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                                                                  Exhibit: 10.3D

                                December 15, 1998

DaMert Company
1609 Forth Street
Berkeley, CA 97410

Dear Sir/Madam:

      This letter is to confirm that Wells Fargo Bank, National Association
("Bank"), subject to all terms and conditions contained herein, has agreed to
make available to DaMert Company ("Borrower") the following described credit
accommodations (each, a "Credit" and collectively, the "Credits"):

      1. A revolving line of credit under which Bank will make advances to
Borrower from time to time up to and including May 15, 1999, not to exceed at
any time the maximum principal amount of Two Million Five Hundred Thousand
Dollars ($2,500,00.00) ("Line of Credit"), the proceeds of which shall be used
to finance working capital requirements.

      2. A term loan in the original amount of Eighty Thousand Two Hundred and
Sixty Dollars ($80,260.00) ("Term Loan"), on which the outstanding principal
balance as of the date hereof is Twenty Six Thousand Seven Hundred Fifty-Three
and 44/100 Dollars ($26,753.44).

      3. A loan in the principal amount of Four Hundred Thousand Dollars
($400,000.00) ("Loan"), the proceeds of which shall be used to finance working
capital requirements.

I.    CREDIT TERMS:

      1. LINE OF CREDIT:

      (a) Line of Credit Note. Borrower's obligation to repay advances under the
Line of Credit shall be evidenced by a promissory note substantially in the form
of Exhibit A attached hereto ("Line of Credit Note"), all terms of which are
incorporated herein by this reference.
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December 15, 1998
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      (b) Letter of Credit Subfeature. As a subfeature under the Line of Credit,
Bank agrees from time to time during the term thereof to issue sight commercial
letters of credit for the account of Borrower to finance inventory purchase
(each, a "Letter of Credit" and collectively, "Letters of Credit") ; provided
however, that the form and substance of each Letter of Credit shall be subject
to approval by Bank, in its sole discretion; and provided further, that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed Two Hundred Fifty Thousand Dollars ($250,000.00). Each Letter of
Credit shall be issued for a term not to exceed 120 days, as designated by
Borrower; provided however, that no Letter of Credit shall have an expiration
date subsequent to the maturity date of the Line of Credit. The undrawn amount
of all Letters of Credit shall be reserved under the Line of Credit and shall
not be available for borrowings thereunder. Each Letter of Credit shall be
subject to the additional terms and conditions of the Letter of Credit Agreement
and related documents, if any, required by Bank in connection with the issuance
thereof. Each draft paid by Bank under a Letter of Credit shall be deemed an
advance under the Line of Credit and shall be repaid by Borrower in accordance
with the terms and conditions of this letter applicable to such advances;
provided however, that if advances under the Line of Credit are not available,
for any reason, at the time any draft is paid by Bank, then Borrower shall
immediately pay to Bank the full amount of such draft, together with interest
thereon from the date such amount is paid by Bank to the date such amount is
fully repaid by Borrower, at the rate of interest applicable to advances under
the Line of Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any demand deposit account maintained by Borrower with
Bank for the amount of any such draft.

      (c) Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outs-Landing
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.

      2. TERM LOAN:

      (a) Term Note. Borrower's obligation to repay the Term Loan shall be
evidenced by a promissory note substantially in the form of Exhibit B attached
hereto ("Term Note"), all terms of which are incorporated herein by this
reference.
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December 15, 1998
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      (b) Repayment. The principal amount of the Term Loan shall be repaid in
accordance with the provisions of the Term Note.

      (c) Prepayment. Borrower may prepay principal on the Term Loan solely in
accordance with the provisions of the Term Note.

      3. LOAN:

      (a) Loan Note. Borrower's obligation to repay the Loan shall be evidenced
by a promissory note substantially in the form of Exhibit C attached hereto
("Loan Note"), all terms of which are incorporated herein by this reference.

      (b) Repayment. The outstanding principal balance of the Loan shall be due
and payable in full on January 31,1999.

      (c) Prepayment. Borrower may prepay principal on the Loan solely in
accordance with the provisions of the Loan Note.

      4. COLLATERAL:

      As security for ail indebtedness of Borrower to Bank under the Line of
Credit and the Loan, Borrower hereby grants to Bank security interests of first
priority in all Borrower's accounts receivable and other rights to payment,
general intangibles and inventory.

      As security for all indebtedness of Borrower to Bank under the Term Loan
and the Loan, Borrower hereby grants to Bank security interests of first
priority in all Borrower's equipment.

      All of the foregoing shall be evidenced by and subject to the terms of
such security agreements, financing statements, deeds of trust and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for
all costs and expenses incurred by Bank in connection with any of the foregoing
security, including without limitation, filing and recording fees and costs of
appraisals, audits and title insurance.

      5. GUARANTIES:

      All indebtedness of Borrower to Bank shall be guaranteed by evidenced by
and subject to the terms of guaranties in form and substance satisfactory to
Bank.
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December 15, 1998
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      6. SUBORDINATION OF DEBT:

      All obligations of Borrower to Frederick A. DaMert shall be subordinated
in right of repayment to all obligations of Borrower to Bank, as evidenced by
and subject to the terms of subordination agreements in form and substance
satisfactory to Bank.

II.   INTEREST/FEES:

      1. Interest. The outstanding principal balance of the Line of Credit, Term
Loan and Loan shall bear interest at the rate of interest set forth in the line
of credit note, term note and the promissory note.

      The amount of each draft paid under any letter of credit shall bear
interest from the date such draft is paid by Bank to the date such amount is
fully repaid by Borrower.

      2. Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in the Line of Credit Note, term Note and Promissory Note.

      3. Letter of Credit Fees. Borrower shall pay to Bank fees upon the
issuance of each Letter of Credit, upon the payment or negotiation by Bank of
each draft under any Letter of Credit and upon the occurrence of any other
activity with respect to any Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity.

      4. Collection of Payments. Borrower authorizes Bank to collect all
principal, interest and fees due under each Credit by charging Borrower's demand
deposit account number 4121-089916 with Bank, or any other demand deposit
account maintained by Borrower with Bank, for the full amount thereof. Should
there be insufficient funds in any such demand deposit account to pay all such
sums when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.
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December 15, 1998
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III.  REPRESENTATIONS AND WARRANTIES:

      Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this letter and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this letter.

      1. Legal Status. Borrower is a corporation, duly organized and existing
and in good standing under the laws of the state of California, and is qualified
or licensed to do business in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

      2. Authorization and Validity. This letter, the Notes, and each other
document, contract or instrument deemed necessary by Bank to evidence any
extension of credit to Borrower pursuant to the terms and conditions hereof, or
now or at any time hereafter required by or delivered to Bank in connection with
this letter (collectively, the "Loan Documents") have been duly authorized, and
upon their execution and delivery in accordance with the provisions hereof will
constitute legal, valid and binding agreements and obligations of Borrower or
the party which executes the same, enforceable in accordance with their
respective terms.

      3. No Violation. The execution, delivery and performance by Borrower of
each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.

      4. Litigation. There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing
prior to the date hereof.

      5. Correctness of Financial Statement. The Financial statement of Borrower
dated December 31, 1997, a true copy of which has been delivered by Borrower to
Bank prior to the date hereof, (a) is complete and correct and presents fairly
the
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December 15, 1998
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financial condition of Borrower, (b) discloses all liabilities of Borrower that
are required to be reflected or reserved against under generally accepted
accounting principles, whether liquidated or unliquidated, fixed or contingent,
and (c) has been prepared in accordance with generally accepted accounting
principles consistently applied. Since the date of such financial statement
there has been no material adverse change in the condition or operation of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or
otherwise encumbered any of its assets or properties except in favor of Bank or
as otherwise permitted by Bank in writing.

      6. Income Tax Returns. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.

      7. No Subordination. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this letter to any other obligation of Borrower.

      8. Permits, Franchises. Borrower possesses, and will hereafter possess,
all permits, consents, approvals, franchises and licenses required and all
rights to trademarks, trade names, patents and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

      9. ERISA. Borrower is in compliance in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time ("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event,
as defined in ERISA, has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.

      10. Other Obligations. Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
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December 15, 1998
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      11. Environmental Matters. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable federal or state environmental, hazardous waste,
health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

IV.   CONDITIONS:

      1. Conditions of Initial Extension of Credit. The obligation of Bank to
grant any of the Credits is subject to fulfillment to Bank's satisfaction of all
of the following conditions:

      (a) Documentation. Bank shall have received each of the Loan Documents,
duly executed and in form and substance satisfactory to Bank.

      (b) Financial Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower or any
guarantor hereunder, nor any material decline, as determined by Bank, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor.

      (c) Insurance. Borrower shall have delivered to Bank evidence of insurance
coverage on all Borrower's property, in form, substance, amounts, covering risks
and issued by companies satisfactory to Bank, and where required by Bank, with
loss payable endorsements in favor of Bank.
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December 15, 1998
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      2. Conditions of Each Extension of Credit. The obligation of Bank to make
each extension of credit requested by Borrower hereunder shall be subject to the
fulfillment to Bank's satisfaction of each of the following conditions:

      (a) Compliance. The representations and warranties contained herein and in
each of the other Loan Documents shall be true on and as of the date of the
signing of this letter and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
default hereunder, and no condition, event or act which with the giving of
notice or the passage of time or both would constitute such a default, shall
have occurred and be continuing or shall exist.

      (b) Documentation. Bank shall have received all additional documents which
may be required in connection with such extension of credit.

V.    COVENANTS:

      Borrower covenants that so long Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

      1. Punctual Payment. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and in
the manner specified therein, and immediately upon demand by Bank, the amount by
which the outstanding principal balance of any of the Credits at any time
exceeds any limitation on borrowings applicable thereto.

      2. Accounting Records. Maintain adequate books and records in accordance
with generally accepted accounting principles consistently applied, and permit
any representative of Bank, at any reasonable time, to inspect, audit and
examine such books and records, to make copies of the same and inspect the
properties of Borrower.

      3. Financial Statements. Provide to Bank all of the following, in form and
detail satisfactory to Bank:
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December 15, 1998
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      (a) not later than 120 days after and as of the end of each fiscal year, a
reviewed financial statement of Borrower, prepared by an independent certified
public accountant acceptable to Bank, to include balance sheet, income
statements and statements of cash flow.

      (b) not later than 45 days after and as of the end of each fiscal year, a
financial statement of Borrower, prepared by Borrower, to include balance sheet
and income statement;

      (c) not later than 180 days after and as of the end of each fiscal year, a
financial statement of guarantor hereunder, prepared by such guarantor, to
include balance sheet and income statement, and within 30 days after filing, but
in no event later than each November 15, copies of such guarantor's filed
federal income tax returns, K1's and extension letters for such year;

      (d) from time to time such other information as Bank may reasonably
request

      4. Compliance. Preserve and maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; and comply with the provisions of all documents pursuant to which
Borrower is organized and/or which govern Borrower's continued existence and
with the requirements of all laws, rules, regulations and orders of a
governmental agency applicable to Borrower and/or its business.

      5. Insurance. Maintain and keep in force insurance of the types and in
amounts customarily carried in lines of business similar to that of Borrower,
including but not limited to fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance carried with
companies and in amounts satisfactory to Bank, and deliver to Bank from time to
time at Bank's request schedules setting forth all insurance then in effect.

      6. Facilities. Keep all properties useful or necessary to Borrower's
business in good repair and condition, and from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.

      7. Taxes and Other Liabilities. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and
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December 15, 1998
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assessments, except (a) such as Borrower may in good faith contest or as to
which a bona fide dispute may arise, and (b) for which Borrower has made
provision, to Bank's satisfaction, for eventual payment thereof in the event
Borrower is obligated to make such payment.

      8. Financial Condition. Maintain Borrower's financial condition as follows
using generally accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
definitions herein):

      (a) Total Liabilities divided by Tangible Net Worth not at any time
greater than 3.90 to 1.0 until December 30, 1998 and 1.50 to 1.00 thereafter,
with "Total Liabilities" defined as the aggregate of current liabilities and
non-current liabilities less subordinated debt, and with "Tangible Net Worth"
defined as the aggregate of Stockholders' equity plus subordinated debt less any
intangible assets.

      (b) Net loss after taxes not greater than $500,000.00 and net income after
taxes not less than $50,000.00 as of December 31, 1998.

      9. Other Indebtedness. Not create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, and (b) any
other liabilities of Borrower existing as of, and disclosed to Bank prior to,
the date hereof.

      10. Merger, Consolidation, Transfer of Assets. Not merge into or
consolidate with any other entity; nor make any substantial change in the nature
of Borrower's business as conducted as of the date hereof; nor acquire all or
substantially all of the assets of any other entity; nor sell, lease, transfer
or otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.

      11. Dividends, Distributions. Not declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class of Borrower's stock now or hereafter outstanding in
excess of Borrower's Net Income before taxes.
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December 15, 1998
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      12. Pledge of Assets. Not mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any portion of Borrower's assets now
owned or hereafter acquired, except any of the foregoing in favor of Bank or
which are existing as of, and disclosed to Bank in writing prior to, the date
hereof.

      13. Year 2000 Compliance. Perform all acts reasonably necessary to ensure
that (a) Borrower and any business in which Borrower holds a substantial
interest, and (b) all customers, suppliers and vendors that are material to
Borrower's business, become Year 2000 Compliant in a timely manner. Such acts
shall include, without limitation, performing a comprehensive review and
assessment of all of Borrower's systems and adopting a detailed plan, with
itemized budget, for the remediation, monitoring and testing of such systems. As
used herein, "Year 2000 Compliant" shall mean, in regard to any entity, that all
software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Borrower shall, immediately upon request, provide to Bank such
certifications or other evidence of Borrower's compliance with the terms hereof
as Bank may from time to time require.

VI.   DEFAULT, REMEDIES:

      1. Default, Remedies. Upon the violation of any term or condition of any
of the Loan Documents, or upon the occurrence of any default or defined event of
default under any of the Loan Documents: (a) all indebtedness of Borrower under
each of the Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank's option and without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any
further credit under any of the Loan Documents shall immediately cease and
terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without
limitation the right to resort to any or all security for any of the Credits and
to exercise any or all of the rights of a beneficiary or secured party pursuant
to applicable law. All rights, powers and remedies of Bank may be exercised at
any time by Bank and from time to time after the occurrence of any such breach
or default, are cumulative and not exclusive, and shall be in addition to any
other rights, powers or remedies provided by law or equity.
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December 15, 1998
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      2. No Waiver. No delay, failure or discontinuance of Bank in exercising
any right, power or remedy under any of the Loan Documents shall affect or
operate as a waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude, waive or otherwise
affect any other or further exercise thereof or the exercise of any other right,
power or remedy. Any waiver, permit, consent or approval of any kind by Bank of
any breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.

VII.  MISCELLANEOUS:

      1. Notices. All notices, requests and demands which any party is required
or may desire to give to any other party under any provision of this letter must
be in writing delivered to each party at its address first set forth above, or
to such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given or made as
follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon
the earlier of the date of receipt or three (3) days after deposit in the U.S.
mail, first class and postage prepaid; and (c) if sent by telecopy, upon
receipt.

      2. Costs, Expenses and Attorneys' Fees. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
letter and the other Loan Documents, Bank's continued administration hereof and
thereof, and the preparation of amendments and waivers hereto and thereto, (b)
the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to any Borrower
or any other person or entity.
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December 15, 1998
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      3. Successors, Assignment. This letter shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may not
assign or transfer its interest hereunder without Bank's prior written consent.
Bank reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Bank's rights and
benefits under each of the Loan Documents. In connection therewith Bank may
disclose all documents and information which Bank now has or hereafter may
acquire relating to any of the Credits, Borrower or its business, [any guarantor
hereunder or the business of such guarantor,] or any collateral required
hereunder.

      4. Entire Agreement; Amendment. This letter and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to the
Credits and supersede all prior negotiations, communications, discussions and
correspondence concerning the subject matter hereof. This letter may be amended
or modified only in writing signed by each party hereto.

      5. No Third Party Beneficiaries. This letter is made and entered into for
the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this letter or any other of the Loan Documents to which it is
not a party.

      6. Severability of Provisions. If any provision of this letter shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
letter.

      7. Governing Law. This letter shall be governed by and construed in
accordance with the laws of the State of California.

      8. Arbitration.

      (a) Arbitration. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this letter. A "Dispute" shall mean any action, dispute, claim
or controversy of any kind, whether in contract or tort, statutory or common
law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit
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December 15, 1998
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and other activities, transactions or obligations of any kind related directly
or indirectly to any of the Loan Documents, including without limitation, any of
the foregoing arising in connection with the exercise of any self-help,
ancillary or other remedies pursuant to any of the Loan Documents. Any party may
by summary proceedings bring an action in court to compel arbitration of a
Dispute. Any party who fails or refuses to submit to arbitration following a
lawful demand by any other party shall bear all costs and expenses incurred by
such other party in compelling arbitration of any Dispute.

      (b) Governing Rules. Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. Section 91 or any similar applicable state law.

      (c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.

      (d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive law
applicable to the subject
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December 15, 1998
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matter of the Dispute. Arbitrators are empowered to resolve Disputes by summary
rulings in response to motions filed prior to the final arbitration hearing.
Arbitrators (i) shall resolve all Disputes in accordance with the substantive
law of the state of California, (ii) may grant any remedy or relief that a court
of the state of California could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award, and (iii) shall
have the power to award recovery of all costs and fees, to impose sanctions and
to take such other actions as they deem necessary to the same extent a judge
could pursuant to the Federal Rules of Civil Procedure, the California Rules of
Civil Procedure or other applicable law. Any Dispute in which the amount in
controversy is $5,000,000 or less shall be decided by a single arbitrator who
shall not render an award of greater than $5,000,000 (including damages, costs,
fees and expenses). By submission to a single arbitrator, each party expressly
waives any right or claim to recover more than $5,000,000. Any Dispute in which
the amount in controversy exceeds $5,000,000 shall be decided by majority vote
of a panel of three arbitrators; provided however, that all three arbitrators
must actively participate in all hearings and deliberations.

      (e) Judicial Review. Notwithstanding anything herein to the contrary, in
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.

      (f) Real Property Collateral; Judicial Reference. Notwithstanding anything
herein to the contrary, no Dispute shall be submitted to arbitration if the
Dispute concerns indebtedness
<PAGE>   16
Damert Company
December 15, 1998
Page 16


secured directly or indirectly, in whole or in part, by any real property unless
(i) the holder of the mortgage, lien or security interest specifically elects in
writing to proceed with the arbitration, or (ii) all parties to the arbitration
waive any rights or benefits that might accrue to them by virtue of the single
action rule statute of California, thereby agreeing that all indebtedness and
obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and
enforceable. If any such Dispute is not submitted to arbitration, the Dispute
shall be referred to a referee in accordance with California Code of Civil
Procedure Section 638 et seq., and this general reference agreement is intended
to be specifically enforceable in accordance with said Section 638. A referee
with the qualifications required herein for arbitrators shall be selected
pursuant to the AAA's selection procedures. Judgment upon the decision rendered
by a referee shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure Sections 644 and
645.

      (g) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.

      Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions. Bank's commitment to extend any credit to
Borrower pursuant to the terms
<PAGE>   17
Damert Company
December 15, 1998
Page 17


of this letter shall terminate on May 15, 1999, unless this letter is
acknowledged by Borrower and returned to Bank on or before that date.

                                        Sincerely,

                                        WELLS FARGO BANK,
                                          NATIONAL ASSOCIATION

                                        By: /s/ Mark Schoenrock
                                            -----------------------------
                                                Mark Schoenrock
                                                Vice President

Acknowledged and accepted as of 25 Dec 98:

DaMert Company

By: /s/ Frederick A. DaMert
    -----------------------------
        Frederick A. DaMert
        President
<PAGE>   18
                                                                       Exhibit A

WELLS FARGO BANK                                   REVOLVING LINE OF CREDIT NOTE
--------------------------------------------------------------------------------


$2,500,000.00                                                Oakland, California
                                                                    May 15, 1998


    FOR VALUE RECEIVED, the undersigned DAMERT COMPANY ("Borrower") promises to
pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its
office at East Bay RCBO, One Kaiser Plaza Suite 850, Oakland, CA 94612, or at
such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal sum
of $2,500,000.00, or so much thereof as may be advanced and be outstanding, with
interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.

INTEREST:

     (a)  Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) at a
rate per annum .75000% above the Prime Rate in effect from time to time. The
"Prime Rate" is a base rate that Bank from time to time establishes and which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is
announced within Bank.

     (b)  Payment of Interest. Interest accrued on this Note shall be payable
in the 15th day of each month, commencing June 15, 1998.

     (c)  Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on
the basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.

     (d)  Collection of Payments. Borrower authorizes Bank to collect all
interest due hereunder by charging Borrower's demand deposit account number
4121-089916 with Bank, or any other demand deposit account maintained by any
Borrower with Bank, for the full amount thereof. Should there be insufficient
funds in any such demand deposit account to pay all such sums when due, the
full amount of such deficiency shall be immediately due and payable by Borrower.

BORROWING AND REPAYMENT:

     (a)  Borrowing and Repayment. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made
hereon by or for any Borrower, which balance may be endorsed hereon from time
to time by the holder. The outstanding principal balance of this Note shall be
due and payable in full on May 15, 1999.

     (b)  Advances. Advances hereunder, to the total amount of the principal
sum available hereunder, may be made by the holder at the oral or written
request of (i) Frederick A. DaMert or Gail Patton DaMert, any one acting alone,
who are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is received
by the holder at the office designated above, or (ii) any person, with respect
to advances deposited to the credit of any account of any Borrower with the
holder, which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of each Borrower regardless of the fact
that persons other than those authorized to request advances may have authority
to draw against such account. The holder shall have no obligation to determine
whether any person requesting an advance is or has been authorized by any
Borrower.

     (c)  Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.

EVENTS OF DEFAULT:

     The occurrence of any of the following shall constitute an "Event of
Default" under this Note:

     (a)  The failure to pay any principal, interest, fees or other charges
when due hereunder or under any contract, instrument or document executed in
connection with this Note.

     (b)  The filing of a petition by or against any Borrower, any guarantor of
this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver,

Revolving Line of Credit Note (08/96), Page 1
<PAGE>   19
trustee, custodian or liquidator of or for any part of the assets or property of
any Borrower or Third Party Obligor; any Borrower or Third Party Obligor becomes
insolvent, makes a general assignment for the benefit of creditors or is
generally not paying its debts as they become due; or any attachment or like
levy on any property of any Borrower or Third Party Obligor.

     (c)  The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.

     (d)  Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder.

     (e)  Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.

     (f)  Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary course
of its business.

     (g)  Any violation or breach of any provision of, or any defined event of
default under, any addendum to this Note or any loan agreement, guaranty,
security agreement, deed of trust, mortgage or other document executed in
connection with or securing this Note.

MISCELLANEOUS:

     (a)  REMEDIES.  Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel), expended
or incurred by the holder in connection with the enforcement of the holder's
rights and/or the collection of any amounts which become due to the holder under
this Note, and the prosecution or defense of any action in any way related to
this Note, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.

     (b)  OBLIGATIONS JOINT AND SEVERAL.  Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.

     (c)  GOVERNING LAW.  This Note shall be governed by and construed in
accordance with the laws of the state of California.

     IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.


DAMERT COMPANY

By: /s/ Frederick A. DaMert
   ------------------------
    Frederick A. DaMert
    Chairman

Revolving Line of Credit Note (08/96), Page 2

<PAGE>   20
                                                                       Exhibit B



WELLS FARGO BANK                                                       TERM NOTE


--------------------------------------------------------------------------------

$80,260.00                                                   Oakland, California
                                                                  April 30, 1996


     FOR VALUE RECEIVED, the undersigned DAMERT COMPANY ("Borrower") promises
to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its
office at East Bay RCBO, One Kaiser Plaza, Suite 850, Oakland, CA 94612, or at
such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal sum
of $80,260.00, with interest thereon as set forth herein.

INTEREST/FEES:

     (a)  Interest. The outstanding principal balance of this Note shall bear
interest at a rate per annum (computed on the basis of a 360-day year, actual
days elapsed) .75000% above the Prime Rate in effect from time to time. The
"Prime Rate" is a base rate that Bank from time to time establishes and which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is
announced within Bank.

     (b)  Payment of Interest. Interest accrued on this Note shall be payable
on the 15th day of each month, commencing May 15, 1996.

     (c)  Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on
the basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.

     (d)  Collection of Payments. Borrower authorizes Bank to collect all
principal and interest due hereunder by charging Borrower's demand deposit
account number 4121-089916 with Bank, or any other demand deposit account
maintained by any Borrower with Bank, for the full amount thereof. Should there
be insufficient funds in any such demand deposit account to pay all such sums
when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.

REPAYMENT AND PREPAYMENT:

     (a)  Repayment. Principal shall be payable on the 15th day of each month
in installments of $1,672.08 each, commencing May 15, 1996, and continuing up
to and including April 15, 2000, with a final installment consisting of all
remaining unpaid principal due and payable in full on May 15, 2000.

     (b)  Prepayment. Borrower may prepay principal on this Note at any time,
in any amount and without penalty. All prepayments of principal shall be
applied on the most remote principal installment or installments then unpaid.

EVENTS OF DEFAULT:

     Any default in the payment or performance of any obligation under this
Note, or any defined event of default under any loan agreement now or at any
time hereafter in effect between Borrower and Bank (whether executed prior to,
concurrently with or at any time after this Note, shall constitute an "Event of
Default" under this Note.

MISCELLANEOUS:

     (a)  Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal, interest,
fees and charges outstanding hereunder to be immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
expressly waived by each Borrower, and the obligation, if any, of the holder to
extend any further credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees and all allocated costs of the
holder's in-house counsel), incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of any amounts which
become due to the holder under this Note, and the prosecution or defense of any
action in any way related to this Note, including without limitation, any
action for declaratory relief, and including any of the foregoing incurred
in connection with any bankruptcy proceeding relating to any Borrower.

     (b)  Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.

     (c)  Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California, except to the extent Bank
has greater rights or remedies under Federal law, whether as a national bank or
otherwise, in which cash such choice of California law shall not be deemed to
deprive Bank of any such rights and remedies as may be available under Federal
law.

Term Note, Prime Rate; Unsecured (EXPDOCS), Page 1

<PAGE>   21
     IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.

DAMERT COMPANY

By: /s/ Fred DaMert
    ----------------------------

Title: President
       -------------------------

Term Note, Prime Rate; Unsecured (EXPDOCS), Page 2


<PAGE>   22
                                                                       Exhibit C
WELLS FARGO BANK                                                 PROMISSORY NOTE
--------------------------------------------------------------------------------

$400,000.00                                                  OAKLAND, CALIFORNIA
                                                               DECEMBER 15, 1998


     FOR VALUE RECEIVED, the undersigned DAMERT COMPANY ("Borrower") promises
to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its
office at EAST BAY RCBO, ONE KAISER PLAZA SUITE 850, OAKLAND, CA 94612, or at
such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal sum
of $400,000.00 with interest thereon as set forth herein.

INTEREST:

     (a)  Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) at a
rate per annum 3.75000% above the Prime Rate in effect from time to time. The
"Prime Rate" is a base rate that Bank from time to time establishes and which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto. Each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is
announced within Bank.

     (b)  Payment of Interest. Interest accrued on this Note shall be payable
on the 15th day of each month, commencing JANUARY 15, 1999.

     (c)  Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.

REPAYMENT AND PREPAYMENT:

     (a)  Repayment. The outstanding principal balance of this Note shall be
due and payable in full on JANUARY 31, 1999.

     (b)  Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.

     (c)  Prepayment. Borrower may prepay principal on this Note at any time,
in any amount and without penalty.

EVENTS OF DEFAULT:

     The occurrence of any of the following shall constitute an "Event of
Default" under this Note:

     (a)  The failure to pay any principal, interest, fees or other charges
when due hereunder or under any contract, instrument or document executed in
connection with this Note.

     (b)  The filing of a petition by or against any Borrower, any guarantor of
this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner
and/or joint venturer referred to herein as a "Third Part Obligor") under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they
become due; or any attachment or like levy on any property of any Borrower or
Third Party Obligor.

     (c)  The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.

     (d)  Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, and purchase obligation, or any other liability
of any kind to any person or entity, including the holder.

     (e)  Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.

     (f)  Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary course
of its business.


FIXED MATURITY PROMISSORY NOTE (08/96)                                    Page 1
02677, #1861417241
<PAGE>   23
     (g)  Any violation or breach of any provision of, or any defined event of
default under, any addendum to this Note or any loan agreement, guaranty,
security agreement, deed of trust, mortgage or other document executed in
connection with or securing this Note.

MISCELLANEOUS:

     (a)  Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel),
expended or incurred by the holder in connection with the enforcement of the
holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.

     (b)  Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.

     (c)  Governing Law. This Note shall be governed by and construed in
accordance with the laws of the state of California.

     IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.

DAMERT COMPANY


By:
   ----------------------------------
   FREDERICK A. DAMERT
   CHAIRMAN OF THE BOARD

Fixed Maturity Promissory Note (08/96)                                   Page 2
02677, #1861417241