      copies for each Lender, at the Borrowers' sole cost and expense, at
      reasonable intervals, a report providing an update of the status of any
      environmental, health or safety compliance, hazard or liability issue
      identified in any notice or report required pursuant to Section 5.10(b),
      that could, individually or in the aggregate, result in liability in
      excess of $250,000.

            5.11  Acquisition Covenants. Comply with each of the following
covenants in connection with the use of Loans for Permitted Acquisitions:

                  (a)   Not permit the consideration paid by the Company and its
      Subsidiaries in connection with Acquisitions and Investments made pursuant
      to Section 6.11(g) completed during the term of this Agreement to exceed
      (a) $50,000,000 in Cash and Property (other than capital stock of the
      Company), and (b) $75,000,000 in Cash and all Property (including capital
      stock of the Company);

                  (b)   Not permit the consideration paid by the Company and its
      Subsidiaries in connection with any single Acquisition completed during
      the term of this Agreement to exceed (a) $20,000,000 in Cash and Property
      other than common stock of


                                      53-

      the Company, and (b) $30,000,000 in Cash and all Property (including
      common stock of the Company);

                  (c)   Not permit the total Cash of the Company and its
      Domestic Subsidiaries, plus the amount of available for Loans hereunder
      (giving effect to any restrictions imposed thereon by the Borrowing Base),
      to be less than $15,000,000 after giving effect to the Acquisition.

                  (d)   Not permit the Leverage Ratio, determined as of the then
      most recently ended Fiscal Quarter preceding the Acquisition, and after
      giving pro forma effect to (i) the incurrence of Indebtedness in an amount
      equal to the cash purchase price payable in connection with the
      Acquisition, and (ii) the Target Adjusted EBITDA of the target, to exceed
      a ratio which is equal to the Leverage Ratio required for the Fiscal
      Quarter ending immediately following the date of the Acquisition minus
      0.25:1.00.

                  (e)   Not consummate any Acquisition for which the Target
      Adjusted EBITDA for the most recently ended four fiscal quarters is a
      negative amount or in which the aggregate consideration payable by the
      Company and its Subsidiaries is in excess of six times the Target Adjusted
      EBITDA, provided that Acquisitions for an aggregate consideration not in
      excess of $5,000,000 in any Fiscal Year may be conducted notwithstanding
      this clause (e); and

                  (f)   In connection with each Acquisition in respect of which
      the aggregate consideration is in excess of $7,500,000, the Company shall
      deliver a certificate to the Administrative Agent, not later than ten
      Business Days prior to the consummation of the proposed Acquisition, as to
      the matters set forth in this Section, together with a copy of (i) the
      purchase agreement and related documents for such Acquisition, (ii) the
      most recent fiscal year-end financial statements and interim financial
      statements for the Target, and (iii) a certificate from a Senior Officer
      to the effect that no Default or Event of Default has occurred and remains
      continuing.

            5.12  Further Assurances. Promptly upon request by the
Administrative Agent or the Requisite Lenders, do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register, any and all
such further acts, deeds, conveyances, security agreements, mortgages,
assignments, estoppel certificates, financing statements and continuations
thereof, termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Administrative Agent or such Lenders, as
the case may be, may reasonably require from time to time in order (i) to carry
out more effectively the purposes of this Agreement or any other Loan Document,
(ii) to subject to the Liens created by any of the Collateral Documents any of
the Properties of the Borrowers and their respective Subsidiaries, rights or
interests covered by any of the Collateral Documents, (iii) to perfect and
maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm to the
Creditor Parties the rights


                                      54-

granted or now or hereafter intended to be granted to the Lenders under any Loan
Document or under any other document executed in connection therewith.

            5.13  Future Subsidiaries. Concurrently with the formation or
acquisition of each new Subsidiary of the Company:

            (a)   deliver to the Administrative Agent an incumbency certificate
      for such Subsidiary, attaching its formation documents and a specimen
      signature for each officer thereof who will execute Loan Documents;

            (b)   cause each Domestic Subsidiary to execute and deliver a
      joinder to the Guaranty in the form attached thereto, a joinder to the
      Guarantor Security Agreement in the form attached thereto, and any other
      instruments, documents or agreements which the Administrative Agent may
      require to grant a Lien on the Property of such Subsidiary;

            (c)   pledge or cause the pledge to the Administrative Agent of 65%
      of the capital stock of each such Subsidiary which is a Foreign Subsidiary
      and 100% of the capital stock of each such Subsidiary which is a Domestic
      Subsidiary, in each case pursuant to the Pledge Agreement or such other
      documents as the Administrative Agent may request.

If the Requisite Lenders so request, each Domestic Subsidiary hereafter formed
or acquired will also enter into a joinder hereto in form and substance
acceptable to the Administrative Agent and shall thereby become a party to this
Agreement and the other Loan Documents as an additional Borrower.

            5.14  Deposit Accounts. Maintain, and cause each of its Domestic
Subsidiaries to maintain, its deposit accounts with the Administrative Agent or
one or more banks acceptable to the Administrative Agent that has entered into a
Deposit Account Control Agreement, in form and substance satisfactory to the
Administrative Agent, in favor of the Administrative Agent.







                                      55-

                                    ARTICLE 6
                               NEGATIVE COVENANTS

            So long as any Loan remains unpaid, any Letter of Credit remains
outstanding, any other Obligation remains unpaid, or any portion of the
Commitment remains in force, the Borrowers shall not, and shall not permit any
of their Subsidiaries to, unless the Requisite Lenders otherwise consent in
writing:

            6.1   Prepayment of Indebtedness. (a) Prepay or repay any principal
(including sinking fund payments) in respect of any Subordinated Obligations, or
(b) pay any principal, interest or other amounts in respect of any Subordinated
Obligations except in accordance with the definitive subordination agreement
between the Administrative Agent and the holder of such Subordinated
Obligations, or (c) prepay any principal (including sinking fund payments),
interest or other amounts on any other Indebtedness of the Borrowers or any of
their Subsidiaries prior to the date when due.

            6.2   Disposition of Property. Make any Disposition of its Property,
whether now owned or hereafter acquired, except a Disposition by a Borrower to a
Wholly-Owned Subsidiary, or by a Subsidiary to a Borrower or a Wholly-Owned
Subsidiary.

            6.3   Mergers. Merge or consolidate with or into any Person, except
(a) mergers and consolidations of two or more Borrowers into one another or of a
Subsidiary of a Borrower into a Borrower or a Wholly-Owned Subsidiary or of
Subsidiaries with each other and (b) a merger or consolidation of a Person into
a Borrower or with or into a Wholly-Owned Subsidiary of a Borrower in connection
with a Permitted Acquisition; provided that (i) a Borrower or a Wholly-Owned
Subsidiary is the surviving entity, (ii) no Change in Control results therefrom,
(iii) no Default or Event of Default then exists or would result therefrom and
(iv) the Borrowers and each of the Guarantors execute such amendments to the
Loan Documents as the Lender may reasonably determine are appropriate as a
result of such merger.

            6.4   Acquisitions. Make any Acquisition other than a Permitted
Acquisition.

            6.5   Distributions. Make any Distribution, whether from capital,
income or otherwise, and whether in cash or other Property, except:

            (a)   Distributions by any Subsidiary of a Borrower to such Borrower
      or to any Wholly-Owned Subsidiary of such Borrower;

            (b)   Distributions consisting of the payment of management fees to
      the Borrowers and their Domestic Subsidiaries by the foreign Affiliates of
      the Borrowers;

            (c)   the repurchase of shares of the capital stock of the Company
      from stockholders and immaterial fractional shares in connection with any
      stock split, in each case for an aggregate consideration not to exceed
      $10,000,000 in any period of twelve months,


                                      56-

      provided that no such repurchases may be made at any time when a Default
      or Event of Default exists or would result therefrom after giving pro
      forma effect to the making of the Distribution as of the last day of the
      most recent Fiscal Quarter for which the Borrowers are required to have
      delivered a Compliance Certificate; and

            (d)   Distributions consisting of the payment of dividends in cash
      on shares of preferred stock of the Company issued after the Closing Date,
      provided that (i) such Distributions shall not exceed a "coupon" rate on
      such shares of 10% per annum (i.e., the aggregate amount of such
      Distributions paid by the Company to the holders of such shares in any
      period of twelve months shall not exceed 10% of the aggregate share
      purchase consideration paid to the Company for such shares) and (ii) such
      Distributions may not be paid at any time when a Default or Event of
      Default exists or would result therefrom after giving pro forma effect to
      the making of the Distribution as of the last day of the most recent
      Fiscal Quarter for which the Borrowers are required to have delivered a
      Compliance Certificate.

            6.6   ERISA.

                  (a)   At any time, maintain, or be or become obligated to
      contribute on behalf of its employees to, any "employee pension benefit
      plan" that is subject to Title IV of ERISA other than those Pension Plans
      disclosed in Schedule 4.14, and Multiemployer Plans to which any of the
      Borrowers or any Subsidiary of a Borrower becomes obligated to contribute
      pursuant to the terms of a collective bargaining agreement.

                  (b)   At any time, permit any Pension Plan, if to do so would
      constitute a Material Adverse Effect, to:

                        (i)   engage in any non-exempt "prohibited transaction",
            as such term is defined in Section 4975 of the Code;

                        (ii)  incur any material "accumulated funding
            deficiency", as that term is defined in Section 302 of ERISA; or

                        (iii) suffer a Termination Event to occur which may
            reasonably be expected to result in liability of a Borrower or any
            ERISA Affiliate thereof to the Pension Plan or to the PBGC or the
            imposition of a Lien on the Property of a Borrower or any ERISA
            Affiliate thereof pursuant to Section 4068 of ERISA.

                  (c)   Fail, upon a Responsible Official of any Borrower
      becoming aware thereof, promptly to notify the Administrative Agent of the
      occurrence of any "reportable event" (as defined in Section 4043 of ERISA)
      or of any non-exempt "prohibited transaction" (as defined in Section 4975
      of the Code) with respect to any Pension Plan described in Schedule 4.14
      or any trust created thereunder.



                                      57-

                  (d)   At any time, permit any Pension Plan described in
      Schedule 4.14 to fail to comply with ERISA or other applicable Laws in any
      respect that could result in a significant liability to any Borrower or
      any Subsidiary of a Borrower.

            6.7   Change in Name; Nature of Business. Change the legal name of
any of the Borrowers or of any Subsidiary of a Borrower or make any material
change in the nature of the business of the Borrowers and their Subsidiaries,
taken as a whole, as at present conducted.

            6.8   Indebtedness and Contingent Obligations. Create, incur, assume
or suffer to exist any Indebtedness or Contingent Obligation, except:

                  (a)   Existing Indebtedness and Contingent Obligations
      disclosed on Schedule 6.8;

                  (b)   Indebtedness and Contingent Obligations in favor of the
      Creditor Parties under the Loan Documents;

                  (c)   Subordinated Obligations in an aggregate principal
      amount not to exceed $10,000,000 issued to sellers in consideration of
      Permitted Acquisitions;

                  (d)   purchase money Indebtedness and obligations in
      connection with Capital Leases provided that (i) the aggregate amount of
      such Indebtedness incurred in any Fiscal Year does not exceed $4,000,000,
      and (ii) not more than $2,000,000 of such Indebtedness in the aggregate
      during the term of this Agreement may be incurred by Persons which are not
      Borrowers; and

                  (e)   Indebtedness amongst Borrowers and their respective
      Subsidiaries incurred in the ordinary course of business.

            6.9   Liens; Negative Pledges; Sales and Leasebacks. Create, incur,
assume or suffer to exist any Lien or Right of Others of any nature upon or with
respect to any of its Property, whether now owned or hereafter acquired; or
suffer to exist any Negative Pledge with respect to any of its Property; or
engage in any sale and leaseback transaction with respect to any of its
Property; except:

                  (a)   Permitted Encumbrances;

                  (b)   Liens and Negative Pledges in favor of the
      Administrative Agent or the Lenders under the Loan Documents; and

                  (c)   purchase money Liens securing Indebtedness permitted
      under Section 6.8(d).



                                      58-

            6.10  Transactions with Affiliates. Except as disclosed on Schedule
6.10, enter into any transaction of any kind with any officer or Affiliate of a
Borrower, or any Person that owns or holds 5% or more of the outstanding common
stock of a Borrower, other than transactions on terms at least as favorable to
the Borrowers or their respective Subsidiaries as would be the case in an
arm's-length transaction between unrelated parties of equal bargaining power.

            6.11  Investments. Make or suffer to exist any Investment, other
than:

                  (a)   Investments consisting of Cash Equivalents;

                  (b)   Investments in a Person that is the subject of a
      Permitted Acquisition;

                  (c)   Investments consisting of advances to officers,
      directors and employees of the Borrowers and their Subsidiaries for
      travel, entertainment, relocation, anticipated bonus and analogous
      ordinary business purposes;

                  (d)   Investments consisting of the extension of credit to
      customers or suppliers of the Borrowers and their Subsidiaries in the
      ordinary course of business and any Investments received in satisfaction
      or partial satisfaction thereof;

                  (e)   Investments in Borrowers or in Wholly-Owned
      Subsidiaries;

                  (f)   Investments following the Closing Date in Permitted
      Joint Ventures (in addition to the Investments in Permitted Joint Ventures
      allowed under subsection (g) below) in an aggregate amount not to exceed
      either (i) $10,000,000 or (ii) the amount that would cause the combination
      of Investments in (A) Permitted Joint Ventures made pursuant to this
      subsection (f) and subsection (g) below, and (B) Permitted Acquisitions to
      exceed either (1) $50,000,000 in Cash and Property (other than capital
      stock of the Company) or (2) $75,000,000 in Cash and Property (including
      capital stock of the Company); and

                  (g)   other Investments following the Closing Date in an
      aggregate amount not to exceed $5,000,000, provided that not more than
      $1,000,000 in the aggregate of such other Investments shall be made for a
      purpose other than a Permitted Joint Venture.

            6.12  Leverage Ratio. Permit the Leverage Ratio to exceed 1.75:1.00
as of the last day of any Fiscal Quarter.

            6.13  Quick Ratio. Permit the Consolidated Quick Ratio as of the
last day of any calendar month to be less than 1.25:1.00, or permit the
Borrowers Quick Ratio as of the last day of any calendar month to be less than
1.00:1.00.



                                      59-

            6.14  Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio as of the last day of (a) any Fiscal Quarter ending on or before December
31, 2001, to be less than 1.30:1.00, and (b) any subsequent Fiscal Quarter, to
be less than 1.40:1.00.

            6.15  Net Worth. Permit Net Worth, as of the last day of any Fiscal
Quarter, to be less than the sum of (a) $180,000,000 plus (b) 75% of the
cumulative Net Income for each Fiscal Quarter which has then ended following the
Closing Date (without reduction for any net loss experienced in any Fiscal
Quarter), plus (c) the Net Cash Proceeds of any sale by the Company or any of
its Subsidiaries of their respective equity Securities to any third party
following the Closing Date.

            6.16  Change of Location. Change the place of their respective chief
executive offices or principal places of business unless the Administrative
Agent has been notified in writing at least 30 days prior to such change.

            6.17  Use of Hazardous Materials. Except as specifically disclosed
in Schedule 4.20, use, generate, manufacture, treat, store, allow to remain or
dispose of on, under, or about their real property or transport to or from such
real property any Hazardous Materials without prior written consent from the
Administrative Agent.

            6.18  Clean Down. Fail to cause a Clean Down Period to occur in each
Fiscal Year.

            6.19  The Lockbox Accounts. Fail to direct each account debtor with
respect to trade accounts receivable of Borrowers and the Guarantors to remit
payments with respect thereto directly to the appropriate Lockbox Accounts, or
fail to remit immediately in kind to the Administrative Agent, and in the same
form as received (but with any endorsements required to transfer the same to the
Administrative Agent), each remittance with respect to trade accounts receivable
which is received by Borrowers or any of the Guarantors.



                                      60-

                                    ARTICLE 7
                     INFORMATION AND REPORTING REQUIREMENTS

            7.1   Financial and Business Information. So long as any Loan
remains unpaid, any Letter of Credit remains outstanding, any other Obligation
remains unpaid, or any portion of the Commitment remain in force, the Borrowers
shall, unless the Requisite Lenders otherwise consent in writing, deliver to the
Administrative Agent, at their sole expense:

                  (a)   Not later than the 20th day of each calendar month, a
      completed Borrowing Base Certificate setting forth the Borrowing Base as
      of the last Business Day of the immediately preceding calendar month,
      together with an accounts receivable aging report and inventory listing in
      form and substance acceptable to the Administrative Agent together with
      any supporting materials requested by the Administrative Agent;

                  (b)   As soon as practicable, and in any event within 20 days
      after the end of each calendar month, (i) the consolidated and
      consolidating balance sheet of the Company and its Subsidiaries at the end
      of such calendar month, (ii) consolidated and consolidating statements of
      income and statement of cash flows of the Company and its Subsidiaries for
      that calendar month and for the portion of the Fiscal Year then ended,
      (iii) a comparison of the income statements for such calendar month with
      the applicable Projections, and with the corresponding financial
      statements as of the end of the same fiscal period during the immediately
      preceding Fiscal Year, all in reasonable detail. Such financial statements
      shall be certified by a Senior Officer of the Company as fairly presenting
      the financial condition, results of operations and changes in financial
      position of the Company and its Subsidiaries, and shall be prepared and
      presented in accordance with Generally Accepted Accounting Principles
      (other than any requirement for footnote disclosures), consistently
      applied, as at such date and for such periods, subject only to normal
      year-end accruals and audit adjustments;

                  (c)   As soon as practicable, and in any event within 120 days
      after the end of each Fiscal Year, (i) the audited combined balance sheet
      and statement of income and cash flows of the Company and its Subsidiaries
      prepared and presented in accordance with Generally Accepted Accounting
      Principles, consistently applied, and accompanied by (A) a report and
      opinion of Pannell, Kerr & Forster or another firm of independent public
      accountants of recognized national standing selected by the Borrowers and
      reasonably satisfactory to the Requisite Lenders, which report and opinion
      shall be prepared in accordance with generally accepted auditing standards
      as at such date, and shall not be subject to any qualifications or
      exceptions as to the scope of the audit nor to any other qualification or
      exception which the Requisite Lenders determine is unacceptable and (B) a
      management letter from Borrowers' auditors to the extent issued, and (ii)
      the unaudited company-prepared consolidating/combining balance sheets and
      statements of income and cash flows for the Company and its Subsidiaries;



                                      61-

                  (d)   As soon as practicable, and in any event no later than
      30 days prior to the commencement of each Fiscal Year, a business plan and
      projections by calendar month for that Fiscal Year and by Fiscal Year for
      each of the following Fiscal Years through the Maturity Date, all in form
      and detail reasonably satisfactory to the Administrative Agent;

                  (e)   Promptly and in any event within five Business Days
      following receipt thereof, copies of any detailed audit reports or
      recommendations submitted to the Borrowers or their Subsidiaries by
      independent accountants in connection with the accounts or books of the
      Borrowers or any of their Subsidiaries, or any audit of any of them;

                  (f)   Promptly after the same are available, copies of each
      annual report, proxy or financial statement or other report or
      communication sent to the shareholders of the Borrowers, and copies of all
      annual, regular, periodic and special reports and registration statements
      which the Borrowers may file or be required to file under Sections 13 or
      15(d) of the Securities Exchange Act of 1934;

                  (g)   Promptly after request by the Requisite Lenders
      submitted through the Administrative Agent, copies of any other specific
      report or other document that was filed by either any of the Borrowers or
      any Subsidiary of a Borrower with any Governmental Agency;

                  (h)   Promptly upon a Responsible Official of any of the
      Borrowers becoming aware, and in any event within ten Business Days after
      becoming aware, of the occurrence of any (i) "reportable event" (as such
      term is defined in Section 4043 of ERISA) or (ii) "prohibited transaction"
      (as such term is defined in Section 406 of ERISA or Section 4975 of the
      Code) in connection with any Pension Plan or any trust created thereunder,
      written notice specifying the nature thereof and specifying what action
      the Borrowers or any of their Subsidiaries is taking or proposes to take
      with respect thereto, and, when known, any action taken by the Internal
      Revenue Service with respect thereto;

                  (i)   As soon as practicable, and in any event within two
      Business Days after a Responsible Official of any of the Borrowers becomes
      aware of the existence of any condition or event which constitutes a
      Default, written notice specifying the nature and period of existence
      thereof and specifying what action Borrowers are taking or propose to take
      with respect thereto;

                  (j)   Promptly upon a Responsible Official of any of the
      Borrowers becoming aware that (i) any Person commenced a legal proceeding
      with respect to a claim against the Company or any of its Subsidiaries
      that is stated to be $1,000,000 or more in excess of the amount thereof
      that is believed by such Responsible Official to be fully covered by
      insurance (subject to customary deductibles and retentions), (ii) any
      creditor or lessor under a written credit agreement or material lease has
      asserted a default thereunder


                                      62-

      on the part of the Company or any of its Subsidiaries, and, in the case of
      a lease, such default has not been cured or rescinded within any
      applicable cure period under the lease or applicable Laws, (iii) any
      Person commenced a legal proceeding with respect to a claim against the
      Company or any of its Subsidiaries under a contract that is not a credit
      agreement or material lease stated to be in excess of $1,000,000, or (iv)
      any other event or circumstance occurs or exists that would constitute a
      Material Adverse Effect, in each case a written notice describing the
      pertinent facts relating thereto and what action the Borrowers are taking
      or propose to take with respect thereto;

                  (k)   Promptly following the issuance thereof, provide notice
      to the Administrative Agent of each new trademark issued to any Borrower
      or any Subsidiary of a Borrower;

                  (l)   Promptly following request by the Requisite Lenders
      submitted through the Administrative Agent, accounts receivable agings and
      inventory listings for the Company and each of its Subsidiaries; and

                  (m)   Such other data and information as from time to time may
      be reasonably requested by the Administrative Agent or any Lender.

            7.2   Compliance Certificates. So long as any Loan remains unpaid,
any Letter of Credit remains outstanding, any other Obligation remains unpaid,
or any portion of the Commitment remains outstanding, the Borrowers shall,
unless the Requisite Lenders otherwise consent, deliver to the Administrative
Agent as soon as practicable and in any event within 30 days after the end of
each calendar month, a Compliance Certificate signed by a Senior Officer of each
of the Borrowers.




                                      63-


                                    ARTICLE 8
                                   CONDITIONS

                  8.1 Conditions to the Initial Loans and Letters of Credit. The
obligation of each Lender to make the initial Advance to be made by it, and the
obligation of any Issuing Lender to issue the initial Letters of Credit, is
subject to the following conditions precedent, each of which shall be satisfied
prior to the making of the initial Advances (unless all of the Lenders, in their
sole and absolute discretion, shall agree otherwise):

                           (a) The Administrative Agent shall have received all
         of the following, each of which shall be originals unless otherwise
         specified or, where applicable, the context otherwise requires, each
         properly executed by a Responsible Official of each party thereto, each
         dated as of the Closing Date and each in form and substance reasonably
         satisfactory to the Administrative Agent and its legal counsel (unless
         otherwise specified or, in the case of the date of any of the
         following, unless the Administrative Agent otherwise agrees or
         directs):

                                    (1) executed counterparts of this Agreement;

                                    (2) the Borrower Security Agreement executed
                  by each of the Borrowers, together with sufficient copies of
                  financing statements and fixture financing statements on Form
                  UCC-1 for filing in every United States jurisdiction in which
                  the Borrowers own Property or in which a Borrower has been
                  organized;

                                    (3) the Guarantor Security Agreement
                  executed by each of the Guarantors, together with sufficient
                  copies of financing statements and fixture financing
                  statements on Form UCC-1 for filing in every United States
                  jurisdiction in which the Guarantors own Property or in which
                  a Guarantor has been organized;

                                    (4) the Trademark Security Agreement,
                  executed by all Parties thereto;

                                    (5) the Pledge Agreement, together with the
                  certificates evidencing (a) 100% of the capital stock of each
                  Domestic Subsidiary and (b) 65% of the capital stock of each
                  Foreign Subsidiary;

                                    (6) the Lockbox Account Agreement executed
                  by Borrowers and each Guarantor;

                                    (7) with respect to the Borrowers, the
                  Guarantors and each of their respective Subsidiaries, such
                  documentation as the Administrative Agent may reasonably
                  require to establish the due organization, valid existence and
                  good standing of each of the Borrowers, the Guarantors, and
                  each such Subsidiary, its


                                      64-

                  qualification to engage in business in each jurisdiction in
                  which it is engaged in business or required to be so
                  qualified, its authority to execute, deliver and perform any
                  Loan Documents to which it is a Party, and the identity,
                  authority and capacity of each Responsible Official thereof
                  authorized to act on its behalf, including, without
                  limitation, certified copies of articles of incorporation and
                  amendments thereto, bylaws and amendments thereto,
                  certificates of good standing and/or qualification to engage
                  in business, tax clearance certificates, certificates of
                  corporate resolutions, incumbency certificates, Certificates
                  of Responsible Officials, and the like;

                                    (8) evidence satisfactory to the
                  Administrative Agent that the Liens and security interest of
                  the Administrative Agent in the Collateral have been perfected
                  and are of first priority and that there are no other Liens on
                  the Collateral except for Permitted Encumbrances and Liens
                  referred to on Schedule 6.9;

                                    (9) evidence of the insurance policies
                  required by Section 5.4, together with such endorsements as
                  are necessary (Form BFU-438 or an equivalent acceptable to the
                  Administrative Agent) to show the Administrative Agent as loss
                  payee thereunder to the extent required by Section 5.4;

                                    (10) a Certificate of a Responsible Official
                  signed by a Senior Officer of each of the Borrowers certifying
                  that the conditions specified in Sections 8.1(e) and 8.1(f),
                  have been satisfied;

                                    (11) a completed Borrowing Base Certificate
                  setting forth the Borrowing Base as of the end of the month
                  most recently ending prior to the Closing Date;

                                    (12) Request for Loan and, if applicable, a
                  Request for Letter of Credit; and

                                    (13) such other assurances, certificates,
                  documents, consents or opinions, consistent with the
                  foregoing, as the Administrative Agent or any Lender
                  reasonably may require;

                           (b) Any amounts payable pursuant to clause (a) of
         Section 11.3 shall be paid concurrently;

                           (c) The Lenders shall have reviewed and found
         satisfactory each of the following:

                                    (1) the Projections;


                                      65-

                                    (2) the terms and conditions of any Material
                  Contracts to which the Borrowers are parties;

                                    (3) the audited consolidated and company
                  prepared consolidating financial statements of the Company and
                  its Subsidiaries for the Fiscal Year ended December 31, 2000,
                  together with any management letter from the Company's
                  auditors;

                                    (4) the internally-prepared financial
                  statements of the Company and its Subsidiaries for the six
                  month fiscal period ended June 30, 2001;

                           (d) The Borrowers shall have completed an
         Environmental Questionnaire and Disclosure Statement on the
         Administrative Agent's prescribed form regarding all real property
         owned or operated by the Borrowers or any of their Subsidiaries, and a
         Phase I environmental site assessment with respect to such real
         property, and the information set forth therein shall be satisfactory
         to Bank of America which shall have reviewed and found satisfactory all
         information concerning environmental matters on such properties as is
         available from the United States Environmental Protection Agency and
         similar Governmental Authorities and deemed appropriate for review by
         the Administrative Agent; and the Administrative Agent shall have
         approved the plan of remediation proposed by the Borrowers with respect
         to any conditions on such real property disclosed by the Environmental
         Questionnaire and Disclosure Statement or such Phase I environmental
         site assessments;

                           (e) The representations and warranties of the
         Borrowers contained in Article 4 shall be true and correct; and

                           (f) The Borrowers shall be in compliance with all the
         terms and provisions of the Loan Documents, no Default or Event of
         Default shall have occurred and be continuing, and no event shall have
         occurred since December 31, 2000 which constitutes a Material Adverse
         Effect.

In the event that the Lenders determine to waive compliance with any of the
conditions precedent set forth in this Section on the Closing Date, the
Borrowers agree to fulfill such conditions promptly, and, unless the Requisite
Lenders otherwise agree, not later than ten Business Days following the Closing
Date.

                  8.2 Any Increasing Loan. The obligation of each Lender to make
any Advance which would increase the outstanding principal amount of the Loans,
and the obligation of any Issuing Lender to issue any Letter of Credit, is
subject to the following conditions precedent, each of which shall be satisfied
prior to the making of such an Advance or the issuance of a Letter of Credit:


                                      66-

                           (a) except as disclosed by the Borrowers and approved
         in writing by the Requisite Lenders, the representations and warranties
         contained in Article 4 (other than Sections 4.7 and 4.11) shall be true
         and correct on and as of the date of the Loan or Letter of Credit as
         though made on that date;

                           (b) other than matters described in Schedule 4.11, or
         matters not required as of the Closing Date to be therein described, or
         matters disclosed by the Borrowers and approved in writing by the
         Requisite Lenders, there shall not be then pending or threatened in
         writing any action, suit, proceeding or investigation against or
         affecting the Borrowers or any of their Subsidiaries or any Property of
         any of them before any Governmental Agency that constitutes a Material
         Adverse Effect;

                           (c) the Administrative Agent shall have received a
         timely Request for Loan in compliance with Article 2, or the relevant
         Issuing Lender and the Administrative Agent shall have timely received
         a Request for Letter of Credit in compliance with Article 2, as
         applicable; and

                           (d) the Administrative Agent shall have received, in
         form and substance reasonably satisfactory to the Administrative Agent,
         such other assurances, certificates, documents or consents related to
         and consistent with the foregoing as the Administrative Agent or the
         Requisite Lenders reasonably may require.


                                      67-

                                    ARTICLE 9
                         EVENTS OF DEFAULT AND REMEDIES

                  9.1 Events of Default. The existence or occurrence of any one
or more of the following events shall constitute an Event of Default:

                           (a) The Borrowers fail to pay any principal or
         interest in respect of the Loans or Letters of Credit hereunder when
         due;

                           (b) The Borrowers fail to pay any commitment fee,
         letter of credit fee, expenses or other amount in respect of the Loans
         or Letters of Credit hereunder, or any portion thereof, within five
         days of the date when due;

                           (c) Any failure to comply with any covenant in
         Section 5.6, 5.11, Article 6 or Article 7 hereof when required;

                           (d) Any Borrower or any other Party fails to perform
         or observe any other covenant or agreement set forth in the Loan
         Documents on its part to be performed or observed and fails to cure
         such Default within thirty days following the first occurrence thereof;

                           (e) Any Borrower or any other Party fails to perform
         or observe any other covenant or agreement contained in any Loan
         Document other than this Agreement, giving effect to any grace period
         and/or notice requirements set forth therein;

                           (f) Any representation or warranty made in any Loan
         Document proves to have been incorrect when made or reaffirmed;

                           (g) The Company or any of its Subsidiaries (i) fails
         to pay the principal, or any principal installment, of any present or
         future indebtedness for borrowed money or Capital Lease of $500,000 or
         more in the aggregate, or any guaranty of present or future
         Indebtedness for borrowed money or Capital Lease of $500,000 or more in
         the aggregate, on its part to be paid, when due (or within any stated
         grace period), whether at the stated maturity, upon acceleration, by
         reason of required prepayment or otherwise or (ii) fails to perform or
         observe any other term, covenant or agreement on its part to be
         performed or observed, or suffers any event to occur, in connection
         with any present or future indebtedness for borrowed money or Capital
         Lease of $500,000 or more in the aggregate, or of any guaranty of
         present or future indebtedness for borrowed money or Capital Lease of
         $500,000 or more in the aggregate, if as a result of such failure or
         sufferance any holder or holders thereof (or an agent or trustee on its
         or their behalf) has the right to declare such Indebtedness due before
         the date on which it otherwise would become due;


                                      68-

                           (h) Any event occurs which gives the holder or
         holders of any Subordinated Obligation (or an agent or trustee on its
         or their behalf) the right to declare such Indebtedness due before the
         date on which it otherwise would become due, or the right to require
         the issuer thereof to redeem or purchase, or offer to redeem or
         purchase, all or any portion of any Subordinated Obligation;

                           (i) This Agreement or any other Loan Document at any
         time after its execution and delivery and for any reason, other than
         the agreement of the Lenders or satisfaction in full of all the
         Obligations, ceases to be in full force and effect or is declared by a
         court of competent jurisdiction to be null and void, invalid or
         unenforceable in any respect which, in any such event in the reasonable
         opinion of the Requisite Lenders, is materially adverse to the
         interests of the Lenders; or any Party thereto denies that it has any
         or further liability or obligation under any Loan Document, or purports
         to revoke, terminate or rescind same (other than in accordance with the
         terms and conditions of the Loan Documents);

                           (j) Any judgments or arbitration awards are entered
         against the Company or any of its Subsidiaries, or the Company or any
         of its Subsidiaries enters into any settlement agreements with respect
         to any litigation or arbitration, in an aggregate amount of $1,000,000
         or more in excess of any insurance coverage;

                           (k) The Company or any of its Subsidiaries institutes
         or consents to any proceeding under a Debtor Relief Law relating to it
         or to all or any part of its Property, or is unable or admits in
         writing its inability to pay its debts as they mature, or makes a
         general assignment for the benefit of creditors; or applies for or
         consents to the appointment of any receiver, trustee, custodian,
         conservator, liquidator, rehabilitator or similar officer for it or for
         all or any part of its Property; or any receiver, trustee, custodian,
         conservator, liquidator, rehabilitator or similar officer is appointed
         without the application or consent of that Person and the appointment
         continues undischarged or unstayed for sixty calendar days; or any
         proceeding under a Debtor Relief Law relating to any such Person or to
         all or any part of its Property is instituted without the consent of
         that Person and continues undismissed or unstayed for sixty calendar
         days; or any judgment, writ, warrant of attachment or execution or
         similar process is issued or levied against all or any material part of
         the Property of any such Person and is not released, vacated or fully
         bonded within sixty calendar days after its issue or levy;

                           (l) Any Lien on any Collateral created by any Loan
         Document, at any time after the execution and delivery of that Loan
         Document and for any reason, ceases to be perfected or of less than
         first priority (subject to any Lien permitted by this Agreement);

                           (m) The occurrence of a Termination Event with
         respect to any Pension Plan if the aggregate liability of the Borrowers
         and their ERISA Affiliates under ERISA as a result thereof exceeds
         $250,000; or the complete or partial withdrawal by the Borrowers or any
         of their Subsidiaries or any of their ERISA Affiliates from any


                                      69-

         Multiemployer Plan if the aggregate liability of the Borrowers and
         their ERISA Affiliates as a result thereof exceeds $250,000;

                           (n) The occurrence of an "event of default" (as such
         term is or may hereafter be specifically defined in any other Loan
         Document) under any other Loan Document;

                           (o) Any judgment, order or ruling, whether or not
         final, is made by a court of competent jurisdiction that payment of
         principal or interest or both shall be made to the holder of any
         Subordinated Obligation which would not be permitted by Section 6.1 or
         that any Subordinated Obligation is not subordinated in accordance with
         its terms to the Obligations;

                           (p) The results of any audit of the Collateral by or
         on behalf of the Administrative Agent or the Lenders shall bring into
         question, in the opinion of the Requisite Lenders, (a) the reliability
         of the accounting practices or financial information provided, employed
         or generated by any Borrower in connection with the Collateral, or (b)
         the value of the Collateral in any respect that is material,
         individually or in the aggregate and, in either such case, the
         Borrowers shall not have cured such Default to the reasonable
         satisfaction of the Requisite Lenders within twenty days after notice
         from the Administrative Agent;

                           (q) The Administrative Agent determines reasonably
         and in good faith that a circumstance or event has occurred that
         constitutes a Material Adverse Effect; or

                           (r) The occurrence of a Change in Control.

                   9.2 Remedies Upon Event of Default. Without limiting any
other rights or remedies of the Creditor Parties provided for elsewhere in this
Agreement or the Loan Documents, or by applicable Law, or in equity, or
otherwise:

                           (a) Upon the occurrence of any Event of Default other
         than an Event of Default described in Section 9.1(k):

                                    (1) the Commitment to make Advances and to
                  issue Letters of Credit and all other obligations of the
                  Creditor Parties and all rights of the Borrowers and any other
                  Parties under the Loan Documents shall terminate without
                  notice to or demand upon the Borrowers, which are expressly
                  waived by the Borrowers, except that the Requisite Lenders
                  (or, to the extent required by Section 11.2, all of the
                  Lenders) may waive the Event of Default or, without waiving,
                  determine, upon terms and conditions satisfactory to the
                  Requisite Lenders (or, to the extent required by Section 11.2,
                  all of the Lenders), to make further Advances, which waiver or
                  determination shall apply equally to, and shall be binding
                  upon, all the Lenders;


                                      70-

                                    (2) any Issuing Lender may, or following a
                  request from the Requisite Lenders (or, to the extent required
                  by Section 11.2, all of the Lenders) shall, demand immediate
                  payment by each Borrower of an amount equal to the aggregate
                  effective face amount of all outstanding Letters of Credit
                  issued to that Borrower as provided in Section 2.5 to be held
                  as cash collateral for the reimbursement obligations of that
                  Borrower under such Letter of Credit; and

                                      (3) the Requisite Lenders (or, to the
                  extent required by Section 11.2, all of the Lenders) may
                  request the Administrative Agent to, and the Administrative
                  Agent thereupon shall, declare all or any part of the unpaid
                  principal of all Loans, all interest accrued and unpaid
                  thereon and all other amounts payable under the Loan Documents
                  to be forthwith due and payable, whereupon the same shall
                  become and be forthwith due and payable, without protest,
                  presentment, notice of dishonor, demand or further notice of
                  any kind, all of which are expressly waived by the Borrowers.

                           (b) Upon the occurrence of any Event of Default
         described in Section 9.1(k):

                                      (1) the Commitment to make Advances and to
                  issue Letters of Credit and all other obligations of Creditor
                  Parties and all rights of the Borrowers and any other Parties
                  under the Loan Documents shall terminate without notice to or
                  demand upon the Borrowers, which are expressly waived by the
                  Borrowers, except that all the Lenders may waive the Event of
                  Default or, without waiving, determine, upon terms and
                  conditions satisfactory to all the Lenders, to make further
                  Advances, which determination shall apply equally to, and
                  shall be binding upon, all the Lenders; and

                                      (2) an amount equal to the aggregate
                  effective face amount of all outstanding Letters of Credit
                  issued to each Borrower shall be forthwith due and payable by
                  that Borrower to the relevant Issuing Lender to be held by
                  such Issuing Lender as cash collateral for the reimbursement
                  obligations of that Borrower to such Issuing Lender with
                  respect to Letters of Credit issued by such Issuing Lender,
                  without protest, presentment, notice of dishonor, demand or
                  further notice of any kind, all of which are waived by the
                  Borrowers; and

                                      (3) the unpaid principal amount of all
                  Loans, all interest accrued and unpaid thereon and all other
                  amounts payable under the Loan Documents shall be forthwith
                  due and payable, without protest, presentment, notice of
                  dishonor, demand or further notice of any kind, all of which
                  are expressly waived by the Borrowers.


                                      71-

                           (c) Upon the occurrence of any Event of Default, the
         Lenders and the Administrative Agent, or any of them, without notice to
         or demand upon the Borrowers, which are expressly waived by the
         Borrowers, may proceed (but only with the consent of the Requisite
         Lenders) to protect, exercise and enforce their rights and remedies
         under the Loan Documents against the Borrowers and such other rights
         and remedies as are provided by Law or equity.

                           (d) The order and manner in which the Lenders' rights
         and remedies are to be exercised shall be determined by the Requisite
         Lenders in their sole discretion, and all payments received by the
         Creditor Parties, or any of them, shall be applied first to the costs
         and expenses (including attorneys' fees and disbursements) of the
         Administrative Agent, acting in such capacity, second, to the principal
         amount of the Obligations and interest and credit fees thereon, and
         thereafter paid pro rata to the Lenders in the same proportions that
         the aggregate Obligations owed to each Lender under the Loan Documents
         bear to the aggregate Obligations owed under the Loan Documents to all
         the Lenders, without priority or preference among the Lenders for
         application to Obligations. Regardless of how each Lender may treat
         payments for the purpose of its own accounting, for the purpose of
         computing the Borrowers' Obligations hereunder, payments shall be
         applied first, to the costs and expenses of the Creditor Parties, as
         set forth above, second, to the payment of accrued and unpaid interest
         due under any Loan Documents to and including the date of such
         application (ratably, and without duplication, according to the accrued
         and unpaid interest due under each of the Loan Documents), and third,
         to the payment of all other amounts (including principal and credit
         fees) then owing to the Creditor Parties under the Loan Documents. No
         such application of payments will cure any Event of Default, or prevent
         acceleration, or continued acceleration, of amounts payable under the
         Loan Documents, or prevent the exercise, or continued exercise, of
         rights or remedies of the Lenders hereunder or thereunder or at law or
         in equity.


                                      72-

                                   ARTICLE 10
                            THE ADMINISTRATIVE AGENT

                  10.1 Appointment and Authorization. Each Lender hereby
irrevocably appoints, designates and authorizes the Administrative Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

         The Issuing Bank shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time (and except for so long) as the Administrative Agent may agree at the
request of the Requisite Lenders to act for the Issuing Bank with respect
thereto: provided , however, the Issuing Bank shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Article 10 with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit issued by it or proposed by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term "Administrative Agent" as used in this Article 10
included the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided herein with respect to the Issuing Bank.

                  10.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that they select with reasonable care.

                  10.3 Liability of the Administrative Agent. None of the Agent
Related Persons shall (i) be liable for any action taken or omitted to be taken
by any of them under or in connection with this Agreement or any other Loan
Document (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Creditor Parties for any recital,
statement, representation or warranty made by the Borrowers or any Subsidiary or
Affiliate of the Borrowers, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in


                                      73-

         any certificate, report, statement or other document referred to or
         provided for in, or received by the Administrative Agent under or in
         connection with, this Agreement or any other Loan Document, or for the
         value of any Collateral or the validity, effectiveness, genuineness,
         enforceability or sufficiency of this Agreement or any other Loan
         Document, or for any failure of any Borrower or any other Party to any
         Loan Document to perform its obligations hereunder or thereunder. No
         Agent Related Person shall be under any obligation to the Creditor
         Parties to ascertain or to inquire as to the observance or performance
         of any of the agreements contained in, or conditions of, this Agreement
         or any other Loan Document, or to inspect the Properties, books or
         records of the Borrowers or any of the Borrowers' Subsidiaries or
         Affiliates.

                  10.4 Reliance by Administrative Agent.

                           (a) The Administrative Agent shall be entitled to
         rely, and shall be fully protected in relying, upon any writing,
         resolution, notice, consent, certificate, affidavit, letter, telegram,
         facsimile, telex or telephone message, statement or other document or
         conversation believed by them to be genuine and correct and to have
         been signed, sent or made by the proper Person or Persons, and upon
         advice and statements of legal counsel (including counsel to the
         Borrowers), independent accountants and other experts selected by them.
         The Administrative Agent shall be fully justified in failing or
         refusing to take any action under this Agreement or any other Loan
         Document unless it shall first receive such advice or concurrence of
         the Requisite Lenders (and, in a case covered by Section 11.2, of all
         the Lenders) as it deems appropriate and, if it so requests, it shall
         first be indemnified to its satisfaction by the Lenders against any and
         all liability and expense which may be incurred by it by reason of
         taking or continuing to take any such action. The Administrative Agent
         shall in all cases be fully protected in acting, or in refraining from
         acting, under this Agreement or any other Loan Document in accordance
         with a request or consent of the Requisite Lenders (or, in a case
         covered by Section 11.2, of all the Lenders) and such request and any
         action taken or failure to act pursuant thereto shall be binding upon
         all of the Lenders. Where this Agreement expressly permits or prohibits
         an action unless the Requisite Lenders otherwise determine, the
         Administrative Agent shall, and in all other instances, the
         Administrative Agent may, but shall not be required to, initiate any
         solicitation for the consent or a vote of the Lenders.

                           (b) For purposes of determining compliance with the
         conditions specified in Section 8.1, each Lender that has executed this
         Agreement shall be deemed to have consented to, approved or accepted or
         to be satisfied with each document or other matter either sent by the
         Administrative Agent to such Lender for consent, approval, acceptance
         or satisfaction, or required thereunder to be consented to or approved
         by or acceptable or satisfactory to the Lender.

                  10.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent


                                      74-

for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a Lender or a Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be requested by the Requisite Lenders in accordance
with Article 9; provided, however, that unless and until the Administrative
Agent shall have received any such request, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable or
in the best interest of the Lenders.

                  10.6 Credit Decision. Each other Creditor Party expressly
acknowledges that none of the Agent Related Persons has made any representation
or warranty to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of the Borrowers and their Subsidiaries
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any other Creditor Party. Each other Creditor Party
represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, Property, financial and
other condition and creditworthiness of the Borrowers and their Subsidiaries,
and all applicable bank regulatory Laws relating to the transactions
contemplated thereby, and made its own decision to enter into this Agreement and
extend credit to the Borrowers hereunder. Each other Creditor Party also
represents that it will, independently and without reliance upon the
Administrative Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, Property, financial
and other condition and creditworthiness of the Borrowers. Except for notices,
reports and other documents expressly herein required to be furnished to the
other Creditor Parties by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, Property,
financial and other condition or creditworthiness of the Borrowers or any of
their Subsidiaries which may come into the possession of any of the Agent
Related Persons.

                  10.7 Indemnification. Whether or not the transactions
contemplated hereby shall be consummated, the Lenders shall indemnify upon
demand the Agent Related Persons (to the extent not reimbursed by or on behalf
of the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
repayment of the Loans and the termination or resignation of the Administrative
Agent) be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by any such Person under or in connection with
any of the foregoing;


                                      75-

provided, however, that no Lender shall be liable for the payment to the Agent
Related Persons of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including attorneys fees and expenses and the allocated
fees and expenses of any internal counsel to the Administrative Agent) incurred
by the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein to the extent
that the Administrative Agent is not reimbursed for such expenses by or on
behalf of the Borrowers. Without limiting the generality of the foregoing, if
the Internal Revenue Service or any other Governmental Agency asserts a claim
that the Administrative Agent did not properly withhold tax from amounts paid to
or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Administrative Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify the Administrative Agent fully for all
amounts paid, directly or indirectly, by the Administrative Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Administrative Agent under this
Section, together with all costs and expenses (including attorneys fees and
expenses and the allocated fees and expenses of any internal counsel to the
Administrative Agent). The obligation of the Lenders in this Section shall
survive the payment of all Obligations hereunder.

                  10.8 Bank of America in its Individual Capacity. Bank of
America and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory or other business with
the Borrowers and their Subsidiaries and Affiliates as though Bank of America
were not the Administrative Agent hereunder and without notice to or consent of
the Lenders. With respect to its Advances and its risk participation in Letters
of Credit, Bank of America shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Administrative Agent, and the terms "Lender" and "Lenders" shall include
Bank of America in its individual capacity.

                  10.9 Successor Agents. The Administrative Agent may, and at
the request of the Requisite Lenders shall, resign upon 30 days' notice to the
Lenders. If the Administrative Agent so resigns, the Requisite Lenders shall
appoint from among the Lenders a successor Administrative Agent for the Lenders.
If no successor is appointed prior to the effective date of the resignation, the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrowers, a successor Administrative Agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring agent and the
term "Administrative Agent" shall mean such successor agent and the retiring
agent's appointment, powers and duties as Administrative Agent shall be
terminated. After


                                      76-

any retiring agent's resignation under this Section, the provisions of this
Article 10 and Sections 11.3, 11.12 and 11.22 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. If no successor agent has accepted appointment as
Administrative Agent by the date which is 30 days following a retiring agent's
notice of resignation, the retiring agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the retiring agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor agent as provided for above.

                  10.10 Action by the Administrative Agent; Collateral Matters

                           (a) The Administrative Agent is authorized on behalf
         of all the Lenders, without the necessity of any notice to or further
         consent from the Lenders, from time to time to take any action with
         respect to any Collateral or the Collateral Documents which may be
         necessary to perfect and maintain perfected the security interest in
         and Liens upon the Collateral granted pursuant to the Collateral
         Documents.

                           (b) The Lenders irrevocably authorize the
         Administrative Agent, at its option and in its discretion, to release
         any Lien granted to or held by the Administrative Agent upon any
         Collateral (i) upon termination of the Commitment and payment in full
         of all Loans and all other Obligations payable under this Agreement and
         under any other Loan Document; (ii) constituting Property sold or to be
         sold or disposed of as part of or in connection with any disposition
         permitted hereunder; (iii) constituting Property in which the Borrowers
         or any Subsidiary of the Borrowers owned no interest at the time the
         Lien was granted or at any time thereafter; (iv) constituting Property
         leased to the Borrowers or any Subsidiary of the Borrowers under a
         lease which has expired or been terminated in a transaction permitted
         under this Agreement or is about to expire and which has not been, and
         is not intended by the Borrowers or such Subsidiary to be, renewed or
         extended; (v) consisting of an instrument evidencing Indebtedness or
         other debt instrument, if the Indebtedness evidenced thereby has been
         paid in full; or (vi) if approved, authorized or ratified in writing by
         the Requisite Lenders or all the Lenders, as the case may be, as
         provided in Section 11.2. Upon request by the Administrative Agent at
         any time, the Lenders will confirm in writing the Administrative
         Agent's authority to release particular types or items of Collateral
         pursuant to this Section 10.10(b).

                           (c) Each Lender agrees with and in favor of each
         other (which agreement shall not be for the benefit of the Borrowers or
         any of their Subsidiaries) that the Borrowers' obligations to such
         Lender under this Agreement and the other Loan Documents is not and
         shall not be secured by any real property collateral now or hereafter
         acquired by such Lender unless all of the Lenders otherwise agree.

                  10.11 Proportionate Interest of the Lenders in Collateral. The
Administrative Agent, on behalf of all the Lenders, shall hold in accordance
with the Loan Documents all items of any collateral or interests therein
received or held by the Administrative Agent. Subject to the


                                      77-

Administrative Agent's rights to reimbursement for its costs and expenses
hereunder (including attorneys' fees and disbursements and other professional
services and the allocated costs of attorneys employed by the Administrative
Agent) and subject to the application of payments in accordance with Section
9.2(d), each Lender shall have an interest in any collateral or interests
therein in the same proportions that the aggregate Obligations owed such Lender
under the Loan Documents (other than the Approved Swap Agreement) bear to the
aggregate Obligations owed under the Loan Documents to all the Lenders, without
priority or preference among the Lenders. Any obligation owed to a Lender under
the Approved Swap Agreement shall rank pari passu with the Obligations under the
Loan Documents.


                                      78-

                                   ARTICLE 11
                                  MISCELLANEOUS

                  11.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of the Creditor Parties provided herein or in any Loan
Document are cumulative and not exclusive of any right, power, privilege or
remedy provided by Law or equity. No failure or delay on the part of the
Administrative Agent or any Lender in exercising any right, power, privilege or
remedy may be, or may be deemed to be, a waiver thereof; nor may any single or
partial exercise of any right, power, privilege or remedy preclude any other or
further exercise of the same or any other right, power, privilege or remedy. The
terms and conditions of Article 8 hereof are inserted for the sole benefit of
the Administrative Agent the Lenders; the same may be waived in whole or in
part, with or without terms or conditions, in respect of any Loan without
prejudicing the Administrative Agent's or any Lender's rights to assert them in
whole or in part in respect of any other Loan.

                  11.2 Amendments; Consents. No amendment, modification,
supplement, extension, termination or waiver of any provision of this Agreement
or any other Loan Document, no approval or consent hereunder or thereunder, and
no consent to any departure by any Party therefrom, may in any event be
effective unless in writing signed by the Requisite Lenders (and, in the case of
amendments, modifications, supplements, extensions or terminations of or to any
Loan Document to which the Borrowers are a Party, the approval in writing of the
Borrowers) and then only in the specific instance and for the specific purpose
given; and, without the approval in writing of all the Lenders, no amendment,
modification, supplement, termination, waiver or consent may be effective:

                                    (i) To (A) decrease the principal of, or the
                  amount of principal, principal prepayments or the rate of
                  interest payable on, any Loan, or (B) increase the amount of
                  the Commitment attributable to any Lender, or (C) decrease the
                  rate of any commitment fee or any letter of credit fee payable
                  to any Lender, or any other fee or amount payable to any
                  Lender under the Loan Documents or (D) waive an Event of
                  Default consisting of the failure of the Borrowers to pay when
                  due principal, interest, any commitment fee or any letter of
                  credit fee;

                                   (ii) To postpone any date fixed for any
                  payment of principal of, prepayment of principal of, or any
                  installment of interest on, any Loan or any installment of any
                  commitment fee or letter of credit fee, or to extend the term
                  of the Commitment, or to release the Liens created under any
                  Collateral Document, except to the extent expressly
                  contemplated thereby or to release any Guarantor except in
                  accordance with the terms of the Guaranty;

                                    (iii) To amend the provisions of the
                  definition of "Requisite Lenders", Articles 8 or 9, or this
                  Section 11.2;


                                      79-

                                    (iv) To amend the Borrowing Base or any of
                  its components, including without limitation, the advance rate
                  percentages or the definitions of Eligible Accounts or
                  Eligible Inventory, in any manner (a) that would result in an
                  increase in the amount of the Borrowing Base, as calculated in
                  accordance with the definition thereof, or (b) which increases
                  the ability of the Borrowers to obtain Loans or Letters of
                  Credit hereunder; or

                                    (v) To amend any provision of this Agreement
                  that expressly requires the consent or approval of all the
                  Lenders.

Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all the
Lenders and the Administrative Agent. Without implying that the Lenders are
obligated to agree to any amendment, modification, supplement, extension,
termination or waiver requested by the Borrowers, the Lenders may impose such
additional conditions and such other fees and expenses (including pursuant to
Section 11.3) as the Lenders may deem appropriate in connection with the
Lenders' approval thereof.

                  11.3 Costs, Expenses and Taxes. The Borrowers shall pay the
reasonable costs and expenses (including any sales, use, value-added, goods,
services or other taxes) of (a) the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of the Loan Documents
(including fees and out-of-pocket expenses of legal counsel to the
Administrative Agent and the allocated costs of internal counsel to the
Administrative Agent), (b) of each Creditor Party in connection with any
amendment, modification, supplement, extension or waiver of the Loan Documents
in connection with any refinancing, restructuring, reorganization (including a
bankruptcy reorganization) and enforcement or attempted enforcement of the Loan
Documents, and any matter related thereto, in each case including filing fees,
recording fees, title insurance fees, appraisal fees, search fees and other
out-of-pocket expenses and the reasonable fees (including any sales, use,
value-added, goods, services or other taxes) and out-of-pocket expenses of any
legal counsel (including the allocated cost of in-house counsel), independent
public accountants and other outside experts retained by the Administrative
Agent, and including any costs, expenses or fees incurred or suffered by each
Creditor Party in connection with or during the course of any bankruptcy or
insolvency proceedings of the Borrowers or any Subsidiary thereof, and (c)
out-of-pocket costs and expenses of the Administrative Agent incurred in
connection with not less than one audit of the Borrowers and their Subsidiaries
during each year and with the administration of the Loan Documents. The
Borrowers shall pay any and all documentary and other taxes (other than income
or gross receipts taxes generally applicable to banks) and all costs, expenses,
fees and charges payable or determined to be payable in connection with the
filing or recording of any Loan Document or any other instrument or writing to
be delivered hereunder or thereunder, or in connection with any transaction
pursuant hereto or thereto, and shall reimburse, hold harmless and indemnify
each Creditor Party from and against any and all loss, liability or legal or
other expense with respect to or resulting from any delay in paying or failure
to pay any such tax, cost, expense, fee or charge that the Creditor Parties may
suffer or incur by reason of the failure of any Party to perform any of its
Obligations. Any amount payable to the Creditor Parties under this Section shall


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bear interest from the second Business Day following the date of demand for
payment at the Default Rate.

                  11.4 Nature of Lenders' Obligations. The obligations of the
Lenders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement or any other Loan Document and no action taken by
the Creditor Parties or any of them pursuant hereto or thereto may, or may be
deemed to, make the Creditor Parties a partnership, an association, a joint
venture or other entity, either among themselves or with the Borrowers or any
Affiliate of any of the Borrowers. Each Lender's obligation to make any Advance
pursuant hereto is several and not joint or joint and several, and, in the case
of the initial Advances hereunder, is conditioned upon the performance by all
other Lenders of their obligations to make Advances. A default by any Lender
will not increase the Pro Rata Share of any other Lender. Any Lender not in
default may, if it desires, assume in such proportion as the nondefaulting
Lenders agree the obligations of any Lender in default, but is not obligated to
do so.

                  11.5 Survival of Representations and Warranties. All
representations and warranties contained herein or in any other Loan Document,
or in any certificate or other writing delivered by or on behalf of any one or
more of the Parties to any Loan Document, will survive the making of the Loans
hereunder (except to the extent the same relate solely to a specified earlier
date), and have been or will be relied upon by the Administrative Agent and each
Lender, notwithstanding any investigation made by the Administrative Agent or by
any Lender or on their behalf.

                  11.6 Notices. Except as otherwise expressly provided in the
Loan Documents: (a) All notices, requests, demands, directions and other
communications provided for hereunder or under any other Loan Document must be
in writing and must be mailed, telecopied, delivered by recognized overnight
delivery service or hand delivered to the appropriate party at the address set
forth on the signature pages of this Agreement or other applicable Loan Document
or, as to any party to any Loan Document, at any other address as may be
designated by it in a written notice sent to all other parties to such Loan
Document in accordance with this Section; and (b) Any notice, request, demand,
direction or other communication given by telecopier must be confirmed within
two Business Days by letter mailed or delivered to the appropriate party at its
address. Except as otherwise expressly provided in any Loan Document, if any
notice, request, demand, direction or other communication required or permitted
by any Loan Document is given by mail it will be effective on the earlier of
receipt or the third Business Day after deposit in the United States mail with
first class or airmail postage prepaid; if given by telecopier, when sent; or if
given by recognized overnight delivery service or personal delivery, when
delivered.

                  11.7 Execution of Loan Documents. This Agreement and any other
Loan Document may be executed in any number of counterparts and any party hereto
or thereto may execute any counterpart, each of which when executed and
delivered will be deemed to be an original and all of which counterparts of this
Agreement or any other Loan Document, as the case may be, when taken together
will be deemed to be but one and the same instrument.


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                  11.8     Binding Effect; Assignment.

                           (a) This Agreement and the other Loan Documents to
         which any Borrower is a Party will be binding upon and inure to the
         benefit of the Borrowers, the Creditor Parties, and their respective
         successors and assigns, except that the Borrowers may not assign their
         rights hereunder or thereunder or any interest herein or therein
         without the prior written consent of the Lenders. Each Lender
         represents that it is not acquiring its interest in the Loans with a
         view to the distribution thereof within the meaning of the Securities
         Act of 1933, as amended (subject to any requirement that disposition of
         such interest must be within the control of such Lender). Any Lender
         may at any time pledge its interest in the Loans to a Federal Reserve
         Bank, but no such pledge shall release that Lender from its obligations
         hereunder or grant to such Federal Reserve Bank the rights of a Lender
         hereunder absent foreclosure of such pledge.

                           (b) From time to time, each Lender may assign all or
         any portion of its Pro Rata Share to any Eligible Assignee; provided
         that (i) the assignee, if not then a Lender or an Affiliate of the
         assigning Lender, shall be approved by the Borrowers (which approval
         shall not be unreasonably withheld or delayed), (ii) such assignment
         shall be evidenced by an Assignment Agreement, a copy of which shall be
         furnished to the Administrative Agent as hereinbelow provided, (iii)
         such assignment shall be of the same Pro Rata Share of each Commitment,
         (iv) except in the case of an assignment to an Affiliate of the
         assigning Lender, to another Lender or of the entire remaining Pro Rata
         Share of the assigning Lender, the assignment shall not assign a Pro
         Rata Share equivalent to less than $5,000,000 and (v) the effective
         date of any such assignment shall be as specified in the Assignment
         Agreement, but not earlier than the date which is five Business Days
         after the date the Administrative Agent has received the Assignment
         Agreement. Upon the effective date of such Assignment Agreement, the
         assignee named therein shall be a Lender for all purposes of this
         Agreement, with the Pro Rata Share therein set forth and, to the extent
         of such Pro Rata Share, the assigning Lender shall be released from its
         obligations under this Agreement.

                           (c) By executing and delivering an Assignment
         Agreement, the assignee Lender thereunder acknowledges and agrees that:
         (i) other than the representation and warranty that it is the legal and
         beneficial owner of the Pro Rata Share being assigned thereby free and
         clear of any adverse claim, the assigning Lender has made no
         representation or warranty and assumes no responsibility with respect
         to any statements, warranties or representations made in or in
         connection with this Agreement or the execution, legality, validity,
         enforceability, genuineness or sufficiency of this Agreement or any
         other Loan Document; (ii) the assigning Lender has made no
         representation or warranty and assumes no responsibility with respect
         to the financial condition of the Borrowers or the performance by the
         Borrowers of the Obligations; (iii) it has received a copy of this
         Agreement, together with copies of the most recent financial statements
         delivered pursuant to Section 7.1 and such other documents and
         information as it has deemed appropriate to


                                      82-

         make its own credit analysis and decision to enter into such Assignment
         Agreement; (iv) it will, independently and without reliance upon the
         Administrative Agent or any Lender and based on such documents and
         information as it shall deem appropriate at the time, continue to make
         its own credit decisions in taking or not taking action under this
         Agreement; (v) it appoints and authorizes the Administrative Agent to
         take such action and to exercise such powers under this Agreement as
         are delegated to the Administrative Agent by this Agreement; and (vi)
         it will perform in accordance with their terms all of the obligations
         which by the terms of this Agreement are required to be performed by it
         as a Lender.

                           (d) The Administrative Agent shall maintain at the
         Administrative Agent's Office a copy of each Assignment Agreement
         delivered to it. After receipt of a completed Assignment Agreement
         executed by any Lender and an assignee, and receipt of an assignment
         fee of $3,500 from such assignee, Administrative Agent shall, promptly
         following the effective date thereof notify Borrower and each Lender of
         the identity of the new Lender.

                           (e) Each Lender may from time to time grant
         participations to one or more banks or other financial institutions in
         a portion of its Pro Rata Share; provided, however, that (i) such
         Lender's obligations under this Agreement shall remain unchanged, (ii)
         such Lender shall remain solely responsible to the other parties hereto
         for the performance of such obligations, (iii) the participating banks
         or other financial institutions shall not be a Lender hereunder for any
         purpose except, if the participation agreement so provides, for the
         purposes of Sections 3.5, 3.7, and 11.12 but only to the extent that
         the cost of such benefits to the Borrowers does not exceed the cost
         which the Borrowers would have incurred in respect of such Lender
         absent the participation, (iv) the Borrowers, the Administrative Agent
         and the other Lenders shall continue to deal solely and directly with
         such Lender in connection with such Lender's rights and obligations
         under this Agreement, (v) the participation interest shall be expressed
         as a percentage of the assigning Lender's Pro Rata Share and shall not
         restrict an increase in the Commitment or in the assigning Lender's Pro
         Rata Share, so long as the amount of the participation interest is not
         affected thereby and (vii) the consent of the holder of such
         participation interest shall not be required for amendments or waivers
         of provisions of the Loan Documents other than those which (A) extend
         the Maturity Date or any other date upon which any payment of money is
         due to the Lenders or (B) reduce the rate of interest on the Loans, any
         fee or any other monetary amount payable to the Lenders.

                  11.9 Foreign Lenders and Participants. Each Lender, and each
holder of a participation interest in the Loans that is incorporated under the
Laws of a jurisdiction other than the United States of America or any state
thereof shall deliver to the Borrowers (with a copy to the Administrative
Agent), within twenty days after accepting an assignment or receiving a
participation interest herein pursuant to Section 11.8, all appropriate United
States Internal Revenue Service forms as the Administrative Agent may require,
or such other evidence satisfactory to the Borrowers and the Administrative
Agent, to establish that no withholding under the federal income tax Laws is


                                      83-

required with respect to such Person. Thereafter and from time to time, each
such Person shall (a) promptly submit to the Borrowers (with a copy to the
Administrative Agent), such additional duly completed and signed copies of one
of such forms (or such successor forms as shall be adopted from time to time by
the relevant United States taxing authorities) as may then be available under
then current United States Laws and regulations to avoid, or such evidence as is
satisfactory to the Borrowers and the Administrative Agent of any available
exemption from, United States withholding taxes in respect of all payments to be
made to such Person by the Borrowers pursuant to this Agreement and (b) take
such steps as shall not be disadvantageous to it, in the judgment of such
Lender, and as may be reasonably necessary (including the re-designation of its
Eurodollar Lending Office, if any) to avoid any requirement of applicable Laws
that the Borrowers make any deduction or withholding for taxes from amounts
payable to such Person.

                  11.10 Right of Setoff. If an Event of Default has occurred and
is continuing, the Administrative Agent or any Lender (but only with the consent
of the Requisite Lenders) may exercise its rights under Article 9 of the Uniform
Commercial Code and other applicable Laws and, to the extent permitted by
applicable Laws, apply any funds in any deposit account maintained with it by
any Borrower and/or any Property of that Borrower in its possession against the
Obligations.

                  11.11 Sharing of Setoffs. Each Lender severally agrees that if
it, through the exercise of any right of setoff, banker's lien or counterclaim
against the Borrowers, or otherwise, receives payment of the Obligations held by
it that is ratably more than any other Lender, through any means, receives in
payment of the Obligations held by that Lender, then, subject to applicable
Laws: (a) the Lender exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Lender a participation
in the Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien or counterclaim or receipt of
payment; and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by the Borrowers or any Person claiming through or
succeeding to the rights of any of the Borrowers, the purchase of a
participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Lender that
purchases a participation in the Obligations pursuant to this Section shall from
and after the purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligations purchased. Each Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in an Obligation so purchased may exercise any and all
rights of setoff, banker's lien or counterclaim with


                                      84-

respect to the participation as fully as if that Lender were the original owner
of the Obligation purchased.

                  11.12 Indemnity by the Borrowers. The Borrowers agree to
indemnify, save and hold harmless each Creditor Party and their respective
parent corporations, Subsidiaries, directors, officers, agents, attorneys and
employees (collectively the "Indemnitees") from and against: (a) Any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than any Indemnitee or any Party) if the claim,
demand, action or cause of action directly or indirectly relates to a claim,
demand, action or cause of action that such Person asserts or may assert against
the Borrowers, any Affiliate of the Borrowers or any officer, director or
shareholder of the Borrowers in relation to the transactions described herein,
provided that the same relates to or arises from this Agreement, any other Loan
Document, or any transaction contemplated hereunder or thereunder; (b) Any and
all claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than any Indemnitee or any Party) if the claim,
demand, action or cause of action arises out of or relates to the Commitment,
the use or contemplated use of proceeds of any Loan or Letter of Credit, or the
relationship of the Borrowers and the Creditor Parties under this Agreement; (c)
Any administrative or investigative proceeding by any Governmental Agency
arising out of or related to a claim, demand, action or cause of action
described in clauses (a) or (b) above; and (d) Any and all liabilities, losses,
costs or expenses (including reasonable attorneys' fees (including the allocated
cost of in-house counsel) and disbursements and other reasonable professional
services) that any Indemnitee suffers or incurs as a result of the assertion of
any foregoing claim, demand, action or cause of action; provided that no
Indemnitee shall be entitled to indemnification for any loss caused by its own
gross negligence or willful misconduct. If any such claim, demand, action or
cause of action is asserted against any Indemnitee, such Indemnitee shall
promptly notify the Borrowers in writing, but the failure promptly to so notify
the Borrowers shall not affect the Borrowers' obligations under this Section.
Any obligation or liability of the Borrowers to any Indemnitee under this
Section shall survive the expiration or termination of this Agreement and the
repayment of all Loans and the payment and performance of all other Obligations.

                  11.13 Nonliability of the Creditor Parties. The Borrowers
acknowledge and agree that:

                           (a) Any inspections or audits of any Property of the
         Borrowers made by or through the Creditor Parties are for purposes of
         administration of the Loan Documents only and the Borrowers are not
         entitled to rely upon the same, nor is any Creditor Party obligated to
         release to the Borrowers any information obtained as a result of such
         inspection or audit;

                           (b) By accepting or approving anything required to be
         observed, performed, fulfilled or given to any Creditor Party pursuant
         to the Loan Documents, the Creditor Parties shall not be deemed to have
         warranted or represented the sufficiency, legality, effectiveness or
         legal effect of the same, or of any term, provision or condition


                                      85-

         thereof, and such acceptance or approval thereof shall not constitute a
         warranty or representation to anyone with respect thereto by any
         Creditor Party; and

                           (c) The relationship among the Borrowers and the
         Creditor Parties is, and shall at all times remain, solely that of
         borrowers, guarantors and lenders; no Creditor Party shall under any
         circumstance be construed to be a partner or joint venturer of the
         Borrowers or their Affiliates; no Creditor Party shall under any
         circumstance be deemed to be in a relationship of confidence or trust
         or a fiduciary relationship with the Borrowers or their Affiliates, or
         to owe any fiduciary duty to the Borrowers or their respective
         Affiliates under this Agreement; the Creditor Parties do not undertake
         or assume any responsibility or duty to the Borrowers or their
         respective Affiliates to select, review, inspect, supervise, pass
         judgment upon or inform the Borrowers or their respective Affiliates of
         any matter in connection with their Property or the operations of the
         Borrowers or their respective Affiliates; the Borrowers and their
         Affiliates shall rely entirely upon their own judgment with respect to
         such matters; and any review, inspection, supervision, exercise of
         judgment or supply of information undertaken or assumed by the Creditor
         Parties in connection with such matters is solely for the protection of
         the Creditor Parties and none of the Borrowers nor any other Person is
         entitled to rely thereon.

                  11.14 No Third Parties Benefited. This Agreement is made for
the purpose of defining and setting forth certain obligations, rights and duties
of the Borrowers and the Creditor Parties in connection with the Loans and
Letters of Credit, and is made for the sole benefit of the Borrowers and the
Creditor Parties and the successors and assigns of the Creditor Parties. Except
as provided in Section 11.8, no other Person shall have any rights of any nature
hereunder or by reason hereof.

                  11.15 Further Assurances. The Borrowers shall, and shall cause
their Subsidiaries to, at their expense and without expense to the Creditor
Parties, do, execute and deliver such further acts and documents as the
Administrative Agent or the Requisite Lenders from time to time reasonably
require for the assuring and confirming unto the Creditor Parties of the rights
hereby created or intended now or hereafter so to be created, or for carrying
out the intention or facilitating the performance of the terms of any Loan
Document.

                  11.16 Confidentiality. Each Lender agrees to hold any
confidential information that it may receive from the Borrowers pursuant to this
Agreement in confidence, except for disclosure: (a) To other Lenders; (b) To
legal counsel and accountants for the Borrowers, the Administrative Agent or any
Lender; (c) To other professional advisors to the Borrowers, the Administrative
Agent or any Lender; (d) To regulatory officials having jurisdiction over that
Lender; (e) As required by Law or legal process or in connection with any legal
proceeding to which that Lender is a party; and (g) To another financial
institution in connection with a disposition or proposed disposition to that
financial institution of all or part of that Lender's interests hereunder or a
participation interest in its Loans, provided that the recipient has accepted
such information subject to a confidentiality agreement substantially similar to
this Section. For purposes of the foregoing, "confidential


                                      86-

information" shall mean any information respecting the Borrowers or their
Subsidiaries reasonably considered by the Borrowers to be confidential, other
than (i) information previously filed with any Governmental Agency and available
to the public, (ii) information previously published in any public medium from a
source other than, directly or indirectly, that Lender, and (iii) information
previously disclosed by any Borrower to any Person not an Affiliate, agent or
employee of the Borrower without a confidentiality agreement substantially
similar to this Section. Nothing in this Section shall be construed to create or
give rise to any fiduciary duty on the part of the Administrative Agent or the
Lenders to any Borrower.

                  11.17 Integration. This Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and supersedes all prior agreements, written or
oral, on the subject matter hereof. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of the Administrative
Agent or the Lenders in any other Loan Document shall not be deemed a conflict
with this Agreement. Each Loan Document was drafted with the joint participation
of the respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.

                  11.18 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.

                  11.19 Independent Covenants. Each covenant in Articles 5, 6
and 7 is independent of the other covenants in those Articles; the breach of any
such covenant shall not be excused by the fact that the circumstances underlying
such breach would be permitted by another such covenant.

                  11.20 Headings. Article and Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.

                  11.21    Arbitration Reference.

                           (a) Mandatory Arbitration. Any controversy or claim
         between or among the parties, including but not limited to those
         arising out of or relating to this Agreement or any agreements or
         instruments relating hereto or delivered in connection herewith and any
         claim based on or arising from an alleged tort, shall at the request of
         any party be determined by arbitration. The arbitration shall be
         conducted in accordance with the United States Arbitration Act (Title
         9, U.S. Code), notwithstanding any choice of law provision in this
         Agreement, and under the Commercial Rules of the American Arbitration
         Association


                                      87-

         ("AAA"). The arbitrators shall give effect to statutes of limitation in
         determining any claim. Any controversy concerning whether an issue is
         arbitrable shall be determined by the arbitrators. Judgment upon the
         arbitration award may be entered in any court having jurisdiction. The
         institution and maintenance of an action for judicial relief or pursuit
         of a provisional or ancillary remedy shall not constitute a waiver of
         the right of any party, including the plaintiff, to submit the
         controversy or claim to arbitration if any other party contests such
         action for judicial relief.

                           (b) Real Property Collateral. Notwithstanding the
         provisions of subparagraph (a), no controversy or claim shall be
         submitted to arbitration without the consent of all parties if, at the
         time of the proposed submission, such controversy or claim arises from
         or relates to an obligation to any Creditor Party which is secured by
         real property Collateral. If all parties do not consent to submission
         of such a controversy or claim to arbitration, the controversy or claim
         shall be determined as provided in subparagraph (c).

                           (c) Judicial Reference. A controversy or claim which
         is not submitted to arbitration as provided and limited in
         subparagraphs (a) and (b) shall, at the request of any party, be
         determined by a reference in accordance with California Code of Civil
         Procedure Sections 638 et seq. If such an election is made, the parties
         shall designate to the court a referee or referees selected under the
         auspices of the AAA in the same manner as arbitrators are selected in
         AAA-sponsored proceedings. The presiding referee of the panel, or the
         referee if there is a single referee, shall be an active attorney or
         retired judge. Judgment upon the award rendered by such referee or
         referees shall be entered in the court in which such proceeding was
         commenced in accordance with California Code of Civil Procedure
         Sections 644 and 645.

                           (d) Provisional Remedies, Self-Help and Foreclosure.
         No provision of this section shall limit the right of any party to this
         Agreement to exercise self-help remedies such as setoff, to foreclose
         against or sell any real or personal property Collateral or security or
         to obtain provisional or ancillary remedies from a court of competent
         jurisdiction before, after, or during the pendency of any arbitration
         or other proceeding. The exercise of a remedy does not waive the right
         of any party to resort to arbitration or reference. At the Requisite
         Lenders' option, foreclosure under a deed of trust or mortgage may be
         accomplished either by exercise of power of sale under the deed of
         trust or mortgage or by judicial foreclosure.

                  11.22    Environmental Indemnity.

                           (a) Each Borrower hereby agrees to indemnify, defend
         and hold harmless each Creditor Party and each of their respective
         officers, directors, employees, counsel, agents and attorneys-in-fact
         (each, an "Indemnified Person"), from and against any and all
         liabilities, obligations, losses, damages, penalties, actions,
         judgments, suits, costs, charges, expenses or disbursements (including
         fees and out-of-pocket expenses of legal


                                      88-

         counsel to the Administrative Agent and the allocated costs of internal
         counsel to the Administrative Agent and the allocated cost of internal
         environmental audit or review services), which may be incurred by or
         asserted against such Indemnified Person in connection with or arising,
         directly or indirectly out of any pending or threatened investigation,
         litigation or proceeding, or any action taken by any Person, with
         respect to any Environmental Claim arising out of or related to any
         Property subject to a Lien in favor of the Administrative Agent or any
         Lender. No action taken by legal counsel chosen by the Administrative
         Agent or any Lender in defending against any such investigation,
         litigation or proceeding or requested remedial, removal or response
         action shall vitiate or any way impair the Borrowers' obligation and
         duty hereunder to indemnify and hold harmless each Creditor Party.

                           (b) In no event shall any site visit, observation or
         testing by the Administrative Agent or any Lender (or any contractee of
         the Administrative Agent or any Lender) be deemed a representation or
         warranty that Hazardous Materials are or are not present in, on, or
         under, the site, or that there has been or shall be compliance with any
         Environmental Law. None of the Borrowers nor any other Person is
         entitled to rely on any site visit, observation or testing by the
         Administrative Agent or any Lender. Neither the Administrative Agent
         nor any Lender owes any duty of care to protect the Borrowers or any
         other Person against, or to inform the Borrowers or any other party of,
         any Hazardous Materials or any other adverse condition affecting any
         site or Property. Neither the Administrative Agent nor any Lender shall
         be obligated to disclose to the Borrowers or any other Person any
         report or findings made as a result of, or in connection with, any site
         visit, observation or testing by the Administrative Agent or any
         Lender.

                           (c) The obligations in this Section shall survive
         payment of all other Obligations. At the election of any Indemnified
         Person, the Borrowers shall defend such Indemnified Person using legal
         counsel reasonably satisfactory to the Borrowers and such Indemnified
         Person, at the sole cost and expense of the Borrowers. All amounts
         owing under this Section shall be paid within 30 days after demand.

                           (d) The Borrowers acknowledge that the Administrative
         Agent's and Lenders' appraisal of the Real Property is such that
         Administrative Agent and Lenders are not willing to accept the
         consequences under any applicable anti-deficiency rules of inclusion
         of the obligations under this Section among the obligations secured by
         the Real Property, and that the Administrative Agent and the Lenders
         would not enter into the Loan Agreement with the Borrowers but for the
         personal liability undertaken by the Borrowers for such obligations.

                  11.23 Jurisdiction. Except as otherwise expressly provided in
any Loan Document, the parties hereto and thereto agree and intend that the
proper and exclusive forum for any litigation of any disputes or controversies
arising out of or related to the Loan Documents shall be the Superior Court of
the State of California for the County of Los Angeles. Notwithstanding the


                                      89-

foregoing, the parties agree that, with respect to any Collateral given by any
Borrower or any Affiliate thereof to any of the Creditor Parties located in
states or jurisdictions other than California, or in counties of California
other than Los Angeles County, the Administrative Agent shall be entitled on
behalf of such Creditor Parties to commence actions in such states or
jurisdictions, or in such counties of California, against the Borrowers or any
Affiliate thereof or other Persons for the purpose of seeking provisional
remedies, including actions for claim and delivery of Property, or for
injunctive relief or appointment of a receiver, or actions to foreclose upon
Liens granted to the Creditor Parties. Each party to any Loan Document, to the
extent permitted by applicable Laws, hereby expressly waives any defence or
objection to jurisdiction or venue based on the doctrine of forum non
conveniens, and stipulates that the Superior Court of the State of California
for the County of Los Angeles shall have in personam jurisdiction and venue over
such party for the purpose of litigating any dispute or controversy arising out
of or related to the Loan Documents. In the event the Borrowers or any Affiliate
thereof should commence or maintain any action or proceeding arising out of or
related to the Loan Documents in a forum other than the Superior Court of the
State of California for the County of Los Angeles, the Creditor Parties shall be
entitled to request the dismissal or stay of such action or proceeding, and the
Borrowers and their Affiliates stipulate that such action or proceeding shall be
dismissed or stayed.

                  11.24 Joint Borrower Provisions. The Borrowers acknowledge
that the Loans and Letters of Credit are being extended to the Borrowers on a
joint and several basis at their request and as an accommodation to the
Borrowers (rather than in separate credit facilities made available to the
individual Borrowers) and, in furtherance thereof, hereby consent and agree to
the Joint Borrower provisions attached hereto as Exhibit G and incorporated
herein by this reference.

                  11.25 GOVERNING LAW. EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY
PROVIDED THEREIN, EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA (WITH OUT
REGARD TO THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION WHICH MAY BE
REQUIRED BY THE CHOICE OF LAW AND CONFLICT OF LAWS PROVISIONS THEREOF).

                  11.26 PURPORTED ORAL AMENDMENTS. THE PARTIES HERETO EXPRESSLY
ACKNOWLEDGE THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED
OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. THE PARTIES HERETO AGREE
THAT THEY WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL
OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF THE ADMINISTRATIVE AGENT OR ANY
LENDER THAT DOES NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT,
MODIFICATION, WAIVER OR SUPPLEMENT TO THE AGREEMENT OF THE OTHER LOAN DOCUMENTS.

                [Remainder of this Page Intentionally Left Blank]


                                      90-

                  11.27 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.

                          Borrowers:

                          JAKKS PACIFIC, INC.
                          FLYING COLORS TOYS, INC.
                          ROAD CHAMPS, INC. and
                          PENTECH INTERNATIONAL INC.

                          By: /s/ JOEL M. BENNETT

                              Joel M. Bennett

                          Title: Exec. V.P./C.F.O. of each of the foregoing

                          Address for notices for each of the foregoing:

                          22619 Pacific Coast Highway, #250
                          Malibu, CA 90265
                          Attn: Chief Financial Officer



                          BANK OF AMERICA, N.A., as Administrative Agent


                          By:      /s/ RONALD R. PARSONS
                                   --------------------------------------
                                   Ronald R. Parsons, Vice President and Manager

                          Address:

                          Bank of America, N.A.
                          800 Fifth Avenue, 37th Floor
                          Mail Code:  WA1-501-37-20
                          Seattle, WA 98104
                          206/358-7578
                          206/358-0971 FAX

                          Attn.:  Ron Parsons, Vice President



                          BANK OF AMERICA, N.A., as Issuing Lender and as
                          a Lender

                          By:      /s/ DAVID J. STASSEL
                                   --------------------------------------
                                   David J. Stassel, Vice President

                          Address:

                          Bank of America, N.A. #1459
                          Mail Code CA 9-156-MZ-07
                          525 South Flower, Mezzanine Level
                          Los Angeles, CA 90071-2202
                          213/345-6931
                          213/345-6982 FAX

                          david.j.stassel@bankamerica.com
                          -----------------------------------------------
                          Commitment Amount  $17,500,000



                          UNITED CALIFORNIA BANK, as a Lender


                          By:  /s/ DIRK PRICE
                                   Dirk Price

                          Title:  Vice President

                          Address for Notices:

                          United California Bank
                          601 South Figueroa Street
                          Los Angeles, California  90017
                          Attn: Dirk Price, Vice President
                          Telephone: 213 896 7850
                          Telecopier: 213 896 7090

                          Commitment Amount: $15,000,000



                          BNP PARIBAS, as Issuing Lender and as a Lender



                          By:  /s/ GERRY ARTEAGA
                               ------------------------------------------
                                 Gerry Arteaga

                          Title:  Vice President
                                  ---------------------------------------

                          BNP Paribas

                          725 South Figueroa Street, Suite 2090
                          Los Angeles, California  90017
                          Attn: Gerry Arteaga, Vice President
                          Telephone: 213 486-9120
                          Telecopier: 213 891-0819

                          Commitment Amount: $12,500,000


                          WASHINGTON MUTUAL BANK, d/b/a
                          WM BUSINESS BANK


                          By: /s/ JAMES S. KNIGHT
                                  James S. Knight

                          Title:  Vice President

                          Address for Notices:

                          1000 Wilshire Boulevard, Suite 100
                          Los Angeles, California 90017
                          Attn: James S. Knight, Vice President
                          Telephone: 213 996-7725
                          Telecopier: 213 996-7780

                          Commitment Amount $5,000,000






                                    EXHIBIT A

                              ASSIGNMENT AGREEMENT

                  THIS ASSIGNMENT AGREEMENT ("Agreement") dated as of
__________, _____ is made with reference to that certain Loan Agreement dated as
of October 12, 2001 (as it may from time to time be amended, restated, extended,
renewed, modified or supplemented, the "Loan Agreement") by and among JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, "Borrowers"), the
Lenders referred to therein and Bank of America, N.A., as Administrative Agent,
and is entered into between the "Assignor" described below, in its capacity as a
Lender under the Loan Agreement, and the "Assignee" described below.

                  Assignor and Assignee hereby represent, warrant and agree as
follows:

                  1. Definitions. Capitalized terms defined in the Loan
Agreement are used herein with the meanings set forth for such terms in the Loan
Agreement. As used in this Agreement, the following capitalized terms shall have
the meanings set forth below:

         "Assignee" means ____________________________.

         "Assigned Pro Rata Share" means _____% of the Commitment of the Lenders
under the Loan Agreement which equals $____________.

         "Assignor" means _____________________________.

         "Effective Date" means ______________, _____, the effective date of
this Agreement determined in accordance with Section 11.8 of the Loan Agreement.

                  2. Representations and Warranties of the Assignor. The
Assignor represents and warrants to the Assignee as follows:

                           a. As of the date hereof, the Pro Rata Share of the
Assignor is ____% of the Commitment (without giving effect to assignments
thereof which have not yet become effective). The Assignor is the legal and
beneficial owner of the Assigned Pro Rata Share and the Assigned Pro Rata Share
is free and clear of any adverse claim.

                           b. As of the date hereof, the outstanding principal
balance of Loans made by the Assignor under the Assignor's Pro Rata Share of the
Commitment is $_________, and Assignor's ratable participation in outstanding
Letters of Credit is $___________.

                           c. The Assignor has full power and authority, and has
taken all action necessary, to execute and deliver this Agreement and any and
all other documents required or


                                      -1-

permitted to be executed or delivered by it in connection with this Agreement
and to fulfill its obligations under, and to consummate the transactions
contemplated by, this Agreement, and no governmental authorizations or other
authorizations are required in connection therewith; and

                           d. This Agreement constitutes the legal, valid and
binding obligation of the Assignor.

The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrowers, or any of them, or the
performance by Borrowers, or any of them, of the Obligations, and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or the execution, legality,
validity, enforceability, genuineness, or sufficiency of the Loan Agreement or
any other Loan Document other than as expressly set forth above.

                  3. Representations and Warranties of the Assignee. The
Assignee hereby represents and warrants to the Assignor as follows:

                           a. The Assignee has full power and authority, and has
taken all action necessary, to execute and deliver this Agreement, and any and
all other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith;

                           b. This Agreement constitutes the legal, valid and
binding obligation of the Assignee;

                           c. The Assignee has independently and without
reliance upon the Administrative Agent or Assignor and based on such documents
and information as the Assignee has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. The Assignee will,
independently and without reliance upon the Administrative Agent or any Lender,
and based upon such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Loan Agreement;

                           d. The Assignee has received copies of such of the
Loan Documents delivered pursuant to Section 8.1 of the Loan Agreement as it has
requested, together with copies of the most recent financial statements
delivered pursuant to Section 7.1 of the Loan Agreement;

                           e. The Assignee will perform in accordance with their
respective terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender; and

                           f. The Assignee is an Eligible Assignee.

                  4. Assignment. On the terms set forth herein, the Assignor, as
of the Effective Date, hereby irrevocably sells, assigns and transfers to the
Assignee all of the rights and obligations of


                                      -2-

the Assignor under the Loan Agreement, the other Loan Documents and the
Assignor's Pro Rata Share of the Commitment to the extent of the Assigned Pro
Rata Share, and the Assignee irrevocably accepts such assignment of rights and
assumes such obligations from the Assignor on such terms and effective as of the
Effective Date. As of the Effective Date, the Assignee shall have the rights and
obligations of a "Lender" under the Loan Documents, except to the extent of any
arrangements with respect to payments referred to in Section 5 hereof. Assignee
hereby appoints and authorizes the Administrative Agent to take such action and
to exercise such powers under the Loan Agreement as are delegated to the
Administrative Agent by the Loan Agreement.

                  5. Payment. On the Effective Date, the Assignee shall pay to
the Assignor, in immediately available funds, an amount equal to the purchase
price of the Assigned Pro Rata Share, as agreed between the Assignor and the
Assignee pursuant to a letter agreement of even date herewith. Such letter
agreement also sets forth the agreement between the Assignor and the Assignee
with respect to the amount of interest, fees, and other payments with respect to
the Assigned Pro Rata Share which are to be retained by the Assignor. Assignee
shall also pay to the Administrative Agent an assignment fee of $3,500, if
applicable, in accordance with Section 11.8 of the Loan Agreement.

                  The Assignor and the Assignee hereby agree that if either
receives any payment of interest, principal, fees or any other amount under the
Loan Agreement, their respective Pro Rata Shares of the Commitment or any other
Loan Documents which is for the account of the other, it shall hold the same in
trust for such party to the extent of such party's interest therein and shall
promptly pay the same to such party.

                  6. Principal, Interest, Fees, etc. Any principal that would be
payable and any interest, fees and other amounts that would accrue from and
after the Effective Date to or for the account of the Assignor pursuant to the
Loan Agreement and its Pro Rata Share of the Commitment shall be payable to or
for the account of the Assignor and the Assignee, in accordance with their
respective interests as adjusted pursuant to this Agreement.

                  7. Further Assurances. Concurrently with the execution of this
Agreement, the Assignor shall execute two counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, and the Assignor specifically agrees to cause the delivery of (i) two
original counterparts of this Agreement and (ii) the Request for Registration,
to the Administrative Agent for the purpose of registration of the Assignee as a
"Lender" pursuant to Section 11.8 of the Loan Agreement.

                  8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LOCAL LAWS OF THE STATE OF CALIFORNIA. FOR
ANY DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT, THE ASSIGNEE HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA.


                                      -3-

                  9. Notices. All communications among the parties or notices in
connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram or cable, addressed to the
appropriate party at its address set forth on the signature pages hereof. All
such communications and notices shall be effective upon receipt.

                  10. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that the Assignee shall not assign its rights or obligations
under this Agreement without the prior written consent of the Assignor and any
purported assignment, absent such consent, shall be void. Nothing contained in
this Section shall restrict the assignment by Assignee of its rights under the
Loan Documents following the Effective Date.

                  11. Interpretation. The headings of the various sections
hereof are for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.

                                         "Assignor"

                                         _______________________________________


                                         By:____________________________________

                                             Its:_______________________________

                                         Address:     __________________________
                                                      __________________________
                                                      __________________________
                                         Attention:   __________________________
                                         Telephone:   __________________________
                                         Telecopier:  __________________________


                                         "Assignee"

                                         _______________________________________


                                         By:____________________________________

                                             Its:_______________________________


                                      -4-

                                         Address:     __________________________
                                                      __________________________
                                                      __________________________
                                         Attention:   __________________________
                                         Telephone:   __________________________
                                         Telecopier:  __________________________




                                      -5-

                        Exhibit A to Assignment Agreement

                            REQUEST FOR REGISTRATION

To:      Bank of America, N.A., as Administrative Agent, and Borrowers (as
         defined below)


                  THIS REQUEST FOR REGISTRATION is made as of the date of the
enclosed Assignment Agreement with reference to that certain Loan Agreement
dated as of October 12, 2001 by and among JAKKS PACIFIC, INC., a Delaware
corporation, FLYING COLORS TOYS, INC., a Michigan corporation, ROAD CHAMPS,
INC., a Delaware corporation, and PENTECH INTERNATIONAL INC., a Delaware
corporation (collectively, "Borrowers"), the Lenders therein named, and Bank of
America, N.A., Administrative Agent (as amended as of the date hereof, the "Loan
Agreement").

                  The Assignor and Assignee described below hereby request that
Administrative Agent register the Assignee as a Lender pursuant to Section 11.8
of the Loan Agreement effective as of the Effective Date described in the
Assignment Agreement. Enclosed with this Request are two counterpart originals
of the Assignment Agreement.

                  IN WITNESS WHEREOF, the Assignor and Assignee have executed
this Request for Registration by their duly authorized officers as of
________________.

                                       
"Assignor"                                "Assignee"

______________________________________    ______________________________________


By:___________________________________    By:___________________________________

     Its:_____________________________         Its:_____________________________





                                      -6-

                  CONSENT OF ADMINISTRATIVE AGENT AND BORROWERS

TO:      The Assignor and Assignee referred to in the above Request for
         Registration


                  When countersigned by both Borrowers and Administrative Agent
below, this document shall certify that:

         [ ]      [CHECK HERE IF BORROWERS' SIGNATURE IS REQUIRED PURSUANT TO
                  SECTION 11.8(b)(i) OF THE LOAN AGREEMENT:]

                  1. Borrowers have consented, pursuant to the terms of the Loan
Documents, to the assignment by the Assignor to the Assignee of the Assigned Pro
Rata Share.

                  2. Administrative Agent has registered the Assignee as a
Lender under the Loan Agreement, effective as of the Effective Date described
above, with a Pro Rata Share of the Commitment corresponding to the Assigned Pro
Rata Share and has adjusted the registered Pro Rata Share of the Commitment of
the Assignor to reflect the assignment of the Assigned Pro Rata Share.

Approved:

JAKKS PACIFIC, INC.                            BANK OF AMERICA, N.A.,
FLYING COLORS TOYS, INC.                       as Administrative Agent
ROAD CHAMPS, INC. and
PENTECH INTERNATIONAL INC.



By:______________________________              By:______________________________

Title:____________________________ of          Title:___________________________
each of the foregoing



                                      -7-


                                    EXHIBIT B

                           BORROWING BASE CERTIFICATE

TO:      BANK OF AMERICA, N.A., as Administrative Agent


                  This Borrowing Base Certificate ("Certificate") is delivered
pursuant to the Loan Agreement dated as of October 12, 2001 among JAKKS PACIFIC,
INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan corporation,
ROAD CHAMPS, INC., a Delaware corporation, and PENTECH INTERNATIONAL INC. a
Delaware corporation (collectively, "Borrowers"), the Lenders referred to
therein, and Bank of America, N.A., as Administrative Agent (as it may from time
to time be amended, restated, extended, renewed, modified or supplemented, the
"Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined
in this Certificate shall have the meanings defined for them in the Loan
Agreement. Section references herein relate to the Loan Agreement unless stated
otherwise. This Certificate covers the calendar month ending _______, _____ (the
"Test Date"), and is delivered to the Administrative Agent pursuant to Section
7.1(a) of the Loan Agreement.

                  The following calculations determine the Borrowing Base as of
the Test Date and current borrowing availability under the Loan Agreement and
the related Loan Documents. Such calculations are derived from the books and
records of Borrower in accordance with the relevant definitions of financial
terms set forth in Section 1.1 of the Loan Agreement:

A.       BORROWING BASE

         (1)      Eligible Accounts Component (all accounts are calculated at
                  book value).

                  (a)      Eligible Accounts Calculation.

                                                                                     
                           (i) accounts receivable of the Borrowers as of the
                           Test Date as to which the Administrative Agent holds         $
                           a first priority perfected security interest                  --------

                           less (ii) the following accounts receivable, to the
                           extent included in (i), (without duplication):

                           (A) accounts receivable of any Borrower that did not
                           arise in the ordinary course of business of that             $
                           Borrower.                                                     --------

                           (B) accounts receivable of any Borrower which do not
                           represent amounts owed for services rendered or goods        $
                           delivered.                                                    --------




                                      -1-

                                                                                     
                           (C) accounts receivable of any Borrower which were
                           not the subject of invoices sent to the relevant
                           account debtors within 5 days of shipment of the
                           related goods or the rendering of the related                $
                           services.                                                     --------

                           (D) accounts receivable of any Borrower which are not
                           due and payable within 90 days of the issuance of the        $
                           invoice.                                                      --------

                           (E) accounts receivable of any Borrower which are
                           more than 60 days past due (or more than 90 days from        $
                           the issuance of the invoice).                                 --------

                           (F) accounts receivable of any Borrower which
                           represent amounts owed to such Borrower for goods            $
                           shipped on a consignment or "bill and hold" basis.            --------

                           (G) accounts receivable of any Borrower which have as
                           the account debtor a Person who is the subject of any        $
                           pending proceeding under any Debtor Relief Law.               --------

                           (H) accounts receivable of any Borrower which have as
                           the account debtor any Governmental Agency or any
                           Affiliate, officer or employee of any Borrower or its        $
                           Subsidiaries.                                                 --------

                           (I) accounts receivable of any Borrower which have as
                           the account debtor a Person located outside the
                           United States and Canada, unless the payment of such
                           accounts receivable are secured by an acceptable
                           letter of credit issued to that Borrower by a Bank           $
                           reasonably acceptable to the Requisite Lenders.               --------

                           (J) accounts receivable of any Borrower due from an
                           account debtor or its Affiliates if 25% or more of
                           the aggregate accounts receivable due from that              $
                           account debtor do not qualify as "Eligible Accounts".         --------

                           (K) accounts receivable of any Borrower due from an
                           account debtor which, if added to all other accounts         (K) shall be
                           receivable owing from such account debtor, causes the        increased to
                           total of all accounts receivable owing from that             the amounts
                           account debtor to exceed 10 percent (10%) of all             set forth in
                           accounts receivable of all account debtors, provided         the
                           that as to the Approved Customers, the limit                 definition
                           expressed in this clause                                     thereof in





                                      -2-

                           the Loan Agreement.


                                                                                     
                                                                                        $
                                                                                         --------

                           (L) accounts receivable of any Borrower which are
                           subject to any known or asserted offset, counterclaim
                           or defense, or with respect to which the account             $
                           debtor has disputed its liability.                            --------

                           (M) contra accounts of any Borrower with respect to
                           an account debtor as a result of amounts owing from          $
                           the Borrowers to such account debtor.                         --------

                           (N) accounts receivable of any Borrower which are
                           unenforceable unless a future condition is met,
                           including any accounts receivable arising out of
                           cash-on-delivery sales, consignments or guaranteed           $
                           sales.                                                        --------

                           (O) accounts receivable of any Borrower which are            $
                           evidenced by a promissory note or other instrument.           --------

                           (P) accounts receivable of any Borrower which have
                           been the subject of a "rebilling" or any other
                           re-invoicing of such account receivable submitted to
                           the relevant account debtor on a date which is more
                           than 30 days following the date upon which the
                           initial invoice with respect to such account                 $
                           receivable was submitted to that account debtor               --------

                           (Q) accounts receivable of any Borrower which have
                           otherwise been objected to by the Requisite Lenders
                           in the exercise of their reasonable discretion for a
                           reason which is not the express subject matter of any        $
                           of clauses (A) through (P) above.                             --------

                           equals (iii) Eligible Accounts [(i) - (ii)]                  $
                                                                                         --------




                                      -3-

                                                                                     
                  (b)      Eligible Accounts Component.

                           (i)      Eligible Accounts (from item 1(a)(iii)              $
                                    above)                                               --------

                           times (ii) 70%                                               x 0.70(1)

                           equals Eligible Accounts Component [(i)  x (ii)]             $
                                                                                         ========
         (2)      Eligible Inventory Component (The "value" of Eligible
                  Inventory as used in this item 2 shall be determined in
                  accordance with GAAP based on the lower of cost or market
                  value on a "first-in, first-out" basis. For purposes of the
                  foregoing sentence, "cost" shall mean the Borrowers' direct
                  cost in acquiring such Eligible Inventory and shall not
                  include any allocation of the Borrowers' operating expenses or
                  overhead in determining such cost).

                  (a)      Eligible Inventory Calculation.

                           (i)      value of the finished goods inventory               $
                                    of the Borrower as of the Test Date.                 --------

                           less (ii) the value of the following inventory, to
                           the extent included in (i) (without duplication):

                           (A) finished goods inventory of any Borrower that is
                           subject to any Lien, other than any Lien in favor of         $
                           the Administrative Agent.                                     --------

                           (B) finished goods inventory of any Borrower that is
                           damaged, defective, unsalable, slow-moving or                $
                           otherwise unfit for use.                                      --------

                           (C) inventory of any Borrower consisting of work-in-
                           progress, packaging materials, pallets, bags, boxes,
                           capitalized depot freight and handling costs or              $
                           supplies, or discontinued inventory.                          --------

                           (D) inventory of any Borrower which is located at
                           locations other than those described on Schedule 1.1
                           to the Loan Agreement or such other locations of
                           which the Borrowers have advised the Administrative          $
                           Agent in writing.                                             --------




- --------

(1)      or such lower advance rate as the Administrative Agent or the Requisite
         Lenders shall have determined in accordance with the Loan Agreement.


                                      -4-

                                                                                     
                           (E) inventory of any Borrower covered by a negotiable
                           document of title which has not been delivered to the        $
                           Administrative Agent in pledge.                               --------

                           (F) inventory of any Borrower other than that which
                           is held for sale or use in the ordinary course of
                           such Borrower's business and is of good and                  $
                           merchantable quality.                                         --------

                           (G) inventory of any Borrower which has been placed
                           on consignment.

                           (H) finished goods inventory of any Borrower that has
                           otherwise been objected to by the Requisite Lenders
                           in the exercise of their reasonable discretion for a
                           reason which is not the express subject matter of any        $
                           of clauses (A) through (G) above.                             --------


                           equals (iii) the value of Eligible Inventory [(i) -          $
                           (ii)]                                                         --------

                  (b)      Eligible Inventory Component

                           (i) value of Eligible Inventory (from item 2(a)(iii)
                           above).

                           times (ii) the Inventory Advance Rate                        x
                                                                                         --------
                           equals Eligible Inventory Component [(i) x (ii)]             $
                                                                                         ========

         (3)      Borrowing Base.
                                                                                        $
                  (a)      Eligible Accounts Component (item 1(b))                       --------

                  plus (b) Eligible Inventory Component (item 2(b)) (provided
                  that the amount resulting from item 2(b) shall not be in              $
                  excess of up                                                           --------

                  to 20% of the Borrowing Base)

                  equals Borrowing Base [(a) + (b)]                                     $
                                                                                         ========



B.       NET BORROWING AVAILABILITY

         Borrower's net borrowing availability as of the Test Date is
$___________, calculated as follows:


                                      -5-

                                                                                     
         (1)      Lesser of:

                  (a)      Borrowing Base (item A above) less any                       $
                           Availability Reserves                                         --------

                                       and

                  (b)      the aggregate Commitment as of the                           $
                           Test Date                                                     --------

         Less (2) the sum of (i) the aggregate outstanding principal balance of         $
         the                                                                             --------

         Loans and (ii) the Letter of Credit Usage, each as of the Test Date

         equals (3) Borrower's net borrowing availability [(1) - (2)]                   $
                                                                                         ========



C. This Borrowing Base Certificate is executed on ___________, _____, by the
Chief Financial Officer of Borrowers. The undersigned hereby further certifies
that each and every matter contained herein is derived from the books and
records of the Borrowers and is true and correct in all material respects.



                                     -------------------------------------------

                                                       , Chief Financial Officer
                                     ------------------


                                      -6-


                                    EXHIBIT C

                             COMPLIANCE CERTIFICATE

TO: BANK OF AMERICA, N.A., as Administrative Agent

      This Compliance Certificate ("Certificate") is delivered pursuant to the
Loan Agreement dated as of October 12, 2001 among JAKKS PACIFIC, INC., a
Delaware corporation, FLYING COLORS TOYS, INC., a Michigan corporation, ROAD
CHAMPS, INC., a Delaware corporation, and PENTECH INTERNATIONAL INC., a Delaware
corporation (collectively, "Borrowers"), the Lenders referred to therein, and
Bank of America, N.A., as Administrative Agent (as it may from time to time be
amended, restated, extended, renewed, modified or supplemented, the "Loan
Agreement"). Terms defined in the Loan Agreement and not otherwise defined in
this Certificate shall have the meanings defined for them in the Loan Agreement.
Section references herein relate to the Loan Agreement unless stated otherwise.

      This Certificate is delivered in accordance with Section 7.2 of the Loan
Agreement by a Senior Officer of Borrower. This Certificate is delivered as of
the last day of the [Fiscal Quarter] [Fiscal Year] ended _________________,
____, (the "Test Date"). Computations indicating compliance with respect to the
covenants contained in Sections 6.5(c), 6.8(c) and (d), 6.11(f) and (g), 6.12,
6.13, 6.14, 6.15, and 6.18 of the Loan Agreement are set forth below.

I. Section 6.5(c) - Distributions. During the twelve month period ending on the
Test Date, the aggregate consideration paid towards repurchase of shares of the
capital stock of the Company from public shareholders and immaterial fractional
shares in connection with any stock split, provided that no Default or Event of
Default exists or would have resulted from any such repurchase after giving pro
forma effect to the making of the Distribution as of the last day of the most
recent Fiscal Quarter for which the Borrowers are required to have delivered a
Compliance Certificate, was $______________.

      Maximum Permitted:             $10,000,000

II.   Section 6.8(c) and (d) - Indebtedness and Contingent Obligations.

      A. As of the Test Date, the aggregate principal amount of Subordinated
Obligations issued to sellers in connection with Permitted Acquisitions was
$_______________.

      Maximum Permitted:             $10,000,000

      B. During the Fiscal Year, or portion thereof, ending on the Test Date,
the aggregate amount of purchase-money Indebtedness and obligations incurred in
connection with Capital Leases was $______________.

      Maximum Permitted
      in any Fiscal Year:            $ 4,000,000


                                       -1-

      C. The aggregate amount of purchase-money Indebtedness and obligations in
connection with Capital Leases incurred by Persons which are not Borrowers was $
______________.

      Maximum Permitted:             $ 2,000,000

III.  Section 6.11(f) and (g) - Investments.

      A. As of the Test Date, the aggregate amount of Investments made in
Permitted Joint Ventures, made under Section 6.11(f) or Section 6.11(g),
following the Closing Date was $______________.

      Maximum Permitted:             $ 10,000,000

      B. As of the Test Date, the aggregate amount of (a) Investments made in
Permitted Joint Ventures, made under Section 6.11(f) or Section 6.11(g),
following the Closing Date and (b) all other Permitted Acquisitions which have
then been consummated, was $_______________.

      Maximum Permitted:             $50,000,000 in Cash and Property (other
                                     than capital stock of the Company)

                                     $75,000,000 in Cash and Property (including
                                     capital stock of the Company)

      C As of the Test Date, the aggregate amount of other Investments not
otherwise provided for in Section 6.11(a) - (f), was $_______________.

      Maximum Permitted:             $ 5,000,000

      C As of the Test Date, the aggregate amount of Permitted Joint Ventures
not otherwise provided for in Section 6.11(a) - (f), was $_______________.

      Maximum Permitted:            $ 1,000,000


IV.   Section 6.12 - Leverage Ratio. The Leverage Ratio, as of the Test Date,
      was ____:1.00.

      Maximum Permitted:              1.75:1.00

The Leverage Ratio is calculated as follows:

      As of the Test Date:

      (a)   the sum of (without duplication):

            (i) the Company's consolidated


                                       -2-

            liabilities for borrowed money
            (excluding all Subordinated Obligations)             $___________

            plus (ii) the Company's consolidated
            interest bearing obligations                         $___________

            plus (iii) the Company's consolidated
            obligations under Capital Leases                     $___________

            plus (iv) the Company's consolidated
            obligations to reimburse the issuer of
            any letter of credit (including any
            Letter of Credit issued by the Issuing
            Lender under the Loan Agreement) for
            amounts drawn or which may be drawn
            under such letters of credit, other than
            Letters of Credit issued for the importation
            or purchase of goods                                 $___________

            plus (v) without duplication as to the
            foregoing, any obligation to the extent
            secured by a Lien on the assets of the
            Company or any of its Subsidiaries                   $____________

            plus (vi) all guaranties of financial
            obligations issued by the Company or
            any of its Subsidiaries                              $____________

            equals [(i)+(ii)+(iii)+(iv)+(v)+(vi)]                $____________

      divided by

      (b)   EBITDA for the twelve month period ending
            on the Test Date (the "Test Period")
            (as calculated below)                                $____________


   equals   Leverage Ratio [(a)/(b)]                             ________:1.00


EBITDA is calculated as follows.

As determined in accordance with Generally Accepted Accounting Principles:

      (a)   EBITDA


                                       -3-

            (i) Net Income for the Test Period                   $___________

            plus (ii) to the extent deducted in arriving
            at Net Income, income tax expense                    $___________

            plus (iii) to the extent deducted in arriving
            at Net Income, gross interest expense                $___________

            plus (iv) to the extent deducted in arriving
            at Net Income, depreciation                          $___________

            plus (v) to the extent deducted in arriving
            at Net Income, amortization (or minus
            non-cash gains or reserve reversals)                 $___________

            minus (vi) to the extent deducted in
            arriving at Net Income, extraordinary
            income/gains (except to the extent of any
            corresponding extraordinary cash losses
            incurred during the same period)                     $___________

            minus (vii) gains (or plus losses) on sales
            of fixed assets                                      $___________

            equals EBITDA
            [(i)+(ii)+(iii)+(iv)+(v)-(vi)-(vii)]                 $___________

V.    Section 6.13 - Quick Ratio.

      A. The Consolidated Quick Ratio, as of the last day of the calendar month
ending on the Test Date, was ____:1.00.

      Minimum Permitted:             1.25:1.00

The Consolidated Quick Ratio is calculated as follows.

      As of the last day of the calendar month ending on the Test Date:

      (a)   the sum of:

            (i) the market value of the Company's
            consolidated Cash, Cash Equivalents
            and marketable Securities                            $____________

            plus (ii) the gross amount of the


                                       -4-

            Company's consolidated trade
            accounts receivable                                  $____________

            equals [(i)+(ii)]                                    $____________

      divided by (b) the sum of:

            (i) the Company's consolidated
            current liabilities, determined in
            accordance with Generally Accepted
            Accounting Principles                                $____________

            plus (ii) the aggregate outstanding
            Obligations                                          $____________

            equals [(i)+(ii)]                                    $____________

      equals [(a)/(b)]                                           ______:1.00

      B. The Borrowers Quick Ratio, as of the last day of the calendar month
ending on the Test Date, was _____:1.00.

      Minimum Permitted:             1.00:1.00

The Borrower Quick Ratio is calculated as follows.

      As of the last day of the calendar month ending on the Test Date:

      (a)   the sum of:

            (i) the market value of the Borrowers'
            combined Cash, Cash Equivalents
            and marketable Securities                            $____________

            plus (ii) the gross amount of the
            Borrowers' consolidated trade accounts
            receivable                                           $____________

            equals [(i)+(ii)]                                    $____________

      divided by (b) the sum of:

            (i) the Borrowers' combined
            current liabilities, determined in
            accordance with Generally Accepted
            Accounting Principles                                $____________


                                       -5-

            plus (ii) the aggregate outstanding
            Obligations                                          $____________

            equals [(i)+(ii)]                                    $____________

      equals [(a)/(b)]                                           ______:1.00

VI. Section 6.14 - Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio,
as of the Test Date, was ____:1.00.

      Minimum Permitted:             1.30:1.00 for any Fiscal Quarter ending on
                                     or before December 31, 2001

                                     1.40:1.00 for any Fiscal Quarter ending
                                     thereafter

The Fixed Charge Coverage Ratio is calculated as follows:

      As of the Test Date:

      (a)   the sum of:

            (i)   EBITDA for the Test Period
                  (as determined above)                          $___________

            minus (ii) Capital Expenditures made in
            cash during the Test Period (net of any
            portion thereof representing amounts
            expended using funds received from
            insurance proceeds, trade-in allowances
            or the sale of similar assets being
            replaced)                                            $____________

            minus (iii) state and federal income taxes
            paid in cash during the Test Period                  $____________

            equals [(i)-(ii)-(iii)]                              $____________

      divided by (b) the sum of:

            (i)   Interest Expense paid in cash during
                  the Test Period                                $____________

            plus (ii) the amount of payments of principal
                      scheduled to be made by the Company
                      and its Subsidiaries with respect to
                      Indebtedness during the twelve month


                                       -6-

                      period following the Test Date (other
                      that intercompany Indebtedness)            $____________

            plus (iii) 20% of the average principal amount
                      of the Commitment during the Test
                      Period                                     $____________

            plus (iv) any Distributions made by the
                      Company during the Test Period             $____________

            equals [(i)+(ii)+(iii)+(iv)]                         $____________

      equals Fixed Charge Coverage Ratio [(a)/(b)]               _______:1.00

VII. Section 6.15 - Net Worth. Net Worth, as of the Test Date, was
$_____________.

      Minimum Permitted:

      the sum of:

      (a)   $180,000,000                                         $180,000,000

      plus (b) 75% of the cumulative Net Income
      for each Fiscal Quarter which has ended
      following the Closing Date (without reduction
      for any net loss experienced in any Fiscal
      Quarter)                                                   $___________

      plus (c) the Net Cash Proceeds of any sale by
      the Company or its Subsidiaries of their
      respective equity Securities to any third party
      following the Closing Date                                 $___________

      equals Minimum Net Worth [(a)+(b)+(c)]                     $___________

VIII. Section 6.18 - Clean Down. [compute only during the Clean Down Period] As
of the Test Date, the highest aggregate outstanding principal amount of the
Obligations during the Clean Down Period was $______________.

      Maximum Permitted:             $30,000,000 during the Clean Down Period

IX. A review of the activities of Borrowers and their Subsidiaries during the
fiscal period covered by this Certificate has been made under the supervision of
the undersigned with a view to determining whether during the fiscal period
ending on the Test Date Borrowers and their Subsidiaries performed and observed
all of their respective obligations under the Loan Documents. To the best
knowledge of


                                       -7-

the undersigned, during the period ending on the Test Date, all covenants and
conditions have been so performed and observed and no Default or Event of
Default has occurred and is continuing, with the exceptions set forth below in
response to which Borrowers have taken or propose to take the following actions
(if none, so state).

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

X. The undersigned Senior Officer of Borrowers certifies that the calculations
made and the information contained herein are derived from the books and records
of Borrowers and that each and every matter contained herein correctly reflects
those books and records.

XI. To the best knowledge of the undersigned no event or circumstance has
occurred that constitutes a Material Adverse Effect since the date the most
recent Certificate was executed and delivered.


Dated:  _______________


                               ________________________________________

                               ________________________________________
                               Printed Name and Title of Senior Officer
                               of JAKKS Pacific, Inc., Flying Colors Toys, Inc.,
                               Road Champs, Inc. and Pentech International
                               Inc.


                                       -8-





                                    EXHIBIT D

                          REQUEST FOR LETTER OF CREDIT

      This REQUEST FOR LETTER OF CREDIT is executed and delivered by JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, "Borrowers") with
reference to the Loan Agreement dated as October 12, 2001 among the Borrowers,
the Lenders therein named and Bank of America, N.A., as Administrative Agent (as
it may from time to time be amended, restated, extended, renewed, modified or
supplemented, the "Loan Agreement"). Any terms used herein and not defined
herein shall have the meanings set forth for such terms in the Loan Agreement.

      Borrowers hereby jointly and severally request that the Issuing Lender
issue a Letter of Credit pursuant to the Loan Agreement as follows:

      AMOUNT OF REQUESTED LETTER OF CREDIT:  ______________

      DATE OF REQUESTED ISSUANCE: _________________

      BENEFICIARY: _________________________

      Terms:  Attached

            Attached hereto is an application for letter of credit on Issuing
Lender's standard form. In connection with the requested Letter of Credit,
Borrowers hereby jointly and severally certify that

      a.    except as disclosed by Borrowers and approved in writing by the
            Requisite Lenders, the representations and warranties contained in
            Article 4 (other than Sections 4.7 and 4.11) are true and correct on
            and as of the date hereof as though made on that date;

      b.    other than matters described in Schedule 4.11, or matters not
            required as of the Closing Date to be therein described, or matters
            disclosed by Borrowers and approved in writing by the Requisite
            Lenders, there is not any pending or threatened in writing action,
            suit, proceeding or investigation against or affecting Borrowers or
            any of their Subsidiaries or any Property of any of them before any
            Governmental Agency that constitutes a Material Adverse Effect;

      c.    giving effect to the requested Letter of Credit, (A) the sum of the
            aggregate outstanding principal balance of the Loans plus the Letter
            of Credit Usage does not exceed (B) the lesser of the Borrowing Base
            or the Commitment or (C) $30,000,000 [applies only during the Clean
            Down Period];

      d.    giving effect to the requested Letter of Credit, the aggregate
            effective face amount of


                                       -1-

            all Letters of Credit issued in support of the purchase of
            merchandise by the Borrowers and their Subsidiaries does not exceed
            $15,000,000;

      e.    giving effect to the requested Letter of Credit, the aggregate
            undrawn effective amount of all Standby Letters of Credit does not
            exceed $2,000,000; and

      f.    giving effect to the requested Letter of Credit, the aggregate
            outstanding principal balance of the Loans is $______________ and
            the Letter of Credit Usage is $______________.

      This Request for Letter of Credit is executed on __________, _____, by a
Responsible Official of the Borrowers. The undersigned, in such capacity, hereby
certifies each and every matter contained herein to be true and correct.

                                     JAKKS PACIFIC, INC.
                                     FLYING COLORS TOYS, INC.
                                     ROAD CHAMPS, INC.
                                     PENTECH INTERNATIONAL INC.


                                     By: _______________________________________

                                     Title: ____________________________________
                                     of each of the foregoing


                                       -2-


                                    EXHIBIT E

                                REQUEST FOR LOAN

      1. This REQUEST FOR LOAN is executed and delivered by JAKKS PACIFIC, INC.,
a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan corporation, ROAD
CHAMPS, INC., a Delaware corporation, and PENTECH INTERNATIONAL INC., a Delaware
corporation (collectively, "Borrowers") with reference to the Loan Agreement
dated as October 12, 2001 among the Borrowers, the Lenders therein named and
Bank of America, N.A., as Administrative Agent (as it may from time to time be
amended, restated, extended, renewed, modified or supplemented, the "Loan
Agreement"). Any terms used herein and not defined herein shall have the
meanings set forth for such terms in the Loan Agreement.

      2. Borrowers hereby jointly and severally request that the Lenders make a
Loan pursuant to the Loan Agreement as follows:

                  (a)   Amount of Requested Loan: $_____________(1/)

                  (b)   Date of Requested Loan: ________________

                  (c)   Type of Requested Loan (check one box only)

            / /   Base Rate

            / /   Eurodollar Rate for a Eurodollar Period of ________ Months(2/)

                  (d)   Giving effect to the requested Loan, the aggregate Loans
      outstanding under the Commitment will be $__________________.

      3. In connection with the request, Borrowers hereby jointly and severally
certify that:

                  (a)   except as disclosed by Borrowers and approved in writing
      by the Requisite Lenders, the representations and warranties contained in
      Article 4 (other than Sections 4.7 and 4.11) are true and correct on and
      as of the date hereof as though made on that date; and

                  (b)   other than matters described in Schedule 4.11, or
      matters not required as of the Closing Date to be therein described, or
      matters disclosed by Borrowers and


- ----------

(1/)  Unless the Lender otherwise consents, each Base Rate Loan shall not be
      less than $500,000 and in an integral multiple of $100,000 and each
      Eurodollar Rate Loan shall not be less than $1,000,000 and in an integral
      multiple of $100,000.

(2/)  Specify whether 1, 2, 3 or 6-month Eurodollar Period.


                                       -1-

      approved in writing by the Requisite Lenders, there is not any pending or
      threatened in writing action, suit, proceeding or investigation against or
      affecting Borrowers or any of their Subsidiaries or any Property of any of
      them before any Governmental Agency that constitutes a Material Adverse
      Effect.

      4. This Request for Loan is executed on ________________, by a Responsible
Official of the Borrowers. The undersigned, in such capacity, hereby certifies
each and every matter contained herein to be true and correct.

                                     JAKKS PACIFIC, INC.
                                     FLYING COLORS TOYS, INC.
                                     ROAD CHAMPS, INC.
                                     PENTECH INTERNATIONAL INC.


                                     By: _______________________________________

                                     Title: ____________________________________
                                     of each of the foregoing


                                       -2-





                                    EXHIBIT F

                            REQUEST FOR REDESIGNATION



      1. This REQUEST FOR REDESIGNATION is executed and delivered by JAKKS
PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a Michigan
corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (collectively, "Borrowers") with
reference to the Loan Agreement dated as of October 12, 2001 among the
Borrowers, the Lenders therein named and Bank of America, N.A., as
Administrative Agent (as it may from time to time be amended, restated,
extended, renewed, modified or supplemented, the "Loan Agreement"). Any terms
used herein and not defined herein shall have the meanings set forth for such
terms in the Loan Agreement.

      2. Borrowers hereby jointly and severally request that the Administrative
Agent redesignate certain outstanding Loans heretofore made or redesignated for
the account of Borrowers pursuant to the Loan Agreement, as set forth below:

            A.    Type of Loan under which Redesignation is requested:

                  [ ]   Base Rate Loan

                  [ ]   Eurodollar Rate Loan

            B.    Redesignation:

                  (a)   Base Rate Loans:

                        (i)   Total Amount of Loans to be Redesignated: $______.

                        (ii)  Date of Redesignation: ___________, _____.

                        (iii) Type of Loan as so redesignated (check one box
                              only):

                              [ ]   Eurodollar Rate Loan with a _____-month
                                    Interest Period.(1)

                              [ ]   Base Rate Loan

                  (b)   Eurodollar Rate Loans

                        (i)   Total Amount of Loans to be Redesignated: $______.

                        (ii)  Date of Redesignation: ___________, ____.


- ----------

(1)   Specify whether 1, 2, 3 or 6-month Eurodollar Period.

                        (iii) Type of Loan as so redesignated (check one box
                              only):

                              [ ]   Eurodollar Rate Loan with a _____-month
                                    Interest Period.(2)

                              [ ]   Base Rate Loan

      3. In connection with the redesignation requested herein, Borrowers hereby
jointly and severally represent, warrant and certify that, as of the date of the
redesignation requested herein:

                  (a) except as disclosed by Borrowers and approved in writing
            by the Requisite Lenders, the representations and warranties
            contained in Article 4 (other than Sections 4.7 and 4.11) will be
            true and correct, both immediately before and after giving effect to
            the redesignation of the Loan, as though made on and as of that
            date; and

                  (b) other than matters described in Schedule 4.11, or matters
            not required as of the Closing Date to be therein described, or
            matters disclosed by Borrowers and approved in writing by the
            Requisite Lenders, there is not any pending or threatened in writing
            action, suit, proceeding or investigation against or affecting
            Borrowers or any of their Subsidiaries or any Property of any of
            them before any Governmental Agency that constitutes a Material
            Adverse Effect.

      4. This Request for Redesignation is executed on _______________, _____ by
a Responsible Official of the Borrowers. The undersigned, in such capacity,
hereby certifies each and every matter contained herein to be true and correct.

                                          JAKKS PACIFIC, INC.
                                          FLYING COLORS TOYS, INC.
                                          ROAD CHAMPS, INC.
                                          PENTECH INTERNATIONAL INC.



                                          By:___________________________________

                                          Title:________________________________
                                          of each of the foregoing

- ----------

(2)   Specify whether 1, 2, 3 or 6-month Eurodollar Period.


                                       2


                                                                  EXHIBIT 15(B)

                        FIRST AMENDMENT TO LOAN AGREEMENT
                             AND CONSENT AND WAIVER

            THIS FIRST AMENDMENT TO LOAN AGREEMENT AND CONSENT AND WAIVER (this
"Amendment"), dated as of March 8, 2002, is entered into by and among JAKKS
Pacific, Inc., a Delaware corporation, Flying Colors Toys, Inc., a Michigan
corporation, Road Champs, Inc., a Delaware corporation and Pentech
International, Inc., a Delaware corporation (collectively, the "Borrowers"),
each of the Lenders listed on the signature pages hereto and Bank of America,
N.A. as Administrative Agent ("Agent") for itself and for the other Lenders.

                                    RECITALS

            A. Borrowers, Agent and Lenders are parties to that certain Loan
Agreement, dated October 12, 2001 (the "Loan Agreement"), pursuant to which
Lenders have extended certain credit facilities to Borrowers.

            B. Borrowers have requested that Agent and Lenders amend the Loan
Agreement as set forth herein and Agent and Lenders are willing to do so on the
terms and conditions hereinafter set forth.

            C. Borrowers have requested that Agent and Lenders consent to the
acquisition by JAKKS Pacific, Inc. of Toymax International, Inc. ("Toymax") and
its Subsidiaries (Toymax and such Subsidiaries, collectively, the "Toymax
Companies"), such acquisition to be completed in two phases (such phases, "Phase
I" and "Phase II" respectively), all on substantially the terms and conditions
set forth in the Waiver Request Memo (the "Waiver Request Memo") dated February
11, 2002 from Banc of America Securities LLC to the Lenders (such acquisition
and each of as Phase I and Phase II, collectively, the "Acquisition") and to
grant certain waivers in connection therewith.

            D. Borrowers have advised Agent and Lenders that the Toymax
Companies have the following credit facilities (1) a US $40 million credit
facility extended under that certain Financing Agreement dated December 27, 2000
among Toymax, Inc., Go Fly A Kite, Inc.("GFK") and Funnoodle, Inc. ("Funnoodle,
and together with Toymax, Inc. and GFK, the "Companies") and The CIT
Group/Commercial Services, Inc. and Fleet Capital Corporation, as amended from
time to time (the CIT Facility") and (2) a US $3.3 million credit facility
extended by Hongkong and Shanghai Bank Corporation Limited to Toymax (H.K.)
Limited, a subsidiary of Toymax (the "Hongkong Bank Facility" and, collectively
with the CIT Facility, the "Facilities").


                                      -1-

            E. Borrowers have requested that Agent and Lenders permit the
Facilities, each of the liens granted by Toymax and its Affiliates thereunder
(the "Liens") and each of the guaranties of Toymax and its Affiliates executed
and delivered in connection with the Facilities, including, without limitation,
that certain Guaranty of the Obligations of the Companies dated December 27,
2000, executed and delivered by Toymax to the lenders and agents under the CIT
Facility (collectively, the "Guaranties") to continue for a period not to exceed
45 days following the closing date of Phase I of the Acquisition (the "Phase I
Closing Date").

            NOW, THEREFORE, the parties hereby agree as follows:

            1. DEFINED TERMS. Any and all initially capitalized terms set forth
without definition in this Amendment (including, without limitation, in the
recitals hereto) shall have the respective meanings ascribed thereto in the Loan
Agreement.

            2. SECTION 1.1 (DEFINED TERMS). Section 1.1 of the Loan Agreement is
hereby amended by adding the following at the end of clause (j) of the
definition of "Eligible Accounts": "provided that as to any accounts receivable
due from an account debtor which is an Approved Customer, the limit expressed in
this clause (j) shall be (i) 50%, with respect to the period from December 1
through and including March 31 in any Fiscal Year and (ii) 25%, with respect to
the period from April 1 through and including November 30 in any Fiscal Year ;".

            3. SECTION 6.13 (QUICK RATIO). Section 6.13 of the Loan Agreement is
hereby amended and restated in its entirety as follows:

            "Permit the Consolidated Quick Ratio as of the last day of any
            Fiscal Quarter to be less than 1.25:1.00, or permit the Borrowers
            Quick Ratio as of the last day of any Fiscal Quarter to be less than
            1.00:1.00."

            4. SECTION 7.1 (FINANCIAL AND BUSINESS INFORMATION). Section 7.1 of
the Loan Agreement is hereby amended by:

                  (a) deleting the words "calendar month" in the first sentence
      of paragraph 7.1(b) thereof and substituting therefore the words "Fiscal
      Quarter"; and

                  (b) deleting the word "and" at the end of paragraph 7.1(l),
      deleting the period at the end of paragraph 7.1(m) and substituting
      therefore "; and", and adding the following as new paragraph 7.1(n):

            "As soon as practicable, and in any event within 20 days after the
            end of each calendar month, (i) balance sheets of each Borrower at
            the end of such calendar month, and (ii) statements of income and
            cash flows of each Borrower for that calendar month. Such financial
            statements shall


                                      -2-

            be certified by a Senior Officer of the Borrowers as fairly
            presenting the financial condition, results of operations and
            changes in financial position of the Borrowers, and shall be
            prepared and presented in accordance with Generally Accepted
            Accounting Principles (other than any requirement for footnote
            disclosures), consistently applied, as at such date and for such
            periods, subject only to normal year-end accruals and audit
            adjustments."

            5. SECTION 7.2 (COMPLIANCE CERTIFICATES). Section 7.2 of the Loan
Agreement is hereby amended by deleting the words "as soon as practical and in
any event within 30 days after the end of each calendar month" and substituting
therefor "concurrently with the delivery of the financial statements described
in Sections 7.1(b),".

            6. CONSENT AND WAIVER. Subject to conditions set forth in Sections 7
and 9 hereof, each of Agent and the Lenders hereby:

                  (a) consent to the consummation of the Acquisition on
      substantially the terms and conditions set forth in the Waiver Request
      Memo;

                  (b) agree that the Acquisition shall be a Permitted
      Acquisition for the purposes of the Loan Agreement;

                  (c) waive and exempt the Acquisition from the requirements of
      Sections 5.11(a), 5.11(b), 5.11(e) and 5.11(f) of the Loan Agreement;

                  (d) waive the requirements of Sections 6.1(c), 6.8 and 6.9 of
      the Loan Agreement to permit the continuance of each of the Facilities,
      the Guaranties and the Liens for a period not to exceed 45 days following
      the Phase I Closing Date and to permit the repayment in full of each of
      the Facilities on or before such date provided that the principal amount
      of the loans outstanding under the CIT Facility shall not, at any time,
      exceed $18,000,000.; and

                  (e) extend the time for compliance with Section 5.13 and 5.14
      of the Loan Agreement, with respect to Toymax Companies and any other
      Subsidiaries of Borrowers formed or acquired in connection with the
      Acquisition, in order to permit the Borrowers (i) to deliver the
      certificates contemplated by Section 5.13(a), (ii) to deliver the joinder
      documents contemplated by Section 5.13(b), (iii) to effect the pledges
      contemplated by Section 5.13(c) and (iv) to maintain the deposit accounts
      of any such formed or acquired Subsidiaries in accordance with Section
      5.14, in each case, on or before the 45th day following the Phase I
      Closing Date.


                                      -3-

            The consent, waivers and exemptions set forth in this Section 6 are
granted in connection with the Acquisition only and shall not constitute a
consent to, waiver of or exemption from any term or condition of the Loan
Agreement with respect to any other or future transaction or any future breach
thereof.

            7. CONDITIONS TO CONSENT, WAIVERS AND EXEMPTIONS. Borrowers
acknowledge and agree that the consent and each of the waivers and exemptions
set forth in Section 6 of this Amendment are expressly conditioned upon
Borrowers' satisfaction of each of the following conditions:

                  (a) Borrowers shall have delivered the certificate and
      documents contemplated by Section 5.11(f) to the Agent not later than two
      Business Days prior to the Phase 1 Closing Date;

                  (b) On or before the 45th day following the Phase I Closing
      Date Borrowers shall have (i) caused all of the obligations under the
      Facilities to repaid in full and each of the Facilities to be terminated
      and (ii) obtained full and final releases and discharges, in form and
      substances satisfactory to Agent, of each of the Guaranties and Liens;

                  (c) On or before the 45th day following the Phase I Closing
      Date Borrowers shall have (i) delivered the certificates contemplated by
      Section 5.13(a), (ii) delivered the joinder documents contemplated by
      Section 5.13(b), (iii) effected the pledges contemplated by Section
      5.13(c) and (iv) caused each of the deposit accounts of any Domestic
      Subsidiaries formed or acquired in connection with the Acquisition to be
      maintained in accordance with Section 5.14; and

                  (d) Borrowers shall not permit the principal amount of the
      loans outstanding under the CIT Facility, at any time, to exceed
      $18,000,000.

In the event that Borrowers shall fail to comply with any of the conditions set
forth in this Section 7 when required, such failure shall constitute an Event of
Default under the Loan Agreement and the Loan Documents. Borrowers shall
promptly provide Agent with such evidence of compliance with this Section 7 as
Agent may reasonably request.

            8. COVENANTS. Notwithstanding anything to the contrary in the Loan
Agreement, until such date as Borrowers have satisfied each of the conditions
set forth in Section 7 of this Amendment, the Toymax Companies shall be deemed
not to be consolidated Subsidiaries of the Borrowers, and the relevant financial
information of the Toymax Companies shall be excluded from the Borrowers'
consolidated financial information, for the purpose of calculating Leverage
Ratio, Quick Ratio, Fixed Charge Coverage Ratio and Net Worth (and any
components thereof) and in testing


                                      -4-

compliance under sections 6.12, 6.13, 6.14 and 6.15 of the Loan Agreement
provided that for the first Fiscal Quarter following the delivery of joinder
documents for the Toymax Companies in accordance with Section 5.13(b) of the
Loan Agreement, Borrowers may include the Toymax consolidated fourth quarter
results (together with any adjustments thereto required or permitted under the
Loan Agreement) in calculating Leverage Ratio, Quick Ratio, Fixed Charge
Coverage Ratio and Net Worth (and any components thereof) and in testing
compliance under sections 6.12, 6.13, 6.14 and 6.15 of the Loan Agreement .

            9. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
subject to the prior satisfaction of each of the following conditions:

                  (a) Agent shall have received this Amendment, duly executed by
      each Borrower and each of the Requisite Lenders;

                  (b) Lender shall have received an acknowledgment, in the form
      attached hereto as Exhibit A, from each Guarantor;

                  (c) Borrowers shall have paid the waiver fee described in the
      Waiver Request Memo to each of the approving Lenders.

            10. REAFFIRMATION OF LOAN AGREEMENT; NO DEFAULT; NO DEFENSES; ETC.
Each Borrower hereby reaffirms the Loan Agreement and its obligations to Agent
and Lenders thereunder. Each Borrower represents and warrants that there are no
outstanding Events of Default under the Loan Agreement. Each Borrower
acknowledges that Agent and Lenders have fully complied with their respective
obligations under the Loan Agreement and that such Borrower has no defenses to
the validity, enforceability or binding effect of the Loan Agreement.

            11. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so executed and delivered shall be deemed an original and all of which when
taken together, shall constitute but one and the same instrument.

            12. OTHERWISE NOT EFFECTED. In the event of any conflict or
inconsistency between the Loan Agreement and the provisions of this Amendment,
the provisions of this Amendment shall govern. Except to the extent set forth
herein, the Loan Agreement shall remain unaltered and in full force and effect.


                                      -5-

            IN WITNESS WHEREOF, the parties hereto have executed this Amendment
by their respective duly authorized officers as of the date first above written.

                                    BORROWERS:


                                    JAKKS PACIFIC, INC.
                                    FLYING COLORS TOYS, INC.
                                    ROAD CHAMPS, INC. and
                                    PENTECH INTERNATIONAL INC.

                                    By: /s/ JOEL M. BENNETT
                                        -------------------------
                                            Joel Bennett

                                    Title:  Executive Vice President and
                                            Chief Financial Officer



                                    ADMINISTRATIVE AGENT:

                                    BANK OF AMERICA, N.A., as
                                    Administrative Agent



                                    By: /s/ KEN PURO
                                        -------------------------
                                            Ken Puro,
                                            Vice President

                                    LENDERS:

                                    BANK OF AMERICA, N.A., as
                                    Issuing Lender and as a Lender



                                    By: /s/ DAVID J. STASSEL
                                        -------------------------
                                            David J. Stassel,
                                            Vice President


                                      -6-

                                    UNITED CALIFORNIA BANK, as Lender



                                    By: /s/ DIRK PRICE
                                            Dirk Price

                                    Title: Vice President


                                    BNP PARIBAS, as Issuing Lender and
                                    as Lender



                                    By: /s/ GERRY ARTEAGA
                                            Gerry Arteaga
                                    Title:



                                      -7-

                                    EXHIBIT A

                          ACKNOWLEDGMENT OF GUARANTORS

            In order to induce Agent and Lenders to execute the First Amendment
to Loan Agreement and Consent and Waiver of even date herewith (the "Amendment")
amending the Loan Agreement dated October 12, 2001, among JAKKS Pacific, Inc., a
Delaware corporation, Flying Colors Toys, Inc., a Michigan corporation, Road
Champs, Inc., a Delaware corporation and Pentech International, Inc., a Delaware
corporation, as Borrowers, Agent and each of the Lenders party thereto, and
granting certain consents and waivers, as set forth therein, each of the
undersigned hereby represents, warrants and agrees that the undersigned has
reviewed and approved the Amendment and that nothing contained therein shall
diminish, alter, amend or otherwise affect the undersigned's obligations to
Agent, for the benefit of Lenders, under the Guaranty dated October 12, 2001
(the "Guaranty") made by each of the undersigned in favor of Agent for the
benefit of the Lenders. Each of the undersigned further confirms that the
Guaranty shall continue in full force and effect and agrees that it shall
continue to be liable under such Guaranty in accordance with the terms thereof.
Each of the undersigned further confirms that it has no defense, counterclaim or
offset right whatsoever with respect to its obligations under the Guaranty.

            Dated this ________ day of March, 2002.

                              "Guarantors"

                                    JAKKS ACQUISITION CORP.
                                    J-X ENTERPRISES, INC.
                                    BERK CORPORATION
                                    PENTECH COSMETICS, INC.
                                    SAWDUST PENCIL CO.
                                    PENTECH-MON AMI, INC.
                                    JP FERRERO PARKWAY, INC.

                                    By: /s/ JOEL M. BENNETT
                                            Joel M. Bennett

                                    Title: Exec. V.P./C.F.O.


                                      -8-



                                                                   EXHIBIT 15(C)

                               SECURITY AGREEMENT
                                   (BORROWERS)

        This SECURITY AGREEMENT ("Agreement"), dated as of October 12, 2001, is
made by JAKKS PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS, INC., a
Michigan corporation, ROAD CHAMPS, INC., a Delaware corporation, and PENTECH
INTERNATIONAL INC., a Delaware corporation (each a "Grantor" and collectively,
"Grantors"), jointly and severally, in favor of BANK OF AMERICA, N.A., as
Administrative Agent under the Loan Agreement hereafter referred to, the Lenders
therein named and in favor of each of the Lenders which may hereafter become a
party thereto, collectively as Secured Party, with reference to the following
facts:

                                    RECITALS

        A. Grantors have entered into a Loan Agreement of even date herewith
among Grantors, the Lenders referred to therein, and Bank of America, N.A., as
Administrative Agent (as it may from time to time be amended, restated,
extended, renewed, modified or supplemented, the "Loan Agreement"). This
Agreement is the Borrower Security Agreement referred to in the Loan Agreement
and is one of the "Loan Documents" referred to in the Loan Agreement.

        B. Pursuant to the Loan Documents of even date the Lenders are making
certain credit facilities available to Grantors.

        C. As a condition of the availability of such credit facilities,
Grantors are required to enter into this Agreement to grant security interests
to Secured Party as herein provided.

                                    AGREEMENT

        NOW, THEREFORE, in order to induce Secured Party to extend the
aforementioned credit facilities, and for other good and valuable consideration,
the receipt and adequacy of which hereby is acknowledged, Grantors hereby
jointly and severally represent, warrant, covenant, agree, assign and grant as
follows:

        1. Definitions. Terms defined in the Loan Agreement and not otherwise
defined in this Agreement shall have the meanings defined for those terms in the
Loan Agreement. Terms defined in the California Uniform Commercial Code (as
amended from time to time) and not otherwise defined in this Agreement or in the
Loan Agreement shall have the meanings defined for those terms in the Uniform
Commercial Code, as enacted in the State of California. In addition, as used in
this Agreement, the following terms shall have the meanings respectively set
forth after each:

                "Agreement" means this Security Agreement, and any extensions,
        modifications, renewals, restatements, supplements or amendments hereof.

                "Collateral" means and includes all present and future right,
        title and interest of Grantors, or any of them, in or to any personal
        property whatsoever, and all rights and powers of Grantors, or any of
        them, to transfer any interest in or to any personal property
        whatsoever, including, without limitation, any and all of the following
        personal property:



                                      -1-


        (a) All present and future accounts, accounts receivable, agreements,
contracts, leases, contract rights, payment intangibles, rights to payment,
instruments, documents, chattel paper (whether tangible or electronic), security
agreements, guaranties, letters of credit, letter-of-credit rights,
undertakings, surety bonds, insurance policies, notes and drafts, and all forms
of obligations owing to Grantors, or any of them, or in which Grantors, or any
of them, may have any interest, however created or arising;

        (b) All present and future general intangibles, all tax refunds of every
kind and nature to which Grantors, or any of them, now or hereafter may become
entitled, however arising, all other refunds, and all deposits, goodwill, choses
in action, trade secrets, computer programs, software, customer lists,
trademarks, trade names, service marks, patents, licenses, copyrights,
technology, processes, proprietary information and insurance proceeds;

        (c) All present and future deposit accounts of Grantors, or any of them,
including, without limitation, any demand, time, savings, passbook or like
account maintained by Grantors, or any of them, with any bank, savings and loan
association, credit union or like organization, and all money, Cash and Cash
Equivalents of Grantors, or any of them, whether or not deposited in any such
deposit account;

        (d) All present and future books and records, including, without
limitation, books of account and ledgers of every kind and nature, all
electronically recorded data relating to Grantors, or their businesses, all
receptacles and containers for such records, and all files and correspondence;

        (e) All present and future goods, including, without limitation, all
consumer goods, farm products, inventory, equipment, machinery, tools, molds,
dies, furniture, furnishings, trade fixtures, fixtures, motor vehicles and all
other goods used in connection with or in the conduct of Grantors' or any of
their businesses;

        (f) All present and future inventory and merchandise, including, without
limitation, all present and future goods held for sale or lease or to be
furnished under a contract of service, all raw materials, work in process and
finished goods, all packing materials, supplies and containers relating to or
used in connection with any of the foregoing, and all bills of lading, warehouse
receipts or documents of title relating to any of the foregoing;

        (g) All present and future investment property, stocks, bonds,
debentures, securities (whether certificated or uncertificated), subscription
rights, options, warrants, puts, calls, certificates, partnership interests,
limited liability company memberships or other interests, joint venture
interests, Investments and/or brokerage accounts and all rights, preferences,
privileges, dividends, distributions, redemption payments, or liquidation
payments with respect thereto;

        (h) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and/or improvements to or of or with respect to any of the foregoing;

        (i) All other tangible and intangible personal property of Grantors, or
any of them;

        (j) All rights, remedies, powers and/or privileges of Grantors, or any
of them, with respect to any of the foregoing; and



                                      -2-


        (k) Any and all proceeds and products of any of the foregoing,
including, without limitation, all money, accounts, payment intangibles, general
intangibles, deposit accounts, promissory notes, documents, instruments,
certificates of deposit, chattel paper, goods, insurance proceeds, and any other
tangible or intangible property received upon the sale or disposition of any of
the foregoing.

                "Secured Obligations" means any and all present and future
        Obligations of any type or nature of Grantors, or any one or more of
        them, arising under or relating to the Loan Documents or any one or more
        of them, whether due or to become due, matured or unmatured, liquidated
        or unliquidated, or contingent or noncontingent, including Obligations
        of performance as well as Obligations of payment, and including interest
        that accrues after the commencement of any bankruptcy or insolvency
        proceeding by or against any Grantor.

                "Secured Party" means the Administrative Agent under the Loan
        Agreement, the Lenders therein named and each of the Lenders which may
        hereafter become a party thereto. All rights of the Secured Party under
        this Agreement shall be exercised by the Administrative Agent, acting
        with the consent of those Lenders required by the Loan Agreement.

        2. Further Assurances. At any time and from time to time at the request
of Secured Party, Grantors, and each of them, shall execute and deliver to
Secured Party all such financing statements and other instruments and documents
in form and substance satisfactory to Secured Party as shall be necessary or
desirable to fully perfect, when filed and/or recorded, Secured Party's security
interests granted pursuant to Section 3 of this Agreement. At any time and from
time to time, Secured Party shall be entitled to file and/or record any or all
such financing statements, instruments and documents held by it, and any or all
such further financing statements, documents and instruments, and to take all
such other actions, as Secured Party may deem appropriate to perfect and to
maintain perfected the security interests granted in Section 3 of this
Agreement. Before and after the occurrence of any Event of Default, at Secured
Party's request, Grantors, and each of them, shall execute all such further
financing statements, instruments and documents, and shall do all such further
acts and things, as may be deemed necessary or desirable by Secured Party to
create and perfect, and to continue and preserve, an indefeasible security
interest in the Collateral in favor of Secured Party, or the priority thereof.
With respect to any Collateral consisting of certificated securities,
instruments, documents, certificates of title or the like, as to which Secured
Party's security interest need be perfected by, or the priority thereof need be
assured by, possession or control of such Collateral, Grantors, and each of
them, will upon demand of Secured Party deliver possession or control, as
applicable, of same in pledge to Secured Party. With respect to any Collateral
consisting of securities, instruments, partnership or joint venture interests,
limited liability company memberships or the like, Grantors hereby jointly and
severally consent and agree that the issuers of, or obligors on, any such
Collateral, or any registrar or transfer agent or trustee for any such
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of Secured Party to effect any transfer or
exercise any right hereunder or with respect to any such Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by Grantors, or any of them, or any other Person to such issuers
or such obligors or to any such registrar or transfer agent or trustee.

        3. Security Agreement. For valuable consideration, Grantors hereby
jointly and severally assign and pledge to Secured Party, and grant to Secured
Party a security interest in, all



                                      -3-


presently existing and hereafter acquired Collateral, as security for the timely
payment and performance of the Secured Obligations, and each of them. This
Agreement is a continuing and irrevocable agreement and all the rights, powers,
privileges and remedies hereunder shall apply to any and all Secured
Obligations, including those arising under successive transactions which shall
either continue the Secured Obligations, increase or decrease them, or from time
to time create new Secured Obligations after all or any prior Secured
Obligations have been satisfied, and notwithstanding the bankruptcy of any
Grantor or any other Person or any other event or proceeding affecting any
Person.

        4. Grantors' Representations, Warranties and Agreements. Except as
otherwise disclosed to Secured Party in writing concurrently herewith, Grantors
jointly and severally represent, warrant and agree that: (a) Grantors will pay,
prior to delinquency, all taxes, charges, Liens and assessments against the
Collateral, except such as are expressly permitted by the Loan Agreement or are
timely contested in good faith, and upon its failure to pay or so contest such
taxes, charges, Liens and assessments, Secured Party at its option may pay any
of them, and Secured Party shall be the sole judge of the legality or validity
thereof and the amount necessary to discharge the same; (b) the Collateral will
not be knowingly used for any unlawful purpose or in material violation of any
Law, regulation or ordinance, nor used in any way that will void or impair any
insurance required to be carried in connection therewith; (c) Grantors will, to
the extent consistent with good business practice, keep the Collateral in
reasonably good repair, working order and condition, and from time to time make
all needful and proper repairs, renewals, replacements, additions and
improvements thereto and, as appropriate and applicable, will otherwise deal
with the Collateral in all such ways as are considered good practice by owners
of like Property; (d) Grantors will take all steps to preserve and protect the
Collateral; (e) Grantors will maintain, with responsible insurance companies,
insurance covering the Collateral against such insurable losses as is required
by the Loan Agreement and as is consistent with sound business practice, and
will cause Secured Party to be designated as an additional insured and loss
payee with respect to such insurance, will obtain the written agreement of the
insurers that such insurance shall not be cancelled, terminated or materially
modified to the detriment of Secured Party without at least 30 days prior
written notice to Secured Party, and will furnish copies of such insurance
policies or certificates to Secured Party promptly upon request therefor; and
(f) Grantors will promptly notify Secured Party in writing in the event of any
substantial or material damage to the Collateral from any source whatsoever,
and, except for the disposition of collections and other proceeds of the
Collateral permitted by Section 6 hereof, Grantors will not remove or permit to
be removed any part of the Collateral from its place of business without the
prior written consent of Secured Party, except for such items of the Collateral
as are removed in the ordinary course of business or in connection with any
transaction or disposition otherwise permitted by the Loan Documents.

        5. Secured Party's Rights Re Collateral. At any time (whether or not an
Event of Default has occurred), without notice or demand and at the expense of
Grantors, Secured Party may, to the extent it may be necessary or desirable to
protect the security hereunder, but Secured Party shall not be obligated to: (a)
enter upon any premises on which Collateral is situated upon reasonable notice
and examine the same or (b) upon any Event of Default, to perform any obligation
of Grantors under this Agreement or any obligation of any other Person under the
Loan Documents. Grantors shall maintain books and records pertaining to the
Collateral in such detail, form and scope as is consistent with Grantors' past
practices. Grantors shall at any time at Secured Party's request mark the
Collateral and/or Grantors' ledger cards, books of account and other records
relating to the Collateral with appropriate notations satisfactory to Secured
Party disclosing that they are subject to Secured Party's security interests.
Secured Party shall at all times on reasonable notice have full access to and
the right to audit any and all of Grantors' books and records pertaining to the
Collateral, and to



                                      -4-


confirm and verify the value of the Collateral and to do whatever else Secured
Party reasonably may deem necessary or desirable to protect its interests;
provided, however, that any such action which involves communicating with
customers of Grantors shall be carried out by Secured Party through Grantors'
independent auditors unless Secured Party shall then have the right directly to
notify obligors on the Collateral as provided in Section 9. Secured Party shall
be under no duty or obligation whatsoever to take any action to preserve any
rights of or against any prior or other parties in connection with the
Collateral, to exercise any voting rights or managerial rights with respect to
any Collateral, whether or not an Event of Default shall have occurred, or to
make or give any presentments, demands for performance, notices of
non-performance, protests, notices of protests, notices of dishonor or notices
of any other nature whatsoever in connection with the Collateral or the Secured
Obligations. Secured Party shall be under no duty or obligation whatsoever to
take any action to protect or preserve the Collateral or any rights of Grantors
therein, or to make collections or enforce payment thereon, or to participate in
any foreclosure or other proceeding in connection therewith.

        6. Collections on the Collateral. Except as otherwise provided in any
Loan Document, Grantors shall have the right to use, dispose of and to continue
to make collections on and receive dividends and other proceeds of all of the
Collateral in the ordinary course of business so long as no Event of Default
shall have occurred and be continuing. Upon the occurrence and during the
continuance of an Event of Default, at the option of Secured Party, except as
prohibited by applicable Law, Grantors' right to make collections on and receive
dividends and other proceeds of the Collateral and to use or dispose of such
collections and proceeds shall terminate, and any and all dividends, proceeds
and collections, including all partial or total prepayments, then held or
thereafter received on or on account of the Collateral will be held or received
by Grantors in trust for Secured Party and immediately delivered in kind to
Secured Party. Any remittance received by Grantors from any Person shall be
presumed to relate to the Collateral and to be subject to Secured Party's
security interests. Upon the occurrence and during the continuance of an Event
of Default, Secured Party shall have the right at all times to receive, receipt
for, endorse, assign, deposit and deliver, in the name of Secured Party or in
the name of Grantors, any and all checks, notes, drafts and other instruments
for the payment of money constituting proceeds of or otherwise relating to the
Collateral; and Grantors each hereby authorize Secured Party to affix, by
facsimile signature or otherwise, the general or special endorsement of it, in
such manner as Secured Party shall deem advisable, to any such instrument in the
event the same has been delivered to or obtained by Secured Party without
appropriate endorsement, and Secured Party and any collecting bank are hereby
authorized to consider such endorsement to be a sufficient, valid and effective
endorsement by Grantors, and each of them, to the same extent as though it were
manually executed by the duly authorized officer of each Grantor, regardless of
by whom or under what circumstances or by what authority such facsimile
signature or other endorsement actually is affixed, without duty of inquiry or
responsibility as to such matters, and each Grantor hereby expressly waives
demand, presentment, protest and notice of protest or dishonor and all other
notices of every kind and nature with respect to any such instrument.

        7. Possession of Collateral by Secured Party. All the Collateral now,
heretofore or hereafter delivered to Secured Party shall be held by Secured
Party in its possession, custody and control. Any or all of the cash Collateral
delivered to Secured Party will be held in an interest bearing account until it
is applied in accordance with the terms hereof. Nothing herein shall obligate
Secured Party to invest any Collateral or obtain any particular return thereon.
Upon the occurrence and during the continuance of an Event of Default, whenever
any of the Collateral is in Secured Party's possession, custody or control,
Secured Party may use, operate and consume the Collateral, as reasonably
necessary, whether for the purpose of preserving and/or protecting the
Collateral, or for



                                      -5-


the purpose of performing any of Grantors' obligations with respect thereto, or
otherwise. Secured Party may at any time deliver or redeliver the Collateral or
any part thereof to Grantors, and the receipt of any of the same by Grantors
shall be complete and full acquittance for the Collateral so delivered, and
Secured Party thereafter shall be discharged from any liability or
responsibility therefor. Notwithstanding anything to the contrary in this
agreement, so long as Secured Party exercises reasonable care with respect to
any Collateral in its possession, custody or control, Secured Party shall have
no liability for any loss of or damage to such Collateral, and in no event shall
Secured Party have liability for any diminution in value of Collateral
occasioned by economic or market conditions or events. Secured Party shall be
deemed to have exercised reasonable care within the meaning of the preceding
sentence if the Collateral in the possession, custody or control of Secured
Party is accorded treatment substantially equal to that which Secured Party
accords its own property, it being understood that Secured Party shall not have
any responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Collateral, whether or not Secured Party has or is deemed to have knowledge of
such matters, or (b) taking any necessary steps to preserve rights against any
Person with respect to any Collateral.

        8. Events of Default. There shall be an Event of Default hereunder upon
the occurrence and during the continuance of an Event of Default under the Loan
Agreement.

        9. Rights Upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default, Secured Party shall have, in any
jurisdiction where enforcement hereof is sought, in addition to all other rights
and remedies that Secured Party may have under applicable Law or in equity or
under this Agreement (including, without limitation, all rights set forth in
Section 6 hereof) or under any other Loan Document, all rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any jurisdiction,
and, in addition, the following rights and remedies, all of which may be
exercised with or without notice to Grantors and without affecting the
Obligations of Grantors hereunder or under any other Loan Document, or the
enforceability of the Liens and security interests created hereby: (a) to
foreclose the Liens and security interests created hereunder or under any other
agreement relating to any Collateral by any available judicial procedure or
without judicial process; (b) to enter any premises where any Collateral may be
located for the purpose of securing, protecting, inventorying, appraising,
inspecting, repairing, preserving, storing, preparing, processing, taking
possession of or removing the same; (c) to sell, assign, lease or otherwise
dispose of any Collateral or any part thereof, either at public or private sale
or at any broker's board, in lot or in bulk, for cash, on credit or otherwise,
with or without representations or warranties and upon such terms as shall be
acceptable to Secured Party; (d) to notify obligors on the Collateral that the
Collateral has been assigned to Secured Party and that all payments thereon are
to be made directly and exclusively to Secured Party; (e) to collect by legal
proceedings or otherwise all dividends, distributions, interest, principal or
other sums now or hereafter payable upon or on account of the Collateral; (f) to
enter into any extension, reorganization, deposit, merger or consolidation
agreement, or any other agreement relating to or affecting the Collateral, and
in connection therewith Secured Party may deposit or surrender control of the
Collateral and/or accept other Property in exchange for the Collateral; (g) to
settle, compromise or release, on terms acceptable to Secured Party, in whole or
in part, any amounts owing on the Collateral and/or any disputes with respect
thereto; (h) to extend the time of payment, make allowances and adjustments and
issue credits in connection with the Collateral in the name of Secured Party or
in the name of Grantors; (i) to enforce payment and prosecute any action or
proceeding with respect to any or all of the Collateral and take or bring, in
the name of Secured Party or in the name of Grantors, any and all steps,
actions, suits or proceedings deemed by Secured Party necessary or desirable to
effect collection of or to realize upon the Collateral, including any judicial
or nonjudicial



                                      -6-


foreclosure thereof or thereon, and each Grantor specifically consents to any
nonjudicial foreclosure of any or all of the Collateral or any other action
taken by Secured Party which may release any obligor from personal liability on
any of the Collateral, and each Grantor waives any right not expressly provided
for in this Agreement to receive notice of any public or private judicial or
nonjudicial sale or foreclosure of any security or any of the Collateral; and
any money or other property received by Secured Party in exchange for or on
account of the Collateral, whether representing collections or proceeds of
Collateral, and whether resulting from voluntary payments or foreclosure
proceedings or other legal action taken by Secured Party or Grantors may be
applied by Secured Party without notice to Grantors, to the Secured Obligations
in such order and manner as Secured Party in its sole discretion shall
determine; (j) to insure, process and preserve the Collateral; (k) to exercise
all rights, remedies, powers or privileges provided under any of the Loan
Documents; (l) to remove, from any premises where the same may be located, the
Collateral and any and all documents, instruments, files and records, and any
receptacles and cabinets containing the same, relating to the Collateral, and
Secured Party may, at the cost and expense of Grantors, use such of its
supplies, equipment, facilities and space at its places of business as may be
necessary or appropriate to properly administer, process, store, control,
prepare for sale or disposition and/or sell or dispose of the Collateral or to
properly administer and control the handling of collections and realizations
thereon, and Secured Party shall be deemed to have a rent-free tenancy of any
premises of Grantors for such purposes and for such periods of time as
reasonably required by Secured Party; (m) to receive, open and dispose of all
mail addressed to Grantors, or any of them, and notify postal authorities to
change the address for delivery thereof to such address as Secured Party may
designate; provided that Secured Party agrees that it will promptly deliver over
to Grantors such mail as does not relate to the Collateral; and (n) to exercise
all other rights, powers, privileges and remedies of an owner of the Collateral;
all at Secured Party's sole option and as Secured Party in its sole discretion
may deem advisable. Grantors will, at Secured Party's request, assemble the
Collateral and make it available to Secured Party at places which Secured Party
may designate, whether at the premises of Grantors or elsewhere, and will make
available to Secured Party, free of cost, all premises, equipment and facilities
of Grantors for the purpose of Secured Party's taking possession of the
Collateral or storing same or removing or putting the Collateral in salable form
or selling or disposing of same.

        Upon the occurrence and during the continuance of an Event of Default,
Secured Party also shall have the right, without notice or demand, either in
person, by agent or by a receiver to be appointed by a court, and without regard
to the adequacy of any security for the Secured Obligations, to take possession
of the Collateral or any part thereof and to collect and receive the rents,
issues, profits, income and proceeds thereof. Taking possession of the
Collateral shall not cure or waive any Event of Default or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and powers
of any receiver appointed by a court shall be as ordered by said court.

        Any public or private sale or other disposition of the Collateral may be
held at any office of Secured Party, or at any Grantor's place of business, or
at any other place permitted by applicable Law, and without the necessity of the
Collateral's being within the view of prospective purchasers. Secured Party may
direct the order and manner of sale of the Collateral, or portions thereof, as
it in its sole and absolute discretion may determine, and Grantors, expressly
waive any right to direct the order and manner of sale of any Collateral.
Secured Party or any Person on Secured Party's behalf may bid and purchase at
any such sale or other disposition. The net cash proceeds resulting from the
collection, liquidation, sale, lease or other disposition of the Collateral
shall be applied, first, to the expenses (including attorneys' fees and
disbursements) of retaking, holding, storing, processing and preparing for sale
or lease, selling, leasing, collecting, liquidating and the like, and then to
the satisfaction of the Secured Obligations in such order as shall be determined
by



                                      -7-


Secured Party in its sole and absolute discretion. Grantors and any other Person
then obligated therefor shall pay to Secured Party on demand any deficiency with
regard thereto which may remain after such sale, disposition, collection or
liquidation of the Collateral.

        Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Secured Party
will send or otherwise make available to Grantors notice of the time and place
of any public sale thereof or of the time on or after which any private sale
thereof is to be made. The requirement of sending notice conclusively shall be
met if such notice is given in the manner contemplated by the Loan Agreement at
least ten (10) days before the date of the sale. Each Grantor expressly waives
any right to receive notice of any public or private sale of any Collateral or
other security for the Secured Obligations except as expressly provided for in
this paragraph.

        With respect to any Collateral consisting of securities, partnership
interests, joint venture interests, limited liability company memberships,
Investments or the like, and whether or not any of such Collateral has been
effectively registered under the Securities Act of 1933 or other applicable
Laws, Secured Party may, in its sole and absolute discretion, sell all or any
part of such Collateral at private sale in such manner and under such
circumstances as Secured Party may deem necessary or advisable in order that the
sale may be lawfully conducted. Without limiting the foregoing, Secured Party
may (i) approach and negotiate with a limited number of potential purchasers,
and (ii) restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing such Collateral for their own
account for investment and not with a view to the distribution or resale
thereof. In the event that any such Collateral is sold at private sale, each
Grantor agrees that if such Collateral is sold for a price which Secured Party
in good faith believes to be reasonable under the circumstances then existing,
then (a) the sale shall be deemed to be commercially reasonable in all respects,
(b) no Grantor shall be entitled to a credit against the Secured Obligations in
an amount in excess of the purchase price, and (c) Secured Party shall not incur
any liability or responsibility to any Grantor in connection therewith,
notwithstanding the possibility that a substantially higher price might have
been realized at a public sale. Each Grantor recognizes that a ready market may
not exist for such Collateral if it is not regularly traded on a recognized
securities exchange, and that a sale by Secured Party of any such Collateral for
an amount substantially less than a pro rata share of the fair market value of
the issuer's assets minus liabilities may be commercially reasonable in view of
the difficulties that may be encountered in attempting to sell a large amount of
such Collateral or Collateral that is privately traded.

        Upon consummation of any sale of Collateral hereunder, Secured Party
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such sale
shall hold the Collateral so sold absolutely free from any claim or right upon
the part of any Grantor or any other Person, and each Grantor hereby waives (to
the extent permitted by applicable Laws) all rights of redemption, stay and
appraisal which it now has or may at any time in the future have under any rule
of Law or statute now existing or hereafter enacted. If the sale of all or any
part of the Collateral is made on credit or for future delivery, Secured Party
shall not be required to apply any portion of the sale price to the Secured
Obligations until such amount actually is received by Secured Party, and any
Collateral so sold may be retained by Secured Party until the sale price is paid
in full by the purchaser or purchasers thereof. Secured Party shall not incur
any liability in case any such purchaser or purchasers shall fail to pay for the
Collateral so sold, and, in case of any such failure, the Collateral may be sold
again.

        10. Voting Rights; Dividends; etc. With respect to any Collateral
consisting of



                                      -8-


securities, partnership interests, joint venture interests, limited liability
company memberships, Investments or the like (referred to collectively and
individually in this Section 10 and in Section 11 as the "Investment
Collateral"), so long as no Event of Default occurs and remains continuing:

                (a) Voting Rights. Grantors shall be entitled to exercise any
        and all voting and other consensual rights pertaining to the Investment
        Collateral, or any part thereof, for any purpose not inconsistent with
        the terms of this Agreement, the Loan Agreement, or the other Loan
        Documents; provided, however, that Grantors shall not exercise, or shall
        refrain from exercising, any such right if it would result in a Default.

                (b) Dividend and Distribution Rights. Except as otherwise
        provided in any Loan Document, Grantors shall be entitled to receive and
        to retain and use any and all dividends or distributions paid in respect
        of the Investment Collateral; provided, however, that any and all such
        dividends or distributions received in the form of capital stock,
        certificated securities, warrants, options or rights to acquire capital
        stock or certificated securities forthwith shall be, and the
        certificates representing such capital stock or certificated securities,
        if any, forthwith shall be delivered to Secured Party to hold as pledged
        Collateral and shall, if received by Grantors, be received in trust for
        the benefit of Secured Party, be segregated from the other Property of
        Grantors, and forthwith be delivered to Secured Party as pledged
        Collateral in the same form as so received (with any necessary
        endorsements).

        11. Rights During Event of Default. With respect to any Investment
Collateral, so long as an Event of Default has occurred and is continuing:

                (a) Voting, Dividend, and Distribution Rights. At the option of
        Secured Party, all rights of Grantors to exercise the voting and other
        consensual rights which it would otherwise be entitled to exercise
        pursuant to Section 10(a) above, and to receive the dividends and
        distributions which it would otherwise be authorized to receive and
        retain pursuant to Section 10(b) above, shall cease, and all such rights
        thereupon shall become vested in Secured Party which thereupon shall
        have the sole right to exercise such voting and other consensual rights
        and to receive and to hold as pledged Collateral such dividends and
        distributions.

                (b) Dividends and Distributions Held in Trust. All dividends and
        other distributions which are received by Grantors contrary to the
        provisions of this Agreement shall be received in trust for the benefit
        of Secured Party, shall be segregated from other funds of Grantors and
        forthwith shall be paid over to Secured Party as pledged Collateral in
        the same form as so received (with any necessary endorsements).

                (c) Irrevocable Proxy. Each Grantor hereby revokes all previous
        proxies with regard to the Investment Collateral and appoints Secured
        Party as its proxyholder to attend and vote at any and all meetings of
        the shareholders or other equity holders of the Persons that issued the
        Investment Collateral and any adjournments thereof, held on or after the
        date of the giving of this proxy and prior to the termination of this
        proxy, and to execute any and all written consents of shareholders or
        equity holders of such Persons executed on or after the date of the
        giving of this proxy and prior to the termination of this proxy, with
        the same effect as if such Grantor had personally attended the meetings
        or had personally voted its shares or other interests or had personally
        signed the written consents; provided, however, that the proxyholder
        shall have rights hereunder only upon the occurrence and during the
        continuance of an Event of Default. Each Grantor hereby authorizes
        Secured Party to substitute another



                                      -9-


        Person as the proxyholder and, upon the occurrence and during the
        continuance of any Event of Default, hereby authorizes the proxyholder
        to file this proxy and any substitution instrument with the secretary or
        other appropriate official of the appropriate Person. This proxy is
        coupled with an interest and is irrevocable until such time as all
        Secured Obligations have been paid and performed in full.

        12. Attorney-in-Fact. Each Grantor hereby irrevocably nominates and
appoints Secured Party as its attorney-in-fact for the following purposes: (a)
to do all acts and things which Secured Party may deem necessary or advisable to
perfect and continue perfected the security interests created by this Agreement
and, upon the occurrence and during the continuance of an Event of Default, to
preserve, process, develop, maintain and protect the Collateral; (b) upon the
occurrence and during the continuance of an Event of Default, to do any and
every act which such Grantor is obligated to do under this Agreement, at the
expense of the Grantors, so obligated and without any obligation to do so; (c)
to prepare, sign, file and/or record, for such Grantor, in the name of the
Grantor, any financing statement, application for registration, or like paper,
and to take any other action deemed by Secured Party necessary or desirable in
order to perfect or maintain perfected the security interests granted hereby;
and (d) upon the occurrence and during the continuance of an Event of Default,
to execute any and all papers and instruments and do all other things necessary
or desirable to preserve and protect the Collateral and to protect Secured
Party's security interests therein; provided, however, that Secured Party shall
be under no obligation whatsoever to take any of the foregoing actions, and,
absent bad faith or actual malice, Secured Party shall have no liability or
responsibility for any act taken or omission with respect thereto.

        13. Costs and Expenses. Each Grantor agrees to pay to Secured Party all
costs and expenses (including, without limitation, attorneys' fees and
disbursements) incurred by Secured Party in the enforcement or attempted
enforcement of this Agreement, whether or not an action is filed in connection
therewith, and in connection with any waiver or amendment of any term or
provision hereof. All advances, charges, costs and expenses, including
attorneys' fees and disbursements, incurred or paid by Secured Party in
exercising any right, privilege, power or remedy conferred by this Agreement
(including, without limitation, the right to perform any Secured Obligation of
such Grantor under the Loan Documents), or in the enforcement or attempted
enforcement thereof, shall be secured hereby and shall become a part of the
Secured Obligations and shall be paid to Secured Party by such Grantor,
immediately upon demand, together with interest thereon at the Default Rate.

        14. Statute of Limitations and Other Laws. Until the Secured Obligations
shall have been paid and performed in full, the power of sale and all other
rights, privileges, powers and remedies granted to Secured Party hereunder shall
continue to exist and may be exercised by Secured Party at any time and from
time to time irrespective of the fact that any of the Secured Obligations may
have become barred by any statute of limitations. Each Grantor expressly waives
the benefit of any and all statutes of limitation, and any and all Laws
providing for exemption of property from execution or for valuation and
appraisal upon foreclosure, to the maximum extent permitted by applicable Law.

        15. Other Agreements. Nothing herein shall in any way modify or limit
the effect of terms or conditions set forth in any other security or other
agreement executed by Grantors, or any of them, or in connection with the
Secured Obligations, but each and every term and condition hereof shall be in
addition thereto. All provisions contained in the Loan Agreement or any other
Loan Document that apply to Loan Documents generally are fully applicable to
this Agreement and are



                                      -10-


incorporated herein by this reference.

        16. Understandings With Respect to Waivers and Consents. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein are
made after consultation with legal counsel and with full knowledge of their
significance and consequences, with the understanding that events giving rise to
any defense or right waived may diminish, destroy or otherwise adversely affect
rights which such Grantor otherwise may have against Secured Party or others, or
against Collateral, and that, under the circumstances, the waivers and consents
herein given are reasonable and not contrary to public policy or Law. If any of
the waivers or consents herein are determined to be contrary to any applicable
Law or public policy, such waivers and consents shall be effective to the
maximum extent permitted by Law.

        17. Release of Grantors. This Agreement and all Secured Obligations of
Grantors hereunder shall be released when all Secured Obligations have been paid
in full in cash or otherwise performed in full and when no portion of the
Commitment remains outstanding. Upon such release of Grantors' Secured
Obligations hereunder, Secured Party shall return any pledged Collateral to
Grantors, or to the Person or Persons legally entitled thereto, and shall
endorse, execute, deliver, record and file all instruments and documents, and do
all other acts and things, reasonably required for the return of the Collateral
to Grantors, or to the Person or Persons legally entitled thereto, and to
evidence or document the release of Secured Party's interests arising under this
Agreement, all as reasonably requested by, and at the sole expense of, Grantors.

        18. WAIVER OF JURY TRIAL. EACH GRANTOR AND SECURED PARTY EXPRESSLY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH GRANTOR AND SECURED PARTY AGREE THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE LOAN AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

        19. Incorporation of Suretyship Provisions and Waivers. The attached
Exhibit A, "Suretyship Provisions and Waivers" is hereby incorporated by this
reference as though set forth herein in full.



                                      -11-


        IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly
authorized officer as of the date first written above.


                                       "Grantors"

                                       JAKKS PACIFIC, INC.
                                       FLYING COLORS TOYS, INC.
                                       ROAD CHAMPS, INC.
                                       PENTECH INTERNATIONAL INC.


                                       By: /s/ JOEL M. BENNETT
                                           Joel M. Bennett

                                       Title: Exec. V.P./C.F.O. of each of
                                              the foregoing



                                      -12-


                                    EXHIBIT A
                                       TO
                               SECURITY AGREEMENT

                        SURETYSHIP PROVISIONS AND WAIVERS

        1. Waivers and Consents. Each Grantor acknowledges that the Liens and
security interests created or granted herein will or may secure obligations of
Persons other than such Grantor and, in full recognition of that fact, each
Grantor consents and agrees that Secured Party may, at any time and from time to
time, without notice or demand, and without affecting the enforceability or
security hereof:

                (a) supplement, modify, amend, extend, renew, or otherwise
change the time for payment or the terms of the Obligations or any part thereof,
including any increase or decrease of the rate(s) of interest thereon;

                (b) supplement, modify, amend or waive, or enter into or give
any agreement, approval or consent with respect to, the Obligations or any part
thereof or any of the Loan Documents or any additional security or guaranties,
or any condition, covenant, default, remedy, right, representation or term
thereof or thereunder;

                (c) accept new or additional instruments, documents or
agreements in exchange for or relative to any of the Loan Documents or the
Obligations or any part thereof;

                (d) accept partial payments on the Obligations;

                (e) receive and hold additional security or guaranties for the
Obligations or any part thereof;

                (f) release, reconvey, terminate, waive, abandon, subordinate,
exchange, substitute, transfer and enforce any security or guaranties, and apply
any security and direct the order or manner of sale thereof as Secured Party in
its sole and absolute discretion may determine;

                (g) release any Person or any guarantor from any personal
liability with respect to the Obligations or any part thereof;

                (h) settle, release on terms satisfactory to Secured Party or by
operation of applicable Laws or otherwise liquidate or enforce any Obligations
and any security or guaranty therefor in any manner, consent to the transfer of
any security and bid and purchase at any sale; and

                (i) consent to the merger, change or any other restructuring or
termination of the corporate existence of any Borrower or any other Person, and
correspondingly restructure the Obligations, and any such merger, change,
restructuring or termination shall not affect the liability of any Grantor or
the continuing existence of any Liens hereunder, under any other Loan Document
to which any Grantor is a party or the enforceability hereof or thereof with
respect to all or any part of the Obligations.



                                      -13-


        Upon the occurrence of and during the continuance of any Event of
Default, Secured Party may enforce this Agreement independently as to each
Grantor and independently of any other remedy or security Secured Party at any
time may have or hold in connection with the Obligations, and it shall not be
necessary for Secured Party to marshal assets in favor of any Grantor, any
Borrower or any other Person or to proceed upon or against and/or exhaust any
other security or remedy before proceeding to enforce this Agreement. Each
Grantor expressly waives any right to require Secured Party to marshal assets in
favor of such Grantor, any Borrower or any other Person or to proceed against
any other Person or any collateral provided by any other Person, and agrees that
Secured Party may proceed against any Person and/or collateral in such order as
it shall determine in its sole and absolute discretion. Secured Party may file a
separate action or actions against any Grantor, whether action is brought or
prosecuted with respect to any other security or against any other Grantor, any
Borrower or any other Person, or whether any other Person is joined in any such
action or actions. Each Grantor agrees that Secured Party and the Borrowers and
any other Person may deal with each other in connection with the Obligations or
otherwise, or alter any contracts or agreements now or hereafter existing
between any of them, in any manner whatsoever, all without in any way altering
or affecting the security of this Agreement. Secured Party's rights hereunder
shall be reinstated and revived, and the enforceability of this Agreement shall
continue, with respect to any amount at any time paid on account of the
Obligations which thereafter shall be required to be restored or returned by
Secured Party upon the bankruptcy, insolvency or reorganization of any Borrower,
any Grantor or any other Person, or otherwise, all as though such amount had not
been paid. The Liens created or granted herein and the enforceability of this
Agreement at all times shall remain effective to secure the full amount of all
the Obligations including, without limitation, the amount of all loans and
interest thereon at the rates provided for in the Loan Agreement, even though
the Obligations, including any part thereof or any other security or guaranty
therefor, may be or hereafter may become invalid or otherwise unenforceable as
against the Borrowers or any other Person and whether or not the Borrowers or
any other Person shall have any personal liability with respect thereto. Each
Grantor expressly waives any and all defenses now or hereafter arising or
asserted by reason of (a) any disability or other defense of any Borrower or any
other Person with respect to the Obligations, (b) the unenforceability or
invalidity of any security or guaranty for the Obligations or the lack of
perfection or continuing perfection or failure of priority of any security for
the Obligations, (c) the cessation for any cause whatsoever of the liability of
any Borrower or any other Person (other than by reason of the full payment and
performance of all Obligations), (d) any failure of Secured Party to marshal
assets in favor of such Grantor or any other Person, (e) except as otherwise
required by Law or as provided in this Agreement, any failure of Secured Party
to give notice of sale or other disposition of collateral to such Grantor or any
other Person or any defect in any notice that may be given in connection with
any sale or disposition of collateral, (f) except as otherwise required by Law
or as provided in this Agreement, any failure of Secured Party to comply with
applicable Laws in connection with the sale or other disposition of any
collateral or other security for any Obligation, including without limitation
any failure of Secured Party to conduct a commercially reasonable sale or other
disposition of any collateral or other security for any Obligation, (g) any act
or omission of Secured Party or others that directly or indirectly results in or
aids the discharge or release of any Borrower, any Grantor or any other Person
or the Obligations or any other security or guaranty therefor by operation of
law, (h) any Law which provides that the obligation of a surety or guarantor
must neither be larger in amount nor in other respects more burdensome than that
of the principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation, (i) any failure of Secured Party to file
or enforce a claim in any bankruptcy or other proceeding with respect to any
Person, (j) the election by Secured Party, in any bankruptcy proceeding of any
Person, of the application or non-application of Section 1111(b)(2) of the
United States Bankruptcy Code, (k) any extension of credit or the grant of any
Liens under Section 364 of the United States Bankruptcy Code, (l) any use of
cash collateral under Section 363 of the United States Bankruptcy Code, (m) any



                                      -14-


agreement or stipulation with respect to the provision of adequate protection in
any bankruptcy proceeding of any Person, (n) the avoidance of any Liens in favor
of Secured Party for any reason, (o) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any Person, including any discharge of, or bar or stay
against collecting, all or any of the Obligations (or any interest thereon) in
or as a result of any such proceeding, or (p) to the extent permitted, the
benefits of any form of one-action rule. Until no part of any commitment to lend
remains outstanding and all of the Obligations have been paid and performed in
full, Grantors shall have no right of subrogation, contribution, reimbursement
or indemnity, and each Grantor expressly waives any right to enforce any remedy
that Secured Party now has or hereafter may have against any other Person and
waives the benefit of, or any right to participate in, any other security now or
hereafter held by Secured Party. Each Grantor expressly waives all setoffs and
counterclaims and all presentments, demands for payment or performance, notices
of nonpayment or nonperformance, protests, notices of protest, notices of
dishonor and all other notices or demands of any kind or nature whatsoever with
respect to the Obligations, and all notices of acceptance of this Agreement or
of the existence, creation or incurring of new or additional Obligations.

        2. Condition of Grantors and their Subsidiaries. Each Grantor represents
and warrants to Secured Party that such Grantor has established adequate means
of obtaining from each other Grantor and its Subsidiaries, on a continuing
basis, financial and other information pertaining to the businesses, operations
and condition (financial and otherwise) of each other Grantor and its
Subsidiaries and their properties, and such Grantor now is and hereafter will be
completely familiar with the businesses, operations and condition (financial and
otherwise) of each other Grantor and its Subsidiaries and their properties. Each
Grantor hereby expressly waives and relinquishes any duty on the part of Secured
Party to disclose to such Grantor any matter, fact or thing related to the
businesses, operations or condition (financial or otherwise) of any Grantor or
its Subsidiaries or their properties, whether now known or hereafter known by
Secured Party during the life of this Agreement. With respect to any of the
Obligations, Secured Party need not inquire into the powers of any Grantor or
any Subsidiaries thereof or the officers or employees acting or purporting to
act on their behalf, and all Obligations made or created in good faith reliance
upon the professed exercise of such powers shall be secured hereby.

        3. Liens on Real Property. In the event that all or any part of the
Obligations at any time are secured by any one or more deeds of trust or
mortgages creating or granting Liens on any interests in real property, each
Grantor authorizes Secured Party, upon the occurrence of and during the
continuance of any Event of Default, at its sole option, without notice or
demand and without affecting any Obligations, the enforceability of this
Agreement, or the validity or enforceability of any Liens of any Secured Party
on any collateral, to foreclose any or all of such deeds of trust or mortgages
by judicial or nonjudicial sale. Insofar as the Liens created herein secure the
obligations of other Persons, (i) each Grantor expressly waives any defenses to
the enforcement of this Agreement or any Liens created or granted hereby or to
the recovery by Secured Party against the Borrowers or any other Person liable
therefor of any deficiency after a judicial or nonjudicial foreclosure or sale,
even though such a foreclosure or sale may impair the subrogation rights of such
Grantor and may preclude such Grantor from obtaining reimbursement or
contribution from any other Person and (ii) each Grantor expressly waives any
defenses or benefits that may be derived from California Code of Civil Procedure
- - 580a, 580b, 580d or 726, or comparable provisions of the Laws of any other
jurisdiction and all other suretyship defenses it otherwise might or would have
under California Law or other applicable Law. Each Grantor expressly waives any
right to receive notice of any judicial or nonjudicial foreclosure or sale of
any real property or interest therein subject to any such deeds of trust or
mortgages and such Grantor's failure to receive any such notice shall not impair
or affect such



                                      -15-


Grantor's obligations hereunder or the enforceability of this Agreement or any
Liens created or granted hereby.

        4. Waiver of Rights of Subrogation. Notwithstanding anything to the
contrary elsewhere contained herein or in any other Loan Document to which any
Grantor is a Party, each Grantor hereby waives with respect to the Borrowers and
their successors and assigns (including any surety) and any other Party any and
all rights at Law or in equity, to subrogation, to reimbursement, to
exoneration, to contribution, to setoff or to any other rights that could accrue
to a surety against a principal, to a guarantor against a maker or obligor, to
an accommodation party against the party accommodated, or to a holder or
transferee against a maker and which such Grantor may have or hereafter acquire
against any Borrower or any other Party in connection with or as a result of
such Grantor's execution, delivery and/or performance of this Agreement or any
other Loan Document to which such Grantor is a party. Each Grantor agrees that
it shall not have or assert any such rights against any Borrower or its
successors and assigns or any other Person (including any surety), either
directly or as an attempted setoff to any action commenced against such Grantor
by any Borrower (as borrower or in any other capacity) or any other Person. Each
Grantor hereby acknowledges and agrees that this waiver is intended to benefit
Secured Party and shall not limit or otherwise affect such Grantor's liability
hereunder, under any other Loan Document to which such Grantor is a party, or
the enforceability hereof or thereof.

        5. Understandings with Respect to Waivers and Consents. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein is
made with full knowledge of its significance and consequences, with the
understanding that events giving rise to any defense waived may diminish,
destroy or otherwise adversely affect rights which such Grantor otherwise may
have against the Borrowers, Secured Party or others, or against collateral, and
that, under the circumstances, the waivers and consents herein given are
reasonable and not contrary to public policy or Law. If any of the waivers or
consents herein are determined to be contrary to any applicable Law or public
policy, such waivers and consents shall be effective to the maximum extent
permitted by Law.



                                      -16-



                                                                   EXHIBIT 15(D)

                          TRADEMARK SECURITY AGREEMENT

        This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
October 12, 2001, is made by JAKKS PACIFIC, INC., a Delaware corporation, FLYING
COLORS TOYS, INC., a Michigan corporation, ROAD CHAMPS, INC., a Delaware
corporation, and PENTECH INTERNATIONAL INC., a Delaware corporation, together
with each other Person which hereafter may become a party hereto pursuant to
Section 9 of this Agreement (each a "Grantor" and collectively, "Grantors"),
jointly and severally, in favor of BANK OF AMERICA, N.A., as the Administrative
Agent under the Loan Agreement hereafter referred to, the Lenders therein named
and in favor of each of the Lenders which may hereafter become a party hereto
collectively as Secured Party, with reference to the following facts:

                                    RECITALS

        A. Grantors have entered into a Loan Agreement of even date herewith
among Grantors, the Lenders referred to therein, and Bank of America, N.A., as
Administrative Agent (as it may from time to time be amended, restated,
extended, renewed, modified or supplemented, the "Loan Agreement"). This
Agreement is the Trademark Security Agreement referred to in the Loan Agreement
and is one of the "Loan Documents" referred to in the Loan Agreement.

        B. Pursuant to the Loan Documents of even date the Lenders are making
certain credit facilities available to Grantors.

        C. As a condition of the availability of such credit facilities,
Grantors are required to enter into this Agreement to grant security interests
to Secured Party as herein provided.

        D. Each Grantor expects to realize direct and indirect benefits as a
result of the availability of the aforementioned credit facilities.

                                    AGREEMENT

        NOW, THEREFORE, in order to induce the Lenders to extend the
aforementioned credit facilities to the Grantors, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantors, and each of the subsequent Grantors which hereafter
become party hereto, hereby jointly and severally represent, warrant, covenant
and agree as follows:

1. Definitions. Terms defined in the Loan Agreement and not otherwise defined in
this Agreement shall have the meanings defined for those terms in the Loan
Agreement. As used in this Agreement, the following terms shall have the
meanings respectively set forth after each:


        "Agreement" means this Trademark Security Agreement, and any extensions,
modifications, renewals, restatements, supplements or amendments hereof,
including, without limitation, any documents or agreements by which additional
Grantors become party hereto.

        "Collateral" means and includes all of the following: (a) all of
Grantors' now-existing, or hereafter acquired, right, title, and interest in and
to all of Grantors' trademarks, trade names, trade styles, and service marks;
all prints and labels on which said trademarks, trade names, trade styles, and
service marks appear, have appeared, or will appear, and all designs and general
intangibles of a like nature; all applications, registrations, and recordings
relating to the foregoing in the United States Patent and Trademark Office
("USPTO") or in any similar office or agency of the United States, any State
thereof, or any political subdivision thereof (provided that no "intent to use"
application filed by any Grantor with the USPTO relating to the foregoing shall
constitute part of the Collateral unless and until such Grantor files a
"declaration of use" with respect to such application and the USPTO accepts such
declaration), and all reissues, extensions, and renewals thereof, including
those trademarks, trade names, trade styles, service marks, terms, designs, and
applications described in Schedule 1 hereto (the "Trademarks"); (b) the goodwill
of the business symbolized by each of the Trademarks, including, without
limitation, all customer lists and other records relating to the distribution of
products or services bearing the Trademarks; (c) all licenses and sublicenses of
trademarks, trade names, trade styles and service marks, to the extent that
there exists no prohibition as a matter of law on the transfer thereof for
security as contemplated by this Agreement, and (d) any and all proceeds of any
of the foregoing, including any claims by Grantors against third parties for
past, present and future infringement of the Trademarks or any licenses with
respect thereto.

        "Secured Obligations" means any and all present and future Obligations
of any type or nature of Grantors or any one or more of them to the
Administrative Agent, the Lenders, and any one or more of them, arising under or
relating to the Loan Documents or any one or more of them, whether due or to
become due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including Obligations of performance as well as Obligations of
payment, and including interest that accrues after the commencement of any
bankruptcy or insolvency proceeding by or against any Grantor.

        "Secured Party" means the Administrative Agent under the Loan Agreement,
the Lenders therein named and each of the Lenders which may hereafter become a
party thereto. All rights of the Secured Party under this Agreement shall be
exercised by the Administrative Agent, acting with the consent of those Lenders
required by the Loan Agreement.

2. Security Agreement. For valuable consideration, Grantors, and each of them
hereby, jointly and severally grant and assign to Secured Party a security
interest, to secure the prompt and indefeasible payment and performance of the
Secured Obligations, and each of them, in and to all of the presently existing
and hereafter acquired Collateral. This Agreement is a continuing and
irrevocable agreement and all the rights, powers, privileges and remedies
hereunder shall apply to any and all Secured Obligations, including those
arising under successive transactions which shall either continue the Secured
Obligations, increase or decrease them and notwithstanding the bankruptcy of any
Grantor or any other event or




proceeding affecting any Grantor.

3. Representations, Warranties and Covenants. Grantors, and each of them,
represent, warrant and agree that:

(a) To Grantors' knowledge, all of the existing Collateral is valid and
subsisting and in full force and effect, and Grantors own the sole, full, and
clear title thereto, and the right and power to grant the security interests
granted hereunder. Grantors will, at their expense, perform all acts and execute
all documents necessary to maintain the existence of the Collateral as valid,
subsisting, and registered trademarks, including, without limitation, the filing
of any renewal affidavits and applications provided that Grantors may abandon or
not maintain or renew such trademark if in its good faith judgment, the
particular mark is not material to its business. The Collateral is not subject
to any Liens, claims, mortgages, assignments or licenses of any nature
whatsoever, whether recorded or unrecorded, except as permitted by the Loan
Agreement.

(b) To Grantors' knowledge, as of the date hereof, none of Grantors or their
Subsidiaries has any Trademarks registered, or subject to pending applications,
in the USPTO, or any similar office or agency in the United States, other than
those described in Schedule 1.

(c) No Grantor nor any Subsidiary of any Grantor shall file any application for
the registration of a trademark with the USPTO or any similar office or agency
in the United States, or State therein, unless such Grantor or Subsidiary has
informed Secured Party of such action in advance or informs Secured Party
promptly thereafter. Upon request of Secured Party, Grantors shall execute and
deliver to Secured Party any and all agreements, instruments, documents, and
such other papers as may be reasonably requested by Secured Party to evidence
the grant and assignment of a security interest to Secured Party of such
trademark (other than mere "intent to use" filings). Each Grantor authorizes
Secured Party to modify this Agreement by amending Schedule 1 to include any new
trademark or service mark, and any trademark or service mark renewal of any
Grantor applied for and obtained hereafter.

(d) Except to the extent permitted by this Agreement, no Grantor nor any
Subsidiary of any Grantor has abandoned any of the Trademarks, and no Grantor
nor any Subsidiary of any Grantor will do any act, or omit to do any act,
whereby the Trademarks may become abandoned, canceled, invalidated,
unenforceable, avoided, or avoidable. Each Grantor shall notify Secured Party
promptly if it knows, or has reason to know, of any reason why any application,
registration, or recording may become abandoned, canceled, invalidated, or
unenforceable.

(e) Grantors will render any assistance, as Secured Party may reasonably
determine is necessary, to Secured Party in any proceeding before the USPTO, any
federal or state court, or any similar office or agency in the United States, or
any State therein, to protect Secured Party's security interest in the
Trademarks.

(f) Grantors assume all responsibility and liability arising from the use of the
Trademarks, and each Grantor hereby indemnifies and holds the Administrative
Agent and each of the Lenders harmless from and against any claim, suit, loss,
damage, or expense (including reasonable attorneys'




fees) arising out of any alleged defect in any product manufactured, promoted,
or sold by any Grantor (or any Affiliate or Subsidiary thereof) in connection
with any Trademark or out of the manufacture, promotion, labeling, sale, or
advertisement of any such product by any Grantor or any Affiliate or Subsidiary
thereof.

(g) Grantors shall promptly notify Secured Party in writing of any adverse
determination in any proceeding in the USPTO or domestic Governmental Agency,
court or body, regarding any Grantor's ownership of any of the Trademarks. In
the event of any material infringement of any of the Trademarks by a third
party, Grantors shall promptly notify Secured Party of such infringement and
shall diligently pursue damages or an injunction for such infringement provided
that Grantors have no obligation to take any such action with respect to a
Trademark if, in its good faith judgement, such Trademark is not material to its
business..

(h) Each Grantor shall, at its sole expense, do, make, execute and deliver all
such additional and further acts, things, assurances, and instruments, in each
case in form and substance reasonably satisfactory to Secured Party, relating to
the creation, validity, or perfection of the security interests provided for in
this Agreement under 35 U.S.C. Section 261, 15 U.S.C. Section 1051 et seq., the
Uniform Commercial Code or other Law of the United States, the State of
California, or of any other States as Secured Party may from time to time
reasonably request, and shall take all such other action as the Secured Party
may reasonably require to more completely vest in and assure to Secured Party
its security interest in any of the Collateral, and each Grantor hereby
irrevocably authorizes Secured Party or its designee, at such Grantor's expense,
to execute such documents, and file such financing statements with respect
thereto with or without such Grantor's signature, as Secured Party may
reasonably deem appropriate. In the event that any recording or refiling (or the
filing of any statement of continuation or assignment of any financing
statement) or any other action, is required at any time to protect and preserve
such security interest, Grantors shall, at their sole cost and expense, cause
the same to be done or taken at such time and in such manner as may be necessary
and as may be reasonably requested by Secured Party. Each Grantor further
authorizes Secured Party to have this or any other similar security agreement
recorded or filed with the Commissioner of Patents and Trademarks or other
appropriate federal, state or government office.

(i) Secured Party is hereby irrevocably appointed by each Grantor as its lawful
attorney and agent, with full power of substitution to execute and deliver on
behalf of and in the name of any or all Grantors, such financing statements and
other documents and agreements, and to take such other action as Secured Party
may deem necessary for the purpose of perfecting, protecting or effecting the
security interests granted herein and effected hereby, and any mortgages or
Liens necessary or desirable to implement or effectuate the same, under any
applicable Law, and Secured Party is hereby authorized to file on behalf of and
in the name of any or all Grantors, at Grantors' sole expense, such financing
statements, documents and agreements in any appropriate governmental office.

(j) Secured Party may, in its sole discretion, pay any amount, or do any act
which Grantors fail to pay or do as reasonably required hereunder to preserve,
defend, protect, maintain, record, amend, or enforce the Secured Obligations,
the Collateral, or the security interest granted hereunder, including, but not
limited to, all filing or recording fees, court costs,




collection charges, and reasonable attorneys' fees. Grantors will be liable to
Secured Party for any such payment, and any amount so paid shall be an expense
reimbursable by the Borrowers under Section 11.3 of the Loan Agreement (or, in
the proper case, by each other Grantor under the expense provisions of its
Guaranty).

4. Events of Default. Any "Event of Default" as defined in the Loan Agreement
shall constitute an Event of Default hereunder.

5. Rights and Remedies. Upon the occurrence and during the continuance of any
such Event of Default, in addition to all other rights and remedies of Secured
Party, whether provided under Law, the Loan Agreement or otherwise, Secured
Party may enforce its security interest hereunder which may be exercised without
notice to, or consent by, any Grantor, except as such notice or consent is
expressly provided for hereunder. Upon such enforcement:

(a) Secured Party may use any of the Trademarks for the sale of goods,
completion of work in process, or rendering of services in connection with
enforcing any security interest granted to Secured Party by Grantors or any
Subsidiary of any Grantor.

(b) Secured Party may grant such license or licenses relating to the Collateral
for such term or terms, on such conditions and in such manner, as Secured Party
shall, in its sole discretion, deem appropriate. Such license or licenses may be
general, special, or otherwise, and may be granted on an exclusive or
nonexclusive basis throughout all or part of the United States of America and
its territories and possessions.

(c) Secured Party may assign, sell, or otherwise dispose of the Collateral, or
any part thereof, either with or without special conditions or stipulations,
except that Secured Party agrees to provide Grantors with ten (10) days' prior
written notice of any proposed disposition of the Collateral. Each Grantor
hereby irrevocably appoints each Borrower as its agent for the purpose of
receiving notice of sale hereunder, and agrees that such Grantor conclusively
shall be deemed to have received notice of sale when notice of sale has been
given to each Borrower. Each Grantor expressly waives any right to receive
notice of any public or private sale of any Collateral or other security for the
Secured Obligations except as expressly provided in this Section 5(c). Secured
Party shall have the power to buy the Collateral, or any part thereof, and
Secured Party shall also have the power to execute assurances and perform all
other acts which Secured Party may, in Secured Party's sole discretion, deem
appropriate or proper to complete such assignment, sale, or disposition. In any
such event, Grantors shall be liable for any deficiency.

(d) In addition to the foregoing, in order to implement the assignment, sale or
other disposition of any of the Collateral pursuant to Section 5(c) hereof,
Secured Party may, at any time, execute and deliver, on behalf of Grantors, and
each of them, pursuant to the authority granted in powers of attorney, one or
more instruments of assignment of the Trademarks (or any application,
registration, or recording relating thereto), in form suitable for filing,
recording, or registration. Grantors agree to pay Secured Party, on demand, all
costs incurred in any such transfer of the Collateral, including, but not
limited to any taxes, fees, and reasonable attorneys' fees.

(e) Secured Party may first apply the proceeds actually received from any such
use, license, assignment, sale, or other disposition of Collateral




first to the reasonable costs and expenses thereof, including, without
limitation, reasonable attorneys' fees and all reasonable legal, travel, and
other expenses which may be incurred by Secured Party. Thereafter, Secured Party
may apply any remaining proceeds to such of the Secured Obligations as provided
in the Loan Agreement. Grantors shall remain liable to Secured Party for any
expenses or Secured Obligations remaining unpaid after the application of such
proceeds, and Grantors will pay Secured Party, on demand, any such unpaid
amount, together with interest at the rate(s) set forth in the Loan Agreement.

(f) Upon request of Secured Party, Grantors shall supply to Secured Party, or
Secured Party's designee, Grantors' knowledge and expertise relating to the
manufacture and sale of the products and services bearing the Trademarks and
Grantors' customer lists and other records relating to the Trademarks and the
distribution hereof.

        Nothing contained herein shall be construed as requiring Secured Party
to take any such action at any time. All of Secured Party's rights and remedies,
whether provided under Law, the Loan Agreement, this Agreement, or otherwise
shall be cumulative, and none is exclusive of any right or remedy otherwise
provided herein or in any of the other Loan Documents, at law or in equity. Such
rights and remedies may be enforced alternatively, successively, or
concurrently.

        Secured Party or Designee will keep such confidential information, lists
or records provided hereunder in confidence in accordance with Section 11.16 of
the Loan Agreement.

6. Waivers.

        (a) Each Grantor hereby waives any and all rights that it may have to a
judicial hearing, if any, in advance of the enforcement of any of Secured
Party's rights hereunder, including, without limitation, its rights following
any Event of Default and during the continuance thereof to take immediate
possession of the Collateral and exercise its rights with respect thereto.

        (b) Secured Party shall not be required to marshal any present or future
security for (including, but not limited to, this Agreement and the Collateral
subject to a security interest hereunder), or guaranties of, the Secured
Obligations or any of them, or to resort to such security or guaranties in any
particular order. Each Grantor hereby agrees that it will not invoke any Law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of Secured Party's rights under this Agreement or any other
instrument evidencing any of the Secured Obligations or by which any of such
Secured Obligations is secured or guaranteed, and each Grantor hereby
irrevocably waives the benefits of all such Laws.

        (c) Except for notices specifically provided for herein, each Grantor
hereby expressly waives demand, notice, protest, notice of acceptance of this
Agreement, notice of loans made, credit extended, collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description. With respect both to Secured Obligations and any
collateral therefor, each Grantor assents to any extension or postponement of
the time of payment or any other indulgence, to any substitution, of any Person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromising or adjusting of any thereof, all in such manner
and at such time or times as




Secured Party may deem advisable. Secured Party shall have no duty as to the
protection of the Collateral or any income thereon, nor as to the preservation
of rights against prior parties, nor as to the preservation of any rights
pertaining thereto except as otherwise required by Law. Secured Party may
exercise its rights with respect to the Collateral without resorting or regard
to other collateral or sources of reimbursement for liability. Secured Party
shall not be deemed to have waived any of its rights upon or under the Loan
Agreement or the Collateral unless such waiver be in writing and signed by the
Secured Party. The exercise of the rights under this Agreement are not intended
by the parties to constitute an "action" within the meaning of Sections 580a,
580d, or 726 of the California Code of Civil Procedure. No delay or omission on
the part of the Secured Party in exercising any right shall operate as a waiver
of any right on any future occasion. All rights and remedies of the Secured
Party under the Loan Agreement or on the Collateral, whether evidenced hereby or
by any other instrument or papers, shall be cumulative and may be exercised
singularly or concurrently.

7. Costs and Expenses. Grantors will pay any and all charges, costs and taxes
incurred in implementing or subsequently amending this Agreement, including,
without limitation, recording and filing fees, appraisal fees, stamp taxes, and
reasonable fees and disbursements of Secured Party's counsel incurred by Secured
Party, and the allocated cost of in-house counsel to Secured Party, in
connection with this Agreement, and in the enforcement of this Agreement and in
the enforcement or foreclosure of any Liens, security interests or other rights
of the Secured Party under this Agreement, or under any other documentation
heretofore, now, or hereafter given to Secured Party in furtherance of the
transactions contemplated hereby.

8. Continuing Effect. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Grantor
for liquidation or reorganization, should any Grantor become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor's assets.

9. Joinder. Any other Person may become a Grantor hereunder and become bound by
the terms and conditions of this Agreement by executing and delivering to
Administrative Agent an Instrument of Joinder substantially in the form attached
hereto as Exhibit A, accompanied by such documentation as Administrative Agent
may require to establish the due organization, valid existence and good standing
of such Person, its qualification to engage in business in each material
jurisdiction in which it is required to be so qualified, its authority to
execute, deliver and perform this Agreement, and the identity, authority and
capacity of each Responsible Official thereof authorized to act on its behalf.

10. Release of Grantors. This Agreement and all Secured Obligations of Grantors
hereunder shall be released when all Secured Obligations have been paid in full
in cash or otherwise performed in full and when no portion of the Commitments
remain outstanding. Upon such release of Grantors' Secured Obligations
hereunder, Secured Party shall return and reassign any Collateral to Grantors,
or to the Person or Persons legally entitled thereto, and shall endorse,
execute, deliver, record and file all instruments and documents, and do all
other acts and things, reasonably required for the return of the Collateral to
Grantors, or to the Person or Persons legally entitled thereto, and to evidence
or document the release of Secured Party's interests arising under this
Agreement, all as reasonably requested by, and at the reasonable expense of,
Grantors.




11. Additional Powers and Authorization. Secured Party shall be entitled to the
benefits accruing to it as Administrative Agent under the Loan Agreement and the
other Loan Documents. Notwithstanding anything contained herein to the contrary,
Secured Party may employ agents, trustees, or attorneys-in-fact and may vest any
of them with any Property (including, without limitation, any Collateral
assigned hereunder), title, right or power deemed necessary for the purposes of
such appointment.

12. WAIVER OF JURY TRIAL. EACH GRANTOR AND SECURED PARTY EXPRESSLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH GRANTOR AND SECURED PARTY AGREE THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE LOAN AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA AND THE
LAWS OF THE STATE OF CALIFORNIA.

14. Miscellaneous.

(a) Grantors and Secured Party may from time to time agree in writing to the
release of certain of the Collateral from the security interest created hereby.

(b) Any notice, request, demand or other communication required or permitted
under this Agreement shall be in writing and shall be deemed to be properly
given if done in accordance with Section 11.6 of the Loan Agreement.

(c) Except as otherwise set forth in the Loan Agreement, the provisions of this
Agreement may not be modified, amended, restated or supplemented, whether or not
the modification, amendment, restatement or supplement is supported by new
consideration, except by a written instrument duly executed and delivered by
Secured Party and Grantors.

(d) Except as otherwise set forth in the Loan Agreement or this Agreement, any
waiver of the terms and conditions of this Agreement, or any Event of Default
and its consequences hereunder or thereunder, and any consent or approval
required or permitted by this Agreement to be given, may be made or given with,
but only with, the written consent of Secured Party on such terms and conditions
as specified in the written instrument




granting such waiver, consent or approval.

(e) Any failure or delay by Secured Party to require strict performance by
Grantors of any of the provisions, warranties, terms, and conditions contained
herein, or in any other agreement, document, or instrument, shall not affect
Secured Party's right to demand strict compliance and performance therewith, and
any waiver of any default shall not waive or affect any other default, whether
prior or subsequent thereto, and whether of the same or of a different type.
None of the warranties, conditions, provisions, and terms contained herein, or
in any other agreement, document, or instrument, shall be deemed to have been
waived by any act or knowledge of Secured Party, its agents, officers, or
employees, but only by an instrument in writing, signed by an officer of Secured
Party and directed to Grantors, specifying such waiver.

(f) If any term or provision of this Agreement conflicts with any term or
provision of the Loan Agreement, the term or provision of the Loan Agreement
shall control.

(g) If any provision hereof shall be deemed to be invalid by any court, such
invalidity shall not affect the remainder of this Agreement.

(h) This Agreement supersedes all prior oral and written assignments and
agreements between the parties hereto on the subject matter hereof.

(i) This Agreement shall be binding upon, and for the benefit of, the parties
hereto and their respective legal representatives, successors, and assigns.

(j) This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same agreement.





        IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly
authorized officer as of the date first written above.


"Grantors"

JAKKS PACIFIC, INC.
FLYING COLORS TOYS, INC.
ROAD CHAMPS, INC.
PENTECH INTERNATIONAL INC.


By: /s/ JOEL M. BENNETT
   ----------------------------------
        Joel M. Bennett

Title: Exec. V.P./C.F.O.
      -------------------------------
      of each of the foregoing

ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:

"Secured Party"

BANK OF AMERICA, N.A.,
as Administrative Agent, and
for and on behalf of the Lenders

By: /s/ SCOTT J. OLMSTED
   ----------------------------------
        Scott J. Olmsted

Title:Assistant Vice President
      -------------------------------





                                   SCHEDULE 1
                                       TO
                          TRADEMARK SECURITY AGREEMENT

                         Existing and Pending Trademarks



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                                                  Application No./      Application Date/
         Owner                 Trademark          Registration No.      Registration Date
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                                   EXHIBIT A

                                       TO

                          TRADEMARK SECURITY AGREEMENT

                              INSTRUMENT OF JOINDER

        THIS INSTRUMENT OF JOINDER (this "Joinder") is executed as of
_________________, _____, by ______________________________, a
___________________________ ("Joining Party"), and delivered to Bank of America
N.A., as Administrative Agent, pursuant to the Trademark Security Agreement
dated as of ___________, 2001 made by JAKKS Pacific, Inc., a Delaware
corporation, Flying Colors Toys, Inc., a Michigan corporation, Road Champs,
Inc., a Delaware corporation, and Pentech International Inc., a Delaware
corporation (and, with other parties that may be added from time to time, the
"Grantors"), in favor of the Administrative Agent and the Lenders referred to in
the Loan Agreement referred to below (the "Agreement"). Terms used but not
defined in this Joinder shall have the meanings defined for those terms in the
Agreement.

                                    RECITALS

1. The Agreement was made by the Grantors in favor of the Administrative Agent
for the benefit of the Lenders that are parties to that certain Loan Agreement
dated as of October 12, 2001 by and among the Borrowers which are parties
thereto, the Lenders which are parties thereto, and Bank of America, N.A., as
the Administrative Agent for the Lenders (the "Loan Agreement).

2. Joining Party is required pursuant to the Loan Agreement to become a Grantor.

3. Joining Party expects to realize direct and indirect benefits as a result of
the availability of the credit facilities under the Loan Agreement to the
Borrowers.

        NOW THEREFORE, Joining Party agrees as follows:

                                    AGREEMENT

(2) By this Joinder, Joining Party becomes a "Grantor" under and pursuant to
Section 9 of the Agreement. Joining Party agrees that, upon its execution
hereof, it will become a Grantor under the Agreement with respect to all
Obligations of the Borrowers heretofore or hereafter incurred under the Loan
Documents, and will be bound by all terms, conditions, and duties applicable to
a Grantor under the Agreement.

(3) The effective date of this Joinder is _________, _____.




                                       "Joining Party"


                                       ---------------------------------------,
                                       a
                                        ----------------------------------------


                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------

ACKNOWLEDGED:

BANK OF AMERICA, N.A.,
as Administrative Agent

By:
   --------------------------------------
Name:
     ------------------------------------
Title:
      -----------------------------------



                                                                   EXHIBIT 15(E)

                            PATENT SECURITY AGREEMENT

        This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of October
12, 2001, is made by JAKKS PACIFIC, INC., a Delaware corporation, FLYING COLORS
TOYS, INC., a Michigan corporation, ROAD CHAMPS, INC., a Delaware corporation,
and PENTECH INTERNATIONAL INC., a Delaware corporation, together with each other
Person which hereafter may become a party hereto pursuant to Section 9 of this
Agreement (each a "Grantor" and collectively, "Grantors"), jointly and
severally, in favor of BANK OF AMERICA, N.A., as the Administrative Agent under
the Loan Agreement hereafter referred to, the Lenders therein named and in favor
of each of the Lenders which may hereafter become a party hereto collectively as
Secured Party, with reference to the following facts:

                                    RECITALS

        A. Grantors have entered into a Loan Agreement of even date herewith
among Grantors, the Lenders referred to therein, and Bank of America, N.A., as
Administrative Agent (as it may from time to time be amended, restated,
extended, renewed, modified or supplemented, the "Loan Agreement"). This
Agreement is one of the "Loan Documents" referred to in the Loan Agreement.

        B. Pursuant to the Loan Documents of even date the Lenders are making
certain credit facilities available to Grantors.

        C. As a condition of the availability of such credit facilities,
Grantors are required to enter into this Agreement to grant security interests
to Secured Party as herein provided.

        D. Each Grantor expects to realize direct and indirect benefits as a
result of the availability of the aforementioned credit facilities.

                                    AGREEMENT

        NOW, THEREFORE, in order to induce the Lenders to extend the
aforementioned credit facilities to the Grantors, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Grantors, and each of the subsequent Grantors which hereafter
become party hereto, hereby jointly and severally represent, warrant, covenant
and agree as follows:

1. Definitions. Terms defined in the Loan Agreement and not otherwise defined in
this Agreement shall have the meanings defined for those terms in the Loan
Agreement. As used in this Agreement, the following terms shall have the
meanings respectively set forth after each:

        "Agreement" means this Patent Security Agreement, and any




extensions, modifications, renewals, restatements, supplements or amendments
hereof, including, without limitation, any documents or agreements by which
additional Grantors become party hereto.

        "Collateral" means and includes all of the following: (a) all of
Grantors' now-existing, or hereafter acquired, right, title, and interest in and
to all of Grantors' patents, together with all applications, registrations, and
recordings relating to the foregoing in the United States Patent and Trademark
Office ("USPTO") or in any similar office or agency of the United States, any
State thereof, or any political subdivision thereof, and all reissues,
extensions, and renewals thereof, including those patents, applications,
registrations and recordings described in Schedule 1 hereto (the "Patents"); (b)
all licenses and sublicenses of the Patents to the extent that there exists no
prohibition as a matter of law on the transfer thereof for security as
contemplated by this Agreement, and (c) any and all proceeds of any of the
foregoing, including any claims by Grantors against third parties for past,
present and future infringement of the Patents or any licenses with respect
thereto.

        "Secured Obligations" means any and all present and future Obligations
of any type or nature of Grantors or any one or more of them to the
Administrative Agent, the Lenders, and any one or more of them, arising under or
relating to the Loan Documents or any one or more of them, whether due or to
become due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including Obligations of performance as well as Obligations of
payment, and including interest that accrues after the commencement of any
bankruptcy or insolvency proceeding by or against any Grantor.

        "Secured Party" means the Administrative Agent under the Loan Agreement,
the Lenders therein named and each of the Lenders which may hereafter become a
party thereto. All rights of the Secured Party under this Agreement shall be
exercised by the Administrative Agent, acting with the consent of those Lenders
required by the Loan Agreement.

2. Security Agreement. For valuable consideration, Grantors, and each of them
hereby, jointly and severally grant and assign to Secured Party a security
interest, to secure the prompt and indefeasible payment and performance of the
Secured Obligations, and each of them, in and to all of the presently existing
and hereafter acquired Collateral. This Agreement is a continuing and
irrevocable agreement and all the rights, powers, privileges and remedies
hereunder shall apply to any and all Secured Obligations, including those
arising under successive transactions which shall either continue the Secured
Obligations, increase or decrease them and notwithstanding the bankruptcy of any
Grantor or any other event or proceeding affecting any Grantor.

3. Representations, Warranties and Covenants. Grantors, and each of them,
represent, warrant and agree that:

(a) To Grantors' knowledge, all of the existing Collateral is valid and
subsisting and in full force and effect, and Grantors own the sole, full, and
clear title thereto, and the right and power to grant the security interests
granted hereunder. Grantors will, at their expense, perform all acts and execute
all documents necessary to maintain the existence of the Collateral as valid,
subsisting, and registered patents, including, without




limitation, the filing of any renewal affidavits and applications provided that
Grantors may abandon or not maintain or renew such patent if in its good faith
judgment, the particular mark is not material to its business. The Collateral is
not subject to any Liens, claims, mortgages, assignments or licenses of any
nature whatsoever, whether recorded or unrecorded, except as permitted by the
Loan Agreement.

(b) To Grantors' knowledge, as of the date hereof, none of Grantors or their
Subsidiaries has any Patents registered, or subject to pending applications, in
the USPTO, or any similar office or agency in the United States, other than
those described in Schedule 1.

(c) No Grantor nor any Subsidiary of any Grantor shall file any application for
the registration of a patent with the USPTO or any similar office or agency in
the United States, or State therein, unless such Grantor or Subsidiary has
informed Secured Party of such action in advance or informs Secured Party
promptly thereafter. Upon request of Secured Party, Grantors shall execute and
deliver to Secured Party any and all agreements, instruments, documents, and
such other papers as may be reasonably requested by Secured Party to evidence
the grant and assignment of a security interest to Secured Party of such patent.
Each Grantor authorizes Secured Party to modify this Agreement by amending
Schedule 1 to include any new patent, and any patent renewal of any Grantor
applied for and obtained hereafter.

(d) Except to the extent permitted by this Agreement, no Grantor nor any
Subsidiary of any Grantor has abandoned any of the Patents, and no Grantor nor
any Subsidiary of any Grantor will do any act, or omit to do any act, whereby
the Patents may become abandoned, canceled, invalidated, unenforceable, avoided,
or avoidable. Each Grantor shall notify Secured Party promptly if it knows, or
has reason to know, of any reason why any application, registration, or
recording may become abandoned, canceled, invalidated, or unenforceable.

(e) Grantors will render any assistance, as Secured Party may reasonably
determine is necessary, to Secured Party in any proceeding before the USPTO, any
federal or state court, or any similar office or agency in the United States, or
any State therein, to protect Secured Party's security interest in the Patents.

(f) Grantors assume all responsibility and liability arising from the use of the
Patents, and each Grantor hereby indemnifies and holds the Administrative Agent
and each of the Lenders harmless from and against any claim, suit, loss, damage,
or expense (including reasonable attorneys' fees) arising out of any alleged
defect in any product manufactured, promoted, or sold by any Grantor (or any
Affiliate or Subsidiary thereof) in connection with any Patent or out of the
manufacture, promotion, labeling, sale, or advertisement of any such product by
any Grantor or any Affiliate or Subsidiary thereof.

(g) Grantors shall promptly notify Secured Party in writing of any adverse
determination in any proceeding in the USPTO or domestic Governmental Agency,
court or body, regarding any Grantor's ownership of any of the Patents. In the
event of any material infringement of any of the Patents by a third party,
Grantors shall promptly notify Secured Party of such infringement and shall
diligently pursue damages or an injunction for such infringement provided that
Grantors have no obligation to take any such action with respect to a Patent if,
in its good faith judgement, such Patent is not material to its business..





(h) Each Grantor shall, at its sole expense, do, make, execute and deliver all
such additional and further acts, things, assurances, and instruments, in each
case in form and substance reasonably satisfactory to Secured Party, relating to
the creation, validity, or perfection of the security interests provided for in
this Agreement under 35 U.S.C. Section 261, 15 U.S.C. Section 1051 et seq., the
Uniform Commercial Code or other Law of the United States, the State of
California, or of any other States as Secured Party may from time to time
reasonably request, and shall take all such other action as the Secured Party
may reasonably require to more completely vest in and assure to Secured Party
its security interest in any of the Collateral, and each Grantor hereby
irrevocably authorizes Secured Party or its designee, at such Grantor's expense,
to execute such documents, and file such financing statements with respect
thereto with or without such Grantor's signature, as Secured Party may
reasonably deem appropriate. In the event that any recording or refiling (or the
filing of any statement of continuation or assignment of any financing
statement) or any other action, is required at any time to protect and preserve
such security interest, Grantors shall, at their sole cost and expense, cause
the same to be done or taken at such time and in such manner as may be necessary
and as may be reasonably requested by Secured Party. Each Grantor further
authorizes Secured Party to have this or any other similar security agreement
recorded or filed with the Commissioner of Patents and Trademarks or other
appropriate federal, state or government office.

(i) Secured Party is hereby irrevocably appointed by each Grantor as its lawful
attorney and agent, with full power of substitution to execute and deliver on
behalf of and in the name of any or all Grantors, such financing statements and
other documents and agreements, and to take such other action as Secured Party
may deem necessary for the purpose of perfecting, protecting or effecting the
security interests granted herein and effected hereby, and any mortgages or
Liens necessary or desirable to implement or effectuate the same, under any
applicable Law, and Secured Party is hereby authorized to file on behalf of and
in the name of any or all Grantors, at Grantors' sole expense, such financing
statements, documents and agreements in any appropriate governmental office.

(j) Secured Party may, in its sole discretion, pay any amount, or do any act
which Grantors fail to pay or do as reasonably required hereunder to preserve,
defend, protect, maintain, record, amend, or enforce the Secured Obligations,
the Collateral, or the security interest granted hereunder, including, but not
limited to, all filing or recording fees, court costs, collection charges, and
reasonable attorneys' fees. Grantors will be liable to Secured Party for any
such payment, and any amount so paid shall be an expense reimbursable by the
Borrowers under Section 11.3 of the Loan Agreement (or, in the proper case, by
each other Grantor under the expense provisions of its Guaranty).

4. Events of Default. Any "Event of Default" as defined in the Loan Agreement
shall constitute an Event of Default hereunder.

5. Rights and Remedies. Upon the occurrence and during the continuance of any
such Event of Default, in addition to all other rights and remedies of Secured
Party, whether provided under Law, the Loan Agreement or otherwise, Secured
Party may enforce its security interest hereunder which may be exercised without
notice to, or consent by, any Grantor, except as




such notice or consent is expressly provided for hereunder. Upon such
enforcement:

(a) Secured Party may use any of the Patents for the sale of goods, completion
of work in process, or rendering of services in connection with enforcing any
security interest granted to Secured Party by Grantors or any Subsidiary of any
Grantor.

(b) Secured Party may grant such license or licenses relating to the Collateral
for such term or terms, on such conditions and in such manner, as Secured Party
shall, in its sole discretion, deem appropriate. Such license or licenses may be
general, special, or otherwise, and may be granted on an exclusive or
nonexclusive basis throughout all or part of the United States of America and
its territories and possessions.

(c) Secured Party may assign, sell, or otherwise dispose of the Collateral, or
any part thereof, either with or without special conditions or stipulations,
except that Secured Party agrees to provide Grantors with ten (10) days' prior
written notice of any proposed disposition of the Collateral. Each Grantor
hereby irrevocably appoints each Borrower as its agent for the purpose of
receiving notice of sale hereunder, and agrees that such Grantor conclusively
shall be deemed to have received notice of sale when notice of sale has been
given to each Borrower. Each Grantor expressly waives any right to receive
notice of any public or private sale of any Collateral or other security for the
Secured Obligations except as expressly provided in this Section 5(c). Secured
Party shall have the power to buy the Collateral, or any part thereof, and
Secured Party shall also have the power to execute assurances and perform all
other acts which Secured Party may, in Secured Party's sole discretion, deem
appropriate or proper to complete such assignment, sale, or disposition. In any
such event, Grantors shall be liable for any deficiency.

(d) In addition to the foregoing, in order to implement the assignment, sale or
other disposition of any of the Collateral pursuant to Section 5(c) hereof,
Secured Party may, at any time, execute and deliver, on behalf of Grantors, and
each of them, pursuant to the authority granted in powers of attorney, one or
more instruments of assignment of the Patents (or any application, registration,
or recording relating thereto), in form suitable for filing, recording, or
registration. Grantors agree to pay Secured Party, on demand, all costs incurred
in any such transfer of the Collateral, including, but not limited to any taxes,
fees, and reasonable attorneys' fees.

(e) Secured Party may first apply the proceeds actually received from any such
use, license, assignment, sale, or other disposition of Collateral first to the
reasonable costs and expenses thereof, including, without limitation, reasonable
attorneys' fees and all reasonable legal, travel, and other expenses which may
be incurred by Secured Party. Thereafter, Secured Party may apply any remaining
proceeds to such of the Secured Obligations as provided in the Loan Agreement.
Grantors shall remain liable to Secured Party for any expenses or Secured
Obligations remaining unpaid after the application of such proceeds, and
Grantors will pay Secured Party, on demand, any such unpaid amount, together
with interest at the rate(s) set forth in the Loan Agreement.

(f) Upon request of Secured Party, Grantors shall supply to Secured Party, or
Secured Party's designee, Grantors' knowledge and expertise


relating to the manufacture and sale of the products and services relating to
the Patents and Grantors' customer lists and other records relating to the
Patents and the distribution hereof.

        Nothing contained herein shall be construed as requiring Secured Party
to take any such action at any time. All of Secured Party's rights and remedies,
whether provided under Law, the Loan Agreement, this Agreement, or otherwise
shall be cumulative, and none is exclusive of any right or remedy otherwise
provided herein or in any of the other Loan Documents, at law or in equity. Such
rights and remedies may be enforced alternatively, successively, or
concurrently.

        Secured Party or Designee will keep such confidential information, lists
or records provided hereunder in confidence in accordance with Section 11.16 of
the Loan Agreement.

6. Waivers.

(a) Each Grantor hereby waives any and all rights that it may have to a judicial
hearing, if any, in advance of the enforcement of any of Secured Party's rights
hereunder, including, without limitation, its rights following any Event of
Default and during the continuance thereof to take immediate possession of the
Collateral and exercise its rights with respect thereto.

(b) Secured Party shall not be required to marshal any present or future
security for (including, but not limited to, this Agreement and the Collateral
subject to a security interest hereunder), or guaranties of, the Secured
Obligations or any of them, or to resort to such security or guaranties in any
particular order. Each Grantor hereby agrees that it will not invoke any Law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of Secured Party's rights under this Agreement or any other
instrument evidencing any of the Secured Obligations or by which any of such
Secured Obligations is secured or guaranteed, and each Grantor hereby
irrevocably waives the benefits of all such Laws.

(c) Except for notices specifically provided for herein, each Grantor hereby
expressly waives demand, notice, protest, notice of acceptance of this
Agreement, notice of loans made, credit extended, collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description. With respect both to Secured Obligations and any
collateral therefor, each Grantor assents to any extension or postponement of
the time of payment or any other indulgence, to any substitution, of any Person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromising or adjusting of any thereof, all in such manner
and at such time or times as Secured Party may deem advisable. Secured Party
shall have no duty as to the protection of the Collateral or any income thereon,
nor as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto except as otherwise required by
Law. Secured Party may exercise its rights with respect to the Collateral
without resorting or regard to other collateral or sources of reimbursement for
liability. Secured Party shall not be deemed to have waived any of its rights
upon or under the Loan Agreement or the Collateral unless such waiver be in
writing and signed by the Secured Party. The exercise of the rights under this
Agreement are not intended by the parties to constitute an "action" within the
meaning of Sections 580a, 580d, or 726 of the California Code of Civil
Procedure. No delay or omission on the


part of the Secured Party in exercising any right shall operate as a waiver of
any right on any future occasion. All rights and remedies of the Secured Party
under the Loan Agreement or on the Collateral, whether evidenced hereby or by
any other instrument or papers, shall be cumulative and may be exercised
singularly or concurrently.

7. Costs and Expenses. Grantors will pay any and all charges, costs and taxes
incurred in implementing or subsequently amending this Agreement, including,
without limitation, recording and filing fees, appraisal fees, stamp taxes, and
reasonable fees and disbursements of Secured Party's counsel incurred by Secured
Party, and the allocated cost of in-house counsel to Secured Party, in
connection with this Agreement, and in the enforcement of this Agreement and in
the enforcement or foreclosure of any Liens, security interests or other rights
of the Secured Party under this Agreement, or under any other documentation
heretofore, now, or hereafter given to Secured Party in furtherance of the
transactions contemplated hereby.

8. Continuing Effect. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against any Grantor
for liquidation or reorganization, should any Grantor become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor's assets.

9. Joinder. Any other Person may become a Grantor hereunder and become bound by
the terms and conditions of this Agreement by executing and delivering to
Administrative Agent an Instrument of Joinder substantially in the form attached
hereto as Exhibit A, accompanied by such documentation as Administrative Agent
may require to establish the due organization, valid existence and good standing
of such Person, its qualification to engage in business in each material
jurisdiction in which it is required to be so qualified, its authority to
execute, deliver and perform this Agreement, and the identity, authority and
capacity of each Responsible Official thereof authorized to act on its behalf.

10. Release of Grantors. This Agreement and all Secured Obligations of Grantors
hereunder shall be released when all Secured Obligations have been paid in full
in cash or otherwise performed in full and when no portion of the Commitments
remain outstanding. Upon such release of Grantors' Secured Obligations
hereunder, Secured Party shall return and reassign any Collateral to Grantors,
or to the Person or Persons legally entitled thereto, and shall endorse,
execute, deliver, record and file all instruments and documents, and do all
other acts and things, reasonably required for the return of the Collateral to
Grantors, or to the Person or Persons legally entitled thereto, and to evidence
or document the release of Secured Party's interests arising under this
Agreement, all as reasonably requested by, and at the reasonable expense of,
Grantors.

11. Additional Powers and Authorization. Secured Party shall be entitled to the
benefits accruing to it as Administrative Agent under the Loan Agreement and the
other Loan Documents. Notwithstanding anything contained herein to the contrary,
Secured Party may employ agents, trustees, or attorneys-in-fact and may vest any
of them with any Property (including, without limitation, any Collateral
assigned hereunder), title, right or power deemed necessary for the purposes of
such appointment.


12. WAIVER OF JURY TRIAL. EACH GRANTOR AND SECURED PARTY EXPRESSLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH GRANTOR AND SECURED PARTY AGREE THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE LOAN AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA AND THE
LAWS OF THE STATE OF CALIFORNIA.

14. Miscellaneous.

(a) Grantors and Secured Party may from time to time agree in writing to the
release of certain of the Collateral from the security interest created hereby.

(b) Any notice, request, demand or other communication required or permitted
under this Agreement shall be in writing and shall be deemed to be properly
given if done in accordance with Section 11.6 of the Loan Agreement.

(c) Except as otherwise set forth in the Loan Agreement, the provisions of this
Agreement may not be modified, amended, restated or supplemented, whether or not
the modification, amendment, restatement or supplement is supported by new
consideration, except by a written instrument duly executed and delivered by
Secured Party and Grantors.

(d) Except as otherwise set forth in the Loan Agreement or this Agreement, any
waiver of the terms and conditions of this Agreement, or any Event of Default
and its consequences hereunder or thereunder, and any consent or approval
required or permitted by this Agreement to be given, may be made or given with,
but only with, the written consent of Secured Party on such terms and conditions
as specified in the written instrument granting such waiver, consent or
approval.

(e) Any failure or delay by Secured Party to require strict performance by
Grantors of any of the provisions, warranties, terms, and conditions contained
herein, or in any other agreement, document, or instrument, shall not affect
Secured Party's right to demand strict compliance and performance therewith, and
any waiver of any default shall not waive or affect any other default, whether
prior or subsequent thereto, and whether of the same or of a different type.
None of the warranties, conditions,


provisions, and terms contained herein, or in any other agreement, document, or
instrument, shall be deemed to have been waived by any act or knowledge of
Secured Party, its agents, officers, or employees, but only by an instrument in
writing, signed by an officer of Secured Party and directed to Grantors,
specifying such waiver.

(f) If any term or provision of this Agreement conflicts with any term or
provision of the Loan Agreement, the term or provision of the Loan Agreement
shall control.

(g) If any provision hereof shall be deemed to be invalid by any court, such
invalidity shall not affect the remainder of this Agreement.

(h) This Agreement supersedes all prior oral and written assignments and
agreements between the parties hereto on the subject matter hereof.

(i) This Agreement shall be binding upon, and for the benefit of, the parties
hereto and their respective legal representatives, successors, and assigns.

(j) This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same agreement.





        IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly
authorized officer as of the date first written above.


"Grantors"


JAKKS PACIFIC, INC.
FLYING COLORS TOYS, INC.
ROAD CHAMPS, INC.
PENTECH INTERNATIONAL INC.


By: /s/ JOEL M. BENNETT
   ----------------------------------

Title: EXEC. V.P./C.F.O.
      -------------------------------
      of each of the foregoing


ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:

"Secured Party"

BANK OF AMERICA, N.A.,
as Administrative Agent, and
for and on behalf of the Lenders

By: /s/ SCOTT J. OLMSTED
   ----------------------------------
        Scott J. Olmsted

Title: Assistant Vice President
      -------------------------------





                                   SCHEDULE 1
                                       TO
                            PATENT SECURITY AGREEMENT

                          Existing and Pending Patents



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                                                  Application No./      Application Date/
         Owner                  Patent            Registration No.      Registration Date
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                                    EXHIBIT A
                                       TO
                            PATENT SECURITY AGREEMENT

                              INSTRUMENT OF JOINDER

        THIS INSTRUMENT OF JOINDER (this "Joinder") is executed as of
_________________, _____, by ______________________________, a
___________________________ ("Joining Party"), and delivered to Bank of America
N.A., as Administrative Agent, pursuant to the Patent Security Agreement dated
as of October 12, 2001 made by JAKKS Pacific, Inc., a Delaware corporation,
Flying Colors Toys, Inc., a Michigan corporation, Road Champs, Inc., a Delaware
corporation, and Pentech International Inc., a Delaware corporation (and, with
other parties that may be added from time to time, the "Grantors"), in favor of
the Administrative Agent and the Lenders referred to in the Loan Agreement
referred to below (the "Agreement"). Terms used but not defined in this Joinder
shall have the meanings defined for those terms in the Agreement.

                                    RECITALS

1. The Agreement was made by the Grantors in favor of the Administrative Agent
for the benefit of the Lenders that are parties to that certain Loan Agreement
dated as of October 12, 2001 by and among the Borrowers which are parties
thereto, the Lenders which are parties thereto, and Bank of America, N.A., as
the Administrative Agent for the Lenders (the "Loan Agreement).

2. Joining Party is required pursuant to the Loan Agreement to become a Grantor.

3. Joining Party expects to realize direct and indirect benefits as a result of
the availability of the credit facilities under the Loan Agreement to the
Borrowers.

        NOW THEREFORE, Joining Party agrees as follows:

                                    AGREEMENT

(2) By this Joinder, Joining Party becomes a "Grantor" under and pursuant to
Section 9 of the Agreement. Joining Party agrees that, upon its execution
hereof, it will become a Grantor under the Agreement with respect to all
Obligations of the Borrowers heretofore or hereafter incurred under the Loan
Documents, and will be bound by all terms, conditions, and duties applicable to
a Grantor under the Agreement.

(3) The effective date of this Joinder is _________, _____.



                                        "Joining Party"

                                        ---------------------------------------,

                                        a
                                         ---------------------------------------


                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

ACKNOWLEDGED:

BANK OF AMERICA, N.A.,
as Administrative Agent

By:
   -------------------------------------
Name:
     -----------------------------------
Title:
      ----------------------------------



                                                                   EXHIBIT 15(F)

                                PLEDGE AGREEMENT

        This PLEDGE AGREEMENT (this "Agreement"), dated as of October 12, 2001,
is made by JAKKS PACIFIC, INC., a Delaware corporation, FLYING COLORS TOYS,
INC., a Michigan corporation, ROAD CHAMPS, INC., a Delaware corporation, JAKKS
ACQUISITION CORP., a Delaware corporation ("JAC") and PENTECH INTERNATIONAL
INC., a Delaware corporation (each a "Grantor" and collectively, "Grantors"),
jointly and severally, in favor of BANK OF AMERICA, N.A., as Administrative
Agent under the Loan Agreement hereafter referred to, the Lenders therein named
and in favor of each of the Lenders which may hereafter become a party thereto
collectively as Secured Party, with reference to the following facts:

                                    RECITALS

        A. Grantors (other than JAC) have entered into a Loan Agreement of even
date herewith among Grantors, the Lenders referred to therein, and Bank of
America, N.A., as Administrative Agent (as it may from time to time be amended,
restated, extended, renewed, modified or supplemented, the "Loan Agreement").
JAC is a guarantor under the Guaranty (as defined in the Loan Agreement
referenced below.) This Agreement is the Pledge Agreement referred to in the
Loan Agreement and is one of the "Loan Documents" referred to in the Loan
Agreement.

        B. Pursuant to the Loan Documents of even date the Lenders are making
certain credit facilities available to Grantors (other than JAC).

        C. As a condition of the availability of such credit facilities,
Grantors are required to enter into this Agreement to pledge certain Pledged
Collateral to Secured Party as herein provided.

                                    AGREEMENT

        NOW, THEREFORE, in order to induce the Lenders to extend credit
facilities to Grantors under the Loan Agreement, and for other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged,
Grantors hereby jointly and severally represent, warrant, covenant, agree, and
pledge as follows:

        1. Definitions. Terms defined in the Loan Agreement and not otherwise
defined in this Agreement shall have the meanings given those terms in the Loan
Agreement as though set forth herein in full. The following terms shall have the
meanings respectively set forth after each:

                "Certificates" means all certificates, instruments or other
        documents now or hereafter representing or evidencing any Pledged
        Securities.

                "Distributions" means dividends, distributions, redemption
        payments, liquidation payments, and all rights to any of the foregoing.

                "Issuer" means any issuer of any Pledged Securities.




                "Pledged Collateral" means any and all property of Grantors, or
        any of them, now or hereafter pledged and delivered to Secured Party
        pursuant to this Agreement, and includes without limitation (a) the
        Pledged Securities, and any Certificates or other written evidences
        representing such equity interests and any interest of Grantors, or any
        of them, in the entries on the books of any securities intermediary or
        financial intermediary pertaining thereto, (b) all proceeds and products
        of any of the foregoing, and (c) any and all collections, Distributions,
        interest or premiums with respect to any of the foregoing.

                "Pledged Securities" means:

                        (a) any and all shares of capital stock or member or
                other equity interests in each of the Domestic Subsidiaries
                listed on Schedule I hereto (each a "Designated Domestic
                Subsidiary" and collectively, the "Designated Domestic
                Subsidiaries"), (b) sixty-five percent (65%) of the capital
                stock or member or other equity interests in each of the Foreign
                Subsidiaries listed on Schedule I hereto (each a "Designated
                Foreign Subsidiary" and collectively, the "Designated Foreign
                Subsidiaries"), (c) any and all securities now or hereafter
                issued in substitution, exchange or replacement for any of the
                foregoing shares, or with respect thereto and (d) any and all
                warrants, options or other rights to subscribe to or acquire any
                additional capital stock or member or other equity interests in
                any Designated Domestic Subsidiary or Designated Foreign
                Subsidiary (except that in no event shall more than sixty-five
                percent (65%) of the capital stock or member or other equity
                interest of any Designated Foreign Subsidiary be pledged to
                Secured Party hereunder).

                "Secured Party" means the Administrative Agent (acting as the
        Administrative Agent and/or on behalf of the Lenders), and the Lenders,
        and each of them, and any one or more of them. Subject to the terms
        hereof and of the Loan Agreement, any right, remedy, privilege or power
        of Secured Party may be exercised by the Administrative Agent, or by the
        Requisite Lenders, or by any Lender acting with the consent of the
        Requisite Lenders.

2. Incorporation of Representations, Warranties, Covenants and Other Provisions
of Loan Documents. This Agreement is one of the Loan Documents referred to in
the Loan Agreement. All representations, warranties, affirmative and negative
covenants and other provisions contained in any Loan Document that are
applicable to Loan Documents generally are fully applicable to this Agreement
and are incorporated herein by this reference as though set forth herein in
full. In addition, Grantors, and each of them, hereby represent and warrant to
Secured Party as follows:

(a) Grantors have good and marketable title to the Pledged Collateral in which
Grantors are purporting to grant a security interest to Administrative Agent on
behalf of Secured Party, and the Pledged Collateral is not subject to any Lien
other than Permitted Encumbrances and other encumbrances permitted pursuant to
the Loan Agreement;

(b) Grantors have the right and power to pledge the Pledged Collateral owned by
Grantors to Administrative Agent on behalf of Secured Party without the consent,
approval or authorization of, or notice to, any Person (other than such
consents, approvals, authorization or notices which have been obtained or given
prior to the date hereof) and such pledge constitutes the valid, binding and
enforceable obligation of Grantors, and each of them,




enforceable against Grantors, and each of them, in accordance with the terms
hereof and the other Loan Documents, except as enforcement may be limited by
Debtor Relief Laws or equitable principles relating to the granting of specific
performance and other equitable remedies as a matter of judicial discretion;

(3) Upon delivery to Administrative Agent of the Pledged Collateral referred to
in this Agreement, Administrative Agent will have a first priority perfected
security interest in the Pledged Collateral securing the Obligations;

(4) All shares of capital stock or member or other equity interest that
constitute a portion of the Pledged Collateral are duly authorized, validly
issued in accordance with all applicable Laws, fully paid and non-assessable,
and represent one hundred percent (100%) of the issued and outstanding shares of
common stock or member or other equity interest of each of the Designated
Domestic Subsidiaries and sixty-five percent (65%) of the issued and outstanding
shares of common stock or member or other equity interest of each of the
Designated Foreign Subsidiaries.

3. Creation of Security Interest.

3.1 Pledge of Pledged Collateral. Grantors hereby jointly and severally pledge
to Administrative Agent on behalf of Secured Party and grant to Administrative
Agent on behalf of Secured Party a security interest in and to all Pledged
Collateral for the benefit of Secured Party, together with all products,
proceeds, Distributions, Cash, instruments and other Property, and any and all
rights, titles, interests, privileges, benefits and preferences appertaining or
incidental to the Pledged Collateral (provided that in no event shall more than
sixty-five percent (65%) of the capital stock or member or other equity interest
of any Designated Foreign Subsidiary be pledged to Secured Party hereunder). The
security interest and pledge created by this Section 3.1 shall continue in
effect so long as any Obligation is owed to Secured Party or any commitment to
extend credit to Grantors under the Loan Documents remains outstanding from the
Lenders.

3.2 Delivery of Certain Pledged Collateral. On or before the Closing Date,
Grantors shall cause to be pledged and delivered to Administrative Agent for the
benefit of Secured Party the Certificates evidencing the capital stock listed on
Schedule I hereto. Following the Closing Date, additional Pledged Collateral may
from time to time be delivered to Administrative Agent for the benefit of
Secured Party by agreement between Secured Party and Grantors. All Certificates
at any time delivered to Administrative Agent for the benefit of Secured Party
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to Secured Party. Administrative Agent shall hold all
Certificates pledged hereunder pursuant to this Agreement unless and until
released in accordance with Section 3.3 of this Agreement.

3.3 Release of Pledged Collateral. Pledged Collateral that is required to be
released from the pledge and security interest created by this Agreement in
order to permit Grantors to consummate any disposition of stock or assets,
merger, consolidation, amalgamation, acquisition, or dividend payment or
distribution that Grantors are entitled to consummate pursuant to the Loan
Documents, if any, shall be so released by Administrative Agent at such times
and to the extent necessary to permit Grantors to consummate such permitted
transactions promptly following




Administrative Agent's receipt of written request therefor by Grantors
specifying the purpose for which release is requested and such further
certificates or other documents as Administrative Agent on behalf of Secured
Party reasonably shall request in its discretion to confirm that Grantors are
permitted to consummate such permitted transaction and to confirm Secured
Party's replacement Lien on appropriate collateral (unless replacement
collateral is not required pursuant to the Loan Documents). Any request for any
permitted release shall be transmitted to Administrative Agent on behalf of
Secured Party. Administrative Agent, at the expense of Grantors, promptly shall
redeliver all Certificates and shall execute and deliver to Grantors all
documents requested by Grantors that are reasonably necessary to release Pledged
Collateral of record whenever Grantors shall be entitled to the release thereof
in accordance with this Section 3.3.

4. Security for Obligations. This Agreement and the pledge and security
interests granted herein secure the prompt payment, in full in cash, and full
performance of, all Obligations, whether for principal, interest, fees, expenses
or otherwise, including, without limitation, all Obligations of Grantors now or
hereafter existing under the Loan Documents, and all interest that accrues on
all or any part of any of the Obligations of Grantors after the filing of any
petition or pleading against Grantors, or any of them, or any other Person for a
proceeding under any Debtor Relief Law.

5. Further Assurances. Each Grantor agrees that at any time, and from time to
time, at its own expense such Grantor will promptly execute, deliver and file or
record all further financing statements, instruments and documents, and will
take all further actions, including, without limitation, causing the issuers of,
or obligors on any of the Pledged Collateral to so execute, deliver, file or
take other actions, that may be necessary or desirable, or that Secured Party
reasonably may request, in order to perfect and protect any pledge or security
interest granted hereby or to enable Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral and to
preserve, protect and maintain the Pledged Collateral and the value thereof,
including, without limitation, payment of all taxes, assessments and other
charges imposed on or relating to the Pledged Collateral. Each Grantor hereby
(a) irrevocably directs the issuers of or obligors on any such Pledged
Collateral, or each securities intermediary, registrar, transfer agent or
trustee for any such Pledged Collateral, to accept the provisions of this
Agreement as conclusive evidence of the right of Secured Party to effect any
transfer or exercise any right hereunder or with respect to any such Pledged
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by such Grantor or any other Person to any of such
parties; and (b) covenants and agrees to transfer or reinvest any such Pledged
Collateral, immediately upon Secured Party's request, in such manner as may be
deemed necessary or desirable by Secured Party to create and perfect, and to
continue and preserve, an indefeasible security interest in such Pledged
Collateral in favor of Administrative Agent on behalf of Secured Party, or the
priority, control and exclusivity thereof, free of all other Liens and claims
except as may be permitted by the terms hereof or of the Loan Agreement.

6. Voting Rights; Dividends; etc. So long as no Default or Event of Default
under the Loan Agreement occurs and remains continuing:

6.1 Voting Rights. Grantors shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Securities, or any part
thereof, for any purpose not inconsistent with the terms of this Agreement, the
Loan Agreement, or the other Loan Documents.





6.2 Interest and Distribution Rights. Grantors shall be entitled to receive and
to retain and use any and all interest, premiums or Distributions paid in
respect of the Pledged Collateral; provided, however, that any and all such
Distributions received in the form of capital stock (or other equity interest)
shall be, and the Certificates representing such capital stock (or other equity
interest) forthwith shall be delivered to Administrative Agent to hold as,
Pledged Collateral and shall, if received by Grantors, be received in trust for
the benefit of Secured Party, be segregated from the other property of Grantors,
and forthwith be delivered to Administrative Agent for the benefit of Secured
Party as Pledged Collateral in the same form as so received (with any necessary
endorsements). Notwithstanding the foregoing sentence, Grantors shall not be
required to deliver to Administrative Agent to hold as Pledged Collateral any
Distributions received in the form of capital stock (or other equity interest),
and such Distributions shall not constitute Pledged Collateral, to the extent
that (a) such capital stock (or other equity interest) represents an equity
interest in a Designated Foreign Subsidiary and (b) Secured Party's receipt of
such capital stock (or other equity interest) would cause Secured Party to
obtain a pledge pursuant to this Agreement of greater than sixty-five percent
(65%) of the applicable equity interest of the applicable Designated Foreign
Subsidiary.

7. Rights During Default or Event of Default. When a Default or Event of Default
has occurred and is continuing:

7.1 Voting and Distribution Rights. At the option of Secured Party, all rights
of Grantors to exercise the voting and other consensual rights which they would
otherwise be entitled to exercise pursuant to Section 6.1 above, and to receive
the interest, premiums and Distributions which it would otherwise be authorized
to receive and retain pursuant to Section 6.2 above, shall cease, and all such
rights shall thereupon become vested in Administrative Agent for the benefit of
Secured Party who shall thereupon, at the direction of Administrative Agent,
have the sole right to exercise such voting and other consensual rights and to
receive and to hold as Pledged Collateral such Distributions, provided, however,
that Grantors' rights to receive Distributions pursuant to Section 6.2 above
shall not cease with respect to, and Secured Party shall not have the right to
receive and hold as Pledged Collateral, any Distributions made in respect of the
Pledged Collateral in the form of capital stock (or other equity interest), or
the Certificates representing such capital stock (or other equity interest), to
the extent that (a) such capital stock (or other equity interest) represents an
equity interest in a Designated Foreign Subsidiary and (b) Secured Party's
receipt of such capital stock (or other equity interest) would cause Secured
Party to obtain a pledge pursuant to this Agreement of greater than sixty-five
percent (65%) of the applicable equity interest of the applicable Designated
Foreign Subsidiary. Administrative Agent shall give notice to Grantors of
Secured Party's election to exercise voting rights with respect to the Pledged
Collateral; provided, however, that (i) neither the giving of such notice nor
the receipt thereof by Grantors shall be a condition to exercise of any rights
of Secured Party hereunder, and (ii) neither Administrative Agent nor any Lender
shall incur any liability for failing to give such notice.

7.2 Distributions Held in Trust. All Distributions which are received by
Grantors contrary to the provisions of this Agreement shall be received in trust
for the benefit of Secured Party, shall be segregated from other funds of
Grantors, and forthwith shall be paid over to Administrative Agent for the
account of Secured Party as Pledged Collateral in the same form as




so received (with any necessary endorsements).

7.3 Irrevocable Proxy. Grantors hereby jointly and severally revoke all previous
proxies with regard to the Pledged Securities and appoints Administrative Agent
for the benefit of Secured Party as its proxyholder to attend and vote at any
and all meetings of the shareholders (or other equity holders, as applicable) of
the corporations (or other entities, as applicable) which issued the Pledged
Securities, and any adjournments thereof, held on or after the date of the
giving of this proxy and prior to the termination of this proxy and to execute
any and all written consents of shareholders (or other equity holders, as
applicable) of such corporations (or other entities, as applicable) executed on
or after the date of the giving of this proxy and prior to the termination of
this proxy, with the same effect as if each Grantor had personally attended the
meetings or had personally voted its shares (or other equity interests, as
applicable) or had personally signed the written consents; provided, however,
that the proxyholder shall have rights hereunder only upon the occurrence and
during the continuance of a Default or Event of Default under the Loan
Agreement. Grantors hereby jointly and severally authorize Administrative Agent
to substitute another Person as the proxyholder and, upon the occurrence or
during the continuance of any Event of Default, hereby authorizes and directs
the proxyholder to file this proxy and the substitution instrument with the
secretary or other appropriate officer of the appropriate corporation or other
entity as applicable. This proxy is coupled with an interest and is irrevocable
until such time as no commitment to extend credit to Grantors remains
outstanding from the Lenders and until such time as all Obligations have been
paid and performed in full.

8. Transfers and Other Liens. Grantors agree that, except as specifically
permitted under the Loan Documents, they will not (i) sell, assign, exchange,
transfer or otherwise dispose of, or contract to sell, assign, exchange,
transfer or otherwise dispose of, or grant any option with respect to, any of
the Pledged Collateral, (ii) create or permit to exist any Lien upon or with
respect to any of the Pledged Collateral, except for Permitted Encumbrances and
other encumbrances permitted pursuant to the Loan Agreement, or (iii) take any
action with respect to the Pledged Collateral which is inconsistent with the
provisions or purposes of this Agreement or any other Loan Document.

9. Secured Party Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints Administrative Agent for the benefit of Secured Party as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor,
and in the name of such Grantor, or otherwise, from time to time, in Secured
Party's sole and absolute discretion to do any of the following acts or things:
(a) to do all acts and things and to execute all documents necessary or
advisable to perfect and continue perfected the security interests created by
this Agreement and to preserve, maintain and protect the Pledged Collateral; (b)
to do any and every act which such Grantor is obligated to do under this
Agreement; (c) to prepare, sign, file and record, in such Grantor's name, any
financing statement covering the Pledged Collateral; and (d) to endorse and
transfer the Pledged Collateral upon foreclosure by Secured Party; provided,
however, that Administrative Agent shall be under no obligation whatsoever to
take any of the foregoing actions, and neither Administrative Agent nor any
Lender shall have any liability or responsibility for any act (other than
Administrative Agent's or such Lender's own gross negligence or willful
misconduct) or omission taken with respect thereto. Each Grantor hereby agrees
to repay immediately upon demand all reasonable costs and expenses incurred or
expended by Secured Party in exercising any right or




taking any action under this Agreement, together with interest as provided for
in the Loan Agreement.

10. Administrative Agent May Perform Obligations. If any Grantor fails to
perform any Obligation contained herein, Administrative Agent for the benefit of
Secured Party may, but without any obligation to do so and without notice to or
demand upon such Grantor, perform the same and take such other action as Secured
Party may deem necessary or desirable to protect the Pledged Collateral or
Secured Party's security interests therein, Administrative Agent being hereby
authorized (without limiting the general nature of the authority hereinabove
conferred) to pay, purchase, contest and compromise any Lien which in the
reasonable judgment of Secured Party appears to be prior or superior to Secured
Party's security interests, and in exercising any such powers and authority to
pay necessary expenses, employ counsel and pay reasonable attorneys' fees. Each
Grantor hereby agrees to repay immediately upon demand all sums so expended by
Secured Party, together with interest from the date of expenditure at the rates
provided for in the Loan Agreement. Neither Administrative Agent nor any Lender
shall be under any duty or obligation to preserve, maintain or protect the
Pledged Collateral or any of such Grantor's rights or interest therein, exercise
any voting rights with respect to the Pledged Collateral, whether a Default or
Event of Default has occurred or is continuing, or make or give any notices of
default, presentments, demands for performance, notices of nonperformance or
dishonor, protests, notices of protest or notice of any other nature whatsoever
in connection with the Pledged Collateral on behalf of such Grantor or any other
Person having any interest therein; and neither Administrative Agent nor any
Lender assumes and none shall be obligated to perform the obligations of such
Grantor, if any, with respect to the Pledged Collateral.

11. Reasonable Care. So long as Administrative Agent exercises reasonable care
with respect to any Pledged Collateral in its possession, custody or control,
Administrative Agent shall have no liability for any loss of or damage to such
Pledged Collateral, and in no event shall Administrative Agent have liability
for any diminution in value of Pledged Collateral occasioned by economic or
market conditions or events. Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially similar to that which Administrative Agent accords its own
property, it being understood that Administrative Agent shall not have any
responsibility for ascertaining or taking action with respect to maturities,
calls, conversions, exchanges, tenders or other matters relative to any Pledged
Collateral, whether or not Administrative Agent has or is deemed to have
knowledge of such matters, or taking any necessary steps to preserve rights
against any Person with respect to any Pledged Collateral.

12. Events of Default and Remedies.

12.1 Rights Upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default under the Loan Agreement, Grantors shall be
in default hereunder and Secured Party shall have in any jurisdiction where
enforcement is sought, in addition to all other rights and remedies that Secured
Party may have under this Agreement and under applicable Law or in equity, all
of its rights and remedies as a secured party under the Uniform Commercial Code
as enacted in any such jurisdiction, and in addition the following rights and
remedies, all of which may be exercised with or without further notice to
Grantors:




(a) to notify any Issuer of any Pledged Securities and any and all other
obligors on any Pledged Collateral that the same has been pledged to
Administrative Agent for the benefit of Secured Party and that all Distributions
and other payments thereon are to be made directly and exclusively to
Administrative Agent for the account of Secured Party; to renew, extend, modify,
amend, accelerate, accept partial payments on, make allowances and adjustments
and issue credits with respect to, release, settle, compromise, compound,
collect or otherwise liquidate, on terms acceptable to Secured Party, in whole
or in part, the Pledged Collateral and any amounts owing thereon or any guaranty
or security therefor; to enter into any other agreement relating to or affecting
the Pledged Collateral; and to give all consents, waivers and ratifications with
respect to the Pledged Collateral and exercise all other rights (including
voting rights), powers and remedies and otherwise act with respect thereto as if
Secured Party were the owner thereof;

(b) to enforce payment and prosecute any action or proceeding with respect to
any and all of the Pledged Collateral and take or bring, in Secured Party's
name(s) or in the name of Grantors, all steps, actions, suits or proceedings
deemed by Secured Party necessary or desirable to effect collection of or to
realize upon the Pledged Collateral;

(c) in accordance with applicable Law, to take possession of the Pledged
Collateral with or without judicial process;

(d) to endorse, in the name of Grantors, all checks, notes, drafts, money
orders, instruments and other evidences of payment relating to the Pledged
Collateral;

(e) to transfer any or all of the Pledged Collateral into the name of Secured
Party or its nominee or nominees; and

(6) in accordance with applicable Law, to foreclose the Liens and security
interests created under this Agreement or under any other agreement relating to
the Pledged Collateral by any available judicial procedure or without judicial
process, and to sell, assign or otherwise dispose of the Pledged Collateral or
any part thereof, either at public or private sale or at any broker's board or
securities exchange, in lots or in bulk, for cash, on credit or on future
delivery, or otherwise, with or without representations or warranties, and upon
such terms as shall be acceptable to Secured Party;

all at the sole option of and in the sole discretion of Secured Party.

12.2 Notice of Sale. Secured Party shall give Grantors at least ten (10) days'
written notice of sale of all or any part of the Pledged Collateral. Any sale of
the Pledged Collateral shall be held at such time or times and at such place or
places as Secured Party may determine in the exercise of its sole and absolute
discretion. Secured Party may bid (which bid may be, in whole or in part, in the
form of cancellation of Obligations) for and purchase for the account of Secured
Party or any nominee of Secured Party the whole or any part of the Pledged
Collateral. Secured Party shall not be obligated to make any sale of the Pledged
Collateral if it shall determine not to do so regardless of the fact that notice
of sale of the Pledged Collateral may have been given. Secured Party may,
without notice or publication, adjourn the sale from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned.





12.3 Private Sales. Upon the occurrence and during the continuance of an Event
of Default under the Loan Agreement, whether or not any of the Pledged
Collateral has been effectively registered under the Securities Act of 1933, as
amended, or other applicable Laws, Secured Party may, in its sole and absolute
discretion, sell all or any part of the Pledged Collateral at private sale in
such manner and under such circumstances as Secured Party may deem necessary or
advisable in order that the sale may be lawfully conducted. Without limiting the
foregoing, Secured Party may (i) approach and negotiate with a limited number of
potential purchasers, and (ii) restrict the prospective bidders or purchasers to
Persons who will represent and agree that they are purchasing the Pledged
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. In the event that any of the Pledged Collateral
is sold at private sale, each Grantor agrees that if the Pledged Collateral is
sold for a price which Secured Party in good faith believes to be reasonable,
then, (A) the sale shall be deemed to be commercially reasonable in all
respects, (B) such Grantor shall not be entitled to a credit against the
Obligations in an amount in excess of the purchase price, and (C) Secured Party
shall not incur any liability or responsibility to such Grantor in connection
therewith, notwithstanding the possibility that a substantially higher price
might have been realized at a public sale. Grantors recognize that a ready
market may not exist for Pledged Collateral which is not regularly traded on a
recognized securities exchange or in another recognized market, and that a sale
by Secured Party of any such Pledged Collateral for an amount substantially less
than a pro rata share of the fair market value of such Issuer's assets minus
liabilities may be commercially reasonable in view of the difficulties that may
be encountered in attempting to sell a large amount of Pledged Collateral or
Pledged Collateral that is privately traded.

12.4 Title of Purchasers. Upon consummation of any sale of Pledged Collateral
pursuant to this Section 12, Administrative Agent on behalf of Secured Party
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Pledged Collateral so sold. Each such purchaser at any
such sale shall hold the Pledged Collateral sold absolutely free from any claim
or right on the part of Grantors, and each Grantor hereby waives (to the extent
permitted by applicable Law) all rights of redemption, stay and appraisal which
it now has or may at any time in the future have under any rule of Law or
statute now existing or hereafter enacted. If the sale of all or any part of the
Pledged Collateral is made on credit or for future delivery, Secured Party shall
not be required to apply any portion of the sale price to the Obligations until
such amount actually is received by Secured Party, and any Pledged Collateral so
sold may be retained by Secured Party until the sale price is paid in full by
the purchaser or purchasers thereof. Secured Party shall not incur any liability
in case any such purchaser or purchasers shall fail to pay for the Pledged
Collateral so sold, and, in case of any such failure, the Pledged Collateral may
be sold again upon like notice.

12.5 Disposition of Proceeds of Sale. The net cash proceeds resulting from the
collection, liquidation, sale or other disposition of the Pledged Collateral
shall be applied, first, to the reasonable costs and expenses (including
reasonable attorneys' fees) of retaking, holding, storing, processing and
preparing for sale, selling, collecting and liquidating the Pledged Collateral,
and the like; second, to the satisfaction of all Obligations, with application
as to any particular Obligations to be in the order set forth in the Loan
Agreement or other Loan Documents; and, third, to all other indebtedness secured
hereby in such order and manner as Secured Party in its sole and absolute
discretion




may determine.

13. Continuing Effect. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Grantors for
liquidation or reorganization, should Grantors become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of Grantors' assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable Law, rescinded or reduced in amount, or must otherwise be restored or
returned by Administrative Agent or any Lender, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment or any part
thereof is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

14. Covenant Not to Issue Uncertificated Securities. Grantors jointly and
severally represent and warrant to Secured Party that all of the capital stock
(or other equity interests) of each of the Issuers is in certificated form (as
contemplated by Article 8 of the California Uniform Commercial Code), and
covenant to Secured Party that they will not cause or permit any Issuer to issue
any capital stock (or other equity interest) in uncertificated form or seek to
convert all or any part of its existing capital stock (or other equity interest)
into uncertificated form (as contemplated by Article 8 of the California Uniform
Commercial Code). The foregoing representations, warranties and covenants shall
survive the execution and delivery of this Agreement.

15. Covenant Not to Dilute Interests of Secured Party in Pledged Securities.
Grantors jointly and severally represent, warrant and covenant to Secured Party
that they will not at any time cause or permit any Issuer to issue any
additional capital stock (or other equity interest), or any warrants, options or
other rights to acquire any additional capital stock (or other equity interest),
if the effect thereof would be to dilute in any way the interests of Secured
Party in any Pledged Securities or in any Issuer.

16. Indemnity. Grantors jointly and severally agree to indemnify and hold
harmless Secured Party, and each of them, from and against any and all claims,
demands, losses, judgments and liabilities (including without limitation
liabilities for penalties) of whatsoever kind or nature, and to reimburse
Secured Party for all costs and expenses, including without limitation
reasonable attorneys' fees and expenses and/or costs and expenses associated
with, arising out of or in connection with this Agreement or the exercise by
Secured Party of any right or remedy granted to it hereunder or under the other
Loan Documents other than arising from the gross negligence or willful
misconduct of Secured Party. In no event shall Secured Party be liable for any
matter or thing in connection with this Agreement other than to account for
monies actually received by it in accordance with the terms hereof. If and to
the extent that the agreements of Grantors under this Section 16 are
unenforceable for any reason, Grantors hereby agree to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable Law.

17. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.

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

19. Additional Powers and Authorization. The Administrative Agent has been
appointed as the Administrative Agent hereunder pursuant to the Loan




Agreement and shall be entitled to the benefits of the Loan Agreement and the
other Loan Documents. Notwithstanding anything contained herein to the contrary,
the Administrative Agent may employ agents, trustees, or attorneys-in-fact and
may vest any of them with any Property (including, without limitation, the
Pledged Collateral), title, right or power deemed necessary for the purposes of
such appointment.

20. WAIVER OF JURY TRIAL. EACH GRANTOR AND SECURED PARTY EXPRESSLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED OR INCIDENTAL TO THIS AGREEMENT,
THE LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. EACH GRANTOR AND SECURED PARTY AGREE THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE LOAN
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, THE LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
        duly executed as of the date first above written.

                                                            
 ACCEPTED AND AGREED                                           "Grantors"
 AS OF THE DATE FIRST
 ABOVE WRITTEN:                                                JAKKS PACIFIC, INC.
                                                               FLYING COLORS TOYS, INC.
 "Secured Party"                                               ROAD CHAMPS, INC.
                                                               JAKKS ACQUISITION CORP.
 BANK OF AMERICA, N.A.,                                        PENTECH INTERNATIONAL INC.
 as Administrative Agent
 for the Lenders
                                                               By: /s/ JOEL M. BENNETT
 By: /s/ DAVID J. STASSEL                                         ----------------------------
    -----------------------------                                 Joel M. Bennett

                                                               Title: Exec. V.P./C.F.O.
 David J. Stassel, V.P.                                               -------------------------
 --------------------------------                                     of each of the foregoing
      [Printed name and title]




























                                   SCHEDULE I

                          CLOSING DATE EQUITY INTERESTS

                            DOMESTIC EQUITY INTERESTS



- -------------------------------------------------------------------------------------------------------------------
 Issuer of Capital Stock                                         Class of   Certificate    Number     Percentage of
or Other Equity Interest                Shareholder              Interest      No(s).    of Shares      Ownership
- -------------------------------------------------------------------------------------------------------------------
                                                                                       
Berk Corporation                    JAKKS Pacific, Inc.        Corporation       6         5,000           100%

Flying Colors Toys, Inc.            JAKKS Pacific, Inc.        Corporation      160        23,825          100%

JAKKS Acquisition Corp.             JAKKS Pacific, Inc.        Corporation       2          200            100%

JP Ferrero Parkway, Inc.            JAKKS Pacific, Inc.        Corporation       1          100            100%

J-X Enterprises, Inc.               JAKKS Pacific, Inc.        Corporation       2          200            100%

Pentech Cosmetics, Inc.         Pentech International Inc.     Corporation       3          200            100%

Pentech International, Inc.         JAKKS Pacific, Inc.        Corporation     P-X-2         10            100%

Pentech-Mon Ami, Inc.           Pentech International Inc.     Corporation       2          200            100%

Road Champs, Inc.                 JAKKS Acquisition Corp.      Corporation       2          100            100%

Sawdust Pencil Co.              Pentech International Inc.     Corporation       3          200            100%




- -------------------------------------------------------------------------------------------------------------
                                          FOREIGN EQUITY INTERESTS
- -------------------------------------------------------------------------------------------------------------
 Issuer of Capital Stock                               Class of   Certificate  Number of    Percentage of
or Other Equity Interest         Shareholder           Interest      No(s).      Shares       Ownership
- -------------------------------------------------------------------------------------------------------------
                                                                             


JAKKS Pacific (H.K.)         JAKKS Pacific, Inc.      Hong Kong                   650            65%
Limited                                              Corporation

Road Champs Limited           Road Champs, Inc.       Hong Kong                   195            65%
                                                     Corporation

Flying Colors Toys (HK)      JAKKS Pacific, Inc.      Hong Kong                   650            65%
Limited                                              Corporation

JP (HK) Limited              JAKKS Pacific, Inc.      Hong Kong                   650            65%
                                                     Corporation



                                                                   EXHIBIT 15(G)

                               LOCK BOX AGREEMENT

        THIS LOCK BOX AGREEMENT ("Agreement"), dated as of October 12, 2001, by
and among JAKKS PACIFIC, INC., a Delaware corporation ("JAKKS"), FLYING COLORS
TOYS, INC., a Michigan corporation ("Flying Colors"), ROAD CHAMPS, INC., a
Delaware corporation ("Road Champs" and together with JAKKS and Flying Colors,
the "Customers"), and BANK OF AMERICA, N.A., as Administrative Agent (herein
called "Agent") under that certain Loan Agreement dated as of October 12, 2001
among Customers, Pentech International, Inc., a Delaware corporation, the
lenders referred to therein and Agent (the "Loan Agreement").

        1. Agent agrees, subject to the terms and conditions of this Agreement,
to perform a lock box service, acting as a depository for the collection,
crediting and reporting of remittances addressed to Customers.

        2. Customers will pay Agent such charges for the services furnished
hereunder as may be mutually agreed upon from time to time by Agent and
Customers.

        3. Agent has arranged with the United States Post Office Department to
gather mail addressed to JAKKS at P.O. Box 56441 located at 1000 W. Temple, Los
Angeles, California 90012 (the "JAKKS Lock Box"), to gather mail addressed to
Flying Colors at P.O. Box 56442 located at 1000 W. Temple, Los Angeles,
California 90012 (the "Flying Colors Lock Box") and to gather mail addressed to
Road Champs at P.O. Box 56444 located at 1000 W. Temple, Los Angeles, California
90012 (the "Road Champs Lock Box", and together with the JAKKS Lock Box and the
Flying Colors Lock Box, the "Lock Boxes"). All costs and charges incurred in
connection with the Lock Boxes shall be charged to separate account numbers
14590-08406 (for the JAKKS Lock Box), 14590-08411 (for the Flying Colors Lock
Box) and 14590-08406 (for the Road Champs Lock Box), in the name of the
Customers, and borne entirely by the Customers.

        4. Agent will have exclusive and unrestricted access to the Lock Boxes
and will have complete and exclusive authority to receive, pick up and open all
regular, registered, certified or insured mail addressed to Customers at the
Lock Boxes.

        5. In accordance with the terms of this Agreement, Agent will:

                (a) Dispatch a messenger to the post office at least daily to
        gather the mail addressed to Customers.

                (b) Open and inspect the mail gathered from the Lock Boxes.

                (c) Prepare a photocopy of each remitter's check and balance
        such copies to the original checks.

                (d) Prepare a summary advice of credit for each Lock Box each
        business day and indicate the total amount of remittances credited to
        special bank accounts established at Agent, Account No. 14590-08406 for
        the JAKKS Lock Box (the "JAKKS Account"), Account No. 14590-08411 for
        the Flying Colors Lock Box (the "Flying Colors Account") and Account No.
        14590-08406 for the Road Champs Lock Box (the "Road Champs Account", and
        together with the JAKKS Account and the Flying Colors Account, the
        "Accounts"). These summary advice of credit, accompanied by supporting
        adding machine tapes, photocopies, envelopes, and any other papers
        received with the remittances will be forwarded to each respective
        Customer at its address specified in Paragraph 11 below.



                (e) Forward as expeditiously as possible to the respective
        Customer at its address specified in Paragraph 11 below, all mail
        received in that Customer's Lock Box that does not include remittances.
        However, Agent will not be subject to any liability for delays that may
        arise in this connection absent bad faith or actual malice.

                (f) Return to the respective Customer at its address specified
        in Paragraph 11 below all checks which appear to be irregular and which
        irregularity cannot be reconciled by Agent through its normal operating
        practices and procedures. However, Agent will not be subject to any
        liability for delays that may arise in this connection absent bad faith
        or actual malice.

                (g) Withhold from deposit any remittances bearing the legend
        "paid in full" or words of similar import. However, Agent cannot assume
        liability for any such items inadvertently credited to the Accounts
        absent bad faith or actual malice.

                (h) Other than those items handled in accordance with
        Subparagraphs (f) and (g) above, endorse each check made payable to the
        respective Customer (or any other acceptable payee listed in
        Subparagraph (m) below), or a reasonable variation thereof, as follows:

                        "Credited to the account of the within named payee."

                  Agent's appointment as agent to endorse such checks is for the
                  specific, limited and restricted purpose of endorsement for
                  deposit as described and shall at no time be interpreted as
                  authorizing Agent as such agent to commit Customers to
                  acceptance of any legend of any kind, nature or description
                  appearing on checks or other evidence of payment which are
                  deposited to the Accounts.

                (i) Process all such endorsed checks and other evidences of
        payment and credit the total amount to the Accounts. Such collection of
        items, processing and crediting shall be subject to the terms and
        conditions of Agent's standard deposit agreement as applied to deposits
        normally received by Agent. No monies shall be withdrawn from the
        Accounts except as provided in Subparagraph 5(j) below.

                (j) No later than 12:00 noon (New York time) on the following
        business day, after the previous day's collections are credited to the
        account, the total prior day deposit(s) balance will be transferred to
        account no. 14590-08406 with Agent (the "Concentration Account"). No
        later than 5:00 p.m. (New York time) on the day such funds are credited
        to the Concentration Account, if an Event of Default (as defined in the
        Loan Agreement) has occurred or is continuing on that day, the balance
        of the Concentration Account shall be applied by the Agent against the
        outstanding principal balance of the Loans (as defined in the Loan
        Agreement).

                (k) Microfilm all checks for record purposes.

                (l) Charge checks returned for any reason to the Customers'
        Accounts, and mail such items to Customer at its address specified in
        Paragraph 11 below along with a supporting advice of debit.

                (m) Acceptable payees on checks to be processed through these
        Lock Boxes are: (please list all names and abbreviations expected to be
        on checks):

                                    Any name

6. Customers and Agent each agree that: (a) each Customer will assume all of the
liabilities of a general endorser of any kind on all checks deposited to the
Account, (b) protest and notice of nonpayment and protest of any and all checks
deposited in or credited to the Account are hereby waived and (c) Customer will
have no control whatsoever over the Account until after this Agreement is




terminated in accordance with Paragraph 10 below.

7. Agent, with respect to the services provided herein, is acting as the agent
of Customers for the limited purpose of opening the Lock Boxes and the
processing of checks for payment in accordance herewith.

8. Agent shall not be liable for any loss in the event that any checks are
inadvertently processed contrary to the terms of this Agreement absent bad faith
or actual malice.

9. This Agreement may be modified from time to time only in a writing executed
by Agent and each Customer.

10. This Agreement shall continue in full force and effect until terminated by
Agent upon not less than thirty (30) days' written notice to each of the other
parties. Termination of this Agreement by Agent shall in no event affect any
obligation incurred hereunder prior to such termination.

11. Any notice required or permitted to be given under this Agreement shall be
effective and deemed given, if by mail, on the earlier of receipt or the third
business day after deposit in the United States mail with first class or airmail
postage prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telex or telecopier, when sent; or if
given by personal delivery, when delivered; in each case addressed as follows:


to Agent as follows:                    Bank of America, N.A. #1459
                                        Mail Code CA 9-156-MZ-07
                                        525 South Flower Street
                                        Mezzanine Level
                                        Los Angeles, CA 90071-2202
                                        Attention: David J. Stassel,
                                                   Vice President
                                        Facsimile: (213) 345-6982

to Customers as follows:                JAKKS Pacific, Inc.
                                        22619 Pacific Coast Highway,
                                        Suite 250
                                        Malibu, California  90625
                                        Attention: Joel M. Bennett
                                        Facsimile: (310) 455-6352

                                        Flying Colors Toys, Inc.
                                        22619 Pacific Coast Highway,
                                        Suite 250
                                        Malibu, California  90625
                                        Attention: Joel M. Bennett
                                        Facsimile: (310) 455-6352

                                        Road Champs, Inc.
                                        22619 Pacific Coast Highway,
                                        Suite 250
                                        Malibu, California  90625
                                        Attention: Joel M. Bennett
                                        Facsimile: (310) 455-6352




           Each party hereto may change the address specified above by the
giving of a notice in writing to each of the other parties.

12. This agreement will become effective upon its receipt by Bank properly
executed by all of the parties hereto.

13. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.

        IN WITNESS WHEREOF, Customers and Agent have executed this Agreement as
of the date first above written.


                                        JAKKS PACIFIC, INC.,
                                        a Delaware corporation


                                        By /s/ JOEL M. BENNETT
                                        Its  EXEC. V.P./C.F.O.

                                        FLYING COLORS TOYS, INC.,
                                        a Michigan corporation

                                        By /s/ JOEL M. BENNETT
                                        Its  EXEC. V.P./C.F.O.

                                        ROAD CHAMPS, INC.,
                                        a Delaware corporation

                                        By /s/ JOEL M. BENNETT
                                        Its  EXEC. V.P./C.F.O.


                                        BANK OF AMERICA, N.A.,
                                        as Administrative Agent

                                        By /s/ DAVID J. STASSEL
                                        Its V.P.



                                                                   EXHIBIT 15(H)

                                    GUARANTY

        This GUARANTY (this "Guaranty"), dated as of October 12, 2001, is made
by each of the Domestic Subsidiaries listed on the signature pages hereto,
together with each other Person who may become a party hereto pursuant to
Section 15 of this Guaranty, jointly and severally in favor of Bank of America,
N.A., as Administrative Agent (the "Administrative Agent") under the Loan
Agreement referred to below, and each of the lenders that are party to such Loan
Agreement (each a "Lender" and collectively, the "Lenders"), with reference to
the following facts:

                                    RECITALS

A. Pursuant to that certain Loan Agreement dated as of October 12, 2001 entered
into among JAKKS Pacific, Inc., a Delaware corporation (the "Company"), Flying
Colors Toys, Inc., a Michigan corporation, Road Champs, Inc., a Delaware
corporation, and Pentech International Inc., a Delaware corporation
(collectively, and together with the Company, "Borrowers"), the Lenders and the
Administrative Agent (such Loan Agreement, as it may hereafter be amended,
extended, renewed, supplemented, or otherwise modified from time to time, being
the "Loan Agreement"), the Lenders are providing Borrowers with certain credit
facilities.

B. As a condition to the availability of such credit facilities, Guarantors are
required to enter into this Guaranty and to guaranty the Guarantied Obligations
as hereinafter provided.

C. Guarantors expect to realize direct and indirect benefits as the result of
the availability of the aforementioned credit facilities to Borrowers, as the
result of financial or business support which will be provided to Guarantors by
Borrowers.

                                    AGREEMENT

        NOW, THEREFORE, in order to induce the Lenders to extend the
aforementioned credit facilities, and for other good and valuable consideration,
the receipt and adequacy of which hereby are acknowledged, Guarantors hereby
represent, warrant, covenant, agree and guaranty as follows:

1. Definitions. This Guaranty is the Guaranty referred to in the Loan Agreement
and is one of the Loan Documents. Terms defined in the Loan Agreement and not
otherwise defined in this Guaranty shall have the meanings given those terms in
the Loan Agreement when used herein and such definitions are incorporated herein
as though set forth in full. In addition, as used herein, the following terms
shall have the meanings respectively set forth after each:

        "Guaranty" means this Guaranty, and any extensions, modifications,
        renewals, restatements, reaffirmations, supplements or amendments
        hereof, including, without limitation, any documents or agreements by
        which additional Guarantors become party hereto.

        "Guarantied Obligations" means all Obligations at any time and from time
        to time owing to any one or more of the Creditor Parties and arising
        under or relating to the Commitment.





        "Guarantors" means the Domestic Subsidiaries of the Company that are
        parties hereto as indicated on the signature pages hereof, or that
        become parties hereto as provided in Section 15 hereof, and each of
        them, and any one or more of them, jointly and severally.

2. Guaranty of Guarantied Obligations. Guarantors hereby, jointly and severally,
irrevocably and unconditionally guaranty and promise to pay and perform on
demand the Guarantied Obligations and each and every one of them, including all
amendments, modifications, supplements, renewals or extensions of any of them,
whether such amendments, modifications, supplements, renewals or extensions are
evidenced by new or additional instruments, documents or agreements or change
the rate of interest on any Guarantied Obligation or the security therefor, or
otherwise.

3. Nature of Guaranty. This Guaranty is irrevocable and continuing in nature and
relates to any Guarantied Obligations now existing or hereafter arising. This
Guaranty is a guaranty of prompt and punctual payment and performance and is not
merely a guaranty of collection.

4. Relationship to Other Agreements. Nothing herein shall in any way modify or
limit the effect of terms or conditions set forth in any other document,
instrument or agreement executed by any Guarantor or in connection with the
Guarantied Obligations, but each and every term and condition hereof shall be in
addition thereto. All provisions contained in the Loan Agreement or any other
Loan Document that apply to Loan Documents generally are fully applicable to
this Guaranty and are incorporated herein by this reference.

5. Subordination of Indebtedness of Borrowers to Guarantors to the Guarantied
Obligations. Each Guarantor agrees that:

        (a) Any indebtedness of Borrowers now or hereafter owed to any Guarantor
        hereby is subordinated to the Guarantied Obligations.

        (b) If the Creditor Parties so request, upon the occurrence and during
        the continuance of any Event of Default, any such indebtedness of
        Borrowers now or hereafter owed to any Guarantor shall be collected,
        enforced and received by such Guarantor as trustee for the Creditor
        Parties and shall be paid over to the Creditor Parties in kind on
        account of the Guarantied Obligations, but without reducing or affecting
        in any manner the obligations of such Guarantor under the other
        provisions of this Guaranty.

6. Statutes of Limitations and Other Laws. Until the Guarantied Obligations
shall have been paid and performed in full, all the rights, privileges, powers
and remedies granted to the Creditor Parties hereunder shall continue to exist
and may be exercised by the Creditor Parties at any time and from time to time
irrespective of the fact that any of the Guarantied Obligations may have become
barred by any statute of limitations. Each Guarantor expressly waives the
benefit of any and all statutes of limitation, and any and all Laws providing
for exemption of property from execution or for evaluation and appraisal upon
foreclosure, to the maximum extent permitted by applicable Laws.

7. Waivers and Consents. Each Guarantor acknowledges that this Guaranty may
support obligations of Persons other than such Guarantor and, in full
recognition of that fact, each Guarantor consents and agrees that the Creditor
Parties may, at any time and from time to time, without



notice or demand, and without affecting the enforceability or security hereof:

        (a) supplement, modify, amend, extend, renew, or otherwise change the
        time for payment or the terms of the Guarantied Obligations or any part
        thereof, including any increase or decrease of the rate(s) of interest
        thereon;

        (b) supplement, modify, amend or waive, or enter into or give any
        agreement, approval or consent with respect to, the Guarantied
        Obligations or any part thereof or any of the Loan Documents or any
        additional security or guaranties, or any condition, covenant, default,
        remedy, right, representation or term thereof or thereunder;

        (c) accept new or additional instruments, documents or agreements in
        exchange for or relative to any of the Loan Documents or the Guarantied
        Obligations or any part thereof;

        (d) accept partial payments on the Guarantied Obligations;

        (e) receive and hold additional security or guaranties for the
        Guarantied Obligations or any part thereof;

        (f) release, reconvey, terminate, waive, abandon, subordinate, exchange,
        substitute, transfer and enforce any security or guaranties, and apply
        any security and direct the order or manner of sale thereof as the
        Creditor Parties in the exercise of their commercial discretion may
        determine;

        (g) release any Person or any guarantor from any personal liability with
        respect to the Guarantied Obligations or any part thereof;

        (h) settle, release on terms satisfactory to the Creditor Parties or by
        operation of applicable laws or otherwise liquidate or enforce any
        Guarantied Obligations and any security or guaranty therefor in any
        manner, consent to the transfer of any security and bid and purchase at
        any sale; and

        (i) consent to the merger, change or any other restructuring or
        termination of the corporate existence of any Borrower or any other
        Person, and correspondingly restructure the Guarantied Obligations, and
        any such merger, change, restructuring or termination shall not affect
        the liability of any Guarantor or the continuing existence of any Liens
        hereunder, under any other Loan Document to which any Guarantor is a
        party or the enforceability hereof or thereof with respect to all or any
        part of the Guarantied Obligations.

        Upon the occurrence of and during the continuance of any Event of
Default, the Creditor Parties may enforce this Guaranty independently as to each
Guarantor and independently of any other remedy or security the Creditor Parties
at any time may have or hold in connection with the Guarantied Obligations, and
it shall not be necessary for the Creditor Parties to marshal assets in favor of
any Guarantor, any Borrower or any other Person or to proceed upon or against
and/or exhaust any other security or remedy before proceeding to enforce this
Guaranty. Each Guarantor expressly waives any right to require the Creditor
Parties to marshal assets in favor of such Guarantor, any Borrower or any other
Person or to proceed against any other Person or any collateral provided by any




other Person, and agrees that the Creditor Parties may proceed against any
Person and/or collateral in such order as they shall determine in their sole and
absolute discretion. The Creditor Parties may file a separate action or actions
against any Guarantor, whether action is brought or prosecuted with respect to
any other security or against any other Guarantor, any Borrower or any other
Person, or whether any other Person is joined in any such action or actions.
Each Guarantor agrees that the Creditor Parties, the Borrowers and any other
Person may deal with each other in connection with the Guarantied Obligations or
otherwise, or alter any contracts or agreements now or hereafter existing
between any of them, in any manner whatsoever, all without in any way altering
or affecting this Guaranty. The Creditor Parties' rights hereunder shall be
reinstated and revived, and the enforceability of this Guaranty shall continue,
with respect to any amount at any time paid on account of the Guarantied
Obligations which thereafter shall be required to be restored or returned by the
Creditor Parties upon the bankruptcy, insolvency or reorganization of any
Borrower, any Guarantor or any other Person, or otherwise, all as though such
amount had not been paid. The enforceability of this Guaranty at all times shall
remain effective to guarantee payment and performance of the full amount of all
the Guarantied Obligations including, without limitation, the amount of all
loans and interest thereon at the rates provided for in the Loan Agreement, even
though the Guarantied Obligations, including any part thereof or any other
security or guaranty therefor, may be or hereafter may become invalid or
otherwise unenforceable as against any Borrower or any other Person and whether
or not any Borrower or any other Person shall have any personal liability with
respect thereto. Each Guarantor expressly waives any and all defenses now or
hereafter arising or asserted by reason of (a) any disability or other defense
of any Borrower or any other Person with respect to the Guarantied Obligations,
(b) the unenforceability or invalidity of any security or guaranty for the
Guarantied Obligations or the lack of perfection or continuing perfection or
failure of priority of any security for the Guarantied Obligations, (c) the
cessation for any cause whatsoever of the liability of any Borrower or any other
Person (other than by reason of the full payment and performance of all
Guarantied Obligations), (d) any failure of any Creditor to marshal assets in
favor of such Guarantor or any other Person, (e) except as otherwise required by
Law or as provided in this Agreement, any failure of any Creditor Party to give
notice of sale or other disposition of collateral to such Guarantor or any other
Person or any defect in any notice that may be given in connection with any sale
or disposition of collateral, (f) except as otherwise required by Law or as
provided in this Agreement, any failure of any Creditor Party to comply with
applicable Laws in connection with the sale or other disposition of any
collateral or other security for any Guarantied Obligation, including without
limitation any failure of any Creditor Party to conduct a commercially
reasonable sale or other disposition of any collateral or other security for any
Guarantied Obligation, (g) any act or omission of any Creditor Party or others
that directly or indirectly results in or aids the discharge or release of any
Borrower, any Guarantor or any other Person or the Guarantied Obligations or any
other security or guaranty therefor by operation of law or otherwise, (h) any
Law which provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in proportion to
the principal obligation, (i) any failure of any Creditor Party to file or
enforce a claim in any bankruptcy or other proceeding with respect to any
Person, (j) the election by any Creditor Party, in any bankruptcy proceeding of
any Person, of the application or non-application of Section 1111(b)(2) of the
United States Bankruptcy Code, (k) any extension of credit or the grant of any
Liens under Section 364 of the United States Bankruptcy Code, (l) any use of
cash collateral under Section 363 of the United States Bankruptcy




Code, (m) any agreement or stipulation with respect to the provision of adequate
protection in any bankruptcy proceeding of any Person, (n) the avoidance of any
Liens in favor of any Creditor Party for any reason, (o) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any of the Guarantied
Obligations (or any interest thereon) in or as a result of any such proceeding,
or (p) to the extent permitted, the benefits of any form of one-action rule.

8. Condition of Borrowers and their Subsidiaries. Each Guarantor represents and
warrants to the Creditor Parties that each Guarantor has established adequate
means of obtaining from each Borrower and its Subsidiaries, on a continuing
basis, financial and other information pertaining to the businesses, operations
and condition (financial and otherwise) of each Borrower and its Subsidiaries
and their Properties, and each Guarantor now is and hereafter will be completely
familiar with the businesses, operations and condition (financial and otherwise)
of each Borrower and its Subsidiaries and their Properties. Each Guarantor
hereby expressly waives and relinquishes any duty on the part of any Creditor
Party (should any such duty exist) to disclose to any Guarantor any matter, fact
or thing related to the businesses, operations or condition (financial or
otherwise) of each Borrower or its Subsidiaries or their Properties, whether now
known or hereafter known by the Creditor Parties during the life of this
Guaranty. With respect to any of the Guarantied Obligations, the Creditor
Parties need not inquire into the powers of each Borrower or any Subsidiary
thereof or the officers or employees acting or purporting to act on their behalf
(unless Creditor Parties have actual knowledge that such officers or employees
have no authority to act on their behalf), and all Guarantied Obligations made
or created in good faith reliance upon the professed exercise of such powers
shall be secured hereby.

9. Liens on Real Property. In the event that all or any part of the Guarantied
Obligations at any time are secured by any one or more deeds of trust or
mortgages or other instruments creating or granting Liens on any interests in
real Property, each Guarantor authorizes the Creditor Parties, upon the
occurrence of and during the continuance of any Event of Default, at their sole
option, without notice or demand and without affecting any Guarantied
Obligations of any Guarantor, the enforceability of this Guaranty, or the
validity or enforceability of any Liens of any Creditor Party on any Collateral,
to foreclose any or all of such deeds of trust or mortgages or other instruments
by judicial or nonjudicial sale. Each Guarantor expressly waives any defenses to
the enforcement of this Guaranty or any rights of any Creditor Party created or
granted hereby or to the recovery by the Creditor Parties against any Borrower,
any Guarantor or any other Person liable therefor of any deficiency after a
judicial or nonjudicial foreclosure or sale, even though such a foreclosure or
sale may impair the subrogation rights of any Guarantor or may preclude any
Guarantor from obtaining reimbursement or contribution from any Borrower. Each
Guarantor expressly waives any defenses or benefits that may be derived from
California Code of Civil Procedure Section Section 580a, 580b, 580d or 726, or
comparable provisions of the Laws of any other jurisdiction, and all other
suretyship defenses it otherwise might or would have under California Law or
other applicable Law. Each Guarantor expressly waives any right to receive
notice of any judicial or nonjudicial foreclosure or sale of any real Property
or interest therein subject to any such deeds of trust or mortgages or other
instruments and any Guarantor's or any other Person's failure to receive any
such notice




shall not impair or affect Guarantors' Obligations or the enforceability of this
Guaranty or any rights of any Creditor Party created or granted hereby.

10. Waiver of Rights of Subrogation. Notwithstanding anything to the contrary
elsewhere contained herein or in any other Loan Document to which any Guarantor
is a Party, Guarantors hereby so long as the Guarantied Obligations remain
outstanding expressly waive with respect to any Borrower and its successors and
assigns (including any surety) and any other Person which is directly or
indirectly a creditor of any Borrower or any surety for any Borrower, any and
all rights at Law or in equity to subrogation, to reimbursement, to exoneration,
to contribution, to setoff or to any other rights that could accrue to a surety
against a principal, to a guarantor against a maker or obligor, to an
accommodation party against the party accommodated, or to a holder or transferee
against a maker, and which Guarantors may have or hereafter acquire against any
Borrower or any other such Person in connection with or as a result of
Guarantors' execution, delivery and/or performance of this Guaranty or any other
Loan Document to which any Guarantor is a party. Guarantors agree that so long
as the Guarantied Obligations remain outstanding they shall not have or assert
any such rights against any Borrower or their successors and assigns or any
other Person (including any surety) which is directly or indirectly a creditor
of area Borrower or any surety for any Borrower, either directly or as an
attempted setoff to any action commenced against Guarantors by such Borrower (as
a borrower or in any other capacity), the Creditor Parties or any other such
Person. Guarantors hereby acknowledge and agree that this waiver is intended to
benefit Borrowers and the Creditor Parties and shall not limit or otherwise
affect Guarantors' liability hereunder, under any other Loan Document to which
any Guarantor is a party, or the enforceability hereof or thereof.

11. Right of Contribution. Each Guarantor hereby agrees that to the extent that
a Guarantor shall have paid more than its proportionate share of all payments
made hereunder, provided that the Guarantied Obligations are then satisfied,
such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder who has not paid its proportionate share
of all such payments. The provisions of this Section 11 shall in no respect
limit the obligations and liabilities of any Guarantor to the Creditor Parties,
and each Guarantor shall remain liable to the Creditor Parties for the full
amount guaranteed by such Guarantor hereunder. The "proportionate share" of any
Guarantor shall be a fraction (which shall in no event exceed 1.00) the
numerator of which is the excess, if any, of the fair value of the assets of
such Guarantor over a fair estimate of the liabilities of Guarantor and the
denominator of which is the excess (but not less than $1.00) of the fair value
of the aggregate assets (without duplication) of all Guarantors over a fair
estimate of the aggregate liabilities (without duplication) of all Guarantors.
All relevant calculations shall be made as of the date such Guarantor became a
Guarantor.

12. Understandings With Respect to Waivers and Consents. Each Guarantor warrants
and agrees that each of the waivers and consents set forth herein are made with
full knowledge of their significance and consequences, with the understanding
that events giving rise to any defense or right waived may diminish, destroy or
otherwise adversely affect rights which such Guarantor otherwise may have
against any Borrower, the Creditor Parties or others, or against any Collateral,
and that, under the circumstances, the waivers and consents herein given are
reasonable and not contrary to public policy or Law. Each Guarantor acknowledges
that it has either consulted with legal counsel regarding the effect of this
Guaranty




and the waivers and consents set forth herein, or has made an informed decision
not to do so. If this Guaranty or any of the waivers or consents herein are
determined to be unenforceable under or in violation of applicable Law, this
Guaranty and such waivers and consents shall be effective to the maximum extent
permitted by Law.

13. Costs and Expenses. Each Guarantor agrees to pay to the Creditor Parties all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) actually incurred by the Creditor Parties in
the enforcement or attempted enforcement of this Guaranty, whether or not an
action is filed in connection therewith, and in connection with any waiver or
amendment of any term or provision hereof. All reasonable advances, charges,
costs and expenses, including reasonable attorneys' fees and disbursements
(including the reasonably allocated cost of legal counsel employed by the
Creditor Parties), actually incurred or paid by the Creditor Parties in
exercising any right, privilege, power or remedy conferred by this Guaranty, or
in the enforcement or attempted enforcement thereof, shall be subject hereto and
shall become a part of the Guarantied Obligations and shall be paid to the
Creditor Parties by each Guarantor, immediately upon demand, together with
interest thereon at the rate(s) provided for under the Loan Agreement.

14. Liability. The liability of each Guarantor hereunder is independent of any
other guaranties at any time in effect with respect to all or any part of the
Guarantied Obligations, and each Guarantor's liability hereunder may be enforced
regardless of the existence of any such guaranties. Any termination by or
release of any guarantor in whole or in part (whether it be another Guarantor
under this instrument or not) shall not affect the continuing liability of any
Guarantor hereunder, and no notice of any such termination or release shall be
required.

15. Joinder. Any other Person may become a Guarantor under and become bound by
the terms and conditions of this Guaranty by executing and delivering to the
Administrative Agent an Instrument of Joinder substantially in the form attached
hereto as Exhibit A, accompanied by such documentation as the Administrative
Agent may reasonably require to establish the due organization, valid existence
and good standing of such Person, its qualification to engage in business in
each material jurisdiction in which it is required to be so qualified, its
authority to execute, deliver and perform this Guaranty, and the identity,
authority and capacity of each Responsible Official thereof authorized to act on
its behalf.

16. Release of Guarantors. This Guaranty and all Guarantied Obligations of
Guarantors hereunder shall be released when all Obligations of each Party to any
Loan Document have been paid in full in Cash or otherwise performed in full and
when no portion of the Commitment remains outstanding. Upon such release of any
or all of Guarantors' Guarantied Obligations hereunder, the Administrative Agent
shall endorse, execute, deliver, record and file all instruments and documents,
and do all other acts and things, reasonably required to evidence or document
the release of the Creditor Parties' rights arising under this Guaranty, all as
reasonably requested by, and at the sole expense of, Guarantors.

17. WAIVER OF JURY TRIAL. EACH GUARANTOR AND EACH CREDITOR PARTY HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS GUARANTY, ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS GUARANTY, ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH




CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE; AND EACH GUARANTOR AND EACH CREDITOR PARTY HEREBY AGREES
AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY GUARANTOR OR CREDITOR PARTY
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

18. JURISDICTION. EACH GUARANTOR AND EACH CREDITOR PARTY HEREBY AGREE AND INTEND
THAT THE PROPER AND EXCLUSIVE FORUM FOR ANY LITIGATION OF ANY DISPUTES OR
CONTROVERSIES ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENTS SHALL BE THE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY
OF LOS ANGELES. NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE THAT, WITH
RESPECT TO ANY COLLATERAL GIVEN BY ANY GUARANTOR OR ANY AFFILIATE THEREOF TO ANY
OF THE CREDITOR PARTIES LOCATED IN STATES OR JURISDICTIONS OTHER THAN
CALIFORNIA, OR IN COUNTIES OF CALIFORNIA OTHER THAN LOS ANGELES COUNTY, THE
ADMINISTRATIVE AGENT SHALL BE ENTITLED ON BEHALF OF SUCH CREDITOR PARTIES TO
COMMENCE ACTIONS IN SUCH STATES OR JURISDICTIONS, OR IN SUCH COUNTIES OF
CALIFORNIA, AGAINST THE GUARANTORS OR ANY AFFILIATE THEREOF OR OTHER PERSONS FOR
THE PURPOSE OF SEEKING PROVISIONAL REMEDIES, INCLUDING ACTIONS FOR CLAIM AND
DELIVERY OF PROPERTY, OR FOR INJUNCTIVE RELIEF OR APPOINTMENT OF A RECEIVER, OR
ACTIONS TO FORECLOSE UPON LIENS GRANTED TO THE CREDITOR PARTIES. EACH GUARANTOR
UNDER THIS GUARANTY, TO THE EXTENT PERMITTED BY APPLICABLE LAWS, HEREBY
EXPRESSLY WAIVES ANY DEFENCE OR OBJECTION TO JURISDICTION OR VENUE BASED ON THE
DOCTRINE OF FORUM NON CONVENIENS, AND STIPULATES THAT THE SUPERIOR COURT OF THE
STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO SHALL HAVE IN PERSONAM
JURISDICTION AND VENUE OVER SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY DISPUTE
OR CONTROVERSY ARISING OUT OF OR RELATED TO THIS GUARANTY OR ANY OTHER LOAN
DOCUMENTS. IN THE EVENT ANY GUARANTOR OR ANY AFFILIATE THEREOF SHOULD COMMENCE
OR MAINTAIN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENTS IN A FORUM OTHER THAN THE SUPERIOR COURT OF THE
STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO, THE CREDITOR PARTIES SHALL
BE ENTITLED TO REQUEST THE DISMISSAL OR STAY OF SUCH ACTION OR PROCEEDING, AND
THE GUARANTORS AND THEIR AFFILIATES STIPULATE THAT SUCH ACTION OR PROCEEDING
SHALL BE DISMISSED OR STAYED.

19. THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.


        IN WITNESS WHEREOF, each Guarantor has executed this Guaranty by its
duly authorized officer as of the date first written above.


                                       "Guarantors"

                                       JAKKS ACQUISITION CORP.
                                       J-X ENTERPRISES, INC.
                                       BERK CORPORATION
                                       PENTECH COSMETICS, INC.
                                       SAWDUST PENCIL CO.
                                       PENTECH-MON AMI, INC.
                                       JP FERRERO PARKWAY, INC.

                                       By: /s/ JOEL M. BENNETT
                                          --------------------------------------
                                           Joel M. Bennett

                                       Title: Exec. V.P./C.F.O.
                                             -----------------------------------
                                             of each of the foregoing

                                       Address for Guarantors:

                                       22619 Pacific Coast Highway
                                       Malibu, California 90025





                                    EXHIBIT A
                                       TO
                                    GUARANTY

                              INSTRUMENT OF JOINDER

        THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of __________,
____, by _____________________________________, a ___________________________
("Joining Party"), and delivered to Bank of America, N.A., as the Administrative
Agent under the Loan Agreement referred to below (the "Administrative Agent"),
pursuant to the Guaranty dated as of ________, 2001 made by each of the parties
listed on the signature pages thereto (each a "Guarantor" and collectively,
"Guarantors") in favor of the Administrative Agent and each of the lenders that
are party to the Loan Agreement referred to below (each a "Lender" and
collectively, the "Lenders") (as the same may be amended or supplemented from
time to time, the "Guaranty"). Terms used but not defined in this Joinder shall
have the meanings defined for those terms in the Guaranty.

                                    RECITALS

(1) The Guaranty was made by Guarantors in favor of Bank of America, N.A.
pursuant to that certain Loan Agreement dated as of October 12, 2001, by and
among JAKKS Pacific, Inc., a Delaware corporation (the "Company"), Flying Colors
Toys, Inc., a Michigan corporation, Road Champs, Inc., a Delaware corporation,
and Pentech International Inc., a Delaware corporation (collectively, and
together with Company, "Borrowers"), the Lenders and the Administrative Agent
(as the same may be amended or supplemented from time to time, the "Loan
Agreement").

(2) Joining Party is required pursuant to the Loan Agreement to become a
Guarantor.

(3) Joining Party expects to realize direct and indirect benefits as a result of
the availability to the Borrowers of the loan facility under the Loan Agreement.

                NOW THEREFORE, Joining Party agrees as follows:

                                    AGREEMENT

(2) By this Joinder, Joining Party becomes a "Guarantor" under and pursuant to
Section 15 of the Guaranty. Joining Party agrees that, upon its execution
hereof, it will become a Guarantor under the Guaranty with respect to all
Obligations heretofore or hereafter incurred under the Loan Documents, and will
be bound by all terms, conditions, and duties applicable to a Guarantor under
the Guaranty.

(3) The effective date of this Joinder is _________, ____.

"Joining Party"

_____________________________________________________________________________

a ___________________________________________________________________________



                                      -1-


By:

Name:
Title:


Address:

Attn:
Telephone:
Facsimile:


 ACKNOWLEDGED:

BANK OF AMERICA, N.A.
as Administrative Agent

By:

Name:

Title:



                                      -11-



                                                                   EXHIBIT 15(I)

                               SECURITY AGREEMENT

                                   (GUARANTOR)

        This SECURITY AGREEMENT ("Agreement"), dated as of October 12, 2001, is
made by JAKKS ACQUISITION CORP., a Delaware corporation, J-X ENTERPRISES, INC.,
a New York corporation, BERK CORPORATION, a California corporation, JP FERRERO
PARKWAY, INC., a California corporation, PENTECH COSMETICS, INC., a Delaware
corporation, SAWDUST PENCIL CO., a Delaware corporation and PENTECH-MON AMI,
INC., a Delaware corporation (each a "Grantor" and, collectively, "Grantors"),
jointly and severally in favor of BANK OF AMERICA, N.A., as Administrative Agent
under the Loan Agreement hereafter referred to, the Lenders therein named and in
favor of each of the Lenders which may hereafter become a party thereto,
collectively as Secured Party, with reference to the following facts:

                                    RECITALS

        A. Grantors have guaranteed the obligations of JAKKS PACIFIC, INC.,
FLYING COLORS TOYS, INC., ROAD CHAMPS, INC. and PENTECH INTERNATIONAL INC.
(collectively, "Borrowers") pursuant to a Loan Agreement of even date herewith
among Borrowers, the Lenders referred to therein, and Bank of America, N.A., as
Administrative Agent (as it may from time to time be amended, restated,
extended, renewed, modified or supplemented, the "Loan Agreement"). This
Agreement is the Guarantor Security Agreement referred to in the Loan Agreement
and is one of the "Loan Documents" referred to in the Loan Agreement.

        B. Pursuant to the Loan Documents of even date the Lenders are making
certain credit facilities available to Borrowers.

        C. As a condition of the availability of such credit facilities,
Grantors are required to enter into this Agreement to grant security interests
to Secured Party as herein provided.

        D. Each Grantor expects to realize direct and indirect benefits from the
execution of this Agreement.

                                    AGREEMENT

        NOW, THEREFORE, in order to induce Secured Party to extend the
aforementioned credit facilities, and for other good and valuable consideration,
the receipt and adequacy of which hereby is acknowledged, Grantors hereby
jointly and severally represent, warrant, covenant, agree, assign and grant as
follows:

        1. Definitions. Terms defined in the Loan Agreement and not otherwise
defined in this Agreement shall have the meanings defined for those terms in the
Loan Agreement. Terms defined in the California Uniform Commercial Code (as
amended from time to time) and not otherwise defined in this Agreement or in the
Loan Agreement shall have the meanings defined for those terms in the Uniform
Commercial Code, as enacted in the State of California. In addition, as used in
this Agreement, the following terms shall have the meanings respectively set
forth after each:

                "Agreement" means this Security Agreement, and any extensions,
        modifications, renewals, restatements, supplements or amendments hereof.



                                      -1-


                "Collateral" means and includes all present and future right,
        title and interest of Grantors or any of them in or to any personal
        property whatsoever, and all rights and powers of Grantors, or any of
        them to transfer any interest in or to any personal property whatsoever,
        including, without limitation, any and all of the following personal
        property:

                        (a) All present and future accounts, accounts
                receivable, agreements, contracts, leases, contract rights,
                payment intangibles, rights to payment, instruments, documents,
                chattel paper (whether tangible or electronic), security
                agreements, guaranties, letters of credit, letter-of-credit
                rights, undertakings, surety bonds, insurance policies, notes
                and drafts, and all forms of obligations owing to Grantors, or
                any of them, or in which Grantors, or any of them may have any
                interest, however created or arising;

                        (b) All present and future general intangibles, all tax
                refunds of every kind and nature to which Grantors, or any of
                them now or hereafter may become entitled, however arising, all
                other refunds, and all deposits, goodwill, choses in action,
                trade secrets, computer programs, software, customer lists,
                trademarks, trade names, service marks, patents, licenses,
                copyrights, technology, processes, proprietary information and
                insurance proceeds;

                        (c) All present and future deposit accounts of Grantors
                or any of them, including, without limitation, any demand, time,
                savings, passbook or like account maintained by Grantors, or any
                of them with any bank, savings and loan association, credit
                union or like organization, and all money, Cash and Cash
                Equivalents of Grantors, or any of them, whether or not
                deposited in any such deposit account;

                        (d) All present and future books and records, including,
                without limitation, books of account and ledgers of every kind
                and nature, all electronically recorded data relating to
                Grantors or their businesses, all receptacles and containers for
                such records, and all files and correspondence;

                        (e) All present and future goods, including, without
                limitation, all consumer goods, farm products, inventory,
                equipment, machinery, tools, molds, dies, furniture,
                furnishings, fixtures, trade fixtures, motor vehicles and all
                other goods used in connection with or in the conduct of
                Grantors', or any of their businesses;

                        (f) All present and future inventory and merchandise,
                including, without limitation, all present and future goods held
                for sale or lease or to be furnished under a contract of
                service, all raw materials, work in process and finished goods,
                all packing materials, supplies and containers relating to or
                used in connection with any of the foregoing, and all bills of
                lading, warehouse receipts or documents of title relating to any
                of the foregoing;

                        (g) All present and future investment property, stocks,
                bonds, debentures, securities (whether certificated or
                uncertificated), subscription rights, options, warrants, puts,
                calls, certificates, partnership interests, limited liability
                company memberships or other interests, joint venture interests,
                Investments and/or brokerage accounts and all rights,
                preferences, privileges, dividends, distributions,



                                      -2-


                redemption payments, or liquidation payments with respect
                thereto;

                        (h) All present and future accessions, appurtenances,
                components, repairs, repair parts, spare parts, replacements,
                substitutions, additions, issue and/or improvements to or of or
                with respect to any of the foregoing;

                        (i) All other tangible and intangible personal property
                of Grantors, or any of them;

                        (j) All rights, remedies, powers and/or privileges of
                Grantors, or any of them with respect to any of the foregoing;
                and

                        (k) Any and all proceeds and products of any of the
                foregoing, including, without limitation, all money, accounts,
                payment intangibles, general intangibles, deposit accounts,
                promissory notes, documents, instruments, certificates of
                deposit, chattel paper, goods, insurance proceeds, and any other
                tangible or intangible property received upon the sale or
                disposition of any of the foregoing.

                "Secured Obligations" means any and all present and future
        Obligations of any type or nature of Grantors, or any one or more of
        them, arising under or relating to the Guaranty, of even date herewith,
        made by Grantors in favor of Secured Party. The Guaranty relates to the
        Loan Agreement and the Loan Documents or any one or more of them, and
        all obligations thereunder whether due or to become due, matured or
        unmatured, liquidated or unliquidated, or contingent or noncontingent,
        including Obligations of performance as well as Obligations of payment,
        and including interest that accrues after the commencement of any
        bankruptcy or insolvency proceeding by or against any Grantor.

                "Secured Party" means the Administrative Agent under the Loan
        Agreement, the Lenders therein named and each of the Lenders which may
        hereafter become a party thereto. All rights of the Secured Party under
        this Agreement shall be exercised by the Administrative Agent, acting
        with the consent of those Lenders required by the Loan Agreement.

        2. Further Assurances. At any time and from time to time at the request
of Secured Party, Grantors, and each of them, shall execute and deliver to
Secured Party all such financing statements and other instruments and documents
in form and substance satisfactory to Secured Party as shall be necessary or
desirable to fully perfect, when filed and/or recorded, Secured Party's security
interests granted pursuant to Section 3 of this Agreement. At any time and from
time to time, Secured Party shall be entitled to file and/or record any or all
such financing statements, instruments and documents held by it, and any or all
such further financing statements, documents and instruments, and to take all
such other actions, as Secured Party may deem appropriate to perfect and to
maintain perfected the security interests granted in Section 3 of this
Agreement. Before and after the occurrence of any Event of Default, at Secured
Party's request, Grantors, and each of them, shall execute all such further
financing statements, instruments and documents, and shall do all such further
acts and things, as may be deemed necessary or desirable by Secured Party to
create and perfect, and to continue and preserve, an indefeasible security
interest in the Collateral in favor of Secured Party, or the priority thereof.
With respect to any Collateral consisting of certificated securities,
instruments, documents, certificates of title or the like, as to which Secured
Party's security interest need be perfected by, or the priority thereof need be
assured by, possession or control of such



                                      -3-


Collateral, Grantors, and each of them, will upon demand of Secured Party
deliver possession or control, as applicable, of same in pledge to Secured
Party. With respect to any Collateral consisting of securities, instruments,
partnership or joint venture interests, limited liability company memberships or
the like, Grantors hereby jointly and severally consent and agree that the
issuers of, or obligors on, any such Collateral, or any registrar or transfer
agent or trustee for any such Collateral, shall be entitled to accept the
provisions of this Agreement as conclusive evidence of the right of Secured
Party to effect any transfer or exercise any right hereunder or with respect to
any such Collateral, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by Grantors, or any of them, or any other
Person to such issuers or such obligors or to any such registrar or transfer
agent or trustee.

        3. Security Agreement. For valuable consideration, Grantors hereby
jointly and severally assign and pledge to Secured Party, and grant to Secured
Party a security interest in, all presently existing and hereafter acquired
Collateral, as security for the timely payment and performance of the Secured
Obligations, and each of them. This Agreement is a continuing and irrevocable
agreement and all the rights, powers, privileges and remedies hereunder shall
apply to any and all Secured Obligations, including those arising under
successive transactions which shall either continue the Secured Obligations,
increase or decrease them, or from time to time create new Secured Obligations
after all or any prior Secured Obligations have been satisfied, and
notwithstanding the bankruptcy of any Grantor or any other Person or any other
event or proceeding affecting any Person.

        4. Grantors' Representations, Warranties and Agreements. Except as
otherwise disclosed to Secured Party in writing concurrently herewith, Grantors
jointly and severally represent, warrant, and agree that: (a) Grantors will pay,
prior to delinquency, all taxes, charges, Liens and assessments against the
Collateral, except such as are expressly permitted by the Loan Agreement or are
timely contested in good faith, and upon its failure to pay or so contest such
taxes, charges, Liens and assessments, Secured Party at its option may pay any
of them, and Secured Party shall be the sole judge of the legality or validity
thereof and the amount necessary to discharge the same; (b) the Collateral will
not be knowingly used for any unlawful purpose or in material violation of any
Law, regulation or ordinance, nor used in any way that will void or impair any
insurance required to be carried in connection therewith; (c) Grantors will, to
the extent consistent with good business practice, keep the Collateral in
reasonably good repair, working order and condition, and from time to time make
all needful and proper repairs, renewals, replacements, additions and
improvements thereto and, as appropriate and applicable, will otherwise deal
with the Collateral in all such ways as are considered good practice by owners
of like Property; (d) Grantors will take all steps to preserve and protect the
Collateral; (e) Grantors will maintain, with responsible insurance companies,
insurance covering the Collateral against such insurable losses as is required
by the Loan Agreement and as is consistent with sound business practice, and
will cause Secured Party to be designated as an additional insured and loss
payee with respect to such insurance, will obtain the written agreement of the
insurers that such insurance shall not be canceled, terminated or materially
modified to the detriment of Secured Party without at least 30 days prior
written notice to Secured Party, and will furnish copies of such insurance
policies or certificates to Secured Party promptly upon request therefor; and
(f) Grantors will promptly notify Secured Party in writing in the event of any
substantial or material damage to the Collateral from any source whatsoever,
and, except for the disposition of collections and other proceeds of the
Collateral permitted by Section 6 hereof, Grantors will not remove or permit to
be removed any part of the Collateral from its place of business without the
prior written consent of Secured Party, except for such items of the Collateral
as are removed in the ordinary course of business or in connection with any
transaction or disposition otherwise permitted by the Loan Documents.



                                      -4-


        5. Secured Party's Rights Re Collateral. At any time (whether or not an
Event of Default has occurred), without notice or demand and at the expense of
Grantors, Secured Party may, to the extent it may be necessary or desirable to
protect the security hereunder, but Secured Party shall not be obligated to: (a)
enter upon any premises on which Collateral is situated upon reasonable notice
and examine the same or (b) upon any Event of Default, to perform any obligation
of Grantors under this Agreement or any obligation of any other Person under the
Loan Documents. Grantors shall maintain books and records pertaining to the
Collateral in such detail, form and scope as is consistent with Grantors' past
practices. Grantors shall at any time at Secured Party's request mark the
Collateral and/or Grantors' ledger cards, books of account and other records
relating to the Collateral with appropriate notations satisfactory to Secured
Party disclosing that they are subject to Secured Party's security interests.
Secured Party shall at all times on reasonable notice have full access to and
the right to audit any and all of Grantors' books and records pertaining to the
Collateral, and to confirm and verify the value of the Collateral and to do
whatever else Secured Party reasonably may deem necessary or desirable to
protect its interests; provided, however, that any such action which involves
communicating with customers of Grantors shall be carried out by Secured Party
through Grantors' independent auditors unless Secured Party shall then have the
right directly to notify obligors on the Collateral as provided in Section 9.
Secured Party shall be under no duty or obligation whatsoever to take any action
to preserve any rights of or against any prior or other parties in connection
with the Collateral, to exercise any voting rights or managerial rights with
respect to any Collateral, whether or not an Event of Default shall have
occurred, or to make or give any presentments, demands for performance, notices
of non-performance, protests, notices of protests, notices of dishonor or
notices of any other nature whatsoever in connection with the Collateral or the
Secured Obligations. Secured Party shall be under no duty or obligation
whatsoever to take any action to protect or preserve the Collateral or any
rights of any Grantor therein, or to make collections or enforce payment
thereon, or to participate in any foreclosure or other proceeding in connection
therewith.

        6. Collections on the Collateral. Except as otherwise provided in any
Loan Document, Grantors shall have the right to use, dispose of and to continue
to make collections on and receive dividends and other proceeds of all of the
Collateral in the ordinary course of business so long as no Event of Default
shall have occurred and be continuing. Upon the occurrence and during the
continuance of an Event of Default, at the option of Secured Party, except as
prohibited by applicable Law, Grantors' right to make collections on and receive
dividends and other proceeds of the Collateral and to use or dispose of such
collections and proceeds shall terminate, and any and all dividends, proceeds
and collections, including all partial or total prepayments, then held or
thereafter received on or on account of the Collateral will be held or received
by Grantors in trust for Secured Party and immediately delivered in kind to
Secured Party. Any remittance received by Grantors from any Person shall be
presumed to relate to the Collateral and to be subject to Secured Party's
security interests. Upon the occurrence and during the continuance of an Event
of Default, Secured Party shall have the right at all times to receive, receipt
for, endorse, assign, deposit and deliver, in the name of Secured Party or in
the name of Grantors, any and all checks, notes, drafts and other instruments
for the payment of money constituting proceeds of or otherwise relating to the
Collateral; and each Grantor hereby authorizes Secured Party to affix, by
facsimile signature or otherwise, the general or special endorsement of it, in
such manner as Secured Party shall deem advisable, to any such instrument in the
event the same has been delivered to or obtained by Secured Party without
appropriate endorsement, and Secured Party and any collecting bank are hereby
authorized to consider such endorsement to be a sufficient, valid and effective
endorsement by Grantors, and each of them, to the same extent as though it were
manually executed by the duly authorized officer of each Grantor, regardless of
by whom or under what circumstances or by what authority such facsimile



                                      -5-


signature or other endorsement actually is affixed, without duty of inquiry or
responsibility as to such matters, and each Grantor hereby expressly waives
demand, presentment, protest and notice of protest or dishonor and all other
notices of every kind and nature with respect to any such instrument.

        7. Possession of Collateral by Secured Party. All the Collateral now,
heretofore or hereafter delivered to Secured Party shall be held by Secured
Party in its possession, custody and control. Any or all of the cash Collateral
delivered to Secured Party will be held in an interest bearing account until it
is applied in accordance with the terms hereof. Nothing herein shall obligate
Secured Party to invest any Collateral or obtain any particular return thereon.
Upon the occurrence and during the continuance of an Event of Default, whenever
any of the Collateral is in Secured Party's possession, custody or control,
Secured Party may use, operate and consume the Collateral, as reasonably
necessary, whether for the purpose of preserving and/or protecting the
Collateral, or for the purpose of performing any of Grantors' obligations with
respect thereto, or otherwise. Secured Party may at any time deliver or
redeliver the Collateral or any part thereof to Grantors, and the receipt of any
of the same by Grantors shall be complete and full acquittance for the
Collateral so delivered, and Secured Party thereafter shall be discharged from
any liability or responsibility therefor. Notwithstanding anything to the
contrary in this Agreement, so long as Secured Party exercises reasonable care
with respect to any Collateral in its possession, custody or control, Secured
Party shall have no liability for any loss of or damage to such Collateral, and
in no event shall Secured Party have liability for any diminution in value of
Collateral occasioned by economic or market conditions or events. Secured Party
shall be deemed to have exercised reasonable care within the meaning of the
preceding sentence if the Collateral in the possession, custody or control of
Secured Party is accorded treatment substantially equal to that which Secured
Party accords its own property, it being understood that Secured Party shall not
have any responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relating to
any Collateral, whether or not Secured Party has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any Person with respect to any Collateral.

        8. Events of Default. There shall be an Event of Default hereunder upon
the occurrence and during the continuance of an Event of Default under the Loan
Agreement.

        9. Rights Upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default, Secured Party shall have, in any
jurisdiction where enforcement hereof is sought, in addition to all other rights
and remedies that Secured Party may have under applicable Law or in equity or
under this Agreement (including, without limitation, all rights set forth in
Section 6 hereof) or under any other Loan Document, all rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any jurisdiction,
and, in addition, the following rights and remedies, all of which may be
exercised with or without notice to Grantors and without affecting the
Obligations of Grantors hereunder or under any other Loan Document, or the
enforceability of the Liens and security interests created hereby: (a) to
foreclose the Liens and security interests created hereunder or under any other
agreement relating to any Collateral by any available judicial procedure or
without judicial process; (b) to enter any premises where any Collateral may be
located for the purpose of securing, protecting, inventorying, appraising,
inspecting, repairing, preserving, storing, preparing, processing, taking
possession of or removing the same; (c) to sell, assign, lease or otherwise
dispose of any Collateral or any part thereof, either at public or private sale
or at any broker's board, in lot or in bulk, for cash, on credit or otherwise,
with or without representations or warranties and upon such terms as shall be
acceptable to Secured Party; (d) to notify obligors on the Collateral that the
Collateral has been assigned to Secured Party and that all



                                      -6-


payments thereon are to be made directly and exclusively to Secured Party; (e)
to collect by legal proceedings or otherwise all dividends, distributions,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral; (f) to enter into any extension, reorganization, deposit, merger
or consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in connection therewith Secured Party may deposit or surrender
control of the Collateral and/or accept other Property in exchange for the
Collateral; (g) to settle, compromise or release, on terms acceptable to Secured
Party, in whole or in part, any amounts owing on the Collateral and/or any
disputes with respect thereto; (h) to extend the time of payment, make
allowances and adjustments and issue credits in connection with the Collateral
in the name of Secured Party or in the name of Grantors; (i) to enforce payment
and prosecute any action or proceeding with respect to any or all of the
Collateral and take or bring, in the name of Secured Party or in the name of
Grantors, any and all steps, actions, suits or proceedings deemed by Secured
Party necessary or desirable to effect collection of or to realize upon the
Collateral, including any judicial or nonjudicial foreclosure thereof or
thereon, and each Grantor specifically consents to any nonjudicial foreclosure
of any or all of the Collateral or any other action taken by Secured Party which
may release any obligor from personal liability on any of the Collateral, and
each Grantor waives any right not expressly provided for in this Agreement to
receive notice of any public or private judicial or nonjudicial sale or
foreclosure of any security or any of the Collateral; and any money or other
property received by Secured Party in exchange for or on account of the
Collateral, whether representing collections or proceeds of Collateral, and
whether resulting from voluntary payments or foreclosure proceedings or other
legal action taken by Secured Party or Grantors may be applied by Secured Party
without notice to Grantors to the Secured Obligations in such order and manner
as Secured Party in its sole discretion shall determine; (j) to insure, process
and preserve the Collateral; (k) to exercise all rights, remedies, powers or
privileges provided under any of the Loan Documents; (l) to remove, from any
premises where the same may be located, the Collateral and any and all
documents, instruments, files and records, and any receptacles and cabinets
containing the same, relating to the Collateral, and Secured Party may, at the
cost and expense of Grantors, use such of its supplies, equipment, facilities
and space at its places of business as may be necessary or appropriate to
properly administer, process, store, control, prepare for sale or disposition
and/or sell or dispose of the Collateral or to properly administer and control
the handling of collections and realizations thereon, and Secured Party shall be
deemed to have a rent-free tenancy of any premises of Grantors for such purposes
and for such periods of time as reasonably required by Secured Party; (m) to
receive, open and dispose of all mail addressed to Grantors or any of them and
notify postal authorities to change the address for delivery thereof to such
address as Secured Party may designate; provided that Secured Party agrees that
it will promptly deliver over to Grantors such mail as does not relate to the
Collateral; and (n) to exercise all other rights, powers, privileges and
remedies of an owner of the Collateral; all at Secured Party's sole option and
as Secured Party in its sole discretion may deem advisable. Grantors will, at
Secured Party's request, assemble the Collateral and make it available to
Secured Party at places which Secured Party may designate, whether at the
premises of Grantors or elsewhere, and will make available to Secured Party,
free of cost, all premises, equipment and facilities of Grantors for the purpose
of Secured Party's taking possession of the Collateral or storing same or
removing or putting the Collateral in salable form or selling or disposing of
same.

        Upon the occurrence and during the continuance of an Event of Default,
Secured Party also shall have the right, without notice or demand, either in
person, by agent or by a receiver to be appointed by a court, and without regard
to the adequacy of any security for the Secured Obligations, to take possession
of the Collateral or any part thereof and to collect and receive the rents,
issues, profits, income and proceeds thereof. Taking possession of the
Collateral shall not cure or waive any Event of Default or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and powers
of any receiver appointed by a court shall be as ordered by said



                                      -7-


court.

        Any public or private sale or other disposition of the Collateral may be
held at any office of Secured Party, or at any Grantors' place of business, or
at any other place permitted by applicable Law, and without the necessity of the
Collateral's being within the view of prospective purchasers. Secured Party may
direct the order and manner of sale of the Collateral, or portions thereof, as
it in its sole and absolute discretion may determine, and Grantors expressly
waive any right to direct the order and manner of sale of any Collateral.
Secured Party or any Person on Secured Party's behalf may bid and purchase at
any such sale or other disposition. The net cash proceeds resulting from the
collection, liquidation, sale, lease or other disposition of the Collateral
shall be applied, first, to the expenses (including attorneys' fees and
disbursements) of retaking, holding, storing, processing and preparing for sale
or lease, selling, leasing, collecting, liquidating and the like, and then to
the satisfaction of the Secured Obligations in such order as shall be determined
by Secured Party in its sole and absolute discretion. Grantors and any other
Person then obligated therefor shall pay to Secured Party on demand any
deficiency with regard thereto which may remain after such sale, disposition,
collection or liquidation of the Collateral.

        Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Secured Party
will send or otherwise make available to Grantors notice of the time and place
of any public sale thereof or of the time on or after which any private sale
thereof is to be made. The requirement of sending notice conclusively shall be
met if such notice is given in the manner contemplated by the Loan Agreement at
least ten (10) days before the date of the sale. Each Grantor expressly waives
any right to receive notice of any public or private sale of any Collateral or
other security for the Secured Obligations except as expressly provided for in
this paragraph.

        With respect to any Collateral consisting of securities, partnership
interests, joint venture interests, limited liability company memberships,
Investments or the like, and whether or not any of such Collateral has been
effectively registered under the Securities Act of 1933 or other applicable
Laws, Secured Party may, in its sole and absolute discretion, sell all or any
part of such Collateral at private sale in such manner and under such
circumstances as Secured Party may deem necessary or advisable in order that the
sale may be lawfully conducted. Without limiting the foregoing, Secured Party
may (i) approach and negotiate with a limited number of potential purchasers,
and (ii) restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing such Collateral for their own
account for investment and not with a view to the distribution or resale
thereof. In the event that any such Collateral is sold at private sale, each
Grantor agrees that if such Collateral is sold for a price which Secured Party
in good faith believes to be reasonable under the circumstances then existing,
then (a) the sale shall be deemed to be commercially reasonable in all respects,
(b) no Grantor shall not be entitled to a credit against the Secured Obligations
in an amount in excess of the purchase price, and (c) Secured Party shall not
incur any liability or responsibility to any Grantor in connection therewith,
notwithstanding the possibility that a substantially higher price might have
been realized at a public sale. Each Grantor recognizes that a ready market may
not exist for such Collateral if it is not regularly traded on a recognized
securities exchange, and that a sale by Secured Party of any such Collateral for
an amount substantially less than a pro rata share of the fair market value of
the issuer's assets minus liabilities may be commercially reasonable in view of
the difficulties that may be encountered in attempting to sell a large amount of
such Collateral or Collateral that is privately traded.



                                      -8-


        Upon consummation of any sale of Collateral hereunder, Secured Party
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such sale
shall hold the Collateral so sold absolutely free from any claim or right upon
the part of any Grantor or any other Person, and each Grantor hereby waives (to
the extent permitted by applicable Laws) all rights of redemption, stay and
appraisal which it now has or may at any time in the future have under any rule
of Law or statute now existing or hereafter enacted. If the sale of all or any
part of the Collateral is made on credit or for future delivery, Secured Party
shall not be required to apply any portion of the sale price to the Secured
Obligations until such amount actually is received by Secured Party, and any
Collateral so sold may be retained by Secured Party until the sale price is paid
in full by the purchaser or purchasers thereof. Secured Party shall not incur
any liability in case any such purchaser or purchasers shall fail to pay for the
Collateral so sold, and, in case of any such failure, the Collateral may be sold
again.

        10. Voting Rights; Dividends; etc. With respect to any Collateral
consisting of securities, partnership interests, joint venture interests,
limited liability company memberships, Investments or the like (referred to
collectively and individually in this Section 10 and in Section 11 as the
"Investment Collateral"), so long as no Event of Default occurs and remains
continuing:

                (a) Voting Rights. Grantors shall be entitled to exercise any
        and all voting and other consensual rights pertaining to the Investment
        Collateral, or any part thereof, for any purpose not inconsistent with
        the terms of this Agreement, the Loan Agreement, or the other Loan
        Documents; provided, however, that Grantors shall not exercise, or shall
        refrain from exercising, any such right if it would result in a Default.

                (b) Dividend and Distribution Rights. Except as otherwise
        provided in any Loan Document, Grantors shall be entitled to receive and
        to retain and use any and all dividends or distributions paid in respect
        of the Investment Collateral; provided, however, that any and all such
        dividends or distributions received in the form of capital stock,
        certificated securities, warrants, options or rights to acquire capital
        stock or certificated securities forthwith shall be, and the
        certificates representing such capital stock or certificated securities,
        if any, forthwith shall be delivered to Secured Party to hold as pledged
        Collateral and shall, if received by Grantors, be received in trust for
        the benefit of Secured Party, be segregated from the other Property of
        Grantors, and forthwith be delivered to Secured Party as pledged
        Collateral in the same form as so received (with any necessary
        endorsements).

        11. Rights During Event of Default. With respect to any Investment
Collateral, so long as an Event of Default has occurred and is continuing:

                (a) Voting, Dividend, and Distribution Rights. At the option of
        Secured Party, all rights of Grantors to exercise the voting and other
        consensual rights which it would otherwise be entitled to exercise
        pursuant to Section 10(a) above, and to receive the dividends and
        distributions which it would otherwise be authorized to receive and
        retain pursuant to Section 10(b) above, shall cease, and all such rights
        thereupon shall become vested in Secured Party which thereupon shall
        have the sole right to exercise such voting and other consensual rights
        and to receive and to hold as pledged Collateral such dividends and
        distributions.

                (b) Dividends and Distributions Held in Trust. All dividends and
        other distributions which are received by Grantors contrary to the
        provisions of this Agreement shall be received in trust for the benefit
        of Secured Party, shall be segregated from other funds of Grantors, and
        forthwith shall be paid over to Secured Party as pledged Collateral in
        the same form as so



                                      -9-


        received (with any necessary endorsements).

                (c) Irrevocable Proxy. Each Grantor hereby revokes all previous
        proxies with regard to the Investment Collateral and appoints Secured
        Party as its proxyholder to attend and vote at any and all meetings of
        the shareholders or other equity holders of the Persons that issued the
        Investment Collateral and any adjournments thereof, held on or after the
        date of the giving of this proxy and prior to the termination of this
        proxy, and to execute any and all written consents of shareholders or
        equity holders of such Persons executed on or after the date of the
        giving of this proxy and prior to the termination of this proxy, with
        the same effect as if such Grantor had personally attended the meetings
        or had personally voted its shares or other interests or had personally
        signed the written consents; provided, however, that the proxyholder
        shall have rights hereunder only upon the occurrence and during the
        continuance of an Event of Default. Each Grantor hereby authorizes
        Secured Party to substitute another Person as the proxyholder and, upon
        the occurrence and during the continuance of any Event of Default,
        hereby authorizes the proxyholder to file this proxy and any
        substitution instrument with the secretary or other appropriate official
        of the appropriate Person. This proxy is coupled with an interest and is
        irrevocable until such time as all Secured Obligations have been paid
        and performed in full.

        12. Attorney-in-Fact. Each Grantor hereby irrevocably nominates and
appoints Secured Party as its attorney-in-fact for the following purposes: (a)
to do all acts and things which Secured Party may deem necessary or advisable to
perfect and continue perfected the security interests created by this Agreement
and, upon the occurrence and during the continuance of an Event of Default, to
preserve, process, develop, maintain and protect the Collateral; (b) upon the
occurrence and during the continuance of an Event of Default, to do any and
every act which such Grantor is obligated to do under this Agreement, at the
expense of the Grantors so obligated and without any obligation to do so; (c) to
prepare, sign, file and/or record, for such Grantor, in the name of such
Grantor, any financing statement, application for registration, or like paper,
and to take any other action deemed by Secured Party necessary or desirable in
order to perfect or maintain perfected the security interests granted hereby;
and (d) upon the occurrence and during the continuance of an Event of Default,
to execute any and all papers and instruments and do all other things necessary
or desirable to preserve and protect the Collateral and to protect Secured
Party's security interests therein; provided, however, that Secured Party shall
be under no obligation whatsoever to take any of the foregoing actions, and,
absent bad faith or actual malice, Secured Party shall have no liability or
responsibility for any act taken or omission with respect thereto.

        13. Costs and Expenses. Each Grantor agrees to pay to Secured Party all
costs and expenses (including, without limitation, attorneys' fees and
disbursements) incurred by Secured Party in the enforcement or attempted
enforcement of this Agreement, whether or not an action is filed in connection
therewith, and in connection with any waiver or amendment of any term or
provision hereof. All advances, charges, costs and expenses, including
attorneys' fees and disbursements, incurred or paid by Secured Party in
exercising any right, privilege, power or remedy conferred by this Agreement
(including, without limitation, the right to perform any Secured Obligation of
such Grantor under the Loan Documents), or in the enforcement or attempted
enforcement thereof, shall be secured hereby and shall become a part of the
Secured Obligations and shall be paid to Secured Party by Grantor, immediately
upon demand, together with interest thereon at the Default Rate.

        14. Statute of Limitations and Other Laws. Until the Secured Obligations
shall



                                      -10-


have been paid and performed in full, the power of sale and all other rights,
privileges, powers and remedies granted to Secured Party hereunder shall
continue to exist and may be exercised by Secured Party at any time and from
time to time irrespective of the fact that any of the Secured Obligations may
have become barred by any statute of limitations. Each Grantor expressly waives
the benefit of any and all statutes of limitation, and any and all Laws
providing for exemption of property from execution or for valuation and
appraisal upon foreclosure, to the maximum extent permitted by applicable Law.

        15. Other Agreements. Nothing herein shall in any way modify or limit
the effect of terms or conditions set forth in any other security or other
agreement executed by Grantors, or any of them, or in connection with the
Secured Obligations, but each and every term and condition hereof shall be in
addition thereto. All provisions contained in the Loan Agreement or any other
Loan Document that apply to Loan Documents generally are fully applicable to
this Agreement and are incorporated herein by this reference.

        16. Understandings With Respect to Waivers and Consents. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein are
made after consultation with legal counsel and with full knowledge of their
significance and consequences, with the understanding that events giving rise to
any defense or right waived may diminish, destroy or otherwise adversely affect
rights which such Grantor otherwise may have against Secured Party or others, or
against Collateral, and that, under the circumstances, the waivers and consents
herein given are reasonable and not contrary to public policy or Law. If any of
the waivers or consents herein are determined to be contrary to any applicable
Law or public policy, such waivers and consents shall be effective to the
maximum extent permitted by Law.

        17. Release of Grantors. This Agreement and all Secured Obligations of
Grantors hereunder shall be released when all Secured Obligations have been paid
in full in cash or otherwise performed in full and when no portion of the
Commitment remains outstanding. Upon such release of Grantors' Secured
Obligations hereunder, Secured Party shall return any pledged Collateral to
Grantors, or to the Person or Persons legally entitled thereto, and shall
endorse, execute, deliver, record and file all instruments and documents, and do
all other acts and things, reasonably required for the return of the Collateral
to Grantors, or to the Person or Persons legally entitled thereto, and to
evidence or document the release of Secured Party's interests arising under this
Agreement, all as reasonably requested by, and at the sole expense of, Grantors.

        18. WAIVER OF JURY TRIAL. EACH GRANTOR AND SECURED PARTY EXPRESSLY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH GRANTOR AND SECURED PARTY AGREE THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY



                                      -11-


OR ENFORCEABILITY OF THIS AGREEMENT, THE LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

        19. Incorporation of Suretyship Provisions and Waivers. The attached
Exhibit A, "Suretyship Provisions and Waivers" is hereby incorporated by this
reference as though set forth herein in full.

        IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly
authorized officer as of the date first written above.


                                       "Grantors"

                                       JAKKS ACQUISITION CORP.
                                       J-X ENTERPRISES, INC.
                                       BERK CORPORATION
                                       JP FERRERO PARKWAY, INC.
                                       PENTECH COSMETICS, INC.
                                       SAWDUST PENCIL CO.
                                       PENTECH-MON AMI, INC.


                                       By: /s/ JOEL M. BENNETT
                                           Joel M. Bennett

                                       Title: C.F.O.
                                             of each of the foregoing



                                      -12-


                                    EXHIBIT A
                                       TO
                               SECURITY AGREEMENT

                        SURETYSHIP PROVISIONS AND WAIVERS

        1. Waivers and Consents. Each Grantor acknowledges that the Liens and
security interests created or granted herein will or may secure obligations of
Persons other than such Grantor and, in full recognition of that fact, each
Grantor consents and agrees that Secured Party may, at any time and from time to
time, without notice or demand, and without affecting the enforceability or
security hereof:

                (a) supplement, modify, amend, extend, renew, or otherwise
change the time for payment or the terms of the Obligations or any part thereof,
including any increase or decrease of the rate(s) of interest thereon;

                (b) supplement, modify, amend or waive, or enter into or give
any agreement, approval or consent with respect to, the Obligations or any part
thereof or any of the Loan Documents or any additional security or guaranties,
or any condition, covenant, default, remedy, right, representation or term
thereof or thereunder;

                (c) accept new or additional instruments, documents or
agreements in exchange for or relative to any of the Loan Documents or the
Obligations or any part thereof;

                (d) accept partial payments on the Obligations;

                (e) receive and hold additional security or guaranties for the
Obligations or any part thereof;

                (f) release, reconvey, terminate, waive, abandon, subordinate,
exchange, substitute, transfer and enforce any security or guaranties, and apply
any security and direct the order or manner of sale thereof as Secured Party in
its sole and absolute discretion may determine;

                (g) release any Person or any guarantor from any personal
liability with respect to the Obligations or any part thereof;

                (h) settle, release on terms satisfactory to Secured Party or by
operation of applicable Laws or otherwise liquidate or enforce any Obligations
and any security or guaranty therefor in any manner, consent to the transfer of
any security and bid and purchase at any sale; and

                (i) consent to the merger, change or any other restructuring or
termination of the corporate existence of any Borrower or any other Person, and
correspondingly restructure the Obligations, and any such merger, change,
restructuring or termination shall not affect the liability of any Grantor or
the continuing existence of any Liens hereunder, under any other Loan Document
to which any Grantor is a party or the enforceability hereof or thereof with
respect to all or any part of the Obligations.



                                      -13-


        Upon the occurrence of and during the continuance of any Event of
Default, Secured Party may enforce this Agreement independently as to each
Grantor and independently of any other remedy or security Secured Party at any
time may have or hold in connection with the Obligations, and it shall not be
necessary for Secured Party to marshal assets in favor of any Grantor, any
Borrower or any other Person or to proceed upon or against and/or exhaust any
other security or remedy before proceeding to enforce this Agreement. Each
Grantor expressly waives any right to require Secured Party to marshal assets in
favor of such Grantor, any Borrower or any other Person or to proceed against
any other Person or any collateral provided by any other Person, and agrees that
Secured Party may proceed against any Person and/or collateral in such order as
it shall determine in its sole and absolute discretion. Secured Party may file a
separate action or actions against any Grantor, whether action is brought or
prosecuted with respect to any other security or against any other Grantor, any
Borrower or any other Person, or whether any other Person is joined in any such
action or actions. Each Grantor agrees that Secured Party and the Borrowers and
any other Person may deal with each other in connection with the Obligations or
otherwise, or alter any contracts or agreements now or hereafter existing
between any of them, in any manner whatsoever, all without in any way altering
or affecting the security of this Agreement. Secured Party's rights hereunder
shall be reinstated and revived, and the enforceability of this Agreement shall
continue, with respect to any amount at any time paid on account of the
Obligations which thereafter shall be required to be restored or returned by
Secured Party upon the bankruptcy, insolvency or reorganization of any Borrower,
any Grantor or any other Person, or otherwise, all as though such amount had not
been paid. The Liens created or granted herein and the enforceability of this
Agreement at all times shall remain effective to secure the full amount of all
the Obligations including, without limitation, the amount of all loans and
interest thereon at the rates provided for in the Loan Agreement, even though
the Obligations, including any part thereof or any other security or guaranty
therefor, may be or hereafter may become invalid or otherwise unenforceable as
against the Borrowers or any other Person and whether or not the Borrowers or
any other Person shall have any personal liability with respect thereto. Each
Grantor expressly waives any and all defenses now or hereafter arising or
asserted by reason of (a) any disability or other defense of any Borrower or any
other Person with respect to the Obligations, (b) the unenforceability or
invalidity of any security or guaranty for the Obligations or the lack of
perfection or continuing perfection or failure of priority of any security for
the Obligations, (c) the cessation for any cause whatsoever of the liability of
any Borrower or any other Person (other than by reason of the full payment and
performance of all Obligations), (d) any failure of Secured Party to marshal
assets in favor of such Grantor or any other Person, (e) except as otherwise
required by Law or as provided in this Agreement, any failure of Secured Party
to give notice of sale or other disposition of collateral to such Grantor or any
other Person or any defect in any notice that may be given in connection with
any sale or disposition of collateral, (f) except as otherwise required by Law
or as provided in this Agreement, any failure of Secured Party to comply with
applicable Laws in connection with the sale or other disposition of any
collateral or other security for any Obligation, including without limitation
any failure of Secured Party to conduct a commercially reasonable sale or other
disposition of any collateral or other security for any Obligation, (g) any act
or omission of Secured Party or others that directly or indirectly results in or
aids the discharge or release of any Borrower, any Grantor or any other Person
or the Obligations or any other security or guaranty therefor by operation of
law, (h) any Law which provides that the obligation of a surety or guarantor
must neither be larger in amount nor in other respects more burdensome than that
of the principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation, (i) any failure of Secured Party to file
or enforce a claim in any bankruptcy or other proceeding with respect to any
Person, (j) the election by Secured Party, in any bankruptcy proceeding of any
Person, of the application or non-application of Section 1111(b)(2) of the
United States Bankruptcy Code, (k) any extension of credit or the grant of any
Liens under Section 364 of the United States Bankruptcy Code, (l) any use of
cash collateral under Section 363 of the United States Bankruptcy Code, (m) any



                                      -14-


agreement or stipulation with respect to the provision of adequate protection in
any bankruptcy proceeding of any Person, (n) the avoidance of any Liens in favor
of Secured Party for any reason, (o) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any Person, including any discharge of, or bar or stay
against collecting, all or any of the Obligations (or any interest thereon) in
or as a result of any such proceeding, or (p) to the extent permitted, the
benefits of any form of one-action rule. Until no part of any commitment to lend
remains outstanding and all of the Obligations have been paid and performed in
full, Grantors shall have no right of subrogation, contribution, reimbursement
or indemnity, and each Grantor expressly waives any right to enforce any remedy
that Secured Party now has or hereafter may have against any other Person and
waives the benefit of, or any right to participate in, any other security now or
hereafter held by Secured Party. Each Grantor expressly waives all setoffs and
counterclaims and all presentments, demands for payment or performance, notices
of nonpayment or nonperformance, protests, notices of protest, notices of
dishonor and all other notices or demands of any kind or nature whatsoever with
respect to the Obligations, and all notices of acceptance of this Agreement or
of the existence, creation or incurring of new or additional Obligations.

        2. Condition of Grantors and their Subsidiaries. Each Grantor represents
and warrants to Secured Party that such Grantor has established adequate means
of obtaining from each other Grantor and its Subsidiaries, on a continuing
basis, financial and other information pertaining to the businesses, operations
and condition (financial and otherwise) of each other Grantor and its
Subsidiaries and their properties, and such Grantor now is and hereafter will be
completely familiar with the businesses, operations and condition (financial and
otherwise) of each other Grantor and its Subsidiaries and their properties. Each
Grantor hereby expressly waives and relinquishes any duty on the part of Secured
Party to disclose to such Grantor any matter, fact or thing related to the
businesses, operations or condition (financial or otherwise) of any Grantor or
its Subsidiaries or their properties, whether now known or hereafter known by
Secured Party during the life of this Agreement. With respect to any of the
Obligations, Secured Party need not inquire into the powers of any Grantor or
any Subsidiaries thereof or the officers or employees acting or purporting to
act on their behalf, and all Obligations made or created in good faith reliance
upon the professed exercise of such powers shall be secured hereby.

        3. Liens on Real Property. In the event that all or any part of the
Obligations at any time are secured by any one or more deeds of trust or
mortgages creating or granting Liens on any interests in real property, each
Grantor authorizes Secured Party, upon the occurrence of and during the
continuance of any Event of Default, at its sole option, without notice or
demand and without affecting any Obligations, the enforceability of this
Agreement, or the validity or enforceability of any Liens of any Secured Party
on any collateral, to foreclose any or all of such deeds of trust or mortgages
by judicial or nonjudicial sale. Insofar as the Liens created herein secure the
obligations of other Persons, (i) each Grantor expressly waives any defenses to
the enforcement of this Agreement or any Liens created or granted hereby or to
the recovery by Secured Party against the Borrowers or any other Person liable
therefor of any deficiency after a judicial or nonjudicial foreclosure or sale,
even though such a foreclosure or sale may impair the subrogation rights of such
Grantor and may preclude such Grantor from obtaining reimbursement or
contribution from any other Person and (ii) each Grantor expressly waives any
defenses or benefits that may be derived from California Code of Civil Procedure
Section Section 580a, 580b, 580d or 726, or comparable provisions of the Laws of
any other jurisdiction and all other suretyship defenses it otherwise might or
would have under California Law or other applicable Law. Each Grantor expressly
waives any right to receive notice of any judicial or nonjudicial foreclosure or
sale of any real property or interest therein subject to any such deeds of trust
or mortgages and such Grantor's failure to receive any such notice shall not
impair or affect such



                                      -15-


Grantor's obligations hereunder or the enforceability of this Agreement or any
Liens created or granted hereby.

        4. Waiver of Rights of Subrogation. Notwithstanding anything to the
contrary elsewhere contained herein or in any other Loan Document to which any
Grantor is a Party, each Grantor hereby waives with respect to the Borrowers and
their successors and assigns (including any surety) and any other Party any and
all rights at Law or in equity, to subrogation, to reimbursement, to
exoneration, to contribution, to setoff or to any other rights that could accrue
to a surety against a principal, to a guarantor against a maker or obligor, to
an accommodation party against the party accommodated, or to a holder or
transferee against a maker and which such Grantor may have or hereafter acquire
against any Borrower or any other Party in connection with or as a result of
such Grantor's execution, delivery and/or performance of this Agreement or any
other Loan Document to which such Grantor is a party. Each Grantor agrees that
it shall not have or assert any such rights against any Borrower or its
successors and assigns or any other Person (including any surety), either
directly or as an attempted setoff to any action commenced against such Grantor
by any Borrower (as borrower or in any other capacity) or any other Person. Each
Grantor hereby acknowledges and agrees that this waiver is intended to benefit
Secured Party and shall not limit or otherwise affect such Grantor's liability
hereunder, under any other Loan Document to which such Grantor is a party, or
the enforceability hereof or thereof.

        5. Understandings with Respect to Waivers and Consents. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein is
made with full knowledge of its significance and consequences, with the
understanding that events giving rise to any defense waived may diminish,
destroy or otherwise adversely affect rights which such Grantor otherwise may
have against the Borrowers, Secured Party or others, or against collateral, and
that, under the circumstances, the waivers and consents herein given are
reasonable and not contrary to public policy or Law. If any of the waivers or
consents herein are determined to be contrary to any applicable Law or public
policy, such waivers and consents shall be effective to the maximum extent
permitted by Law.



                                      -16-

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