U.S. SECURITIES AND EXCHANGE COMMISSION

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Amendment No. 1

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JAKKS Pacific, Inc.

Delaware		95-4527222
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

22619 Pacific Coast Highway

Jack Friedman

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Copy to:

Saul Kaszovitz, Esq.

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

     If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.    o

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.    þ

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.    o

CALCULATION OF REGISTRATION FEE

				Proposed Maximum		Proposed Maximum
Title of Each Class of		Amount to		Offering Price		Aggregate Offering		Amount of
Securities to be Registered		be Registered		per Unit(1)		Price(1)		Registration Fee
Common Stock, par value $.001 per share		774,754 Shares		$19.56(2)		$15,154,189		$1,920.04(3)

(1)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c).
(2)	Pursuant to Rule 457(c), represents the average of the high and low sales prices of our common stock for September 1, 2004 as reported on the Nasdaq National Market System.
(3)	Previously paid upon the initial filing of this Registration Statement.

     The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING ANY OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED December 13, 2004

PROSPECTUS

774,754 Shares

JAKKS Pacific, Inc.

Common Stock

        This prospectus relates to 774,754 shares of our common stock, par value $0.001 per share, that may be sold from time to time by the selling security holders listed under the caption “Selling Security Holders” on page 14. We will not receive any of the proceeds from the sale of the common stock. See “Use of Proceeds.”

      The selling security holders may determine the prices at which they will sell the common stock, which prices may be at market prices prevailing at the time of such sale or some other price.

      Our common stock is traded on the Nasdaq National Market System under the symbol “JAKK.” On December 7, 2004, the last reported sale price of our common stock on the Nasdaq National Market System was $19.02 per share.

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       INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE “RISK FACTORS” ON PAGE 8.

       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful and complete. Any representation to the contrary is a criminal offense.

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The date of this Prospectus is                     , 2004

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TABLE OF CONTENTS

		Page
Summary			1
Risk Factors			8
Forward Looking Statements			15
Use of Proceeds			15
Selling Security Holders			15
Plan of Distribution			16
Legal Matters			18
Independent Auditors			18
Incorporation of Documents by Reference			19
Where You Can Find More Information			19
Disclosure of Commission Position on Indemnification For Securities Act Liabilities			20
Exhibit 5.1			E-5.1-1
EX-23.1			E-23.1-1
EX-23.2			E-23.2-1
EX-23.3			E-23.3-1
EX-24.1			E-24.1-1

ABOUT THIS PROSPECTUS

      This prospectus constitutes part of a registration statement on Form S-3 that we filed with the SEC through what is known as the shelf registration process. Under this process, any selling security holder may sell the securities described in the prospectus in one or more offerings. This prospectus provides you with a general description of the securities the selling security holders may offer. A prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described under the heading “Where You Can Find More Information.”

      In connection with this offering, no person is authorized to give any information or to make any representations not contained or incorporated by reference in this prospectus. If information is given or representations are made, you may not rely on that information or representations as having been authorized by us. This prospectus is neither an offer to sell nor a solicitation of an offer to buy any securities other than those registered by this prospectus, nor is it an offer to sell or a solicitation of an offer to buy securities where an offer or solicitation would be unlawful. You may not imply from the delivery of this prospectus, nor from any sale made under this prospectus, that our affairs are unchanged since the date of this prospectus or that the information contained in this prospectus is correct as of any time after the date of this prospectus. The information contained and incorporated by reference in this prospectus and any accompanying prospectus supplement is accurate only as of the date of this prospectus or the prospectus supplement or the date of the document incorporated by reference, as the case may be, regardless of the time of delivery of the prospectus.

      You should not consider any information in this prospectus to be legal, business or tax advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in our securities.

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RISK FACTORS

      An investment in the shares of common stock involves significant risks. In addition to reviewing other information in this prospectus, you should carefully consider the following factors before deciding to purchase the shares of common stock. If any of the following risks actually occur, our business, results of operations and financial condition could be materially adversely affected and you might lose all or part of your investment.

	The outcome of litigation in which we have been named as a defendant is unpredictable and a materially adverse decision in any such matter could have a material adverse affect on our financial position and results of operations.

      We are defendants in litigation matters, as described under “Legal Proceedings” in our periodic reports filed pursuant to the Securities Exchange Act of 1934, including the lawsuit commenced by WWE and the purported securities class action and derivative action claims stemming from the WWE lawsuit (see “— Legal Proceedings”). These claims may divert financial and management resources that would otherwise be used to benefit our operations. Although we believe that we have meritorious defenses to the claims made in each and all of the litigation matters to which we have been named a party, and intend to contest each lawsuit vigorously, no assurances can be given that the results of these matters will be favorable to us. A materially adverse resolution of any of these lawsuits could have a material adverse affect on our financial position and results of operations.

	Our inability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines, may materially and adversely impact our business, financial condition and results of operations.

      Our business and operating results depend largely upon the appeal of our products. Our continued success in the toy industry will depend on our ability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines. Several trends in recent years have presented challenges for the toy industry, including:

	•	The phenomenon of children outgrowing toys at younger ages, particularly in favor of interactive and high technology products;
	•	Increasing use of technology;
	•	Shorter life cycles for individual products; and
	•	Higher consumer expectations for product quality, functionality and value.

      We cannot assure you that:

	•	our current products will continue to be popular with consumers;
	•	the product lines or products that we introduce will achieve any significant degree of market acceptance; or
	•	the life cycles of our products will be sufficient to permit us to recover licensing, design, manufacturing, marketing and other costs associated with those products.

      Our failure to achieve any or all of the foregoing benchmarks may cause the infrastructure of our operations to fail, thereby adversely affecting our business, financial condition and results of operations.

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	The failure of our character-related and theme-related products to become and/or remain popular with children may materially and adversely impact our business, financial condition and results of operations.

      The success of many of our character-related and theme-related products depends on the popularity of characters in movies, television programs, live wrestling exhibitions, auto racing events and other media. We cannot assure you that:

	•	media associated with our character-related and theme-related product lines will be released at the times we expect or will be successful;
	•	the success of media associated with our existing character-related and theme-related product lines will result in substantial promotional value to our products;
	•	we will be successful in renewing licenses upon expiration on terms that are favorable to us; or
	•	we will be successful in obtaining licenses to produce new character-related and theme-related products in the future.

      Our failure to achieve any or all of the foregoing benchmarks may cause the infrastructure of our operations to fail, thereby adversely affecting our business, financial condition and results of operations.

	There are risks associated with our license agreements.

	•	Our current licenses require us to pay minimum royalties

      Sales of products under trademarks or trade or brand names licensed from others account for substantially all of our net sales. Product licenses allow us to capitalize on characters, designs, concepts and inventions owned by others or developed by toy inventors and designers. Our license agreements generally require us to make specified minimum royalty payments, even if we fail to sell a sufficient number of units to cover these amounts. In addition, under certain of our license agreements, if we fail to achieve certain prescribed sales targets, we may be unable to retain or renew these licenses.

	•	Some of our licenses are restricted as to use

      Under some of our license agreements, including WWE, Nickelodeon and NASCAR, the licensors have the right to review and approve our use of their licensed products, designs or materials before we may make any sales. If a licensor refuses to permit our use of any licensed property in the way we propose, or if their review process is delayed, our development or sale of new products could be impeded.

	•	New licenses are difficult and expensive to obtain

      Our continued success will depend substantially on our ability to obtain additional licenses. Intensive competition exists for desirable licenses in our industry. We cannot assure you that we will be able to secure or renew significant licenses on terms acceptable to us. In addition, as we add licenses, the need to fund additional royalty advances and guaranteed minimum royalty payments may strain our cash resources.

	•	A limited number of licensors account for a large portion of our net sales

      We derive a significant portion of our net sales from a limited number of licensors. If one or more of these licensors were to terminate or fail to renew our license or not grant us new licenses, our business, financial condition and results of operations could be adversely affected.

	The toy industry is highly competitive and our inability to compete effectively may materially and adversely impact our business, financial condition results of operations.

      The toy industry is highly competitive. Globally, certain of our competitors have financial and strategic advantages over us, including:

	•	greater financial resources;
	•	larger sales, marketing and product development departments;

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	•	stronger name recognition;
	•	longer operating histories; and
	•	greater economies of scale.

      In addition, the toy industry has no significant barriers to entry. Competition is based primarily on the ability to design and develop new toys, to procure licenses for popular characters and trademarks and to successfully market products. Many of our competitors offer similar products or alternatives to our products. Our competitors have obtained and are likely to continue to obtain licenses that overlap our licenses with respect to products, geographic areas and markets. We cannot assure you that we will be able to obtain adequate shelf space in retail stores to support our existing products or to expand our products and product lines or that we will be able to continue to compete effectively against current and future competitors.

	A decline in the popularity of World Wrestling Entertainment could adversely our video game joint venture with THQ.

      The joint venture with THQ depends entirely on a single license, which gives the venture exclusive worldwide rights to produce and market video games based on World Wrestling Entertainment characters and themes. The popularity of professional wrestling, in general, and World Wrestling Entertainment, in particular, is subject to changing consumer tastes and demands. The relative popularity of professional wrestling has fluctuated significantly in recent years. A decline in the popularity of World Wrestling Entertainment could adversely affect the joint venture’s and our business, financial condition and results of operations.

	The termination of THQ’s manufacturing licenses and the inability of the joint venture to otherwise obtain these licenses from other manufacturers would materially adversely affect the joint venture’s and our business, financial condition and results of operations.

      The joint venture relies on hardware manufacturers and THQ’s non-exclusive licenses with them for the right to publish titles for their platforms and for the manufacture of the joint venture’s titles. If THQ’s manufacturing licenses were to terminate and the joint venture could not otherwise obtain these licenses from other manufacturers, the joint venture would be unable to publish additional titles for these manufacturers’ platforms, which would materially adversely affect the joint venture’s and our business, financial condition and results of operations.

	The failure of the joint venture or THQ to perform as anticipated could have a material adverse affect on our financial position and results of operations.

      The joint venture’s failure to timely develop titles for new platforms that achieve significant market acceptance, to maintain net sales that are commensurate with product development costs or to maintain compatibility between its personal computer CD-ROM titles and the related hardware and operating systems would adversely affect the joint venture’s and our business, financial condition and results of operations.

      Furthermore, THQ controls the day-to-day operations of the joint venture and all of its product development and production operations. Accordingly, the joint venture relies exclusively on THQ to manage these operations effectively. THQ’s failure to effectively manage the joint venture would have a material adverse effect on the joint venture’s and our business and results of operations. We are also dependent upon THQ’s ability to manage cash flows of the joint venture. If THQ is required to retain cash for operations, or because of statutory or contractual restrictions, we may not receive cash payments for our share of profits, on a timely basis, or at all.

	We may not be able to sustain or manage our rapid growth, which may prevent us from continuing to increase our net revenues.

      We have experienced rapid growth in our product lines resulting in higher net sales over the last six years, which was achieved through acquisitions of businesses, products and licenses. For example, revenues associated with our acquired companies in 2003 and 2002 were $40.1 million and $84.7 million, respectively,

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      Our growth strategy calls for us to continuously develop and diversify our toy business by acquiring other companies, entering into additional license agreements, refining our product lines and expanding into international markets, which will place additional demands on our management, operational capacity and financial resources and systems. The increased demand on management may necessitate our recruitment and retention of qualified management personnel. We cannot assure you that we will be able to recruit and retain qualified personnel or expand and manage our operations effectively and profitably. To effectively manage future growth, we must continue to expand our operational, financial and management information systems and to train, motivate and manage our work force. There can be no assurance that our operational, financial and management information systems will be adequate to support our future operations. Failure to expand our operational, financial and management information systems or to train, motivate or manage employees could have a material adverse effect on our business, financial condition and results of operations.

      In addition, implementation of our growth strategy is subject to risks beyond our control, including competition, market acceptance of new products, changes in economic conditions, our ability to obtain or renew licenses on commercially reasonable terms and our ability to finance increased levels of accounts receivable and inventory necessary to support our sales growth, if any. Accordingly, we cannot assure you that our growth strategy will continue to be implemented successfully.

	If we are unable to acquire and integrate companies and new product lines successfully we will be unable to implement our growth strategy.

      Our growth strategy depends in part upon our ability to acquire companies and new product lines. Revenues associated with our acquisitions represented 12.7% and 27.3% of our total revenues in 2003 and 2002, respectively. Future acquisitions will succeed only if we can effectively assess characteristics of potential target companies and product lines, such as:

	•	attractiveness of products;
	•	suitability of distribution channels;
	•	management ability;
	•	financial condition and results of operations; and
	•	the degree to which acquired operations can be integrated with our operations.

      We cannot assure you that we can identify attractive acquisition candidates or negotiate acceptable acquisition terms, and our failure to do so may adversely affect our results of operations and our ability to sustain growth. Our acquisition strategy involves a number of risks, each of which could adversely affect our operating results, including:

	•	difficulties in integrating acquired businesses or product lines, assimilating new facilities and personnel and harmonizing diverse business strategies and methods of operation;
	•	diversion of management attention from operation of our existing business;
	•	loss of key personnel from acquired companies; and
	•	failure of an acquired business to achieve targeted financial results.

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A limited number of customers account for a large portion of our net sales, so that if one or more of our major customers were to experience difficulties in fulfilling their obligations to us, cease doing business with us, significantly reduce the amount of their purchases from us or return substantial amounts of our products, it could have a material adverse effect on our business, financial condition and results of operations.

      Our five largest customers accounted for 57.7% of our net sales in 2003. Except for outstanding purchase orders for specific products, we do not have written contracts with or commitments from any of our customers. A substantial reduction in or termination of orders from any of our largest customers could adversely affect our business, financial condition and results of operations. In addition, pressure by large customers seeking price reductions, financial incentives, changes in other terms of sale or for us to bear the risks and the cost of carrying inventory also could adversely affect our business, financial condition and results of operations. If one or more of our major customers were to experience difficulties in fulfilling their obligations to us, cease doing business with us, significantly reduce the amount of their purchases from us or return substantial amounts of our products, it could have a material adverse effect on our business, financial condition and results of operations. In addition, the bankruptcy or other lack of success of one or more of our significant retailers could negatively impact our revenues and bad debt expense. For example, one of our five largest customers in 2003, Kay Bee Toys, filed for Chapter 11 bankruptcy protection in January 2004. As a result, we have reserved $2.1 million for potential bad debt, which represents 84% of Kay Bee Toys’ $2.5 million pre-petition accounts receivable balance with us. If Kay Bee Toys is unable to extricate itself from bankruptcy and we are unable to replace the revenues previously earned by us from Kay Bee Toys, our business, financial condition and results of operations could be materially adversely affected.

	We depend on our key personnel and any loss or interruption of either of their services could adversely affect our business, financial condition and results of operations.

      Our success is largely dependent upon the experience and continued services of Jack Friedman, our Chairman and Chief Executive Officer and Stephen G. Berman, our President and Chief Operating Officer. We cannot assure you that we would be able to find an appropriate replacement for Mr. Friedman or Mr. Berman if the need should arise, and any loss or interruption of Mr. Friedman’s or Mr. Berman’s services could adversely affect our business, financial condition and results of operations.

	We depend on third-party manufacturers, and if our relationship with any of them is harmed or if they independently encounter difficulties in their manufacturing processes, we could experience product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis, any of which could adversely affect our business, financial condition and results of operations.

      We depend on approximately twenty third-party manufacturers who develop, provide and use the tools, dies and molds that we own to manufacture our products. However, we have limited control over the manufacturing processes themselves. As a result, any difficulties encountered by the third-party manufacturers that result in product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis could adversely affect our business, financial condition and results of operations.

      We do not have long-term contracts with our third-party manufacturers. Although we believe we could secure other third-party manufacturers to produce our products, our operations would be adversely affected if we lost our relationship with any of our current suppliers or if our current suppliers’ operations or sea or air transportation with our overseas manufacturers were disrupted or terminated even for a relatively short period of time. Our tools, dies and molds are located at the facilities of our third-party manufacturers.

      Although we do not purchase the raw materials used to manufacture our products, we are potentially subject to variations in the prices we pay our third-party manufacturers for products, depending on what they pay for their raw materials.

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	We have substantial sales and manufacturing operations outside of the United States subjecting us to risks associated with the outbreak of SARS, as well as risks common to international operations.

      We sell products and operate facilities in numerous countries outside the United States. For the fiscal year ended December 31, 2003, sales to our international customers comprised approximately 14.2% of our net sales. We expect our sales to international customers to account for a greater portion of our revenues in future fiscal periods. Additionally, we utilize third-party manufacturers located principally in The People’s Republic of China, or the PRC, which has been significantly impacted by the outbreak of Severe Acute Respiratory Syndrome, or SARS. The inability of the PRC to effectively control the spread of SARS within its borders or the failure of the medical community to develop a cure for this illness may deplete the workforce of the PRC available to manufacture our products, create barriers to entry into commercial markets for our products manufactured in the PRC and prevent us from sending the requisite monitors and inspectors to the PRC to ensure that our products are being manufactured in accordance with our requirements and specifications. Any of the foregoing may cause the infrastructure of our PRC operations to fail, thereby adversely affecting our business, financial condition and results of operations.

      Furthermore, our PRC sales and manufacturing operations are subject to the risks normally associated with international operations, including:

	•	currency conversion risks and currency fluctuations;
	•	limitations, including taxes, on the repatriation of earnings;
	•	political instability, civil unrest and economic instability;
	•	greater difficulty enforcing intellectual property rights and weaker laws protecting such rights;
	•	complications in complying with laws in varying jurisdictions and changes in governmental policies;
	•	greater difficulty and expenses associated with recovering from natural disasters;
	•	transportation delays and interruptions; and
	•	the potential imposition of tariffs.

      Our reliance on external sources of manufacturing can be shifted, over a period of time, to alternative sources of supply, should such changes be necessary. However, if we were prevented from obtaining products or components for a material portion of our product line due to medical, political, labor or other factors beyond our control, our operations would be disrupted while alternative sources of products were secured. Also, the imposition of trade sanctions by the United States against a class of products imported by us from, or the loss of “normal trade relations” status by China, could significantly increase our cost of products imported from that nation. Because of the importance of our international sales and international sourcing of manufacturing to our business, our financial condition and results of operations could be significantly and adversely affected if any of the risks described above were to occur.

	Our business is subject to extensive government regulation and any violation by us of such regulations could result in product liability claims, loss of sales, diversion of resources, damage to our reputation, increased warranty costs or removal of our products from the market, and we cannot assure you that our product liability insurance for the foregoing will be sufficient.

      Our business is subject to various laws, including the Federal Hazardous Substances Act, the Consumer Product Safety Act, the Flammable Fabrics Act and the rules and regulations promulgated under these acts. These statutes are administered by the Consumer Product Safety Commission (CPSC), which has the authority to remove from the market products that are found to be defective and present a substantial hazard or risk of serious injury or death. The CPSC can require a manufacturer to recall, repair or replace these

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	•	product liability claims;
	•	loss of sales;
	•	diversion of resources;
	•	damage to our reputation;
	•	increased warranty costs; and
	•	removal of our products from the market.

      Any of these results may adversely affect our business, financial condition and results of operations. There can be no assurance that our product liability insurance will be sufficient to avoid or limit our loss in the event of an adverse outcome of any product liability claim.

	We depend on our proprietary rights and our inability to safeguard and maintain the same, or claims of third parties that we have violated their intellectual property rights, could have a material adverse effect on our business, financial condition and results of operations.

      We rely on trademark, copyright and trade secret protection, nondisclosure agreements and licensing arrangements to establish, protect and enforce our proprietary rights in our products. The laws of certain foreign countries may not protect intellectual property rights to the same extent or in the same manner as the laws of the United States. We cannot assure you that we or our licensors will be able to successfully safeguard and maintain our proprietary rights. Further, certain parties have commenced legal proceedings or made claims against us based on our alleged patent infringement, misappropriation of trade secrets or other violations of their intellectual property rights. We cannot assure you that other parties will not assert intellectual property claims against us in the future. These claims could divert our attention from operating our business or result in unanticipated legal and other costs, which could adversely affect our business, financial condition and results of operations.

	Market conditions and other third-party conduct could negatively impact our margins and implementation of other business initiatives.

      Economic conditions, such as rising fuel prices and decreased consumer confidence, may adversely impact our margins. In addition, general economic conditions were significantly and negatively affected by the September 11th terrorist attacks and could be similarly affected by any future attacks. Such a weakened economic and business climate, as well as consumer uncertainty created by such a climate, could adversely affect our sales and profitability. Other conditions, such as the unavailability of electronics components, may impede our ability to manufacture, source and ship new and continuing products on a timely basis. Significant and sustained increases in the price of oil could adversely impact the cost of the raw materials used in the manufacture of our products, such as plastic.

	We may not have the funds necessary to purchase our outstanding convertible notes upon a fundamental change or other purchase date, as required by the indenture governing the notes.

      On June 15, 2010, June 15, 2013 and June 15, 2018, holders of our convertible notes may require us to purchase their notes, which repurchase may be made for cash. In addition, holders may also require us to purchase their notes for cash upon the occurrence of certain fundamental changes in our board composition or ownership structure, if we liquidate or dissolve under certain circumstances or if our common stock ceases being quoted on an established over-the-counter trading market in the United States. If we do not have, or have access to, sufficient funds to repurchase the notes, then we could be forced into bankruptcy. In fact, we expect that we would require third-party financing, but we cannot assure you that we would be able to obtain that financing on favorable terms or at all.

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	Our reported earnings per share may be more volatile because of the contingent conversion provision of our outstanding convertible notes.

      Holders of our convertible notes are entitled to convert the notes into our common stock, among other circumstances, if the closing sale price of our common stock for at least 20 trading days in the 30 trading day period ending on the last day of the preceding calendar quarter exceeds 120% of the accreted conversion price per share of common stock (the accreted principal amount of a convertible note divided by the number of shares issuable upon conversion of a convertible note on that day) on the last trading day of such preceding calendar quarter. Until this contingency or another conversion contingency is met, the shares underlying the notes are not included in the calculation of our basic or fully diluted earnings per share. Should this contingency be met, fully diluted earnings per share would be expected to decrease as a result of the inclusion of the underlying shares in the fully diluted earnings per share calculation. Volatility in our stock price could cause this condition to be met in one quarter and not in a subsequent quarter, increasing the volatility of our fully diluted earnings per share. The convertible notes were convertible at a rate of 50.0 shares of common stock per $1,000 principal amount at issuance of the convertible notes (equivalent to an initial conversion price of $20.00 per share).

FORWARD LOOKING STATEMENTS

      This prospectus includes or incorporates by reference “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. For example, statements included in this prospectus regarding our financial position, business strategy and other plans and objectives for future operations, and assumptions and predictions about future product demand, supply, manufacturing, costs, marketing and pricing factors are all forward-looking statements. When we use words like “intend,” “anticipate,” “believe,” “estimate,” “plan,” “will” or “expect,” we are making forward-looking statements. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, based on information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning. We have disclosed certain important factors that could cause our actual results to differ materially from our current expectations under “Risk Factors” above and elsewhere in this prospectus. You should understand that forward-looking statements made in this prospectus are necessarily qualified by these factors. We are not undertaking to publicly update or revise any forward-looking statement if we obtain information or upon the occurrence of future events or otherwise.

USE OF PROCEEDS

      We will not receive any proceeds from the sale of the shares of common stock by the selling security holders in this offering.

SELLING SECURITY HOLDERS

      This prospectus relates to 774,754 shares of our common stock that may be sold from time to time by the selling security holders, Messrs. Charles Emby, Jay Foreman, Lawrence Geller, David Lipman and John Nimmo.

      The shares of common stock being offered by Messrs. Lipman and Nimmo were originally issued by us on August 17, 2004 and the shares of common stock being offered by Messrs. Emby, Foreman and Geller were originally issued by us on June 10, 2004, in non-public transactions, which issuances were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof. As used herein, selling security holders includes their transferees, pledgees or donees or their successors, selling shares received from a named selling security holder after the date of this prospectus. Selling security holders may from time to time offer and sell pursuant to this prospectus any or all of the shares of common stock listed by their name below.

      In June 2004, we purchased assets of Play Along, Inc., Play Along (Hong Kong) Limited and PA Distribution, Inc. for approximately $85.7 million, consisting of approximately $70.8 million in cash and

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      In December 2001, we purchased the shares of Kidz Biz Limited and Kidz Biz Far East Limited for approximately $12.4 million consisting of approximately $6.4 million in cash and 308,992 shares of our common stock. Prior to the acquisition, Messrs. Lipman and Nimmo were shareholders, directors and executive officers of those companies. Currently, Mr. Lipman is a non-executive level employee of ours and Messrs. Lipman and Nimmo own the building leased by Kidz Biz Limited in Surrey, England.

      The following table sets forth information with respect to the selling security holders and the number of shares beneficially owned by each selling security holder that may be offered pursuant to this prospectus. The information is based on information provided by or on behalf of the selling security holders on or prior to December 7, 2004. The selling security holders may offer all, some or none of the shares of common stock listed below.

		Number of								Number of
		Shares Beneficially Owned				Number of Shares				Shares Beneficially Owned
Selling Security Holders		Prior to the Offering(2)				Offered Hereby(1)				After Offering(2)(3)
Charles Emby			299,602				299,602				0
Jay Foreman			299,602				299,602				0
Lawrence Geller			149,801				149,801				0
David Lipman			44,826	(4)			19,826				25,000	(4)
John Nimmo			5,923				5,923				0

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(1)	Information regarding the selling security holders may change from time to time. Any such change will be set forth in supplements to this prospectus if and when necessary.
(2)	The number of shares of common stock beneficially owned by a person or entity is determined under rules promulgated by the United States Securities and Exchange Commission. Under such rules, beneficial ownership includes any shares as to which a person or entity has sole or shared voting power or investment power. Included among the shares owned by such person or entity are any shares which such person or entity has the right to acquire within 60 days after December 7, 2004. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of such shares. Except for information in our records and reports filed by a selling shareholder with us, if any, we have no knowledge of whether such selling shareholder owns any other shares of our common stock or options or warrants to purchase shares of our common stock. We believe that none of the selling security holders listed above will own 1% or more of our outstanding shares if it sells all of the shares registered for sale hereby.
(3)	Assumes the sale of all shares offered hereby on behalf of such selling security holder.
(4)	Includes 25,000 shares that Mr. Lipman may purchase upon the exercise of certain stock options.

PLAN OF DISTRIBUTION

      The selling security holders and their successors, including their transferees, pledgees or donees or their successors, may sell the common stock directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling security holders or the purchasers of the common stock. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved.

      The common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market prices, at varying prices determined at the time of

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	•	on any national securities exchange or U.S. inter-dealer system of a registered national securities association on which the common stock may be listed or quoted at the time of sale;
	•	in the over-the-counter market;
	•	in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
	•	through the writing of options, whether the options are listed on an options exchange or otherwise; or
	•	through the settlement of short sales.

      In connection with the sale of the common stock, selling security holders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock positions they assume. The selling security holders may also sell the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.

      The aggregate proceeds to the selling security holders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts and commissions, if any. Each of the selling security holders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.

      In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

      The selling security holders and any underwriters, broker-dealers or agents that participate in the sale of the common stock may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be deemed to be underwriting discounts and commissions under the Securities Act.

      Selling security holders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act and may be subject to statutory liabilities, including, but not limited to, liability under Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934. The selling security holders have acknowledged that they understand their obligations to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulation, particularly Regulation M.

      To our knowledge, there are currently no plans, arrangements or understandings between any of the selling security holders and any underwriter, broker-dealer or agent regarding the sale of the common stock. A selling security holder may not sell any common stock described in this prospectus and may not transfer, devise or gift these securities by other means not described in this prospectus. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.

      We entered into registration rights agreements for the benefit of holders of the common stock to register their common stock under applicable federal and state securities laws under specific circumstances and at specific times. The registration rights agreements provide for cross-indemnification of the selling security holders and us (and our directors, officers and controlling persons) against specific liabilities in connection with the offer and sale of the common stock, including liabilities under the Securities Act. We will pay substantially all of the expenses incurred by the selling security holders incident to the offering and sale of the common stock.

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      Under the registration rights agreements, we are obligated to use our reasonable best efforts to keep the registration statement of which this prospectus is a part effective until the earlier to occur of (i) the date when all of the securities registered hereby are disposed of in accordance with the terms of the shelf registration statement or (ii) for Messrs. Emby, Foreman and Geller, the first anniversary of the effective date of the registration statement of which this prospectus forms a part, and for Messrs. Lipman and Nimmo, the date when their registered shares can be immediately sold to the public without registration or restriction.

      Except for Messrs. Lipman and Nimmo, each of the selling security holders has agreed not sell more than 75% of his registered shares until after March 7, 2005. Commencing on March 8, 2005 there will be no limitation on the number of shares a selling security holder may sell.

      The above notwithstanding, none of these limitations shall apply in the event the closing sales price of our common stock, as reported on the Nasdaq National Market, exceeds $25.00 for five consecutive trading days.

      Our obligation to keep the registration statement to which this prospectus relates effective is subject to specified, permitted exceptions set forth in the registration rights agreements. In these cases, we may prohibit offers and sales of the shares of common stock pursuant to the registration statement to which this prospectus relates.

      When we are notified by any selling security holder that any material arrangement has been entered into with a broker-dealer for the sale of the common stock covered by this prospectus through a block trade, special offering, exchange distribution or secondary distribution or purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, or, if appropriate, a post-effective amendment to the registration statement of which this prospectus forms a part, disclosing (a) the name of each such selling security holder and of the participating broker-dealer or dealers, (b) the number of shares of common stock involved, (c) the price at which the common stock was sold, (d) the commissions paid or discounts or concessions allowed to such broker-dealer or dealers, if applicable, and (e) other facts material to the transaction. In addition, when we are notified by any selling security holder that a donee or pledgee intends to sell more than 500 shares, a supplement to this prospectus will be filed.

      We may suspend the use of this prospectus if we learn of any event that causes this prospectus to include an untrue statement of a material fact required to be stated in the prospectus or necessary to make the statements in the prospectus not misleading in light of the circumstances then existing. If this type of event occurs, a prospectus supplement or post-effective amendment, if required, will be distributed to each selling security holder. Each selling security holder has agreed not to trade securities from the time the selling security holder receives notice from us of this type of event until the selling security holder receives a prospectus supplement or amendment.

LEGAL MATTERS

      The legality of the common stock being offered hereby will be passed upon for us by Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP, New York, New York. Murray L. Skala, a partner of that firm, is one of our directors, an owner of 1,000 shares of our common stock, a holder of options to purchase 82,771 shares of our common stock, and a trustee under a trust that owns 3,186 shares of our common stock.

INDEPENDENT AUDITORS

      Our consolidated financial statements as of December 31, 2002 and 2003 and for each of the three years in the period ended December 31, 2003 incorporated by reference in this prospectus have been audited by PKF, Certified Public Accountants, A Professional Corporation, Los Angeles, California, independent auditors, as stated in their report incorporated by reference herein.

      The financial statements of PA Distribution, Inc. and Play Along, Inc. for the twelve-month periods ended March 31, 2003 and 2002 and the nine-month period ended December 31, 2003, incorporated by

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      The financial statements of Play Along (Hong Kong) Limited for the twelve-month period ended March 31, 2003 and the nine-month period ended December 31, 2003, incorporated by reference into this prospectus have been audited by Grant Thornton, Certified Public Accountants, Hong Kong, independent auditors, as stated in their reports incorporated by reference herein.

INCORPORATION OF DOCUMENTS BY REFERENCE

      This prospectus “incorporates by reference” certain of the reports and other information that we have filed with the SEC under the Exchange Act. This means that we are disclosing important information to you by referring you to those documents. Information filed with the SEC after the date of this prospectus will update and supersede this information. The following documents filed with the SEC are incorporated by reference:

	(1) Our Annual Report on Form 10-K for the year ended December 31, 2003;
	(2) Our Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2004;
	(3) Our Current Reports on Form 8-K filed with the SEC on February 17, March 12, April 21, June 16, July 20, August 6, September 7, October 15, October 19, and November 16, 2004;
	(4) The description of our common stock contained in our Registration Statement on Form 8-A (File No. 0-28104), filed March 29, 1996, and as incorporated therein by reference to our Registration Statement on Form SB-2 (Reg. No. 333-2048-LA).

      Any future filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (File No. 0-28104) after the date hereof are incorporated by reference until all of the securities offered by this prospectus are sold. Any statement contained in this prospectus or in a document incorporated by reference shall be deemed to be modified or superseded for all purposes to the extent that a statement contained in those documents modifies or supersedes that statement. Any statements so modified or superseded will not be deemed to constitute a part of this prospectus except as so modified or superseded. In addition, any supplement prepared in relation to this prospectus shall be deemed to supersede for all purposes any earlier supplement prepared in relation to this prospectus.

      We will provide each person to whom a copy of this prospectus has been delivered, without charge, a copy of any of the documents referred to above as being incorporated by reference. You may request a copy by writing or telephoning Joel M. Bennett, c/o JAKKS Pacific, Inc., 22619 Pacific Coast Highway, Malibu, California, 90265 (telephone: 310-456-7799).

WHERE YOU CAN FIND MORE INFORMATION

      We are subject to the information requirements of the Securities Exchange Act of 1934. In accordance with the Exchange Act, we file reports, proxy statement and other information with the SEC. Such reports, proxy statements and other information can be inspected and copied at prescribed rates at the public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a website at http://ww.sec.gov that contains reports, proxy and information statements and other information. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our common stock is listed on the Nasdaq National Market and reports and information concerning us can also be inspected through such exchange. We intend to furnish our stockholders with annual reports containing audited financial statements and such other periodic reports as we deem appropriate or as may be required by law.

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DISCLOSURE OF COMMISSION POSITION ON

      Our certificate of incorporation provides that the personal liability of our directors shall be limited to the fullest extent permitted by the provisions of Section 102(b)(7) of the General Corporation Law of the State of Delaware (“DGCL”). Section 102(b)(7) of the DGCL generally provides that no director shall be liable personally to a company or its security holders for monetary damages for breach of fiduciary duty as a director, provided that the certificate of incorporation does not eliminate the liability of a director for (1) any breach of the director’s duty of loyalty to it or its security holders; (2) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (3) acts or omissions in respect of certain unlawful dividend payments or stock redemptions or repurchases; or (4) any transaction from which such director derives an improper personal benefit. The effect of this provision is to eliminate the rights of a company and its security holders to recover monetary damages against a director for breach of her or his fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (1) through (4) above. The limitations summarized above, however, do not affect the ability of a company or its security holders to seek nonmonetary remedies, such as an injunction or rescission, against a director for breach of her or his fiduciary duty.

      In addition, our certificate of incorporation provides that we shall, to the fullest extent permitted by Section 145 of the DGCL, indemnify all persons whom it may indemnify pursuant to Section 145 of the DGCL. In general, Section 145 of the DGCL permits us to indemnify our directors, officers, employees or agents or, when so serving at our request, another company who was or is a party or is threatened to be made a party to any proceeding because of his or her position, if he or she acted in good faith and in a manner reasonably believed to be in or not opposed to our best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

      We maintain a directors’ and officers’ liability insurance policy covering certain liabilities that may be incurred by any director or officer in connection with the performance of his or her duties and certain liabilities that we may incur, including the indemnification payable to any director or officer. This policy provides for $30 million in maximum aggregate coverage, including defense costs. We pay the entire premium for such insurance.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers, or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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PART II — INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.	Other Expenses of Issuance and Distribution

      The following table sets forth the various expenses payable by the Registrant in connection with the sale and distribution of the securities being registered hereby. The Registrant is paying all of the selling security holders’ expenses related to this offering, except that the selling security holders will pay any applicable broker’s commissions and expenses. All amounts are estimated except the Securities and Exchange Commission registration fee.

SEC Registration fee		$	1,920
Printing and Edgarization			4,000
Accountants’ fees and expenses			20,000
Attorneys’ fees and expenses			45,000
Miscellaneous			4,080
Total		$	75,000

Item 15.	Indemnification of Directors and Officers

      The Registrant’s Certificate of Incorporation provides that the personal liability of the directors of the Registrant shall be limited to the fullest extent permitted by the provisions of Section 102(b)(7) of the General Corporation Law of the State of Delaware (“DGCL”). Section 102(b)(7) of the DGCL generally provides that no director shall be liable personally to the Registrant or its security holders for monetary damages for breach of fiduciary duty as a director, provided that the Certificate of Incorporation does not eliminate the liability of a director for (1) any breach of the director’s duty of loyalty to the Registrant or its security holders; (2) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (3) acts or omissions in respect of certain unlawful dividend payments or stock redemptions or repurchases; or (4) any transaction from which such director derives an improper personal benefit. The effect of this provision is to eliminate the rights of the Registrant and its security holders to recover monetary damages against a director for breach of her or his fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (1) through (4) above. The limitations summarized above, however, do not affect the ability of the Registrant or its security holders to seek nonmonetary remedies, such as an injunction or rescission, against a director for breach of her or his fiduciary duty.

      In addition, the Certificate of Incorporation provides that the Registrant shall, to the fullest extent permitted by Section 145 of the DGCL, indemnify all persons whom it may indemnify pursuant to Section 145 of the DGCL. In general, Section 145 of the DGCL permits the Registrant to indemnify a director, officer, employee or agent of the Registrant or, when so serving at the Registrant’s request, another company who was or is a party or is threatened to be made a party to any proceeding because of his or her position, if he or she acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Registrant and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

      The Registrant maintains a directors’ and officers’ liability insurance policy covering certain liabilities that may be incurred by any director or officer in connection with the performance of his or her duties and certain liabilities that may be incurred by the Registrant, including the indemnification payable to any director or officer. This policy provides for $30 million in maximum aggregate coverage, including defense costs. The entire premium for such insurance is paid by the Registrant.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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Item 16.	Exhibits

Exhibit
Number				Description
	2	.1		Form of certificate evidencing shares of common stock(1)
	2	.2		Asset Purchase and Sale Agreement, dated as of June 10, 2004, by and among the Registrant (and certain subsidiaries) and Messrs. Emby, Foreman and Geller (and certain affiliated companies)(2)
	2	.3		Stock Purchase Agreement, dated as of December 27, 2001, by and among the Registrant, Kidz Biz Limited, Kidz Biz Far East Limited, Messrs. Lipman and Nimmo and Marilyn*
	2	.4		Settlement Agreement, dates as of August 2004, by and between the Registrant and David Lipman*
	2	.5		Compromise Agreement, dated August 2004, by and between JAKKS Pacific/Kidz Biz Limited and David Lipman*
	4	.1		Registration Rights Agreement, dated as of June 10, 2004, by and among the Registrant and Messrs. Emby, Foreman and Geller(3)
	4	.2		Registration Rights Agreement, dated as of December 27, 2001, by and among the Registrant and Messrs. Lipman and Nimmo and Marilyn Lipman*
	5	.1		Opinion of Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP(3)
	23	.1		Consent of PKF, Certified Public Accountants, A Professional Corporation*
	23	.2		Consent of Daszkal Bolton LLP*
	23	.3		Consent of Grant Thornton, Certified Public Accountants, Hong Kong*
	23	.4		Consent of Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP (included in Exhibit 5.1)
	24	.1		Power of Attorney*

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	*	Filed herewith.

(1)	Filed on May 1, 1996 as an exhibit to the Company’s Registration Statement on Form SB-2 (Reg. No. 333-2048-LA), and incorporated herein by reference.
(2)	Filed on June 16, 2004 as an exhibit to the Company’s Current Report on Form 8-K.
(3)	Filed on September 8, 2004 as an exhibit to the initial filing of this Registration Statement.

Item 17.	Undertakings

      The undersigned registrant hereby undertakes:

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement

	(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933,
	(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement, and
	(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

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	Provided, however, that paragraphs 1(i) and 1(ii) above do not apply if the registration statement on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs, is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

      The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities as that time shall be deemed to be the initial bona fide offering thereof.

      The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Malibu, State of California, on December 13, 2004.

	JAKKS PACIFIC, INC.

	By:	/s/ JACK FRIEDMAN

	Jack Friedman
	Chairman

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:

Signature				Title		Date
/s/ JACK FRIEDMAN Jack Friedman				Chairman and Chief Executive Officer (Principal Executive Officer)		December 13, 2004
/s/ JOEL M. BENNETT Joel M. Bennett				Chief Financial Officer (Principal Financial and Accounting Officer)		December 13, 2004
/s/ DAN ALMAGOR Dan Almagor				Director		December 13, 2004
/s/ STEPHEN G. BERMAN Stephen G. Berman				Director		December 13, 2004
/s/ DAVID C. BLATTE David C. Blatte				Director		December 13, 2004
/s/ ROBERT E. GLICK Robert E. Glick				Director		December 13, 2004
/s/ MICHAEL G. MILLER Michael G. Miller				Director		December 13, 2004
/s/ MURRAY L. SKALA Murray L. Skala				Director		December 13, 2004

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EXHIBIT INDEX

Exhibit
Number				Description
	2	.1		Form of certificate evidencing shares of common stock(1)
	2	.2		Asset Purchase and Sale Agreement, dated as of June 10, 2004, by and among the Registrant (and certain subsidiaries) and Messrs. Emby, Foreman and Geller (and certain affiliated companies)(2)
	2	.3		Stock Purchase Agreement, dated as of December 27, 2001, by and among the Registrant, Kidz Biz Limited, Kidz Biz Far East Limited, Messrs. Lipman and Nimmo and Marilyn*
	2	.4		Settlement Agreement, dates as of August 2004, by and between the Registrant and David Lipman*
	2	.5		Compromise Agreement, dated August 2004, by and between JAKKS Pacific/Kidz Biz Limited and David Lipman*
	4	.1		Registration Rights Agreement, dated as of June 10, 2004, by and among the Registrant and Messrs. Emby, Foreman and Geller(3)
	4	.2		Registration Rights Agreement, dated as of December 27, 2001, by and among the Registrant and Messrs. Lipman and Nimmo and Marilyn Lipman*
	5	.1		Opinion of Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP(3)
	23	.1		Consent of PKF, Certified Public Accountants, A Professional Corporation*
	23	.2		Consent of Daszkal Bolton LLP*
	23	.3		Consent of Grant Thornton, Certified Public Accountants, Hong Kong*
	23	.4		Consent of Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP (included in Exhibit 5.1)
	24	.1		Power of Attorney*

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	*	Filed herewith.

(1)	Filed on May 1, 1996 as an exhibit to the Company’s Registration Statement on Form SB-2 (Reg. No. 333-2048-LA), and incorporated herein by reference.
(2)	Filed on June 16, 2004 as an exhibit to the Company’s Current Report on Form 8-K.
(3)	Filed on September 8, 2004 as an exhibit to the initial filing of this Registration Statement.

                                                                     Exhibit 2.3

                            STOCK PURCHASE AGREEMENT

      THIS STOCK PURCHASE AGREEMENT is entered into by and among JAKKS Pacific,
Inc., a corporation organized under the law of the state of Delaware, U.S.
("JAKKS Pacific"), and the shareholders of KIDZ BIZ LIMITED, a private limited
company organized under the laws of England ("Kidz Biz UK"), KIDZ BIZ FAR EAST
LIMITED, a Hong Kong private limited company ("Far East"), listed on Schedule I
(the "Shareholders"). Kidz Biz UK and Far East are sometimes collectively
referred to as the "Kidz Biz Companies". JAKKS Pacific and the Shareholders are
sometimes collectively referred to as the "Parties."

                              W I T N E S S E T H :

      WHEREAS, JAKKS Pacific desires to purchase all of the outstanding capital
stock of the Kidz Biz Companies, all of which is owned by some or all of the
Shareholders, and the Shareholders desire to sell all such capital stock to
JAKKS Pacific 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 "L" means English pounds.

      1.2 "Acquisition" means the purchase of the Shares and the related
transactions contemplated by this Agreement and the other Acquisition Documents.

      1.3 "Acquisition Documents" means this Agreement, the Agent Agreement, and
each agreement to be executed and delivered at the Closing pursuant to this
Agreement, including the Employment Agreement.

      1.4 "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.

      1.5 "Agent" means David Lipman, as agent of the Shareholders pursuant to
the Agent Agreement.

      1.6 "Agent Agreement" means the Shareholders' Agent Agreement of even date
herewith among the Shareholders and the Agent.

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

      1.8 "Assets" means the assets of each of the Kidz Biz Companies, as the
context may require.

      1.9 "Awareness" or "Knowledge" when used in this Agreement in reference to
any Shareholder refers to the actual awareness or knowledge of such Shareholder
as of the date of this Agreement, without further investigation and without
giving effect to imputed knowledge.

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

      1.11 "Business" means the business operated by Kidz Biz UK or Far East or
both, as the context so requires, as of the date hereof and all products
designed, developed, marketed and otherwise dealt with and traded in by Kidz Biz
UK or Far East on and prior to the Closing Date and all business activities
incidental thereto.

      1.12 "Claim" means any claims, demands, suits, damages, or causes of
action.

      1.13 "Claim for Tax" means any letter, document, assessment or receipt of
any Tax Governmental Authority from which it appears that a Kidz Biz Company may
be placed under liability to any Tax.

                                        2


      1.14 "Clockhouse Lease" refers to a lease by Kidz Biz UK of offices
located at The Clockhouse, 4 Dorking Road, Epsom, Surrey, England, in the form
of the draft provided to JAKKS Pacific by the Shareholders.

      1.15 "Closing" means the closing of the Acquisition as provided in
Article 6.

      1.16 "Closing Date" means the date of the Closing, which is also the date
of this Agreement.

      1.17 "Closing Purchase Price" means the portion of the Purchase Price
payable or deliverable at the Closing consisting of US$6,400,000.00 in cash and
the JAKKS Pacific Shares, allocated between the Kidz Biz Companies as set forth
in Section 6.3.

      1.18 "Commission" means the U.S. Securities and Exchange Commission.

      1.19 "Common Stock" means the shares of common stock, par value $.001 per
share, of JAKKS Pacific.

      1.20 "Consent" means any material 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,
License Agreement or Order, the failure to obtain which would have a Material
Adverse Effect or would prohibit the Acquisition.

      1.21 "Contract" means any material contract (including without limitation
any purchase, sale, supply or service order or agreement, equipment lease,
License Agreement or Lease) that relates to the Business or the Assets. 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 either of the
Kidz Biz Companies of an amount in excess of (pound)25,000 (or the transfer of
property with a fair market value in excess of (pound)25,000), (b) a breach or
default thereunder would have a Material Adverse Effect, or (c) it relates to
any Trade Right or any transaction not in the ordinary course of business.

                                        3


      1.22 "David Lipman" means David Lipman, one of the Shareholders.

      1.23 "Disclosure Schedules" means the disclosure schedules attached to
this Agreement.

      1.24 "Dividends" means any dividends, dividend equivalents, bonuses or
other distributions paid or payable by either of the Kidz Biz Companies to the
Shareholders on or after October 1, 2001 through and up to (and including) the
Closing Date (other than base salaries paid in the ordinary course consistent
with past practice).

      1.25 "Dragon Ball Z Claims" refers to any Claim by AB Toys, SNC, a company
incorporated in France, against Kidz Biz UK under a Distribution Agreement dated
December 5, 2000 between AB Toys, SNC, as licensor and Kidz Biz UK, as licensee.

      1.26 "Earn-Out" means that portion of the Purchase Price payable under
certain conditions pursuant to Section 2.3.

      1.27 "Earn-Out Payment" means the payment, if any, to be satisfied by the
issue of the Earn-Out Shares to the Shareholders and to be determined pursuant
to Section 2.3 in respect of any Earn-Out Year.

      1.28 "Earn-Out Payment Date" means a date on which any portion of the
Earn-Out is to be satisfied by the issue of the Earn-Out Shares pursuant to
Section 2.3.

      1.29 "Earn-Out Shares" means the new Common Stock to be issued to satisfy
any Earn-Out Payment.

      1.30 "Earn-Out Year" means each of calendar year 2002, 2003, 2004 and
2005.

      1.31 "Employment Agreement" means the employment agreement entered into at
the Closing between Kidz Biz UK and David Lipman.

                                       4


      1.32 "Escrowee" means Feder, Kaszovitz, Isaacson, Weber, Skala, Bass &
Rhine LLP, counsel to JAKKS Pacific or any substitute escrow agent appointed
pursuant to Section 2.4.

      1.33 "Far East Shares" means the shares of HK$1.00 each of Far East.

      1.34 "`Financial Claim" refers to any Claim by JAKKS Pacific against any
or all of the Shareholders for breach of the representations and warranties
contained in Sections 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11 and 4.12 of this
Agreement.

      1.35 "Financial Statements" means the UK Financial Statements, the HK
Financial Statements and the Management Accounts.

      1.36 "Governmental Authority" means any U.S., English, Hong Kong or other
U.S. federal, U.S. state or U.S. or other local government or governmental
authority, agency or instrumentality, or any court or arbitration panel of
competent jurisdiction, or any recognized professional or industry association
or organization which establishes policies or standards or otherwise regulates
or supervises services and activities related to the Business or the Assets.

      1.37 "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 asbestos,
polychlorinated biphenyls or urea formaldehyde or which is otherwise subject to
any Law, License or Order relating to the protection of the environment or human
health or safety.

      1.38 "HK Financial Statements" has the meaning given in Section 4.6.

      1.39 "Holdback" means the aggregate sum of US$1,000,000.00 for the Dragon
Ball Z Claims, and any Financial Claims.

      1.40 "Holdback Claim" refers to any Dragon Ball Z Claim and any Financial
Claim.

                                       5


      1.41 "Holdback Period" means the period expiring on the date (i) ten (10)
business days following the resolution of the Dragon Ball Z Claims, and (ii) ten
(10) business days following the resolution of any Financial Claim by the
dispute resolution procedures set forth in Section 7.5 or, in respect of any
portion of the Holdback for Financial Claims against which no Financial Claim is
made, the second anniversary of Closing, provided, however that the Holdback
Period with respect to the Dragon Ball Z Claims and the Financial Claims shall
terminate on the later of the date that is two (2) years and six (6) months
following the date hereof and the date when any dispute among the Parties
regarding indemnification for any such Claim is resolved.

      1.42 "Hong Kong Lease" means a Lease for a term commencing July 10, 2000
between Hornbrook Investment, Ltd. as landlord and Far East as Tenant, a true
and correct copy of which has been delivered by the Shareholders of Far East to
JAKKS Pacific.

      1.43 "JAKKS Pacific Shares" means 308,992 shares of new Common Stock
issued as the Common Stock portion of the Closing Purchase Price.

      1.44 "JAKKS Pacific Securities Claims" has the meaning given in the
Registration Rights Agreement.

      1.45 "John Nimmo" means John Nimmo, one of the Shareholders.

      1.46 "Kidz Biz Accountants" means, when referring to Kidz Biz UK, Morgan
Brown & Spofforth, Chartered Accountants and Registered Auditors, Surrey,
England, and, when referring to Far East, David Ho & Company, Hong Kong.

      1.47 "Kidz Biz Sales" means:

            (a) in any period ending prior to the Closing Date, the sales of the
Kidz Biz Companies in such period, and

            (b) in any period ending on or after the Closing Date, the sales of
the Kidz Biz Companies including, without limitation, for this purpose sales of
any products produced or sold by

                                       6


JAKKS Pacific (or any Affiliate thereof) using properties, including without
limitation, Trade Rights, acquired by JAKKS Pacific (or such Affiliate) in the
Acquisition in such period, determined on a "stand alone" basis in accordance
with the accounting principles and practices consistently applied in the
determination of the Kidz Biz Companies' sales by the relevant Kidz Biz Company
and the relevant Kidz Biz Accountants prior to the Closing, as reflected in the
relevant Kidz Biz Company's regularly prepared statements of operations,
including those included in the relevant Kidz Biz Company's audited 1999 and
2000 Financial Statements.

      1.48 "Kidz Biz Shares" means the Ordinary Shares and the Far East Shares.

      1.49 "Law" means any statute, rule, regulation or ordinance of any
Governmental Authority.

      1.50 "Lease" means a lease pursuant to which either of the Kidz Biz
Companies is a lessee of any Real Property.

      1.51 "License Agreement" means a license, royalty or other Contract
pursuant to which either of the Kidz Biz Companies has the right to use or
exploit any Trade Right of another Person.

      1.52 "Lien" means any security interest, conditional sale or other title
retention agreement, mortgage, pledge, lien, charge, encumbrance or other
adverse claim or interest other than, in any case,as may arise in the ordinary
course of business.

      1.53 "Limitations" means the limitations set out in Section 8.4.

      1.54 "Management Accounts" means the Management Accounts of each of the
Kidz Biz Companies for the period from December 31, 2000 to September 30, 2001
(copies of which are annexed to the Disclosure Schedules).

      1.55 "Marilyn Lipman" means Marilyn Lipman, one of the Shareholders.

      1.56 "Material Adverse Effect" means a material adverse effect on the
Business or the Assets.

                                       7


      1.57 "Notice" means giving any notice to, or making any declaration or
filing, or registration or recordation, with any Person.

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

      1.59 "Ordinary Shares" means the ordinary shares of(pound)1 each of Kidz
Biz UK.

      1.60 "Payment Factor" means the percentage amounts set forth in Schedule I
for allocation of the Purchase Price among the Shareholders.

      1.61 "Percentage Y/O/Y Increase" has the meaning given in Section 2.3.

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

      1.63 "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.

      1.64 "Proceeding" means any action, suit, arbitration, audit,
investigation or other proceeding, at law or in equity, before or by any
Governmental Authority (other than any routine audit of any Tax Authority).

      1.65 "Purchase Price" means the aggregate of the Closing Purchase Price,
increased by the Earn-Out.

      1.66 "Real Property" means any real property subject to a Lease.

      1.67 "Registration Rights Agreement" means an agreement among JAKKS
Pacific and the Shareholders providing for Registration of the JAKKS Pacific
Shares delivered at the Closing and the Earn-Out Shares.

                                       8


      1.68 "Securities Act" means the U.S. Securities Act of 1933, as amended.

      1.69 "Share Certificates" means the certificates representing the JAKKS
Pacific Shares, which shall bear the following legend:

      Any transfer or other disposition of the shares represented by this
      certificate is subject to the provisions of a Stock Purchase Agreement
      among JAKKS Pacific, Inc. (the "Corporation") and the individual
      shareholders of Kidz Biz Limited and Kidz Biz Far East Limited. The shares
      of stock represented by this Certificate have not been registered under
      the United States Securities Act of 1933, as amended (the "Act"), and may
      be transferred only if (i) registered under the Act and the requirements
      of any state having jurisdiction are complied with or (ii) the transfer is
      exempt from such registration and state requirements and counsel
      reasonably acceptable to the Corporation has delivered to the Corporation
      a written opinion reasonably acceptable to the Corporation setting forth
      the basis for such exemption.

      1.70 "Shareholder" means each Person listed on Schedule I, constituting
all of the shareholders of record of the Kidz Biz Companies.

      1.71 "Shareholder Securities Claims" has the meaning given in the
Registration Rights Agreement.

      1.72 "Storage Facility Agreement" means the agreement between Kidz Biz UK
and Euro Pressing Services Ltd (EUROP) of Leicester, for use by Kidz Biz UK of a
warehouse facility at 16-20 Euston Street, Freemens Common, Ayleston Road,
Leicester LE2 7SS, England.

      1.73 "Tax" means any income, excise, import, sales, property, withholding,
social security or franchise tax or duty, and any interest, penalty or fine due
thereon or with respect thereto of the U.S. (federal, state or local), United
Kingdom or Hong Kong, or any other jurisdiction, as the context may require.

      1.74 "Tax Authority" means any U.S., English or Hong Kong governmental
authority, whether local, state or federal, or any agency of such authority
which is competent to charge, impose or collect any Tax.

                                       9


      1.75 "Tax Claim" refers to any claim by any Tax Authority against Kidz Biz
UK for Tax in respect of income, profits, or gains made by Kidz Biz UK before
the Closing.

      1.76 "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.

      1.77 "UK Financial Statements" has the meaning given in Section 4.6.4.6.

      1.78 "U.S." means the United States of America.

      1.79 "US$" means U.S. dollars.

2. Purchase of the Kidz Biz Shares.

      2.1 Transfer of Shares. Each Shareholder agrees to sell with full title
guarantee and JAKKS Pacific agrees to buy at the Closing the Ordinary Shares
owned by such Shareholder and each right attached to the Ordinary Shares at or
after the date of this Agreement, free of any encumbrances, and each Shareholder
agrees to sell, assign, transfer and deliver to JAKKS Pacific agrees to buy at
the Closing the Far East Shares owned by such Shareholder free and clear of any
liens, claims or encumbrances.

      2.2 Delivery of Closing Purchase Price. At the Closing, JAKKS Pacific is
delivering the Closing Purchase Price to the Shareholders in proportion to their
respective Payment Factors in accordance with payment instructions given by the
Shareholders to JAKKS Pacific.

      2.3 Earn-Out. In addition to the Closing Purchase Price, JAKKS Pacific
shall pay the Earn-Out to the Agent in the form of Common Stock for the benefit
and account of the several Shareholders in the amount and payable in the manner
and upon the terms and conditions set forth below:

            (a) The Earn-Out for each Earn-Out Year shall be determined by the
increase, if any, in Kidz Biz Sales for such Earn-Out Year over the prior year's
Kidz Biz Sales, expressed as a percentage

                                      10


of the prior year's Kidz Biz Sales (the "Percentage Y/O/Y Increase"), and shall
be earned and payable as follows:

                  (i) if the Percentage Y/O/Y Increase is less than or equal to
five (5%) percent, there will be no Earn-out Payment for the Earn-Out Year;

                  (ii) if the Percentage Y/O/Y Increase is greater than five
(5%) percent but less than or equal to ten (10%) percent, the Earn-out Payment
for such Earn-Out Year will equal the number of shares of Common Stock equal to
the product of (i) a fraction the numerator of which is five (5%) percent and
the denominator of which is the excess of the Percentage Y/O/Y Increase over
five (5%) percent and (ii) 25,749 shares of Common Stock; and

                  (iii) if the Percentage Y/O/Y Increase is greater than ten
(10%) percent, the Earn-out Payment for such Earn-Out Year will be 25,749 shares
of Common Stock.

            (b) The Earn-Out Shares, if any, for each Earn-Out Year shall be
delivered as soon as practicable, but in any event not later than sixty (60)
days, after the end of such Earn-Out Year.

            (c) On each Earn-Out Payment Date, JAKKS Pacific shall pay the
Earn-Out, if any, for the applicable Earn-Out Year to the Agent (for the benefit
and account of the several Shareholders) in the manner provided in a Notice
given to JAKKS Pacific pursuant to Section 3.2 or, if no such Notice is given,
by delivering share certificates for the Earn-Out Shares in the names of each
Shareholder to the Agent, each certificate to be for the same proportion of the
Earn-Out Shares for that Earn-Out Year as the proportion of Earn-Out Shares
received by such Shareholder in payment of the last preceding Earn-Out Payment,
or if no preceding Earn-Out Payment has then been made, for the same proportion
of the Earn-Out Shares as the proportion of the JAKKS Pacific Shares received by
such Shareholder on Closing.

            (d) In the event that JAKKS Pacific ceases to control Kidz Biz UK or
Far East and David Lipman's employment is terminated without "cause" by Kidz Biz
UK or by David Lipman for "good reason" (as such terms are used in the
Employment Agreement) prior to the end of the term of the Employment Agreement,
JAKKS Pacific shall within ten (10)business days thereafter deliver to the Agent
for the benefit and account of the Shareholders 25,749 shares of Common Stock in
respect of the

                                      11


then current Earn-Out Year in which such events occur in full satisfaction of
the Earn-Out obligation for such Earn-Out Year, and 25,749 shares of Common
Stock in respect of each Earn-Out Year thereafter, such delivery to occur within
thirty (30) days after the end of the relevant subsequent Earn-Out Year, if any,
provided, however, that if such termination occurs after the third anniversary
of the Closing under this Agreement, the number of shares of Common Stock
thereafter deliverable on account of the Earn-Out shall equal the average number
of shares of Common Stock delivered in satisfaction of the Earn-Out obligation,
if any, during the Earn-Out Years ending prior to such termination.

      2.4 Holdback .

            (a) At the Closing, cash in an aggregate amount equal to the
Holdback shall be held in escrow by the Escrowee in accordance with this Section
2.4. In the event that any Holdback Claim arises during the relevant Holdback
Period following Closing, JAKKS Pacific shall promptly give the Agent notice
after its receipt of written notice of the Holdback Claim, and JAKKS Pacific
may, subject to the following requirements of this Section 2.4, instruct the
Escrowee to release an amount equal to the amount asserted in the Holdback Claim
(not to exceed US$500,000.00 with respect to the Dragon Ball Z Claim and not to
exceed $500,000 with respect to the Financial Claims, subject to the other
limitations contained in Section 8.4 of this Agreement), and if no specific
amount is asserted, then an amount reasonably estimated by JAKKS Pacific not to
exceed the foregoing limitations, and the Escrowee shall comply with such
instructions. JAKKS Pacific shall use good faith efforts to consult with the
Agent with respect to the resolution of a Holdback Claim. Prior to giving notice
to the Escrowee to effect a release of any amount from escrow, JAKKS Pacific
shall give a written notice (the "Release Notice") to the Agent that it is to
proposing to notify the Escrowee to effect a release of funds, specifying in
reasonable detail (i) the amount of the Holdback Claim which JAKKS Pacific
claims to be entitled to pursuant to this Section 2.4 (or, if not readily
calculable, a reasonable estimate of the amount of such Holdback Claim), (ii)
the basis of the Holdback Claim and (iii) the date on which such release shall
be effected (which date shall not be less than ten (10) days after the date that
such written notice is given to the Agent (such ten (10) day period is referred
to herein as the "Release Notice Period")).

            (b) In the case of a Financial Claim if, prior to the expiration of
the Release Notice Period, the Agent shall notify JAKKS Pacific in writing of an
intention to dispute the Financial Claim, the parties hereto shall, for a period
of ten (10) business days, attempt to resolve such dispute and JAKKS

                                      12


Pacific shall be prohibited from giving notice to the Escrowee to effect such
release during such period. If the Agent and JAKKS Pacific, each acting
reasonably, are unable to resolve such dispute within such period, no funds
shall be released by Escrowee until receipt by Escrowee of joint written
instructions signed by Agent and JAKKS Pacific or the issuance of a final,
non-appealable order of instruction by a court of competent jurisdiction. If (x)
the Agent does not so notify JAKKS Pacific of an intention to dispute the
Financial Claim prior to the expiration of the Release Notice Period, (y) joint
instructions are so received regarding the Release Notice, or (z) a court of
competent jurisdiction shall issue such an order providing that JAKKS Pacific is
entitled to the Financial Claim, then JAKKS Pacific shall be entitled to give
notice to the Escrowee to effect a release of funds in accordance with this
Section 2.4.

            (c) The Parties agree that the Agent shall use good faith efforts to
resolve the Dragon Ball Z Claim in a manner reasonably acceptable to the Agent
and JAKKS Pacific within six (6) months after the date hereof. If the Dragon
Ball Z Claim is not resolved within such six (6) month period, then JAKKS
Pacific shall be entitled to resolve the Dragon Ball Z Claim on such terms as it
deems acceptable ( using reasonable business judgment), and shall be entitled to
withdraw the amount by which it resolves such Claim (by settlement or
litigation) from the funds held in escrow by the Escrowee by giving the Release
Notice and following the procedure described in paragraph (a) of this Section
2.4. In attempting to resolve the Dragon Ball Z Claim, the Agent and JAKKS
Pacific shall consult with one another.

            (d) The Holdback shall be deposited in an interest bearing account
and the interest paid thereon shall be paid to Agent semi-annually.

            (e) At the end of any Holdback Period, the balance of the Holdback
remaining in escrow with respect to the category of Holdback Claims as to which
the Holdback Period has expired shall be released to the Agent with all interest
paid thereon for distribution among the Shareholders.

            (f) Following the Closing, upon request of any of the Parties, the
Shareholders and JAKKS Pacific shall cooperate with one another in good faith to
promptly select an independent third party institution acceptable to the
Parties, such as a bank, to act as the escrow agent under this paragraph, and
the fees of such substitute escrow agent shall be paid by JAKKS Pacific.

                                      13


      2.5 Escrowee Obligations. The Escrowee shall perform only the duties
expressly set forth herein and in Section 2.5, and shall refer to this Agreement
in performing its duties hereunder. The Escrowee may rely upon, and shall be
protected in acting, or refraining from acting upon, any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or parties. The
Escrowee shall not be liable for any action taken by it hereunder except for the
Escrowee's gross negligence or willful misconduct. The Parties shall indemnify
the Escrowee and hold it harmless against any loss, liability or expense
incurred without bad faith or gross negligence on its part, arising out of or in
connection with this Agreement, including the costs and expenses incurred in
defending any such claim of liability. The Escrowee may consult with its own
counsel, and shall have full and complete authorization and protection for any
action taken or suffered in good faith and in accordance with the opinion of
such counsel. The Escrowee may resign at any time by giving thirty (30) days'
prior written notice of such resignation to the Parties. Thereafter, the
Escrowee shall have no further obligation hereunder except to hold the funds
delivered to it as depositary. In such event, the Escrowee shall not take any
action until the Parties have designated a successor Escrowee. The Parties
together may terminate the appointment of the Escrowee hereunder upon notice
specifying, the date upon which such termination shall take effect. In the event
of such termination, the Parties shall, within thirty (30) days after notice
from the Escrowee, jointly appoint a successor Escrowee. Upon appointment of a
successor Escrowee, the Escrowee shall turn over the funds held by it to such
successor Escrowee and shall thereafter have no further obligations hereunder.
JAKKS Pacific shall pay the compensation of the Escrowee for the Escrowee's
services hereunder and all expenses, disbursements and advances (including
reasonable attorneys' fees) incurred in carrying out the Escrowee's duties
hereunder. The Shareholders acknowledge that the Escrowee has acted as counsel
to JAKKS Pacific in the preparation, negotiation and conclusion of this
Agreement and the transactions related to the Acquisition, and hereby consent to
the Escrowee representing its and their Affiliates in any proceeding arising out
of any dispute under this Agreement, any of the transactions or agreements
contemplated by this Agreement.

      2.6 Effective Date. The Parties acknowledge that JAKKS Pacific will for
its Tax and financial statement purposes treat the Acquisition of the Shares to
have taken effect on October 1, 2001.

3. The Agent.

                                      14


      3.1 Notices to Agent. Any Party hereto may rely upon any Notice given by
the Agent on behalf of any Shareholder with respect to any election,
determination or other action to be made or taken by him hereunder as the act
and deed of such Shareholder. It shall be sufficient to deliver to the Agent at
his address set forth in Section 12.4 below any payment, Notice or other
document to be delivered hereunder to any Shareholder and it shall be the sole
responsibility of the Agent to disburse any funds or deliver any Notice or other
document so delivered to him in such manner as he and the Shareholders, or any
of them, may agree.

      3.2 Directions from Agent. The Agent may specify the manner of payment of
the Purchase Price, and the account or Person to which such payment is to be
made, by giving to JAKKS Pacific at least two business days prior to an Earn-Out
Payment Date, a written Notice setting forth instructions for the manner in
which payment of the Earn-Out is to be made.

      3.3 Authority of Agent. Each election, determination or other action of
the Agent in connection with this Agreement shall be binding upon all of the
Shareholders, and no Shareholder shall have any right to object, dissent from,
or protest or otherwise contest the same or take any separate action relating to
the same.

      3.4 Payments to Agent. Any delivery or payment to be made hereunder to or
for the account of any Shareholder that is made to the Agent as herein provided
shall constitute, as between JAKKS Pacific and the Shareholders, payment and
delivery in full of the amount thereof. It shall be the sole responsibility of
the Agent to hold for the account of the Shareholders and to disburse to them
the JAKKS Pacific Shares and any funds JAKKS Pacific may pay or deliver to it
pursuant hereto.

4. Representations and Warranties of Kidz Biz and the Shareholders.

      The Shareholders, severally but not jointly, except as to David Lipman and
Marilyn Lipman, whose obligations shall be joint and several, hereby represent
and warrant to JAKKS Pacific as follows, subject to and except for the matters
disclosed on the Disclosure Schedules (each Shareholder makes such
representation and warranty as to the corporation of which he or she is a
Shareholder):

                                      15


      4.1 Kidz Biz UK Existence; Shareholders. Kidz Biz UK is a private limited
company duly organized and validly existing under the Laws of England and Wales
and has been in continuous existence since its incorporation and has full 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 Kidz Biz UK's Articles of Association, including
all amendments thereto, and Kidz Biz UK's Memorandum of Association, including
all amendments thereto, have been delivered to JAKKS Pacific. The only share
capital that Kidz Biz UK is authorized to issue consists of 25,000 Ordinary
Shares. Except as set forth on Schedule I, such Shareholder owns beneficially
and of record all of the Ordinary 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 restrictions of general
applicability imposed by applicable securities Laws), and such Ordinary Shares
constitute in the aggregate all of the Ordinary Shares. All of the Ordinary
Shares are duly authorized, validly issued and fully paid. None of the share
capital of Kidz Biz UK is 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 share
capital of Kidz Biz UK.

      4.2 Far East Existence; Shareholders. Far East is a private limited
liability company duly organized, validly existing and under the Laws of Hong
Kong and has full 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 Far East's Articles of
Association, including all amendments thereto, and Far East's Memorandum of
Association, including all amendments thereto, have been delivered to JAKKS
Pacific. The authorized capital stock of Far East is HK$10,000 divided into
10,000 ordinary shares of HK$1.00 each, 1,000 of which shares have been issued
and are fully paid up. Except as set forth on Schedule I, such Shareholder owns
beneficially and of record all of the Far East 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 restrictions of
general applicability imposed by applicable securities Laws), and such Far East
Shares constitute in the aggregate all of the issued share capital of Far East.
All of such Far East Shares are duly authorized and validly issued. No shares of
capital stock of Far East are 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 Far East.

                                      16


      4.3 Power and Authority. Each Shareholder (as to himself or herself) has
the legal capacity, power and authority, to execute and deliver this Agreement
and each Acquisition Document to which he or she is a party and to assume and
perform his or her respective obligations hereunder and thereunder. This
Agreement has been, and each other Acquisition Document to which he or she is a
party will be, duly executed and delivered by such Shareholder. No Consent of,
or Notice to, any Person is required as to any Shareholder in connection with
its execution and delivery of this Agreement or any other Acquisition Document
to which he or she is a party, or the performance of his or her obligations
hereunder or thereunder.

      4.4 Proceedings.

            (a) Except as set forth on the Disclosure Schedules, so far as such
Shareholder of Kidz Biz UK is aware, no Proceeding is pending or, to the best of
his/her knowledge, threatened against or affecting the Business, the Assets or
the operations of Kidz Biz UK in which an unfavorable Order would have a
Material Adverse Effect, or prohibit, invalidate, or make unlawful, in whole or
in part, the Acquisition, this Agreement or any other Acquisition Document, or
the carrying out of the provisions hereof or thereof. Except as set forth on
Schedule 4.4, so far as such Shareholder is aware, Kidz Biz UK is not in default
in respect of any Order, nor is there any Order enjoining either of Kidz Biz UK
or any Shareholder of Kidz Biz UK in respect of, or the effect of which is to
prohibit or curtail the Kidz Biz UK's or any such Shareholder's performance of,
its obligations hereunder or thereunder.

            (b) Except as set forth on the Disclosure Schedules, so far as such
Shareholder of Far East is aware, no Proceeding is pending or, to the best of
their knowledge, threatened against or affecting the Business, the Assets or the
operations of Far East in which an unfavorable Order would have a Material
Adverse Effect, or prohibit, invalidate, or make unlawful, in whole or in part,
the Acquisition, this Agreement or any other Acquisition Document, or the
carrying out of the provisions hereof or thereof. Except as set forth on
Schedule 4.4, so far as such Shareholder of Far East is aware, Far East is not
in default in respect of any Order, nor is there any Order enjoining either of
Far East or any Shareholder of Far East in respect of, or the effect of which is
to prohibit or curtail Far East's or any such Shareholder's performance of, its
obligations hereunder or thereunder.

      4.5 Financial Statements.

                                      17


            Except as set forth on the Disclosure Schedules:

            (a) UK Financial Statements.

                  (i) Kidz Biz UK's audited financial statements comprising the
balance sheet, profit and loss account and cash flow statement of Kidz Biz UK
together with the notes thereon (collectively, the "UK Financial Statements"),
for the financial year ended on December 31, 2000:

                        (1) show a true and fair view of the:

                              (A) state of affairs of Kidz Biz UK as at December
                              31, 2000, and

                              (B) the results of Kidz Biz UK for the financial
                              year ended on December 31, 2000.

                        (2) have been prepared and audited in accordance with
the standards, principles and practices specified in of the UK Financial
Statements applied on a consistent basis and subject thereto in accordance with
the law and applicable standards, principles and practices generally accepted in
the United Kingdom consistently applied; and

                        (3) have been prepared on a basis consistent with the
basis upon which all audited Financial Statements of Kidz Biz UK have been
prepared in respect of the three years ended December 31, 2000.

                  (ii) Kidz Biz UK owns all of its material Assets free and
clear of all Liens, except as disclosed in the UK Financial Statements, its
Management Accounts or any Disclosure Schedule .

                  (iii) The Management Accounts of Kidz Biz UK have been
prepared on a basis consistent with the UK Financial Statements and are
reasonably accurate in all material respects, and (in light of the purpose for
which they were prepared) give a fair view of the state of affairs of Kidz Biz
UK for the period from January 1, 2001 through September 30, 2001.

            (b) HK Financial Statements.

                  (i) Far East's audited financial statements comprising the
balance sheet, profit and loss account and cash flow statement of Far East
together with the notes thereon, (collectively, the "HK Financial
Statements")for the financial Year ended on December 31, 2000:

                        (1) show a true and fair view of the

                              (A) state of affairs of Far East as at December
                              31, 2000, and

                                      18


                              (B) the results of Far East for the financial year
                              ended on December 31, 2000;

                        (2) have been prepared and audited in accordance with
the standards, principles and practices specified in the HK Financial Statements
applied on a consistent basis and subject thereto in accordance with the law and
applicable standards, principles and practices generally accepted in the HKSAR
consistently applied; and

                        (3) have been prepared on a basis consistent with the
basis upon which all audited Financial Statements of Far East have been prepared
in respect of the three years ended December 31, 2000.

                  (ii) Far East owns all of its material Assets free and clear
of all Liens, except as disclosed in the HK Financial Statements, its Management
Accounts or any Disclosure Schedule.

                  (iii) The Management Accounts of Far East have been prepared
on a basis consistent with the HK Financial Statements and are reasonably
accurate in all material respects, and (in light of the purpose for which they
were prepared) give a fair view of the state of affairs of Far East for the
period from January 1, 2001 through September 30, 2001.

      4.6 Material Adverse Changes.

            (a) Except as set forth on the Disclosure Schedules or specifically
disclosed elsewhere herein, so far as such Shareholder of Kidz Biz UK is aware,
since September 30, 2001 there has not been any material adverse change in the
Business or the Assets of Kidz Biz UK or Kidz Biz UK's financial condition.

            (b) Except as set forth on the Disclosure Schedules or specifically
disclosed elsewhere herein, so far as each Shareholder of Far East is aware,
since September 30, 2001 there has not been any material adverse change in the
Business or the Assets of Far East or Far East's financial condition.

                                      19


      4.7 Trade Rights.

            (a) Except as set forth on the Disclosure Schedules, so far as such
Shareholder of Kidz Biz UK is aware, no Trade Right of Kidz Biz UK conflicts
with or infringes on, and, so far as such Shareholder of Kidz Biz UK is aware,
there has been no misappropriation or unauthorized use by Kidz Biz UK of, any
Trade Right of any other Person.

            (b) Except as set forth on the Disclosure Schedules, so far as such
Shareholder of Far East is aware, no Trade Right of Far East conflicts with or
infringes on, and, so far as such Shareholder of Far East is aware, there has
been no misappropriation or unauthorized use by Far East of, any Trade Right of
any other Person.

      4.8 Real Property.

            Except as disclosed on the Disclosure Schedules:

            (a) Kidz Biz UK does not own, lease, use or occupy any real property
except the lease of the Real Property subject to the Clockhouse Lease and use of
the Storage Facility Agreement. Kidz Biz UK does not sublease any Real Property.

            (b) Far East does not own, lease, use or occupy any real property
except the lease of the Real Property subject to the Hong Kong Lease. Far East
does not sublease any Real Property.

      4.9 Hazardous Material.

            (a) So far as such Shareholder of Kidz Biz UK is aware, no Hazardous
Material has been generated, used, stored, released or disposed of at, or
transported to or from, the Real Property leased by Kidz Biz UK or in connection
with the Business of Kidz Biz UK, and no Law, Permit, Order or Proceeding
applicable to Kidz Biz UK or its Assets requires any clean-up or remediation or
participation in or contribution to any such clean-up or remediation.

            (b) So far as such Shareholder of Far East is are aware, no
Hazardous Material has been generated, used, stored, released or disposed of at,
or transported to or from, the Real Property leased by Far East or in connection
with the Business of Far East, and no Law, Permit, Order or

                                      20


Proceeding applicable to Far East or its Assets requires any clean-up or
remediation or participation in or contribution to any such clean-up or
remediation.

      4.10 Tax Returns. Except as disclosed on the Disclosure Schedules, each of
the Kidz Biz Companies has duly filed all Tax and information returns and
reports required to have been filed by it, each of which is complete and correct
in all material respects. Except as disclosed on the Disclosure Statements, each
of the Kidz Biz Companies has paid all Taxes due to any Governmental Authority
required to have been paid by it and has created sufficient reserves or made
provision for all Taxes accrued but not yet due and payable by it. Except as
disclosed in the Disclosure Schedules, each of the Kidz Biz Companies has paid
to the proper Governmental Authorities all customs, duties and similar or
related charges required to be paid by it with respect to the importation of
goods into the United Kingdom. Except as disclosed on the Disclosure Schedules,
no Governmental Authority is now asserting or, to the best of their knowledge,
threatening to assert any deficiency or assessment for additional Tax Claims,
nor, to the best of their knowledge, is there any basis for any such deficiency
or assessment. Except as disclosed on the Disclosure Schedules, so far as each
Shareholder is aware, neither of the Kidz Biz Companies has been audited by any
Governmental Authority with respect to any fiscal year ending at any time in the
three-year period prior to Closing and, so far as each Shareholder is aware, no
other such audit has been threatened or proposed. Neither of the Kidz Biz
Companies has waived or consented to any tolling of any limitation period with
respect to any Tax liability. The Kidz Biz Companies have delivered to JAKKS
Pacific complete and correct copies of the Tax returns of the Kidz Biz Companies
for each of their respective ended fiscal years ended December 31, 1998, 1999
and 2000.

      4.11 Employees.

            (a) The Disclosure Schedules include a complete and correct list of
the names and current annual salary, bonus and commission for each current
employee of Kidz Biz UK. Except as set forth on Schedule 4.11-A, so far as such
Shareholder of Far East is aware, no employee listed thereon intends to
terminate his or her employment relationship with Kidz Biz UK.

            (b) The Disclosure Schedules include a complete and correct list of
the names and current annual salary, bonus and commission for each current
employee of Far East. Except as set forth on Schedule 4.11-B, so far as each
Shareholder of Kid Biz HK is aware, no employee listed thereon intends to
terminate his or her employment relationship with Far East.

                                      21


      4.12 Excess Dividends . The Kidz Biz Companies have not paid Dividends in
excess of (pound)112,000 in the aggregate since September 30, 2001.

      4.13 Affiliates.

            (a) Except as set forth in the UK Financial Statements or the
Disclosure Schedules, no Shareholder and no Affiliate of the Kidz Biz UK or any
Shareholder of either of the Kidz Biz Companies or any relative, associate or
agent of any of them has any interest in any property of Kidz Biz UK, 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
Shareholder or such Affiliate. Except as set forth in the UK Financial
Statements or the Disclosure Schedules, no Shareholder or Affiliate of any
Shareholder of any of the Kidz Biz Companies holds any indebtedness of or has
any Claim against Kid Biz UK.

            (b) Except as set forth in the HK Financial Statements or the
Disclosure Schedules, no Shareholder and no Affiliate of Far East or any
Shareholder of either of Far East or any relative, associate or agent of any of
them has any interest in any property of Far East, 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 Shareholder or such
Affiliate. Except as set forth in the HK Financial Statements or the Disclosure
Schedules, no Shareholder or Affiliate of any Shareholder of any of the Kidz Biz
Companies holds any indebtedness of or has any Claim against Far East.

      4.14 Brokers.

            (a) Neither Kidz Biz UK nor such Shareholder of Kidz Biz UK has
employed or engaged any Person to act as a broker, finder or other intermediary
in connection with the Acquisition, and (b) no Person is entitled to any fee,
commission or other compensation relating to any such employment or engagement
by Kidz Biz UK or such Shareholder of Kidz Biz UK.

            (b) Neither Far East nor such Shareholder of Far East has employed
or engaged any Person to act as a broker, finder or other intermediary in
connection with the Acquisition, and (b) no

                                      22


Person is entitled to any fee, commission or other compensation relating to any
such employment or engagement by Far East or such Shareholder of Far East.

                                      23


4.15 Investment Representation. Each Shareholder represents and warrants that he
or she will be acquiring the JAKKS Pacific Shares for investment purposes only
and not with a view to distribution thereof, and recognizes that any sale,
pledge or other disposition of such shares is limited by the provisions of the
Securities Act, and the regulations issued thereunder, and other applicable
securities laws and Blue Sky Laws.

4.16 Agent's Appointment. Such Shareholder has duly appointed the Agent to act
as such Shareholder's agent and attorney-in-fact with respect to the Acquisition
in accordance with the Agent Agreement, a correct and complete copy of which has
been heretofore delivered to JAKKS Pacific, and has duly authorized the Agent to
take any action necessary in connection with (i) the implementation of this
Agreement on behalf of such Shareholder, (ii) the waiver of any condition to the
obligations of such Shareholder to close the Acquisition, or (iii) the
compromise or settlement of any dispute hereunder, all as more fully set forth
therein.

4.17 Limitation of Warranties. JAKKS Pacific acknowledges that in making its
determination as to the propriety of the transactions contemplated by this
Agreement, it has relied solely on the representations and warranties of the
Shareholders expressly contained in Section 4 of this Agreement. EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 4, THE SHAREHOLDERS MAKE NO EXPRESS OR IMPLIED
WARRANTY OF ANY KIND WHATSOEVER, INCLUDING ANY REPRESENTATION AS TO PHYSICAL
CONDITION OR VALUE OF ANY OF THE ASSETS OF THE KIDZ BIZ COMPANIES OR THE FUTURE
PROFITABILITY OR FUTURE EARNINGS PERFORMANCE OF THE KIDZ BIZ COMPANIES. ALL
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE
EXPRESSLY EXCLUDED.

5. Representations and Warranties of JAKKS Pacific.

      JAKKS Pacific hereby represents and warrants and the Shareholders as
follows:

      5.1 JAKKS Pacific Good Standing. JAKKS Pacific is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
has full 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

                                      24


now being conducted. Complete and correct copies of JAKKS Pacific's Certificate
of Incorporation, including all amendments thereto, and Bylaws, including all
amendments thereto, have been delivered to the Shareholders.

      5.2 Power and Authority. Each of JAKKS Pacific has full corporate power
and authority to execute and deliver this Agreement and each other Acquisition
Document to which it is a party and to assume and perform its obligations
hereunder and thereunder. The execution and delivery by JAKKS Pacific of this
Agreement and each other Acquisition Document 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 Document to which it is a party will be, duly
executed and delivered by JAKKS Pacific, and this Agreement is, and each other
Acquisition Document to which it is a party, when so executed and delivered,
will be, a legally valid and binding obligation of JAKKS Pacific, enforceable
against it in accordance with its 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. The execution and delivery of this Agreement does not, and the
execution and delivery of each other Acquisition Document and the performance by
JAKKS Pacific of its obligations hereunder and thereunder will not, violate any
provision of its Certificate of Incorporation or Bylaws. No Consent of, or
Notice to, any Person is required as to JAKKS Pacific in connection with its
execution and delivery of this Agreement or any other Acquisition Document to
which it is a party, or the performance of its obligations hereunder or
thereunder. The approval of the shareholders of JAKKS Pacific for JAKKS Pacific
to execute this Agreement or consummate the transactions contemplated hereby is
not required.

      5.3 JAKKS Pacific Shares. The JAKKS Pacific Shares have been duly
authorized and validly issued, and are fully paid and non-assessable, and free
and clear of any liabilities, liens, security interests, pledges or encumbrances
of any nature whatsoever, and the Earn-Out Shares shall be duly authorized and
validly issued, and are fully paid and non-assessable, and free and clear of any
liabilities, liens, security interests, pledges or encumbrances of any nature
whatsoever, except in any such case as may be created by the Shareholders and
except as the sale, pledge or other disposition thereof is limited by the
provisions of the Securities Act and other applicable US or English securities
laws and Blue Sky

                                      25


Laws. JAKKS Pacific shall keep available at all times sufficient authorized but
unissued Common Stock as may be necessary for issuance of the Earn-Out Shares.

      5.4 Brokers. Neither JAKKS Pacific nor JAKKS Pacific 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 JAKKS Pacific.

      5.5 Proceedings. No Proceeding is pending, or, to the best of JAKKS
Pacific's or JAKKS Pacific's knowledge, threatened against or affecting its
business, assets, operations or financial or other condition in which an
unfavorable Order would have a material adverse effect on JAKKS Pacific's
business or assets or prohibit, invalidate, or make unlawful, in whole or in
part, the Acquisition, this Agreement or any other Acquisition Document, or the
carrying out of the provisions hereof or thereof. Neither JAKKS Pacific nor
JAKKS Pacific is 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.

      5.6 No Material Adverse Change. So far as JAKKS Pacific is aware, since
September 30, 2001 there has not been any material adverse change in JAKKS
Pacific's financial condition.

      5.7 Eligibility for Form S-3. JAKKS Pacific meets, and shall use its best
efforts to continue to meet, the requirements for the use of Form S-3 for
registration or re-sale by the Shareholders of the JAKKS Pacific Shares and the
Earn-Out Shares for their own account and not as an "underwriter" as such term
is defined in the Securities Act, and JAKKS Pacific shall use its best efforts
to file all reports required to be filed by JAKKS Pacific with the Commission in
a timely fashion so as to maintain such eligibility for the use of Form S-3.

      5.8 Limitation of JAKKS Pacific's and JAKKS Pacific's Warranties. Each of
the Shareholders acknowledges that in making their determination as to the
propriety of the transactions contemplated by this Agreement, they have relied
solely on the representations and warranties of JAKKS Pacific expressly
contained in Section 5 of this Agreement and on the documents (including
financial statements, proxy statements, and annual reports) filed by JAKKS
Pacific with the Commission.

                                      26


EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5, JAKKS Pacific MAKE NO EXPRESS OR
IMPLIED WARRANTY OF ANY KIND WHATSOEVER, INCLUDING ANY REPRESENTATION AS TO THE
FUTURE PROFITABILITY OR FUTURE EARNINGS PERFORMANCE OF JAKKS PACIFIC OR ANY OF
THEIR AFFILIATES. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.

6. Closing.

      6.1 Concurrent Closing. The Closing is being held concurrently with the
execution of this Agreement. 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 deemed to be executed and/or delivered or taken, as the
case may be, simultaneously.

      6.2 Deliveries by Shareholders. At the Closing, the Shareholders shall
deliver to JAKKS Pacific:

            (a) transfers in common form relating to all the Ordinary Shares
duly executed in favor of JAKKS Pacific (or as it may direct);

            (b) instruments of transfer and bought and sold notes relating to
all the Far East Shares duly executed by the Shareholders in favor of JAKKS
Pacific and or in the name(s) of any other person(s) or nominee(s) that JAKKS
Pacific may direct;

            (c) share certificates relating to the Ordinary Shares or lost share
certificate indemnities therefor in the agreed terms;

            (d) share certificates relating to the Far East Shares or lost share
certificate indemnities therefor in the agreed terms;

            (e) the resignations, effective at the Closing, of all of Kidz Biz
Companies' directors immediately prior to the Closing; and

                                      27


            (f) Evidence satisfactory to JAKKS Pacific and its counsel that at
or prior to the Closing (and prior to the taking effect of the resignations of
the directors referred to in clause 6.2(d) above) the Shareholders of Kidz Biz
UK shall have procured the passing of board resolutions of Kidz Biz UK:

                  (i) sanctioning for registration (subject to due stamping
which shall be paid by JAKKS Pacific) the transfers in respect of the Ordinary
Shares;

                  (ii) appointing such persons as JAKKS Pacific may specify to
be the directors and secretary of Kidz Biz UK;

                  (iii) revoking all mandates to bankers and giving authority in
favor of such persons as JAKKS Pacific may nominate to operate the bank accounts
thereof;

                  (iv) resolving that Kidz Biz UK enters into the Employment
Agreement with David S. Lipman;

            (g) Evidence satisfactory to JAKKS Pacific and its counsel that at
or prior to the Closing (and prior to the taking effect of the resignations of
the directors referred to in clause 6.2(e) above) the Shareholders of Far East
shall have procured the passing of board resolutions of Kidz Biz HK:

                  (i) sanctioning for registration (subject where necessary to
due stamping) the transfers in respect of the Far East Shares;

                  (ii) appointing such persons as JAKKS Pacific may specify to
be the directors and secretary of Far East;

                  (iii) revoking all mandates to bankers and giving authority in
favor of such persons as JAKKS Pacific may nominate to operate the bank accounts
thereof.

      6.3 Deliveries by JAKKS Pacific. At the Closing:

            (a) JAKKS Pacific shall deliver to the Shareholders of Kidz Biz UK,
in the original principal amount of US$1,408,000.00 cash, less US$220,000.00 as
part of the Holdback, which portion of the Holdback shall be delivered to the
Escrowee, and 67,979 JAKKS Pacific Shares; and

                                      28


            (b) JAKKS Pacific shall deliver to the Shareholders of Far East,
US$4,992,000.00 cash less US$780,000.00 as part of the Holdback, which portion
of the Holdback shall be delivered to the Escrowee, and 241,013 JAKKS Pacific
Shares.

            (c) JAKKS Pacific shall deliver to the Shareholders evidence
satisfactory to the Shareholders and their counsel of the approval by the board
of JAKKS Pacific of entry into this Agreement and the other Acquisition
Documents.

      6.4 At the Closing Kidz Biz UK and David Lipman shall each execute and
deliver to the other the Employment Agreement and Kidz Biz UK.

7. Additional Covenants.

      7.1 Restrictive Covenants. From and after the Closing Date and until
December 31, 2004, no Shareholder of either of the Kidz Biz Companies shall,
directly or indirectly through any Affiliate or other intermediary (a) engage in
the Business conducted by the Kidz Biz Companies, or serve as a partner, member,
manager, director, an 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 (in each case, other than (i) except as does not directly
relate to the Business and (ii) David Lipman under the Employment Agreement or
Marilyn Lipman or John Nimmo as employees of either of the Kid Biz Companies as
provided in Section 7.7 below), any Person that engages in the Business
conducted by the Kidz Biz Companies, or authorize the use of its name in
connection therewith within the geographic area in which Kidz Biz Companies
conducted their respective businesses at the date hereof, or (b) for itself or
on behalf of any other Person, other than in response to a general solicitation
or advertisement, employ, engage or retain any Person who at any time during the
preceding twelve ( 12) month period shall have been an employee of either of the
Kidz Biz Companies, or contact any supplier, customer or employee of either of
the Kidz Biz Companies for the purpose of soliciting or diverting any such
supplier, customer or employee from Kidz Biz UK or Far East. The foregoing
provisions notwithstanding, any Shareholder 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 the Shareholders' aggregate holdings therein represent less than 5% of the
total number of shares or principal amount of the securities of such issuer then
outstanding. The Shareholders acknowledge that the provisions of this

                                      29


Section, and the period of time, geographic area and scope and type of
restrictions on their activities set forth herein, are reasonable and necessary
for the protection of JAKKS Pacific and are an essential inducement to JAKKS
Pacific entering into this Agreement.

      7.2 Confidentiality. Except as otherwise provided in this Section 7.2,
from and after the Closing Date, the Shareholders shall keep absolutely
confidential all confidential or proprietary information on the Closing Date
relating to the Kidz Biz Companies, including without limitation all of Kidz Biz
Companies' Trade Rights, product information, customer and supplier lists,
marketing and sales data, personnel and financing and Tax matters. The
Shareholders acknowledge that the confidentiality of all such information is
absolutely essential to the operation of the Business. No Shareholder shall, at
any time after the date hereof, use or disclose to any Person any such
information, without JAKKS Pacific's prior written consent, except as may be
required by Law or an Order (in which case, where reasonably feasible, such
Shareholder shall promptly give notice to JAKKS Pacific of any demand, subpoena,
Order or legal process requiring disclosure so that JAKKS Pacific may oppose
such disclosure or seek a protective Order or other confidential treatment of
such information), unless such Shareholder can demonstrate that such information
(i) has become, at any time after the Closing Date, generally available in the
public domain or (ii) was already known to a Person to whom he discloses such
information other than, in either case, through the disclosure of such
information in violation of any confidentiality obligation to or for the benefit
of JAKKS Pacific or either of the Kidz Biz Companies.

      7.3 Non-Disparagement. No Party hereto shall, at any time after the date
hereof, directly or indirectly 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 7.3 shall be
construed to prohibit or restrict any statement by any Person made in
furtherance or defense of any Material Adverse Effect or in the course of any
Proceeding or the resolution of any dispute pursuant to Section 7.5.

      7.4 Operation of Kidz Biz Business.

            (a) JAKKS Pacific shall cause the Kidz Biz Companies to, and the
Kidz Biz Companies shall, operate the Business throughout the balance of 2001
and the Earn-Out Years in a

                                      30


manner consistent with JAKKS Pacific's customary business practices and
policies, and JAKKS Pacific shall procure that neither of the Kidz Biz Companies
shall take any action for the purpose of reducing the Earn-Out or limiting or
adversely affecting the ability of the Shareholders to achieve the financial
conditions for the Earn-Out under Section 2.3. JAKKS Pacific shall not, during
the Earn-Out Years, unreasonably require that the Business be operated
substantially differently from how the Business was operated prior to the
Closing Date.

            (b) JAKKS Pacific and Kidz Biz shall maintain complete and correct
records relating to the determination of the Earn-Out, and shall permit the
Shareholders and their authorized representatives, from time to time during
normal business hours and upon reasonable prior written Notice, to examine and
to audit such records (including ledgers, work papers and other relevant
documents and information) in order to confirm JAKKS Pacific's and Kidz Biz's
compliance with the provisions of this Section 7.4 and to verify the Earn-Out
for any Earn-Out Year. JAKKS Pacific and Kidz Biz shall cooperate with such
examination and make available appropriate financial and accounting personnel to
respond to inquiries relating thereto. Any information so disclosed to any
Shareholder or his authorized representative shall be subject to the
confidentiality restrictions of Section 7.2; provided that no provision of
Section 7.2 shall be constructed to prohibit or restrict any statement by any
Person made in furtherance or defense of any Material Adverse Effect or in the
course of any Proceeding or the resolution of any dispute pursuant to Section
7.5.

            (c) Promptly following the Closing, Kidz Biz UK shall enter into the
Clockhouse Lease, subject to approval by JAKKS Pacific, which will not be
unreasonably withheld provided that JAKKS Pacific is reasonably satisfied that
the rental rate is commercially fair on an arms-length basis to Kidz Biz UK, and
JAKKS Pacific shall enter into a guarantee of Kidz Biz UK's obligations under
the Clockhouse Lease, such guarantee to be in the agreed terms.

      7.5 Resolution of Financial Disputes. If JAKKS Pacific, the Agent and the
Shareholders, or any of them, at any time, disagree with the determination of
any amount made or certified by another Party hereto, including the Earn-Out for
any Earn-Out Year, such Party shall, within forty-five (45) days of delivery of
such determination or certificate, give written Notice (the "Dispute Notice") to
the other

                                      31


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
change. 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 its regular independent
certified public accountants, who shall confer and attempt 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 internationally-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 its 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

                                      32


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 7.5, shall be borne
and promptly paid equally by JAKKS Pacific, on the one hand, and the
Shareholders, on the other.

      7.6 Tax & Financial Matters; Books and Records. After the Closing, JAKKS
Pacific shall procure that the Kidz Biz Companies shall:

            (a) prepare and file all English or Hong Kong Tax returns or reports
of the Kidz Biz Companies for any period ending on or before the Closing Date
which shall not have been filed prior to the Closing Date; provided, however,
that at least ten (10) days prior to the proposed date of filing thereof, JAKKS
Pacific shall deliver a copy thereof to the Shareholders, who may review the
same and, if he or she so desires, have a reasonable opportunity to make
inquiries or discuss the same with appropriate personnel designated by JAKKS
Pacific, and JAKKS Pacific shall procure that the Kid Biz Companies make any
revision thereto requested by the Agent which may affect the interests of any
Shareholder and is reasonably acceptable to JAKKS Pacific; it being further
agreed that for such Tax and financial statement purposes the Acquisition of the
Shares shall be deemed to have taken effect on October 1, 2001;

            (b) not make any amendment to any Tax return or report of the Kidz
Biz Companies filed prior to the Closing Date without the prior written consent
of the Agent, if such amendment would result in a material liability to any
Shareholder, unless at least thirty (30) days prior to the filing thereof, JAKKS
Pacific gives to the Agent written Notice of such amendment, including a copy
thereof, and either such Notice is accompanied by a certificate of JAKKS
Pacific's Chief Financial Officer to the effect that such amendment is required
to be filed by applicable Law or the Agent fails to deliver to JAKKS Pacific
within fifteen (15) days of his receipt of the Notice of such amendment a
written Notice objecting to such amendment, setting forth therein in reasonable
detail the basis for such objection, the changes, if any, he asserts are
required to be made therein and appropriate indemnification of JAKKS Pacific
with respect to any Tax it may incur by reason of such change, in which latter
case, JAKKS Pacific and the Agent shall

                                      33


promptly confer and attempt to resolve such objections or, if they fail to
promptly do so, submit such dispute for resolution in accordance with Section
7.5;

            (c) not agree to any extension or tolling of any statute of
limitations under any applicable Tax Law with respect to any matter for which
any Shareholder may have any liability, without the prior written consent of
such Shareholder; and

            (d) maintain, until the seventh anniversary of the Closing Date, all
accounting ledgers, books and records of the Kidz Biz Companies with respect to
the periods ending on or before the Closing Date and permit any Shareholder
reasonable access thereto in connection with the preparation of financial
reports, Tax returns, Tax audits or the defense or prosecution of any
Proceeding.

Any information so delivered to the Agent or any Shareholder pursuant to this
Section 7.6 shall be subject to the confidentiality restrictions of Section 7.2.

      7.7 Employment of Marilyn Lipman and John Nimmo. For a period of six (6)
months following the Closing, each of Marilyn Lipman and John Nimmo shall
continue to be employed by Kidz Biz UK to perform such duties as were
respectively performed by each of them prior to the Closing (or such other
duties as may be reasonably assigned to them by Kidz Biz UK which are not
inconsistent with the duties and responsibilities performed by them prior to
Closing), at salaries of (pound)10,000 per annum; provided that the maximum
period of time that each of them shall be required to make available and spend
to carry out such duties will be limited to 16 hours per week.

      7.8 Shareholders' Guarantees of Kidz Biz Companies Obligations. JAKKS
Pacific shall procure that as soon as reasonably practicable after Closing that
the Shareholders shall be released from all guarantees and indemnities given by
them or any of them or their Affiliates (other than under this Agreement) in
respect of the obligations and liabilities of the Kidz Biz Companies and,
pending such release, JAKKS Pacific shall with effect from the date hereof
indemnify the Shareholders and keep each of them fully and effectively
indemnified from and against all liabilities in connection therewith.

8. Indemnification.

                                      34


      8.1 Shareholders' Indemnity. Each Shareholder, severally but not jointly
(except for David Lipman and Marilyn Lipman, whose liability shall be joint and
several), shall indemnify and defend JAKKS Pacific and, after the Closing, each
director and officer of JAKKS Pacific, 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
Material Adverse Effect or any Proceeding against any of them arising out of,
based upon or resulting from:

            (a) the failure of any representation or warranty made by that
Shareholder herein or in any Acquisition Document delivered to JAKKS Pacific in
connection herewith to be true in all material respects on the date hereof;
provided, however, that in the case of a failure of any of the representations
and warranties contained in Section 4, only the Shareholder whose representation
and warranty was inaccurate or breached shall have an obligation of
indemnification under this Article 8; and further provided, however, that
notwithstanding the foregoing, the obligations of David Lipman and Marilyn
Lipman shall be joint and several;

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

      8.2 JAKKS Pacific's Indemnity.

            (a) JAKKS Pacific shall indemnify and defend each Shareholder
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 Material Adverse Effect or any
Proceeding against any of them arising out of, based upon or resulting from:

                  (i) the failure of any representation or warranty made by
JAKKS Pacific herein or in any Acquisition Document delivered to that
Shareholder in connection herewith to be true in all material respects on the
date hereof and on the Closing Date;

                  (ii) JAKKS Pacific's 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 Pacific.

                                      35


            (b) In addition to the foregoing provisions of Section 8.2(a), JAKKS
Pacific and the Successor Company (if any, as such term is defined below) shall
jointly and severally indemnify and hold each Shareholder harmless, on a net of
Tax basis, for any additional United Kingdom capital gains tax liability
incurred by the Shareholder as a consequence of any loss of taper relief
suffered by the Shareholder as a consequence of any of the following enumerated
acts events or omissions carried out by JAKKS Pacific or the Successor Company
or any of their Affiliates or their subsidiaries or holding companies or
subsidiaries of such holding companies voluntarily after Closing consisting of:

                  (i) anything which causes the employment and/or directorship
of any Shareholder with Kidz Biz UK to cease in circumstances or as a
consequence of circumstances which amount to a breach of contract by Kidz Biz
UK;

                  (ii) anything which causes either or both of the Kidz Biz
Companies to cease to be a subsidiary or subsidiaries of JAKKS Pacific or the
Successor Company;

                  (iii) anything which causes JAKKS Pacific or the Successor
Company to cease to be a trading company or the holding company of a trading
group;

                  (iv) anything which causes JAKKS Pacific or the Successor
Company to become owned or controlled either directly or indirectly by five or
fewer persons (and their Affiliates) or by its directors; and

                  (v) a re-organization or re-construction of the share capital
of JAKKS Pacific or the Successor Company on a previous application of section
8.2.(v) (2) (if any) except in circumstances where the shares ("new shares")
replacing the Common Stock of JAKKS Pacific or the shares of such other company
are either:

                        (1) new shares in JAKKS Pacific or the other company; or

                        (2) new shares in a company (the "Successor Company")
which is or immediately becomes a holding company of JAKKS Pacific or the other
company

As an example of the operation of the foregoing provisions, a transfer by JAKKS
Pacific of the shares of one or both of the Kidz Biz Companies to a wholly owned
subsidiary of JAKKS Pacific would not be an event described above that could
result in the loss of taper relief by a Shareholder.

      The indemnification obligations set out in this Section 8.2(b) shall
terminate with respect to any loss of taper relief suffered by a Shareholder (i)
on December 31, 2002 as to the JAKKS Pacific Shares, and (ii) on December 31,
2003 as to the any Earn-Out Shares, and the maximum amount of JAKKS Pacific's
liability for all Claims under this Section 8.2(b) shall not exceed
US$600,000.00.

                                      36


      8.3 Claims Procedure. Promptly after Notice to an indemnified party of any
Material Adverse Effect or the commencement of any Proceeding by a third party
involving any loss, liability, obligation, damage or expense referred to in
Section 8.1 or 8.2, such indemnified party shall, if a Material Adverse Effect
for indemnification in respect thereof is to be made against an indemnifying
party, give written Notice to the latter of the commencement of such Material
Adverse Effect 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

                                      37


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 which 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 Material Adverse Effect or Proceeding. 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. This Section 8.3
is subject to the provisions of Section 8.5 in respect of any Claim for Tax.

      8.4 Limitations. Any other provision hereof notwithstanding:

                  (i) no indemnifying party shall be required to indemnify any
Person unless and until the aggregate amount of loss, liability, obligation,
damage or expense as to which indemnification would be required from all the
Shareholders, collectively, under Section 8.1(a), or JAKKS Pacific, under
Section 8.2(a), as the case may be, but for the provisions of this Section 8.4,
exceeds US$50,000, and thereafter the indemnifying party shall be required, in
the manner and to the extent otherwise provided in this Article, to indemnify
any Person and to pay all amounts otherwise required to be paid by the
indemnifying party to the extent of the entire loss, liability, obligation,
damage or expense suffered or incurred by such Person; the foregoing
notwithstanding, JAKKS Pacific's Securities Claims, Shareholder Securities
Claims, any Material Adverse Effect for indemnification based upon a breach of
the representations and warranties made in the last four sentences of Sections
4.1 and 4.2 (including, without limitation, the shareholders of the Kidz Biz
Companies as set forth on Schedule I), all

                                      38


of Section 4.3 and any Dragon Ball Z Claim shall not be subject to, or included
in calculating, the limitations contained in this clause 8.4(i);

                  (ii) the aggregate amount required to be paid under Section
8.1(a) pursuant to this Article 8 for any Claims for indemnification under this
Agreement (including, but not limited to Claims based upon a breach of the
representations and warranties made in the last four sentences of Sections 4.1
and 4.2, all of Section 4.3, the Dragon Ball Z Claims, Financial Claims, and any
of the other provisions of Section 4) by David Lipman and Marilyn Lipman in the
aggregate shall not exceed US$6,000,000.00 with respect to all Claims for
indemnification, and (ii) by John Nimmo in the aggregate shall not exceed
US$6,000,000.00 with respect to all Claims for indemnification.

                  (iii) the aggregate amount required to be paid under Section
8.2 pursuant to this Article 8 by JAKKS Pacific shall not exceed
US$12,000,000.00 with respect to all Claims for indemnification;

                  (iv) the amount to be paid by David Lipman and Marilyn Lipman
on the one hand and John Nimmo on the other hand shall not exceed (i)
US$250,000.00 in aggregate with respect to the Dragon Ball Z Claims, and (ii)
US$250,000.00 in aggregate with respect to the Financial Claims;

                  (v) the indemnification obligations provided herein shall
terminate with respect to any Material Adverse Effect for indemnification
arising under Section 8.1(a) or Section 8.2(a) that is not made prior to the
second anniversary of the Closing Date, except that any Claim under the last
four sentences of Section 4.1 and Section 4.2, or arising under Section 8.1(b)
or Section 8.2(b), or for Securities Claims under the Registration Rights
Agreement shall not be so limited under this Section and shall terminate in
accordance with the statute of limitations of applicable Law, and the obligation
to indemnify for the Holdback Claims shall terminate with respect to any
Holdback Claim that is not made during the Holdback Period;

                  (vi) if JAKKS Pacific is entitled to receive indemnification
from any of the Shareholders pursuant to Section 8.1 or pursuant to the
Registration Rights Agreement, JAKKS Pacific may, upon thirty (30) days prior
written Notice to the Agent, offset and retain the amount thereof from any
payment of the Earn-Out otherwise payable hereunder to that Shareholder;

                                      39


                  (vii) no indemnified party shall be entitled to any
indemnification under this Article 8 (i) 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 or (ii) to the extent the matter in question,
taken together with all similar matters, does not exceed the amount of any
reserves with respect to such matters which are reflected in the Financial
Statements;

                  (viii) A Party shall not be entitled to recover under this
Article 8:

                        (1) with respect to consequential damages, including
damages for lost profits, or with respect to punitive, exemplary or special
damages;

                        (2) with respect to any failure of warranty or covenant
by the other Party which is contained herein if at or before the time of
Closing, the Party seeking recovery had actual knowledge of the failure of
warranty or covenant;

                  (ix) the amount of any recovery pursuant to this Article 8
shall be net of any foreign (non-U.S.), U.S. federal, U.S. state and/or local
Tax benefits inuring to the indemnified party as a result of the state of facts
which entitled the indemnified party to recover from the indemnifying party
pursuant to Article 8;

                  (x) no Shareholder shall be liable for indemnification to
JAKKS Pacific with respect to any Material Adverse Effect of JAKKS Pacific which
is indemnifiable hereunder in an amount which exceeds such Shareholder's
pro-rata portion of the aggregate amount of such Claim (such pro rata portion
being computed on the basis of the ratio of the total number of Shares owned by
such Shareholder immediately prior to the Closing to the total number of Shares
outstanding (except that all such computations with respect to David Lipman
and/or Marilyn Lipman shall be made as to the number of Shares owned by them in
the aggregate).

      8.5 Provisions Regarding Tax Claims.

            (a) Limitations on Tax Claims. No Claim shall be made against the
Shareholders under Section 2.4 or Section 8 or for breach of any of the
representations or warranties to the extent that it relates to any Tax Claim,
Claim for Tax or Tax liability or Tax affairs of any Kidz Biz Company and

                                      40


                  (i) the matter to which it relates was disclosed in the
Disclosure Schedules; or

                  (ii) the Tax liability to which it relates was discharged
before Closing; or

                  (iii) the Tax liability to which it relates is a liability
which is the subject of a reserve or provision in the Financial Statements; or

                  (iv) the Tax liability to which it relates arises in respect
of any income profits or gains earned accrued or received by any Kidz Biz
Company or in the ordinary course of any such company's business at time on or
after September 30, 2001; or

                  (v) the Tax liability to which the Claim would relate (but for
this clause 8.5(a)(v) arises as a result of a change after Closing in any
accounting bases or policy used for the purposes of drawing up the accounts of
any Kidz Biz Company or in the application of such bases or policies; or

                  (vi) the Tax liability to which the Claim would relate (but
for this cause 8.5(a)(vi)) arises or is increased as a result of the loss or
unavailability of any Relief which would (were it not for the said loss) have
been available to any Kidz Biz Company and which is an asset in the Financial
Statements or has been taken into account in computing (and so reducing) any
provision for tax in the Financial Statements and the Relief is lost or is
unavailable as a result of a failure by any Kidz Biz Company to make after
Closing any of the claims or elections in respect of the Relief within the time
limits or as a result of the making of a disclaimer after Closing of a Relief;
or

                  (vii) the fact, matter or circumstances giving rise to the
Claim has also given rise to a Claim under any other provision of this Agreement
and the sum payable in respect of such equivalent Claim has been recovered; or

                  (viii) the Tax liability to which the Claim relates comprises
of interest, penalty, surcharge or fines and which has arisen or is increased as
a result of a failure on the part of any Kidz Biz Company or JAKKS Pacific to
pay a Tax liability (the "Underlying Tax Liability") in connection with which
any interest, penalty, surcharge or fine has been made within ten (10) Business
Days of the date on which JAKKS Pacific receives any amount payable by the
Shareholders pursuant to any Claim by JAKKS Pacific against the Shareholders in
respect of the Underlying Tax Liability or where no Claim arises or may be made
against the Shareholders in respect of the Underlying Tax liability, or

                  (ix) the Claim would (but for this clause 8.5(a)(ix)) relate
to:

                        (1) a primary Tax liability of any Kidz Biz Company or
                        any Affiliate of JAKKS Pacific which would not have
                        arisen or would not have been

                                      41


                        capable of practical enforcement but for JAKKS Pacific
                        or any Affiliate of JAKKS Pacific having or obtaining a
                        presence for Tax purposes in any jurisdiction other than
                        the United Kingdom or Hong Kong or which would not have
                        arisen but for the Kidz Biz Company joining the same
                        group as JAKKS Pacific or any Affiliate of JAKKS Pacific
                        as a consequence of or after Closing; or

                        (2) a secondary Tax liability of any Kidz Biz Company
                        which is also a primary Tax liability of JAKKS Pacific
                        or any Affiliate of JAKKS Pacific; or

                  (x) it relates to any Tax liability which arises as a result
of any event act or omission by JAKKS Pacific or any Affiliate of JAKKS Pacific
(including any Kidz Biz Company) after Closing, unless such act event or
omission is carried out by JAKKS Pacific or such Affiliate pursuant to an
obligation imposed by statute; or

                  (xi) it relates to any stamp duty or stamp reserve tax payable
on or in respect of this Agreement or the transfer of the Kidz Biz Shares
pursuant to the Agreement; or

                  (xii) it relates to any Tax liability which would not have
arisen but for the coming into force of any legislation or the withdrawal or
alteration of any published extra-statutory concession of any Tax Authority
after Closing.

            (b) Conduct of Claims for Tax.

                  (i) JAKKS Pacific shall give notice to the Shareholders of any
Claim for Tax in respect of a Tax liability for which the Shareholders are or
may be liable under this Agreement within ten (10) business days of JAKKS
Pacific or any Kidz Biz Company receiving the Claim for Tax;

                  (ii) If other Claims for indemnification of JAKKS Pacific
under this Section 8, do not, when taken together with the Claim for Tax, exceed
the limitations set forth in Section 8.4 of this Agreement upon the amount of
the indemnification obligations of the Shareholders to which the Claim for Tax
relates, the relevant Shareholders jointly shall be entitled (and JAKKS Pacific
shall procure that they are so entitled) to resist any such Claim for Tax in the
name of JAKKS Pacific or the relevant Kidz Biz Company as the case may be and to
have made available information and documents of the Kidz Biz Company reasonably
necessary for the purpose of such resistance provided that:

                        (1) within twenty (20) business days of the service of
notice of the Claim of Tax pursuant to clause 8.5(b)(i) above, JAKKS Pacific and
the relevant Kidz Biz Company is

                                       42


indemnified to its reasonable satisfaction by the relevant Shareholders against
all losses (including additional Tax liability), costs, damages and expenses
which may be incurred in resisting the Claim for Tax provided that where the
Claim for Tax would, in the absence of an appeal being made within applicable
time limits, become final, the relevant Kidz Biz Company shall at the cost and
request of the relevant Shareholders file the appeal whether or not such
indemnity has been provided by the Shareholders; and

                        (2) the Shareholders have been advised by an independent
tax adviser, acceptable to JAKKS Pacific in its reasonable discretion, after
disclosure of all relevant information and documents, that it is reasonable to
resist the Claim for Tax in the manner proposed by the Shareholders.

                  (iii) The relevant Kidz Biz Company shall be kept fully
informed of all material matters pertaining to the Claim for Tax and all steps
proposed to be taken by the Shareholders.

                  (iv) Nothing in this clause shall prevent any Kidz Biz Company
or JAKKS Pacific or any Affiliate of JAKKS Pacific from paying or discharging
the Tax Liability (or any part of it) which is the subject of the Claim for Tax
provided it does so (and JAKKS Pacific shall procure that if any such person
makes or discharges any such liability it does, does so) without admitting
liability for it.

                  (v) Subject to clauses 8.5(b)(vi) and 8.5(b)(vii), if as a
consequence of any action taken under clause 8.5(b)(1), JAKKS Pacific, any
Affiliate of JAKKS Pacific or any Kidz Biz Company receives any benefit, an
amount equal to the value of the benefit will be payable by JAKKS Pacific to the
Shareholders to the extent it exceeds any other amount due from the Shareholders
to JAKKS Pacific under this Section 8 at the time such benefit is received by
JAKKS Pacific, an Affiliate of JAKKS Pacific or any Kidz Biz Company, and
otherwise the other amounts due from the Shareholders to JAKKS Pacific shall be
reduced by the amount of such benefit.

                  (vi) For the purposes of clause 8.5(b)(v) the value of the
benefit received will be:

                        (1) where the benefit is a payment from a Tax authority,
the amount of the payment (including any payment received in respect of costs
and interest supplement);

                        (2) where the benefit is the reinstatement of a Relief,
an amount equal to the amount paid by the Shareholders in respect of the loss or
set-off of such Relief;

                        (3) where the benefit is the reinstatement of any shares
or assets (the enforcement or exercise of any mortgage or charge or power of
sale over which gave rise to the

                                       43


Shareholders' liability under this Agreement), an amount equal to the amount
paid by the Shareholders to JAKKS Pacific as a consequence of such enforcement
or exercise;

                        (4) where the benefit is the grant of a Relief to any
Kidz Biz Company or JAKKS Pacific or any Affiliate of JAKKS Pacific, an amount
equal to the amount of the Relief, unless the Relief on utilization would
operate as a deduction from gross income, profits or gains, in which case an
amount equal to such amount of Tax as the utilization of the Relief saves for
the JAKKS Pacific, an Affiliate of JAKKS Pacific or any Kidz Biz Company.

                  (vii) The amount payable by JAKKS Pacific to the Shareholders
pursuant to clause 8.5(b)(vi), shall be paid within thirty (30) days of the date
on which the benefit is received. For these purposes the benefit will be deemed
to be received on:

                        (1) where the benefit is a payment from a Tax authority,
the date of receipt of the payment;

                        (2) where the benefit is the reinstatement of a Relief,
the date of receipt of written confirmation from the relevant Tax authority of
such reinstatement;

                        (3) where the benefit is the reinstatement of any shares
or assets (the enforcement or exercise of any mortgage or charge or power of
sale over which gave rise to the Shareholders' liability under this Agreement),
the date of such reinstatement;

                        (4) where the benefit is the grant of a Relief, the date
on which an actual payment of Tax by the JAKKS Pacific or any Kidz Biz Company
or any Affiliate of JAKKS Pacific is mitigated by the use of such Relief.

      8.6 Indemnification Exclusive Remedy . Indemnification pursuant to the
provisions of this Article 8 shall be the exclusive remedy of the Parties for
failure of any warranty or covenant contained herein or in any Acquisition
Document, other than the covenants contained in Sections 7.1 and 7.2. The only
legal action which may be asserted by any Party with respect to any matter which
is the subject of this Article 8 shall be a contract action to enforce, or to
recover damages for breach, of this Article 8. Without limiting the generality
of the preceding sentence, no legal action sounding in tort or strict liability
may be maintained by any Party.

                                      44


9. Miscellaneous.

      9.1 Survival of Representations and Warranties. Subject to Section
8.4(viii) the representations and warranties of each Party hereto contained in
this Agreement shall survive the Closing, notwithstanding any investigation or
inquiry made by any other Party hereto.

      9.2 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.

      9.3 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. All the stamp duty to be incurred in connection with this Agreement
and the Acquisition shall be borne by the Purchaser.

      9.4 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 in writing and (i) if sent by messenger or
Federal Express or internationally recognized courier service, or by priority
overnight delivery between any two points within the U.S. or any two points
within the U.K., on the business day next following the date such Notice or
demand was delivered, or (ii) if sent by priority overnight delivery between any
point within the U.S. and any point outside of the U.S., or between any point
within the U.K. and any point outside of the U.K., or between any two points
outside of the U.S. or the U.K., three (3) business days next following the date
such Notice or demand was delivered; or (iii) if sent by mail, three (3)
business days after deposit in the mails, if mailed by certified or registered
mail (return receipt requested) between any two points within the U.S. or any
two points within the U.K., and seven (7) business days if mailed by certified
or registered mail (return receipt requested) between any point within the U.S.
and any point outside of the U.S., or between any point within the U.K. and any
point outside of the U.K., or between any two points outside of the U.S. or the
U.K., or (iv) if sent by telegram, telecopy (confirmed to the sender), telex or
similar electronic means, the business day next following the date such notice
or demand was so transmitted, 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:

                                      45


if to JAKKS Pacific:         JAKKS Pacific, Inc.
                             22619 Pacific Coast Highway
                             Malibu, California 90265
                             Attn: President
                             Fax: (310) 317-8527

        and to:              Feder, Kaszovitz, Isaacson,
                               Weber, Skala, Bass & Rhine LLP
                             750 Lexington Avenue
                             New York, New York 10022-1200 U.S.
                             Attn: Geoffrey A. Bass, Esq.
                             Fax: (212) 888-7776

to David Lipman or
Marilyn Lipman at:           David S. Lipman
                             Castilian House
                             The Ridge
                             Epsom, Surrey KT18 1BS
                             United Kingdom
                             Fax:

to John Nimmo:               John Nimmo
                             Morwell
                             5 Grays Lane
                             Ashtead, Surrey KT21 1BS
                             United Kingdom
                             Fax:

with a copy to:              Altheimer & Gray
                             10 South Wacker Drive
                             Chicago, Illinois 60606-7482 U.S.
                             Attn: Jonathan Baird, Esq
                             Fax: 312-715-4800

and to:                      Altheimer & Gray
                             7 Bishopsgate
                             London EC2N 3AR United Kingdom
                             Fax: 020-7786-0000
                             Attn: Dean Harper, Esq.

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

                                      46


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.

      9.5 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.

      9.6 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.

      9.7 Exchange Rate. Whenever any calculation in this Agreement requires
conversion of a currency into or from US$, the average exchange rate published
in the Wall Street Journal, New York, New York, USA as of the five (5) business
days immediately preceding the date that the relevant payment is due, if the
calculation involves a payment, or the date when any other calculation is due to
be made under this Agreement, shall be the exchange rate used in converting such
amount into or from US$.

      9.8 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. For the purpose of
enforcing the provisions of Section 9.9 of this Agreement and any other remedy
available to a Party under this Agreement, 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, U.S., and to the jurisdiction of the U.S. District Court for
the Southern District of New York, New York, New York, U.S. 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 9.4. If service of
process is required to be made within the U.S., the Shareholders appoint as
their agent for service of any process Corporation Service Company, 1177 Avenue
of the Americas, 17th Floor, New York, New York 10036, or such other agent for
service of process, located in the U.S. of which the Agent (or any Shareholder
as to that Shareholder) gives Notice to JAKKS Pacific.

                                      47


      9.9 Arbitration. Any 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 before a panel of three arbitrators. JAKKS Pacific, on
the one hand, and the Shareholders shall each pay one-half of any filing fees or
other administrative costs to be paid in advance of or during such Proceeding.
The arbitrators 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 arbitrators shall be final and binding upon the parties to
such Proceeding, and judgment thereon may be entered in any court of competent
jurisdiction. The arbitrators shall have no power to change any of the
provisions of this Agreement in any respect, nor shall they have any power to
make an award of reformation, and the jurisdiction of the arbitrators is
expressly limited accordingly. 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. At least one of the arbitrators shall
be an attorney admitted to the practice of law for at least fifteen (15) years
with substantial experience in business and commercial transactions.

      9.10 Remedies. Notwithstanding the provisions of Section 9.9, or any
other provision of this Agreement, 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. Subject to the provisions of Sections 7.5, and 9.9 and
Article 8, 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 Article 8 shall be the sole and exclusive
remedy, as among the Parties hereto, with respect to any Material Adverse Effect
for monetary damages under this Agreement.

      9.11 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.

                                      48


      9.12 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.

      9.13 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.

      9.14 Binding Effect. Subject to Section 9.15, this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and its 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.

      9.15 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.

      9.16 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.

      9.17 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.

      9.18 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.

                                      49


      9.19 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.

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

      9.21 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. The Parties make
no representations or warranties to each other, except as contained in this
Agreement, and any and all prior representations and warranties made by any
Party or its representatives, whether orally or in writing, shall be deemed
merged into this Agreement, it being intended that no such prior representations
or warranties shall survive the execution of delivery of this Agreement.

                                      50


      IN WITNESS WHEREOF, JAKKS Pacific by its duly authorized officer, and the
Shareholders, have executed this Agreement on the dates set forth below.

JAKKS PACIFIC, INC.

By: __________________________
    Name:
    Title:

Executed on: December ____ , 2001

______________________________
David S. Lipman

Executed on: December ____ , 2001

______________________________
John Nimmo

Executed on: December ____ , 2001

______________________________
Marilyn Lipman

Executed on: December ____ , 2001

                                      51

                                                                     Exhibit 2.4


                                                                  EXECUTION COPY

                               JAKKS Pacific, Inc.

                                       and

                            David Lipman and Others

                              SETTLEMENT AGREEMENT


                                                                     Exhibit 2.4

This Agreement is made on August 2004 between:

(1)   JAKKS Pacific, Inc., a corporation organised under the laws of the State
      of Delaware, U.S. (JAKKS Pacific); and

(2)   DAVID LIPMAN, of Castillan House, The Ridge, Epsom, Surrey KT21 1BS,
      United Kingdom and others, details of which are set out in Schedule 1 (the
      "SHAREHOLDERS").

Whereas:

(A)   JAKKS Pacific and the Shareholders entered into a Stock Purchase Agreement
      on 27 December 2001 (the "SPA") whereby JAKKS Pacific acquired the entire
      issued share capital of Kidz Biz Limited and Kidz Biz Far East Limited in
      consideration for payment of an initial closing purchase price and
      additional earn out consideration, details of which are set out in the
      SPA.

(B)   The parties have agreed to accelerate the payment by JAKKS Pacific of a
      portion of its remaining Earn-Out Payment obligations under the SPA and to
      address that portion of the Holdback relating to Dragon Bell Z Claims,
      amongst other matters, in accordance with this Agreement.

It is agreed as follows:

1     INTERPRETATION

1.1   In this Agreement, capitalized terms used, but not otherwise defined,
      herein shall have the respective meanings assigned to them in the SPA,
      and, unless the context otherwise requires:

      "BUSINESS DAY" means a day excluding a Saturday or Sunday on which banks
      in London are open for business;

      "COMPROMISE AGREEMENT" means the compromise agreement to be made between
      JAKKS Pacific/Kidz Biz Limited, an affiliate of JAKKS Pacific and David
      Lipman relating to the termination of his employment by such company;

      "COMPLETION" means completion of this Agreement in accordance with Clause
      3;

      "REGISTRABLE SECURITIES" has the meaning assigned to such term in the
      Registration Rights Agreement;

      "REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
      Agreement, dated 27 December 2001, by and among the Shareholders and JAKKS
      Pacific; and

      "SHARES" means shares of the common stock, par value $.001 per share, of
      JAKKS Pacific.

1.2   References to this Agreement include its Schedules and references to
      Clauses and Schedules are to Clauses of, and Schedules to, this Agreement.

1.3   Headings shall be ignored in construing this Agreement.

2     NO WAIVER OF RIGHTS UNDER THE SPA

      Each of the parties agrees with the others that save as specifically and
      expressly provided in this Agreement, with effect from and conditional
      upon Completion, the provisions of the

                                       1


      SPA shall remain in full force and effect in accordance with its terms and
      in particular it is agreed that the covenants, warranties, indemnities and
      obligations of the Shareholders (or any of them) contained in the SPA in
      favour of JAKKS Pacific shall remain fully effective and enforceable as
      against the Shareholders or any of them, except as provided in this
      Agreement and in the Compromise Agreement.

3     SETTLEMENT OBLIGATIONS AND COMPLETION

3.1   Completion shall take place within five (5) business days following the
      execution of this Agreement.

3.2   On Completion, JAKKS Pacific shall issue to the Agent (for the benefit and
      account of the Shareholders) an aggregate of 25,749 Shares, which Shares
      represent the maximum Earn-Out Payment payable for the 2005 Earn-Out Year.
      These Shares shall be allocated among the Shareholders as follows:

      3.2.1 19,826 to Mr. David Lipman, and by her signature below Mrs. Marilyn
            Lipman acknowledges having directed JAKKS Pacific to issue that
            portion of such Shares to which she would otherwise have been
            entitled to David Lipman

      3.2.2 5,923 to Mr. John Nimmo

      It being acknowledged by the Shareholders that these amounts may not
      represent their respective Payment Factors and proportionate entitlements
      to Earn-Out Payments under the SPA.

      For the avoidance of doubt, these Shares shall be deemed Registrable
      Securities and subject to the terms and conditions of the Registration
      Rights Agreement and the parties shall comply with their respective
      obligations under the Registration Rights Agreement in relation to the
      Shares referred to in Clause 3.2.

3.3   In consideration of the issue of the Shares to be made pursuant to Clause
      3.1 above, each of the Shareholders hereby irrevocably (i) accepts the
      issue of the Shares set out in Clause 3.2 in full and final settlement of
      any claim, right or entitlement which they may have to the Earn-Out and
      the Earn-Out Payments in respect of the 2005 Earn-Out Year only, and not
      with respect to the 2004 Earn-Out Year. The entitlement to the Earn-Out
      Payment for the 2004 Earn-Out Year shall continue to be determined and be
      payable in accordance with the provisions of Clause 2.3 of the SPA, but
      allocated in the manner provided for in Clause 3.2 (and disputes regarding
      its calculation resolved in accordances with Clause 7.5 of the SPA),
      except that each of the Shareholders hereby waives any and all rights or
      claims which they have or might have (whether in their capacity as Agent
      or a Shareholder) to acceleration of the Earn-Out Payment for the 2004
      Earn-Out Year under clause 2.3(d) of the SPA as a result of the
      modification of David Lipman's employment under the Compromise Agreement.
      JAKKS Pacific shall cause the Company to operate its business through
      December 31, 2004 in a manner consistent with JAKKS Pacific's normal
      business practices and policies used in the operation of its other
      subsidiaries and divisions and acting in good faith, and JAKKS Pacific
      shall procure that the Company shall not take any action that would have
      the reasonably foreseeable consequence of reducing the Earn-Out Payment
      for Earn-Out Year 2004 under the SPA or limiting or adversely affecting
      the ability of the Company to achieve the financial conditions for payment
      of the Earn-Out Payment.

                                       2


3.4   The Parties acknowledge that they have not resolved issues regarding the
      distribution of the Holdback with respect to the Dragon Ball Z Claims and
      Golden Express Trading and that the Holdback Period with respect thereto
      shall continue until resolution of such issues.

3.5   Concurrently with the signing of this Agreement, Mr. Lipman shall enter
      into the Compromise Agreement with JAKKS Pacific/Kidz Biz Limited
      concerning his present and future obligations to JAKKS Pacific/Kidz Biz
      Limited.

4     CONFIDENTIALITY

4.1   Subject to Clause 4.2, the parties shall treat as confidential and not
      disclose or use any confidential information received or obtained as a
      result of entering into this Agreement (or any agreement entered into
      pursuant to this Agreement) which relates to:

            (i)   the provisions of this Agreement and any agreement entered
                  into pursuant to this Agreement;

            (ii)  the negotiations relating to this Agreement (and such other
                  agreements); or

            (iii) any other party's business, financial or other affairs
                  (including the business, financial or other affairs of any
                  group company and including, in each case, future plans and
                  targets).

4.2   Clause 4.1 (i) to (iii) (inclusive) shall not prohibit disclosure of any
      such information received by a party (the "receiving party") from another
      party (the "disclosing party") if and to the extent:

      4.2.1 the disclosure or use is required by law, any regulatory body or the
            rules and regulations of any recognised stock exchange;

      4.2.2 the disclosure or use is required for the purpose of any Judicial
            proceedings arising out of this Agreement or any other agreement
            entered into under or pursuant to this Agreement or the disclosure
            is reasonably required to be made to a taxation authority in
            connection with the taxation affairs of the disclosing party;

      4.2.3 the disclosure is made to professional advisers on terms that such
            professional advisers undertake to comply with the provisions of
            Clause 4.1 in respect of such information as if they were a party to
            this Agreement;

      4.2.4 the information to or becomes publicly available (other than by
            breach of this Agreement by the receiving party);

      4.2.5 the disclosing party has given prior written approval to the
            disclosure or use;

      4.2.6 the information is independently developed after the date hereof by
            the receiving party,

4.3   provided that prior to disclosure or use by a receiving party of any
      confidential information of a disclosing party pursuant to Clause 4.2.1 or
      4.2.2, the receiving party concerned shall promptly notify the relevant
      disclosing party of such requirement and the disclosing party may seek a
      protective order from the relevant authority to prevent or limit
      disclosure (at the sole cost, expense and liability of such disclosing
      party) or waive compliance with the terms of this Agreement, except that
      JAKKS Pacific shall not be required to give such

                                       3


      notice if it determines on the advice of counsel that disclosure is
      required under the securities laws of the United States or the
      regulations of any recognized stock exchange.

5     RELEASE AND WAIVER

5.1   Any liability to a party under this Agreement may in whole or in part be
      released, compounded or compromised or time or indulgence given by the
      relevant party in its absolute discretion under such liability without in
      any way prejudicing or affecting its rights against any other party under
      the same or a like liability, whether joint and several or otherwise.

5.2   No failure of a party to exercise, and no delay by it in exercising, any
      right, power or remedy in connection with this Agreement (each a "RIGHT")
      will operate as a waiver thereof, nor will any single or partial exercise
      of any Right preclude any other or further exercise of such Right or the
      exercise of any other Right.

6     WHOLE AGREEMENT, VARIATION, ASSIGNMENT

6.1   This Agreement shall together with the Compromise Agreement entered into
      between JAKKS Pacific/Kidz Biz Limited and Mr. Lipman, when signed,
      supersede any previous written or oral agreement between the parties in
      relation to the matters dealt with in this Agreement and contains the
      whole agreement between the parties relating to the subject matter of this
      Agreement at the date hereof to the exclusion of any terms implied by law
      which may be excluded by contract. Each party acknowledges that it has not
      been induced to enter into this Agreement by any representation, warranty
      or undertaking not expressly incorporated into it. So far as permitted by
      law and except in the case of fraud, each party agrees and acknowledges
      that its only rights and remedies in relation to any representation,
      warranty or undertaking made or given in connection with this Agreement
      shall be for breach of the terms of this Agreement, to the exclusion of
      all other rights and remedies (including those in tort or arising under
      statute). In this sub-Clause "this Agreement" includes all documents
      entered into pursuant to this Agreement. The provisions of the SPA shall
      continue to survive, however, except to the extent specifically modified
      by this Agreement.

6.2   No variation of this Agreement shall be effective unless in writing and
      signed by or on behalf of each of the parties.

6.3   This Agreement shall be binding on and enure to the benefit of the parties
      and their successors and permitted assigns, but the parties may not assign
      or transfer all or any part of their rights or obligations under this
      Agreement without the prior written consent of the other parties.

7     FURTHER ASSURANCE

      At any time after the date of this Agreement, each party shall, and shall
      use all reasonable endeavours to procure that any necessary third party
      shall, execute such documents and do such acts and things as the other
      party may reasonably require for the purpose of giving to such party the
      full benefit of all the provisions of this Agreement.

                                       4


8     INVALIDITY

      If any provision in this Agreement shall be held to be illegal, invalid or
      unenforceable, in whole or in part, under the law of any jurisdiction, the
      legality, validity or enforceability of such provision or part under the
      law of any other jurisdiction and the legality, validity and
      enforceability of the remainder of this Agreement shall not be affected.

9     COUNTERPARTS

      This Agreement may be entered into in any number of counterparts, all of
      which taken together shall constitute one and the same instrument. Any
      party may enter into this Agreement by signing any such counterpart.

10    NOTICES

      Any notice required or permitted to be given under this Agreement shall be
      given in accordance with the provisions of Section 9.4 of the SPA, except
      with the deletion of Altheimer & Gray.

11    COSTS

      Each party shall bear its own costs, fees and expenses incurred in
      connection with the preparation, negotiation and entry into this Agreement
      and the documents to be entered into pursuant to it.

12    GOVERNING LAW AND SUBMISSION TO JURISDICTION

12.1  This Agreement shall be governed by and construed in accordance with the
      law of the state of New York, United States of America and the enforcement
      of rights under this Agreement and choice of forum to enforce such rights
      shall be governed by the provisions of Section 9.8 of the SPA.

                                       5


                                   SCHEDULE 1

                                The Shareholders

      David Lipman

      Castillan House, The Ridge, Epsom, Surrey KT21 1BS, United Kingdom

      Marilyn Lipman

      Castillan House, The Ridge, Epsom, Surrey KT21 1BS, United Kingdom

      John Nimmo

      Morwell, 5 Grays Lane, Ashtead, Surrey, KT21 1BS, United Kingdom

                                       6


In witness whereof this Agreement has been entered into on the date stated at
the begining.

SIGNED by on behalf of
JAKKS Pacific, Inc. in the presence of:

SIGNED by David Lipman                          [Illegible]
in the presence of:

[Illegible]

SIGNED by Marilyn Lipman                        [Illegible]
in the presence of:

[Illegible]

SIGNED by John Nimmo                            [Illegible]
in the presence of:

[Illegible]

                                       7

                                                                     Exhibit 2.5


                                                                  EXECUTION COPY

                             DATED: AUGUST __, 2004

                         JAKKS PACIFIC/KIDZ BIZ LIMITED

                                       and

                                DAVID S. LIPMAN

                              COMPROMISE AGREEMENT



THIS AGREEMENT is made on this     day of August, 2004

BETWEEN:

(1)   JAKKS Pacific/Kidz Biz Limited of Clockhouse, Epsom, Surrey, KT18 7LX,
      United Kingdom ("the Company")

and

(2)   David S. Lipman of Castilian House, The Ridge, Epsom, Surrey, KT21 1BS,
      United Kingdom ("the Employee")

(who shall together be called "the Parties")

IT IS AGREED AS FOLLOWS:

1.    TERMINATION OF EMPLOYMENT

1.1   As provided in the Employment Agreement between the Parties dated 27
      December 2001 (the "Employment Agreement"), the Parties confirm that the
      Employee's employment with the Company shall terminate on 31 December 2005
      ("the Termination Date"). The Employee will continue to be employed by the
      Company until the Termination Date but will be on 'garden leave'. While
      the Employee is on garden leave the Company, at its absolute discretion,
      may require the Employee:

      1.1.1 Not to attend any of his places of work or any other premises of the
            Company or any Group Company (other than as landlord of the office
            premises occupied by the Company); and

      1.1.2 Not to carry out some or all of his duties under the Employment
            Agreement or to substitute his current duties and carry out other
            duties instead (not inconsistent with the description of his duties
            set forth in the Employment Agreement).

      The Company shall have no right to terminate the Employee's employment
      while on garden leave other than if the Employee after the date of this
      Agreement breaches the covenants set forth in Section 11(a)(ii) of the
      Employment Agreement or in Clause 9.3 of this Agreement, and then, only if
      such breach has a material adverse financial impact on the Company and its
      affiliates (including JAKKS Pacific, Inc.) taken as a whole.

1.2   The Employee shall be paid an advance payment in respect of all salary and
      an advance payment for car allowance for the period up to the Termination
      Date, totalling (pound)486,250, which shall be paid by the Company within
      14 days of the date of this Agreement. These payments will be subject to
      normal deductions in respect of income tax and employee national insurance
      contributions. Subject to the terms of this Agreement, the Employee's
      entitlement to any further salary or payments on



      account of car allowance from the Company will terminate upon receipt of
      such payments. The Employee shall continue to receive the other benefits
      provided to him in connection with his employment under Section 1(c) of
      the Employment Agreement up to the Termination Date, and, subject to the
      terms of this Agreement, the Employee's entitlement to any benefits from
      the Company will terminate on the Termination Date. In particular, the
      Company shall continue through the Termination Date medical insurance for
      Employee and his family and pension contributions for Employee on terms no
      less favourable than those in effect as of the date of this Agreement.

1.3   In addition to the payments set forth in Clause 1.2, for calendar 2004,
      the Employee shall be eligible to receive a cash performance bonus (the
      "Performance Bonus") of up to US $325,000 based on the net sales achieved
      by the Company during calendar 2004, which net sales shall be calculated
      on a basis consistent with the Company's most recent financial statements.
      Subject to final audit following the close of the Company's fiscal year,
      the Company and Employee agree that according to the books and records of
      the Company net sales of the Company as at June 30, 2004 were
      approximately US$8,437,100. The determination of the Company's 2004 net
      sales shall be made by the Chief Financial Officer of JAKKS Pacific, Inc.,
      a corporation organized under the law of Delaware, United States of
      America ("JAKKS Pacific"), which determination, absent manifest error,
      shall be conclusive and binding upon the Company and Employee. If earned,
      the Company shall pay the Performance Bonus to the Employee, subject to
      normal deductions in respect of income tax and national insurance
      contributions, no later than ninety (90) days after the later of (i) the
      end of such calendar year or (ii) completion of an audit by the Company's
      then current auditors. The amount of any Performance Bonus payable to the
      Employee shall be determined as set forth in the following table:



  COMPANY NET SALES FOR 2004                     PERFORMANCE BONUS
- --------------------------------                 -----------------
                                              
         or = US $27,000.000                         US $325,000


                                       2


      For the avoidance of doubt, any payment of the Performance Bonus to
      Employee shall be made in US Dollars.

1.4   Section 4 (Expense Allowance) of the Employment Agreement shall continue
      to apply to the Employee.

1.5   The options to acquire shares of common stock of JAKKS Pacific previously
      issued to Employee shall continue to vest in accordance with the
      provisions of JAKKS Pacific's stock option plan under which they were
      issued.

1.6   JAKKS Pacific shall cause the Company to operate its business through
      December 31, 2004 in a manner consistent with JAKKS Pacific's normal
      business practices and policies used in the operation of its other
      subsidiaries and divisions and acting in good faith, and JAKKS Pacific
      shall procure that the Company shall not take any action that would have
      the reasonably foreseeable consequence of reducing the Performance Bonus
      or the Earn-Out Payment for Earn-Out Year 2004 under the Stock Purchase
      Agreement dated 27 December 2001 among JAKKS Pacific, Employee, Marilyn
      Lipman and John Nimmo (the "SPA") or limiting or adversely affecting the
      ability of the Company to achieve the financial conditions for payment of
      the Performance Bonus or said Earn-Out Payment.

1.7   The Company shall maintain complete and correct records relating to the
      determination of the Performance Bonus, and shall permit the Employee and
      his authorized representative, from time to time during normal business
      hours and upon reasonable prior written Notice, to examine and to audit
      such records (including ledgers, work papers and other relevant documents
      and information) in order to confirm JAKKS Pacific's and the Company's
      compliance with the provisions of this Section 1.7 and to verify the
      Performance Bonus. JAKKS Pacific and the Company shall cooperate with such
      examination and make available appropriate financial and accounting
      personnel to respond to inquiries relating thereto. Any information so
      disclosed to Employee or his authorized representative shall be subject
      held in confidence, provided that such restriction shall not be
      constructed to prohibit or restrict any statement by any person made in
      the course of any legal proceeding to enforce rights or obligations under
      this Agreement, the Employment Agreement or the Settlement Agreement
      entered into concurrently herewith regarding the SPA, or the resolution of
      any dispute pursuant to Section 1.8 below.

1.8   If Employee disagrees with the determination of the Performance Bonus, he
      shall, within forty-five (45) days after the later of delivery of such
      determination or certificate and compliance by JAKKS Pacific with the
      provisions of clause 1.7 above, give written Notice (the "Dispute Notice")
      to JAKKS Pacific 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 change. 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 its regular independent certified public accountants,

                                       3


      who shall confer and attempt 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
      JAKKS Pacific and Employee to such effect, setting forth therein the
      amount as so determined and the basis therefor, and such determination
      shall be final and binding on JAKKS Pacific and Employee. If such
      accountants do not make such determination within such thirty (30) day
      period, JAKKS Pacific and Employee involved shall refer such dispute to a
      mutually agreeable internationally-recognized accounting firm that is
      "independent" with respect to the Parties hereto (the "Neutral
      Accountants"). Unless the Neutral Accountants expressly determine
      otherwise, JAKKS Pacific and Employee 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 both JAKKS Pacific and
      Employee so request in their statements, and may conduct a hearing,
      whether or not either or both of JAKKS Pacific and Employee 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 JAKKS Pacific and Employee only if
      both have an opportunity to appear and present evidence at such hearing.
      The Neutral Accountants may require JAKKS Pacific or Employee (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 JAKKS Pacific and Employee, 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 1.8, shall be borne and promptly paid equally by JAKKS Pacific, on
      the one hand, and the Employee, on the other.

                                       4


2.    CONDITIONS PRECEDENT

2.1   Full operation of this Agreement is dependent upon receipt by the Company
      of all of the following within seven (7) days of the date of this
      Agreement:

      2.1.1 this Agreement duly executed by the Employee;

      2.1.2 an Independent Adviser Certificate in the form annexed at Schedule
            1; and

      2.1.3 the Resignation Letter duly executed.

3.    TERMINATION PAYMENT AND TAX

3.1   Subject to Clause 2 above and the remaining terms of this Agreement the
      Company without any admission of liability, will pay to the Employee
      within 14 days after the Termination Date the sum of (pound)12,000 as
      compensation for the termination of the Employee's employment. Payment of
      the said sum shall be conditioned upon receipt by the Company within 7
      days after the Termination Date of an Independent Adviser's Certificate in
      the form annexed at Schedule 1-A.

3.2   The sum referred to in Clause 3.1 will be paid free of tax and national
      insurance contributions as it is the Parties' understanding that the first
      (pound)30,000 of such type of payment may be made without deduction for
      tax under section 403 of the Income Tax (Earnings and Pensions) Act 2003,
      and tax would be deducted from the excess, if any, over (pound)30,000. In
      the event that it is finally determined that notwithstanding the Parties'
      understanding of the treatment of such amount expressed in the foregoing
      sentence, that such amount is subject to tax and national insurance
      contributions, the Company shall be responsible for the payment of any
      additional tax or national insurance contributions and all costs, claims,
      expenses or proceedings, penalties and interest incurred by the Employee
      which arise out of or in connection with any liability to pay (or deduct)
      tax or national insurance contributions in respect of the payment under
      Clause 3.1 above. As a condition to the Company's liability for such
      amounts, the Employee shall give prompt written notice to the Company
      promptly after Employee receives any notice from the governmental
      authorities that tax and national insurance contributions may be due with
      respect to the sum referred to in Clause 3.1.

3.3   The Employee accepts the payment to be given to him under Clauses 1.1 and
      3.1 of this Agreement in full and final settlement of:

      3.3.1 the Potential Claims; and

      3.3.2 all other claims and rights of action (whether under statute, common
            law or otherwise) in any jurisdiction in the world, howsoever
            arising (including but not limited to contractual claims, breach of
            contract, tort and the Employees prospective entitlement to bring
            any other Statutory Claim) which the Employee (or anyone on his
            behalf) has or may have against the Company,

                                       5


            any Group Company, or its or their directors, officers, employees or
            shareholders, arising from or connected with the Employee's
            employment by the Company or any Group Company, its termination and
            any other matter concerning the Company or any Group Company;

      with the exception that this Clause 3.3 shall not apply to the Employee's
      entitlement to a Performance Bonus as set out at Clause 1.3 of this
      Agreement and/or to any pension rights or pension benefits which shall
      have accrued to the Employee up to the Termination Date, or any claims
      relating to options to acquire shares of common stock of JAKKS Pacific,
      Inc. issued to Employee as of the date of this Agreement, or any claim for
      personal injury or claims by third parties relating to Employee's
      performance of his responsibilities as an employee of the Company for
      which Employee would be entitled to indemnification from the Company.

3.4   It is a fundamental term of this Agreement that:

      3.4.1 the payments to be given to the Employee under Clauses 1.2, 1.3 and
            3.1 of this Agreement shall at all times be conditional on the
            Employee refraining from issuing or pursuing any type of employment
            related proceedings in respect of the Potential Claims, any other
            Statutory Claim or any claim referred to in Clause 3.3.2 (with the
            exception of the reserved claims referred to at the end of Clause
            3.3 of this Agreement,) for accrued pension rights or pension
            benefits or for personal injury against the Company, any Group
            Company, or its or their directors, officers, employees or
            shareholders (and whether in an Employment Tribunal, the High Court,
            a Country Court or otherwise); and

      3.4.2 if the Employee subsequently issues or pursues such employment
            related proceedings in breach of this Agreement then the payment
            paid to the Employee under this Agreement shall be repayable (less
            any tax actually paid by Employee on such amount as of such date) to
            the Company forthwith on demand; and

      3.4.3 the total sum shall be recoverable as a debt, together with all
            costs (including legal costs) reasonably incurred by the Company (or
            by any Group Company, or any of its or their directors, officers,
            employees or shareholders, as applicable) in recovering the sum
            and/or in relation to any proceedings so brought by the Employee.

      The repayment provisions of this Clause 3.4 shall be without prejudice to
      the Company's right to seek further damages from the Employee in respect
      of the breach referred to in this Clause and any other breach of this
      Agreement.

                                       6


4.    RETURN OF COMPANY PROPERTY

4.1   On or before the Termination Date and subject to the remaining terms of
      this Agreement, the Employee shall:

      4.1.1 return to the Company all property (including but not limited to
            documents materials, disks, credit cards, computer hardware (other
            than the Employee's lap-top computer), computer software or data,
            tax machine, equipment, key, and passes) belonging or relating to
            the Company, any Group Company, or any officer, employee, customer,
            supplier, banker, agent or professional adviser of the Company or
            any Group Company, which are in his possession or control, and the
            Employee undertakes that no copies, drafts, reproductions, notes,
            extracts or summaries of any such property have been made or kept in
            any form. The Company will permit the Employee to retain his mobile
            telephone number as his personal mobile telephone number and
            Employee shall arrange for transfer of such service to his personal
            account. The Employee shall, if requested by the Company, confirm
            in writing the compliance with his obligations under this Caused
            4.1.1, and

      4.1.2 inform Joel Bennett of JAKKS Pacific, Inc. of all passwords and
            other codes used by the Employee immediately prior to the
            termination of his employment to access any part of the Company's
            computer system (or that of any Group Company); and

      4.1.3 delete from any hard disc used by the Employee on a computer at his
            home, or at any location other than the Company's premises (or
            those of any Group Company), any data that relates in any way to the
            Company, any Group Company (or to any officer, employee, customer,
            supplier or shareholder of the Company or any Group Company).

5.    SETTLEMENT OR CLAIMS

5.1   The Employee represents and warrants that;

      5.1.1 he has instructed the Adviser who is referred to in Clause 5.1.3 to
            advise whether he has or may have any Statutory Claims (as defined
            in Clause 109). Potential Claims (as defined in Clause 108) or other
            claims (as referred to in Clause 3.3.2) against the Company, any
            Group Company, or any of its or then directors, officers, or
            employees, arising out of or in connection with his employment by
            the Company and its termination, and immediately prior to the
            Termination Date, he will again instruct the Adviser who is referred
            to in Clause 5.1.3 to advise whether he has or may have any
            Statutory Claims (as defined in Clause 10.9), Potential Claims (as
            defined in Clause 10.8) on other claims (as referred to in Clause
            3.3.2) against the Company, any Group Company, or any of its or
            their directors, officers, employees or shareholders

                                       7


            arising out of or in connection with his employment by the Company
            and its termination; and

      5.1.2 he has provided, and will provide the Adviser with whatever
            information is in his possession to enable the Adviser to advise
            whether he has or may have any such Statutory Claims as of this date
            and as of the Termination Date; and

      5.1.3 he has received independent legal advice from Julian Roskill of
            Mayer, Brown, Rowe, & Maw LLP as to the terms and effect of this
            Agreement, in particular regarding the Employee's ability to
            institute or pursue any claims (including the Potential Claims) in
            an Employment Tribunal following signature of this Agreement; and

      5.1.4 he, having had legal advice from the Adviser, has no Statutory
            Claims other than those referred to in this Clause 5.1 against the
            Company, any Group Company, or its or their directors, officers,
            employees or shareholders, arising out of or in connection with his
            employment with the Company and its termination; and

      5.1.5 the Adviser is a qualified independent lawyer. As provided in
            Section 2.1, full operation of this Agreement is dependent upon
            receipt by the Company within seven (7) days of the date of this
            Agreement of the Adviser's certificate addressed to the Company in
            the form attached at Schedule 1 to this Agreement. Payment of the
            Termination Payment and the Company's performance of obligations to
            be performed by it following the Termination Date is dependent upon
            receipt by the Company within seven (7) days of the Termination Date
            of the Adviser's certificate addressed to the Company in the form
            attached at Schedule 1-A to this Agreement and a certificate from
            Employee in the form attached at Schedule 1-B to this Agreement.

5.2   In consideration of the Company's undertakings set out in Clause 6 below,
      the Employee agrees:

      5.2.1 to keep the existence and terms of this Agreement, and the
            circumstances giving rise to this Agreement, confidential and not to
            disclose the same to any person other than the Adviser, ACAS, the
            Employee's spouse (subject to the Adviser, ACAS, and the Employee's
            spouse maintaining confidentiality), the Inland Revenue or otherwise
            as required by operation of law or by any regulatory body; and

      5.2.2 except for the trade announcement set forth in Schedule 2, not to
            make, or cause to be made (directly or indirectly), any statement or
            comment to the press or other media relating to his employment with
            the Company, his departure from the Company, or his resignation from
            any offices with the Company or any Group Company, without the prior
            written consent of the Company; and

                                       8


      5.2.3 on signature of this Agreement to resign all offices held at the
            Company and of any Group Company, such resignation taking immediate
            effect, and forthwith to provide the Board of Directors of the
            Company with a letter of resignation in the form attached as
            Schedule 3; and

      5.2.4 having resigned from such offices as were held within the Company or
            any Group Company, not to conduct himself in any way inconsistent
            with having surrendered his authority either in matters of internal
            company administration or externally, and following the termination
            of employment not to represent himself as being a director of, or
            employed by, or connected in any way with the Company or any Group
            Company; and

      5.2.5 that he will, at the request of the Company, assist it in any
            threatened or actual litigation concerning the Company where he has
            in his possession or knowledge any facts or other matters which the
            Company reasonably considers is relevant to such legal proceedings
            (including, but not limited to, giving statements/affidavits,
            meeting with the Company's legal and other professional advisers,
            attending any legal hearing and giving evidence, provided Employee
            is reimbursed for his expenses incurred in providing such
            assistance), and provided that such assistance is requested on a
            reasonable basis and consideration is given to other time
            commitments of Employee.

5.3   The Employee acknowledges that Sections 9, 10, 11 and 24 (as it pertains
      to Sections 9, 10 and 11 only) of the Employment Agreement shall remain in
      full force and effect, provided, however, that Section 11 shall not
      prohibit Employee after the date of this Agreement from providing
      consulting services of a non-executive and advisory nature to third
      parties engaged in the toy business. The Company hereby waives its right
      to enforce Section 11 of the Employment Agreement so far as it applies
      after the Termination Date.

5.4   The Potential Claims are hereby unconditionally and irrevocably waived by
      the Employee and will not be repeated, referred to or pursued either by
      the Employee or by anyone else on his behalf.

6.    COMPANY'S OBLIGATIONS

      In consideration of the Employee entering into this Agreement the Company
      hereby agrees:

6.1   to keep the terms of this Agreement, and the circumstances giving rise to
      this Agreement, confidential, and not to disclose or reveal its terms to
      any person other than the Group Companies, its or their professional
      advisers, ACAS (on terms that they agree to keep the same confidential),
      the Inland Revenue or otherwise as required by operation of law or by any
      regulatory body, provided that this Clause shall not prevent the Company
      from providing information in relation to or supplying a copy of this
      Agreement to its directors, officers, shareholders senior employees and

                                       9


      any of its other employees where reasonably necessary for the
      administration of this Agreement or the termination of the Employee's
      employment or, in respect of any person, firm or organisation who offers
      employment, engagement or other business opportunities to the Employee,
      from providing a copy of the restraints set out in paragraph 11 of the
      Employment Agreement as modified by Section 5.3 of this Agreement; and

6.2   except for the trade announcement set forth in Schedule 2, not to make, or
      cause to be made (whether directly or indirectly) any statement or comment
      to the press or other media relating to the Employee's employment with the
      Company, or his departure from the Company, or the loss of any offices
      which the Employee held with the Company, without the prior written
      consent of the Employee, provided that this Clause shall not prevent the
      Company from publishing those facts of such termination or resignation(s)
      of office as may be required for the Company's annual report and accounts
      or other statutory or regulatory requirements; and

6.3   provide to any prospective employer of the Employee a reference in the
      form attached at Schedule 4 and undertakes not to contradict that
      reference, provided that the Employee directs all reference requests to
      Joel Bennett at JAKKS Pacific, Inc., and without prejudice to the
      Company's right to provide the information contained in the reference in a
      form acceptable to the prospective employer (for example by way of a
      completed response form); and

6.4   An announcement concerning the Employee's departure will be made
      internally within the Company and its Group Companies and externally to
      the press and to third parties who deal regularly with the Company in the
      form set out in Schedule 2.

7.    STATUTORY CONDITIONS SATISFIED

      The Parties agree that this is a compromise agreement as provided in
      section 203(3) Employment Rights Act 1996, section 77(4A) of the Sex
      Discrimination Act 1975, section 72(4A) of the Race Relations Act 1976,
      section 9(3) of the Disability Discrimination Act 1995, section 288 of the
      Trade Union and Labour Relations (Consolidation) Act 1992, Regulation 35
      of the Working Time Regulations 1998 and section 49(4) of the National
      Minimum Wage Act 1998, section 35 of the Employment Equality (Sexual
      Orientation) Regulations 2003 and section 35 of the Employment Equality
      (Religion or Belief) Regulations 2003 and the conditions contained in
      those Act(s) and Regulations relating to compromise agreements have been
      satisfied.

8.    LEGAL EXPENSES

      Each of the Company and Employee shall be responsible for their respective
      legal expenses incurred in connection with obtaining legal advice on the
      terms of this Agreement, except that the Company agrees to pay
      (pound)13,250 inclusive of Value Added

                                       10


      Tax on account of Employee's legal expenses incurred in connection with
      this Agreement.

9.    GENERAL

9.1   Although marked "Without Prejudice" and "Subject to Contract", once signed
      by the Parties this Agreement shall have full force and effect and may be
      disclosed as evidence of a binding Agreement before a court or Employment
      Tribunal.

9.2   Any Group Company may enforce the terms of this Agreement, subject to and
      in accordance with the Contracts (Rights of Third Parties) Act 1999 ("the
      1999 Act'), but the Parties may rescind, vary, waive, assign or release
      any or all of their respective rights and obligations under this Agreement
      without the consent of any Group Company. Other than as provided in this
      Clause, the Parties do not intend that any term of this Agreement shall be
      enforceable solely by virtue of the 1999 Act by any person who is not a
      party to this Agreement.

9.3   Employee agrees not to make, or cause to be made, (directly or indirectly)
      any statements or announcements (whether orally or in writing) about the
      Company or any Group Company or their officers or employees which are
      disparaging, detrimental, or likely to bring the Company into disrepute or
      which are in any way untruthful or intended to or have the effect of
      damaging or lowering the reputation of the Company. The Company agrees not
      to make, or cause to be made, (directly or indirectly) any statements or
      announcements (whether orally or in writing) about the Employee which are
      disparaging, detrimental, or likely to bring the Employee into disrepute
      or which are in any way untruthful or intended to or have the effect of
      damaging or lowering the reputation of the Employee

9.4   The terms of this Agreement, and a Settlement Agreement between JAKKS
      Pacific, Inc., Employee and others entered into concurrently with this
      Agreement regarding the SPA, constitute the entire agreement and
      understanding between the parties and it supersedes and replaces all prior
      or contemporaneous negotiations, agreements, arrangements or
      understandings (whether implied or expressed, orally or in writing)
      concerning the subject matter hereof, all of which are hereby treated as
      terminated by mutual consent.

9.5   The various provisions, sub-provisions, schedules and annexes of this
      Agreement are severable and if any provision of this Agreement is held by
      any court of competent jurisdiction to be invalid, illegal, or otherwise
      unenforceable in any jurisdiction that will not affect or impair the
      validity, legality or enforceability of the remaining provisions,
      schedules or annexes or identifiable parts thereof in this Agreement.

9.6   This Agreement is governed by and shall be construed in accordance with
      the laws of England and Wales, and the Parties agree to submit to the
      exclusive jurisdiction of the English Courts;

                                       11


9.7   This Agreement may be executed in any number of counterparts each of which
      when signed is an original, but all counterparts together constitute the
      same document.

10.   INTERPRETATION IN THIS AGREEMENT:

10.1  "Adviser" has the meaning ascribed to it in Clause 5.1.3;

10.2  "Board" means the Board of Directors of the Company;

10.3  "Employment Agreement" has the meaning ascribed to it in Clause 1.1;

10.4  "Group Company" means any company which for the time being is a holding
      company of the Company or a subsidiary of the Company (both as defined by
      section 736 of the Companies Act 1985), or a subsidiary of a holding
      company (as defined);

10.5  "Independent Adviser Certificate" means the certificates referred to in
      Clause 5.1.5 and attached at Schedule 1 and Schedule 1-A to this
      Agreement;

10.6  "JAKKS Pacific" has the meaning ascribed to it in Clause 1.3;

10.7  "Performance Bonus" has the meaning ascribed to it in Clause 1.3;

10.8  "Potential Claim" means any claim relating to wrongful dismissal, breach
      of contract, unauthorized deduction of wages, unfair dismissal,
      constructive dismissal, remuneration and holiday pay;

10.9  "Statutory Claim" means any claim under the Employment Rights Act 1996,
      the Equal Pay Act 1970, the Sex Discrimination Act 1975, the Race
      Relations Act 1976, the Disability Discrimination Act 1995, the Transfer
      of Undertakings (Protection of Employment) Regulations 1981, the Working
      Time Regulations 1998, the Trade Union and Labour Relations
      (Consolidation) Act 1992, the Public Interest Disclosure Act 1998, the
      National Minimum Wage Act 1998, the Data Protection Act 1998, the
      Employment Relations Act 1999, the Employment Equality (Sexual
      Orientation) Regulations 2003, the Employment Equality (Religion or
      Belief) Regulations 2003, Article 141 of the EC Treaty, Equal Pay,
      Directive No 75/117 and any other Treaty, Directive, Regulation or
      Recommendation of the European Union;

10.10 "Termination Date" has the meaning ascribed to it in Clause 1.1;

10.11 any reference to a "Clause" or "Schedule" is to the relevant Clause or
      Schedule of or to this Agreement;

10.12 headings are inserted for convenience only and shall not affect the
      construction of this Agreement;

10.13 any reference to a statute, statutory provision or subordinate legislation
      ("Legislation") shall be construed as referring to such legislation as
      amended and in

                                       12


      force from time to time and to any legislation which re-enacts or
      consolidates (with or without modification) any such legislation;

10.14 any reference to the "Company" shall (where the context permits) include a
      reference to any Group Company and to all directors, officers, employees,
      agents, contractors or shareholders of the Company or any group company;

10.15 any reference to the Company or any Group Company shall include any
      successor in title or assign of the company or any Group Company;

10.16 the Schedules and Annexes form part of this Agreement and shall have
      effect as if set out in full in the body of this Agreement and any
      reference to this Agreement includes the Schedules;

10.17 use of the singular includes the plural and vice versa; and

10.18 use of any gender includes the other gender.

                                       13


                                   SCHEDULE 1

                   ADVISER'S CERTIFICATE PURSUANT TO CLAUSE 5

                                                                August ___, 2004
To David S. Lipman

CC JAKKS Pacific/Kidz Biz Limited

Dear David

I, Julian Roskill, of Mayer, Brown, Rowe & Maw [address of firm] confirm that I
have given independent legal advice to you as to the terms and effect of the
Compromise Agreement between you and JAKKS Pacific/Kidz Biz Limited of August
___, 2004.

I also warrant and confirm that I am a solicitor of the Supreme Court who holds
a valid practicing certificate and whose firm is covered by a policy of
insurance, or an indemnity provided for members of a profession or professional
body, which covers the risk of claims by you in respect of any loss arising in
consequence of such advice that I have given to you in connection with the terms
and effect of the Agreement.

Yours sincerely

Julian Roskill

                                       14


                                  SCHEDULE 1-A

                   ADVISER'S CERTIFICATE PURSUANT TO CLAUSE 5

                                                               January ___, 2006

To David S. Lipman

CC JAKKS Pacific/Kidz Biz Limited

Dear David

I, Julian Roskill, of Mayer, Brown, Rowe & Maw [address of firm] confirm that I
have again given independent legal advice to you as to the terms and effect of
the Compromise Agreement between you and JAKKS Pacific/Kidz Biz Limited of
August____, 2004, including matters that may have arisen between the date of
the Agreement and this date.

I also warrant and confirm that I am a solicitor of the Supreme Court who holds
a valid practicing certificate and whose firm is covered by a policy of
insurance, or an indemnity provided for members of a profession or professional
body, which covers the risk of claims by you in respect of any loss arising in
consequence of such advice that I have given to you in connection with the terms
and effect of the Agreement.

Yours sincerely

Julian Roskill

                                       15


                                  SCHEDULE 1-B

                  EMPLOYEE'S CERTIFICATE PURSUANT TO CLAUSE 5

                                                               January ___, 2006

To JAKKS Pacific/Kidz Biz Limited

Gentlemen:

I, David Lipman confirm that I have again received independent legal advice from
Julian Roskill of Mayer, Brown, Rowe & Maw [address of firm] as to the terms and
effect of the Compromise Agreement between me and JAKKS Pacific/Kidz Biz Limited
of August_____, 2004 with respect to matters that may have, arisen between the
date of the Agreement and this date, in particular regarding my ability to
institute or pursue any claims (including the Potential Claims as such term is
defined in the said Agreement) in an Employment Tribunal following the
Termination Date; and

having had legal advice from the Adviser, I represent and warrant that I have no
Statutory Claims other than those referred to in Clause 5.1 of the said
Agreement against the Company, any Group Company, or its or their directors,
officers, employees or shareholders, arising out of or in connection with my
employment with the Company and its termination.

Yours sincerely

                                  David Lipman

                                       16


                                   SCHEDULE 2

                  TRADE ANNOUNCEMENT AND ANNOUNCEMENT TO STAFF

It is with regret that I announce the resignation of David Lipman from his
position as Chairman of JAKKS Pacific/Kidz Biz Limited.

The acquisition of Kidz Biz by the JAKKS Group in 2001 has led to many changes
within the organisation and David has played a significant role ensuring that
the integration has been as smooth and seamless as possible.

In addition to his efforts integrating Kidz Biz into the JAKKS Group David has
worked tirelessly to maintain and build on the successful business relationships
that exist with the major UK customers.

I would like to take this opportunity to personally thank David for his years of
dedicated service and contribution in developing the awareness of JAKKS Pacific
internationally.

I am sure you all join me in my heartfelt thanks to David for his invaluable
input over the past three years. I wish for him all the best in the future.

In the coming years, David will remain one of the Company's greatest supporters
and allies, as well as a true friend.

                                       17


                                   SCHEDULE 3

                           RESIGNATION AS AN OFFICER

To:   The Board of Directors

      JAKKS Pacific/Kidz Biz Limited of Clockhouse, Epsom, Surrey KT18 7LX ("the
      Company")

                                                                August ___, 2004

Dear Sirs,

RESIGNATION AS AN OFFICER

I am writing to resign as President of the Company with immediate effect. I
confirm that I do not hold any other offices or directorships in relation to the
Company or any of its Group Companies.

The expression "Group Company" means any company that for the time being is a
holding company of the Company or a subsidiary of the Company (both as defined
by section 736 of the Companies Act 1985), or a subsidiary of a holding company
(as defined).

EXECUTED AS A DEED

by David S. Lipman ___________________

in the presence of

Witness Signature  ___________________

Witness Name:      ___________________

Witness Address:   ___________________

Witness Occupation:___________________

                                       18


SIGNED this day of August, 2004 by

/s/ David S. Lipman
- ---------------------
David S. Lipman

For and on behalf of the Company

________________________________

________________________________

________________________________

[name]

Employee

                                       20

                                                                     Exhibit 4.2

                          REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT dated as of December ____, 2001 is entered
into by and among JAKKS Pacific, Inc., a Delaware corporation ("JAKKS"), and
David S. Lipman, Marilyn Lipman and John Nimmo (together the "Shareholders" and
each a "Shareholder").

                              W I T N E S S E T H :

      WHEREAS, JAKKS has this date acquired from the Shareholders all of the
outstanding capital stock of Kidz Biz Limited, a private limited company
incorporated under the law of England and Wales and Kidz Biz Far East Limited, a
Hong Kong corporation (collectively, the "Kidz Biz Companies" and the
acquisition of the shares of the Kidz Biz Companies is referred to as the
"Acquisition"), pursuant to a Stock Purchase Agreement of even date herewith
(the "Stock Purchase Agreement"); and

      WHEREAS, a portion of the purchase price for the Acquisition consists of
shares of JAKKS' common stock, and in order to induce the Shareholders to enter
into the Stock Purchase Agreement and close the Acquisition, JAKKS has agreed to
enter into this Agreement regarding registration of such shares of JAKKS' common
stock.

      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 "Agent" means David S. Lipman, one of the Shareholders.

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

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.

1.5 "Common Stock" means shares of JAKKS' common stock, par value $.001 per
share.

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

1.7 "Inspectors" has the meaning provided for in Section 3.1 below.

1.8 "JAKKS Securities Claims" has the meaning provided for in Section 7.2 below.

1.9 "JAKKS Shares" means the shares of Common Stock delivered as part of the
Closing Purchase Price or which may be delivered in payment of the Earn-Out
under the Stock Purchase Agreement.

                                       1


1.10 "Notice" means giving any notice to, or making any declaration or filing,
or registration or recordation, with any Person.

1.11 "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.

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

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

1.14 "Records" has the meaning provided for in Section 3.1 below.

1.15 The terms "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, that becomes effective
pursuant to the Securities Act or the Exchange Act and the applicable rules and
regulations under either such Act.

1.16 "Registrable Securities" has the meaning provided for in Section 2.1 below.

1.17 "Securities Act" means the U.S. Securities Act of 1933, as amended.

1.18 "Shareholders Securities Claims" has the meaning provided for in Section
7.1 below.

2. Registration Rights.

2.1 Registration Statement. JAKKS shall prepare a Registration Statement on Form
S-3 (or, if Form S-3 is not then available, on such form of registration
statement as is then available to effect a registration of all of the
Registrable Securities, subject to the consent of the Shareholders (as
determined pursuant to Section 5 hereof)), and file the same with the
Commission, in the case of Registrable Securities included in the Closing
Purchase Price, on or prior to March 1, 2002, and, in the case of Registrable
Securities included in the Earn-Out, if any, within two (2) months after the
date of issuance thereof, covering the JAKKS Shares (the "Registrable
Securities"), and shall use its best efforts to cause each such registration
statement to become effective as soon as practicable, but in no event later than
within three (3) months, after the Closing Date, in the case of Registrable
Securities included in the Closing Purchase Price, or the date of issuance, in
the case of Registrable Securities included in the Earn-Out, if any, to permit,
when such registration statement becomes effective, the sale of the Registrable
Securities in the public securities markets.

2.2 Incidental Registrations. If at any time prior to the date on which the
Registration statement becomes effective, JAKKS shall file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with an acquisition of any entity
or business or equity securities issuable in connection with

                                       2


stock option or other employee benefit plans), then JAKKS shall send to each
Shareholder written notice of such determination and, if within fifteen (15)
days after the date of such notice, any Shareholder shall so request in writing,
JAKKS shall include in such Registration Statement all or any part of the
Registrable Securities such Shareholder requests to be registered, except that
if, in connection with any underwritten public offering, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then JAKKS shall be
obligated to include in such Registration Statement only such limited portion of
the Registrable Securities with respect to which such Shareholder has requested
inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Shareholders seeking to
include Registrable Securities, in proportion to the number of Registrable
Securities sought to be included by such Shareholders; provided, however, that
JAKKS shall not exclude any Registrable Securities unless JAKKS has first
excluded all outstanding securities, the holders of which are not entitled to
inclusion of such securities in such Registration Statement or are not entitled
to pro rata inclusion with the Registrable Securities; and provided, further,
however, that, after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the Registration
Statement. No right to registration of Registrable Securities under this Section
2.2 shall be construed to limit any registration required under Section 2.1
hereof. If an offering in connection with which a Shareholder is entitled to
registration under this Section 2.2 is an underwritten offering, then each
Shareholder whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by JAKKS, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.

2.3 Limitation on Sales of JAKKS Shares. Each of David S. Lipman and Marilyn
Lipman shall not sell, assign, pledge or otherwise transfer, or engage in
short-selling or hedging transactions with respect to, any Registrable
Securities held by him or her, notwithstanding that such securities may have
been registered for sale under the Securities Act, in any calendar quarter of
2002, in excess of the number set forth below:

               Quarter                      Number of Shares
               -------       ---------------------------------------------------
                  1          25% of JAKKS Shares initially issued to both such
                             Shareholders

                  2          50% of JAKKS Shares initially issued to both such
                             Shareholders, less the number of such Shares sold
                             hereunder by both such Shareholders in the prior
                             quarter

                  3          75% of JAKKS Shares initially issued to both such
                             Shareholders, less the number of such Shares sold
                             hereunder by both such Shareholders in the prior
                             two quarters

                  4          100% of JAKKS Shares initially issued to both such
                             Shareholders, less the number of such Shares sold
                             hereunder by both such Shareholders in the prior
                             three quarters

                                       3


      2.4 Preparation and Filing of Registration Statement. With respect to any
      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 when such registration statement becomes effective and
      use its best efforts to keep the Registration Statement effective pursuant
      to Rule 415 at all times until such date as is the earlier of (i) the date
      on which all of the Registrable Securities have been sold and (ii) the
      date on which all of the Registrable Securities (in the reasonable opinion
      of counsel to Shareholders) may be immediately sold to the public without
      registration and without restriction as to the number of Registrable
      Securities to be sold, whether pursuant to Rule 144 or otherwise (the
      "Registration Period").

      (ii) prepare and file with the Commission such amendments and supplements
      to such Registration Statement and the prospectus included therein as may
      be necessary, to keep the Registration Statement effective at all times
      during the Registration Period, and, during such period, comply with the
      provisions of the Securities Act with respect to the disposition of all
      Registrable Securities of JAKKS covered by the Registration Statement
      until the termination of the Registration Period. JAKKS shall use its best
      efforts to cause such amendments to become effective as soon as
      practicable following the filing thereof.

      (iii) furnish to the Agent (a) promptly after the same is prepared and
      publicly distributed, filed with the Commission, or received by JAKKS, one
      copy of the Registration Statement and any amendment thereto, each
      preliminary prospectus and prospectus and each amendment or supplement
      thereto, and, in the case of a Registration Statement referred to in
      Section 2.1, each written correspondence by or on behalf of JAKKS to the
      Commission or the staff of the Commission, and each item of correspondence
      from the Commission or the staff of the Commission, in each case relating
      to such Registration Statement (other than any portion, if any, thereof
      which contains information for which JAKKS has sought confidential
      treatment), and (b) 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 the Agent may
      reasonably request in order to facilitate the sale of the Registrable
      Securities in the public securities markets;

      (iv) use its best efforts to register or to qualify the Registrable
      Securities under the Blue Sky Laws of each state governing further
      purchase or sale of securities as the Agent may reasonably request, to
      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 the disposition of the
      Registrable Securities in accordance with the manner of disposition set
      forth in the registration statement relating thereto; and provided,
      further, that JAKKS will not be required to (A) qualify generally to do
      business in any jurisdiction where it would not otherwise be required to
      qualify but for this paragraph or (B) subject itself to taxation in any
      such jurisdiction;

      (v) notify the Agent as expeditiously as practicable, and confirm such
      advice in writing:

                                       4


            (1) when the registration statement or any amendment thereto has
            been filed and when it has become effective;

            (2) of the issuance by the Commission of any stop order suspending
            the effectiveness of the registration statement or the initiation of
            any proceedings for that purpose; and

            (3) of the registration or qualification of the Registrable
            Securities for sale under the Blue Sky Laws of any jurisdiction
            affecting such registration or qualification;

            (4) of the happening of any event as a result of which the
            prospectus included in the Registration Statement, as then in
            effect, includes an untrue statement of a material fact or omission
            to state a material fact required to be stated therein or necessary
            to make the statements therein not misleading, and use its best
            efforts to as soon as possible (but in any event it shall within
            five (5) days) prepare a supplement or amendment to the Registration
            Statement to correct such untrue statement or omission, and deliver
            such number of copies of such supplement or amendment to each
            Shareholder as such Shareholder may reasonably request.

      (vi) make its best efforts to prevent the issuance of any Order suspending
      the effectiveness of the registration statement and, if such an Order is
      issued, to obtain the withdrawal of such Order at the earliest possible
      time;

      (vii) 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
      Common Stock is listed or included.

      (viii) JAKKS shall comply with all applicable laws related to a
      Registration Statement and offering and sale of securities and all
      applicable rules and regulations of governmental authorities in connection
      therewith (including, without limitation, the Securities Act and the
      Exchange Act, and the rules and regulations promulgated by the
      Commission); and

      (ix) JAKKS shall take all such other actions as any Shareholder or the
      underwriters, if any, reasonably request in order to expedite or
      facilitate the disposition of such Registrable Securities.

2.5 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; provided that the
duration of any such delay, suspension or withdrawal shall not exceed 90 days
from the date that JAKKS' board of directors commences or becomes aware of such
transaction or development and that JAKKS shall not exercise its right to cause
such delay, suspension or withdrawal on one or more occasions if, as a result
thereof, the aggregate duration of all such delays, suspensions or withdrawals
would exceed 90 days within any rolling 12-month period during the term of this
Agreement; and, in case of any such delay, suspension or withdrawal, JAKKS shall
make such filing or amendment as is reasonably necessary to complete, restore or
reinstate such registration statement no later than the

                                       5


earlier of (i) the earliest date on which the conditions leading to such delay,
suspension or withdrawal no longer apply and (ii) the end of such 90 day period.

2.6 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
incidental registration of Common Stock or other equity securities of JAKKS for
sale in an underwritten public offering, each Shareholder who participates in
such registration agrees to sell his or her Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as apply to the other securities included in such registration and
that they execute the underwriting agreement, custody agreement and related
documents that apply to all the securities to be offered under such
registration.

3. Preparation; Reasonable Investigation.

3.1 In connection with the preparation and filing of the registration statement
and any amendments thereto and any Blue Sky Filing, JAKKS will give the Agent
and its counsel and accountant the opportunity to review, in each case, a
reasonable time prior to their 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 Blue Sky Filing in order to verify the accuracy of any factual
information concerning the Kidz Biz Companies or the Shareholders. JAKKS will
make available for inspection by the Agent, any underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other agent retained by the Agent or any such underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of JAKKS (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
cause JAKKS's officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with such registration
statement and permit the Inspectors to participate in the preparation of such
registration statement and any prospectus contained therein and any amendment
thereof or supplement thereto. Records which JAKKS determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential shall not
be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in the registration
statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other Order from a court of competent jurisdiction, or (iii) the information in
such Records has been made generally available to the public. The seller of
Registrable Securities agrees by acquisition of such Registrable Securities that
it will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to JAKKS and allow JAKKS, at JAKKS's
expense, to undertake appropriate action to prevent or limit disclosure of the
Records deemed confidential. JAKKS shall pay for all registration and filing
fees, printing expenses and fees and disbursements of JAKKS's counsel and one
counsel for the Shareholders and the Agent and JAKKS's Accountants in connection
with the preparation, review and filing of the registration statement or any
Blue Sky Filing pursuant to this Agreement; provided, however, that the Agent on
behalf of the Shareholders shall pay underwriting discounts and commissions
applicable to the sale of the Registrable Securities.

                                       6


4. Application to Subsequent Holders.

4.1 The provisions of this Agreement shall inure to the benefit of and be
binding upon any holder of Registrable Securities; provided that all such
holders shall be deemed to be represented by and act through the Agent (or, if
he shall die, resign or otherwise cease so to act, a successor designated by the
Agent in a written notice given to JAKKS, or if the Agent shall not so designate
a successor, a successor designated by the holders of a majority of the
Registrable Securities then outstanding in a written notice given to JAKKS, the
designation of such successor to be effective upon actual receipt of such notice
by JAKKS) and any notice or other documents required or permitted to be given or
delivered pursuant to the provisions of this Agreement to or by the Shareholders
shall be deemed to be duly so given or delivered if given to or by the Agent (or
such successor) in accordance with Section 8.2, and any right of the holders of
Registrable Securities, including in connection with the preparation of any
documents or any investigation pursuant to Agreement relating to any
registration, shall be exercised or effected by or through the Agent (or such
successor).

5. The Agent.

5.1 Any Party hereto may rely upon any Notice given by the Agent on behalf of
any Shareholder with respect to any election, determination or other action to
be made or taken by him hereunder as the act and deed of such Shareholder. It
shall be sufficient to deliver to the Agent at his address set forth in Section
8.2 below any Notice or other document to be delivered hereunder to any
Shareholder and it shall be the sole responsibility of the Agent to deliver any
Notice or other document so delivered to him in such manner as he and the
Shareholders, or any of them, may agree.

5.2 Each election, determination or other action of the Agent in connection with
this Agreement shall be binding upon all of the Shareholders, and no Shareholder
shall have any right to object, dissent from, or protest or otherwise contest
the same or take any separate action relating to the same.

5.3 Any delivery to be made hereunder to or for any Shareholder that is made to
the Agent as herein provided shall constitute, as between JAKKS and the
Shareholders, delivery in full of the item to be delivered. It shall be the sole
responsibility of the Agent to hold for and disburse to the Shareholders and any
items delivered to the Agent pursuant hereto.

6. Reports under the Exchange Act. With a view to making available to the
Shareholders the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the Commission that may at any time
permit the Shareholders to sell securities of JAKKS to the public without
registration ("Rule 144"), JAKKS agrees to, so long as such Shareholder holds or
beneficially owns Registrable Securities:

      (i) File with the Commission in a timely manner and make and keep
      available all reports and other documents required of JAKKS under the
      Securities Act and the Exchange Act so long as JAKKS remains subject to
      such requirements and the filing and availability of such reports and
      other documents is required for the applicable provisions of Rule 144; and

      (ii) Furnish to each Shareholder promptly upon request, (i) a written
      statement by JAKKS that it has complied with the reporting requirements of
      Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
      recent annual or quarterly report of JAKKS and such other reports and
      documents so filed by JAKKS, and (iii) such other information as may be
      reasonably

                                       7


      requested to permit the Shareholders to sell such securities pursuant to
      Rule 144 without registration.

7. Indemnification.

7.1 Shareholders' Indemnity. Each Shareholder, severally but not jointly, shall
indemnify and defend JAKKS against, and hold it harmless from, any loss,
liability, obligation, damage or expense (including reasonable attorneys' fees
and disbursements) which it may suffer or incur incidental to any claim or any
Proceeding against it 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 JAKKS Shares 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 that Shareholder solely for use in the preparation thereof
("Shareholders' Securities Claims"). provided, however, that no Shareholder
shall 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 JAKKS solely for use in the
preparation thereof.

7.2 JAKKS' Indemnity. JAKKS shall indemnify and defend each Shareholder and each
person who participates as a placement or sales agent or as an underwriter
(within the meaning of the Securities Act) in any offering of the Registrable
Securities 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
the registration statement, any preliminary prospectus or final prospectus
contained therein, any document incorporated by reference therein or any
amendment or supplement thereto, or any document prepared and/or furnished by
JAKKS or its Affiliates incident to the registration or qualification of the
Registrable Securities, or arise out of or are based upon the omission or
alleged omission to state therein a material fact 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 that Shareholder solely for use in
the preparation thereof.

                                       8


7.3 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 7.1 or 7.2, 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 which 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. 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.

                                       9


7.4 Limitations.

      (i)   Any other provision hereof notwithstanding:

            (1) If JAKKS is entitled to receive indemnification from the
            Shareholders pursuant to Section 7.1, JAKKS may, upon thirty (30)
            days prior written Notice to the Shareholders, cause the amount
            thereof to be offset and retained by JAKKS HK from any payment of
            the Earn-Out (as such term is defined in the Stock Purchase
            Agreement) otherwise payable to the Shareholders thereunder;

            (2) 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.

(b) 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.

7.5 Contribution. Each Shareholder and JAKKS agree that if, for any reason, the
indemnification provisions contemplated by Sections 7.1 or 7.2 hereof are
unavailable to or are insufficient to hold harmless an indemnified party in
respect of any losses (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative fault of, and benefits derived by, the indemnifying party and the
indemnified party, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact or omission alleged omission to state a
material fact relates to information supplied by such indemnifying party or by
such indemnified party, and the parties' relative intent, knowledge access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would bot be just and equitable if contribution
pursuant to this Section 7.5 were determined (i) by pro rate allocation (even if
the Shareholder or any agents for, or underwriters of, the Registrable
Securities, or all of them, were treated as one entity for such purpose); or
(ii) by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7.5. The amount paid or
payable by an indemnified party as a result of losses (or actions or proceedings
in respect thereof) referred to above shall be deemed to include (subject to the
limitations set forth in Section 7.3 hereof) any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action, proceeding or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

7.6 Extent of Indemnification. The obligations of the Company under this Section
7 shall be in addition to any liability that it may otherwise have and shall
extend, upon the same terms and conditions,

                                      10


to each agent and underwriter of the Registrable Securities and each person, if
any, who controls such agent or underwriter with the meaning of the Securities
Act.

8. Miscellaneous.

8.1 Fees and Expenses. Except as otherwise specified in this Agreement, each
party hereto shall bear such fees and expenses as may be incurred by it in
connection with this Agreement.

8.2 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 in writing and (i) if sent by messenger or Federal
Express or internationally recognized courier service, or by priority overnight
delivery between any two points within the U.S. or any two points within the
U.K., on the business day next following the date such Notice or demand was
delivered, or (ii) if sent by priority overnight delivery between any point
within the U.S. and any point outside of the U.S., or between any point within
the U.K. and any point outside of the U.K., or between any two points outside of
the U.S. or the U.K., three (3) business days next following the date such
Notice or demand was delivered; or (iii) if sent by mail, three (3) business
days after deposit in the mails, if mailed by certified or registered mail
(return receipt requested) between any two points within the U.S. or any two
points within the U.K., and seven (7) business days if mailed by certified or
registered mail (return receipt requested) between any point within the U.S. and
any point outside of the U.S., or between any point within the U.K. and any
point outside of the U.K., or between any two points outside of the U.S. or the
U.K., or (iv) if sent by telegram, telecopy (confirmed to the sender), telex or
similar electronic means, the business day next following the date such notice
or demand was so transmitted, 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:

                             if to JAKKS Pacific:

                             JAKKS Pacific, Inc.

                             22619 Pacific Coast Highway

                             Malibu, California 90265

                             Attn: President

                             Fax: (310) 317-8527

                                      11


        and to:              Feder, Kaszovitz, Isaacson,

                             Weber, Skala, Bass & Rhine LLP

                             750 Lexington Avenue

                             New York, New York 10022-1200 U.S.

                             Attn: Geoffrey A. Bass, Esq.

                             Fax: (212) 888-7776

to David Lipman or

                             Marilyn Lipman  at:

                             David S. Lipman

                             Castilian House

                             The Ridge

                             Epsom, Surrey KT18 1BS

                             United Kingdom

                             Fax:

                             to John Nimmo:

                             John Nimmo

                             Morwell

                             5 Grays Lane

                             Ashtead, Surrey KT21 1BS

                             United Kingdom

                             Fax:

                                      12


                             with a copy to:              Altheimer & Gray

                             10 South Wacker Drive

                             Chicago, Illinois 60606-7482 U.S.

                             Attn: Jonathan Baird, Esq

                             Fax: 312-715-4800

and to:                      Altheimer & Gray

                             7 Bishopsgate

                             London EC2N 3AR United Kingdom

                             Fax: 020-7786-0000

                             Attn: Dean Harper, Esq.

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.

8.3 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.

8.4 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.

8.5 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. For the purpose of enforcing
the provisions of Section 8.6 of this Agreement and any other remedy available
to a Party under this Agreement which is outside of the jurisdiction of the
arbitrators referred to in Section 8.6, 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

                                      13


service of any summons, complaint, Notice or other process relating to such
Proceeding may be effected in the manner provided by Section 8.2.

8.6 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 before a panel of three arbitrators. JAKKS, on the one
hand, and the Shareholders shall each pay one-half of any filing fees or other
administrative costs to be paid in advance of or during such Proceeding. The
arbitrators 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 arbitrators shall be final and binding upon the parties to
such Proceeding, and judgment thereon may be entered in any court of competent
jurisdiction. The arbitrators shall have no power to change any of the
provisions of this Agreement in any respect, nor shall they have any power to
make an award of reformation, and the jurisdiction of the arbitrators is
expressly limited accordingly. 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. At least one of the arbitrators shall
be an attorney admitted to the practice of law for at least fifteen (15) years
with substantial experience in business and commercial transactions.

8.7 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.

8.8 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.

8.9 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.

8.10 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.

8.11 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.

8.12 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. 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.

                                      14


8.13 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 PACIFIC, INC., by its duly authorized officer,
and the other parties hereto have duly executed this Agreement as of the date
set forth in the Preamble hereto.

JAKKS PACIFIC, INC.

By: __________________________
    Name:
    Title:
______________________________
David S. Lipman

______________________________
John Nimmo

______________________________
Marilyn Lipman

                                      15

 

CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM

      We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 of JAKKS Pacific, Inc. of our report dated February 16, 2004, on our audits of the consolidated financial statements of JAKKS Pacific, Inc. as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003 and to the incorporation by reference of our report in any registration statement relating to the offering to which this Registration Statement relates filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended. We also hereby consent to the reference to our firm as “Experts” in the Registration Statement.

	/s/ PKF
	PKF
	Certified Public Accountants
	A Professional Corporation

Los Angeles, California

 

CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM

      We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 of JAKKS Pacific, Inc. of our reports dated February 13, 2004, on our audits of the financial statements of each of Play Along, Inc. and PA Distribution, Inc. as of the twelve-month periods ended March 31, 2003 and 2002 and for the nine-month period ended December 31, 2003, and to the incorporation by reference of our reports in any registration statement relating to the offering to which this Registration Statement relates filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended. We also hereby consent to the reference to our firm as “Experts” in the Registration Statement.

	/s/ DASZKAL BOLTON LLP
	Daszkal Bolton LLP
	Certified Public Accountants

Boca Raton, Florida

 

CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM

      We have issued our reports dated June 6, 2003 and February 19, 2004, accompanying the financial statements of Play Along (Hong Kong) Limited for the year ended March 31, 2003 and nine months ended December 31, 2003, respectively, included in the Company’s 8-K/ A dated September 7, 2004. We hereby consent to the incorporation by reference of said reports in the Registration Statement of Jakks Pacific, Inc. and Subsidiaries on Form S-3/ A. We also hereby consent to the reference to our firm as “Experts” in the Registration Statement.

	/s/ GRANT THORNTON
	Grant Thornton
	Certified Public Accountants

Hong Kong

 

POWER OF ATTORNEY

      Each of the undersigned hereby constitutes and appoints Jack Friedman, Stephen G. Berman and Joel M. Bennett, and each of them, as his attorneys-in-fact, with full power of substitution and resubstitution, to execute in his name, place and stead, individually and in each capacity stated below, one or more amendments (including without limitation post-effective amendments) to this registration statement, any related Rule 462(b) registration statement and any other documents related thereto, to file the same (and any exhibit thereto) with the Commission and to take any other action to effect the registration under the Securities Act of 1933 of common stock of the registrant subject thereto, as the attorney-in-fact acting in the premises deems appropriate as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, acting severally, may lawfully do or cause to be done by virtue hereof.

Signature				Title		Date
/s/ JACK FRIEDMAN Jack Friedman				Chairman and Chief Executive Officer (Principal Executive Officer)		December 13, 2004
/s/ JOEL M. BENNETT Joel M. Bennett				Chief Financial Officer (Principal Financial and Accounting Officer)		December 13, 2004
/s/ DAN ALMAGOR Dan Almagor				Director		December 13, 2004
/s/ STEPHEN G. BERMAN Stephen G. Berman				Director		December 13, 2004
/s/ DAVID C. BLATTE David C. Blatte				Director		December 13, 2004
/s/ ROBERT E. GLICK Robert E. Glick				Director		December 13, 2004
/s/ MICHAEL G. MILLER Michael G. Miller				Director		December 13, 2004
/s/ MURRAY L. SKALA Murray L. Skala				Director		December 13, 2004