SCHEDULE 14A INFORMATION

           PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

Filed by the Registrant |X|

Filed by a party other than the Registrant |_|

Check the appropriate box:

|_| Preliminary Proxy Statement      |_| Confidential, for Use of the Commission
                                         Only (as permitted by
                                          Rule 14a-6(e)(2))
|X| Definitive Proxy Statement

|_| Definitive Additional Materials

|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

                            4Kids Entertainment, Inc.
                        ---------------------------------
                              (Name of Registrant)

Payment of Filing Fee (Check the appropriate box):

|X| No fee required.

|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

      (1) Title of each class of securities to which transaction applies:

      (2) Aggregate number of securities to which transaction applies:

      (3) Per unit  price  or other  underlying  value of  transaction  computed
pursuant to Exchange Act Rule 0-11(set  forth the amount on which the filing fee
is calculated and state how it was determined):

      (4) Proposed maximum aggregate value of transaction:

      (5) Total fee paid:

|_| Fee paid previously with preliminary materials:

|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was paid
previously.  Identify the previous filing by registration  statement  number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:


<PAGE>

                            4KIDS ENTERTAINMENT, INC.
                           1414 Avenue of the Americas
                            New York, New York 10019

                                                                  April 20, 2001

Dear Shareholder:

      You  are  cordially  invited  to  attend  the  4Kids  Entertainment,  Inc.
("4Kids") Annual Meeting of Shareholders to be held at 10:00 a.m. (New York City
time) on May 23, 2001, at JP Morgan Chase, 270 Park Avenue,  New York, New York,
Conference Room A, 11th Floor (the "Annual Meeting").

      The  purposes  of the  Annual  Meeting  are to (i) elect  directors,  (ii)
consider and vote upon a proposal to approve the 4Kids Entertainment,  Inc. 2001
Stock Option Plan,  (iii) ratify the  appointment  of auditors and (iv) transact
such other business as may properly come before the meeting and any  adjournment
or  postponements  thereof.  These matters are described in the formal Notice of
Annual Meeting of Shareholders and the accompanying Proxy Statement.

      Your  Board  of  Directors  recommends  a vote  "FOR"  each of the  listed
nominees for Director and "FOR" each of the other proposals.

      Included  with the Proxy  Statement is a copy of 4Kids'  Annual Report for
the fiscal year 2000.  We encourage you to read the Annual  Report.  It includes
information on 4Kids'  business,  markets and products as well as 4Kids' audited
financial statements.

      Your vote is very important. We hope you will find it convenient to attend
the Annual Meeting in person.  Whether or not you are personally able to attend,
it is important that your shares be represented at the meeting. Accordingly, you
are requested to sign,  date and return the enclosed proxy  promptly.  If you do
attend the Annual  Meeting  you may still  revoke your proxy and vote in person.
Your cooperation is greatly appreciated.

                                           Sincerely,

                                           /s/ Alfred R. Kahn
                                           ------------------------------------
                                           ALFRED R. KAHN
                                           Chairman of the Board of Directors,
                                           Chief Executive Officer


<PAGE>

                           4KIDS ENTERTAINMENT, INC.
                          1414 Avenue of the Americas
                            New York, New York 10019

                                   ----------

                  NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
                           to be held on May 23, 2001

                                   ----------

      NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of  Shareholders  (the
"Annual  Meeting")  of  4Kids  Entertainment,   Inc.,  a  New  York  corporation
("4Kids"), will be held at JP Morgan Chase, 270 Park Avenue, New York, New York,
Conference  Room A, 11th Floor,  on Wednesday,  May 23, 2001, at 10:00 a.m. (New
York City time) for the purpose of  considering  and acting  upon the  following
matters as set forth in the accompanying Proxy Statement:

            1. Election of four directors to serve until the next Annual Meeting
      and until their successors are duly elected and qualified;

            2. Approval of the 4Kids Entertainment, Inc. 2001 Stock Option Plan;

            3.  Ratification  of the  appointment  of  Deloitte  & Touche LLP as
      auditors for 4Kids for the fiscal year ending December 31, 2001; and

            4. The  transaction  of such other  business  as may  properly  come
      before the meeting and any adjournment or postponements thereof.

      The Board of Directors has fixed the close of business on April 5, 2001 as
the record date for the Annual  Meeting and only  holders of shares of record at
that time are entitled to notice of, and to vote at, the Annual  Meeting and any
adjournment or postponements thereof.

                                           By Order of the Board of Directors,

                                           /s/ Alfred R. Kahn
                                           ------------------------------------
                                           ALFRED R. KAHN
                                           Chairman of the Board of Directors,
                                           Chief Executive Officer

April 20, 2001

    ------------------------------------------------------------------------
    |    ALL  SHAREHOLDERS  ARE CORDIALLY  INVITED TO ATTEND THE ANNUAL    |
    |    MEETING.  WHETHER  OR NOT YOU  INTEND  TO BE  PRESENT,  PLEASE    |
    |    COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE    |
    |    STAMPED AND ADDRESSED  ENVELOPE ENCLOSED FOR YOUR CONVENIENCE.    |
    |    SHAREHOLDERS  CAN HELP 4KIDS  AVOID  UNNECESSARY  EXPENSE  AND    |
    |    DELAY BY PROMPTLY  RETURNING  THE  ENCLOSED  PROXY  CARD.  THE    |
    |    BUSINESS OF THE  MEETING TO BE ACTED UPON BY THE  SHAREHOLDERS    |
    |    CANNOT  BE  TRANSACTED  UNLESS  ONE-THIRD  OF THE  OUTSTANDING    |
    |    SHARES OF 4KIDS'  COMMON STOCK ARE  REPRESENTED  AT THE ANNUAL    |
    |    MEETING.                                                          |
    ------------------------------------------------------------------------


<PAGE>

                                PROXY STATEMENT

      This Proxy  Statement  is being  furnished  to the  shareholders  of 4Kids
Entertainment,  Inc.,  a New York  corporation  ("4Kids" or the  "Company"),  in
connection  with the Annual Meeting of Shareholders of 4Kids to be held at 10:00
a.m. (New York City time) on May 23, 2001, at JP Morgan Chase,  270 Park Avenue,
New York,  New York,  Conference  Room A, 11th Floor,  (the  "Annual  Meeting").
Accompanying this Proxy Statement ("Proxy Statement") is a notice of such Annual
Meeting,  a form of proxy  solicited  by the 4Kids  Board of  Directors  and the
Company's  Annual  Report for the fiscal year 2000.  This Proxy  Statement,  the
accompanying  proxy,  and the  Company's  Annual  Report  were  first  mailed to
shareholders on or about April 20, 2001.  Audited financial  statements of 4Kids
for the fiscal year ended  December 31, 2000 are contained in the Annual Report.
The Annual Report to  Shareholders  is not  incorporated in this Proxy Statement
and is not deemed to be a part of the proxy solicitation material.

                    VOTING RIGHTS AND SOLICITATION OF PROXIES

      Proxies in the  accompanying  form which are  properly  executed  and duly
returned to 4Kids and not revoked prior to the voting at the Annual Meeting will
be  voted  as  specified.  If no  contrary  specification  is  made  and  if not
designated as broker  non-votes,  the shares of common stock of 4Kids, par value
$.01 per share, represented by the enclosed proxy will be voted FOR the election
of the  nominees  for  director  (Proposal  1),  FOR the  approval  of the 4Kids
Entertainment,   Inc.  2001  Stock  Option  Plan   (Proposal  2),  and  FOR  the
ratification of the  appointment of Deloitte & Touche LLP as auditors  (Proposal
3). In addition,  the shares of common stock  represented  by the enclosed proxy
will be voted by the person named  therein,  in such person's  discretion,  with
respect to any other  business which may properly come before the Annual Meeting
or any adjournment or postponements  thereof. Any shareholder giving a proxy has
the  power to  revoke it at any time  prior to the  voting  by  filing  with the
Secretary  of 4Kids a written  notice of  revocation  or a duly  executed  proxy
bearing a later date or by voting in person at the Annual Meeting.

      The Board of  Directors  has fixed the close of business on April 5, 2001,
as the record date for the determination of the shareholders entitled to receive
notice of, and to vote at, the Annual  Meeting.  The holders of one-third of the
voting power of all issued and  outstanding  shares of common  stock  present in
person,  or  represented  by proxy,  shall  constitute  a quorum  at the  Annual
Meeting.  Assuming the presence of a quorum, the affirmative vote by the holders
of a majority of the votes cast at the Annual  Meeting is  necessary  to approve
Proposals 2 and 3. The affirmative  vote by a plurality of the votes cast at the
Annual Meeting is required for the election of directors.

      On April 5,  2001,  the  record  date for the  Annual  Meeting,  4Kids had
12,080,493  shares of common  stock  outstanding.  Each share of common stock is
entitled to one vote on each matter to come before the Annual Meeting.
There is no cumulative voting. Votes shall be counted by 4Kids' Transfer Agent.

      Shares  represented  by proxies  designated  as broker  non-votes  will be
counted for purposes of  determining  a quorum.  Broker  non-votes  occur when a
broker  nominee  (which has voted on one or more matters at a meeting)  does not
vote on one or more  other  matters  at a meeting  because  it has not  received
instructions   to  so  vote  from  the  beneficial   owner  and  does  not  have
discretionary  authority to so vote.  Shares  represented  by proxies  marked as
abstentions  will also be treated as present  for  purposes of  determining  the
outcome of a vote on any matter, but will not serve as a vote "for" or "against"
any  matter.  Shares  represented  by proxies  designated  as broker  non-votes,
however,  will not be treated as present for purposes of determining the outcome
of a vote on any matter.

Expenses

      All expenses in connection  with  solicitation of proxies will be borne by
4Kids.  Officers and regular  employees of 4Kids may solicit proxies by personal
interview and telephone and telegraph.  Brokerage houses,  banks and custodians,
nominees and  fiduciaries  will be reimbursed for  out-of-pocket  and reasonable
expenses incurred in forwarding  proxies and proxy  statements.  Georgeson & Co.
has been engaged to assist in the  solicitation of proxies,  brokers,  nominees,
fiduciaries and other custodians.  4Kids will pay that firm approximately $6,000
for its services and reimburse its out-of-pocket expenses.


                                       2
<PAGE>

                      PROPOSAL 1 -- ELECTION OF DIRECTORS

      The directors are elected annually by the shareholders of 4Kids. The 4Kids
By-laws provide that the number of directors shall be no less than three or more
than seven unless and until  otherwise  determined  by vote of a majority of the
entire Board of Directors.  In accordance therewith, a total of four persons has
been designated by the Board of Directors as nominees for election at the Annual
Meeting and are being presented to the shareholders for election.  The directors
to be elected at the Annual  Meeting  shall be  determined by a plurality of the
votes cast at the Annual Meeting.

      The four  persons  named  below,  who are  currently  the entire  Board of
Directors,  have been  nominated  for  election  to serve  until the next Annual
Meeting and until their respective successors have been elected and qualified:

         o  Joel I. Cohen                   o  Joseph P. Garrity

         o  Jay Emmett                      o  Alfred R. Kahn

      The Board of Directors  recommends that shareholders vote FOR the director
nominees named above, and, unless a shareholder gives  instructions on the proxy
card to the contrary or a broker  non-vote is  indicated on the proxy card,  the
appointees  named thereon  intend so to vote. All of the nominees have consented
to serve as  directors  if elected.  If at the time of the Annual  Meeting,  any
nominee  is  unable  or  declines  to serve,  the  proxies  may be voted for the
election of such other person or persons as the  remaining  members of the Board
of Directors may recommend.

                                   MANAGEMENT

Directors and Executive Officers

      The directors and executive officers of 4Kids, as of April 5, 2001, are as
follows:

Name                       Age    Position
-----                     ----    -------
Joel I. Cohen (1)(2)       54     Director
Jay Emmett (1)(2)          72     Director
Joseph P. Garrity          45     Director, Executive Vice President, Chief
                                   Operating Officer and Chief Financial Officer

Norman Grossfeld           37     President of 4Kids Productions, Inc.
Sheldon Hirsch             53     Chief Executive Officer of The Summit
                                   Media Group, Inc.
Alfred R. Kahn             54     Chairman of the Board of Directors, Chief
                                   Executive Officer
Thomas Kenney              42     Executive Vice President
Samuel R. Newborn, Esq.    46     Executive Vice President, General Counsel
----------
(1)   Member of the Audit Committee

(2)   Member of the Compensation Committee

      Joel I. Cohen has been a director  since November 1999. Mr. Cohen has been
a Managing  Director of J.P. Morgan Chase & Co.  Incorporated for more than five
years.

      Jay Emmett  has been a  director  since  August  1999.  For more than five
years, Mr. Emmett has been a member of the  International  Board of Directors of
the Special Olympics and the Board of Directors of the San Diego Padres.

      Joseph P. Garrity has been a director  since August 1999.  Mr. Garrity has
been the Chief  Financial  Officer  since joining 4Kids in June 1991. In October
1994 he became Executive Vice President (Chief Operating Officer). For more than
five years  prior to such time,  Mr.  Garrity  was a Senior  Audit  Manager  for
Deloitte & Touche LLP.

      Alfred  R. Kahn has been  Chairman  of the  Board of  Directors  and Chief
Executive  Officer of 4Kids since March 1991.  Mr. Kahn was Vice Chairman of the
Board of Directors of 4Kids from July 1987 until he became Chairman of the Board
of Directors in 1991.


                                       3
<PAGE>

      Norman  Grossfeld has been President of 4Kids  Productions,  Inc.,  4Kids'
television, film and home video production subsidiary,  since February 1994. For
two  years  prior  to  such  time he was  President  of  Gold  Coast  Television
Entertainment.  Prior to such time he served as  Coordinating  Director  for NBC
Sports  from  1991  through  1992,  and  as  Producer/Director   for  Television
Programming Enterprises from 1988-1991.

      Sheldon Hirsch has been Chief Executive Officer of The Summit Media Group,
Inc. ("Summit Media"), 4Kids' media buying, planning and television distribution
subsidiary,  since November 1992. For three years prior to such time, Mr. Hirsch
was President of Sachs Family  Entertainment,  a television program distribution
company.

      Thomas  Kenney has been  Executive  Vice  President of 4Kids since January
2001. From February 1993 to January 2001, he was President of Summit Media.  For
five years  prior to such time Mr.  Kenney  served as Senior  Vice  President  -
Advertising at Tiger Electronics Inc.

      Samuel R. Newborn, Esq. has been Executive  Vice-President General Counsel
since January 2000. Prior to joining 4Kids, Mr. Newborn was a partner in the law
firm of Janklow, Newborn & Ashley for more than five years.

Meetings and Committees of the Board of Directors

      The Board of  Directors  of 4Kids met four times  during  the fiscal  year
which ended on December 31, 2000. None of the directors  attended fewer than 75%
of the total  number of meetings of the Board of  Directors  and  committees  on
which he serves since the date of his appointment.

      4Kids has an Audit  Committee  which consists of Mr. Cohen,  who serves as
the  chairman,  and Mr.  Emmett.  The  Audit  Committee  reviews  the  financial
reporting and internal  controls of 4Kids and meets with  appropriate  financial
personnel of 4Kids,  as well as its  independent  auditors,  in connection  with
these reviews. The Audit Committee also recommends to the Board of Directors the
firm which is to be presented to the shareholders for designation as independent
auditors to examine the corporate accounts of 4Kids for the current fiscal year.
The Audit  Committee met three times during  fiscal 2000 and once  subsequent to
December  31,  2000 but before the  filing of the 4Kids'  Annual  Report on Form
10-K. 4Kids also has a Compensation  Committee which consists of Mr. Emmett, who
serves as the chairman, and Mr. Cohen. The Compensation Committee is responsible
for setting and  administering  the policies  which govern  annual and long-term
compensation for our executives. The Compensation Committee is also empowered to
grant stock options  pursuant to the 4Kids' stock option plans and to administer
such Plans. The Compensation Committee met three times during fiscal 2000.

      4Kids does not have a nominating committee.

                                  COMPENSATION

Executive Compensation -- Annual Compensation

      The  following  table  sets  forth  a  summary  of  annual  and  long-term
compensation during the fiscal years ended December 31, 2000, 1999 and 1998 paid
to 4Kids' chief executive officer and the four most highly compensated executive
officers (as defined in Rule 3b-7 promulgated under the Securities  Exchange Act
of 1934,  as amended) of 4Kids (other than the Chief  Executive  Officer)  whose
total annual salary and bonus for the year ended December 31, 2000 was in excess
of $100,000 (collectively, the "Named Officers"):

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                    Long-Term
                                                                                   Compensation
                                                Annual Compensation                   Awards
Name and                               --------------------------------------      Stock Options
Principal Position                      Year    Salary ($)(1)(2)    Bonus ($)        (Shares)
----------------                       ------   ----------------    ---------      ------------
<S>                                     <C>         <C>            <C>                <C>
Alfred R. Kahn ......................   2000        $395,000       $7,560,729              --
   Chairman of the Board of             1999         395,000        4,771,917         100,000
   Directors and Chief Executive        1998         395,000          556,917         195,000
   Officer

Joseph P. Garrity ...................   2000        $250,000       $1,512,145              --
   Executive Vice President,            1999         250,000          954,383          20,000
   Chief Operating Officer &            1998         250,000          111,383         178,500
   Chief Financial Officer
</TABLE>


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                                    Long-Term
                                                                                   Compensation
                                                Annual Compensation                   Awards
Name and                               --------------------------------------      Stock Options
Principal Position                      Year    Salary ($)(1)(2)    Bonus ($)        (Shares)
----------------                       ------   ----------------    ---------      ------------
<S>                                     <C>         <C>            <C>                <C>
Samuel R. Newborn Esq. ..............   2000        $250,000         $378,037          50,000
   Executive Vice President,            1999              --               --              --
   General Counsel                      1998              --               --              --
Thomas Kenney .......................   2000        $250,000         $400,000              --
   President, Summit Media              1999         250,000           16,010              --
                                        1998         250,000           78,976         105,000

Norman Grossfeld ....................   2000        $250,000         $786,113              --
   President, 4Kids Productions         1999         250,000          420,664          10,000
                                        1998         250,000           29,881          30,000
</TABLE>
----------
(1)   Does not include  amounts paid on behalf of executive  officers  under the
      Company's benefit plans. Such benefit plans, which are offered to all full
      time  employees  of the  Company  include,  a  401K  Plan,  major  medical
      insurance, long term disability insurance and life insurance.

(2)   In accordance with the rules of the SEC, other compensation in the form of
      perquisites  and  other  personal   benefits  has  been  omitted  as  such
      perquisites and other personal  benefits  constituted less than the lesser
      of  $50,000  or 10% of the total  annual  salary and bonus for each of the
      Named Officers for each fiscal year.

      The following table sets forth certain information  concerning  individual
grants of stock  options made during the fiscal year ended  December 31, 2000 to
the Named Officers:

                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                      Potential Realizable
                                                                                        Value at Assumed
                                                                                         Annual Rates of
                                                                                          Stock Price
                                                                                          Appreciation
                                                 Individual Grants                      for Option Term(1)
                               -----------------------------------------------------  --------------------
                                             % of Total     Exercise
                                Number of  Options Granted   or Base
                                 Options   to Employees in    Price      Expiration
    Name                         Granted     Fiscal Year    ($/Sh)(2)       Date          5%         10%
   ------                      ----------   -------------   --------     -----------   ---------  ---------
<S>                     <C>       <C>           <C>          <C>           <C>          <C>        <C>
Samuel R. Newborn, Esq. (3) ..    50,000        100%         $28.375       1/2/05       392,000    866,000
</TABLE>

----------
(1)   4Kids used such method as it is one of the  alternative  methods of option
      valuation  suggested by the Securities and Exchange  Commission's rules on
      executive compensation disclosure.  4Kids does not advocate or necessarily
      agree that such method can properly determine the value of an option.

(2)   Based upon the fair  market  value of 4Kids'  common  stock on the date of
      grant.

(3)   All such options are currently exercisable.


                                       5
<PAGE>

               OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES

      The following table sets forth the number of options  exercised and dollar
value  realized  for such  exercises  and fiscal  year end value of  unexercised
options:

<TABLE>
<CAPTION>
                                                                       Number of
                                                                      Unexercised     Value of Unexer-
                                         Shares         Value         Options at     cised In-the-Money
                                       Acquired on     Realized      December 31,        Options at
    Name                              Exercise (#)       ($)            2000(1)      December 31, 2000(2)
    -----                              -----------    ---------      -------------   -------------------
<S>                                        <C>       <C>                <C>              <C>
Joseph P. Garrity                          50,000    $ 1,038,369        334,900          $ 2,409,215
Norman Grossfeld                               --             --         10,000                    0
Alfred R. Kahn                                 --             --      1,458,800            9,751,454
Thomas Kenney                              30,000        577,925        204,000            1,646,250
Samuel R. Newborn, Esq.                        --             --         50,000                    0
</TABLE>
----------
(1)   All options are currently exercisable.

(2)   Calculation based upon the closing price of 4Kids' common stock on The New
      York Stock Exchange on December 29, 2000 of $8.9375 per share.

Compensation of Directors

      No director of 4Kids  receives any cash  compensation  for his services in
such capacity. Currently, 4Kids has two directors, Messrs. Cohen and Emmett, who
are not  employees,  both of whom are  eligible  to  receive  options  under the
Company's stock option plans. No options were granted to either Messrs. Cohen or
Emmett  during the fiscal  year ended  December  31,  2000.  All  directors  are
reimbursed for their  out-of-pocket  expenses  incurred in connection with their
service as directors.

Employment  Contracts  and  Termination  of  Employment  and   Change-in-Control
Arrangements

      Mr.  Kahn has an  employment  agreement  with 4Kids  pursuant  to which he
receives  a fixed  salary of  $395,000  per year and is  entitled  to receive an
annual  bonus equal to 10% of 4Kids'  Income  Before  Income Tax  Provision  and
before  calculation  of bonus  compensation  of  employees  as  stated on 4Kids'
financial  statements  in its annual report on Form 10-K.  Mr. Kahn's  agreement
expires on March 31, 2006.  On the first day of April each year,  the  agreement
automatically  extends  for an  additional  year.  For the  fiscal  year  ending
December 31, 2001,  Mr. Kahn intends to  voluntarily  reduce the amount of bonus
compensation  he  would  otherwise  be  entitled  to  and  to  recommend  to the
Compensation  Committee that it consider using the difference between the annual
bonus Mr.  Kahn is  entitled  to receive  for fiscal  2001under  his  employment
agreement and the reduced amount he actually  receives in such year to support a
general bonus pool from which annual bonuses to certain  executive  officers are
paid  at the  discretion  of the  Compensation  Committee.  The  agreement  also
provides that for a period of six months after  termination of  employment,  Mr.
Kahn will not "compete" with 4Kids. Under the employment agreement,  if Mr. Kahn
is terminated  without cause,  he will be entitled to receive a payment equal to
2.99 times his average annual  compensation paid by 4Kids (including bonuses, if
any)  during  the  five  years  preceding  the date of  termination  ("Severance
Payment").  If, at any time, a majority of the  directors  of 4Kids  consists of
individuals  who have not been  recommended by Mr. Kahn (a "Change of Control"),
Mr.  Kahn can  terminate  the  agreement  within  six  months of such  Change of
Control, in which event he would be entitled to receive the Severance Payment.

      Mr.  Garrity  has an  employment  agreement  with  4Kids  which  currently
provides for an annual  salary of $250,000  (the "Fixed  Salary") plus an annual
bonus to be awarded at the  discretion  of the Chief  Executive  Officer and the
Compensation  Committee  of the  Board of  Directors.  Mr.  Garrity's  agreement
expires on December 31, 2002.  The  agreement  may be terminated by 4Kids in the
event of Mr.  Garrity's  disability  or for  cause.  If  during  the term of Mr.
Garrity's  agreement a Change of Control  occurs,  Mr. Garrity can terminate the
agreement  within six months of such Change of Control,  in which event he would
be  entitled  to  receive  a payment  equal to 2.99  times  his  average  annual
compensation paid by 4Kids (including bonuses) during the three years preceeding
the date such  termination  occurs.  Mr.  Garrity's prior  employment  agreement
expired on December 31, 2000 and provided for an annual  salary of $250,000 plus
an annual bonus equal to 2% of 4Kids'  Income  Before  Income Tax  Provision and
before  calculation  of bonus  compensation  of  employees  as  stated on 4Kids'
financial statements in its annual report on Form 10-K.


                                       6
<PAGE>

      Mr.  Grossfeld has an agreement  with 4Kids  Productions  which  currently
provides for an annual  salary of $250,000  plus an annual bonus ranging from 3%
to 10% of 4Kids Productions Income Before Income Tax Provision  depending on the
source of the revenue to 4Kids  Productions.  The Agreement expires December 31,
2001.

      Mr. Kenney has an employment  agreement  with Summit Media which  provides
for an annual  salary of $250,000  and for an annual  bonus to be awarded at the
discretion of the Chief Executive Officer and the Compensation  Committee of the
Board of Directors.  Mr.  Kenney's  agreement  expires on December 31, 2002. The
agreement may be terminated by 4Kids in the event of Mr. Kenney's  disability or
for cause.  If during the term of the  agreement  there  shall occur a Change of
Control, Mr. Kenney can terminate his agreement within six months of such Change
of Control,  in which  event he would be entitled to receive a payment  equal to
the Fixed Salary remaining to be paid for the year during which such termination
occurs.  Mr. Kenney's prior employment  agreement  expired on December 31, 2000.
The agreement  provided for an annual salary of $250,000 and for an annual bonus
equal to 6% of Summit  Media's  Income  before  Income Tax  Provision and before
calculation of bonus compensation of employees as stated on Summit Media's books
and records.

      Mr.  Newborn  has an  employment  agreement  with  4Kids  which  currently
provides  for an annual  salary of  $250,000  plus an annual  bonus equal to the
greater of (i) 1/2% of 4Kids'  Income  Before  Income Tax  Provision  and before
calculation  of bonus  compensation  of employees as stated on 4Kids'  financial
statements in its annual report on Form 10-K,  or (ii)  $250,000.  The agreement
expires on December 31, 2004.  The  agreement  may be terminated by 4Kids in the
event of Mr.  Newborn's  disability  or for  cause.  If  during  the term of Mr.
Newborn's  agreement  there  shall occur a Change of  Control,  Mr.  Newborn can
terminate  the agreement  within six months of such Change of Control,  in which
event he would be entitled to receive a payment  equal to 2.99 times his average
annual  compensation  paid by 4Kids  (including  bonuses) during the three years
preceeding the date such termination occurs.

Compensation Committee Interlocks and Insider Participation

      As described in "Election of Directors -- Meetings and  Committees  of the
Board of Directors" above,  4Kids has a Compensation  Committee,  the members of
which are Messrs. Cohen and Emmett. Neither of such individuals has ever been an
officer or employee of 4Kids or any of its subsidiaries.  During fiscal 2000, no
executive  officer of 4Kids served as a member of the compensation  committee or
board of directors of another entity,  one of whose executive officers served on
the Board of Directors of 4Kids.

Report of Compensation Committee of Board of Directors

      Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended,  or the
Securities  Exchange Act of 1934, as amended,  that might incorporate this Proxy
Statement or future  filings with the  Securities  and Exchange  Commission,  in
whole or in part, the following report shall not be deemed to be incorporated by
reference into any such filing.

Membership and Role of the Compensation Committee

      4Kids has a  Compensation  Committee  which  consists of Mr.  Emmett,  who
serves as the chairman,  and Mr. Cohen. The Compensation  Committee of the Board
of  Directors  is  responsible  for 4Kids'  executive  compensation  policy.  In
general, the goal of our executive  compensation policy is to attract and retain
high-performing  executives and to motivate and reward such executives  based on
overall  corporate and individual  performance,  and the creation of shareholder
value.

Components

      For  2000,  the  compensation  of  our  executive  officers  was  composed
primarily  of  salaries,  bonuses  and  stock  options.  Salary  ranges  for our
executive officers are established with reference to the competitive marketplace
for equivalent job levels.  Each executive officer's base salary is set based on
the level and scope of responsibility  within 4Kids and individual  performance.
Salaries are reviewed annually by the Compensation  Committee either formally or
informally.


                                       7
<PAGE>

      Stock options are intended to strengthen  the mutuality of interest of our
executive  officers and our  shareholders  in maximizing  long-term  shareholder
value.  The 4Kids  Compensation  Committee is  responsible  for  granting  stock
options to the executive  officers as well as other eligible  employees pursuant
to the 4Kids' stock option plans.  Grants of stock options are made from time to
time  to the  executive  officers  based  on our  overall  performance  and  the
individual  performance of each executive officer. On January 3, 2000 options to
acquire 50,000 shares were granted to Mr. Newborn pursuant to the Company's 1999
Stock Option Plan at an exercise price of $28.375,  the fair market value on the
date of grant. No additional options were granted to any other executive officer
or director in 2000.


Basis for the Compensation of the CEO

      The Company has an employment agreement with Mr. Kahn pursuant to which he
receives a fixed  annual  salary of $395,000 and an annual bonus during the term
of the agreement, which expires in 2006. We believe that Mr. Kahn's base salary,
which has remained  unchanged  since 1991, is reasonable and no more generous to
him  than  base  salaries  paid to  other  similarly  situated  chief  executive
officers.  Please see  "Employment  Contracts and  Termination of Employment and
Change-in-Control   Agreements"  for  a  more  detailed  discussion  as  to  the
compensation paid to Mr. Kahn.

      In addition  to cash  compensation,  Mr. Kahn is also  eligible to receive
stock options pursuant to the 4Kids' stock option plans. The purpose of any such
stock  option  grants  is to  provide  Mr.  Kahn with a  further  inducement  to
contribute to the  long-term  growth and  development  of the business of 4Kids.
Consequently, during the term of any such options, Mr. Kahn will receive, for no
consideration prior to exercise,  the opportunity to profit from any rise in the
market value of the 4Kids'  common  stock.  During 2000,  no stock  options were
granted to Mr. Kahn.

      Section  162(m) of the Internal  Revenue Code of 1986,  as amended,  makes
compensation  paid to certain  executives in amounts in excess of $1 million not
deductible  unless  the  compensation  is paid under a  predetermined  objective
performance plan meeting certain requirements, or satisfies one of various other
exemptions.  The  Compensation  Committee  has not  adopted  a  policy  that all
compensation  be  deductible  under  Section  162(m),  in order to preserve  the
Compensation Committee's flexibility to compensate executive officers.

                                                     Compensation Committee

                                                     Joel I. Cohen

                                                     Jay Emmett

Report of the Audit Committee of the Board of Directors

      Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933, as amended,  or the
Securities  Exchange Act of 1934, as amended,  that might incorporate this Proxy
Statement or future  filings with the  Securities  and Exchange  Commission,  in
whole or in part, the following report shall not be deemed to be incorporated by
reference into any such filing.

Membership and Role of the Audit Committee

      4Kids has an Audit  Committee  which consists of Mr. Cohen,  who serves as
the  chairman,  and  Mr.  Emmett.  Both  members  of  the  Audit  Committee  are
independent as defined under the New York Stock  Exchange's  listing  standards.
The Audit  Committee  operates under a written  charter  adopted by the Board of
Directors which is included in this proxy as Exhibit A.

      The Audit Committee reviews the financial  reporting and internal controls
of 4Kids and meets with appropriate financial personnel of 4Kids, as well as its
independent auditors, in connection with these reviews. The Audit Committee also
recommends  to the Board of  Directors  the firm which is to be presented to the
shareholders  for  designation as independent  auditors to examine the corporate
accounts of 4Kids for the current fiscal year.


                                       8
<PAGE>

Review of the Company's Audited  Financial  Statements for the Fiscal Year ended
December 31, 2000

      The Audit  Committee  has reviewed  and  discussed  the audited  financial
statements  of the Company for the fiscal year ended  December 31, 2000 with the
Company's  management.  The Audit Committee has discussed with Deloitte & Touche
LLP, the Company's  independent public  accountants,  the matters required to be
discussed by Statement on Auditing  Standards No. 61  (Communication  with Audit
Committee).

      The Audit  Committee  has also  received the written  disclosures  and the
letter from Deloitte & Touche LLP required by Independence Standards Board No. 1
(Independent  Discussion  with Audit  Committees)  and the Audit  Committee  has
discussed with Deloitte & Touche LLP the latter's independence.

      Based on the Audit  Committee's  review and discussions  noted above,  the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in Company's Annual Report on Form 10-K for the
fiscal year ended  December 31, 2000 for filing with the Securities and Exchange
Commission.
                                                     Audit Committee

                                                     Joel I. Cohen

                                                     Jay Emmett


Performance Graph

      Set forth below is a line graph comparing the yearly  percentage change in
the  cumulative  total return on the shares of 4Kids'  common stock  against the
cumulative  total return of the S&P 600 Index and the Russell 2000 Index for the
past five fiscal years.

                        4Kids Performance Chart Raw Data
                                      2000

                              1995     1996     1997     1998    1999     2000
                              ----     ----     ----     ----    ----     ----
4Kids ....................    100       40      110      440     3361     1073
S&P 600 ..................    100      108      134      131      146      163
Russell 2000 .............    100      116      143      139      168      163

Certain Transactions Involving Management

      From January 1, 2000 to the present,  there have been no transactions,  or
currently proposed transactions,  between the Company or any of its subsidiaries
and any executive officer, director, 5% beneficial owner of the Company's common
stock, or member of the immediate  family of the foregoing  persons in which one
of the foregoing individuals or entities had an interest or more than $60,000.


                                       9
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

      Section  16(a) of the Exchange Act requires the officers and  directors of
4Kids, and persons who own more than ten percent of a registered class of 4Kids'
equity  securities,  to file reports of ownership and changes in ownership  with
the Securities and Exchange Commission. These persons are required by regulation
to furnish 4Kids with copies of all Section 16(a) forms they file.

      Based  solely on its review of the copies of such  forms  received  by it,
4Kids  believes  that during the fiscal year ended  December  31,  2000,  4Kids'
officers, directors and greater than ten percent beneficial owners complied with
all applicable Section 16(a) filing requirements.

      During 2000, each of Messrs. Emmett, Hirsch, Garrity, Kenney and Grossfeld
purchased and sold common stock of 4Kids and exercised  stock options granted to
them  under  the 4Kids  stock  option  plans.  All of them  filed  Form 4's when
required in connection with their transactions.

                             PRINCIPAL SHAREHOLDERS

      The following table sets forth, as of April 5, 2001,  certain  information
concerning  the  beneficial  ownership of the shares of common stock of 4Kids by
(i) each person who is known by 4Kids to own beneficially more than five percent
of the outstanding  shares of common stock of 4Kids,  (ii) each of our directors
and (iii) all current  directors  and  officers  of 4Kids as a group.  Except as
otherwise indicated, all such persons have both sole voting and investment power
over the shares shown as being beneficially owned by them.

<TABLE>
<CAPTION>
                                                        Share of Common Stock
                                                         Beneficially Owned
                                              ------------------------------------
Name and Address of Beneficial Owner(1)         Shares       Options       Total       Percent of Class
---------------------------------------        ---------    ---------    ---------     ----------------
<S>                                               <C>          <C>          <C>         <C>
Joel I. Cohen ..............................      11,000       25,000       36,000       less than 1%
Jay Emmett .................................         300       25,000       25,300       less than 1%
Joseph P. Garrity ..........................      25,000      384,900      409,900               3.3%
Alfred R. Kahn .............................   1,122,000    1,608,800    2,730,800(2)           19.9%
All directors and officers as a group
   (8 persons) .............................   1,158,300    2,597,700    3,756,000              25.6%
</TABLE>
----------
(1)   The  address  for  Messrs.  Kahn,  Garrity,  Cohen  and  Emmett  is  4Kids
      Entertainment,  Inc.,  1414  Avenue of the  Americas,  New York,  New York
      10019.

(2)  Includes  1,056,000  shares  owned by Mr.  Kahn,  6,000 shares owned by Mr.
     Kahn's  wife,  15,000  shares held by Mr. Kahn for the benefit of his minor
     daughter  under the NY/UGMA,  45,000 shares owned by Mr. Kahn's three adult
     children with respect to which Mr. Kahn disclaims  beneficial ownership and
     currently exercisable options to acquire 1,608,800 shares.

                  PROPOSAL 2 -- PROPOSED 2001 STOCK OPTION PLAN

      The Board of Directors has determined  that it is in the best interests of
4Kids to adopt the 4Kids  Entertainment,  Inc. 2001 Stock Option Plan (the "2001
Plan"),  and will submit the 2001 Plan to the  shareholders  for approval at the
Annual  Meeting.  The 2001 Plan  authorizes the issuance not later than December
31, 2011 of options to purchase up to 600,000 shares of 4Kids' common stock. The
2001 Plan was  approved by the Board of Directors at a meeting held on March 30,
2001, subject to shareholder approval.

      The Board of  Directors  believes  that  4Kids and its  shareholders  have
benefitted  from the  grant of  stock  options  in the  past,  and that  similar
benefits  will result from the adoption of the 2001 Plan. It believes that stock
options  play  an  important  role in  providing  eligible  individuals  with an
incentive  and  inducement  to  contribute  fully  to  the  further  growth  and
development of 4Kids and its subsidiaries  because of the opportunity to acquire
a proprietary  interest in 4Kids on an attractive basis.  During the term of the
2001 Plan, optionees will receive,  for no consideration prior to exercise,  the
opportunity  to profit from any rise in the market value of the shares of 4Kids'
common  stock.  Exercise of the options  will dilute the equity  interest of the
other  shareholders  of 4Kids.  The grant and  exercise of the options  also may
affect  4Kids'  ability  to obtain  additional  capital  during  the term of any
options.


                                       10
<PAGE>

The principal features of the 2001 Plan are summarized below:

      The 2001 Plan  provides  for the  granting  of stock  options to  purchase
shares  of  4Kids'  common  stock to  certain  key  employees  of 4Kids  and its
subsidiaries, to non-employee directors and to independent consultants (each, an
"Optionee").  No employee  may be granted  stock  options to purchase  more than
150,000 shares,  in the aggregate,  in any calendar year. The 2001 Plan provides
for the grant of  "nonqualified  stock options"  ("NQOs") and  "incentive  stock
options" ("ISOs"); ISOs will only be granted to employees.

      The 2001 Plan will be administered by the Compensation Committee appointed
by the Board of Directors.  The  Compensation  Committee  currently  consists of
Messrs.  Joel  Cohen and Jay  Emmett,  neither of whom are  employees  of 4Kids.
Awards of stock options to non-employee directors will be approved by the entire
Board of Directors.

      Each  stock  option  granted  under the 2001 Plan will be  evidenced  by a
written  agreement  containing such  provisions as approved by the  Compensation
Committee not  inconsistent  with the 2001 Plan, and which need not be identical
in respect of each Optionee.  In general,  stock options  granted under the 2001
Plan will have the following terms:

            a. Time for Exercise; Term. All stock options granted under the 2001
      Plan will be exercisable  at such time or times and in such  installments,
      if any,  as the  Compensation  Committee  or the  Board of  Directors  may
      determine,  and will  expire no more than ten years from the date of grant
      (five  years in the case of an ISO  granted to an  employee  who is a "10%
      Shareholder," as defined below).

            b. Exercise  Price.  The exercise price of any NQO granted under the
      2001 Plan will not be less than (a) eighty-five  percent (85%) of the fair
      market value of a share of 4Kids' common stock on the date of grant or (b)
      one  hundred  percent  (100%) of the fair  market  value in the case of an
      option  intended to be exempt from the  deduction  limitations  of Section
      162(m) of the Code. The exercise price of an ISO will not be less than (a)
      one hundred  percent  (100%) of the fair market value of a share of 4Kids'
      common  stock on the date of grant,  or (b) one  hundred  and ten  percent
      (110%) of such fair market  value if the ISO is granted to an employee who
      owns stock  possessing  more than ten percent of the total voting power of
      4Kids, any parent corporation or any subsidiary (a "10% Shareholder"). The
      exercise  price of each stock  option  must be paid in cash or in stock of
      4Kids valued at its then fair market  value.  The closing  price of 4Kids'
      common stock on The New York Stock Exchange on April 5, 2001 was $11.29.

            c.  Nontransferability.  Options are non-transferable  except (i) by
      will or by the laws of the  descent  and  distribution,  (ii)  for  estate
      planning  purposes,  or (iii) as a  charitable  contribution  to an exempt
      organization as such term is defined in Section  501(c)(3) of the Internal
      Revenue Code of 1986.

            d. Ceiling on ISO Grants.  To the extent the  aggregate  fair market
      value  (determined  at the time any ISO is  granted)  of common  stock for
      which ISOs are  exercisable  for the first time by any optionee during any
      calendar  year  under the 2001 Plan  (together  with any  incentive  stock
      options  granted  under any other plan of the  Company,  any parent or any
      subsidiary) exceeds $100,000, such excess ISOs shall be treated as NQOs.

            e.  Termination of Option.  Stock options granted to employees under
      the 2001 Plan  generally  terminate  three  months  after  the  optionee's
      employment is terminated,  provided that, if such termination is by reason
      of death or  disability,  the stock option  generally  will  terminate six
      months  thereafter (or at the end of the option term if earlier).  Options
      granted to  non-employee  directors  under the 2001 Plan generally  remain
      exercisable  for one  year  after  such  individual  ceases  to serve as a
      director (but not beyond the end of the option term).  Options  granted to
      independent  consultants  under  the 2001  Plan  will  remain  exercisable
      following a termination of the consultancy to the extent, if any, provided
      in the stock option agreement evidencing the grant of such option.

            f.  Adjustments.  Each stock  option  agreement  will  contain  such
      provisions  as the Committee  shall  determine to be  appropriate  for the
      adjustments of the kind and number of shares  subject to each  outstanding
      stock option,  the exercise price, or both, in the event of any changes in
      the  outstanding  shares  of  4Kids'  common  stock  by  reason  of  stock
      dividends,  stock  splits,  recapitalizations,  reorganizations,  mergers,
      consolidations,  combinations or exchanges of shares,  or the like. In the
      event of any such  change or changes in the  outstanding  shares of 4Kids'
      common stock, and as often as the same shall occur, the kind and aggregate
      number  of  shares  available  under  the 2001  Plan may be  appropriately
      adjusted by the Compensation Committee, whose determination is binding and
      conclusive.


                                       11
<PAGE>

      The Board of Directors  has the right to alter,  suspend or terminate  the
2001  Plan as it may deem  advisable,  except  that it may not  without  further
shareholder  approval (a) increase the maximum  number of shares  subject to the
2001 Plan (except for corporate changes  described above);  (b) permit the grant
of  options to anyone  other  than the  employees,  non-employee  directors  and
independent  consultants;  (c)  change  the manner of  determining  the  minimum
exercise  prices;  or (d) extend the period  during  which stock  options may be
granted or exercised. No alteration,  suspension or termination of the 2001 Plan
may,  without  the  consent  of the  optionee  to  whom  any  stock  option  has
theretofore  been granted,  terminate such optionee's  stock option or adversely
affect such optionee's rights thereunder.

      Notwithstanding  anything in the 2001 Plan to the  contrary,  in the event
that the Board of  Directors  shall at any time declare it advisable to do so in
connection with any proposed sale or conveyance of all or  substantially  all of
the property and assets of 4Kids or of any proposed  consolidation  or merger of
4Kids (unless 4Kids shall be the surviving  corporation  in such merger),  4Kids
may give  written  notice to each  optionee  that his or her stock option may be
exercised  only within  thirty (30) days after the date of such notice,  and all
rights  under said stock  option  which shall not have been so  exercised  shall
terminate at the expiration of such thirty (30) days, provided that the proposed
sale,  conveyance,  consolidation  or merger to which such notice  shall  relate
shall be  consummated  within six months after the date of such notice.  If such
proposed  sale,  conveyance,  consolidation  or merger shall not be  consummated
within said time period,  no unexercised  rights under any stock option shall be
affected  by such  notice  except  that such stock  option may not be  exercised
between  the date of  expiration  of such  thirty  (30) days and the date of the
expiration of such six-month period.

                         FEDERAL INCOME TAX CONSEQUENCES

      The  following  is a summary of the Federal  income tax  treatment  of the
stock  options  which may be granted  under the 2001 Plan based upon the current
provisions of the Internal Revenue Code of 1986, as amended.

      Nonqualified Stock Options.  The grant of a NQO under the 2001 Plan is not
taxable to the option holder at the time of grant. Upon the exercise of a NQO by
the option  holder,  (1) the  option  holder  will  recognize  taxable  ordinary
compensation income in an amount equal to the excess of the fair market value of
the shares acquired on the date of exercise over the exercise  price;  (2) 4Kids
generally will be entitled to a corresponding  deduction; and (3) upon a sale of
the shares so  acquired,  the option  holder will have  short-term  or long-term
capital gain or loss, depending on the holding period, in an amount equal to the
difference  between  the amount  realized  on such sale and the tax basis of the
shares  sold.  In general,  the option  holder's tax basis in the shares will be
equal to their fair market value on the date of exercise, and the holding period
of the shares will begin at exercise.

      Incentive  Stock  Options.  The grant of an ISO under the 2001 Plan is not
taxable to the option  holder,  and,  upon the  exercise  of an ISO by an option
holder during  employment or within three months after termination of employment
(12  months in the case of total  disability),  (1) the option  holder  will not
recognize  any ordinary  compensation  income at the time of  exercise;  (2) the
excess of the fair market  value of the shares  received  upon  exercise and the
exercise  price  paid will be  includible  in the  option  holder's  alternative
minimum taxable income;  (3) no deduction will be allowed to 4Kids in connection
with the exercise; and (4) upon a sale of the shares so acquired after the later
of (a) one year from the  exercise  date,  or (b) two years from the date of the
ISO grant (the "ISO holding  period"),  any amount realized by the option holder
in excess of the exercise price will be taxed as long-term capital gain, and any
loss sustained will be a long-term capital loss. In general,  an option holder's
tax basis in the shares  received  upon the  exercise of an ISO will be equal to
the exercise price, and the holding period will begin at exercise.

      If the  option  holder  disposes  of any of the shares  received  upon the
exercise  of an ISO before the end of the ISO holding  period (a  "disqualifying
disposition"),  (1) the option holder generally will recognize  taxable ordinary
compensation  income at the time of disposition (and 4Kids will be entitled to a
tax  deduction) in an amount equal to (a) the lesser of (x) the excess,  if any,
of the fair market value of the shares  received over the exercise  price on the
date of exercise,  or (y) the excess of the amount  realized on the  disposition
over the exercise price;  and (2) the option holder will recognize  capital gain
or loss (long-term or short-term,  depending on the holding period) in an amount
equal to the difference between (a) the amount realized upon the disposition and
(b) the exercise price paid for the shares and the amount of ordinary income, if
any, so recognized by the option holder.


                                       12
<PAGE>

      Whenever under the 2001 Plan shares are to be delivered upon exercise of a
stock option, 4Kids shall be entitled to require as a condition of delivery that
the option holder remit an amount sufficient to satisfy all Federal,  state, and
other governmental withholding tax requirements related thereto.

      The Board of Directors  recommends a vote FOR approval of the 2001 Plan as
described above at the Annual Meeting and it is intended that proxies not marked
to the contrary and not  designated as broker  non-votes  will be so voted.  The
description  of the  proposed  2001 Plan set  forth  above is  qualified  in its
entirety  by  reference  to the text of the 2001 Plan as set forth in  Exhibit B
hereto.

                       PROPOSAL 4 -- SELECTION OF AUDITORS

      The 4Kids financial statements for the past several fiscal years have been
examined by Deloitte & Touche LLP, independent public accountants.  On March 30,
2001,  the Board of Directors  voted to propose and  recommend  the selection of
Deloitte  &  Touche  LLP  as  independent  auditors  to  examine  its  financial
statements for the fiscal year ending December 31, 2001.

      Representatives of Deloitte & Touche LLP are expected to be present at the
annual meeting of shareholders  with the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.

Audit Fees

      The aggregate fees billed for professional services rendered by Deloitte &
Touche LLP for the audit of the Company's  financial  statements  for the fiscal
year ended  December  31,  2000,  and the  reviews of the  financial  statements
included in the Company's Forms 10-Q for such fiscal year were $195,000.

Financial Information Systems Design and Implementation Fees

      Deloitte  &  Touche  LLP  did  not  provide  the  Company  any   financial
information  systems design and implementation  services as such term is defined
in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X for the fiscal year ended
December 31, 2000.

All Other Fees

      The aggregate fees billed for services  rendered by Deloitte & Touche LLP,
other than for audit  services  and  financial  information  systems  design and
implementation  services,  for the fiscal  year  ended  December  31,  2000 were
$54,125.

General

      The Audit  Committee of the Company's  Board of Directors  has  considered
whether the provision of services by Deloitte & Touche LLP covered by "Financial
Information  Systems Design and Implementation  Fees" and "All Other Fees" above
is compatible with maintaining Deloitte & Touche's independence.

      Less than 50% of the hours expended on Deloitte & Touche LLP's  engagement
to audit the Company's  financial  statements for the fiscal year ended December
31, 2000,  was  attributed  to work  performed by persons  other than Deloitte &
Touche LLP's full-time, permanent employees.

      The  Board  of  Directors  recommends  a  vote  FOR  ratification  of  the
appointment of Deloitte & Touche LLP as auditors and it is intended that proxies
not marked to the contrary and not  designated  as broker  non-votes  will be so
voted.


                                       13
<PAGE>

                                  OTHER MATTERS

      The Board of  Directors  does not know of any  matters  other  than  those
mentioned  above to be presented to the  meeting.  If any other  matters do come
before  the  meeting,  the  persons  named  in the  proxy  will  exercise  their
discretion in voting thereon.

                              SHAREHOLDER PROPOSALS

      Proposals by any shareholders  intended to be presented at the 2002 Annual
Meeting of  Shareholders  must be received by the  Corporation  for inclusion in
proxy material relating to such meeting not later than January 15, 2002.


                                        By Order of the Board of Directors,


                                        /s/ Alfred R. Kahn
                                        -------------------------------------
                                        ALFRED R. KAHN
                                        Chairman of the Board of Directors
                                        Chief Executive Officer


New York, New York
April 20, 2001


                                       14
<PAGE>

                                                                       Exhibit A

                    AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

                                     CHARTER

I. PURPOSE

      The primary function of the Audit Committee (the "Audit Committee") of the
Board  of  Directors   (the   "Board")  of  4Kids   Entertainment,   Inc.   (the
"Corporation")   is  to  assist   the   Board  in   fulfilling   its   oversight
responsibilities  by reviewing  (i) the  financial  reports and other  financial
information  which will be provided by the Corporation to any governmental  body
or the  public,  (ii)  the  Corporation's  systems  of  internal  controls  that
management and the Board have established; and (iii) the Corporation's auditing,
accounting and financial  reporting processes  generally.  The Audit Committee's
primary duties and responsibilities are to:

      o     Serve  as  an  independent   and  objective  party  to  monitor  the
            Corporation's  financial  reporting  process  and  internal  control
            system.

      o     Review  and  appraise  the  audit   efforts  of  the   Corporation's
            independent accountants and internal auditing department.

      o     Provide  an open  avenue  of  communication  among  the  independent
            accountants,  financial and senior management, the internal auditing
            department and the Board.

II. COMPOSITION

      The Audit  Committee  shall be  comprised  of three or more  directors  as
determined by the Board.

      Prior to June 14, 2001.  Prior to June 14, 2001, a majority of the members
of  the  Audit  Committee   shall  be  "independent   directors"  and  the  term
"independent  director" shall mean a person other than an officer or employee of
the  Corporation  or  its  subsidiaries  or  any  other   individual   having  a
relationship  which,  in the  opinion of the  Board,  would  interfere  with the
exercise  of  independent  judgment in carrying  out the  responsibilities  of a
director.

      On and  Subsequent to June 14, 2001.  On and  subsequent to June 14, 2001,
except  as  provided  herein,  all  members  of the  Audit  Committee  shall  be
"independent  directors" as defined below. A member of the Audit Committee shall
be considered to be an "independent  director" if he or she is not an officer or
employee  of the  Corporation  or its  subsidiaries  or an  individual  having a
relationship  which,  in the  opinion of the  Board,  would  interfere  with the
exercise of  independent  judgement  in carrying out the  responsibilities  of a
director. The following persons shall not be considered "independent":

      o     a  director  who  is  employed  by  the  Corporation  or  any of its
            affiliates  for  the  current  year  or has  been  employed  by such
            entities in any of the past three years;

      o     a director who accepted any compensation from the Corporation or any
            of its  affiliates in excess of $60,000  during the previous  fiscal
            year, other than  compensation  for board service,  benefits under a
            tax-qualified retirement plan, or non-discretionary compensation;

      o     a director who is a member of the immediate  family of an individual
            who is, or has been in any of the past three years,  employed by the
            Corporation  or any  of  its  affiliates  as an  executive  officer.
            Immediate  family  includes a person's  spouse,  parents,  children,
            siblings,     mother-in-law,     father-in-law,      brother-in-law,
            sister-in-law, son-in-law, daughter-in-law and anyone who resided in
            such person's home.

      o     a director who is a partner in, or a controlling  shareholder  or an
            executive officer of, any for-profit business  organization to which
            the  Corporation  made,  or from  which  the  Corporation  received,
            payments  (other than those arising  solely from  investments in the
            Corporation's  securities) that exceeded 5% of the  Corporation's or
            business  organization's  consolidated gross revenues for that year,
            or $200,000, whichever is more, in any of the past three years;

      o     a director who is employed as an executive officer of another entity
            where  any of the  company's  executives  serves  on  that  entity's
            compensation committee.


                                      A-1
<PAGE>

      Notwithstanding  the foregoing,  one director who is not "independent" (as
defined  above)  and  is  not a  current  employee  of  the  Corporation  or its
subsidiaries or an immediate  family member of such an employee may be appointed
to  the  Audit  Committee,   if  the  Board,   under   exceptional  and  limited
circumstances,  determines  that  membership  on the  Audit  Committee  by  that
director  is  required  by  the  best  interests  of  the  Corporation  and  its
shareholders,  and the Board discloses in the next proxy statement subsequent to
such  determination,  the nature of the  relationship  and the  reasons for that
determination.

      All members of the Audit  Committee  shall be able to read and  understand
fundamental  financial  statements,  including a company's balance sheet, income
statement,  and cash  flow  statement  or be able to do so  within a  reasonable
period of time after his or her appointment to the Audit Committee, and at least
one member of the Audit  Committee  shall  have past  employment  experience  in
finance or accounting,  requisite professional  certification in accounting,  or
any comparable  experience or background which results in the member's financial
sophistication,  including being or having been a chief executive officer, chief
financial   officer  or  other   senior   officer   with   financial   oversight
responsibilities.

      The members of the Audit  Committee  shall be elected by the Board at each
annual  organizational  meeting of the Board and each member  shall serve on the
Audit Committee until the next succeeding annual  organizational  meeting of the
Board and until his or her  successor  shall have been  elected  and  qualified.
Unless a  Chairman  is  elected  by the full  Board,  the  members  of the Audit
Committee may designate a Chairman by majority vote of the full Audit  Committee
membership.

III. MEETINGS

      The Audit  Committee  shall  meet at least four  times  annually,  or more
frequently  as  circumstances  dictate.  As  part  of  its  job to  foster  open
communication,   the  Audit  Committee   should  meet  at  least  annually  with
management,  the head of the internal  auditing  department and the  independent
accountants in separate executive sessions to discuss any matters that the Audit
Committee or each of these groups  believes  should be discussed  privately.  In
addition,  the Audit  Committee  or at least its  Chairman  should meet with the
independent  accountants  and management  quarterly to review the  Corporation's
financial statements. See item IV. 6 below.


IV. RESPONSIBILITIES AND DUTIES

      To fulfill its responsibilities and duties the Audit Committee shall:

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

      2.    Recommend   to  the  Board  the   nomination   of  the   independent
            accountants,  considering  independence  and  effectiveness  of  the
            independent  accountants,  to be proposed for shareholder  approval,
            and  approve  the  fees  and  other  compensation  to be paid to the
            independent accountants.

      3.    Confer  with the  independent  accountants  concerning  the scope of
            their examinations of the Corporation's books and records, directing
            their special  attention to specific  matters or areas deemed by the
            Audit  Committee  or the  independent  accountants  to be of special
            significance.

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

      5.    Ensure that the  Corporation's  independent  accountants  review the
            Corporation's  Form 10-Q prior to its filing or prior to the release
            of earnings.

      6.    At least annually receive from the independent  accountants a formal
            written  statement   delineating  all   relationships   between  the
            independent   accountants  and  the   Corporation   consistent  with
            Independence  Standards  Board  Standard  1.  Actively  engage  in a
            dialogue  with  the  independent  accountants  with  respect  to any
            disclosed  relationship or services which may impact the independent
            accountants'  objectivity  and  independence  and recommend that the
            full Board take  appropriate  action to oversee the  independence of
            the independent accountants.


                                      A-2
<PAGE>

      7.    Review the  performance of the  independent  accountants and approve
            any  proposed   discharge  of  the  independent   accountants   when
            circumstances warrant.

      8.    Periodically  consult with the  independent  accountants  out of the
            presence of management about internal  controls and the fullness and
            accuracy of the Corporation's financial statements.

      9.    In consultation  with the  independent  accountants and the internal
            auditing  department,  review  the  integrity  of the  Corporation's
            financial reporting processes, both internal and external.

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

      11.   Following  completion of the annual audit,  review  separately  with
            each of management,  the  independent  accountants  and the internal
            auditing department any significant  difficulties encountered during
            the course of the audit,  including any restrictions on the scope of
            work or access to required information.

      12.   Review  any  significant   disagreement  among  management  and  the
            independent  accountants  or the  internal  auditing  department  in
            connection with the preparation of the financial statements.

      13.   Review  with the  independent  accountants,  the  internal  auditing
            department   and   management   the  extent  to  which   changes  or
            improvements  in financial or accounting  practices,  as approved by
            the Audit Committee,  have been implemented.  (This review should be
            conducted at an appropriate  time  subsequent to  implementation  of
            changes or improvements, as decided by the Audit Committee.)

      14.   Review activities,  organizational  structure, and qualifications of
            the internal auditing department.

      15.   Review, with the Corporation's  counsel, any legal matter that could
            have a significant impact on the Corporation's financial statements.

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

V. ANNUAL REVIEW

      The Board will  review  and update  this  charter  at least  annually,  as
conditions dictate.


                                      A-3
<PAGE>

                                                                       Exhibit B

                            4KIDS ENTERTAINMENT, INC.

                             2001 STOCK OPTION PLAN

      1.  Purpose of Plan.  This 2001 Stock Option Plan (the "Plan") is designed
to assist 4Kids Entertainment,  Inc. (the "Company") in attracting and retaining
the services of employees,  Eligible Directors (as hereinafter defined) and such
independent  consultants  as may be  designated,  and to  provide  them  with an
incentive  and  inducement  to  contribute  fully  to  the  further  growth  and
development of the business of the Company and its subsidiaries.

      2. Legal  compliance.  It is the intent of the  Company  that all  options
granted under it shall be either  "Incentive  Stock Options"  ("ISOs"),  as such
term is defined in Section 422 of the Internal  Revenue Code of 1986, as amended
("Code"), or non-qualified stock options ("NQOs"); provided, however, ISOs shall
be granted  only to  Employees  (as  hereinafter  defined).  An option  shall be
identified  as an ISO  or an  NQO  in  writing  in  the  document  or  documents
evidencing  the grant of the option.  All options that are not so  identified as
ISOs are  intended  to be NQOs.  It is the  further  intent  of the Plan that it
conform in all respects with the  requirements  of Rule 16b-3 of the  Securities
and Exchange  Commission  under the Securities  Exchange Act of 1934, as amended
("Rule 16b-3").  To the extent that any aspect of the Plan or its administration
shall at any time be viewed as inconsistent  with the requirements of Rule 16b-3
or, in  connection  with  ISOs,  the  Code,  such  aspect  shall be deemed to be
modified,  deleted or changed as necessary to ensure  continued  compliance with
such provisions.

      3. Definitions.  In addition to other definitions  contained  elsewhere in
the Plan, as used in the following terms have the following  meanings unless the
context requires a different meaning:

            "Board" means the Board of Directors of the Company.

            "Code" means the Internal Revenue Code of 1986, as the same may from
      time to time be amended.

            "Committee" means the committee referred to in Section 5 hereof.

            "Common Stock" means the Common Stock of the Company, par value $.01
      per share.

            "Designated  Beneficiary" means the person designated by an optionee
      to be  entitled  on his death to any  remaining  rights  arising out of an
      option, such designation to be made in accordance with such regulations as
      the Committee or Board may establish.

            "Eligible Directors" means (i) a Non-Employee Director as defined in
      Rule  16b-3(b)(3),  or  any  successor  provision  promulgated  under  the
      Securities  Exchange Act of 1934 and (ii) an Outside  Director  within the
      meaning  of  Section  162(m) of the  Code,  and the  Treasury  Regulations
      promulgated  thereunder;  provided,  however, that clause (ii) shall apply
      only with  respect  to Stock  Options  that are  intended  to  qualify  as
      "performance-based  compensation" exempt from the limitations contained in
      Section 162(m) of the Code.

            "Employee" means any employee of the Company,  or of any corporation
      which is then a "parent  corporation" within the meaning of Section 424(e)
      of the Code (a "Parent") or a "subsidiary corporation," within the meaning
      of Section 424(f) of the Code (a  "Subsidiary"),  who is designated by the
      Board or the Committee as a key employee.

            "Fair Market  Value" means the average of the high and low prices on
      the over-the-counter  market on the last day on which the Company's shares
      of Common Stock were traded  immediately  preceding  the date an option is
      granted  pursuant to the Plan, as reported by the National  Association of
      Security  Dealers  Automated  Quotation  System  ("NASDAQ"),  or  NASDAQ's
      Successor,  or if not  reported on NASDAQ,  the fair market  value of such
      Common Stock as determined by the Committee or the Board in good faith and
      based on all relevant factors.

            "Mature  Shares"  means  shares of Common Stock owned by an optionee
      which are not subject to any pledge or other  security  interest  and have
      either been held by the  optionee for six months,  previously  acquired by
      the  optionee  on the open market or meet such other  requirements  as the
      Committee may determine necessary in order to avoid an accounting earnings
      charge on account of the use of such shares to pay the purchase  price for
      Stock  Options or satisfy a  withholding  obligation in respect of a Stock
      Option.


                                      B-1
<PAGE>

            "Stock Options" means any stock options granted to an optionee under
      the Plan.

            "Stock Option Agreement" means a stock option agreement entered into
      pursuant to the Plan.

            "Ten-Percent  Shareholder" means an Employee who, at the time an ISO
      is granted to him, owns (within the meaning of Section 424(d) of the Code)
      stock  possessing more than ten percent (10%) of the total combined voting
      power of the Company, any Parent or any Subsidiary.

      4. Stock Options: Stock Subject to Plan; Individual Limit. The stock to be
issued upon  exercise of Stock  Options  granted under the Plan shall consist of
authorized  but unissued  shares,  or of treasury  shares,  of Common Stock,  as
determined  from time to time by the  Board.  The  maximum  number of shares for
which Stock Options may be granted under the Plan is 600,000 shares,  subject to
adjustment  as provided  in Section 8 of the Plan;  provided,  however,  that no
Employee shall be granted Stock Options with respect to more than 150,000 shares
in any year.  If any  Stock  Option  granted  under  the Plan  should  expire or
terminate for any reason  whatsoever  without having been exercised in full, the
unpurchased shares shall become available for new options.

      5. Administration.

      (a) The Plan shall be administered by the Compensation Committee,  each of
the members of which will be an Eligible  Director or, if such  Committee is not
appointed, then it shall be administered by the Board. Options may be granted by
the Board or the Committee. For purposes of the Plan, the Board or its appointed
Committee shall be referred to as the "Committee." The Committee,  if any, shall
be  appointed by the Board and shall  consist of not less than two members.  The
Board shall  establish  the number of members to serve on the  Committee,  shall
fill all vacancies or create new openings on the  Committee,  and may remove any
member of the Committee at any time with or without cause.  The Committee  shall
select  its own  chairman  and  shall  adopt,  alter or  repeal  such  rules and
procedures  as it may deem proper and shall hold its  meetings at such times and
places as it may determine. The Committee shall keep minutes of its meetings and
of actions taken by it without a meeting. A majority of the Committee present at
any  meeting at which a quorum is  present,  or acts  approved in writing by all
members of the Committee without a meeting, shall be the acts of the Committee.

      (b) Unless  otherwise  determined by the Board,  the Committee  shall have
full  and  final  authority  in its  discretion,  but  subject  to  the  express
provisions of the Plan, to:

            (i) prescribe,  amend and rescind rules and regulations  relating to
      the Plan;

            (ii) interpret the Plan and the respective Stock Options; and

            (iii)  make all other  determinations  necessary  or  advisable  for
      administering  the Plan. All  determinations  and  interpretations  by the
      Committee or the Board shall be binding and  conclusive  upon all parties.
      No member of the  Committee or the Board shall be liable for any action or
      determination  made in good  faith in  respect  of the  Plan or any  Stock
      Option granted under it.

      (c) The provisions of this Section 5 shall survive any  termination of the
Plan.

      6. Terms and Exercise of Stock Option.

      (a) Unless  otherwise  determined by the Committee each Stock Option shall
terminate  no later than ten years (or such  shorter term as may be fixed by the
Committee)  after  the  date on  which it shall  have  been  granted;  provided,
however,  that no ISO granted to any Employee who is a  Ten-Percent  Shareholder
shall be made  exercisable  after the  expiration of five years from the date of
grant.  The  date of  termination  pursuant  to this  paragraph  is  hereinafter
referred to as the "termination date" of the option.

      (b) Stock Options shall be  exercisable  at such time or times and in such
installments,  if any, as the Committee or Board may determine. In the event any
option is exercisable in installments,  any shares which may be purchased during
any year or other  period  which  are not  purchased  during  such year or other
period may be purchased  at any time or from time to time during any  subsequent
year or period  during the term of the option unless  otherwise  provided in the
Stock Option Agreement.


                                      B-2
<PAGE>

      (c) A Stock Option shall be exercised by written  notice to the  Secretary
or Treasurer of the Company at its then principal  office.  The notice shall (i)
specify the number of shares as to which the Stock Option is being exercised and
shall be  accompanied  by payment in full of the purchase price for such shares;
provided,  however,  that an optionee at his or her  discretion  may, in lieu of
cash payment to the Company,  deliver Mature Shares, valued at Fair Market Value
on the date of delivery, as payment for the exercise of any Stock Option or (ii)
request  that the Company  withhold,  from the number of shares of Common  Stock
that may  otherwise  be obtained  upon the  exercise of the Stock  Option,  that
number of shares having an aggregate fair market value equal to the Stock Option
exercise price. In the event a Stock Option is being  exercised,  in whole or in
part  pursuant to Section 6(c) hereof by any person other than the  optionee,  a
notice of election shall be accompanied by proof  satisfactory to the Company of
the rights of such person to exercise said Stock Option.  An optionee shall not,
by virtue of the  granting  of a Stock  Option,  be  entitled to any rights of a
shareholder  in the Company and such  optionee  shall not be considered a record
holder of shares purchased by him or her until the date on which he or she shall
actually be recorded as the holder of such shares upon the stock  records of the
Company.  The Company shall not be required to issue any fractional  shares upon
exercise  of any Stock  Option  and shall not be  required  to pay to the person
exercising the Stock Option the cash equivalent of any fractional share interest
unless so determined by the Committee.

      (d) In the event an optionee elects to deliver Mature Shares or to request
that Common Stock be withheld in  accordance  with  subsection  (c) above,  upon
exercise of a Stock Option granted  hereunder,  the Company shall be entitled to
require as a  condition  thereto  that the  optionee  remit an amount  which the
Company deems  sufficient to satisfy all Federal,  state and other  governmental
withholding tax requirements  related thereto. The Company shall have the right,
in  lieu  of or in  addition  to  the  foregoing  to  withhold  such  sums  from
compensation otherwise due to the optionee.

      7. Other Stock Options Conditions.

      (a) Except as expressly permitted by the Committee,  no Stock Option shall
be  transferred  by the  optionee  otherwise  than (i) by will or by the laws of
descent  and  distribution,  (ii) for estate  planning  purposes,  or (iii) as a
charitable  contribution  to an exempt  organization  as such term is defined in
Section  501(c)(3)  of the Code.  During the  lifetime of the optionee the Stock
Option shall be  exercisable  only by such  optionee,  by the  optionee's  legal
representative or by a transferee  permitted under the terms of the grant of the
Stock Option.

      (b) Unless  otherwise  determined  by the  Committee,  in the event of the
termination  of an  optionee's  employment  by the  Company  at any time for any
reason  (excluding  disability or death),  the optionee's  option and all rights
thereunder  shall be exercisable by the optionee at any time within three months
thereafter  to the  extent  such  option  was  exercisable  at the  time of such
termination,  but in no event later than the termination  date of the optionee's
Stock Option.  Notwithstanding the foregoing, unless otherwise determined by the
Committee,  in the event an optionee is permanently and totally disabled (within
the meaning of Section 105(d)(4),  or any successor  section,  of the Code), the
optionee's  Stock Option and all rights  thereunder  shall be exercisable by the
optionee (or the optionee's legal  representative) to the extent such option was
exercisable at the time of such  termination,  at any time within six (6) months
of termination of employment but in no event later than the termination  date of
his Stock Option.

      (c) Unless otherwise determined by the Committee, if an optionee shall die
while in the employ of the Company the optionee's  Stock Option may be exercised
by the optionee's designated  beneficiary or beneficiaries (or if none have been
effectively designated, by the optionee's executor,  administrator or the person
to whom the optionee's  rights under the  optionee's  Stock Option shall pass by
will or by the laws of descent and distribution) to the extent such Stock Option
was  exercisable  at the time of such  termination,  at any time  within six (6)
months  after the date of death but not later than the  termination  date of the
optionee's Stock Option.

      (d) In the event an Eligible  Director  ceases to serve as a member of the
Board of Directors  of the Company at any time for any reason,  his Stock Option
and all rights  thereunder  shall be  exercisable  by him at any time within one
year thereafter,  to the extent such Stock Option was exercisable at the time of
such  termination,  but in no event later than the termination date of his Stock
Option.  If an Eligible  Director  shall die while  serving as a director of the
Company,  his Stock  Option may be exercised by his  designated  beneficiary  or
beneficiaries  (or, if none have been effectively  designated,  by his executor,
administrator or the person to whom his rights under his Stock Option shall pass
by his will or by the laws of descent and distribution) to the extent such Stock
Option was exercisable at the time of such  termination,  at any time within one
year after the date of his death, but not later than the termination date of his
Stock Option.


                                      B-3
<PAGE>

      (e) Nothing in the Plan or in any Stock  Option  Agreement  relating to an
option  granted  pursuant  hereto  shall  confer  on any  employee  any right to
continue  in the employ of the Company or prevent or  interfere  in any way with
the right of the  Company  to  terminate  his  employment  at any time,  with or
without cause.

      (f) Nothing in the Plan or in any Stock  Option  Agreement  relating to an
option granted  pursuant hereto shall confer on any Eligible  Director any right
to continue as a director of the Company.

      (g) Each Stock Option granted pursuant to the Plan shall be evidenced by a
written Stock Option Agreement duly executed by the Company and the optionee, in
such form and containing  such provisions as the Committee may from time to time
authorize or approve.

      8.  Adjustments.  Stock Option Agreements shall contain such provisions as
the Committee  shall  determine to be appropriate for the adjustment of the kind
and number of shares  subject to each  outstanding  Stock  Option,  or the Stock
Option prices,  or both, in the event of any changes in the  outstanding  Common
Stock  of  the   Company   by  reason   of  stock   dividends,   stock   splits,
recapitalizations,  reorganizations,  mergers,  consolidations,  combinations or
exchanges of shares,  or the like. In the event of any such change or changes in
the outstanding Common Stock, and as often as the same shall occur, the kind and
aggregate  number  of  shares  available  under  the Plan  may be  appropriately
adjusted by the Committee, whose determination shall be binding and conclusive.

      9. Amendment and Termination.

      (a)  Unless  the Plan shall have been  otherwise  terminated  as  provided
herein, it shall terminate on, and no option shall be granted thereunder,  after
the tenth anniversary of the adoption of the Plan by the Board. The Board may at
any time prior to that date alter,  suspend or terminate the Plan as it may deem
advisable,  except  that it may not without  further  shareholder  approval  (i)
increase  the maximum  number of shares  subject to the Plan (except for changes
pursuant to Section 8); (ii) permit the grant of Stock  Options to anyone  other
than the Employees, Eligible Directors and consultants;  (iii) change the manner
of  determining  the minimum  exercise  prices  (except for changes  pursuant to
Section 8); or (iv) extend the period  during which Stock Options may be granted
or  exercised.   Except  as  otherwise   hereinafter  provided,  no  alteration,
suspension or termination  of the Plan may,  without the consent of the optionee
to whom any Stock Option shall have  theretofore  been granted (or the person or
persons  entitled to exercise  such Stock Option  under  Section 7 of the Plan),
terminate  such  optionee's  Stock  Option or adversely  affect such  optionee's
rights thereunder.

      (b) Anything herein to the contrary notwithstanding, in the event that the
Board shall at any time  declare it advisable  to do so in  connection  with any
proposed  sale or  conveyance  of all or  substantially  all of the property and
assets of the Company or of any proposed  consolidation or merger of the Company
(unless the Company shall be the  surviving  corporation  in such  merger),  the
Company  may give  written  notice to the  holder of any Stock  Option  that the
optionee's  Stock Option may be exercised only within thirty (30) days after the
date of such notice, and all rights under said Stock Option which shall not have
been so exercised  shall  terminate at the  expiration of such thirty (30) days,
provided that the proposed sale,  conveyance,  consolidation  or merger to which
such notice shall relate  shall be  consummated  within six (6) months after the
date of such notice. If such proposed sale, conveyance,  consolidation or merger
shall not be consummated  within said time period,  no unexercised  rights under
any Stock Option shall be affected by such notice  except that such Stock Option
may not be exercised between the date of expiration of such thirty (30) days and
the date of the expiration of such six-month period.

      10. Option Exercise Price.  The price per share to be paid by the optionee
at the time an ISO is  exercised  shall  not be less  than one  hundred  percent
(100%) of the Fair Market Value of one share of the optioned Common Stock on the
date on which  the  Option is  granted;  provided,  however,  that no ISO may be
granted under the Plan to any Employee who is a Ten-Percent Shareholder,  unless
the exercise  price of such ISO is at least equal to one hundred and ten percent
(110%) of Fair Market Value on the date of grant. The price per share to be paid
by the  optionee  at  the  time  an NQO is  exercised  shall  not be  less  than
eighty-five  percent (85%) of the Fair Market Value on the date on which the NQO
is granted, as determined by the Committee; provided, however, that the exercise
price  of  any  NQO  that  is  intended  to be  treated  as  performance-related
compensation  for purposes of Section  162(m) of the Code shall not be less than
one hundred percent (100%) of the Fair Market Value on the date of grant.

      11.  Ceiling on ISO Grants.  To the extent the aggregate Fair Market Value
(determined  at the time any ISO is granted) of Common  Stock for which ISOs are
exercisable  for the first time by any optionee  during any calendar  year under
the Plan (together with any incentive stock options granted under any other plan
of the Company, any parent or any subsidiary) exceeds $100,000, such excess ISOs
shall be treated as NQOs.


                                      B-4
<PAGE>

      12. Indemnification. Any member of the Committee or the Board who is made,
or threatened to be made, a party to any action or proceeding,  whether civil or
criminal,  by  reason  of the fact  that  such  person is or was a member of the
Committee or the Board insofar as it relates to the Plan shall be indemnified by
the Company, and the Company may advance such person's related expenses,  to the
full extent  permitted by law and/or the Certificate of Incorporation or By-laws
of the Company.

      13. Effective Date of the Plan; Termination of the Plan and Stock Options.
The Plan shall become effective on the date of adoption by the Board,  provided,
however,  that the Plan shall be subject to approval by the affirmative  vote of
the holders of a majority of the votes cast at a meeting of  shareholders  on or
before  December 31, 2001. If any Stock Options are granted  hereunder  prior to
approval  by the  shareholders  and such  approval  does not  occur,  such Stock
Options shall be deemed null and void ab initio.

      14.  Expenses.  Except as  otherwise  provided  herein for the  payment of
Federal,  State and other governmental taxes, the Company shall pay all fees and
expenses  incurred  in  connection  with the Plan and the  issuance of the stock
hereunder.

      15. Government Regulations, Registrations and Listing of Stock.

      (a) The Plan, and the grant and exercise of Stock Options thereunder,  and
the  Company's  obligation  to sell and deliver  stock under such Stock  Options
shall be subject to all applicable Federal and State laws, rules and regulations
and to such  approvals by any regulatory or  governmental  agency as may, in the
opinion of the Company, be necessary or appropriate.

      (b)  The  Company  may  in  its  discretion  require,  whether  or  not  a
registration statement under the Securities Act of 1933 and the applicable rules
and  regulations  thereunder  (collectively  the  "Act") is then in effect  with
respect to shares  issuable  upon  exercise of any Stock Option or the offer and
sale of such shares is exempt from the registration provisions of such Act, that
as a  condition  precedent  to the  exercise  of any  Stock  Option  the  person
exercising  the Stock  Option give to the Company a written  representation  and
undertaking  satisfactory  in form and substance to the Company that such person
is acquiring  the shares for such  person's own account for  investment  and not
with a view to the distribution or resale thereof and otherwise establish to the
Company's  satisfaction  that the  offer  or sale of the  shares  issuable  upon
exercise  of the Stock  Option  will not  constitute  or result in any breach or
violation of the Act or any similar act or statute or law or  regulation  in the
event that a  registration  statement  under the Act is not then  effective with
respect to the Common Stock issued upon the exercise of such Stock  Option;  the
Company may place upon any stock  certificate  appropriate  legends referring to
the restrictions on disposition under the Act.

      (c) In the event the class of shares  issuable  upon the  exercise  of any
Stock  Option is listed on any  national  securities  exchange  or  NASDAQ,  the
Company  shall not be required to issue or achieve  any  certificate  for shares
upon the  exercise  of any Stock  Option,  or to the  listing  of the  shares so
issuable  on such  national  securities  exchange  or  NASDAQ  and  prior to the
registration  of the  same  under  the  Securities  Exchange  Act of 1934 or any
similar act or statute.


                                      B-5
<PAGE>

                           4KIDS ENTERTAINMENT, INC.

                                      PROXY

                  ANNUAL MEETING OF SHAREHOLDERS--MAY 23, 2001.

      The undersigned  shareholder of 4Kids Entertainment,  Inc. hereby appoints
Alfred R. Kahn,  the attorney and proxy of the  undersigned,  with full power of
substitution and resubstitution, to vote, as indicated herein, all the shares of
common stock of 4Kids  standing in the name of the  undersigned  at the close of
business on April 5, 2001 at the Annual Meeting of  Shareholders  of 4Kids to be
held at JP Morgan Chase, 270 Park Avenue, New York, New York, Conference Room A,
11th  Floor at 10:00  a.m.,  local  time,  on May 23,  2001,  and at any and all
adjournments or postponements thereof, with all the powers the undersigned would
possess  if then and  there  personally  present  and  especially  (but  without
limiting the general  authorization and power hereby given) to vote as indicated
on the  proposals,  as more  fully  described  in the  Proxy  Statement  for the
meeting.

      Please mark boxes [  ] or [  ] in blue or black ink.

      1. Election of Directors.

      FOR all nominees [  ]   WITHHOLD authority only     WITHHOLD authority
                              for those nominees whose    for ALL nominees [  ]
                              name(s) I have stricken
                              below [  ]

      Nominees for Director  are: Joel I. Cohen,  Jay Emmett,  Joseph P. Garrity
      and Alfred R. Kahn.

      2. Proposal to approve the 4Kids 2001 Stock Option Plan.

            For [  ]            Against [  ]            Abstain [  ]

      3. Proposal to approve the  ratification  of the appointment of Deloitte &
Touche LLP as 4Kids independent auditors for the fiscal year ending December 31,
2001.

            For [  ]            Against [  ]            Abstain [  ]

      4. In their discretion, the Proxies are authorized to vote upon such other
business  as  may  properly  come  before  the  meeting  or any  adjournment  or
adjournments thereof.

                  (Continued, and to be signed on reverse side)


<PAGE>

                           (Continued from other side)

      THIS PROXY IS SOLICITED  BY THE BOARD OF  DIRECTORS  AND WILL BE VOTED FOR
THE  ELECTION  OF THE  PROPOSED  DIRECTORS  AND FOR THE ABOVE  PROPOSALS  UNLESS
OTHERWISE INDICATED.


                                    SIGNATURE(S)  should be  exactly  as name or
                                    names appear on this proxy. If stock is held
                                    jointly, each holder should sign. If signing
                                    is  by  attorney,  executor,  administrator,
                                    trustee or guardian, please give full title.

                                    Dated _______________________________, 2001


                                    -------------------------------------------
                                                  Signature


                                    -------------------------------------------
                                                 Print Name


                                    -------------------------------------------
                                                  Signature


                                    -------------------------------------------
                                                 Print Name

  [Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.]