Exhibit 10.2

Execution Copy



















AGREEMENT AND PLAN OF MERGER
dated as of
August 12, 2001

among



HUNGRY MINDS, INC.,
JOHN WILEY & SONS, INC.
and
HMI ACQUISITION CORP.

TABLE OF CONTENTS

Page

ARTICLE 1 THE OFFER*

Section 1.01	The Offer.	*

Section 1.02	Company Action.	*

Section 1.03	Directors.	*

ARTICLE 2 THE MERGER	*

Section 2.01	The Merger.	*

Section 2.02	Effective Time.	*

Section 2.03	Closing.	*

Section 2.04	Effects of the Merger.	*

Section 2.05	Certificate of Incorporation.	*

Section 2.06	Bylaws.	*

Section 2.07	Directors and Officers.	*

ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES	*

Section 3.01	Conversion of Company Common Stock.	*

Section 3.02	Dissenting Shares.	*

Section 3.03	Payment for Shares in the Merger.	*

Section 3.04	Stock Options.	*

Section 3.05	Adjustments.	*

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY	*

Section 4.01	Organization and Qualification; Subsidiaries.	*

Section 4.02	Capitalization.	*

Section 4.03	Corporate Authorization.	*

Section 4.04	Governmental Authorization.	*

Section 4.05	Non-contravention.	*

Section 4.06	SEC Reports; Financial Statements.	*

Section 4.07	Information Supplied.	*

Section 4.08	Absence of Certain Changes or Events.	*

Section 4.09	Litigation.	*

Section 4.10	Compliance with Laws.	*

Section 4.11	Taxes.	*

Section 4.12	Employee Benefit Plans.	*

Section 4.13	Environmental Matters.	*

Section 4.14	Intellectual Property.	*

Section 4.15	Title and Condition of Properties.	*

Section 4.16	Insurance.	*

Section 4.17	Certain Contracts.	*

Section 4.18	Employment Matters.	*

Section 4.19	Finders' Fees.	*

Section 4.20	Opinion of Financial Advisor.	*

Section 4.21	Voting Requirements.	*

Section 4.22	Inventories; Receivables; Payables.	*

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER	*

Section 5.01	Organization, Standing and Corporate Power.	*

Section 5.02	Corporate Authorization.	*

Section 5.03	Governmental Authorization.	*

Section 5.04	Non-contravention.	*

Section 5.05	Information Supplied.	*

Section 5.06	Litigation.	*

Section 5.07	Finders' Fees.	*

ARTICLE 6 COVENANTS	*

Section 6.01	Conduct of Business by the Company.	*

Section 6.02	Other Actions.	*

Section 6.03	Stockholder Meeting; Proxy Material; Merger Without Stockholder Meeting.	*

Section 6.04	Access to Information.	*

Section 6.05	No Solicitation; Other Offers.	*

Section 6.06	Commercially Reasonable Efforts; Notification.	*

Section 6.07	Indemnification and Insurance.	*

Section 6.08	Employee Benefits.	*

Section 6.09	Public Announcements.	*

Section 6.10	Further Assurances.	*

Section 6.11	Notices of Certain Events.	*

Section 6.12	Pay-off of Credit Facilities.	*

ARTICLE 7 CONDITIONS TO THE MERGER	*

Section 7.01	Conditions to Obligations of Each Party.	*

ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER	*

Section 8.01	Termination.	*

Section 8.02	Effect of Termination.	*

Section 8.03	Fees and Expenses.	*

Section 8.04	Amendment.	*

Section 8.05	Extension; Waiver.	*

Section 8.06	Procedure for Termination, Amendment, Extension or Waiver.	*

ARTICLE 9 MISCELLANEOUS	*

Section 9.01	Non-Survival of Representations and Warranties.	*

Section 9.02	Notices.	*

Section 9.03	No Waivers.	*

Section 9.04	Successors and Assigns.	*

Section 9.05	Governing Law.	*

Section 9.06	Jurisdiction.	*

Section 9.07	WAIVER OF JURY TRIAL.	*

Section 9.08	Counterparts; Effectiveness; Benefit.	*

Section 9.09	Entire Agreement.	*

Section 9.10	Captions.	*

Section 9.11	Severability.	*

Section 9.12	Specific Performance.	*

Section 9.13	Interpretation.	*

Section 9.14	Company Disclosure Memorandum.	*

Section 9.15	Parties in Interest.	*

Section 9.16	Obligation of Parent and the Company.	*

Section 9.17	Certain Definitions.	*



INDEX OF DEFINED TERMS

|Term | Section
|---- | -------
|     |        

Acquisition Proposal	6.05(e)

Affiliate	9.17(a)

Agreement	Recitals

Beneficially	9.17(b)

Board of Directors	1.02(a)

Business Day	9.17(c)

Cancellation Instrument	3.04

Certificates	3.03(a)

Closing	2.03

Code	4.12(b)

COBRA	4.12(i)

Company	Recitals

Company Common Stock	Recitals

Company Disclosure Memorandum	Article 4

Company Employees	6.08(a)

Company's Form 10-K 	4.15

Company SEC Reports	4.06(a)

Company Securities	4.02(b)

Company Stockholder Meeting	6.03(a)

Confidentiality Agreement	6.04(c)

Continuing Directors	1.03(a)

Control	9.17(a)

Corporate Agent	6.07(b)

DGCL	1.02(a)

Dissenting Shares	3.02

DOJ	6.06(b)

Effective Time	2.02

Employee Plans	4.12(a)

Environmental Laws	4.13(b)(i)

Environmental Permits	4.13(b)(ii)

ERISA	4.12(a)

Exchange Act	1.01(a)

Fairness Opinion	1.02(a)

FTC	6.06(b)

Governmental Entity	4.04

Hazardous Substance	4.13(b)(iii)

HSR Act	4.04

Indemnified Party	6.07(c)

Information Statement	4.07

Initial Expiration Date	1.01(a)

Intellectual Property	4.14(g)

IRS	4.11(f)

Knowledge	9.17(d)

Law	9.17(e)

Licensed Intellectual Property	4.14(f)

Liens	4.01

Material Adverse Effect	4.01

Material Contract	4.17(a)

Merger	Recitals

Merger Consideration	3.01(a)(i)

Minimum Condition	1.01(a)

Morgan Stanley	1.02(a)

Offer	Recitals

Offer Completion Date	6.03(a)

Offer Documents	1.01(c)

Offer Price	Recitals

Option	3.04

Option Consideration	3.04

Option Plan	3.04

Other Enterprise	6.07(d)

Owned Intellectual Property	4.14(f)

Parent	Recitals

Paying Agent	3.03(a)

Payment Fund	3.03(a)

Permits	4.10

Person	9.17(f)

Proxy Statement	4.04

Purchaser	Recitals

Required Vote	9.17(g)

Schedule 14D-9	1.02(b)

Schedule TO	1.01(c)

SEC	1.01(b)

Securities Act	4.06(a)

Shares	1.01(a)

Significant Subsidiaries	9.17(h)

Subsidiary	4.01

Superior Proposal	6.05(e)

Surviving Corporation	2.01

Tax Return	4.11(f)

Taxes	4.11(f)

Taxing Authority	4.11(f)

Termination Fee	8.03(b)

Transactions	1.02(a)

Voting and Tender Agreement	Recitals





AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 12,
2001 among Hungry Minds, Inc., a Delaware corporation (the "Company"), John Wiley & Sons,
Inc., a New York corporation ("Parent"), and HMI Acquisition Corp., a Delaware corporation
and a direct or indirect wholly-owned subsidiary of Parent ("Purchaser").

WHEREAS, the respective Boards of Directors of Parent, Purchaser and the Company
have determined that it would be advisable and in the best interests of their respective
stockholders for Parent to acquire the Company on the terms and conditions set forth herein;

WHEREAS, to effectuate the acquisition, it is proposed that Purchaser commence a
cash tender offer, as it may be amended from time to time as permitted under this Agreement (the
"Offer"), to purchase all of the issued and outstanding shares of Class A Common Stock, $.001
par value per share of the Company (the "Company Common Stock"), at a purchase price, net to
seller in cash, without interest, of $6.09 per share (the "Offer Price"), upon the terms and
subject to the conditions set forth in this Agreement;

WHEREAS, to effectuate the acquisition, it is further proposed that following the
consummation of the Offer, Purchaser will be merged with and into the Company (the "Merger"),
with (i) the Company continuing as the surviving corporation in the Merger and (ii) each
outstanding share of Company Common Stock not owned directly or indirectly by Parent or the Company
being converted into the right to receive the highest per share cash consideration paid pursuant to
the Offer;

WHEREAS, also in furtherance of such acquisition, the Board of Directors of each
of Parent, Purchaser and the Company have approved this Agreement and the Merger following the Offer
pursuant to which Purchaser shall merge with and into the Company and outstanding Shares of Company
Common Stock shall be converted into the right to receive the Offer Price in cash, without interest,
all in accordance with the DGCL and upon the terms and subject to the conditions set forth
herein;

WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each share of Company Common Stock in the Offer and the Merger is fair
to all holders of such shares and has resolved to recommend that the holders of such shares tender
all of their shares pursuant to the Offer and approve and adopt this Agreement and the Merger upon
the terms and subject to the conditions set forth herein; and

WHEREAS, contemporaneously with the execution and delivery of this Agreement, as
a condition and an inducement to the willingness of Parent and Purchaser to enter into this
Agreement, certain stockholders have executed and delivered to Parent an agreement pursuant to which
they have agreed to take certain actions with respect to the Offer and the Merger (the "Voting
and Tender Agreement");

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:

1. THE
OFFER
2. The Offer.
3. Purchaser expressly reserves the right to modify the
terms of the Offer; provided, however, that without the prior written consent of the
Company, which consent may be granted or withheld in the Company's sole discretion, neither Parent
nor Purchaser will  decrease the Offer Price,  decrease the number of Shares sought in the
Offer, (iii) change the form of consideration payable in the Offer, (iv) impose conditions to the
Offer in addition to the Minimum Condition and the other conditions set forth in Annex A, (v)
except as provided below or required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission ("SEC") applicable to the Offer, change the expiration
date of the Offer, or (vi) otherwise amend or change any term or condition of the Offer in a manner
adverse to the holders of Shares.  Notwithstanding anything in this Agreement to the contrary,
without the consent of the Company, Purchaser shall have the right to extend the Offer beyond the
Initial Expiration Date in the following events: (i) from time to time, but in no event later than
the date that is ten (10) Business Days from the Initial Expiration Date (or extended expiration
date of the Offer, if applicable), if, at the Initial Expiration Date (or extended expiration date
of the Offer, if applicable), one or more of the conditions to the Offer (other than the Minimum
Condition, to which this clause does not apply) shall not have been satisfied or waived, until such
conditions are satisfied or waived, provided, however, that the expiration date of the Offer may not
extend beyond the 60th day after commencement of the Offer; (ii) for any period
required by any rule, regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable Law (as hereinafter defined); or (iii)
if all of the conditions to the Offer are satisfied or waived but the number of Shares of Company
Common Stock validly tendered and not withdrawn is less than ninety percent (90%) of the then
outstanding number of Shares, provided, however, that the expiration date of the Offer
may not extend beyond the 60th day after the commencement of the Offer; and,
provided further, that Purchaser shall accept and pay for shares validly tendered and
not withdrawn, as soon as reasonably practical, prior to the date of such extension, shall otherwise
meet the requirements of Rule 14d-11 under the Exchange Act in connection with such extension and
shall waive any condition to the consummation of the Merger other than the conditions in Section
7.01(c) that may fail to be satisfied during such extension.In
addition, Parent and Purchaser agree that Purchaser shall, if requested by the Company, from time to
time extend the Offer if at the Initial Expiration Date (or any extended expiration date of the
Offer, including pursuant to this sentence, if applicable) no conditions to the Offer, other than
the conditions set forth in clause (a) or clause (b) of Annex A, then excuse performance by
Purchaser under Annex A, for ten (10) Business Days after such previously scheduled
expiration date, but in no event later than December 31, 2001.  Upon the satisfaction or waiver of
all the conditions to the Offer and subject to the terms and conditions of this Agreement, Purchaser
will, and Parent will cause Purchaser to, accept for payment, purchase and pay for, in accordance
with the terms of the Offer, all Shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer as soon as reasonably practicable after the expiration of the Offer.
4. As soon as reasonably practicable on the date of
commencement of the Offer, Parent and Purchaser shall file or cause to be filed with the SEC a
Tender Offer Statement on Schedule TO with respect to the Offer (together with any amendments or
supplements thereto, the "Schedule TO"), which shall contain or incorporate by reference the
offer to purchase and forms of the related letter of transmittal and such other ancillary documents
and instruments pursuant to which the Offer will be made (such Schedule TO and such documents
included therein pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents").  Parent and Purchaser agree that the Offer
Documents will comply as to form and content in all material respects with the applicable provisions
of the federal securities Laws and, on the date filed with the SEC and on the date first published,
sent or given to the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or Purchaser with respect to information
supplied by the Company in writing for inclusion in the Offer Documents.  Parent, Purchaser and the
Company each agree to correct promptly any information provided by it for use in the Offer Documents
if and to the extent that such information shall have become false or misleading in any material
respect and to supplement the information provided by it specifically for use in the Schedule TO or
the other Offer Documents to include any information that shall become necessary in order to make
the statements therein, in light of the circumstances under which they were made, not misleading.
Parent and Purchaser agree to take all steps necessary to cause the Offer Documents as so corrected
or supplemented to be filed with the SEC and to be disseminated to holders of Shares of Company
Common Stock, in each case as and to the extent required by applicable federal securities Laws.  The
Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC.  Parent and Purchaser agree to provide to the
Company and its counsel any comments or other communications which Parent, Purchaser or their
counsel may receive from the staff of the SEC with respect to the Offer Documents promptly after
receipt thereof.
5. Parent shall provide or cause to be provided to
Purchaser on a timely basis the funds necessary to accept for payment, and pay for, any shares of
Company Common Stock that Purchaser becomes obligated to accept for payment, and pay for, pursuant
to the Offer.
6. Company Action.
7. As soon as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC and disseminate to holders of Shares
of Company Common Stock, in each case as and to the extent required by applicable federal securities
Laws, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or
supplements thereto, the "Schedule 14D-9") that shall reflect the recommendation of the Board
of Directors referred to in clause (iii) of Section 1.02(a) hereof.  The Schedule 14D-9 will comply
in all material respects with the provisions of applicable federal securities Laws and, on the date
filed with the SEC and on the date first published, sent or given to the Company's stockholders,
shall not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no representation is made by
the Company with respect to information supplied by Parent or Purchaser in writing for inclusion in
the Schedule 14D-9.  The Company, Parent and Purchaser each agree to correct promptly any
information provided by it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect and to supplement the information
provided by it specifically for use in the Schedule 14D-9 to include any information that shall
become necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.  The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected or supplemented to be filed with the SEC and to be disseminated to
holders of Shares of Company Common Stock, in each case as and to the extent required by applicable
federal and state securities Laws.  Parent and its counsel shall be given a reasonable opportunity
to review and comment on the Schedule 14D-9 prior to its being filed
with the SEC.  The Company agrees to provide to Parent and its counsel any comments or other
communications which the Company or its counsel may receive from the staff of the SEC with respect
to the Schedule 14D-9 promptly after receipt thereof.  Parent, Purchaser and the Company each hereby
agree to provide promptly such information necessary to prepare the exhibits and schedules to the
Schedule 14D-9 and the Offer Documents which the respective party responsible therefor may
reasonably request.
8. The Company will cause its transfer agent promptly to furnish Parent and
Purchaser with a list of the Company's stockholders, mailing labels and any available listings or
computer file containing the names and addresses of all record holders of Shares of Company Common
Stock and lists of securities positions of Shares of Company Common Stock held in stock depositories
as of a recent date and to provide to Parent and Purchaser such additional information (including,
without limitation, updated lists of stockholders, mailing labels and lists of securities positions)
and such other assistance as Parent or Purchaser or their agents may reasonably request in
connection with the Offer.  Subject to the requirements of applicable Law, and except for such steps
as are necessary to disseminate the Offer Documents and any other documents necessary to consummate
the Transactions, Parent and Purchaser and each of their affiliates, associates and agents will hold
in confidence the information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this Agreement is terminated,
will deliver, and will cause their agents to deliver, to the Company all copies and any extracts or
summaries from such information then in their possession or control.
9. Directors.
10. The Company's obligations to appoint Purchaser's
designees to the Board of Directors shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder.  The Company shall promptly take all actions and shall include in the
Schedule 14D-9 (or an amendment thereto or an information statement pursuant to Rule 14f-1 if
Purchaser has not theretofore designated directors) such information with respect to the Company and
its officers and directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations under this Section.  Parent and Purchaser shall supply to the Company, and be solely
responsible for, any information with respect to themselves and their nominees, officers, directors
and affiliates required by Section 14(f) and Rule 14f-1.
11. Following the election or appointment of Purchaser's designees pursuant to
Section 1.03(a) and until the Effective Time, the approval of the Continuing Directors shall be
required to authorize (and such authorization shall constitute the authorization of the Company's
Board of Directors and no other action on the part of the Company, including any action by any other
directors of the Company, shall be required to authorize) any termination of this Agreement by the
Company, any amendment of this Agreement, any amendment of the certificate of incorporation or
bylaws of the Company inconsistent with this Agreement, any extension of time for performance of any
obligation or action hereunder by Parent or Purchaser, any waiver of any condition to Parent's
or Purchaser's obligations hereunder or any of the Company's rights hereunder or any material
transaction with Parent, Purchaser or any affiliate thereof (other than the loan transaction
contemplated in Section 6.12 hereof).
12. THE
MERGER
13. The Merger.
14. Effective Time.
15. Closing.
16. Effects of the Merger.
17. Certificate of Incorporation.
18. Bylaws.
19. Directors and Officers.
20. EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
21. Conversion of Company Common Stock.
22. each Share of Company Common Stock outstanding
immediately prior to the Effective Time (other than Shares to be canceled in accordance with Section
3.01 (a)(iii) below and Dissenting Shares (as defined in Section 3.02 below)) shall be converted
into the right to receive the Offer Price, net to the seller in cash, without interest (the
"Merger Consideration"), upon the surrender of the certificate representing such Share; and
23. each share of common stock of Purchaser outstanding immediately prior to the
Effective Time shall be converted into and become such number of fully paid and non-assessable
shares of common stock of the Surviving Corporation as is equal to (A) the aggregate number of
shares that would be subject to any Options (as hereinafter defined) that remain outstanding after
the Effective Time, if any, plus (B) one, and such shares shall constitute the only outstanding
shares of capital stock of the Surviving Corporation; and
24. each Share of Company Common Stock that is held by the Company in its
treasury and all Shares of Company Common Stock that are owned, directly or indirectly, by Parent or
the Company or any of their respective Subsidiaries shall automatically be canceled and retired and
shall cease to exist and shall not be converted into the right to receive the Merger Consideration
or any other consideration whatsoever.
25. At the Effective Time, holders of Company Common
Stock shall cease to be, and shall have no voting or other rights as, stockholders of the Company,
other than to receive the Merger Consideration and any dividend or other distribution with respect
to the Company Common Stock with a record date occurring prior to the Effective Time.  From and
after the Effective Time, there shall be no transfers on the stock transfer records of the Company
of any Shares of Company Common Stock that were outstanding immediately prior to the Effective
Time.
26. Dissenting Shares.
27. Payment for Shares in the Merger.
28. As soon as reasonably practicable after the Effective
Time, Parent will cause the Paying Agent to send to each holder of record of Shares of Company
Common Stock at the Effective Time (other than holders of Shares of Company Common Stock referred to
in Section 3.01(a)(iii)) a letter of transmittal (which shall specify that delivery shall be
effective, and risk of loss and title shall pass, only upon proper delivery of the Certificates
representing such Shares to the Paying Agent and will be in such form and have such other provisions
as Parent reasonably specifies) and instructions for use in effecting the surrender of
Certificate(s) for payment of the Merger Consideration for the Shares represented thereby.
29. Each holder of record of Shares of Company Common Stock that have been
converted into the right to receive the Merger Consideration will be entitled to receive, upon
surrender to the Paying Agent of one or more Certificates, together with a properly completed letter
of transmittal, the Merger Consideration in respect of each Share of Company Common Stock
represented by such Certificates.  Until so surrendered, each such Certificate shall represent after
the Effective Time for all purposes only the right to receive such Merger Consideration.  No
interest shall be paid or accrued on any amount payable upon surrender of any Certificate.
30. If any portion of the Merger Consideration is to be paid to a Person (as
herein defined) other than the Person in whose name the surrendered Certificate is registered, it
shall be a condition to such payment that the Certificate so surrendered shall be properly endorsed
or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to
the Paying Agent any transfer or other taxes required as a result of such payment to a Person other
than the registered holder of such Certificate or establish to the satisfaction of the Paying Agent
that such tax has been paid or is not payable.
31. Each of the Surviving Corporation and Parent shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this Article 3 such
amounts as it is required to deduct and withhold with respect to the making of such payment under
any provision of federal, state, local or foreign tax Law.  If the Surviving Corporation or Parent,
as the case may be, so withholds amounts, such amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares of Company Common Stock in respect of
which the Surviving Corporation or Parent, as the case may be, made such deduction and
withholding.
32. If any Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against any claim that may
be made against it with respect to such Certificate, the Paying Agent will pay, in exchange for such
lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the Shares
of Company Common Stock represented by such Certificate, as contemplated by this Article.
33. At the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of Shares of Company Common Stock.
If, after the Effective Time, Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration provided for, and in accordance with the
procedures set forth, in this Article 3.
34. Any portion of the Payment Fund (and any interest or other income earned
thereon) that remains unclaimed by the holders of Shares of Company Common Stock one year after the
Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged
Shares of Company Common Stock for the Merger Consideration in accordance with this Section 3.03
prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger
Consideration in respect of such Shares, without any interest thereon.  Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto shall be liable to any holder of Shares of
Company Common Stock for any amount paid to a public official pursuant to applicable abandoned
property, escheat or similar Laws.
35. The Surviving Corporation shall pay all charges and expenses of the Paying
Agent.
36. Stock Options.
37. Adjustments.
38. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
39. Organization and Qualification; Subsidiaries.
40. Capitalization.
41. Except as set forth in Section 4.02(a), there are no
outstanding  shares of capital stock or voting securities of the Company,  securities of
the Company convertible into or exchangeable for shares of capital stock or voting securities of the
Company or (iii) Options or other rights (including, without limitation, any subscriptions,
warrants, calls, stock appreciation rights, commitments or agreements of any character) to acquire
from the Company or other obligation of the Company to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting securities of the Company
(the items in clauses (i), (ii) and (iii) being referred to collectively as the "Company
Securities").  There are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company Securities.  Without limiting the
generality of the foregoing, neither the Company nor any of its Subsidiaries has adopted a
shareholder rights plan or similar plan or arrangement.
42. There are no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into securities having the right to vote) on any matters on
which stockholders of the Company may vote.
43. There are no contracts, voting, trusts or other agreements or understandings
(other than the Voting and Tender Agreement) to which the Company or any of its Subsidiaries is a
party or by which it is bound with respect to the voting of any shares of capital stock of the
Company or any of the Subsidiaries.
44. Corporate Authorization.
45. The Board of Directors has adopted such resolutions as are necessary so that
the provisions of Section 203 of the DGCL are inapplicable to the Transactions contemplated by this
Agreement.
46. Governmental Authorization.
47. Non-contravention.
48. SEC Reports; Financial Statements.
49. The consolidated financial statements of the Company
included or incorporated by reference in the Company SEC Reports, in each case:   comply as to
form in all material respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto,  have been prepared in accordance with U.S.
generally accepted accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes to such financial statements) and  fairly present in all material
respects the consolidated financial position of the Company and its consolidated Subsidiaries as of
the date thereof and the consolidated results of their operations and cash flows for the period then
ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).  Except
as set forth in the Company Disclosure Memorandum or in the Company SEC Reports and, except for
liabilities and obligations incurred under this Agreement or in connection with the Transactions,
neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether or  not accrued, absolute, contingent, due, to become due, determined, determinable,
asserted, unasserted or otherwise) which were material to the Company and its Subsidiaries, taken as
a whole, required to be set forth in the balance sheets or notes thereto in accordance with U.S.
generally accepted accounting principles.  The Company has not drawn down any amounts under the
Subordinated Loan Agreement (as hereinafter defined).
50. Information Supplied.
51. Absence of Certain Changes or Events.
52. Litigation.
53. Compliance with Laws.
54. Taxes.
55. Except as set forth in the Company Disclosure
Memorandum, no audits or other administrative proceedings or court proceedings are pending or, to
the knowledge of the Company, threatened with respect to Taxes or Tax Returns of the Company or its
Subsidiaries.
56. No deficiencies for any Taxes have been proposed, asserted or assessed in
writing against the Company or any of its Subsidiaries and neither the Company nor any of its
Subsidiaries has waived any statute of limitations in respect of the assessment and collection of
Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.
57. Except as set forth in the Company Disclosure Memorandum or in the Company
SEC Reports, none of the Company and its Subsidiaries is a party to any Tax allocation or sharing
agreement other than between or among themselves.
58. Except as set forth in the Company Disclosure Memorandum or in the Company
SEC Reports, none of the Company and its Subsidiaries has been a member of an affiliated group
filing a consolidated U.S. federal Tax Return.
59. "Taxes" shall mean any
and all taxes, charges, fees, levies or other assessments, including income, gross receipts, excise,
real or personal property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital, net worth, payroll,
profits, withholding, franchise, business, transfer and recording taxes, fees and charges, and any
other taxes, assessments or similar charges imposed by the Internal Revenue Service (the
"IRS") or any taxing authority (whether domestic or foreign, including any state, county,
local or foreign government or any subdivision or taxing agency thereof (including a United States
possession)) (a "Taxing Authority"), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest, whether paid or received,
fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments.  "Tax Return" shall mean any report,
return, document, declaration or other information or filing required to be supplied to any Taxing
Authority or jurisdiction (foreign or domestic) with respect to Taxes, including information
returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect
to or accompanying requests for the extension of time in which to file any such report, return,
document, declaration or other information.
60. No Liens for Taxes exist with respect to any assets or properties of the
Company or any of its Subsidiaries, except for statutory Liens for Taxes not yet due.
61. Neither the Company nor any of its Subsidiaries is a party to or is bound by
any Tax sharing, Tax indemnity or similar agreement with respect to Taxes pursuant to which it will
have any obligation to make any payment after the Closing Date. Neither the Company nor any of its
Subsidiaries has entered into a closing agreement pursuant to Section 7121 of the Code or any
predecessor provision or any similar provision of state, local or foreign Tax law.
62. The Company and its Subsidiaries have withheld and paid all material Taxes
required to be withheld in connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party.
63. No written claim has been made by a taxing authority in a jurisdiction where
the Company or any of its Subsidiaries does not file Tax Returns to the effect that the Company, or
any of its Subsidiaries is or may be subject to Taxation by that jurisdiction.
64. Neither the Company nor any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of Section 355(a)(1)(A)
of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
65. Employee Benefit Plans.
66. The Company has made available to Parent the most
recent determination letter, if any, of the IRS relating to each Employee Plan intended to qualify
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code").  Each
Employee Plan has been administered in all respects in compliance with its terms and with the
requirements of applicable Law, including but not limited to ERISA and the Code, except where the failure to be so administered would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company.
67. With respect to any Employee Plan covered by Title I of ERISA, no non-exempt
transaction prohibited by Section 406 of ERISA or Section 4975 of the Code has occurred which will
cause the Company to incur a liability under ERISA or the Code that would reasonably be expected to
have a Material Adverse Effect on the Company.  No "accumulated funding deficiency," as defined in
Section 412 of the Code, has been incurred with respect to any Employee Plan subject to such Section
412, whether or not waived.  All material contributions required to be made under any Employee Plan
as of the date hereof have been made or, if required by U.S. generally accepted accounting
principles, provided for on the Company's financial statements. No "reportable event," within the
meaning of Section 4043 of ERISA, and no event described in Section 4062 or 4063 of ERISA, has
occurred in connection with any Employee Plan that is subject to Title IV of ERISA.  Neither the
Company nor any of its Subsidiaries has incurred, or reasonably expects to incur prior to the
Effective Time, a liability (direct or indirect) under Title IV of ERISA arising in connection with
the termination of, or a complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA which would reasonably be expected to have a Material Adverse Effect on the
Company.  Neither the Company nor any of its Subsidiaries contributes to any "multiemployer plan,"
as defined in Section 3(37) of ERISA.  The assets of the Company are not now, nor will they after
the passage of time be, subject to any lien imposed under Code Section 412(n) by reason of a failure
of the Company to make timely installments or other payments required under Code Section 412 prior
to the Effective Time.
68. Except as specifically provided in this Agreement or as set forth in the
Company Disclosure Memorandum, no employee or former employee of the Company or any Subsidiary will
become entitled to any material bonus, severance or similar benefit (including acceleration of
vesting or exercise of an incentive award) as a result of the transactions contemplated hereby, and
there is no contract, plan or arrangement covering any employee or former employee of the Company or
any Subsidiary that, individually or collectively, could reasonably be expected to give rise to a
payment that would not be deductible by Parent, the Company or any Subsidiary by reason of Sections
280G or 162(m) of the Code.
69. With respect to each Employee Plan, where applicable, the Company has made
available to Parent true and complete copies of  the most recent IRS Form 5500 filing and
 the most recent financial statement.
70. There are no pending or, to the knowledge of the Company, threatened actions,
suits, proceedings, or claims against or relating to any Employee Plans other than routine benefit
claims by persons entitled to benefits thereunder.
71. Neither the Company nor its Subsidiaries has any obligation or liability
under any retiree life or retiree health plans that provide for continuing coverage for current or
former officers, directors, or employees of the Company or its Subsidiaries except (i) as may be
required under Part 6 of Title I of ERISA and at the sole expense of the participant or the
participant's beneficiary or (ii) a medical expense reimbursement account plan pursuant to Section
125 of the Code.
72. Neither the Company nor any Subsidiary has liability (contingent or
otherwise) under Section 4069 of ERISA by reason of a transfer of an underfunded pension
plan.
73. The Company is in substantial compliance with all obligations under Part 6 of
Title I of ERISA and Section 4980B of the Code arising in connection with its employment or
termination of employment of any person and their eligible beneficiaries
("COBRA").
74. Environmental Matters.
75. no written notice, demand, request for information,
citation, summons or order has been received, no penalty has been assessed, and no action, suit,
proceeding or, to the knowledge of the Company, investigation is pending or, to the knowledge of the Company, threatened by any Governmental Entity or
Person against the Company or any Subsidiary alleging a violation of a potential liability under any
Environmental Law;
76. the Company and its Subsidiaries are in compliance with all applicable
Environmental Laws and all Environmental Permits; and
77. no release, emission or discharge into the environment of Hazardous
Substances by the Company or, to the knowledge of the Company, by any other Person, has occurred or
is presently occurring on the real property owned, operated or leased by the Company that would
require notification, investigation or remediation under any Environmental Law.  No Hazardous
Substance has been disposed of by the Company except in compliance with applicable Environmental
Laws and, to the Company's knowledge, no Hazardous Substance resulting from the Company's activities
or operations has been disposed of by any other Person except in compliance with applicable
Environmental Laws.
78. As used herein,
79. "Environmental Laws" means any federal, state,
local or foreign law, regulation, rule, order, decree or requirement relating to:  pollution,
contamination, cleanup, preservation, protection, or reclamation of the environment;  public or
employee health or safety;  notification, investigation, monitoring, or remediation  of, or
other response to, a release of Hazardous Substances; or  the handling, use, manufacture,
distribution, treatment, storage, disposal, or recycling of or exposure to Hazardous Substances;
80. "Environmental Permits" means all permits, licenses, certificates or
approvals necessary for the operation of the business of the Company or any of its Subsidiaries as
currently conducted to comply with all applicable Environmental Laws; and
81. "Hazardous Substance" means any pollutant, contaminant, chemical,
petroleum or any fraction thereof, asbestos or asbestos-containing material, polychlorinated
biphenyls, or industrial, toxic, radioactive, infectious, disease-causing or hazardous substance,
material, waste or agent.
82. Intellectual Property.
83. To the knowledge of the Company, (i) the Owned
Intellectual Property and the Licensed Intellectual Property (in each case, as hereinafter defined),
and the use thereof in the operation of the business as conducted by the Company on the date hereof,
do not infringe upon any copyright, trademark or other Intellectual Property right of any Person,
and (ii) except as disclosed on Section 4.09 and Section 4.14 of the Company Disclosure Memorandum,
no claim, written or oral, has been asserted which threatens that the use of such Owned Intellectual
Property or Licensed Intellectual Property does or may infringe upon the intellectual property
rights of any Person.
84. Except as set forth in Section 4.14 of the Company Disclosure Memorandum, to
the knowledge of the Company, no Person is engaging in any activity that infringes in any material
respect upon the Owned Intellectual Property or the Company's rights in or to any Licensed
Intellectual Property.
85. Neither the Company nor any of its Subsidiaries is in breach of, or default
under, any term of any Material Contract relating to the Licensed Intellectual Property, and, to
Company's knowledge, no other party to any such Material Contract is in breach thereof or default
thereunder, except in each case for such breaches or defaults as would not, individually or in the
aggregate, have a material adverse effect on the Company's rights under such Material Contract.
86. Except as disclosed in Section 4.14 of the Company Disclosure Memorandum,
with respect to registrations and applications relating to any Owned Intellectual Property that have
been filed with or recorded by any Governmental Entity (including patent, trademark, copyright and
other registrations and applications), all of such registrations and applications are valid and in
full force and effect and all necessary registration, maintenance and renewal fees in connection
therewith have been paid and all necessary documents and certificates in connection therewith have
been filed with the relevant patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as applicable, for the purpose of maintaining the registrations or
applications for registration of such Owned Intellectual Property, except for such failures to pay
such fees or make such filings as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
87. To the knowledge of the Company, the Titles do not contain defamatory or
unlawful statements, or statements that violate any Person's privacy, publicity or similar right. To
the knowledge of the Company, the Company uses commercially reasonable efforts consistent with
industry practice to attempt to make the factual statements and data contained in the Titles true
and accurate in all material respects.
88. The Company owns or has the right to use, in each case as and to the extent
currently used in its business, all Intellectual Property that is material to the operation of the
business, including the (i) copyrights (including copyrights in and to the works published or under
contract to be published (collectively, the "Titles"), work-in-process, internet websites,
promotional and marketing materials, catalogs and brochures, graphic design materials, characters,
cartoons and other copyrightable works as used in the business), (ii) domain name registrations, and
(iii) trademarks (as applicable, "Owned Intellectual Property" or "Licensed Intellectual
Property") and, within the territory in which the Company publishes each Title, the Company has
all necessary rights with respect to the media in which such rights are currently exercised or under
contract to be exercised.  With respect to any and all Intellectual Property used in the business
which is not owned by the Company, the Company is the licensee of all rights necessary to publish
such copyrightable material in the Titles and to use such trademarks in connection with the Titles
except for excerpts from third party publications incorporated in the Titles by permission of the
copyright owner as to which the Company possesses all consents and permissions required by law from
the respective copyright owners for the publication, sale, distribution and other exploitation of
such copyrightable material as used in its business, except in each case for such invalidities which
would not, and such consents and permissions which if not possessed would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
89. For purposes of this Agreement, "Intellectual Property" shall mean
writings and other works, whether copyrightable or not, in any jurisdiction; registrations or
applications for registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; trademarks, tradenames, service marks, brand names, certification marks, trade dress,
domain names, imprints, logos and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any such registration
or application; inventions, discoveries and ideas, whether patentable or not, in any jurisdiction;
patents, applications for patents (including, without limitation, design patents, utility patents,
utility models and all divisions, continuations, continuations in part and renewal applications),
and any renewals, re-examinations, extensions, confirmations or reissues thereof, and inventors'
certificates and invention disclosures in any jurisdiction; nonpublic information, trade secrets,
electronic databases, computer software, know-how and confidential or proprietary information and
rights in any jurisdiction to limit the use or disclosure thereof by any Person; and any similar
intellectual property or proprietary rights.
90. Title and Condition of Properties.
91. Insurance.
92. Certain Contracts.
93. Each of the Material Contracts constitutes a valid and legally binding
obligation of the Company or its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and similar Laws of general applicability relating to or affecting creditors'
rights or by general equity principles), and is in full force and effect. There is no default under
any Material Contract so listed either by the Company or, to the Company's knowledge, by any other
party thereto, and no event has occurred that with the lapse of time or the giving of notice or both
would constitute a default thereunder by the Company or, to the Company's knowledge, any other
party, in any such case in which such default or event does or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
94. No party to any such Material Contract has given notice to the Company of or
made a claim against the Company with respect to any breach or default thereunder, in any such case
in which such breach or default does or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
95. Employment Matters.
96. (a)  Neither the Company nor any of its Subsidiaries is a party to any labor
or collective bargaining agreement, and no employees of the Company or any of its Subsidiaries are
represented by any labor organization. Within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a representation proceeding,
pending or, to the knowledge of the Company, threatened in writing to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or authority. Within the
preceding three years, to the knowledge of the Company, there have been no organization activities
involving the Company or any of its Subsidiaries in respect of any group of employees of the Company
or any of its Subsidiaries.
97. There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations, or material grievances or other material labor disputes pending or, to the knowledge
of the Company, threatened in writing against or involving the Company or any of its Subsidiaries.
There are no unfair labor practice charges, grievances, or complaints pending or, to the knowledge
of the Company, threatened in writing by or on behalf of any employee or group of employees of the
Company or its Subsidiaries that, if individually or collectively resolved against the Company or
its Subsidiaries, would have a Material Adverse Effect on the Company.
98. There are no complaints, charges, or claims against the Company or its
Subsidiaries pending or, to the knowledge of the Company, threatened to be brought or filed with any
Governmental Entity based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment of any individual by the Company or its
Subsidiaries.
99. Each of the Company and its Subsidiaries is in material compliance with all
laws and orders relating to the employment of labor, including all such laws and orders relating to
wages, hours, WARN, collective bargaining, discrimination, civil rights, safety and health, workers'
compensation, and the collection and payment of withholding and/or social security Taxes and any
similar Tax.
100. There has been no "mass layoff' or "plant closing" as defined by WARN in
respect of the Company or its Subsidiaries within the six months prior to the Closing.
101. Finders' Fees.
102. Opinion of Financial Advisor.
103. Voting Requirements.
104. Inventories; Receivables; Payables.
105. All accounts receivable of the Company and its Subsidiaries have arisen from
bona fide transactions in the ordinary course of business consistent with past practices and in
accordance with SEC regulations and generally accepted accounting principles applied on a consistent
basis.  The Company's reserve for returns and doubtful accounts is adequate and has been calculated
in a manner consistent with past practices.  Since June 30, 2001, neither the Company nor any of its
Subsidiaries has modified or changed in any material respects its sales practices or methods
including, without limitation, such practices or methods in accordance with which the Company and
any of its Subsidiaries sell goods, fill orders or record sales.
106. All accounts payable of the Company and its Subsidiaries are the result of
bona fide transactions in the ordinary course of business and have been paid or are not yet due and
payable.  Since June 30, 2001, the Company and its Subsidiaries have not altered in any material
respects their practices for the payment of such accounts payable, including the timing of such
payment.
107. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER
108. Organization, Standing and Corporate Power.
109. Corporate Authorization.
110. Governmental Authorization.
111. Non-contravention.
112. Information Supplied.
113. Litigation.
114. Finders' Fees.
115. COVENANTS
116. Conduct of Business by the Company.
117. Except with the prior written consent of Parent or as
contemplated or permitted by this Agreement or as expressly set forth in the Company Disclosure
Memorandum, from the date hereof until the Effective Time the Company shall not, and shall not
permit any of its Subsidiaries to:
118. make, declare, set aside or pay any dividend or other distribution with
respect to any shares of its capital stock, other than dividends and other distributions paid by any Subsidiary of the Company to the Company or any
wholly-owned Subsidiary of the Company;
119. adjust, split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock;
120. directly or indirectly repurchase, redeem or otherwise acquire any shares of
capital stock or other securities of, or other ownership interests in, the Company or any of its
Subsidiaries;
121. issue, deliver or sell any shares of any class or series of its capital stock
(including Company Common Stock), or any securities convertible into or exercisable or exchangeable
for shares of any class or series of its capital stock (including Company Common Stock, or any
rights, warrants or options to acquire any shares of Company Common Stock), other than issuances
pursuant to stock-based awards or Options that are outstanding on the date hereof and pursuant to the Company's 1998 Employee Stock Purchase Plan;
122. adopt or implement any amendment to its certificate of incorporation or
bylaws or other comparable organizational documents or any plan of consolidation, merger or
reorganization or amend the terms of its outstanding securities;
123. acquire or agree to acquire  by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other business organization or division
thereof or  any assets for a consideration exceeding $250,000 in any such case, except
purchases of inventory in the ordinary course of business consistent with past practice;
124. transfer, sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets, except sales of assets for
consideration not exceeding $250,000 in any such case and except for sales of inventory in the
ordinary course;
125. except for the items currently contracted for by the Company and the items
contemplated by the Company's capital expenditure budget made available to Parent, make or agree to
make any new capital expenditure or expenditures;
126. incur any indebtedness for borrowed money (whether or not available under a
credit line or agreement in effect on the date hereof, including, but not limited to, the
Subordinated Loan Agreement) or guarantee any such indebtedness of another Person, issue or sell any
debt securities or warrants or other rights to acquire any debt securities, or guarantee any debt
securities of another Person, except for the endorsement of checks in the normal course of business
and the extension of credit in the normal course of business, or  make any loans, advances or
capital contributions to, or investments in, any other Person, other
than to any direct or indirect wholly-owned Subsidiary;
127. enter into or adopt any new, or amend or renew any existing, Employee Plan,
or any collective bargaining agreement, other than as required by Law;
128. except to the extent required by the terms of written employment agreements
as in effect on the date of this Agreement, increase the compensation payable to or to become
payable to, or pension or other fringe benefits or perquisites to its present or former directors,
employees, officers or consultants, except for increases already committed to or increases in salary
consistent with the Company's past practices (of no more than 10%) made in connection with an
employee's annual review;
129. enter into any contracts of employment (other than contracts terminable by
the Company without liability immediately following the Closing) or any severance, retention or
similar agreement except for agreements with new employees entered into in the ordinary course of
business and providing for a term of less than one year and annual base and bonus compensation not
to exceed $100,000;
130. pay, agree to pay or award any employee bonuses other than those paid or
awarded consistent with past practice and up to a maximum of $25,000 per employee, or forgive any
officer or employee loan;
131. adopt any change, other than as required by the SEC, changes in U.S.
generally accepted accounting principles or applicable Law, in its accounting policies, procedures
or practices;
132. make any Tax election,  settle or compromise any material income
Tax liability;
133. pay, discharge, settle or satisfy any claims, litigation, arbitration,
liabilities or other controversies (absolute, accrued, asserted or unasserted, contingent or
otherwise), including the payment, discharge, settlement or satisfaction of any claims, litigation,
arbitration, liabilities or controversies of any nature relating to the Transactions contemplated
hereby, other than the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated financial statements (or the
notes thereto) included in the Company SEC Reports or incurred in the ordinary course of business
consistent with past practice, or waive any material benefits of, or agree to modify in any material
respect, any confidentiality, standstill or similar agreements to which the Company or any of its
Subsidiaries is a party;
134. cancel or terminate any material insurance policy naming the Company or any
Subsidiary as a beneficiary or loss payable payee;
135. revalue in any material respect any of its assets, including, without
limitation, writing down the value of inventory or writing-off notes or accounts receivable other
than in the ordinary and usual course of business consistent with past practice or as required by
generally accepted accounting principles;
136. (i) enter into any contract or agreement, other than in the ordinary and
usual course of business consistent with past practice, or amend in any material respect any of the
Material Contracts or the agreements referred to in Section 4.17; or (ii) enter into any contract,
agreement, commitment or arrangement providing for, or amend any contract, agreement, commitment or
arrangement to provide for, the taking of any action that would be prohibited hereunder;
137. enter into any agreement or arrangement that limits or otherwise restricts
the Company or any of its Subsidiaries or any successor thereto or that could, after the Effective
Time, limit or restrict the Surviving Corporation and its affiliates (including Parent) or any
successor thereto, from engaging or competing in any line of business or in any geographic
area;
138. adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than the Merger);
139. alter through merger, liquidation, reorganization, restructuring or in any
other fashion the corporate structure or ownership of any Subsidiary;
140. make or agree to make (whether or not in the ordinary course of business) any
commitment or investment or enter into any contract which obligates the Company or any of its
Subsidiaries to make payments exceeding $300,000;
141. renew or terminate any significant agreement relating to the distribution,
packaging or manufacture of the Company's Intellectual Property outside the United States;
or
142. enter into, or agree or commit to enter into, any agreement, contract,
commitment or arrangement that if completed would be in contravention of any of the
foregoing.
143. Other Actions.
144. Stockholder Meeting; Proxy Material; Merger Without Stockholder
Meeting.
145. The Company will, if required and at Parent's
request, as soon as practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement with the SEC and will use its reasonable best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to the satisfaction of
the staff.  The Company shall give Parent and its counsel the opportunity to review the Proxy
Statement and all amendments and supplements thereto, prior to their being filed with the SEC.  The
Company will notify Parent promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the SEC or its staff, on the other hand, with
respect to the Proxy Statement or the Merger.  If at any time prior to the Company Stockholder
Meeting there shall occur any event that should be set forth in an amendment or supplement to the
Proxy Statement, the Company will promptly prepare and mail to its stockholders such an amendment or
supplement.  The Company will not mail any Proxy Statement, or any amendment or supplement thereto,
to which Parent reasonably objects.
146. Access to Information.
147. Between the date hereof and the Effective Time, the Company shall furnish to
Parent and Purchaser (i) within five Business Days after the delivery thereof to management, such
monthly financial statements and data as are regularly prepared for distribution to the Company
management and (ii) at the earliest time they are available, such quarterly and annual financial
statements as are prepared for the Company's SEC filings, which (in the case of clause (ii)), shall
be in accordance with the books and records of the Company.
148. Except as required by Law, Parent will hold, and will
cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to
hold in confidence all documents and information concerning the Company or any of its Subsidiaries
furnished to Parent or its affiliates in connection with the transactions contemplated by this
Agreement in accordance with the terms of the letter agreement dated May 29, 2001 between the
Company and Parent (the "Confidentiality Agreement").
149. No Solicitation; Other Offers.
150. Notwithstanding the first sentence of Section
6.05(a), until the receipt of the Required Vote (as hereinafter defined), the Company may negotiate
or otherwise engage in substantive discussions with, and furnish nonpublic information to, any
Person in response to an unsolicited Acquisition Proposal by such Person if (i)  a majority of
the Board of Directors of the Company determines in good faith, after receiving the advice of a
nationally recognized financial advisor, that such Acquisition Proposal would reasonably be expected
to result in a Superior Proposal and, after consultation with and advice from outside legal counsel,
that the failure to take such action would reasonably be deemed to constitute a breach of its
fiduciary duties under applicable Law, and (ii) such Person executes a confidentiality
agreement in a form no less favorable to the Company than the Confidentiality Agreement (including
the standstill provisions).
151. Prior to providing any information to or entering into discussions or
negotiations with any person in connection with an Acquisition Proposal by such person, the Company
shall notify Parent of any Acquisition Proposal (including, without limitation, the material terms
and conditions thereof and the identity of the person making it) as promptly as practicable (but in
no case later than 24 hours) after its receipt thereof, and shall provide Parent with a copy of any
written Acquisition Proposal or amendments or supplements thereto, and shall thereafter inform
Parent on a prompt basis of the status of any discussions or negotiations with such a third party,
and any material changes to the terms and conditions of such Acquisition Proposal, and shall
promptly give Parent a copy of any information delivered to such person which has not previously
been reviewed by Parent.
152. Except as permitted by the second sentence of this
Section 6.05(d), neither the Board of Directors of the Company nor any committee thereof shall,
 withdraw or modify, or publicly propose to withdraw or modify, in a manner adverse to Parent,
its recommendation to its stockholders referred to in Section 1.02 hereof, or take any action not
explicitly permitted by this Agreement that would be inconsistent with, its approval of the Offer
and the Merger,  approve or recommend, or publicly propose to approve or recommend, any
Acquisition Proposal or  cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement, commitment or similar agreement related to any Acquisition
Proposal.  Notwithstanding the foregoing, until receipt of the Required Vote, the Board of Directors
of the Company shall be permitted (i) not to recommend to its stockholders acceptance of the
Offer and/or approval and adoption of this Agreement and the Merger, (ii) to withdraw, or
modify in a manner adverse to Parent, its recommendation to its stockholders referred to in
Section 1.02 hereof, (iii) to approve or recommend any Superior Proposal or (iv) to
terminate this Agreement in accordance with Section 8.01(c)(ii) hereof and in connection therewith
enter into an agreement with respect to such Superior Proposal, but only if (y) the Company has
received an Acquisition Proposal which the Board of Directors determines in good faith, after
receiving the advice of a nationally recognized financial advisor, constitutes a Superior Proposal
and (z) the Board of Directors of the Company determines in good faith, after consultation with and
advice from outside legal counsel, that the failure to take such action could reasonably be deemed
to constitute a breach of its fiduciary duties under applicable Law.  For purposes of this
Section 6.05, the parties agree that the scope of the fiduciary duty of the Board of Directors of
the Company shall not be deemed to be limited or constrained by virtue of the fact that certain
stockholders of the Company have agreed in the Voting and Tender Agreement to tender their shares to
the Purchaser and to vote in favor of the Merger, and in considering whether its failure to take any
action specified above would reasonably be deemed to be a breach of its fiduciary duties to the
stockholders of the Company under applicable Law, the Board of Directors shall be entitled to assume
that the Voting and Tender Agreement has been terminated.
153. For purposes of this Agreement:
154. Commercially Reasonable Efforts; Notification.
155. In furtherance of and without limiting the above
provisions, each of the Company and Parent shall, as promptly as practicable following the execution
and delivery of this Agreement,  file with the United States Federal Trade Commission (the
"FTC") and the United States Department of Justice (the "DOJ") the notification and
report required by the HSR Act (but in no event later than five (5) Business Days after the date of
this Agreement) and, if so requested by the other such party, request early termination of the
waiting period thereunder and  file with the relevant Governmental Entities in other
jurisdictions all other antitrust filings, if any, required for consummation of the transactions
contemplated hereby under any applicable Laws and regulations and, in each case, any supplemental
information requested in connection therewith pursuant to the HSR Act or such other Laws or
regulations.  Any such notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act and other relevant Law or regulation.
Each of the Company and Parent shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any filing or submission
which is necessary under the HSR Act and other relevant Law or regulation.  The Company and Parent
shall cooperate and keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC, the DOJ, or any other Governmental
Entity, and shall comply promptly with any such inquiry or request.The
Company and Parent shall use commercially reasonable efforts to permit each other party (or its
respective counsel) to review any material communication given by it to, and consult with each other
in advance of any meeting or conference with, the FTC, the DOJ or any such other Governmental Entity
or, in connection with any proceeding by a private party, with any other Person, and to the extent
permitted by the FTC, the DOJ or other such Governmental Entity or other Person, give the other
party (or its respective counsel) the opportunity to attend and participate in such meetings and
conferences. The parties hereby agree that neither party will be required to take any action
including, without limitation, the proposing, negotiating, committing to and effecting, by consent
decree, hold separate order or otherwise, the sale, divestiture or disposition of assets or
businesses of Parent (or any of its Subsidiaries) or otherwise taking or committing to take actions
that after the Closing Date would limit Parent or its Subsidiaries' freedom of action with respect
to, or its ability to retain, one or more of its Subsidiaries' businesses, product lines or assets.
Notwithstanding the foregoing, Parent agrees that, if necessary to eliminate an impediment under any
antitrust law that may be asserted by a U.S. governmental antitrust authority to the transactions
contemplated hereby, Parent will consent to the reasonable sale or disposition of one or more of the
Company's Titles; provided, however, that (a) Parent shall not be required to consent
to the divestiture of any of its or its affiliates' pre-Closing assets, (b) the divestiture of
Titles that produced aggregate net revenues for the 12-month period ended June 30, 2001 of up to
$2.0 million shall be deemed reasonable within the meaning of this sentence, and the divestiture of
Titles in excess of such amount shall not be required, and (c) Parent shall not be required to
consent to any divestiture that must be consummated prior to the Effective Time.
156. Subject to the terms and conditions of this Agreement, in furtherance and not
in limitation of the covenants of the parties contained in Sections 6.06(a) and 6.06(b), if any
administrative or judicial action or proceeding, including any proceeding by a Governmental Entity
or a private party, is instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any applicable Law, each of the parties shall
cooperate in all respects with each other and use its respective commercially reasonable efforts in
order to contest and resist any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts consummation of the
transactions contemplated by this Agreement.
157. Parent and Purchaser, on the one hand, and the
Company, on the other hand, each hereby agrees promptly to provide such information necessary to the
preparation of the Schedule 14D-9 and the Offer Documents, respectively, which the respective party
responsible therefor shall reasonably request.
158. The existence of the conditions set forth in Section 7.01 and clauses (a) and
(b) of Annex A shall not limit or diminish Parent's or Purchaser's obligations pursuant to
this Section 6.06 or relieve Parent or Purchaser of any liability or damages that may result from
its breach of its obligations under this Section 6.06.
159. Indemnification and Insurance.
160. "Corporate Agent" shall mean any person who is
or was at any time prior to and including the Effective Time  a director or officer of the
Company, or  a director, officer, trustee, employee or agent of any Other Enterprise, serving
as such at the request of the Company, or the legal representatives of any such director, officer,
trustee, employee or agent.
161. "Indemnified Party" shall mean individually, and "Indemnified
Parties" shall mean collectively, the person or persons entitled to be indemnified, defended and
held harmless under this Section 6.07 or the legal representative of such person or persons.
162. "Other Enterprise" shall mean any domestic or foreign corporation,
other than the Company, and any domestic or foreign partnership, joint venture, sole proprietorship,
trust, or other enterprise (including any employee benefit plan), whether or not for profit.
163. Parent and Purchaser agree that all rights to indemnification existing in
favor of the Indemnified Parties as provided in the certificate of incorporation and bylaws of the
Company and its Subsidiaries as in effect as of the date hereof with respect to matters occurring
prior to the Effective Time shall  survive the Merger and shall continue in full force and effect
for a period  of not less than the statutes of limitations applicable to such matters, and Parent
agrees  to cause the Surviving Corporation to comply fully with its obligations hereunder and
thereunder.  The certificate of incorporation and bylaws of the Surviving Corporation shall not be
amended, repealed or otherwise modified in any manner adverse to persons who, as of the date hereof,
are Indemnified Parties, without the prior written consent of any such persons, for a period of six
years from and after the Effective Time and shall contain indemnification and  exculpation
provisions which  are no less favorable to the Indemnified  Parties  than those provisions contained
in the Company's certificate of incorporation and bylaws as in effect immediately prior to the date
of this Agreement.
164. For six years after the Effective Time, Parent shall maintain, or cause the
Surviving Corporation to maintain, with respect to matters occurring prior to the Effective Time,
policies of directors and officers' liability insurance comparable to those currently maintained by
the Company for the benefit of persons currently covered by the Company's directors' and officers'
liability insurance policies (except to the extent any provisions in such insurance are no longer
generally available in the market), provided that in no event shall the Surviving Corporation be
required in order to maintain such directors' and officers' liability insurance policies to expend
in any one year an amount in excess of 200% of the aggregate annual premiums currently paid by the
Company for such insurance, and provided further, that if the annual premiums of such insurance
coverage exceed such amount, the Surviving Corporation shall only be
obligated to obtain as much coverage as can be obtained for a cost not exceeding such amount.
165. In the event of any suit, action, proceeding or investigation referred to in
Section 6.07(a) above,  the Company or the Surviving Corporation, as applicable, shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company or the Surviving Corporation; provided, however, that neither
the Company nor the Surviving Corporation shall be obligated pursuant to this Section 6.07(d) to pay
the fees and disbursements of more than one counsel for all Indemnified Parties in any single action
except to the extent that, in the opinion of counsel for the Indemnified Parties, two or more of
such Indemnified Parties have conflicting interests in the outcome of such action, and  the
Company and the Surviving  Corporation will cooperate in the defense of any such matter; and
provided, however, that neither the Company nor the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be unreasonably
withheld).
166. In the event Parent, the Surviving Corporation or any of their successors or
assigns merges into any other Person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or transfers all or substantially all of its properties and
assets to any person, then and in each such case, proper provisions shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the
obligations set forth in this Section 6.07.  In the event the Surviving Corporation transfers
any material portion of its assets, in a single transaction or in a series of transactions, Parent
will either guarantee the indemnification obligations referred to in Section 6.07(a) or take
such other action to ensure that the ability of the Surviving Corporation to satisfy such
indemnification obligations will not be diminished in any material respect.
167. This Section 6.07 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Surviving Corporation and the
Indemnified Parties, and shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
168. Employee Benefits.
169. Each Company Employee shall be given full credit for
all service with the Company and its Subsidiaries and their respective predecessors under any plans
or arrangements providing vacation, sick pay, severance, retirement, pension or retiree welfare
benefits maintained by Parent or the Surviving Corporation or any of their respective affiliates in
which such Company Employees participate solely for purposes of vesting, eligibility to participate
and seniority. For purposes of clarification, prior service shall not
be credited for benefit accrual under any pension plan or retiree welfare plan.
170. In the event of any change in the welfare benefits provided to Company
Employees following the Effective Time that become effective in the plan year that includes the
Effective Time, Parent shall or shall cause the Surviving Corporation to  waive all limitations
as to pre-existing conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Company Employees under any such welfare benefits to the
extent that such conditions, exclusions or waiting periods would not apply in the absence of such
change and  credit each Company Employee with any co-payments and deductibles paid prior to any
such change in satisfying any applicable deductible or out-of-pocket requirements after such change
for the relevant plan year.
171. Without limiting any of its other obligations hereunder, Parent shall cause
all of the agreements with individuals listed in Section 4.12 of the Company Disclosure Memorandum
to be honored in accordance with their terms and shall assume the obligations of the Company and its
Subsidiaries thereunder.
172. Public Announcements.
173. Further Assurances.
174. Notices of Certain Events.
175. any representation or warranty made by it contained
in this Agreement that is qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified becoming untrue or inaccurate in any
material respect at or prior to the Effective Time;
176. the failure by it to perform, or comply with, in any material respect, any of
its obligations, covenants, or agreements contained in this Agreement, which failure, either
individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse
Effect;
177. the Company obtaining knowledge of a material breach by Parent, or Parent
obtaining knowledge of a material breach by the Company, of their respective representations,
warranties or covenants hereunder of which the breaching party has not already given notice pursuant
to clauses (a) or (b) above;
178. any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the transactions contemplated
by this Agreement;
179. any notice or other communication from any Governmental Entity in connection
with the transactions contemplated by this Agreement;
180. any actions, suits, claims, investigations, orders, decrees, complaints or
proceedings commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting the Company, Parent or any of their respective Subsidiaries that relate to the
consummation of the transactions contemplated by this Agreement; or
181. the occurrence of any other event which would reasonably be likely to have a
Material Adverse Effect on the Company or cause any condition set forth in Annex A hereto to
be unsatisfied in any material respect at any time prior to consummation of the Offer; provided,
however, that the delivery of any notice pursuant to this Section 6.11 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
182. Pay-
off of Credit Facilities.
183. CONDITIONS TO THE
MERGER
184. Conditions to Obligations of Each Party.
185. Purchaser shall have purchased Shares of Company
Common Stock pursuant to the Offer; provided that this condition shall be deemed to have been
satisfied with respect to the obligation of Parent and Purchaser to effect the Merger if Purchaser
fails to accept for payment or pay for Shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer in violation of the terms of the Offer or of this Agreement;
186. if required by applicable Law, this Agreement shall have been approved and
adopted by the required vote of the stockholders of the Company in accordance with the DGCL; and
187. no statute, rule or regulation shall have been enacted, promulgated or deemed
applicable to the Merger by any Governmental Entity which prevents the consummation of the Merger or
makes the consummation of the Merger unlawful, and no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent jurisdiction preventing the
consummation of the Merger shall be in effect; provided, however, that each of the parties shall
have used commercially reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any injunction or other order that may be
entered.
188. TERMINATION, AMENDMENT AND
WAIVER
189. Termination.
190. by mutual written consent of Parent, Purchaser and
the Company;
191. by either the Company (by action of the Continuing Directors only following
the purchase of Shares of Company Common Stock pursuant to the Offer) or Parent:
192. if any court or Governmental Entity shall have issued an order (other than a
temporary restraining order), decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their best efforts,
subject to Section 6.06 hereof, to lift) restraining, enjoining, prohibiting or otherwise making
illegal, the Merger and such order, decree, ruling or other action shall have become final and
nonappealable; or
193. if (x) the Offer shall have expired without any Company Common Stock being
purchased therein or (y) Parent or Purchaser shall not have accepted for payment all Company Common
Stock tendered pursuant to the Offer by December 31, 2001, provided that the right to terminate this
Agreement under this Section 8.01(b)(ii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of
Parent or Purchaser to purchase the Company Common Stock pursuant to the Offer;
194. by the Company:
195. if Parent and/or Purchaser fails to commence the
Offer as provided in Section 1.01 hereof; provided, that the Company may not terminate this
Agreement pursuant to this Section 8.01(c)(i) if the Company is at such time in breach of its
obligations under this Agreement such as to  cause a Material Adverse Effect on the Company or
 prevent or materially hinder or delay the purchase of the Company Common Stock pursuant to the
Offer or the Merger;
196. in connection with entering into a definitive
agreement with respect to a Superior Proposal, as permitted by the second sentence of Section
6.05(d), if (x) the Company provides written notice to Parent and Purchaser of the material terms
and conditions of the Acquisition Proposal which the Board of Directors determines in good faith,
after consultation with and advice from a nationally recognized financial advisor and its outside
legal counsel, constitutes a Superior Proposal, attaching the most current version of such
Acquisition Proposal with respect thereto and identifying the Person making such Acquisition
Proposal, (y) after five Business Days immediately following delivery of such written notice, the
Board of Directors reasonably determines, based upon the advice of a nationally recognized financial
advisor, that any proposal made by Parent and Purchaser in writing with respect to the Offer, within
such time period, supplementing the terms and conditions of the Offer, is not at least as favorable
to the Company and the Company's stockholders as the terms and conditions of such Acquisition
Proposal specified in (i) above, and (z) upon entering into a definitive agreement with respect to a
Superior Proposal, the Board of Directors causes the Company simultaneously to pay Parent the
Termination Fee and Expenses (as hereinafter defined);
197. if Parent or Purchaser shall have made a material misrepresentation or have
breached in any material respect any of their respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach cannot be or has not been cured, in all
material respects, within 15 days after the giving of written notice to Parent or Purchaser, as
applicable;
198. by Parent:
199. if, due to an occurrence, not resulting from a breach
by Parent or Purchaser of their obligations hereunder, which makes it impossible to satisfy any one
or more of the conditions set forth in Annex A hereto, Parent or Purchaser shall have failed
to commence the Offer on or prior to five Business Days following the date of the initial public
announcement of the Offer;
200. if, prior to the purchase of Shares of Company Common Stock pursuant to the
Offer, the Company shall have breached any representation, warranty, covenant or other agreement
contained in this Agreement which  would give rise to the failure of a condition set forth in
paragraph (d) or (e) of Annex A hereto and  cannot be or has not been cured, in all
material respects, within 15 days after the giving of written notice to the Company;
201. if, whether or not permitted to do so,  the Board of Directors of the
Company shall have withdrawn or modified in a manner adverse to Parent or Purchaser (or shall have
failed, at the request of Parent, to reaffirm) its approval or recommendation of the Offer, the
Merger or the Agreement, or approved or recommended any Acquisition Proposal or  the Company
shall have entered into any agreement with respect to any Acquisition Proposal, including a Superior
Proposal entered into in accordance with the second sentence of Section 6.05(c) of this
Agreement.
202. Effect of Termination.
203. Fees and Expenses.
204. If (x) Parent terminates this Agreement pursuant to Section 8.01(d) (iii) or
(y) the Company terminates this Agreement pursuant to Section 8.01(c)(ii), then, in any such case,
the Company shall pay, or cause to be paid to Parent, at the time of termination, a termination fee
in the amount of $4,000,000 (the "Termination Fee") plus an amount equal to Parent's actual
and reasonably documented out-of-pocket expenses incurred by Parent after the date hereof in
connection with the Offer, the Merger, this Agreement and the consummation of the Transactions,
including, without limitation, the fees and out-of-pocket expenses payable to all banks, investment
banking firms and other financial institutions and persons and their respective agents and counsel
incurred in connection with acting as Parent's financial advisor with respect to, or arranging or
committing to provide or providing any financing for, the Transactions up to an aggregate of
$2,000,000 (the "Expenses"). In addition, if this Agreement is terminated by Parent prior to
consummation of the Offer, by reason of the non-fulfillment of any of the conditions set forth in
paragraph (d), (e) and (g) of Annex A and at the time of such termination, Parentand
Purchaser are not in material breach of their respective obligations under this Agreement, then the
Company shall pay to Parent, at the time of termination, the Expenses, and, if the Company shall
thereafter, within 18 months after such termination, announce its intention to enter into an
agreement with respect to an Acquisition Proposal and the Company subsequently consummates the
transaction(s) contemplated by such agreement, then the Company shall pay the Termination Fee
simultaneously with such consummation. Any payments required to be made pursuant to this Section
8.03(b) shall be made by wire transfer of same day funds to an account designated by
Parent.
205. The Company shall pay all Taxes, such as (a) transfer, stamp and documentary
Taxes or fees and (b) sales, use, gains, real property transfer and other or similar Taxes or fees,
incident to preparing for, entering into and carrying out this Agreement and the consummation of the
Transactions contemplated hereby.
206. The Company acknowledges that the agreements contained in Section 8.01(b) are
an integral part of the Transactions contemplated by this Agreement, and that, without these
agreements Parent would not have entered into this Agreement; accordingly, if the Company fails to
promptly pay the amount due pursuant to Section 8.01(b), and, in order to obtain such payment,
Parent commences a suit which results in a judgment against the Company for the fee set forth in
this Section 8.01(b), the Company shall pay to Parent its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest from the date of termination of this
Agreement on the amounts owed at the prime rate of Citibank N.A. in effect from time to time
during such period plus two percent.
207. Amendment.
208. Extension; Waiver.
209. Procedure for Termination, Amendment, Extension or
Waiver.
210. MISCELLANEOUS
211. Non-Survival of Representations and Warranties.
212. Notices.
213. No Waivers.
214. Successors and Assigns.
215. Governing Law.
216. Jurisdiction.
217. WAIVER OF JURY TRIAL.
218. Counterparts; Effectiveness; Benefit.
219. Entire Agreement.
220. Captions.
221. Severability.
222. Specific Performance.
223. Interpretation.
224. Company Disclosure Memorandum.
225. Parties in Interest.
226. Obligation of Parent and the Company.
227. Certain Definitions.
228. The term "affiliate," as applied to any
Person, means any other Person directly or indirectly controlling, controlled by, or under common
control with, that Person; for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by," and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
229. A Person  will be deemed to "beneficially" own securities if such
Person would be the beneficial owner of such securities under Rule 13d-3 under the Exchange Act,
including securities which such Person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time).
230. The term "Business Day" means any day on which commercial banks are
open for business in New York, New York other than a  Saturday, a Sunday or a day observed as a
holiday in New York, New York under the Laws of the State of New York or the federal Laws of the
United States.
231. The term "knowledge" or any similar formulation of "knowledge"
means, with respect to the Company, the actual knowledge of Marc Mikulich, Richard Swadley, Mark
Reichenthal and the Company's executive officers after due inquiry, and with respect to the Parent,
the actual knowledge of the Parent's executive officers after due
inquiry.
232. The term "Law" means any foreign or domestic law, regulation,
judgement, order, writ, injunction, decree, rule, ordinance, award, stipulation, statute, judicial
or administrative doctrine, rule or regulation entered by a Governmental Entity or
arbitrator.
233. The term "Person" includes individuals, corporations, partnerships,
trusts, limited liability companies, associations, unincorporated organizations, joint ventures,
other entities, groups (which term shall include a "group" as such term is defined in Section
13(d)(3) of the Exchange Act), labor unions or Governmental Entities.
234. The term "Required Vote" means the affirmative vote of the holders of
a majority of the issued and outstanding Shares of the Company Common Stock entitled to
vote.
235. The term "Significant Subsidiaries" means Macmillan General Reference
USA Inc.



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.

| | HUNGRY MINDS, INC.

By:	/s/ John J. Kilcullen	Name: 	John J. Kilcullen
	Title:	Chairman and Chief Executive Officer           
| | ------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                               
| | JOHN WILEY & SONS, INC.

By:	/s/ Timothy B. King	Name: Timothy B. King
	Title: Senior Vice President, Planning and Development
| | HMI ACQUISITION CORP.

By:	/s/ Timothy B. King	Name: Timothy B. King
	Title:	President                                        

ANNEX A

CONDITIONS TO THE OFFER

Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Agreement and Plan of Merger (the "Agreement") of which this Annex A
is a part.  Notwithstanding any other provision of the Offer, Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Exchange Act (relating to the obligation of Purchaser to pay for or
return tendered Shares of Company Common Stock promptly after termination or withdrawal of the
Offer), pay for any tendered Shares of Company Common Stock and (subject to any such rules or
regulations) may delay the acceptance for payment of or the payment for any tendered Shares of
Company Common Stock and (except as provided in the Agreement) amend or terminate the Offer and not
accept for payment any tendered shares if  there are not validly tendered (and not properly
withdrawn) prior to the expiration date for the Offer that number of Shares of Company Common Stock
which, when added to any such Shares, if any, beneficially owned by Parent or any of its affiliates,
will at least satisfy the Minimum Condition, (ii) any applicable waiting period under the HSR Act
has not expired or been terminated prior to the expiration of the Offer or (iii) at any time on or
after the date of the Agreement and before the expiration date of the Offer, any of the following
events shall have occurred and be continuing:

(a)	there shall be threatened or pending any suit, action or proceeding
(i) seeking to prohibit or impose any material limitations on Parent's or Purchaser's ownership
or operation (or that of any of their respective subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, (ii) seeking to compel Parent or Purchaser
or their respective subsidiaries and affiliates to dispose of or hold separate any material portion
of the business or assets of the Company or Parent and their respective subsidiaries, in each case
taken as a whole, (iii) challenging the acquisition by Parent or Purchaser of any Shares of Company
Common Stock pursuant to the Offer or the Merger, (iv) seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other Transactions, (v)
seeking to obtain from the Company any damages that would be reasonably likely to have a Material
Adverse Effect on the Company, (vi) seeking to impose material limitations on the ability of
Purchaser, or rendering Purchaser unable, to accept for payment, pay for or purchase some or all of
the Shares of Company Common Stock pursuant to the Offer and the Merger, (vii) seeking to impose
material limitations on the ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares of Company Common Stock, including, without limitation, the right to vote
the Shares of Company Common Stock purchased by it on all matters properly presented to the
Company's stockholders, or (viii) which otherwise is reasonably likely to have a Material Adverse
Effect on the Company or, as a result of the Transactions, a Material Adverse Effect on the Parent
and its subsidiaries; provided that, any such suit, action or proceeding which is
instituted or threatened by a Person that is not a Governmental Entity has a reasonable likelihood
of success on the merits; or

(b)	there has been any statute, rule, regulation, injunction, order or decree
enacted, enforced, promulgated,  issued or deemed applicable to the Offer or the Merger by any
Governmental  Entity that results in any of the consequences referred to in clauses (i) or (ii) of
paragraph (a) above; or

(c)	the Agreement shall have been terminated in accordance with its terms or
any event shall have occurred which gives the Parent or Purchaser the right to terminate the
Agreement or not consummate the Merger; or

(d)	any representation or warranty of the Company contained in the Agreement
(disregarding all qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect or any similar standard or qualification) shall not be true and correct in
all respects as of the date of consummation of the Offer, as if made at and as of such time (except
to the extent that any such representation or warranty, by its terms, is expressly limited to a
specific date, in which case such representation or warranty shall not be true and correct as of
such date), and the failure of such representation or warranty to be true and correct would
reasonably be expected to have a Material Adverse Effect on the Company, provided that such breach
is incapable of being cured or has not been cured prior to the Initial Expiration Date (or such
later date upon which the Offer shall expire in accordance with Section 1.01(b) of the
Agreement); or

(e)	the Company shall have failed to perform or comply with any of its
obligations, covenants or agreements contained in the Agreement required to be performed or complied
with at or prior to the date of determination, and such failure would reasonably be expected to have
a Material Adverse Effect on the Company, provided that such failure to perform or comply with is
incapable of being cured or has not been cured prior to the Initial Expiration Date (or such later
date upon which the Offer shall expire in accordance with Section 1.01(b) of the Agreement);
or

(f)	there shall have occurred and be continuing (i)any general suspension of
trading in, or limitation on prices for, securities on any national securities exchange or in the
over-the-counter market in the United States (other than a shortening of trading hours or any
coordinated trading halt triggered solely as a result of a specified increase or decrease in a
market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States whether or not mandatory, (iii) any limitation (whether or not
mandatory) by any Governmental Entity on, or other event that materially and adversely affects, the
extension of credit by banks or other lending institutions, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly involving the United
States, (v) any change in the general financial bank or capital market conditions which has a
material adverse effect on the ability of financial institutions in the United States to extend
credit or syndicate loans, or (vi) in the case of any of the foregoing existing at the time of the
execution of the Agreement, a material acceleration or worsening thereof; or

(g)	the Board of Directors of the Company or any committee thereof (i) shall
have withdrawn or modified in a manner adverse to Parent or Purchaser (including by amendment of the
Schedule 14D-9) its approval or recommendation of the Offer, the Merger or the Agreement or
recommended or approved any Acquisition Proposal, (ii) upon request of the Purchaser, shall fail to
reaffirm its approval recommendation of the Offer, the Merger Agreement, or the Merger; or
(iii)shall have resolved to do any of the foregoing;

(h)	a Material Adverse Effect on the Company shall have occurred after the
date hereof;

(i)	Parent and the Company shall have agreed that Purchaser shall terminate
the Offer or postpone the acceptance for payment of or payment for Shares of Company Common Stock
thereunder;

(j)	the consent of the lenders under the Company's credit agreement referred
to in clause (i) of Section 6.12 hereof to the consummation of the Offer or the Merger shall not
have been obtained as of the close of business on the day prior to the date the Offer is
consummated; and

(k)	the consolidated funded debt of the Company and its Subsidiaries, computed
in accordance with U.S. generally accepted accounting principles applied on a consistent basis and
in accordance with the Company's past practice, shall be greater than $92,500,000 in the aggregate
as of the close of business on the date the Offer is consummated.  For the purposes of this
paragraph (k), "consolidated funded debt of the Company and its Subsidiaries" shall mean outstanding
indebtedness under the $110,000,000 Credit Agreement, dated as of July 30, 1999, as may be amended
from time to time, by and between the Company and the lenders party thereto, the Subordinated Loan
Agreement, dated as of May 7, 2001, by and between the Company and International Data Group, Inc.
(the "Subordinated Loan Agreement"), any agreement for the factoring of the Company's accounts
receivable, and any other outstanding long-term, short-term or subordinated consolidated funded debt
of the Company and its Subsidiaries.  The Company shall provide Parent with an opportunity to verify
the Company's computation of consolidated funded debt for purposes of this paragraph (k);

which in the good faith judgment of Parent or Purchaser, in any such case,  and
regardless of the circumstances giving rise to such condition, and provided that Purchaser and
Parent have performed all of their respective obligations under Section 6.06 herein, makes it
inadvisable to proceed with the Offer or the acceptance for payment of or payment for the Company
Common Stock.

The foregoing conditions (x) are for the sole benefit of Parent and Purchaser
and (y) may be asserted by Parent and Purchaser regardless of the circumstances giving rise to such
condition, and, except for the Minimum Condition, and otherwise subject to the terms of the
Agreement, may be waived by Parent and Purchaser, in whole or in part, at any time and from time to
time, in the sole discretion of Parent and Purchaser.  The failure of Parent or Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances, and each right shall be deemed a
continuing right which may be asserted at any time and from time to time.   Should the Offer be
terminated pursuant to the foregoing provisions, all tendered Shares of Company Common Stock not
theretofore accepted for payment pursuant thereto shall forthwith be returned to the tendering
stockholders.