DEFM14A 1 file1.htm DEFM14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

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 §240.14a-12

THE TOPPS COMPANY, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ]  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:

Common Stock, $0.01 par value per share

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

41,678,612 shares of Common Stock of The Topps Company, Inc. (includes 2,938,440 shares underlying options to purchase Common Stock, of which options to purchase 2,261,124 shares are in-the-money and eligible to receive consideration in the transaction, and 22,407 shares of restricted stock)

(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:

$385,591,102

(5)  Total fee paid:

$11,831.78

[X]  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:



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THE TOPPS COMPANY, INC.
One Whitehall Street
New York, New York 10004

May 21, 2007

Dear Fellow Stockholders:

You are cordially invited to attend a special meeting of stockholders of The Topps Company, Inc. (the ‘‘Company’’ or ‘‘Topps’’) to be held on June 28, 2007, at 2:00 P.M., local time, at the Company’s offices at One Whitehall Street, New York, New York. As described in the accompanying Notice of Special Meeting and Proxy Statement, at the special meeting, you will be asked to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of March 5, 2007 (the ‘‘Merger Agreement’’), by and among Tornante-MDP Joe Holding LLC (‘‘Parent’’), Tornante-MDP Joe Acquisition Corp., a wholly-owned subsidiary of Parent (‘‘Merger Sub’’), and Topps and the transactions contemplated by the Merger Agreement.

The Merger Agreement contemplates a merger of Merger Sub with and into Topps, with Topps continuing after the merger as the surviving corporation and a wholly-owned subsidiary of Parent. At the effective time of the merger, each issued and outstanding share of Topps common stock will be converted into the right to receive $9.75 in cash, without interest (and less applicable withholding taxes). In addition, each outstanding option to purchase Topps common stock will be canceled at the effective time of the merger and converted into the right to receive in cash, without interest (and less applicable withholding taxes), the amount (if any) by which $9.75 exceeds the per share exercise price of that option, except that certain options, although they will not be canceled, will remain outstanding and represent only the right to receive the merger consideration when they are exercised.

The Company’s board of directors (the ‘‘Board’’) has determined that the terms of the Merger Agreement and the transactions contemplated thereby (including the merger) are fair to, advisable and in the best interests of Topps and its stockholders, and recommends that you vote in favor of the Merger Agreement. The Board was advised by Willkie Farr & Gallagher LLP (‘‘Willkie Farr’’) as its legal counsel and by Lehman Brothers Inc. (‘‘Lehman Brothers’’) as its financial advisor.

Under Delaware law, the affirmative vote of holders of a majority of the outstanding shares of Topps common stock entitled to vote at the special meeting is necessary to approve and adopt the merger contemplated by the Merger Agreement. In addition, the Merger Agreement conditions the consummation of the merger upon, among other things, such affirmative vote being obtained.

As more fully discussed in the accompanying Proxy Statement, over a more than two-year period leading up to the execution of the Merger Agreement, the Company engaged in numerous efforts beyond the general conduct of its businesses that were designed to enhance stockholder value. In 2004, Topps retained a strategic consultancy firm to assist the Company with performing a thorough strategic review of Topps. In 2005, with the assistance of Lehman Brothers, the Company conducted a solicitation and auction process for the sale of the Topps confectionery business. Due to the absence of an attractive offer, the Company announced that it had terminated its process to evaluate a possible sale of its confectionery business and immediately began to implement a restructuring that it had developed with the assistance of the strategic consultant. As part of this restructuring, among other things, the Company was reorganized into distinct divisions—entertainment and confectionery—with separate strengthened management teams who report to the Chief Executive Officer, President and other senior executives of Topps. At the conclusion of this multi-year process, during which the




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confectionery business sale process failed, the Board ultimately concluded that a sale of the entire Company upon the terms and subject to the conditions set forth in the Merger Agreement was in the best interests of Topps and its stockholders. With the assistance of Willkie Farr, Lehman Brothers, Topps management and other directors of the Company, the lead director appointed by the Board negotiated the terms of the Merger Agreement and recommended the adoption and approval of the Merger Agreement and the transactions contemplated thereby (including the merger) by the Board.

At the time of its approval and adoption of the Merger Agreement, the Board received an opinion from Lehman Brothers to the effect that, from a financial point of view, the $9.75 per share cash merger consideration to be offered to the Company’s stockholders pursuant to the Merger Agreement in connection with the merger is fair to these stockholders. A copy of the opinion of Lehman Brothers is included as Annex B to the enclosed Proxy Statement and should be read carefully and in its entirety. The opinion is not intended to be and does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the merger.

Based in part on consultations with Topps management, Willkie Farr and Lehman Brothers, and in consideration of other supporting factors (including, but not limited to, Lehman Brothers’ opinion), the Board, by a vote of seven to three, has approved and adopted the Merger Agreement and the transactions contemplated thereby, including the merger.

The Board recommends that you vote FOR the approval and adoption of the Merger Agreement and the transactions contemplated thereby, including the merger.

The Merger Agreement provided for a 40-day period following the effective date of the Merger Agreement (often referred to as a ‘‘go-shop’’ period) for Topps to actively solicit and entertain any proposal to acquire the Company that is superior to the proposal contemplated by the Merger Agreement. During the go-shop period, which expired on April 14, 2007, with the assistance of Lehman Brothers, 107 potential bidders were contacted, 72 of whom declined to pursue an acquisition of the Company and five of whom signed confidentiality agreements with the Company and commenced a due diligence review of Topps. In addition, subject to the terms of the Merger Agreement, after the go-shop period, Topps may entertain any unsolicited proposal to acquire the Company that may result in such a superior proposal.

On April 12, 2007, prior to the expiration of the go-shop period, one of the potential go-shop bidders, who is the principal competitor of the Company’s entertainment business, submitted a non-binding indication of interest to acquire Topps for $10.75 per share, in cash. Lehman Brothers called this interested party on the first day of the go-shop period, and numerous times during this period, for the purpose of soliciting and/or assisting them with the development of their bid for Topps. Lehman Brothers’ calls were infrequently returned, but after some time the interested party entered into a confidentiality agreement with the Company and commenced a due diligence review of Topps. The Company’s counsel also contacted the interested party’s counsel during the go-shop period in an effort to guide them in the preparation of their bid. In conversations with Lehman Brothers, the interested party indicated that they had teamed-up with a financial sponsor and engaged an investment bank. However, based upon discussions with the interested party and their representatives, it turned out that, as of the time that the non-binding indication of interest had been submitted to the Company, no such financial sponsor was involved and no investment bank had been retained.

The April 12, 2007 indication of interest contained a number of proposed modifications to the Merger Agreement. Our Board met on April 16, 2007 to review and consider this proposal. At this meeting, our Board did not declare the interested party to be an ‘‘Excluded Party’’ under the Merger Agreement, due to issues raised by this indication of interest, including the lack of any evidence of the interested party’s financial capability to consummate a transaction, concerns regarding the likelihood that certain regulatory approvals of the proposed transaction would be obtained and the inclusion of a cap on the interested party’s liability with respect to its breaching of a definitive merger agreement. Therefore, the Company and its representatives are not permitted to continue discussions and negotiations with this interested party (or any other person) unless it submits an unsolicited proposal




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that, subject to certain conditions specified in the existing merger agreement, our Board determines in good faith is or may reasonably be expected to result in a superior proposal to the transaction comtemplated by the Merger Agreement.

The accompanying Notice of Special Meeting and Proxy Statement explain the proposed merger, provide the notice of appraisal rights required by Delaware law and provide specific information concerning the special meeting. Please read those materials carefully and in their entirety.

The Board has fixed the close of business on May 10, 2007 as the record date for the purpose of determining the stockholders of Topps who are entitled to receive notice of and to vote at the special meeting or any adjournment or postponement thereof.

The Board knows of no matter other than those specified in the Notice of Special Meeting that will be presented for consideration at the special meeting. If any other matter properly comes before the special meeting, the persons named in the enclosed form of proxy (or their substitutes) will vote on such matter in accordance with their best judgment.

The enclosed Proxy Statement provides you with a summary of the Merger Agreement and the proposed merger, and provides additional information regarding the parties involved. In addition, a copy of the Merger Agreement is included as Annex A to the enclosed Proxy Statement and should be read carefully and in its entirety. The consummation of the merger will occur as promptly as practicable following the approval and adoption of the Merger Agreement at the special meeting by Topps stockholders, subject to the satisfaction or waiver of the other conditions to the consummation of the merger, as described in the enclosed Proxy Statement.

Your vote is very important. Whether or not you plan to attend the special meeting, we urge you to vote your shares and submit your WHITE proxy card in the enclosed postage pre-paid envelope. You may also vote your shares and submit your proxy by telephone or through the Internet by following the instructions included with your WHITE proxy card. If you attend the special meeting, you will have the right to revoke your proxy and vote your shares in person. Because under Delaware law the approval and adoption of the Merger Agreement requires the affirmative vote of holders of a majority of the outstanding shares of Topps common stock, the failure to vote your shares will have the same effect as voting against approval and adoption of the merger proposal.

If you hold your shares in ‘‘street name’’ by a broker or through an account with a brokerage firm, bank or other nominee, your broker, bank or other nominee will NOT be able to vote your shares without instructions from you. You should instruct your broker, bank or other nominee to vote your shares, following the procedures provided by your broker, bank or other nominee. Failure to instruct your broker, bank or other nominee to vote your shares will have the same effect as voting against approval and adoption of the merger proposal.

Enclosed with this letter is a Notice of Special Meeting of Stockholders, a Proxy Statement and a WHITE proxy card. If you have any questions concerning these documents, please feel free to contact:

MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
Call Collect: (212) 929-5500
or
Toll Free: (800) 322-2885




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The Proxy Statement is provided by the Board in connection with the furnishing of proxies for use at the special meeting and at any adjournment or postponement of the special meeting. The Proxy Statement provides you with information about the Merger Agreement and the transactions contemplated thereby, including the merger. You may obtain additional information about Topps from documents filed with the Securities and Exchange Commission.

Sincerely,

Arthur T. Shorin
Chairman of the Board and Chief Executive Officer

This proxy statement is dated May 21, 2007, and is first being mailed to stockholders of the Company on or about May 21, 2007.

The transactions described herein have not been approved or disapproved by the SECURITIES AND EXCHANGE Commission nor has the SECURITIES AND EXCHANGE Commission passed upon the fairness or merits of such transactions nor upon the accuracy or adequacy of the information contained in this document. Any representation to the contrary is unlawful.




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THE TOPPS COMPANY, INC.
ONE WHITEHALL STREET
NEW YORK, NEW YORK 10004

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on June 28, 2007

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of The Topps Company, Inc., a Delaware corporation (the ‘‘Company’’ or ‘‘Topps’’), will be held at the Company’s offices at One Whitehall Street, New York, New York on June 28, 2007 at 2:00 P.M. (local time) for the following purposes:

1.  To consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger, dated as of March 5, 2007 (the ‘‘Merger Agreement’’), by and among Tornante-MDP Joe Holding LLC (‘‘Parent’’), Tornante-MDP Joe Acquisition Corp., a wholly-owned subsidiary of Parent (‘‘Merger Sub’’), and Topps and the transactions contemplated by the Merger Agreement. The Merger Agreement contemplates a merger of Merger Sub with and into Topps, with Topps continuing after the merger as the surviving corporation and a wholly-owned subsidiary of Parent. At the effective time of the merger, each issued and outstanding share of Topps common stock will be converted into the right to receive $9.75 in cash, without interest (and less applicable withholding taxes), and each outstanding option to purchase Topps common stock will be canceled at the effective time of the merger and converted into the right to receive in cash, without interest (and less applicable withholding taxes), the amount (if any) by which $9.75 exceeds the per share exercise price of that option, except that certain options, although they will not be canceled, will remain outstanding and represent only the right to receive the merger consideration when they are exercised;
2.  To approve the adjournment of the special meeting for, among other things, the solicitation of additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the merger; and
3.  To transact such other business that may properly come before the special meeting and any adjournment or postponement thereof.

Under Delaware law, the affirmative vote of holders of a majority of the outstanding shares of Topps common stock entitled to vote at the special meeting is necessary to approve and adopt the merger contemplated by the Merger Agreement. In addition, the Merger Agreement conditions the consummation of the merger upon, among other things, such affirmative vote being obtained.

On March 5, 2007, the Company’s board of directors (the ‘‘Board’’), by a vote of seven to three, (i) determined that the terms of the Merger Agreement and the transactions contemplated thereby (including the merger) are fair to, advisable and in the best interests of Topps and its stockholders, and (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, including the merger. Accordingly, the Board recommends that you vote FOR the approval and adoption of the Merger Agreement and the transactions contemplated thereby, including the merger.

The Board has fixed the close of business on May 10, 2007 as the record date for the purpose of determining the stockholders of Topps who are entitled to receive notice of and to vote at the special meeting or any adjournment or postponement thereof. The consummation of the merger will occur as promptly as practicable following the approval and adoption of the Merger Agreement at the special meeting by Topps stockholders, subject to the satisfaction or waiver of the other conditions to the consummation of the merger, as described in the enclosed Proxy Statement.

Under Delaware law, stockholders of Topps who do not wish to accept the $9.75 per share cash consideration provided by the Merger Agreement can exercise appraisal rights in connection with the merger and have the Delaware Court of Chancery determine the fair value of their Topps shares as of the effective time of the merger, exclusive of any element of value arising from the expectation or




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accomplishment of the merger. A stockholder that wishes to exercise appraisal rights must not vote in favor of the adoption of the merger agreement and must comply with all of the other necessary procedural requirements set forth in Section 262 of the Delaware General Corporation Law. For a description of appraisal rights and the procedures to be followed to assert them, you should review the applicable portion of the accompanying proxy statement and the provisions of Section 262 of the Delaware General Corporation Law, a copy of which is included as Annex C to the enclosed Proxy Statement.

Enclosed with this Notice of Special Meeting of Stockholders is a Proxy Statement and a WHITE proxy card. If you have any questions concerning these documents, please feel free to contact:

MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
Call Collect: (212) 929-5500
or
Toll Free: (800) 322-2885

Your vote is very important. Whether or not you plan to attend the special meeting, we urge you to vote your shares and submit your WHITE proxy card in the enclosed postage pre-paid envelope. You may also vote your shares and submit your proxy by telephone or through the Internet by following the instructions included with your WHITE proxy card. If you attend the special meeting, you will have the right to revoke your proxy and vote your shares in person. Because under Delaware law the approval and adoption of the Merger Agreement requires the affirmative vote of holders of a majority of the outstanding shares of Topps common stock, the failure to vote your shares will have the same effect as voting against approval and adoption of the merger proposal.

By Order of the Board of Directors,

Andrew J. Gasper, Esq.
Corporate Secretary

New York, New York
May 21, 2007




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ANNEXES


Annex A Agreement and Plan of Merger  
Annex B Opinion of Lehman Brothers Inc.  
Annex C Section 262 of the Delaware General Corporation Law  
Annex D Form of Voting Agreement  
Annex E-1 Letter, dated March 6, 2007, from Arnaud Ajdler to the Board of Directors of The Topps Company, Inc.  
Annex E-2 Letter, dated March 14, 2007, from Arnaud Ajdler to the Board of Directors of The Topps Company, Inc.  
Annex E-3 Letter, dated April 19, 2007, from Arnaud Ajdler to the Board of Directors of The Topps Company, Inc.  

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QUESTIONS AND ANSWERS ABOUT
THE MERGER AND THE SPECIAL MEETING

The following questions and answers are intended to address briefly some commonly asked questions regarding the special meeting and the proposed merger. These questions and answers may not address all questions that may be important to you. You should carefully read and review this entire proxy statement, the annexes to this proxy statement and the other documents referred to in this proxy statement for a more complete understanding of the matters being considered at the special meeting.

Except as otherwise specifically noted in this proxy statement, ‘‘we,’’ ‘‘our,’’ ‘‘us’’ and similar words in this proxy statement refer to The Topps Company, Inc. In addition, we refer to: (i) The Topps Company, Inc. as ‘‘Topps’’ and the ‘‘Company’’; (ii) Tornante-MDP Joe Holding LLC as ‘‘Parent’’; (iii) Tornante-MDP Joe Acquisition Corp. as ‘‘Merger Sub’’; (iv) the Agreement and Plan of Merger, dated March 5, 2007, by and among Parent, Merger Sub and Topps as the ‘‘merger agreement’’; and (vi) the merger of Merger Sub with and into Topps pursuant to the merger agreement, with Topps continuing after the merger as the surviving corporation and a wholly-owned subsidiary of Parent, as the ‘‘merger.’’

Q1:  What is the date, time and place of the special meeting?
A1:  The special meeting of the stockholders of Topps will be held at the Company’s offices at One Whitehall Street, New York, New York on June 28, 2007 at 2:00 P.M. (local time). See ‘‘SUMMARY—The Special Meeting—Date, Time, Place and Attendees’’ and ‘‘THE SPECIAL MEETING—General; Date, Time and Place; Attendees.’’
Q2:  Who sent me this proxy statement?
A2:  Our Board of Directors, or our Board, sent you this proxy statement and WHITE proxy card. The mailing of this proxy statement and WHITE proxy card began on or about May 21, 2007. We will pay for this solicitation. In addition to this solicitation by mail, proxies may be solicited by our directors, officers and other employees by telephone, e-mail, Internet, facsimile, in person or otherwise. These people will not receive any additional compensation for assisting in the solicitation. We may also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of our common stock. We will reimburse those organizations and our transfer agent for their reasonable out-of-pocket expenses in forwarding such material. We have also retained MacKenzie Partners, Inc. to aid in the solicitation of proxies for a fee of $250,000 plus out-of-pocket expenses. See ‘‘SUMMARY—The Special Meeting—Proxy Solicitation’’ and ‘‘THE SPECIAL MEETING—Expenses of Solicitation.’’
Q3:  Why did I receive this proxy statement and proxy card?
A3:  You received this proxy statement and WHITE proxy card from us because you owned our common stock as of May 10, 2007, the date set by the Board as the date for determining the stockholders entitled to notice of and to vote at the special meeting. We refer to this date as the record date. See ‘‘SUMMARY—The Special Meeting—Date, Time, Place and Attendees’’ and ‘‘THE SPECIAL MEETING—Record Date; Voting Power.’’    This proxy statement contains important information about the special meeting and the business to be transacted at the special meeting. You should carefully read this proxy statement, including its annexes and the other documents we refer to in this proxy statement, because they contain important information about the merger, the merger agreement and the special meeting. The enclosed voting materials allow you to vote your shares without attending the special meeting. Your vote is very important. We encourage you to vote as soon as possible. See ‘‘SUMMARY—The Special Meeting—Purpose,’’ ‘‘—Quorum at the Special Meeting’’ and ‘‘—Required

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  Vote for Approval’’ and ‘‘THE SPECIAL MEETING—Purpose of the Special Meeting,’’ ‘‘—Quorum at the Special Meeting,’’ ‘‘—Required Vote for Approval,’’ and ‘‘—How to Vote.’’
Q4:  What does it mean if I receive more than one proxy card?
A4:  It means that you have multiple accounts with the transfer agent of the Company and/or with stockbrokers. Please sign and return all WHITE proxy cards to ensure that all of your shares are voted. You may also submit your proxy related to each WHITE proxy card through the Internet or by telephone. Proxy submission details are outlined in the enclosed WHITE proxy card. See ‘‘SUMMARY—Voting and Revocation of Proxies’’ and ‘‘THE SPECIAL MEETING—How to Vote.’’
Q5:  What matters will be voted on at the special meeting?
A5:  You will be asked to consider and vote on the following proposals:
  to adopt the merger agreement and the transactions contemplated thereby (including the merger). See ‘‘SUMMARY—The Special Meeting—Purpose,’’ ‘‘SUMMARY— The Merger’’ and ‘‘THE MERGER AGREEMENT’’;
  to approve the adjournment of the special meeting for, among other things, the solicitation of additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger; and
  to transact such other business that may be properly come before the special meeting and any adjournment or postponement thereof.
Q6:  How does our Board of Directors recommend that I vote?
A6:  Our Board, by a vote of seven to three, recommends that you vote ‘‘FOR’’ the proposal to approve and adopt the merger agreement and the transactions contemplated thereby (including the merger). See ‘‘SUMMARY—The Merger—Reasons for the Merger; Recommendation of Our Board’’ and ‘‘THE MERGER—Recommendation of Our Board’’ and ‘‘—Reasons for Our Board’s Recommendation.’’
Q7:  Did any of our directors vote against the transaction?
A7:  Three of our directors, Arnaud Ajdler, Timothy Brog and John Jones (whom we refer to as the objecting directors), voted against approval and adoption of the merger agreement by our Board. Messrs. Ajdler and Brog have publicly stated their opposition to the merger agreement. Following our Board’s seven to three approval of the merger agreement, in letters to our Board, Mr. Ajdler expressed his dissatisfaction with the $9.75 per share cash merger consideration and the process leading up to the execution of the merger agreement. See ‘‘SUMMARY—The Merger—Background of the Merger,’’ ‘‘THE MERGER—Background of the Merger’’ and Annex E-1, Annex E-2 and Annex E-3 to this Proxy Statement.
Q8:  What vote of Topps stockholders is required to approve the merger proposal?
A8:  Assuming that a quorum is present at the special meeting, the proposal to approve and adopt the merger agreement and the merger contemplated thereby must be approved by the holders of a majority of the Topps common stock outstanding as of the close of business on May 10, 2007, the record date set by the Board as the date for determining the stockholders entitled to notice of and to vote at the special meeting. See ‘‘SUMMARY—The Special Meeting—Quorum’’ and ‘‘—Required Vote for Approval’’ and ‘‘THE SPECIAL MEETING—Quorum at the Special Meeting,’’ and ‘‘—Required Vote for Approval.’’

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Q9:  Who is entitled to vote at the special meeting?
A9:  All holders of Topps common stock at the close of business on the record date, May 10, 2007, will be entitled to receive notice of the special meeting and to vote the Topps common stock that they held on the record date at the special meeting and any adjournment or postponement of the special meeting. See ‘‘SUMMARY—The Special Meeting—Date, Time, Place and Attendees’’ and ‘‘THE SPECIAL MEETING—General; Date, Time and Place; Attendees,’’ and ‘‘—Record Date; Voting Power.’’
Q10:  In general, what are the transactions contemplated by the merger agreement?
A10:  The merger agreement provides for the merger of Merger Sub with and into Topps, with Topps continuing after the merger as the surviving corporation and a wholly-owned subsidiary of Parent. At the effective time of the merger, each issued and outstanding share of Topps common stock will be converted into the right to receive $9.75 in cash, without interest (and less applicable withholding taxes), and each outstanding option to purchase Topps common stock will be canceled at the effective time of the merger and converted into the right to receive in cash, without interest (and less applicable withholding taxes), the amount (if any) by which $9.75 exceeds the per share exercise price of that option, except that certain options, although they will not be canceled, will remain outstanding and represent only the right to receive the merger consideration when they are exercised. See ‘‘SUMMARY—The Merger,’’ ‘‘THE MERGER,’’ ‘‘THE MERGER AGREEMENT’’ and Annex A to this proxy statement.
Q11:  If the merger is completed, what will I receive for my common shares?
A11:  You will receive $9.75 in cash, without interest (and less applicable withholding taxes), for each share of Topps common stock that you own. See ‘‘SUMMARY—The Merger—Merger Consideration,’’ ‘‘THE MERGER —Background of the Merger’’ and ‘‘THE MERGER AGREEMENT—Merger Consideration.’’
Q12:  Why did Topps enter into the merger agreement?
A12:  The merger agreement resulted from a multi-year process that started in 2004 with the retention by the Company of a strategic consultancy firm to assist the Company with conducting a thorough strategic review of Topps with a view toward helping us develop opportunities to increase stockholder value. This study highlighted the need for aggressive changes at Topps aimed at addressing the significant challenges faced by the Company’s confectionery and entertainment businesses. See ‘‘SUMMARY—The Merger—Background of the Merger.’’ As part of that study, we concluded that the Topps confectionery business was strategically positioned as a sub-scale business and was vulnerable to the pressures associated with a consolidating industry and increased competition from larger market participants. In February 2005, Topps engaged Lehman Brothers Inc., or Lehman Brothers, to evaluate sale opportunities for the Company. Based on a number of factors (see ‘‘SUMMARY—The Merger—Background of the Merger,’’ ‘‘—Reasons for the Merger; Recommendation of Our Board’’ and ‘‘—Opinion of Lehman Brothers,’’ ‘‘THE MERGER—Background of the Merger,’’ ‘‘—Recommendation of Our Board,’’ ‘‘—Reasons for Our Board’s Recommendation’’), our Board determined that a sale of the Topps confectionery business was in the best interests of the Company and its stockholders and, with the assistance of Lehman Brothers, conducted an auction process for the sale of the confectionery business. Due to the absence of an attractive offer, in September 2005, we announced that we had terminated our process to evaluate a possible sale of our confectionery business and disengaged Lehman Brothers. Beginning in May 2006, during a proxy contest waged against the Company by a

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  small hedge fund stockholder (the second proxy contest by such stockholder in less than a year), Topps received several unsolicited preliminary indications of interest from third parties to acquire the Company at prices ranging from $9.00 to $10.00 per share. Believing this price range to be worthy of consideration in light of many factors, our Board decided to further explore such indications of interest with a view toward receiving firm offers while negotiating the right to solicit other bidders during a go-shop period following public announcement of a transaction. Our Board re-engaged Lehman Brothers and pursued these proposals. During their respective due diligence reviews, these third parties either withdrew their indications of interest or revised their proposals downward and made preliminary proposals ranging from $7.50 to $8.50 per share, which the Board rejected as unattractive. The offer memorialized in the merger agreement—$9.75 per share, with an opportunity to continue to shop the Company for 40 days in search of a superior proposal—emerged as the most attractive proposal for the Company and its stockholders. See ‘‘SUMMARY —The Merger—Background of the Merger,’’ ‘‘—Reasons for the Merger; Recommendation of Our Board’’ and ‘‘—Opinion of Lehman Brothers,’’ ‘‘THE MERGER—Background of the Merger,’’ ‘‘—Recommendation of Our Board,’’ ‘‘—Reasons for Our Board’s Recommendation’’ and ‘‘—Fairness Opinion of Lehman Brothers’’ and Annex B to this proxy statement.
Q13:  Does the merger agreement allow Topps to seek and entertain superior proposals?
A13:  Yes. The merger agreement provided for a 40-day period following the effective date of the merger agreement (often referred to as a ‘‘go-shop’’ period) for Topps to actively solicit and entertain any proposal to acquire the Company that is superior to the proposal contemplated by the merger agreement. In addition, subject to the terms of the merger agreement, after the go-shop period, Topps may entertain any unsolicited proposal to acquire the Company that may result in such a superior proposal. 107 potential bidders were identified as possible acquirors of Topps during the go-shop period. During the go-shop period, which expired on April 14, 2007, with the assistance of Lehman Brothers, 107 potential bidders (including all of the 36 potential bidders proposed by Mr. Brog, one of the objecting directors) were contacted. 72 of the contacted potential bidders declined to pursue an acquisition of Topps, five signed confidentiality agreements with the Company and commenced a due diligence review of Topps, while 34 failed to respond to Lehman Brothers’ further attempts to contact them. On April 12, 2007, prior to the expiration of the go-shop period, one of the potential go-shop bidders , who
is the principal competitor of our entertainment business, submitted a non-binding indication of interest to acquire Topps for $10.75 per share, in cash. Lehman Brothers called this interested party on the first day of the go-shop period, and numerous times during this period, for the purpose of soliciting and/or assisting them with the development of their bid for Topps. Lehman Brothers’ calls were infrequently returned, but after some time the interested party entered into a confidentiality agreement with the Company and commenced a due diligence review of Topps. The Company’s counsel also contacted the interested party’s counsel during the go-shop period in an effort to guide them in the preparation of their bid. In conversations with Lehman Brothers, the interested party indicated that they had teamed-up with a financial sponsor and engaged an investment bank. However, based upon discussions with the interested party and their representatives, it turned out that, as of the time that the non-binding indication of interest had been submitted to the Company, no such financial sponsor was involved and no investment bank had been retained. The April 12, 2007 indication of interest contained a number of proposed modifications to the merger agreement. Our Board met on April 16, 2007 to review and consider this proposal. At this meeting, our Board did not declare the

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  interested party to be an ‘‘Excluded Party’’ under the merger agreement, due to issues raised by this indication of interest, including the lack of any evidence of the interested party’s financial capability to consummate a transaction, concerns regarding the likelihood that certain regulatory approvals of the proposed transaction would be obtained and the inclusion of a cap on the interested party’s liability with respect to its breaching of a definitive merger agreement. Therefore, the Company and its representatives are not permitted to continue discussions and negotiations with this interested party (or any other person) unless it submits an unsolicited proposal that, subject to certain conditions specified in the existing merger agreement, our Board determines in good faith is or may reasonably be expected to result in a superior proposal to the transaction contemplated by the merger agreement. See ‘‘SUMMARY— The Merger—Background of the Merger,’’ ‘‘—Go-Shop Rights,’’ ‘‘—Termination of the Merger Agreement,’’ ‘‘—Termination Fees if the Merger Agreement is Not Completed’’ and ‘‘—Expense Reimbursement if the Merger is Not Completed,’’ ‘‘THE MERGER—Background of the Merger,’’ ‘‘—Effects on Topps if the Merger is Not Completed’’ and ‘‘THE MERGER AGREEMENT—Restrictions on Solicitation of Other Offers,’’ ‘‘—Change in Company Recommendation,’’ ‘‘—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses.’’
Q14:  Did our Board retain a financial advisor in connection with its consideration of a sale of Topps?
A14:  Yes. Our Board retained Lehman Brothers, a prominent and internationally recognized investment banking firm. Lehman Brothers was initially engaged in February 2005 in connection with the attempted sale of the Topps confectionery business. This engagement was terminated in September 2005 when we announced that we had terminated our process to evaluate a possible sale of our confectionery business. Lehman Brothers was then re-engaged on May 31, 2006 in light of unsolicited third party preliminary indications of interest to acquire the Company. As a result, Lehman Brothers advised our Board, including its lead director, during the negotiation of the terms of the merger agreement. At the time of its approval and adoption of the merger agreement, our Board received an opinion from Lehman Brothers to the effect that, from a financial point of view, the $9.75 per share cash consideration to be offered to our stockholders pursuant to the merger agreement in connection with the merger is fair to such stockholders. See ‘‘SUMMARY—The Merger—Background of the Merger’’ and ‘‘—Opinion of Lehman Brothers,’’ ‘‘THE MERGER— Background of the Merger’’ and ‘‘—Fairness Opinion of Lehman Brothers’’ and Annex B to this proxy statement.

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Q15:  Was our Board advised by legal counsel?
A15:  Yes. Our Board was advised by Willkie Farr & Gallagher LLP, counsel to Topps. See ‘‘SUMMARY—The Merger—Background of the Merger’’ and ‘‘THE MERGER— Background of the Merger.’’
Q16:  Why should you vote your shares in favor of approval and adoption of the merger
agreement?
A16:  Our Board, by a vote of seven to three, recommends that you vote ‘‘FOR’’ the approval and the adoption of the merger agreement. Based in part on consultations with Topps management, Willkie Farr and Lehman Brothers, and in consideration of other supporting factors, our Board believes that the merger agreement is fair to, advisable and in the best interests of Topps and its stockholders. Our Board also recommends that you vote ‘‘FOR’’ the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of the approval and adoption of the merger agreement at the time of the special meeting. See ‘‘SUMMARY—The Merger—Reasons for the Merger; Recommendation of Our Board’’ and ‘‘THE MERGER—Recommendation of Our Board’’ and ‘‘—Reasons for Our Board’s Recommendation.’’
Q17:  What effects will the proposed merger have on Topps?
A17:  As a result of the proposed merger, Topps will cease to be a publicly traded company and will be wholly-owned by Parent. You will no longer have any interest in our future earnings or growth. Following consummation of the merger, the registration of our common stock and our reporting obligations with respect to our common stock under the Securities Exchange Act of 1934, as amended (to which we refer as the Exchange Act), will be terminated upon application to the Securities and Exchange Commission (or the SEC). In addition, upon completion of the proposed merger, shares of our common stock will no longer be listed on any stock exchange or quotation system, including the NASDAQ Global Select Market. See ‘‘THE MERGER—Delisting and Deregistration of Our Common Stock.’’
Q18:  What happens if the merger is not consummated?
A18:  If the merger agreement is not adopted by our stockholders or if the merger is not completed for any other reason, our stockholders will not receive any payment for their shares of Topps common stock in connection with the merger. Instead, Topps will remain an independent public company and our common stock will continue to be listed and traded on the NASDAQ Global Select Market. Under specified circumstances, we may be required to pay to Parent a termination fee and/or to reimburse Parent for its out-of-pocket expenses. See ‘‘SUMMARY —The Merger—Termination of the Merger,’’ ‘‘—Termination Fees if the Merger Agreement is Not Completed’’ and ‘‘—Expense Reimbursement if the Merger is Not Completed,’’ ‘‘THE MERGER— Effects on Topps if the Merger is Not Completed’’ and ‘‘THE MERGER AGREEMENT—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses.’’
Q19:  When do you expect the merger to occur?
A19:  The consummation of the merger will occur as promptly as practicable following the approval and adoption of the merger agreement at the special meeting by Topps stockholders, subject to the satisfaction or waiver of the other conditions to the consummation of the merger, as set forth in the merger agreement. See ‘‘SUMMARY—The Merger—Conditions to the Merger,’’ ‘‘THE MERGER— Governmental and Regulatory Approvals’’ and ‘‘THE MERGER AGREEMENT— Consents, Approvals and Resignations’’ and ‘‘—Conditions to the Merger.’’

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Q20:  Will I have the right to have my shares appraised if I dissent from the merger?
A20:  Under Delaware law, stockholders of Topps can exercise appraisal rights in connection with the merger. A stockholder that does not vote in favor of the merger proposal and complies with all of the other necessary procedural requirements will have the right to dissent from the merger and to seek appraisal of the fair value of its Topps common stock, exclusive of any element of value arising from the expectation or accomplishment of the merger. See ‘‘SUMMARY—The Merger—Rights of Stockholders to Seek Appraisal,’’ ‘‘THE MERGER—Appraisal Rights’’ and Annex C to this proxy statement.
Q21:  What do I need to do now?
A21:  After carefully reading and considering the information contained in this proxy statement, please fill out and sign the WHITE proxy card, and then mail your signed WHITE proxy card in the enclosed prepaid envelope as soon as possible so that your shares may be represented and voted at the special meeting. Your WHITE proxy card will instruct the persons named on the card (or their substitutes) to vote your shares at the special meeting as you direct on the card. If you sign and send in your WHITE proxy card and do not indicate how you want to vote, your proxy will be voted ‘‘FOR’’ the approval and adoption of the merger agreement and the transactions contemplated thereby, including the merger. You may also grant your proxy by telephone or through the Internet. If you do not vote or if you abstain, the effect will be a vote against the merger agreement. Our Board knows of no other matter that will be presented for consideration at the special meeting. If any other matter properly comes before the special meeting, the persons named in the enclosed WHITE proxy card (or their substitutes) will vote on such matter in accordance with their best judgment. You may also grant your proxy by telephone, on the Internet or vote in person at the special meeting. See ‘‘SUMMARY—The Special Meeting—Voting and Revocation of Proxies’’ and ‘‘THE SPECIAL MEETING—How to Vote.’’
Q22:  May I change my vote after I have mailed my signed proxy card?
A22:  You may change your vote at any time before your proxy is voted at the special meeting. You can do this in one of four ways. First, you can send a written notice stating that you want to revoke your proxy. Second, you can complete and submit a new proxy card. If you choose either of these two methods, you must submit your notice of revocation or your new proxy card to:
  Andrew J. Gasper, Esq.
Corporate Secretary
The Topps Company, Inc.
One Whitehall Street
New York, NY 10004

Third, you can submit a proxy by telephone or the Internet at a later time. Fourth, you can attend the special meeting and vote in person. Simply attending the meeting, however, will not revoke your proxy; you must vote at the meeting.

If you have instructed a broker, bank or other nominee to vote your shares, you must follow the directions received from your broker, bank or other nominee to change your vote.

See ‘‘SUMMARY—The Special Meeting—Voting and Revocation of Proxies’’ and ‘‘THE SPECIAL MEETING—Revocation of Proxies.’’

Q23:  If my shares are held in ‘‘street name’’ by my broker or through an account with a brokerage firm, bank or other nominee, will my broker, bank or other nominee vote my shares for me?
A23:  Your broker, bank or other nominee will NOT be able to vote your shares without instructions from you. You should instruct your broker, bank or other nominee to vote your shares, following the procedures provided by your broker, bank or other

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  nominee. Failure to instruct your broker, bank or other nominee to vote your shares will have the same effect as voting against approval and adoption of the merger proposal. See ‘‘SUMMARY— The Special Meeting—Required Vote for Approval’’ and ‘‘—Voting and Revocation of Proxies’’ and ‘‘THE SPECIAL MEETING— Required Vote for Approval’’ and ‘‘—How to Vote.’’
Q24:  Should I send in my stock certificates now?
A24:  No. Shortly after the merger is completed, you will receive a letter of transmittal with instructions informing you how to send in your stock certificates to the paying agent in exchange for the cash payment to which you are entitled pursuant to the merger agreement as a result of the merger. PLEASE DO NOT SEND IN SHARE CERTIFICATES WITH YOUR PROXY. See ‘‘THE MERGER AGREEMENT— Payment Procedures.’’
Q25:  Who can help answer my questions?
A25:  If you have any questions about this proxy statement, your proxy or the proposals contained in this proxy statement, or if you need additional copies of this proxy statement or the enclosed WHITE proxy card, you should contact:

MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
Call Collect: (212) 929-5500
                    or
Toll Free: (800) 322-2885

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SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This proxy statement may contain statements that are not historical facts and are considered ‘‘forward-looking’’ within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by their use of the terms: ‘‘expect(s),’’ ‘‘intend(s),’’ ‘‘may,’’ ‘‘plan(s),’’ ‘‘should,’’ ‘‘could,’’ ‘‘will,’’ ‘‘believe(s),’’ ‘‘anticipate(s),’’ ‘‘estimate(s),’’ or similar terms. We or our representatives may also make similar forward-looking statements from time to time orally or in writing. You are cautioned that these forward-looking statements are subject to a number of risks, uncertainties, or other factors that may cause (and in some cases have caused) actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, the following:

  the risk that the merger may not be consummated in a timely manner, if at all;
  the inability to obtain the required vote for approval of our stockholders in order to consummate the merger;
  the outcome of any legal proceeding instituted against Topps and/or others in connection with the proposed merger;
  the failure of the conditions to the consummation of the merger to be satisfied;
  the termination of the merger agreement prior to the consummation of the merger;
  notwithstanding the fact that there is no financing condition to the merger, the inability of Parent and/or Merger Sub to obtain the financing required to pay the merger consideration and/or to otherwise consummate the merger and the other transactions contemplated by the merger agreement;
  the businesses of Topps suffering as a result of uncertainty surrounding the merger, including, but not limited to, potential difficulties in employee retention, adverse effects on client or customer relationships and disruption of current plans or operations, or, if the merger agreement is terminated or the merger otherwise fails to occur, the uncertainties associated with any anticipated, potential or actual subsequent attempt to acquire Topps;
  the diversion of Topps management’s attention from ongoing business operations;
  the enactment or imposition of future regulatory or legislative actions that adversely affect Topps or any industry or jurisdiction in which it operates its businesses;
  the adverse effects of other economic, business and/or competitive factors; and
  other risks detailed in our current filings with the Securities and Exchange Commission, including our most recent filings on Form 10-K or Form 10-Q, which discuss these and other important risk factors concerning our operations.

These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. We operate in a continually changing business environment and new factors emerge from time to time. We cannot predict such factors nor can we assess the impact, if any, of such factors on our financial position or our results of operations or whether or when the merger will be consummated. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

Many of the factors that will determine our future results or whether or when the merger will be consummated are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward−looking statements contained herein, you should not rely on forward−looking statements, which reflect management’s views only as of the date of this proxy statement.

Additional factors that may affect the future results of Topps are set forth in its filings with the Securities and Exchange Commission, which are available via the Internet at www.topps.com or www.sec.gov. Topps undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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All information contained in this proxy statement specifically relating to the identity and nature of the business of Parent, Merger Sub, The Tornante Company LLC or Madison Dearborn Partners, LLC or any of their respective affiliates, agents or representatives has been supplied by The Tornante Company LLC and Madison Dearborn Partners, LLC.

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SUMMARY

This summary highlights selected information from this proxy statement and is not intended to be complete. It does not contain all of the information that may be important to you and is qualified in all respects by the more detailed information appearing elsewhere in this proxy statement. You should carefully read and review this entire proxy statement, the annexes to this proxy statement and the other documents referred to in this proxy statement for a more complete understanding of the matters being considered at the special meeting.

Parties to the Merger Agreement

Topps

The Topps Company, Inc.
One Whitehall Street
New York, NY 10004
(212) 376-0300

Topps is a Delaware corporation that was founded in 1938. We are a leading creator and marketer of distinctive confectionery and entertainment products in the U.S. and abroad. We operate in two principal segments, confectionery and entertainment.

Parent

Tornante-MDP Joe Holding LLC
c/o The Tornante Company LLC
233 South Beverly Drive
2nd Floor
Beverly Hills, CA 90212
(310) 228-6800

and

Tornante-MDP Joe Holding LLC
c/o Madison Dearborn Partners, L.L.C.
Three First National Plaza
Suite 3800
70 West Madison Street
Chicago, Illinois 60602
(312) 895-1000

Parent is a Delaware limited liability company that is owned by The Tornante Company LLC, or Tornante, and investment funds affiliated with Madison Dearborn Partners, LLC, or Madison Dearborn, including Madison Dearborn Capital Partners V-A, L.P., Madison Dearborn Capital Partners V-C, L.P. and Madison Dearborn Capital Partners V Executive-A, L.P. (which we collectively refer to as the MDP Funds). Parent was recently formed by Tornante and Madison Dearborn for the purpose of entering into and consummating the transactions contemplated by the merger agreement and has no business operations.

Founded in 2005 by Michael Eisner, Tornante is a privately held company that makes investments in and incubates companies and opportunities in the media and entertainment space.

Madison Dearborn is a private equity investment firm that focuses on investments across a broad spectrum of industries, including media and communications, basic industries, consumer, financial services and health care.

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Merger Sub

Tornante-MDP Joe Acquisition Corp.
c/o The Tornante Company LLC
233 South Beverly Drive
2nd Floor
Beverly Hills, CA 90212
(310) 228-6800

and

Tornante-MDP Joe Acquisition Corp.
c/o Madison Dearborn Partners, L.L.C.
Three First National Plaza
Suite 3800
70 West Madison Street
Chicago, Illinois 60602
(312) 895-1000

Merger Sub is a Delaware corporation and a wholly-owned subsidiary of Parent. Merger Sub was recently formed by Parent for the purpose of entering into and consummating the transactions contemplated by the merger agreement and has no business operations.

The Special Meeting

Date, Time, Place, and Attendees

The special meeting is scheduled to be held at the Company’s offices at One Whitehall Street, New York, New York on June 28, 2007, at 2:00 p.m. (local time). Only holders of shares of Topps common stock as of the close of business (5:00 p.m., Eastern time) on May 10, 2007, the record date (which we refer to as the record date) determined by our Board as the date for determining the stockholders of the Company entitled to vote at the special meeting, will be entitled to receive notice of and to vote at the special meeting and any adjournments or postponements thereof.

Purpose

The purpose of the special meeting is to: (i) consider and vote upon the approval and adoption of the merger agreement and the transactions contemplated thereby, including the merger; (ii) approve the adjournment of the special meeting for, among other things, the solicitation of additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger; and (iii)  transact any other business that is properly brought before the special meeting.

Quorum

To constitute a quorum for the transaction of business at the special meeting, the presence, in person or by proxy, of the holders of a majority of the shares of Topps common stock outstanding as of the record date is required. Abstentions and ‘‘broker non-votes’’ (shares held by a broker, bank or nominee that does not have the authority, either express or discretionary, to vote on a particular matter) are counted for purposes of determining the presence or absence of a quorum for the transaction of business at the special meeting. If a quorum is not present at the special meeting, the Company expects to adjourn or postpone the meeting to solicit additional proxies.

Required Vote for Approval

At the special meeting, each holder of Topps common stock as of the record date will be entitled to one vote in respect of each such share of Topps common stock.

The affirmative vote of the holders of a majority of the shares of Topps common stock outstanding on the record date is required to approve and adopt the merger agreement and the

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merger contemplated thereby. You may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ If you abstain or fail to vote your shares of Topps common stock with respect to the merger proposal, it will have the same effect as voting against approval and adoption of the merger proposal. Your broker, bank or other nominee will vote your shares only if you provide instructions on how to vote by following the instructions provided to you by your broker, bank or nominee. Failure to instruct your broker, bank or other nominee to vote your shares will have the same effect as voting against approval and adoption of the merger proposal.

The proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of stockholders entitled to cast a majority of the votes of all issued and outstanding shares of our common stock present at the special meeting in person or by proxy and entitled to vote. You may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ Abstentions, but not broker non-votes, will count as shares present and entitled to vote on the proposal to adjourn or postpone the meeting. As a result, abstentions will have the same effect as a vote against the proposal to adjourn or postpone the meeting and broker non-votes will have no effect on the vote to adjourn or postpone the meeting.

Topps Stock Owned by Directors and Executive Officers

As of the record date, our directors and executive officers owned approximately 7.7% of the outstanding Topps common stock entitled to vote at the special meeting and any adjournment or postponement thereof. Our directors (other than the objecting directors) and executive officers have informed us that they currently intend to vote all of their shares of our common stock ‘‘FOR’’ the adoption of the merger agreement and the transactions contemplated thereby and ‘‘FOR’’ the adjournment proposal.

In connection with the merger agreement, and as required by Parent as a condition to its execution of the merger agreement, seven of our directors entered into separate voting agreements with Parent whereby these individuals, in their respective capacity as stockholders of Topps, have agreed to vote their shares of common stock in favor of the consummation of the merger. See ‘‘SUMMARY—The Merger—Voting Agreements,’’ ‘‘THE MERGER—Voting Agreements’’ and ‘‘THE VOTING AGREEMENTS.’’

Voting and Revocation of Proxies

Stockholders of record may submit proxies by mail. If you wish to submit your proxy by mail, you should mark, date, sign and return the WHITE proxy card in the envelope furnished. If you hold your shares in your name as a stockholder of record, you may vote by telephone or electronically through the Internet by following the instructions included with your WHITE proxy card. If you hold your shares beneficially through a broker, bank or other nominee, you may be able to submit a proxy by mail, or by telephone or the Internet if those services are offered by the broker, bank or other nominee. You should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your shares.

Proxies received at any time before the special meeting, and not revoked or superseded before being voted, will be voted at the special meeting. Where a specification is indicated by the proxy, it will be voted in accordance with the specification. If you sign your WHITE proxy card without specifying your vote, your shares will be voted ‘‘FOR’’ the approval and adoption of the merger agreement and the transactions contemplated thereby (including the merger) and ‘‘FOR’’ the adjournment or postponement of the special meeting, if necessary or appropriate, to solicit additional proxies, and in accordance with the recommendations of our Board on any other matters properly brought before the special meeting for a vote.

You have the right to revoke your proxy at any time before it is voted by:

  giving written notice of revocation;
  executing and returning a new proxy bearing a later date;
  submitting a proxy by telephone or the Internet at a later date; or
  attending the special meeting and voting in person.

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Revocation of a proxy by written notice or execution of a new proxy bearing a later date should be submitted to Andrew J. Gasper, Esq., Corporate Secretary, The Topps Company, Inc., One Whitehall Street, New York, New York 10004. If you appear in person at the special meeting, you must vote in order to revoke your proxy.

Please do not send in your stock certificates with your proxy card.    When the merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the merger consideration payable to you pursuant to the merger agreement in respect of your shares of Topps common stock. See ‘‘THE MERGER AGREEMENT—Payment Procedures.’’

Proxy Solicitation

This proxy solicitation is being made and paid for by us on behalf of our Board. In addition to this solicitation by mail, proxies may be solicited by our directors, officers and other employees by telephone, e-mail, Internet, facsimile, in person or otherwise. These people will not receive any additional compensation for assisting in the solicitation. We may also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of our common stock. We will reimburse those organizations and our transfer agent for their reasonable out-of-pocket expenses in forwarding such material. We have also retained MacKenzie Partners, Inc. to aid in the solicitation of proxies for a fee of $250,000 plus out-of-pocket expenses. See ‘‘THE SPECIAL MEETING—Expenses of Solicitation.’’

Other Business

We are not currently aware of any business to be acted upon at the special meeting other than the matters discussed in this proxy statement. Under our bylaws, business transacted at the special meeting is limited to the purposes stated in the notice of the special meeting, which is provided at the beginning of this proxy statement. If other matters do properly come before the special meeting, or at any adjournment or postponement of the special meeting, we intend that shares of our common stock represented by properly submitted proxies will be voted in accordance with the recommendations of our Board.

Questions and Additional Information

If you have any questions about this proxy statement, your proxy or the proposals contained in this proxy statement, or if you need additional copies of this proxy statement or the enclosed WHITE proxy card, please contact: MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016, toll free at (800) 322-2885 or call collect at (212) 929-5500.

The Merger

Background of the Merger

On March 5, 2007, we entered into a definitive agreement to be acquired by entities owned by Tornante and Madison Dearborn. Under the terms of the agreement, Topps stockholders will receive $9.75 per share in cash (less applicable withholding taxes).

The Tornante-Madison Dearborn transaction is the result of a multi-year process that started in 2004 with the retention of The Parthenon Group, or Parthenon, a strategic consultancy firm, to assist us with conducting a thorough strategic review of Topps and to help us develop opportunities to increase stockholder value. The study highlighted the need for aggressive changes aimed at addressing the significant challenges faced by both the confectionery and the entertainment businesses of the Company. The study also highlighted the weak strategic positioning of the Company’s confectionery business as a sub-scale player in a consolidating industry characterized by modest to flat growth, rising costs and increasing competition.

In February 2005, we retained Lehman Brothers to evaluate potential sale opportunities for the Company, and our Board decided to begin an auction process for the sale of our confectionery

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business. In the months that followed, based on feedback from prospective buyers, it became clear that a number of factors contributed to our confectionery business being unattractive to these potential buyers. According to the feedback, these factors included, among other things, the negative trends in the confectionery unit’s financial performance, the relatively small size of the major brands in the Company’s confectionery portfolio and the unattractive dynamics of the ‘‘novelty’’ confectionery segment, including the perceived volatility of revenues, concerns about the growth potential of the novelty category compared to other confectionery segments and the belief that the maintenance and growth of our confectionery product line would require a disproportionate amount of management time and attention. In light of the absence of an offer at an attractive price level, in September 2005, we announced that we had terminated our process to evaluate a possible sale of our confectionery business and that we had instead launched a restructuring program developed by Parthenon and Topps management.

We began to implement the restructuring by dividing our entertainment and confectionery businesses into their current division structure, by strengthening our management team with strategic new hires, by employing significant cost cutting measures and by implementing cultural changes and new incentive plans to increase accountability for performance. These and other strategic initiatives resulted in an increase in net income and earnings per share in fiscal year 2007.

In April 2005, a small hedge fund called Pembridge Value Opportunity Fund, LP, or Pembridge, which then owned less than 1% of the then outstanding shares of Topps common stock, initiated a proxy solicitation to nominate a slate of three candidates for election as directors of Topps, which slate included Mr. Brog, Pembridge’s principal. In furtherance of this effort, Pembridge filed its own proxy statement and other materials with the SEC stating that, if elected, its slate of director nominees would pursue, among other things, a sale of the Company. The Company urged stockholders to oppose Pembridge’s proposal, which was withdrawn in June 2005 after a settlement was reached with the Company. In January 2006, Pembridge initiated another proxy solicitation to, among other things, nominate a slate of three candidates (again including Mr. Brog) for election as directors of Topps. The Company settled the dispute and in July 2006 the objecting directors were elected to the Board, along with Mr. Shorin.

Following the settlement of Pembridge’s second proxy contest in July 2006, based on at least one analyst report, speculation started to emerge in the analyst community that the Company might be the subject of a transaction over the following months. The price of our common stock began to increase over time. Many of our directors believed that this increase may have reflected a transaction premium that was built into the price of our common stock.

Beginning in May 2006, we received several unsolicited preliminary indications of interest from third parties to acquire the entirety of Topps at a price per share ranging from $9.00 to $10.00. Believing this price range to be worthy of consideration in light of many factors, our Board decided to further explore such indications of interest with a view toward receiving firm offers while negotiating the right to solicit other bidders during a go-shop period following public announcement of a transaction. During the due diligence process that followed, upon further review of the Topps businesses, these third party indications of interest were either withdrawn or revised downward from their initial price range to $7.50 to $8.00 per share, which our Board rejected as unattractive.

Tornante and Madison Dearborn, on the other hand, which were provided access to substantially the same information regarding the Company as other potential third party acquirors, emerged as a very credible buyer, both because of the thorough due diligence review that they had been conducting at the time and because their offer remained at a price level higher than that of the other parties involved. Their initial written offer of $9.24 per share in cash, made in late December 2006, was rejected by our Board. After a number of offers and counter-offers, they ultimately increased their offer in January 2007 to $9.75 per share in cash, and our Board granted the Tornante-Madison Dearborn group a 30-day exclusivity period to complete their due diligence review and submit a firm and fully financed offer while negotiating the terms of the merger agreement. On March 5, 2007, our Board, by a vote of seven to three, approved the merger agreement based on, among other things, the

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$9.75 per share cash offer and the 40-day go-shop period contemplated by the merger agreement (during which period we would be required to pay a reduced termination fee, if any, under certain circumstances).

Structure of the Merger

At the effective time of the merger, Merger Sub will merge with and into Topps, with Topps continuing after the merger as the surviving corporation and a wholly-owned subsidiary of Parent.

Merger Consideration

At the effective time of the merger, each issued and outstanding share of Topps common stock will be converted into the right to receive $9.75 in cash, without interest (and less applicable withholding taxes), and each outstanding option to purchase Topps common stock will be canceled at the effective time of the merger and converted into the right to receive in cash, without interest (and less applicable withholding taxes), the amount (if any) by which $9.75 exceeds the per share exercise price of that option, except that certain options, although they will not be canceled, will remain outstanding and represent only the right to receive the merger consideration when they are exercised.

Go-Shop Right

The merger agreement provided for a 40-day period following the effective date of the merger agreement (often referred to as a ‘‘go-shop’’ period) for Topps to actively solicit and entertain any proposal to acquire the Company that is superior to the proposal contemplated by the merger agreement. 107 potential bidders were identified as possible acquirors of Topps during the go-shop period. During the go-shop period, which expired on April 14, 2007, with the assistance of Lehman Brothers, 107 potential bidders (including all of the 36 potential bidders proposed by Mr. Brog, one of the objecting directors) were contacted. 72 of the contacted potential bidders declined to pursue an acquisition of Topps, five signed confidentiality agreements with the Company and commenced a due diligence review of Topps, while 34 failed to respond to Lehman Brothers’ further attempts to contact them. In addition, subject to the terms of the merger agreement, after the go-shop period, Topps may entertain any unsolicited proposal to acquire the Company that may result in such a superior proposal.

On April 12, 2007, prior to the expiration of the go-shop period, one of the potential go-shop bidders, who is the principal competitor of our entertainment business (to whom we refer as Bidder C), submitted a non-binding indication of interest to acquire Topps for $10.75 per share, in cash. Lehman Brothers called Bidder C on the first day of the go-shop period, and numerous times during this period, for the purpose of soliciting and/or assisting Bidder C with the development of its bid for Topps. Lehman Brothers’ calls were infrequently returned, but after some time Bidder C entered into a confidentiality agreement with the Company and commenced a due diligence review of Topps. The Company’s counsel also contacted Bidder C’s counsel during the go-shop period in an effort to guide them in the preparation of Bidder C’s bid. In conversations with Lehman Brothers, Bidder C indicated that it had teamed-up with a financial sponsor and engaged an investment bank. However, based upon discussions with Bidders C and its representatives, it turned out that, as of the time that Bidder C had submitted its non-binding indication of interest, no such financial sponsor was involved and no investment bank had been retained. Bidder C’s proposal consisted of a bid letter and a draft agreement and plan of merger (which we refer to as the Bidder C agreement), which was based on, and proposed a number of modifications to, the existing merger agreement for the Tornante-Madison Dearborn transaction.

Our Board met on April 16, 2007 to review and consider Bidder C’s proposal and to determine whether the proposal warranted our Board’s declaration of Bidder C as an ‘‘Excluded Party’’ under the existing merger agreement. All of our directors other than Richard Tarlow (who was traveling overseas at the time) attended this Board meeting. John Jones and Ann Kirschner, who attended portions of the meeting, were not present at the time of the vote with respect to Bidder C. Five of the directors at the meeting, Allan Feder, Stephen Greenberg, David Mauer, Jack Nusbaum and Arthur

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Shorin, voted against declaring Bidder C an Excluded Party. Mr. Ajdler voted in favor of declaring Bidder C an Excluded Party. Mr. Brog abstained from the vote. Accordingly, our Board did not declare Bidder C to be an Excluded Party under the existing merger agreement (with only one of the three objecting directors affirmatively voting in favor of declaring Bidder C to be an Excluded Party).

Our Board did not declare Bidder C to be an Excluded Party primarily for the following reasons:

  the complete absence of any information as to whether Bidder C would be capable of financing its proposed acquisition, despite the Company’s repeated attempts to confirm such financing in the days leading up to the expiration of the go-shop period;
  the risk that the transaction could be substantially delayed or prevented from being consummated due to the failure of all required regulatory approvals being obtained and Bidder C’s stated unwillingness to assume sufficient risk as to the occurrence of such a failure; and
  Bidder C’s proposed $12 million cap on its liability in the event of its breaching of the definitive merger agreement, which our Board determined was insufficient given the fact that Bidder C was a strategic, and not a financial, buyer. Given the other issues presented by Bidder C’s proposal, our Board viewed a $12 million cap as essentially an option in favor of Bidder C to acquire the Company.

In light of these issues, our Board determined that, notwithstanding Bidder C’s interest in acquiring Topps for $1.00 per share more than the merger consideration proposed in the Tornante-Madison Dearborn transaction, under the circumstances, it could not conclude that Bidder C’s bid was or might reasonably be expected to result in a superior proposal (within the meaning of the existing merger agreement) to the Tornante-Madison Dearborn transaction.

Therefore, the Company and its representatives are not permitted to continue discussions and negotiations with Bidder C (or any other person) unless it submits an unsolicited proposal that, subject to certain conditions specified in the existing merger agreement, our Board determines in good faith is or may reasonably be expected to result in a superior proposal to the Tornante-Madison Dearborn transaction. See ‘‘SUMMARY—The Merger—Termination of the Merger Agreement,’’ ‘‘—Termination Fees if the Merger is Not Completed’’ and ‘‘—Expense Reimbursement if the Merger is Not Completed,’’ and ‘‘THE MERGER AGREEMENT—Restrictions on the Solicitation of Other Offers,’’ ‘‘—Change in Company Recommendation,’’ ‘‘—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses’’ and Annex A to this proxy statement.

April 12, 2007 was not the first time the we had heard of Bidder C’s interest in acquiring Topps. Soon after the conclusion of the attempted sale of our confectionery business, an investment bank claiming to represent Bidder C approached Lehman Brothers. They indicated that Bidder C was interested in acquiring either our entertainment business or the Company as a whole and mentioned that a proposal from Bidder C was forthcoming. However, after a couple of initial conversations, they never called back and failed to return follow-up calls from Lehman Brothers.

Reasons for the Merger; Recommendation of Our Board

Based in part on consultations with Topps management, Willkie Farr and Lehman Brothers, and in consideration of other supporting factors (including, but not limited to, Lehman Brothers’ opinion), our Board, by a vote of seven to three, has approved and adopted the merger agreement and the transactions contemplated thereby (including the merger) and has determined that the merger agreement and such transactions are fair to, advisable and in the best interests of Topps and its stockholders.

Our Board recommends that you vote ‘‘FOR’’ approval and adoption of the merger agreement and the transactions contemplated thereby (including the merger) at the special meeting. Our board also recommends that you vote ‘‘FOR’’ the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes in favor of the approval and adoption of the merger agreement at the time of the special meeting.

The three objecting directors voted against approval and adoption of the merger agreement by our Board. Messrs. Ajdler and Brog have publicly stated their opposition to the merger agreement.

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Following our Board’s seven to three approval of the merger agreement, in letters to our Board, Mr. Ajdler expressed his dissatisfaction with the $9.75 per share cash merger consideration and the process leading up to the execution of the merger agreement. See ‘‘SUMMARY—The Merger— Background of the Merger,’’ ‘‘THE MERGER—Background of the Merger’’ and Annex E-1, Annex E-2 and Annex E-3 to this proxy statement.

Financing of the Merger

The funds necessary to consummate the merger and related transactions (including payment of the aggregate merger consideration) are expected to be funded by (i) approximately $396 million of equity and debt financing, pursuant to written commitments (copies of which have been delivered to us by Parent and Merger Sub), consisting of (a) borrowings by Merger Sub under new senior secured term loan and revolving credit facilities, (b) borrowings by Merger Sub under a new senior subordinated unsecured term loan facility, and (c) investments by Tornante and the MDP Funds in the equity of Parent, and (ii) cash on hand of Topps, Parent and Merger Sub.

Based on discussions with representatives of Tornante and Madison Dearborn, the senior secured revolving credit facility obtained by Merger Sub in connection with the merger is not expected to be drawn for purposes of consummating the transaction. If this is the case, then we expect up to 50% of the merger consideration to be financed by the equity investments in Parent.

The merger is not conditioned upon Parent and/or Merger Sub obtaining sufficient financing to consummate the transactions contemplated by the merger agreement. See ‘‘THE MERGER— Financing of the Merger.’’

Conditions to the Merger

Before the merger can be completed, a number of conditions must be satisfied. These include:

  the approval and adoption of the merger agreement and the transactions contemplated thereby, including the merger, by the holders of a majority of the outstanding shares of our common stock in accordance with the Delaware General Corporation Law, or the DGCL;
  that holders of no more than 15% of the outstanding shares of our common stock exercise their appraisal rights under Section 262 of the DGCL in connection with the merger;
  that any applicable waiting period (or any extension) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act, has been terminated or has expired (which waiting period was terminated on April 2, 2007);
  that certain foreign regulatory approvals are obtained;
  that third party consents to the merger and the other transactions contemplated by the merger agreement pursuant to certain of the Company’s contracts are obtained without any changes to such contracts that are material and adverse or, in some cases, adverse in any respect to Topps;
  the absence of any legal prohibitions against the merger;
  material compliance with our covenants and agreements under the merger agreement;
  the accuracy of our representations and warranties contained in the merger agreement;
  the absence of a Company material adverse effect within the meaning of the merger agreement; and
  other customary conditions specified in the merger agreement.

On April 2, 2007, the Federal Trade Commission granted early termination of the waiting period under the HSR Act with respect to the merger. We expect to complete the merger shortly after all of the other conditions to the merger have been satisfied or waived. The merger will be completed as promptly as practicable following the approval and adoption of the merger agreement at the special

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meeting by Topps stockholders, subject to the satisfaction or waiver of the other conditions to the consummation of the merger, but we cannot be certain when or if the conditions will be satisfied or, to the extent permitted, waived. See ‘‘THE MERGER AGREEMENT—Conditions to the Merger.’’

Opinion of Lehman Brothers

On March 5, 2007, Lehman Brothers rendered its opinion to our Board that as of such date and, based upon and subject to the assumptions and other matters stated in its opinion, from a financial point of view, the consideration to be offered to the stockholders of the Company in connection with the merger is fair to such stockholders. Lehman Brothers’ advisory services and opinion were provided for the information and assistance of our Board in connection with its consideration of the merger. Lehman Brothers’ opinion is not intended to be and does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote in connection with the merger. Lehman Brothers was not requested to opine as to, and Lehman Brothers’ opinion does not address, our underlying business decision to proceed with or effect the merger.

In arriving at its opinion, Lehman Brothers assumed and relied upon the accuracy and completeness of the financial and other information used by Lehman Brothers, including information provided by the Company, without assuming any responsibility for independent verification of such information. Lehman Brothers further relied upon the assurances of the management of Topps that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial projections and adjusted financial projections of the Company, upon advice of the Company, Lehman Brothers assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Topps as to their respective future financial performance and that the Company would perform substantially in accordance with such projections. In arriving at its opinion, Lehman Brothers did not conduct or obtain any evaluations or appraisals of the assets or liabilities of the Company, nor did it conduct a physical inspection of the properties and facilities of Topps. In addition, in 2005 we asked Lehman Brothers to conduct an auction process for our confectionery business, which process was terminated by us on September 12, 2005, but after such termination and prior to March 5, 2007, we did not authorize Lehman Brothers to solicit, and Lehman Brothers has not solicited, any indication of interest from any third party with respect to the purchase of all or a part of the Company’s business. Lehman Brothers’ opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, March 5, 2007.

In performing its analyses, Lehman Brothers made numerous assumptions with respect to industry risks associated with industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company. Any estimates contained in Lehman Brothers’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. The analyses performed were prepared solely as part of Lehman Brothers’ analysis of the fairness, from a financial point of view, of the consideration to be offered to our stockholders in connection with the merger and were prepared in connection with the delivery by Lehman Brothers of its opinion, dated March 5, 2007, to our Board.

Pursuant to Lehman Brothers’ engagement letter with us, upon delivery of its opinion, Lehman Brothers was entitled to receive a fee of $750,000. If the merger and the other transactions contemplated by the merger agreement are completed, Lehman Brothers will receive fees of $4,343,525, in the aggregate, including the fee relating to its opinion. Lehman Brothers’ fee arrangement with respect to the merger was structured so as to provide it with an incentive to seek out a buyer who will provide maximum value to our stockholders. A copy of Lehman Brothers’ fairness opinion dated March 5, 2007 is included as Annex B to this proxy statement. You are encouraged to read Lehman Brothers’ opinion carefully and in its entirety for a description of the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Lehman Brothers in rendering its opinion. See ‘‘THE MERGER—Fairness Opinion of Lehman Brothers’’ and Annex B to this proxy statement.

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While negotiating the terms of the merger agreement, Allan A. Feder, a director of the Company, polled the three other members of the Board committee then negotiating the terms of the merger agreement as to whether they believed it was necessary to obtain an additional fairness opinion from another financial advisor. With the agreement of Stephen Greenberg and Messrs. Ajdler and Brog, Mr. Feder determined that an additional fairness opinion from another financial advisor was not necessary or appropriate. In making this determination, Mr. Feder discussed with the members of the second committee Lehman Brothers’ (i) substantial familiarity with the Company and its operations, which it gained through, among other things, its work in connection with the auction process for the attempted sale of our confectionery business in 2005, as well as in connection with its re-engagement in May 2006, (ii) knowledge of the industries within which the Company operates and (iii) fee structure that provides an incentive for Lehman Brothers to seek out attractive offers to acquire the Company. The members of the second committee also took into account the fees that would be payable to an additional financial advisor and concluded that that the engagement of another financial advisor would not add sufficient value to the sale process. See ‘‘THE MERGER—Background of the Merger’’ and ‘‘—Fairness Opinion of Lehman Brothers.’’

Termination of the Merger Agreement

We and Parent may agree in writing to terminate the merger agreement at any time without completing the merger, even after our stockholders have approved and adopted it. The merger agreement may also be terminated at any time prior to the effective time of the merger under specified circumstances, including:

  if the merger is not consummated by December 5, 2007 (the date that is nine months after the effective date of the merger agreement), which we refer to as the outside date, provided that the party attempting to terminate is not then in breach;
  if any court or other governmental entity issues a final order preventing the merger that cannot be appealed;
  if our stockholders fail to approve and adopt the merger agreement at the special meeting or at any adjournment or postponement of the special meeting;
  if a party to the merger agreement has breached or failed to perform any of its representations, warranties or covenants, which breach (subject to certain cure rights) would reasonably be expected to result in the failure of the conditions to the merger to be satisfied (provided that the party seeking termination is not then in material breach of any of its representations, warranties or covenants under the merger agreement);
  if (i) our Board (a) withdraws, modifies or amends its recommendation to our stockholders to approve and adopt the merger agreement in a manner that is adverse to Parent, (b) approves or recommends any acquisition proposal or superior proposal within the meaning of the merger agreement, or (c) consents in advance to the acquisition by any third party or ‘‘group’’ (within the meaning of Section 13(d) of the Exchange Act) of beneficial ownership of more than 25% of the outstanding shares of our common stock, (ii) the Company enters into any letter of intent or similar agreement or undertaking relating to any acquisition proposal or superior proposal within the meaning of the merger agreement, (iii) the Company approves or recommends that our stockholders tender their shares of Topps common stock in any tender or exchange offer or the Company fails to send to our stockholders, within ten business days after the commencement of such tender or exchange offer, a statement that the Company recommends rejection of such tender or exchange offer, (iv) the Company publicly announces its intention to take any of the actions described in the foregoing clauses (i)(a), (i)(b), (ii) or (iii), or (v) the Company breaches its obligation under the merger agreement to hold a meeting of Topps stockholders to vote upon the merger agreement and the transactions contemplated thereby, unless such breach results from delays caused by the SEC;
  if, at any time prior to the requisite approval and adoption of the merger agreement by our stockholders, our Board determines to terminate the merger agreement in order to allow the Company to enter into a superior proposal within the meaning of the merger agreement;

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  if all conditions to the merger are satisfied and Parent and Merger Sub fail to effect the merger within three business days after the end of a 15-day marketing period intended to allow Parent and Merger Sub sufficient time to obtain the financing necessary to consummate the merger; or
  if prior to the outside date Topps takes actions that make the third-party consent condition described above incapable of being satisfied.

See ‘‘SUMMARY—The Merger—Go-Shop Rights,’’ ‘‘—Termination Fees if the Merger is Not Completed’’ and ‘‘—Expense Reimbursement if the Merger is Not Completed,’’ ‘‘THE MERGER — Background of the Merger,’’ ‘‘—Effects on Topps if the Merger Is Not Completed’’ and ‘‘THE MERGER AGREEMENT — Restrictions on the Solicitation of Other Offers,’’ ‘‘—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses.’’

Termination Fees if the Merger Is Not Completed

The merger agreement provides for a bifurcated termination fee such that: (i) if we had terminated the merger agreement during the go-shop period in order to enter into a superior proposal within the meaning of the merger agreement, we would have been required to pay to Parent a termination fee of $8 million (or approximately 2.0% of the total merger consideration payable by Parent); and (ii) if the merger agreement is terminated for any other reason in respect of which Parent would be entitled to a termination fee, the amount of the termination fee payable by us to Parent will be $12 million (or approximately 3.1% of the total merger consideration payable by Parent).

The $12 million termination fee will be payable by us to Parent if the merger agreement is terminated:

  under any of the circumstances described in the first, third and fourth bullet points above in ‘‘—Termination of the Merger Agreement’’ and, within 12 months after such termination, we enter into or consummate a definitive agreement with respect to an acquisition proposal within the meaning of the merger agreement that was publicly announced or disclosed and not withdrawn prior to the special meeting; or
  under any of the circumstances described in the fifth and sixth bullet points above in ‘‘—Termination of the Merger Agreement,’’ subject to our right to pay the lesser termination fee of $8 million in the event that we had terminated the merger agreement during the go-shop period in order to enter into a superior proposal.

The merger agreement also provides for the payment by Parent to us of a termination fee in the amount of $12 million (which is equal to the higher termination fee that may be payable by us as described above) if the merger agreement is terminated because:

  Parent has breached or failed to perform any of its representations, warranties or covenants, which breach (subject to certain cure rights) would reasonably be expected to result in the failure of the conditions to the merger to be satisfied; or
  after all conditions to the merger are satisfied, Parent and Merger Sub fail to effect the merger within three business days after the end of the 15-day marketing period.

Parent’s obligation to pay a termination fee to us is guaranteed by Tornante and the MDP Funds. See ‘‘SUMMARY—The Merger—Background of the Merger,’’ ‘‘—Go-Shop Rights,’’ ‘‘—Termination of the Merger Agreement,’’ and ‘‘—Expense Reimbursement if the Merger Is Not Completed,’’ ‘‘THE MERGER — Background of the Merger,’’ ‘‘—Effects on Topps if the Merger is Not Completed’’ and ‘‘THE MERGER AGREEMENT—Restrictions on the Solicitation of Other Offers,’’ ‘‘—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses.’’

Expense Reimbursement if the Merger Is Not Completed

Under the merger agreement, subject to certain conditions, Parent is entitled to the reimbursement from us of its reasonable and documented out-of-pocket expenses (up to a cap)

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incurred in connection with negotiating, executing, delivering and performing the merger agreement. However, if the merger agreement is terminated because, prior to the outside date, we took actions that made the third-party consent condition described above incapable of being satisfied, we would be required to reimburse Parent for 50% of its expenses, subject to a cap, incurred in connection with the transaction.

Until May 4, 2007 (60 days following the effective date of the merger agreement), Parent’s expense reimbursement cap is $3.5 million. Thereafter, the cap increases to $4.5 million. Any expense reimbursement payable to Parent would be in addition to any termination fee which Parent is entitled to receive from us. See ‘‘SUMMARY—The Merger—Termination of the Merger Agreement’’ and ‘‘—Termination Fees if the Merger is Not Completed,’’ ‘‘THE MERGER—Background of the Merger,’’ ‘‘—Effects on Topps if the Merger is Not Completed’’ and ‘‘THE MERGER AGREEMENT— Restrictions on the Solicitation of Other Offers,’’ ‘‘—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses.’’

Interests of Certain Persons in the Merger

Under the terms of the existing employment agreement between the Company and Mr. Shorin, our Chief Executive Officer and Chairman of our Board, the occurrence of a change in control of the Company (such as the merger) would constitute ‘‘Good Reason’’ allowing Mr. Shorin to terminate his employment with the Company and to receive severance benefits. In such event, he would be entitled to the following severance benefits: (i) a lump sum payment equal to three times (1) his annual base salary plus (2) the highest annual bonus paid to him with respect to any of the three fiscal years ended immediately prior to the termination date; (ii) a prorated bonus for the year of termination; (iii) continued participation in all compensation plans of the Company for three years; (iv) three additional years of service credit for pension purposes; and (v) immediate vesting of all outstanding unvested stock options held by him at the time of termination. In addition, following such termination, the Company will be obligated to offer Mr. Shorin a three-year consulting arrangement under which he would be entitled to compensation of $350,000 per year and the continuation of all related executive perquisites, including an office and secretarial support. Under Mr. Shorin’s existing employment agreement, upon his retirement, he will also be entitled to receive pension benefits which he accrued over his years of service with the Company, which benefits currently equal $8.4 million.

In connection with the merger agreement, on March 5, 2007, Parent, Topps and Mr. Shorin, Topps’ Chief Executive Officer and the Chairman of the Board, entered into a letter agreement (which we refer to as the Shorin employment letter). Under the Shorin employment letter, upon the consummation of the merger, Mr. Shorin’s existing employment agreement with Topps would be amended and Mr. Shorin would agree, among other things, to retire within 60 days after the date of such consummation. In lieu of the amounts he would have been entitled to receive under his employment agreement described in clauses (i) and (ii) above, after his retirement following the merger, Mr. Shorin will receive one year’s salary of $885,000 and a bonus of approximately $468,000. By consenting to such agreement, Mr. Shorin surrendered approximately $2.8 million to which he would otherwise be entitled under his existing employment agreement in the event of a change of control of Topps. Such decision was made independently by Mr. Shorin in response to a specific request by Tornante and Madison Dearborn (communicated through the Company’s counsel) and, according to Mr. Shorin, was motivated by his desire to facilitate the proposed merger transaction with them, which he believes to be in the best interests of our stockholders (of which he is one). Following his post-merger retirement, Mr. Shorin will serve as a consultant to Topps pursuant to his existing employment agreement upon the terms described above.

Pursuant to the terms of the merger agreement, all unvested options to purchase our common stock will vest at the effective time of the merger, except that certain options, although they will not be canceled, will remain outstanding and represent only the right to receive the merger consideration when they are exercised. See ‘‘THE MERGER AGREEMENT—Stock Options; Restricted Stock; Stock-based Awards.’’

Accordingly, all options held by Mr. Shorin and other members of management will be paid out in the merger. Mr. Shorin will receive approximately $3.5 million as merger consideration for his

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options to purchase 582,500 shares of our common stock. In addition, Mr. Shorin owns 2,317,989 shares of our common stock, in respect of which he will receive merger consideration of $22.6 million.

Under the Topps executive severance plan, upon consummation of the merger nine of our executives (other than Mr. Shorin) will be entitled to certain severance benefits if their employment is terminated by the surviving corporation within two years after the effective date of the merger or by the executive for ‘‘good reason’’ within two years of the effective date of the merger.

On May 7, 2007, our Board approved the payment of retention bonuses, which will total up to $145,000, for five non-executive employees of the Company in an effort to provide each eligible employee with an incentive to remain with the Company through the merger. Subject to certain conditions, each such employee will be entitled to receive his or her retention bonus upon the earlier of a date certain and three months after the consummation of a ‘‘change of control’’ (which would include the consummation of the merger) so long as such employee remains employed by the Company through such payment date. Each eligible employee would also be entitled to receive his or her retention bonus if their employment with the Company is terminated by the Company prior to his or her applicable payment date other than for ‘‘cause’’ or if such employee dies prior to such payment date.

On May 7, 2007, to assist the Company with retaining and recruiting talented employees, our Board also approved a severance plan for certain non-executive employees of the Company. Under the severance plan, subject to certain conditions, in the event that (i) the Company effects a ‘‘change of control’’ (such as the merger) within 18 months following the effectiveness of the severance plan and (ii) within 12 months following such change of control, the Company terminates the employment of any such employee other than for ‘‘cause’’ or the employee resigns for ‘‘good reason,’’ in each case within the meaning of the severance plan, such employee, depending on the category in which he or she falls, will be entitled to receive between 12 and 52 weeks’ of such employee’s salary at the rate of such salary that is in effect at the time of such termination or resignation (as applicable).

Governmental and Regulatory Approvals

Under the provisions of the HSR Act, and as a condition to the merger under the merger agreement, the merger may not be completed until we and a fund affiliated with Madison Dearborn, Madison Dearborn Capital Partners V-A, L.P., as the ‘‘acquiring person’’ of the Company for the purposes of the HSR Act, have made certain filings with the Federal Trade Commission and the United States Department of Justice and the applicable waiting period has expired or been terminated. On April, 2, 2007, the Federal Trade Commission granted early termination of the waiting period under the HSR Act with respect to the merger.

The merger is also subject to antitrust-related regulatory approvals in Austria, Germany and Ireland being obtained. The Irish approval was granted on April 30, 2007. The Austrian and German approvals were granted on May 2, 2007. See ‘‘THE MERGER—Governmental and Regulatory Approvals’’ and ‘‘THE MERGER AGREEMENT—Consents, Approvals and Resignations’’ and—Conditions to the Merger.’’

Voting Agreements

In connection with the merger agreement, and as required by Parent as a condition to its execution of the merger agreement, on March 5, 2007, each of Messrs. Feder, Greenberg, Mauer, Nusbaum, Shorin and Tarlow and Ms. Kirschner (whom we refer to collectively as the voting agreement parties), all of whom are directors of Topps, entered into separate voting agreements (which we refer to as the voting agreements) with Parent. Under the voting agreements, each of the voting agreement parties agreed (among other things), in their respective capacity as stockholders of Topps, to vote the shares of our common stock that they beneficially own (whether or not such shares were acquired before the date of the voting agreements or are acquired thereafter) in favor of approval and adoption of the merger agreement and the transactions contemplated thereby (including the merger) and against any other proposal or offer to acquire Topps. In connection with the voting

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agreements, the voting agreement parties granted to Parent proxies to vote the 2,501,040 outstanding shares of Topps common stock that they held as of March 5, 2007. The voting agreements also prohibit the voting agreement parties (as applicable) from selling, transferring or otherwise disposing of, or granting any proxy or other voting rights (other than their proxies in favor of Parent) with respect to, any shares of Topps common stock that are beneficially owned by them without the prior written consent of Parent.

If the merger agreement is terminated, the voting agreements will also terminate. As of the record date, the voting agreement parties owned, in the aggregate, 2,501,040 outstanding shares of our common stock, which represented approximately 6.5% of Topps’ outstanding common stock as of such date. See ‘‘THE MERGER—Voting Agreements’’ and ‘‘THE VOTING AGREEMENTS.’’

Certain Material U.S. Federal Income Tax Consequences

The merger will generally be a taxable transaction to U.S. holders (as defined below) of Topps common stock for U.S. federal income tax purposes. For U.S. federal income tax purposes, a U.S. holder will generally recognize gain or loss from the merger in an amount determined by the difference between the cash received by such U.S. holder pursuant to the merger and such U.S. holder’s aggregate adjusted tax basis in its shares of Topps common stock. See ‘‘THE MERGER—Certain Material U.S. Federal Income Tax Consequences.’’

Rights of Stockholders to Seek Appraisal

Stockholders of Topps are entitled to appraisal rights under Section 262 of the DGCL in connection with the merger. This means that, if you fully comply with the procedures for perfecting appraisal rights under Delaware law, you will be entitled to have the fair value of your shares determined by the Delaware Court of Chancery (which we refer to as the Delaware Court) and to receive a cash payment based on that valuation, in lieu of the merger consideration. The ultimate amount you receive as a dissenting stockholder in an appraisal proceeding may be more than, the same as or less than the amount you would have received under the merger agreement.

To exercise your appraisal rights, you must submit a written demand for appraisal to Topps before the vote is taken on the merger agreement and you must not vote in favor of the adoption of the merger agreement. Your failure to follow exactly the procedures specified in Section 262 of the DGCL will result in the loss of your appraisal rights. A copy of Section 262 of the DGCL is included as Annex C to this proxy statement. You should read Section 262 of the DGCL carefully and in its entirety. See ‘‘THE MERGER—Appraisal Rights’’ and Annex C to this proxy statement.

Market Price of Our Common Stock

Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol ‘‘TOPP.’’ The average closing price of our common stock for the two-week period that preceded our 2006 annual meeting of stockholders held on July 28, 2006 was $8.02 per share. After we settled the second proxy contest by Pembridge in July 2006 and the objecting directors were elected to our Board, based on at least one analyst report, speculation had emerged in the analyst community that the Company might have been the subject of a transaction over the following months. The price of our common stock began to increase over time. Many of our directors believed that this increase may have reflected a transaction premium that was built into the price of our common stock.

On December 22, 2006, the date on which Tornante and Madison Dearborn first sent us a signed letter of intent, our common stock closed at $8.74 per share. On January 29, 2007, the date on which we entered into a letter of intent in which Tornante and Madison Dearborn offered to acquire Topps for $9.75 per share, our common stock closed at $9.86 per share. On March 5, 2007, the effective date of the merger agreement, and the last trading day before we announced the signing of the merger agreement, our common stock closed at $8.91 per share (meaning that the $9.75 per share offered by Tornante and Madison Dearborn represents a premium of approximately 9.4% over such closing price). On May 18, 2007, which was the last trading day before the printing of this proxy statement, our common stock closed at $9.82 per share. You are encouraged to obtain market quotations for our common stock in connection with voting your shares.

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THE SPECIAL MEETING

General; Date, Time and Place; Attendees

This proxy statement is being provided by, and the enclosed proxy is solicited by and on behalf of, our Board for use at a special meeting of Topps stockholders (including any adjournment or postponement that may take place).

The special meeting is scheduled to be held at the Company’s offices at One Whitehall Street, New York, New York on June 28, 2007, at 2:00 p.m. (local time).

Purpose of the Special Meeting

The purpose of the special meeting is to: (i) consider and vote upon the approval and adoption of the merger agreement and the transactions contemplated thereby, including the merger; (ii) approve the adjournment of the special meeting for, among other things, the solicitation of additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement and the transactions contemplated thereby, including the merger; and (iii)  transact any other business that is properly brought before the special meeting. See ‘‘SUMMARY— The Merger,’’ ‘‘THE MERGER,’’ ‘‘THE MERGER AGREEMENT’’ and Annex A to this proxy statement.

Quorum at the Special Meeting

To constitute a quorum for the transaction of business at the special meeting, the presence, in person or by proxy, of the holders of a majority of the shares of Topps common stock outstanding as of the record date is required. On the record date, 38,717,765 shares of Topps common stock were outstanding. Accordingly, holders of 19,358,884 shares of Topps common stock that were outstanding as of the record date, if present at the special meeting in person or by proxy, will constitute a quorum for the purposes of transacting business at the special meeting. Abstentions and ‘‘broker non-votes’’ (shares held by a broker, bank or other nominee that does not have the authority, either express or discretionary, to vote on a particular matter) are counted for purposes of determining the presence or absence of a quorum for the transaction of business at the special meeting. If a quorum is not present at the special meeting, the Company expects to adjourn or postpone the meeting to solicit additional proxies.

Record Date; Voting Power

Only holders of shares of our common stock as of the close of business (5:00 p.m., Eastern time) on May 10, 2007, the record date determined by our Board as the date for determining the stockholders of the Company entitled to vote at the special meeting, will be entitled to receive notice of and to vote at the special meeting and any adjournments or postponements thereof. At the special meeting, each holder of Topps common stock as of the record date will be entitled to one vote in respect of each such share of Topps common stock.

Required Vote for Approval

The affirmative vote of the holders of a majority of the shares of Topps common stock outstanding on the record date is required to approve and adopt the merger agreement and the merger contemplated thereby. On the record date, 38,717,765 shares of our common stock were outstanding. Accordingly, the affirmative vote of the holders of at least 19,358,884 shares of our common stock that were outstanding as of the record date is required to approve and adopt the merger proposal. You may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ If you abstain or fail to vote your shares of Topps common stock with respect to the merger proposal, it will have the same effect as voting against approval and adoption of the merger proposal. Your broker, bank or other nominee will vote your shares only if you provide instructions on how to vote by following the instructions provided to you by your broker, bank or other nominee. Failure to instruct your broker, bank or other nominee to vote your shares will have the same effect as voting against approval and adoption of the merger proposal.

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The proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of stockholders entitled to cast a majority of the votes of all issued and outstanding shares of our common stock present at the special meeting in person or by proxy and entitled to vote. You may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ Abstentions, but not broker non-votes, will count as shares present and entitled to vote on the proposal to adjourn or postpone the meeting. As a result, abstentions will have the same effect as a vote against the proposal to adjourn or postpone the meeting and broker non-votes will have no effect on the vote to adjourn or postpone the meeting.

If our stockholders fail to approve and adopt the merger agreement at the special meeting, each of Topps and Parent will have the right to terminate the merger agreement. In addition, under certain circumstances, we may be required to pay a termination fee to Parent and/or to reimburse Parent for certain of its expenses relating to the merger agreement and the transactions contemplated thereby. See ‘‘SUMMARY—The Merger—Termination of the Merger Agreement,’’ ‘‘—Termination Fees if the Merger is Not Completed’’ and ‘‘—Expense Reimbursement if the Merger Is Not Completed,’’ ‘‘THE MERGER—Effects on Topps if the Merger is Not Completed’’ and ‘‘THE MERGER AGREEMENT—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses.’’

Voting by Our Directors and Executive Officers

As of the record date, our directors and executive officers were entitled to vote, in the aggregate, 2,995,788 shares of our common stock (or approximately 7.7% of the aggregate number of shares of our common stock outstanding as of the record date). Our directors (other than the objecting directors) and executive officers have informed us that they currently intend to vote all of their shares of our common stock ‘‘FOR’’ the adoption of the merger agreement and the transactions contemplated thereby (including the merger) and ‘‘FOR’’ the adjournment proposal.

In connection with the merger agreement, and as required by Parent as a condition to its execution of the merger agreement, seven of our directors entered into separate voting agreements with Parent whereby these individuals, in their respective capacity as stockholders of Topps, have agreed to vote their shares of common stock in favor of the consummation of the merger. See ‘‘THE MERGER—Voting Agreements’’ and ‘‘THE VOTING AGREEMENTS.’’

How to Vote

A stockholder may vote in person at the special meeting or by proxy without attending the special meeting. To vote by proxy, a stockholder must either:

  complete the enclosed WHITE proxy card, sign and date it and return it in the enclosed postage prepaid envelope;
  submit a proxy by telephone; or
  submit a proxy on the Internet.

The enclosed WHITE proxy card sets forth instructions for submitting a proxy by the telephone and the Internet.

A WHITE proxy card is enclosed for use by our stockholders. Our Board requests that you sign and return the WHITE proxy card in the accompanying envelope. No postage is required if mailed within the United States.

If you hold your shares of Topps common stock beneficially through a broker, bank or other nominee, you may be able to submit a proxy by mail, or by telephone or the Internet if those services are offered by the broker, bank or other nominee.

Proxies received at any time before the special meeting, and not revoked or superseded before being voted, will be voted at the special meeting. Where a specification is indicated by the proxy, it will be voted in accordance with the specification. If you sign your WHITE proxy card without indicating your vote, your shares will be voted ‘‘FOR’’ the approval and adoption of the merger

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agreement and the transactions contemplated thereby (including the merger) and ‘‘FOR’’ the adjournment or postponement of the special meeting, if necessary or appropriate, to solicit additional proxies, and in accordance with the recommendations of our Board on any other matters properly brought before the special meeting for a vote.

Please do not send in your stock certificates with your proxy card.    When the merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the merger consideration payable to you pursuant to the merger agreement in respect of your shares of Topps common stock. See ‘‘THE MERGER AGREEMENT—Payment Procedures.’’

If you have questions or requests for assistance in completing and submitting WHITE proxy cards, please contact:

MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
Call Collect: (212) 929-5500
    or
Toll Free: (800) 322-2885

Revocation of Proxies

If you execute and return a proxy, you may revoke it at any time before it is voted. You may revoke your proxy by:

  giving written notice of revocation;
  executing and returning a new proxy bearing a later date;
  submitting a proxy by telephone or the Internet at a later date; or
  attending the special meeting and voting in person.

Revocation of a proxy by written notice or execution of a new proxy bearing a later date should be submitted to Andrew J. Gasper, Esq., Corporate Secretary, The Topps Company, Inc., One Whitehall Street, New York, New York 10004. If you appear in person at the special meeting, you must vote in order to revoke your proxy.

Adjournment or Postponement

Although it is not expected, the special meeting may be adjourned or postponed, if necessary or appropriate, to solicit additional proxies ‘‘FOR’’ the proposal to approve and adopt the merger agreement and transactions contemplated thereby (including the merger) in the event that there are not sufficient votes in favor of such proposal at the time of the special meeting. Any adjournment or postponement of the special meeting may be made without notice, other than by an announcement made at the special meeting, by approval of the holders of a majority of our common stock present in person or by proxy at the special meeting, whether or not a quorum exists. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow our stockholders who have already sent in their proxies to revoke them at any time prior to being voted.

Expenses of Solicitation

We will bear the costs of this proxy solicitation and the costs of filing, printing and mailing this proxy statement and the accompanying Notice of Special Meeting, proxy and return envelope, as well as the cost of handling and tabulating the number of proxies received. In addition to this solicitation by mail, proxies may be solicited by our directors, officers and other employees by telephone, e-mail, Internet, facsimile, in person or otherwise. These people will not receive any additional compensation for assisting in the solicitation. We may also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of our common stock. We will reimburse those organizations and our transfer agent for their reasonable out-of-pocket expenses in

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forwarding such material. We have also retained MacKenzie Partners, Inc. to aid in the solicitation of proxies for a fee of $250,000 plus out-of-pocket expenses.

Other Business

We are not currently aware of any business to be acted upon at the special meeting other than the matters discussed in this proxy statement. Under our bylaws, business transacted at the special meeting is limited to the purposes stated in the notice of the special meeting, which is provided at the beginning of this proxy statement. If other matters do properly come before the special meeting, or at any adjournment or postponement of the special meeting, we intend that shares of our common stock represented by properly submitted proxies will be voted in accordance with the recommendations of our Board.

Miscellaneous

The grant of a proxy will also confer discretionary authority on the persons named in the proxy as proxy appointees to vote in accordance with their best judgment on matters incident to the conduct of the special meeting, including (except as stated in the following sentence) postponement or adjournment for the purpose of soliciting additional votes. However, shares represented by proxies that have been voted ‘‘AGAINST’’ the proposal to approve and adopt the merger agreement and the transactions contemplated thereby will not be used to vote ‘‘FOR’’ postponement or adjournment of the special meeting to allow additional time to solicit additional votes ‘‘FOR’’ the approval and adoption of such proposal.

Questions and Additional Information

If you have any questions about this proxy statement, your proxy or the proposals contained in this proxy statement, or if you need additional copies of this proxy statement or the enclosed WHITE proxy card, please contact: MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016, toll free at (800) 322-2885 or call collect at (212) 929-5500.

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THE MERGER

Introduction

On March 5, 2007, Topps entered into the merger agreement with Parent and Merger Sub, which are entities owned by Tornante and Madison Dearborn. Under the merger agreement, at the effective time defined in the merger agreement, Topps will merge with and into Merger Sub and, as a result of the merger, will become a wholly-owned subsidiary of Parent. In connection with the merger, each outstanding share of Topps common stock will be converted into the right to receive $9.75 in cash, without interest (and less applicable withholding taxes). In addition, each outstanding option to purchase our common stock will be canceled at the effective time of the merger and converted into the right to receive in cash, without interest (and less applicable withholding taxes), the amount (if any) by which $9.75 exceeds the per share exercise price of that option, except that certain options, although they will not be canceled, will remain outstanding and represent only the right to receive the merger consideration when they are exercised.

Topps is seeking approval and adoption by its stockholders of the merger agreement and the transactions contemplated thereby, including the merger.

Parties to the Merger Agreement


Topps
    The Topps Company, Inc.
One Whitehall Street
New York, NY 10004
(212) 376-0300

Topps is a Delaware corporation. Founded in 1938, we are a leading creator and marketer of distinctive confectionery and entertainment products in the U.S. and abroad. We operate in two principal segments, confectionery and entertainment.

Our confectionery business is a leading marketer of premium-branded, non-chocolate confectionery products, principally comprising lollipops and bubble gum. Branded lollipops include ‘‘Ring Pop,’’ ‘‘Push Pop,’’ ‘‘Baby Bottle Pop,’’ ‘‘Juicy Drop Pop’’ and the recently launched ‘‘Vertigo.’’ The Company also distributes and markets ‘‘Bazooka’’ bubble gum, originally introduced in 1947, and Bazooka Bubble Juice, introduced in 2006. Our entertainment products include Major League Baseball, National Football League, National Basketball Association and other trading cards, sticker album collections for the U.K. Premier League, the Italian football league and World Wrestling Entertainment, among others, and collectible games.

Headquartered in New York City, Topps also has offices in Pennsylvania, the State of Washington, the United Kingdom, Ireland, Italy and Argentina, and distributes its products in many countries around the world.


Parent
    Tornante-MDP Joe Holding LLC
c/o The Tornante Company LLC
233 South Beverly Drive
2nd Floor
Beverly Hills, CA 90212
(310) 228-6800

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and
Tornante-MDP Joe Holding LLC
c/o Madison Dearborn Partners, L.L.C.
Three First National Plaza
Suite 3800
70 West Madison Street
Chicago, Illinois 60602
(312) 895-1000

Parent is a Delaware limited liability company that is owned by Tornante and the MDP Funds. Parent was recently formed by Tornante and Madison Dearborn for the purpose of entering into and consummating the transactions contemplated by the merger agreement and has no business operations.

Founded in 2005 by Michael Eisner, Tornante is a privately held company that makes investments in and incubates companies and opportunities in the media and entertainment space.

Madison Dearborn is a private equity investment firm that focuses on investments across a broad spectrum of industries, including media and communications, basic industries, consumer, financial services, and health care.


Merger Sub
    Tornante-MDP Joe Acquisition Corp.
c/o The Tornante Company LLC
233 South Beverly Drive
2nd Floor
Beverly Hills, CA 90212
(310) 228-6800
    and
    Tornante-MDP Joe Acquisition Corp.
c/o Madison Dearborn Partners, L.L.C.
Three First National Plaza
Suite 3800
70 West Madison Street
Chicago, Illinois 60602
(312) 895-1000

Merger Sub is a Delaware corporation and a wholly-owned subsidiary of Parent. Merger Sub was recently formed by Parent for the purpose of entering into and consummating the transactions contemplated by the merger agreement and has no business operations.

Background of the Merger

    The Strategic Review

In 2004, our Board authorized Topps management to retain Parthenon, a nationally recognized strategic consulting firm, to assist us with conducting a thorough strategic review of the Company’s domestic operations and to help us develop opportunities to increase stockholder value. Parthenon reported to our Board and management that the Company faced significant challenges in both its confectionery and its entertainment businesses that required aggressive steps (including in the areas of new product development and internal cultural adjustments, among others) to be taken in order to grow these businesses. Parthenon also concluded that Topps’ confectionery business, which had been experiencing diminished revenue and increased overhead and marketing spending, was confronted with an extremely challenging environment, as the overall non-chocolate candy market was expected to remain flat for the next several years. As part of this Parthenon study, Topps management

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concluded that our confectionery business was strategically positioned as a sub-scale business and was vulnerable to the pressures associated with the then prevailing trend toward retail consolidation and increased competition from larger market participants. Our Board authorized Parthenon to conduct a second phase of its strategic review that was focused on improving operational processes, methods and procedures of Topps’ domestic operations and an initial assessment of its international operations.

The Confectionery Business Sale Process

As an outgrowth of Parthenon’s strategic review, in November 2004 our Board authorized management to interview various investment banks and, on February 7, 2005, our Board retained Lehman Brothers, an internationally recognized investment banking firm, to study various strategic alternatives, including, without limitation, the evaluation of a sale of all or part of Topps.

In light of the diverse nature of the Company’s confectionery and entertainment businesses and the absence of an identifiable buyer for the Company in its entirety, the decision was made to commence a sale process for the confectionery business in the form of an auction. Among other factors, the decision was motivated by the substantial level of consolidation activity in the confectionery industry over recent years. The expectation was that the business could attract significant interest from industry participants. A list of potential domestic and international buyers was prepared by Lehman Brothers and reviewed with the Company, and the selected parties were contacted and given documentation describing the acquisition opportunity. Nine of the parties approached, including six strategic buyers and three financial buyers, executed confidentiality agreements and conducted varying degrees of due diligence reviews of our confectionery business.

In the months that followed, based on feedback from prospective buyers, it became clear that a number of factors contributed to our confectionery business being unattractive to these potential buyers. According to the feedback, these factors included, among other things, the negative trends in the confectionery unit’s financial performance, the relatively small size of the major brands in the Company’s confectionery portfolio, the unattractive dynamics of the ‘‘novelty’’ confectionery segment, including the perceived volatility of revenues, concerns about the growth potential of the novelty category compared to other confectionery segments and the belief that the maintenance and growth of our confectionery product line would require a disproportionate amount of management time and attention. Only two strategic bidders made preliminary non-binding offers of $120-$160 million and $275 million, respectively. Lehman Brothers indicated to the first bidder that it needed to significantly increase its offer in order to be considered but the bidder decided instead to not pursue the opportunity further. The second bidder was given access to a data room containing nonpublic information about Topps and attended a comprehensive presentation by Topps management on May 26, 2005. On July 3, 2005, the second bidder also declined to proceed further and indicated to Lehman Brothers that upon further review of our confectionery business, its offer, if any, would be significantly lower than its initial $275 million indication of interest.

On August 17, 2005, Lehman Brothers presented to the Board a detailed analysis of the sale process for our confectionery business, along with alternative stockholder value building alternatives, including share repurchase and dividend strategies. On September 12, 2005, we announced that we had terminated our process to evaluate a possible sale of our confectionery business and that we had instead launched the restructuring program developed by Parthenon and Topps management. On September 12, 2005, we also terminated our engagement of Lehman Brothers.

The Company’s Restructuring

During the auction process for the confectionery business, Parthenon reported the conclusions of its analyses and recommended a restructuring whereby Topps, were it to remain a publicly traded entertainment and confectionery company, would divide its entertainment and confectionery operations into distinct divisions with separate management that reported to the Chief Executive Officer, President and certain other senior executives of the Company.

Following the decision to terminate our process to evaluate a possible sale of our confectionery business in September 2005, we began to implement a restructuring developed by Parthenon and

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Topps management by splitting the entertainment and confectionery businesses into their current divisional structure and implementing certain strategic alternatives. As part of these strategic alternatives, among other things, we: (i) strengthened our management team with strategic new hires and fostered a culture of accountability by adopting new incentive plans designed to make managers more accountable for the performance of their respective business units; (ii) reduced annual compensation costs by 20%; (iii) cut other costs by approximately $3.9 million by freezing our pension plan, setting a cap on our retiree medical coverage and reducing our insurance premiums and legal, consulting and auditor fees; (iv) with respect to our confectionery business, renewed our focus on our core brands, developed new advertising campaigns and enhanced our channels of distribution, product placement and new product development strategies; and (v) with respect to our entertainment business, renegotiated certain of our sports licensing arrangements, developed new products designed to attract collectors, restructured our sales force and engaged in activities designed to enhance the awareness of our brand among sports fans and to attract children to card collecting.

Based in large part on our restructuring efforts, in fiscal year 2007, our net income from continuing operations increased to $10.9 million, from $3.9 million in fiscal year 2006, and our earnings per share from continuing operations increased to $0.27, from $0.10 in fiscal year 2006.

The Proxy Contest – Part I

On April 29, 2005, during the then undisclosed confectionery sale process, Pembridge, a small hedge fund which at that time owned less than 1% of the then outstanding shares of our common stock, notified the Company of its intention to nominate its own slate of three candidates, which included Pembridge’s principal, Mr. Brog, for election as directors of the Company at its 2005 annual meeting of stockholders. In furtherance of this effort, Pembridge filed its own proxy statement and other materials with the SEC stating that, if elected, its slate of director nominees would pursue, among other things, a sale of the Company. In our proxy materials filed with the SEC, we urged our stockholders not to vote for Pembridge’s director nominees and instead to vote in favor of the Company’s nominees.

On May 17, 2005, in response to rumors that the Company may have been up for sale, Topps issued a press release announcing its prior engagement of Lehman Brothers in February 2005, long before Pembridge initiated its proxy solicitation, and stating that a potential sale of our confectionery business and other strategic alternatives were being explored by the Company. On June 9, 2005, the Company and Pembridge entered into a letter agreement, pursuant to which Pembridge agreed to terminate its proxy solicitation and to withdraw its nominees for election as directors of Topps. Pembridge also agreed not to engage in certain activities involving the Company, including any proxy solicitation, other stockholder proposal or board representation, until December 31, 2005. As part of the agreement, we agreed to refrain from adopting any stockholder rights plan, rights agreement or other device commonly known as a ‘‘poison pill,’’ without the prior approval of our stockholders, until June 30, 2006, and agreed to pay Pembridge $50,000 for its expenses in connection with the proxy solicitation.

In a joint press release issued by Topps and Pembridge on June 9, 2005, Mr. Brog expressed his approval of our actions by declaring, ‘‘I am glad that Topps retained Lehman Brothers in February 2005 to explore means of maximizing shareholder value and look forward to the outcome of their efforts.’’

The Proxy Contest – Part II

In January 2006, Topps received another letter from Pembridge requesting that its stockholder proposals be included in the Company’s proxy statement for the 2006 annual meeting of stockholders. Pembridge proposed to amend the organizational documents of the Company so as to eliminate the classified structure of our Board and to allow stockholders owning 15% of the outstanding shares of our common stock to call special meetings of stockholders. These proposals, if passed, would have resulted in a conflict between our bylaws and certificate of incorporation in violation of Delaware law. Therefore, we concluded that the proposals should not be included in our proxy materials for the 2006 annual meeting.

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On April 26, 2006, Pembridge then announced its nomination of Mr. Brog, Mr. Jones and Eric Newman to stand for election as directors of the Company. Mr. Newman was replaced less than a week later by Mr. Ajdler. In its proxy materials, Pembridge stated that if its nominees were elected they would propose to form a special committee of independent directors to pursue strategic alternatives and that it was Pembridge’s belief that the Company would benefit from being taken private. Over the course of the entire proxy contest, Pembridge made clear that, if elected, its nominees would pursue a sale of all or part of the Company.

Topps opposed Pembridge’s nominations, nominated Arthur Shorin, Edward Miller and Leonard Stern to stand for election as directors of the Company and continued to implement its restructuring. On July 28, 2006, we reached an agreement with Pembridge to settle this second proxy contest. Under the terms of the settlement, the objecting directors and Mr. Shorin comprised a revised slate of nominees for election as directors of Topps.

To accommodate this settlement, we agreed to expand our Board from nine to ten seats and to solicit proxies for all three director nominees of Pembridge and for Mr. Shorin, the Company’s director nominee. We also agreed to pay $350,000 to the objecting directors as reimbursement for their expenses incurred in connection with Pembridge’s second proxy contest. On August 25, 2006, we announced that the objecting directors and Mr. Shorin were elected to our Board.

The Sale Process

During Pembridge’s second proxy contest, there was a general belief in the marketplace that the Company may be willing to entertain acquisition proposals. On May 15, 2006, a potential financial acquiror (to whom we refer as Bidder A) submitted to our Board an unsolicited preliminary indication of interest to purchase the entire Company for a per share price ranging from $9.50 to $10.00. In response to this indication of interest, at a meeting held on May 22, 2006, our Board established an ad hoc committee of its members (which we refer to as the first committee), consisting of Mr. Greenberg, a veteran investment banker and experienced executive, Mr. Miller, former senior vice chairman of The Chase Manhattan Corporation and former chief executive officer and president of AXA Financial, Inc., and Mr. Shorin. The purpose of the first committee was to evaluate the offer of Bidder A and any other similar proposals and to make recommendations and provide updates to our Board as necessary, while facilitating an appropriate process for responding to Bidder A’s proposal.

At the request of the first committee, representatives of Lehman Brothers attended a meeting of our Board on May 23, 2006 to present their views as to a response to the unsolicited indication of interest of Bidder A. They explained that our Board could, among other things, decide to either (i) let Bidder A conduct its due diligence review of Topps with a view toward receiving a firm offer and negotiating a go-shop right to solicit other buyers following the announcement of a transaction, or (ii) commence a sale process by approaching potential bidders on a confidential basis or (iii) make a public announcement that we had received an unsolicited indication of interest in purchasing the Company and were prepared to consider offers to acquire all or part of the Company. Lehman Brothers indicated that, in light of the limited interest of potential bidders during the recently attempted sale of our confectionery business in 2005, among other things, it was unlikely that option (ii) would have resulted in an attractive proposal. Lehman Brothers also indicated that a public announcement as per option (iii) described above would have been a possible way to attract all parties with an interest in potentially acquiring all or part of the Company. Our Board and Lehman Brothers, however, shared skepticism that a public announcement would produce an acceptable result for our stockholders due, in part, to (i) the recent failed process to sell our confectionery business, (ii) the fact that the financial performance of the confectionery business had declined since this previous sales process, (iii) the absence of a logical strategic buyer for the entirety of Topps, (iv) the low level of operating profit that could be used to support debt financing in a potential transaction with a financial sponsor and (v) the potential taxes associated with selling our confectionery and entertainment businesses in separate transactions.

Based on, among other things, this assessment and the belief that a public announcement could have jeopardized our then ongoing restructuring process and the ability for us to capitalize on the

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benefits that this process had begun to yield, our Board decided to pursue a transaction with Bidder A providing for a go-shop right that would allow us to solicit other buyers following the announcement of the transaction. We re-engaged Lehman Brothers on May 31, 2006 to assist us with this effort and with assessing any other sale opportunities or strategic alternatives that may arise.

On June 1, 2006, the Company received another unsolicited indication of interest to purchase Topps from a private equity firm (whom we refer to as Bidder B) for $9.00 to $9.75 per share. Bidder A and Bidder B were given access to nonpublic information regarding the Company, and meetings between representatives of Topps management and Bidder A and Bidder B, respectively, were arranged during the month of June 2006. Bidder A met with Topps management on June 19, 2006 and, soon afterward Bidder A indicated to Lehman Brothers that it was no longer interested in pursuing an acquisition of the Company. Discussions and meetings with Bidder B, as well as Bidder B’s due diligence review of the Company, continued.

In early June 2006, Mr. Eisner contacted Mr. Shorin and mentioned that he had read about Pembridge’s second proxy contest. Mr. Eisner noted that he would be in New York City in the coming weeks and suggested to Mr. Shorin that they have lunch. Mr. Shorin accepted Mr. Eisner’s invitation and, on June 12, 2006, Mr. Shorin and Scott Silverstein, the Company’s President, had a lunch meeting with Mr. Eisner and one of his colleagues at the Company’s offices in New York City. During the June 12, 2006 meeting, Messrs. Shorin and Silverstein had a general discussion with Mr. Eisner and his colleague regarding the nature and status of Topps’ business. At the end of the meeting, Mr. Eisner inquired whether he could be helpful to Topps. Mr. Shorin declined but he and Mr. Eisner agreed to stay in touch in the future.

Soon after the June 12, 2006 meeting, Mr. Eisner contacted Mr. Shorin and indicated that he could be interested in a possible transaction with the Company. Mr. Shorin directed Mr. Eisner to Mr. Greenberg, as the chairman of the first committee, to discuss any such transaction. Subsequently, Madison Dearborn and Tornante expressed to the Company their unsolicited interest in acquiring Topps. After the execution of confidentiality agreements with the Company dated July 17, 2006 and July 24, 2006, respectively, Madison Dearborn and Tornante were granted access to the nonpublic information that had been provided to Bidder A and Bidder B.

On July 20, 2006, Bidder B indicated to Lehman Brothers that it was considering a cash offer of $7.50 to $8.00 per share for the entire Company. In alternative, Bidder B proposed to Lehman Brothers a transaction in which Bidder B would make a minority equity investment in the Company and have the right to designate representatives on our Board. At the end of July 2006, discussions with Bidder B were put on hold by our Board in order to allow the newly elected objecting directors an opportunity to become involved in the sale process. Discussions with Bidder B recommenced in mid-September 2006.

In connection with the settlement of Pembridge’s second proxy contest, at a July 31, 2006 meeting, our Board determined to reconstitute the first committee into what is now the second committee. The members of this reconstituted second committee were (and still are) Messrs. Feder and Greenberg and, upon their election to our Board, Messrs. Brog and Ajdler, all of whom are independent directors of the Company. The second committee was established for the purpose of exploring and evaluating strategic alternatives for the Company.

At a meeting of the Board held on October 5, 2006, the second committee briefed our Board on the status of Bidder B’s then pending indication of interest to acquire the Company. Given Bidder B’s per share price indication, our Board determined to reject Bidder B’s proposal to acquire the Company. In addition, our Board determined to reject Bidder B’s alternative offer, and discussions with Bidder B were subsequently terminated. Mr. Greenberg also reviewed potential uses of our cash on hand (which was approximately $85.2 million at the end of the preceding fiscal quarter), including, without limitation, a possible ‘‘Dutch auction’’ tender offer, a special dividend to stockholders and a stock repurchase program. Absent a sale of the Company, if we had engaged in any of these uses of our cash, it would have been in addition to the continued implementation of the restructuring developed by Parthenon and Topps management.

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At the October 5, 2006 meeting, which was one of the first meetings attended by the objecting directors, the objecting directors argued in favor of an immediate special cash dividend to stockholders. Several of the other directors of the Company questioned whether the second committee had performed a sufficient review of the matter and possessed adequate information about the Company, its cash flows and projections in order to make a reasonable business judgment about the issue. Our Board deferred further discussion regarding a special dividend until such time as the issue had been more carefully analyzed.

From late October 2006 through late January 2007, the second committee met more than 12 times, in most cases with Schulte Roth & Zabel LLP, counsel to the second committee, and/or Willkie Farr, the Company’s counsel, and/or Lehman Brothers present either in person or by telephone. At most of these meetings, the second committee discussed the financial condition of the Company and the then pending third party proposals to acquire Topps.

In addition, members of the second committee (including Messrs. Brog and Ajdler) interviewed a number of investment banks, including Goldman Sachs, Morgan Stanley, Houlihan Lokey and Greenhill, for possible retention by the second committee as its financial advisor and, if requested, to deliver a fairness opinion. Given that Lehman Brothers, a reputable investment bank, had already been engaged by our Board as its financial advisor, as well as Lehman Brothers’ familiarity with the Company and its operations, its knowledge of the industries within which the Company operates and its fee structure, which provided an incentive for Lehman Brothers to seek out attractive offers, and that the expense of an additional financial advisor likely would not justify the benefits, the second committee decided not to engage a financial advisor at that time.

At a meeting of the second committee held on October 24, 2006, representatives from Lehman Brothers were asked to advise the second committee as to the merits of a potential sale of the Company in the near future versus waiting several years to sell the Company. Lehman Brothers indicated that, while it was able to identify potential strategic buyers for the confectionery business and for the entertainment business, it had not been able to identify a logical strategic buyer for the entire Company due to the different nature of the two businesses. Lehman Brothers further noted that, in light of (i) the limited interest of potential buyers during the attempted sale of our confectionery business in 2005, (ii) the low EBITDA (or earnings before interest, taxes, depreciation and amortization) margin of our confectionery business as compared to the industry average, (iii) the deterioration of the financial performance of our confectionery business since the attempted sale in 2005 and (iv) other factors, including the challenged competitive positioning of our confectionery business and the unattractive industry dynamics, as indicated by Parthenon and several potential buyers involved in the attempted sale in 2005, it was unlikely that our confectionery business could be sold at an attractive price level. In addition, Lehman Brothers and certain members of the second committee noted that the recent consolidation in the confectionery industry and the increasing competition resulting from the declining market made the outcome of a turnaround effort highly uncertain, while the small scale of the business and its brands made it a less attractive target to other industry participants. Regarding the entertainment business, Lehman Brothers and certain members of the second committee concurred that the initiatives of the restructuring effort, and in particular the reduced number of licensees of major United States sports leagues (such as Major League Baseball and the National Football League, which constitute the core of our entertainment business), had started to yield benefits to our entertainment business. However, growth at that time was largely attributable to the redistribution of the market share of those competitors whose licenses had not been renewed and it was still unproven as to whether the changes in the licensing structure would reverse the steady decline that the trading card industry had experienced over the prior decade.

On November 8, 2006, representatives of Tornante and Madison Dearborn met with Topps management as part of their due diligence review of the Company. At around this time, discussions with Bidder B regarding a possible acquisition of Topps recommenced and an additional meeting between Bidder B and the Company’s management team was held on November 13, 2006. By mid-November 2006, the field of potential bidders was comprised of Bidder B and the Tornante-Madison Dearborn group. The second committee, along with representatives of Lehman Brothers, discussed the merits of pursuing an acquisition transaction with the two potential purchasers

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in which we would have a go-shop right to actively solicit competing bids after the execution of a definitive agreement versus conducting an auction without a deal being in place.

On November 24, 2006, Bidder B informed the second committee that its bid for the Company would not include a premium over the trading price of our common stock at that time (which closed at $8.73 per share on such date). This offer was not acceptable to the second committee. On November 28, 2006, members of the second committee and representatives of Lehman Brothers had a conference call with representatives of Bidder B to discuss Bidder B’s offer. During this conference call, Bidder B indicated that it would no longer continue to pursue an acquisition of the Company, leaving the Tornante-Madison Dearborn group as the sole remaining bidder.

The Tornante-Madison Dearborn Transaction

In July 2006, Mr. Eisner attended an annual conference held in Sun Valley, Idaho that is sponsored by the investment bank Allen & Co., Mr. Greenberg’s current employer. At the conference, Mr. Eisner approached Mr. Greenberg and mentioned that, after reading about Pembridge’s second proxy contest, he had contacted Mr. Shorin to inquire about possible opportunities with Topps and had considered a potential acquisition of Topps. Mr. Greenberg (who was then the chairman of the first committee) acknowledged to Mr. Eisner that he was aware of this inquiry but that our Board was not in a position at that time to entertain any discussions regarding a sale of the Company until after the proxy contest had concluded and our Board could determine an appropriate direction for the Company. This was the first conversation between Mr. Eisner and Mr. Greenberg with respect to a potential transaction with the Company.

On August 3, 2006, after the proxy contest had been settled, Mr. Eisner telephoned Mr. Greenberg to once again inquire as to a possible acquisition of Topps. Mr. Greenberg explained to Mr. Eisner that, given that the proxy contest had recently settled, any discussions regarding a sale of the Company at that time would have been premature. Mr. Greenberg then told Mr. Eisner that they might be able to revisit the matter after the upcoming Labor Day weekend. Mr. Eisner called Mr. Greenberg again on September 7, 2006. During this conversation, Mr. Greenberg asked Mr. Eisner for his sense of the price range that Tornante and Madison Dearborn would be willing to pay to acquire Topps. Mr. Eisner explained to Mr. Greenberg that the Tornante-Madison Dearborn group was still in the process of developing their valuation of the Company and that he would have to call Mr. Greenberg back with his response.

On September 29, 2006 (the day after we announced our earnings for the preceding fiscal quarter), Mr. Eisner telephoned Mr. Greenberg and explained that Tornante and Madison Dearborn were having difficulty justifying the payment of a premium over the trading price of our common stock at that time, which closed at $8.96 per share on that day. Mr. Greenberg then indicated that this would not be an acceptable offer. Mr. Eisner then inquired as to what would be an acceptable price. Based on conversations among our directors during the months leading up to this discussion with Mr. Eisner, Mr. Greenberg responded that, in his personal view, he believed that an offer of $10.00 per share would likely garner broad support among our directors, other than the objecting directors (as to whom Mr. Greenberg indicated to Mr. Eisner he did not know what price would be acceptable). Mr. Eisner reiterated the Tornante-Madison Dearborn group’s difficulty with justifying the payment of a premium over the then current trading price of our common stock and explained that, in order for Tornante and Madison Dearborn to gain comfort with respect to a higher acquisition price, they would need to have access to Topps management and to conduct a more extensive due diligence review of the Company.

Accordingly, Mr. Eisner called Mr. Greenberg on October 4, 2006 and October 25, 2006 in order to schedule meetings with Topps management and to coordinate other due diligence matters. The second committee then made arrangements for the Tornante-Madison Dearborn group to continue to expand its due diligence review of Topps so as to include meetings with members of management. Mr. Eisner contacted Mr. Greenberg on December 1, 2006 to inform him that Tornante and Madison Dearborn were in the process of preparing an offer to acquire Topps. On December 22, 2006, Tornante and Madison Dearborn submitted their indication of interest to acquire Topps for $9.24 per share, representing a 5.7% premium over the closing price ($8.74) of our common stock on such date.

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Our Board met on January 9, 2007 to discuss this indication of interest and other strategic alternatives available to the Company. At that meeting, Mr. Brog made a presentation to our Board in which he shared the results of the second committee’s analysis, and the position of the second committee, as to whether the Company should (i) declare and pay a special dividend, (ii) effect a self tender for Company common stock, (iii) establish a stock buyback plan pursuant to Rule 10b5-1 under the Exchange Act, (iv) sell the Company at that time or (v) pursue a sale of the Company in two or more years.

In his presentation, among other things, Mr. Brog acknowledged that the second committee (including Messrs. Ajdler and Brog) unanimously recommended the payment of a special dividend of $1.25 per share because, among other things, in the second committee’s view, ‘‘Topps’ stock price is not materially undervalued to its intrinsic value,’’ and ‘‘the stock is not particularly cheap.’’ On repeated occasions leading up to this Board meeting, the objecting directors advocated the payment of a special dividend rather than a stock buyback because, in the view of the objecting directors, the prevailing trading price of our common stock (which closed at prices ranging from $8.91 to $9.08 per share from October 5, 2006 to January 9, 2007) made it difficult to justify a buyback.

During his presentation, Mr. Brog also noted that the second committee was split as to whether the Company should engage in a public sale process at that time. He noted that pursuing a sale of the Company at the time of the presentation would likely yield a price of $9.50 to $10.50 per share and that, ‘‘depending on different scenarios,’’ a sale in two years would likely result in a price of $7.40 to $13.00 per share. Mr. Brog also pointed out that the expected improvements in Topps’ business had already been priced into our common stock and that there would be ‘‘disappointment if we can not deliver.’’

At the January 9, 2007 meeting, Messrs. Brog and Ajdler indicated that they wanted to initiate a public sale process for the Company. Messrs. Greenberg and Feder, on the other hand, were of the opinion that discussions with the Tornante-Madison Dearborn group would have terminated if the Company were to pursue a public auction, as Mr. Eisner had previously indicated in no uncertain terms that Tornante and Madison Dearborn would withdraw their proposal if any such auction were commenced. In addition, Messrs. Feder and Greenberg noted that they were highly skeptical that such an auction would yield a more attractive offer than what had been proposed by the Tornante-Madison Dearborn group, and that they believed that other potential bidders could emerge and/or be sought after during the go-shop period contemplated by the proposed Tornante-Madison Dearborn transaction. Messrs. Greenberg and Feder also expressed their concern as to the potential impact of a failed auction on our then ongoing restructuring process, in that such an auction would, among other things, (i) distract Topps management from the operations of the Company, (ii) create uncertainty as to the future of the Company that would make it difficult to retain and recruit talented employees and (iii) generally disrupt the Company’s businesses, which could have detrimentally affected the intended results of the restructuring. Mr. Greenberg then briefed our Board on the status of the $9.24 per share offer by Tornante and Madison Dearborn, and of the second committee’s recommendation to reject this offer. Our Board authorized the second committee to continue to negotiate with the Tornante-Madison Dearborn group for a better price and deferred any decision on a special dividend or stock repurchase plan until after these discussions took place.

Mr. Eisner called Mr. Greenberg (as the chairman of the second committee) on January 12, 2007 to discuss the status of the Tornante-Madison Dearborn indication of interest and Mr. Greenberg explained our Board’s issues with respect to the proposal. During the next two weeks, members of the second committee, with the assistance of Lehman Brothers, negotiated with Tornante and Madison Dearborn. This consisted of a number of offers from Tornante and Madison Dearborn and counter-offers on behalf of the Company. At a meeting of our Board held on January 16, 2007, Mr. Greenberg reported to our Board that Mr. Eisner had indicated that Tornante and Madison Dearborn were prepared to increase their price to $9.75 per share, but not more, and insisted on entering into an exclusivity period of 30 days during which the parties would attempt to negotiate a definitive agreement with respect to the transaction. Our Board authorized the second committee to continue to negotiate the general terms of such an agreement and an appropriate exclusivity period.

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As a result of these negotiations, the Tornante-Madison Dearborn group increased its initially offered price to $9.75 per share and we prepared a draft letter of intent providing for (i) a price per share of $9.75, (ii) confirmation that there would be no financing condition to the transaction, (iii) a go-shop period, (iv) a right to match third party offers, (v) a 30-day exclusivity period and (vi) the reimbursement of a portion of Tornante’s and Madison Dearborn’s expenses in the event that our Board failed to approve a definitive agreement submitted by the Tornante-Madison Dearborn group with terms customary for a transaction of this type and consistent with the terms of the letter of intent. After continued negotiations, certain members of the second committee recommended proposing a 40-day go-shop period and an expense reimbursement cap of $1.5 million to Tornante and Madison Dearborn. The second committee met on January 19, 2007 to discuss the letter of intent and to vote on this proposal. The second committee was deadlocked, with Messrs. Brog and Ajdler objecting to the Company entering into any exclusivity letter with Tornante and Madison Dearborn, and Messrs. Greenberg and Feder voting in favor of granting such exclusivity. As a result of the deadlock, the matter was presented to our full Board for its consideration at a meeting called for the following day, January 20, 2007. At the January 20, 2007 meeting, our Board listened to the views of each member of the second committee. Following a discussion regarding the go-shop period, expense reimbursement, the exclusivity period and the matching right, our Board approved the proposal, with all of the directors other than the three objecting directors voting in favor.

Our Board met again on January 25, 2007 and reviewed with Lehman Brothers the offer by the Tornante-Madison Dearborn group. Based in part on this review, our Board, with the objecting directors voting against, authorized continued negotiations with Tornante and Madison Dearborn, with the goal of increasing the price beyond $9.75 per share if possible. Because two of the four members of the second committee voted against the possible transaction with Tornante and Madison Dearborn, our Board expressed serious concerns about whether the second committee could effectively negotiate the terms of a definitive agreement. Therefore, our Board asked Mr. Greenberg to serve as its lead director for the purpose of negotiating the terms of any such definitive agreement on behalf of Topps, in consultation with such of the Company’s officers, advisors or other directors as he deemed appropriate.

Over the next few days, Mr. Greenberg considered this request. Despite the limited business dealings between Mr. Greenberg and his current employer and Mr. Eisner, the objecting directors persistently suggested to our Board that Mr. Greenberg could have a conflict of interest as a result of these limited business dealings. Although Mr. Greenberg, as well as our other directors (except for the objecting directors), disagreed with this view, in order to avoid the appearance of a conflict of interest or other impropriety if he led the negotiations with Tornante and Madison Dearborn, Mr. Greenberg declined our Board’s request that he serve as its lead director for the purpose of negotiating the terms of any definitive agreement with Tornante and Madison Dearborn.

At a meeting on January 31, 2007, our Board then asked its serving lead outside director, Mr. Feder, to serve as its lead director for the purpose of negotiating the terms of any definitive agreement with Tornante and Madison Dearborn because of his skill and experience, as well as his independence and lack of any potential appearance of a conflict of interest. Our Board also authorized Mr. Feder to draw upon the resources of management, other members of our Board and our advisors as he deemed appropriate. Mr. Feder accepted, and was appointed to, this expanded lead director role at the meeting and led the negotiations with Tornante and Madison Dearborn going forward. In connection with Mr. Feder’s appointment, our Board withdrew the second committee’s authority to explore and negotiate the terms of any strategic alternative to the extent that such authority conflicted with that of the lead director.

On January 29, 2007, Tornante and Madison Dearborn delivered to us an executed copy of the letter of intent. After his appointment as lead director with respect to the potential transaction, and upon approval by our Board, Mr. Feder executed and returned the letter of intent to Tornante and Madison Dearborn on January 31, 2007. The letter of intent provided for exclusivity through March 2, 2007. Tornante, Madison Dearborn and their respective counsel, on the one hand, and Topps management, Mr. Feder, Willkie Farr and Lehman Brothers, on the other hand, proceeded to negotiate the terms of merger agreement over the ensuing 30-day exclusivity period.

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Our Board instructed the Company’s management to not have any discussions with the Tornante-Madison Dearborn group prior to the execution of a definitive agreement regarding any employment arrangements following the consummation of a transaction. Tornante and Madison Dearborn were similarly instructed not to have any such discussions with management prior to the execution of the merger agreement. Accordingly, no discussions regarding post-merger employment arrangements took place among Topps management and the Tornante-Madison Dearborn group prior to the execution of the merger agreement.

On various occasions during the process, management, Willkie Farr, Lehman Brothers and Mr. Feder informally briefed our Board (orally and in writing) as to the status of the negotiations, including the material open issues and how they were resolved. During these briefings, the members of our Board had the opportunity to, and did, question management, Willkie Farr, Lehman Brothers and Mr. Feder. In addition, representatives of Willkie Farr and Lehman Brothers made themselves available to directors who wished to contact them individually to ask questions.

Numerous issues were heavily negotiated during the exclusivity period, including, without limitation, the following:

  Price – On at least two occasions, the Company negotiated with the Tornante-Madison Dearborn group to increase its price above the $9.75 offer price, which they refused to do.
  Dividends – Tornante and Madison Dearborn insisted on numerous occasions on prohibiting the payment of any dividends, including the previously declared and announced dividend for our third fiscal quarter, after the merger agreement was signed. However, they ultimately agreed to permit the Company to pay such third quarter dividend as well as the next quarterly dividend in an amount not to exceed $0.04 per share.
  Termination Fee – Tornante and Madison Dearborn had requested a $15 million termination fee, plus reimbursement of up to $5 million of their expenses. The Company agreed to pay a bifurcated termination fee of $8 million or $12 million (during and after the go-shop period, respectively), depending on the circumstances of the termination, plus reasonable and documented expenses of up to $3.5 million (increasing to up to $4.5 million 60 days after the effective date of the merger agreement).
  Superior Proposal – The definition of a superior proposal under the merger agreement was discussed at length, particularly whether the percentage contained therein should be 25% or 60%. At a higher percentage, which was ultimately agreed by the parties to be 60%, the Company is effectively precluded from terminating the merger agreement to enter into a transaction to sell a division of Topps.
  Post-Termination Right to Match – The Tornante-Madison Dearborn group requested a right to match any offers to acquire Topps for a period of one year following any termination of the merger agreement. Such request was resisted by the Company and later withdrawn by Tornante and Madison Dearborn.
  Closing Conditions – Tornante and Madison Dearborn requested several closing conditions that were resisted by Topps and negotiated throughout the exclusivity period.

In late February, during this negotiation process, Mr. Eisner contacted Mr. Feder to express his concern that the Tornante-Madison Dearborn group may need an extension of the exclusivity period in order to complete their due diligence review of the Company and to finalize the merger agreement. Mr. Feder conferred with Mr. Greenberg and other members of our Board, as well as Willkie Farr and Lehman Brothers, and then called Mr. Eisner and explained that an extension of exclusivity was not warranted at that time but that the issue may be revisited as the March 2, 2007 deadline approached. After this conversation, Mr. Eisner telephoned Mr. Greenberg on February 21, 2007 to again express his concern as to the timing and to report what Mr. Feder had explained to him. On the night of March 2, 2007, Mr. Feder ultimately granted the Tornante-Madison Dearborn group a four-hour extension (until 4:00 a.m. on March 3, 2007).

On March 3, 2007, the Tornante-Madison Dearborn group delivered to our Board a definitive proposal to acquire Topps comprising of, among other things, (i) a copy of the merger agreement

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signed by Parent and Merger Sub, with a copy of the related disclosure schedules, (ii) voting agreements with a majority of the members of our Board, signed by Parent, (iii) a limited guaranty from each of Tornante and Madison Dearborn of Parent’s obligation to pay a termination fee to Topps, (iv) a commitment letter from each of Tornante and the MDP Funds with respect to their respective investments in the equity of Parent, and (v) a commitment letter with respect to Merger Sub’s debt financing of the transaction.

The proposal also included the Shorin employment letter, pursuant to which Mr. Shorin agreed to retire within 60 days after the consummation of the merger. By consenting to such agreement, Mr. Shorin surrendered approximately $2.8 million to which he would otherwise be entitled under his existing employment agreement in the event of a change of control of Topps. Such decision was made independently by Mr. Shorin in response to a specific request by Tornante and Madison Dearborn (communicated through the Company’s counsel) and, according to Mr. Shorin, was motivated by his desire to facilitate the proposed merger transaction with them, which he believes to be in the best interests of our stockholders (of which he is one). Following his post-merger retirement, Mr. Shorin will serve as an external consultant to Topps pursuant to his existing employment agreement. See ‘‘SUMMARY—The Merger—Interests of Certain Persons in the Merger,’’ ‘‘THE MERGER— Interests of Certain Persons in the Merger’’ and ‘‘THE MERGER AGREEMENT—Stock Options; Restricted Stock; Stock-based Awards.’’

In the evening of March 5, 2007, our Board met to consider the final merger agreement and related transaction documents. Mr. Feder and representatives of management, Willkie Farr and Lehman Brothers explained the sale process and the terms of each transaction document to our Board. In addition, Lehman Brothers delivered its written opinion to our Board that the consideration payable to the holders of our common stock pursuant to the merger agreement is fair, from a financial point of view, to such holders. By a vote of seven to three (with the objecting directors voting against), our Board approved the terms of the merger agreement and the transactions contemplated thereby (including the merger) and recommended that our stockholders approve the merger agreement and such transactions.

Messrs. Brog and Ajdler indicated, among other things, that they opposed the transaction because there was not, in their view, a full auction of the Company. Seven of the other directors disagreed with this position, noting the prior two-plus years of efforts and the fact that they did not believe that the Tornante-Madison Dearborn group would remain interested in acquiring Topps if our Board were to pursue a public auction prior to signing a definitive merger agreement, or that such an auction would have been likely to result in a more attractive proposal than what had been offered by Tornante and Madison Dearborn, as well as their belief that a failed auction could negatively impact the momentum generated by our turnaround efforts. The directors also noted that the terms of the merger agreement provided for a 40-day go-shop period, as well as the right of our Board to terminate the agreement prior to the stockholder vote if, during or after the go-shop period, a superior proposal emerges.

Several non-objecting directors also noted their belief that, given the prior efforts to sell the confectionery business and the two proxy contests, any bidder interested in acquiring Topps would likely have emerged prior to this time, and although several financial and strategic bidders had expressed interest in acquiring all or part of the Company over the prior two years, none had made an offer that was as attractive as the offer made by Tornante and Madison Dearborn.

The merger agreement was thereupon finalized, followed by its execution and delivery on March 5, 2007, as disclosed in the Company’s Current Report on Form 8-K/A, filed with the SEC on March 6, 2007, which contained a copy of the executed merger agreement, a form of the related voting agreements executed by a majority of our directors and the Shorin employment letter as exhibits thereto.

The Proxy Contest – Part III

During the Board meeting of the evening of March 5, 2007, Mr. Ajdler indicated his dissatisfaction with the Tornante-Madison Dearborn transaction. The following morning, Mr. Ajdler filed with the SEC an amendment to his Schedule 13D, to which he attached a letter addressed to our

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Board, a copy of which letter is included as Annex E-1 to this proxy statement. In the letter, Mr. Ajdler, citing his fiduciary duties, expressed his dissatisfaction with the $9.75 per share cash merger consideration payable to our stockholders pursuant to the merger agreement, as well as his belief that the process leading up to the execution of the merger agreement was flawed.

Mr. Ajdler was widely quoted to this effect in various news publications, including The Wall Street Journal and The Daily Deal. Mr. Brog also made public statements to the effect that he opposed the merger. In an article that appeared in The Daily Deal on March 9, 2007 (which was subsequently filed by Mr. Ajdler with the SEC), Mr. Ajdler stated: ‘‘At this point, we want to kill the deal, take the company over, improve the margins and create value, and then possibly sell the company.’’ Mr. Ajdler also indicated that if our stockholders reject the merger, he intends to nominate additional candidates to our Board in an effort to gain a majority and, consequently, control of Topps.

At the March 5, 2007 meeting of our Board at which the merger agreement was approved, our Board vested in the second committee the authority to monitor the day-to-day developments during the go-shop period. Given the publicly stated opposition to the merger agreement of Messrs. Ajdler and Brog, including Mr. Ajdler’s stated intention to acquire control of our Board without buying the Company, our Board met on March 13, 2007 to reconsider whether Messrs. Ajdler and Brog, as members of the second committee, could adequately represent the best interests of our stockholders during the go-shop period. At the meeting, our Board appointed Messrs. Feder and Greenberg to monitor day-to-day developments during the go-shop period and made clear that the second committee no longer had such authority. In addition, our Board created an Executive Committee consisting of Messrs. Feder, Greenberg, Mauer, Nusbaum and Shorin. The Executive Committee has been vested with the full power of our Board to the extent permitted by the DGCL, except that any decision as to whether a bona fide proposal constitutes a superior proposal within the meaning of the merger agreement will be made by our Board.

The following day, Mr. Ajdler filed with the SEC another amendment to his Schedule 13D, to which he attached a letter addressed to our Board, a copy of which letter is included as Annex E-2 to this proxy statement. In the letter, Mr. Ajdler complained about our Board’s decision to remove the second committee from the go-shop process and to vest substantially all of our Board’s authority in the Executive Committee.

On April 19, 2007, after the initial filing of the preliminary form of this proxy statement with the SEC, Mr. Ajdler sent a letter to our Board in which he asserted that the preliminary proxy statement (which he had not reviewed prior to its filing) contained ‘‘half-truths’’ and mischaracterizations regarding: (i) our Board’s determination to not declare Bidder C an ‘‘Excluded Party’’ under the merger agreement; (ii) the objecting directors’ analysis and recommendations relating to strategic alternatives for the Company, including those outlined in the presentation that Mr. Brog made to our Board at its meeting on January 9, 2007 (portions of which are quoted above); (iii) the timing of the preparation of the adjusted case projections that Lehman Brothers used, together with the management case projections, in connection with its fairness opinion and related presentation to our Board; (iv) the process undertaken by our Board and Topps management to sell the Company (which process is described in this proxy statement); and (v) Mr. Ajdler’s opposition to the Tornante-Madison Dearborn transaction. In the letter, Mr. Ajdler reiterated his view that the merger agreement is not in the best interest of Topps stockholders. A copy of Mr. Ajdler’s letter, which he filed with the SEC, is included as Annex E-3 to this proxy statement.

On April 26, 2007, Mr. Ajdler and certain of his affiliates filed with the SEC a preliminary proxy statement formally opposing the Tornante-Madison Dearborn transaction and soliciting votes against the merger agreement. In their proxy statement, Mr. Ajdler and his affiliates repeat their criticisms of Topps management, the process leading up to the execution of the merger agreement and the $9.75 per share merger consideration, and they offer purported alternatives to the transaction with Tornante and Madison Dearborn. Specifically, they propose the commencement of a modified ‘‘Dutch auction’’ tender offer for approximately 28% of our common stock at $10.00 to $10.50 per share, notwithstanding Mr. Ajdlers’ repeated opposition to such an auction as recently as the January 9, 2007 Board meeting at which Mr. Brog made his presentation, the replacement of certain members of

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Topps management (including the Company’s Chief Executive Officer) and focusing on the improvement of the Company’s operations.

Both Mr. Ajdler’s letter and the proxy statement that he filed with his affiliates question our Board’s decision to approve the $9.75 merger consideration under the Tornante-Madison Dearborn transaction in light of our Board’s prior approval to repurchase our common stock for a maximum price of $10.62 per share from September 2005 to September 2006. Although our repurchase program contemplated this maximum price, the actual average price at which we repurchased our common stock was $8.05 per share and the most that we actually paid for our common stock was $9.34 per share. These prices were substantially less than the $9.75 per share merger consideration under the merger agreement.

The merger agreement and the transactions contemplated thereby were properly approved by our Board. Notwithstanding the efforts of Messrs. Ajdler and Brog (or the other objecting director), subject to its fiduciary duties (including such duties in light of a superior proposal, if any), our Board is committed to consummating the merger and the other transactions contemplated by the merger agreement. Accordingly, our Board encourages our stockholders to vote in favor of approval of the merger agreement and the transactions contemplated thereby (including the merger).

The Go-Shop Process

107 potential strategic and financial bidders were identified as possible acquirors of Topps during the go-shop period under the merger agreement, which expired on April 14, 2007. The list of potential bidders was prepared by Lehman Brothers and reviewed with our Board, including the objecting directors, and included 36 potential bidders proposed by Mr. Brog, one of the objecting directors. Beginning on March 6, 2007, Lehman Brothers contacted 107 potential bidders (including all of the 36 potential bidders proposed by Mr. Brog). 72 of the contacted potential bidders declined to pursue an acquisition of Topps, five signed confidentiality agreements with the Company (which, consistent with the terms of the merger agreement, contain confidentiality and standstill provisions that are no less favorable in the aggregate to the Company than those contained in the confidentiality agreements signed by Tornante and Madison Dearborn) and commenced a due diligence review of Topps, while 34 failed to respond to Lehman Brothers’ further attempts to contact them. Except as described below, no potential bidder submitted a proposal during the go shop period and no superior proposal has materialized to date.

On April 12, 2007, prior to the expiration of the go-shop period, Bidder C, who is the principal competitor of our entertainment business, submitted a non-binding indication of interest to acquire Topps for $10.75 per share, in cash. This proposal consisted of a bid letter and the Bidder C agreement, which was based on, and proposed modifications to, the existing merger agreement for the Tornante-Madison Dearborn transaction. The Bidder C agreement contained a number of proposed modifications to the existing merger agreement. The most significant of these changes were: (i) the deletion of all representations and warranties relating to Bidder C’s ability to finance its proposed acquisition of the Company; (ii) the deletion of the covenant that would require Bidder C to sell or dispose of assets, or to hold them separately, in order to obtain any regulatory approvals required to be obtained to consummate an acquisition of the Company; (iii) the insertion of the affirmative right of Bidder C to not be required to sell or dispose of any assets, or to hold them separately, to obtain such required regulatory approvals; and (iv) the addition of a condition to the consummation of the proposed transaction (often referred to as a due diligence out) providing that Bidder C must have been provided with such additional due diligence information as it may request, had a reasonable opportunity to review such information and be satisfied, in Bidder C’s sole discretion, with the substance and results of such information. In addition, the Bidder C agreement indicated that the condition in the existing merger agreement that certain third party consents must be obtained prior to the consummation of the transaction would be subject to further discussion and retained the provision limiting its liability under the proposed agreement to $12 million. Bidder C noted in the Bidder C agreement that it would consider deleting the due diligence out and the consent condition upon completion of its due diligence. Bidder C later notified Willkie Farr that the consent condition would not apply to any non-governmental consents.

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Lehman Brothers contacted Bidder C on March 6, 2007, in order to solicit its potential interest for the Topps opportunity and sent it a copy of a confidentiality agreement on March 8, 2007, which Bidder C executed on March 20, 2007 after lengthy negotiation of its terms (as compared to the negotiations of the four other confidentiality agreements executed during the go-shop period). Lehman Brothers also called Bidder C a number of times during the go-shop period for the purpose of soliciting and/or assisting Bidder C with the development of its bid, which calls were infrequently returned by Bidder C. Because Bidder C is a competitor of the Topps entertainment business, during its due diligence review of the Company, it was granted full access to all due diligence materials relating to the Topps confectionery business and modified access to due diligence materials relating to the entertainment business. The Company explained to Bidder C that it had restricted access to certain highly competitively sensitive materials, as it had done for all bidders (including Tornante and Madison Dearborn), and that, similar to the procedure implemented for Tornante and Madison Dearborn and subject to applicable contractual confidentiality restrictions on Topps, certain materials would be made available for review at such time as Bidder C had submitted a fully financed and definitive proposal to acquire the Company that was acceptable to our Board. Notwithstanding this proposal, Bidder C repeatedly demanded current access to all due diligence materials, including highly competitively sensitive information, relating to the Topps entertainment business, and prior to submitting any proposal or indication of interest for acquiring the Company.

Prior to and after the submission of its bid, representatives of Lehman Brothers and Willkie Farr had discussions with representatives of Bidder C and its counsel in an effort to provide Bidder C with sufficient guidance as to how it could enhance the likelihood that its bid would be considered a superior proposal under the terms of the existing merger agreement. In connection with this effort and at the request of Bidder C, additional diligence materials were added to the data room to which Bidder C was provided with access and a redacted copy of the Company’s disclosure schedules to the existing merger agreement was provided to Bidder C.

After Bidder C submitted its bid, representatives of Willkie Farr contacted Bidder C’s counsel to discuss the proposed changes to the existing merger agreement contemplated by the Bidder C agreement and the status of Bidder C’s financing of the transaction. Bidder C explained that it was not concerned about the ability to receive all required regulatory approvals. However, Bidder C was not willing to take any risk under the Bidder C agreement that such approvals might not be obtained. Most significantly, as noted above, it deleted any obligation to sell or dispose of any assets, or to hold them separately, in order to obtain such approvals (a covenant to which Tornante and Madison Dearborn agreed) and added an unequivocal right to not have to do so. In light of Bidder C’s repeated refusal to accept the existing covenant, Willkie Farr proposed to Bidder C that it assume the risk as to the failure of any required regulatory approval to be obtained by Bidder C agreeing to pay to the Company a termination fee in the event that the Bidder C agreement, if executed, were terminated due to such failure. Bidder C rejected this proposal. The Company attempted to negotiate with Bidder C to have Bidder C assume the regulatory risk but Bidder C did not evidence any willingness to negotiate until it submitted by email a letter dated April 14, 2007, received by the Company at approximately 10:20 p.m. (New York time), which was less than two hours before the go-shop period expired, in which Bidder C proposed to assume a portion of the regulatory risk.

With respect to Bidder C’s financing of its proposed acquisition, as is typically done in acquisition transactions, representatives of Willkie Farr and Lehman Brothers requested customary evidence of Bidder C’s wherewithal to consummate the transaction in the form of written financing commitments and (to the extent that any such commitment would not be used) recent financial statements of Bidder C, along with a summary of the terms of any existing credit facility upon which Bidder C anticipated drawing in connection with the proposed transaction. This was particularly relevant in this case as no information regarding Bidder C’s financial position was publicly available. Bidder C refused to provide this information and suggested that it would be made available to the Company at such time as the competitively sensitive information that was withheld from Bidder C was made available to it in a manner consistent with the treatment of all other bidders. The Company’s representatives pointed out that these matters were not related and that evidence of Bidder C’s financial capability to consummate the transaction was critical and repeatedly requested the information so that our Board

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could have sufficient information to adequately assess Bidder C’s bid in light of the pending Tornante-Madison Dearborn transaction.

Further to prior requests, on the evening of April 13, 2007, we sent Bidder C a letter suggesting that it provide the requested financial information only to Lehman Brothers so that Lehman Brothers could appropriately advise our Board and reminded Bidder C that the go-shop period would expire after April 14, 2007. Bidder C provided no such response or indication on April 13 or during the day of April 14 leading up to the expiration of the go-shop period nor did it attempt to schedule a time to discuss the issue. However, Bidder C notified Lehman Brothers by email at approximately 9:15 p.m. (New York time) on April 14, 2007 (approximately two hours and 45 minutes before the go-shop period expired), that it would provide unspecified financing information to Lehman Brothers if it executed a confidentiality agreement with Bidder C. Bidder C indicated that it would have its counsel promptly send to Lehman Brothers a confidentiality agreement for review. Having not received any such agreement, Lehman Brothers sent to Bidder C by email its standard form of confidentiality agreement at approximately 10:05 p.m. (New York time). Bidder C’s counsel sent back to Lehman Brothers a revised version of the confidentiality agreement at approximately 11:20 p.m. (New York time), or approximately 40 minutes prior to the expiration of the go-shop period. Due to the very limited time left prior to the expiration of the go-shop period, at which time discussions with Bidder C were required to terminate pending our Board’s determination that its bid was or might reasonably be expected to result in a proposal that is superior to the Tornante-Madison Dearborn transaction, the confidentiality agreement was not finalized. Bidder C failed to submit any information regarding its ability to finance the transaction prior to the expiration of the go-shop period.

In conversations with Lehman Brothers, Bidder C indicated that it had teamed-up with a financial sponsor and engaged an investment bank. However, based upon discussions with Bidders C and its representatives, it turned out that, as of the time that Bidder C had submitted its non-binding indication of interest, no such financial sponsor was involved and no investment bank had been retained.

Our Board met on April 16, 2007 to review and consider Bidder C’s proposal and to determine whether the proposal warranted our Board’s declaration of Bidder C as an ‘‘Excluded Party’’ under the existing merger agreement. All of our directors other than Mr. Tarlow (who was traveling overseas at the time) attended this Board meeting. Mr. Jones and Ms. Kirschner, who attended portions of the meeting, were not present at the time of the vote with respect to Bidder C. Five of the directors at the meeting, Messrs. Feder, Greenberg, Mauer, Nusbaum and Shorin, voted against declaring Bidder C an Excluded Party. Mr. Ajdler voted in favor of declaring Bidder C an Excluded Party. Mr. Brog abstained from the vote. Accordingly, our Board did not declare Bidder C to be an Excluded Party under the existing merger agreement (with only one of the three objecting directors affirmatively voting in favor of declaring Bidder C to be an Excluded Party).

Our Board did not declare Bidder C to be an Excluded Party primarily for the following reasons:

  the complete absence of any information as to whether Bidder C would be capable of financing its proposed acquisition, despite the Company’s repeated attempts to confirm such financing in the days leading up to the expiration of the go-shop period;
  the risk that the transaction could be substantially delayed or prevented from being consummated due to the failure of all required regulatory approvals being obtained and Bidder C’s stated unwillingness to assume sufficient risk as to the occurrence of such a failure; and

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  Bidder C’s proposed $12 million cap on its liability in the event of its breaching of the definitive merger agreement, which our Board determined was insufficient given the fact that Bidder C was a strategic, and not a financial, buyer. Given the other issues presented by Bidder C’s proposal, our Board viewed a $12 million cap as essentially an option in favor of Bidder C to acquire the Company.

In light of these issues, our Board determined that, notwithstanding Bidder C’s interest in acquiring Topps for $1.00 per share more than the merger consideration proposed in the Tornante-Madison Dearborn transaction, under the circumstances, it could not conclude that Bidder C’s bid was or might reasonably be expected to result in a superior proposal (within the meaning of the existing merger agreement) to the Tornante-Madison Dearborn transaction.

Therefore, the Company and its representatives are not permitted to continue discussions and negotiations with Bidder C (or any other person) unless it submits an unsolicited proposal that, subject to certain conditions specified in the existing merger agreement, our Board determines in good faith is or may reasonably be expected to result in a superior proposal to the Tornante-Madison Dearborn transaction. See ‘‘SUMMARY—The Merger—Termination of the Merger Agreement,’’ ‘‘—Termination Fees if the Merger is Not Completed’’ and ‘‘—Expense Reimbursement if the Merger is Not Completed,’’ and ‘‘THE MERGER AGREEMENT—Restrictions on the Solicitation of Other Offers,’’ ‘‘—Change in Company Recommendation,’’ ‘‘—Termination,’’ ‘‘—Termination Fees’’ and ‘‘—Reimbursement of Expenses’’ and Annex A to this proxy statement.

April 12, 2007 was not the first time the we had heard of Bidder C’s interest in acquiring Topps. Soon after the conclusion of the attempted sale of our confectionery business, an investment bank claiming to represent Bidder C approached Lehman Brothers. They indicated that Bidder C was interested in acquiring either our entertainment business or the Company as a whole and mentioned that a proposal from Bidder C was forthcoming. However, after a couple of initial conversations, they never called back and failed to return follow-up calls from Lehman Brothers.

Litigation Relating to the Merger

Subsequent to the announcement of our execution of the merger agreement, nine purported class action lawsuits were filed – four in the Supreme Court of the State of New York and five in the Delaware Court. Topps, as well as our directors Messrs. Feder, Greenberg, Mauer, Nusbaum, Shorin and Tarlow and Ms. Kirschner are named as defendants in all nine of these lawsuits. In seven of the actions, Tornante and Madison Dearborn are also named as defendants. In addition Parent and Merger Sub are named as defendants in three of the cases and Madison Dearborn Capital Partners V-A L.P., Madison Dearborn Capital Partners V-C L.P. and Madison Dearborn Capital Partners V Executive-A, L.P., which are funds affiliated with Madison Dearborn and are joint and several guarantors of 50% of Parent’s obligation to pay a termination fee to us, are named as defendants in one of the lawsuits.

The actions, which were purportedly brought on behalf of our public stockholders (other than the defendants), in substance allege that the terms of the merger agreement are unfair to such stockholders because, in the view of the plaintiffs, the value of our outstanding common stock is greater than the $9.75 per share payable under the merger agreement. All of the complaints assert alleged claims for breach of fiduciary duty against the director defendants, and seven of the complaints allege abetting the breaches of fiduciary duty against (as applicable) Topps, Tornante, Madison Dearborn and the Madison Dearborn funds. All of the complaints, in their prayers for relief, seek, among other things, to enjoin the merger.

The four New York actions are captioned as follows: William Lipscomb v. The Topps Company, Inc., No. 600715/07 (Sup. Ct. March 7, 2007); New Jersey Carpenters Pension Fund v. Topps Co., Inc., No. 600768/07 (Sup. Ct. March 9, 2007); New Jersey Building Laborers Statewide Benefit Funds and New Jersey Carpenters Pension Fund v. Topps Company, Inc., No. 600822/07 (Sup. Ct. March 14, 2007); Fishbury Ltd. v. Topps Company, Inc., No. 600837/07 (Sup. Ct. March 15, 2007). The five Delaware actions are captioned as follows: Phyllis Freiman v. The Topps Company, Inc., C.A. No. 2777-VCS (Del. Ch. March 8, 2007); Gerald Tannenbaum v. Arthur T. Shorin, C.A. No. 2788-VCS

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(Del. Ch. March 9, 2007); Plymouth Country Retirement Systems v. The Topps Company, Inc., C.A. No. 2786-VCS (Del. Ch. March 9, 2007); Barry Lustig v. The Topps Company, Inc., C.A. No. 2790-VCS (Del. Ch. March 12, 2007); and City of Worcester Retirement System v. Arthur T. Shorin, C.A. No. 2802-VCS (Del. Ch. March 16, 2007).

On March 26, 2007, the Delaware Court of Chancery entered an order consolidating the five Delaware actions under the caption In re Topps Company Shareholder Litigation, Consolidated C.A. No. 2777 (VCS). On April 20, 2007, the Supreme Court of the State of New York signed an order consolidating the four New York actions under the caption In re Topps Co., Inc. Shareholder Litigation, No. 600715/07. A Consolidated Amended Complaint was filed in Delaware on April 30, 2007. Discovery requests have been served in the Delaware and the New York actions, and discovery is currently proceeding in both Delaware and New York.

On April 27, 2007, the Company and the director defendants filed a motion to dismiss or, in the alternative, stay the consolidated action pending in the Delaware Court of Chancery. That motion was denied on May 9, 2007. On May 10, 2007, Tornante and Madison Dearborn filed a motion to dismiss the action for failure to state a claim against them. A briefing schedule has yet to be set for that motion. The Delaware Court of Chancery has scheduled a hearing on a motion for a preliminary injunction for June 11, 2007.

On May 7, 2007, the Company and the director defendants filed a motion to dismiss or, in the alternative, stay the consolidated action pending in New York. Plaintiffs’ opposition brief is due on May 21, 2007, a reply brief is due on May 24, 2007 and the court will hear oral argument on the motion on May 30, 2007. The New York court has scheduled a hearing on a motion for a preliminary injunction for June 15, 2007.

The time period for defendants to answer, move to dismiss or otherwise respond to the complaints has not yet expired. Therefore, it is too soon for us to express any view as to the likely outcome of these matters. We intend to vigorously defend against these lawsuits.

Recommendation of Our Board

At its meeting on March 5, 2007, our Board, by a vote of seven to three, determined that the merger agreement is fair to, advisable and in the best interests of Topps and its stockholders and approved the merger agreement and the transactions contemplated thereby, including the merger. Accordingly, our Board recommends that our stockholders vote ‘‘FOR’’ approval and adoption of the merger agreement and the transactions contemplated thereby (including the merger) at the special meeting. Our Board also recommends that you vote ‘‘FOR’’ the proposal to adjourn or postpone the special meeting, if necessary or appropriate, to solicit additional proxies in the event that there are not sufficient votes in favor of the approval and adoption of the merger agreement and the transactions contemplated thereby (including the merger) at the time of the special meeting.

Reasons for Our Board’s Recommendation

In reaching its determination to recommend that our stockholders approve and adopt the merger agreement and the transactions contemplated thereby (including the merger), our Board consulted with management, as well as Lehman Brothers and Willkie Farr, and considered a number of factors that it believed supported its recommendation, including, without, limitation the factors described below.

Factors supporting our Board’s recommendation and determination as to the fairness of the merger to our stockholders upon the terms and subject to the conditions set forth in the merger agreement include, among others, the following:

  the offered merger consideration of $9.75 per share, all in cash, represents a premium of approximately 8.3% over the closing price ($9.00) of our common stock on March 2, 2007, the trading day immediately preceding the date on which Tornante and Madison Dearborn submitted their binding proposal to acquire Topps, and a premium of approximately 9.4% over the closing price ($8.91) of our common stock on March 5, 2007, the effective date of the merger agreement;

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  our historical and current financial performance and results of operations, our prospects and long-term strategy, our competitive position in our industries, the outlook for the confectionery and trading card and sticker album collection and strategy game industries and general economic and stock market conditions, including (i) our limited growth over the past few years, (ii) the general decline of the trading card industry over the last decade, (iii) our relatively flat revenues and earnings over the past several years, and (iv) the initial improvement of our net income and earnings per share and the likelihood and extent to which such improvement would continue, particularly given the substantial dependence of the growth of our confectionery business on new product development and that much of the improvement in our entertainment business resulted from a reallocation of the existing baseball card market rather than growth of the overall market.
  the belief that our stock price is not likely to consistently trade at or above $9.75 per share, which belief is based on a number of factors, including (i) our Board members’ knowledge and understanding of the Company and its industries, (ii) management’s projections and business plan and (iii) the various valuation methodologies and analyses prepared by our Board’s financial advisors;
  the merger consideration is all cash, which provides certainty of value to our stockholders;
  the ability of our stockholders to recognize significant cash value through the proceeds of the merger versus the continued risk of holding our common stock while the Company operates as a stand-alone company, taking into account the uncertainty of achieving management’s projections and the unpredictability of the Company’s operating results going forward;
  seven out of our ten directors support the merger and have executed voting agreements whereby these individuals, in their respective capacity as stockholders of Topps, have agreed to vote their shares of common stock in favor of the consummation of the merger;
  our Board’s belief that, based in part on the Company’s historical and current financial performance, projections of the Company’s financial performance prepared by Topps management and Lehman Brothers’ fairness opinion, the merger consideration would result in greater value to our stockholders than either pursuing management’s current business plan or undertaking any alternative course of action;
  through its lead director and with the participation of other directors, management and the Company’s representatives, there were extensive arm’s-length negotiations with Tornante and Madison Dearborn over several months, which, among other things, resulted in an increase in the offered merger consideration from $9.24 to $9.75 per share;
  the terms of the merger agreement, including the merger consideration, and our go-shop right to actively solicit superior proposals for 40 days following the effective date of the merger agreement (subject to certain conditions);
  the fact that we are permitted to pay a dividend of up to $0.04 per share for our fourth fiscal quarter ended March 3, 2007;
  the absence of a financing condition to consummation of the merger;
  the amount of the termination fee payable by Topps to Parent and the circumstances under which it is payable (including the fact that the termination fee payable during the go-shop period if the Company enters into a superior proposal is substantially lower than the fee otherwise payable), which our Board believes should not unduly discourage a third party from offering a proposal that is more favorable than the proposed Tornante-Madison Dearborn transaction;
  the amount of the termination fee payable by Parent to Topps, including the guaranty thereof, and the circumstances under which it is payable;

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  the fact that the merger agreement permits us to provide information and participate in negotiations with respect to third parties who have submitted written indications of interest or unsolicited acquisition proposals that meet the requirements set forth in the Merger Agreement after the conclusion of the go-shop period, and to terminate the merger agreement to accept a superior proposal from any such third party;
  the fact that, as a public company, the market price of our common stock would be susceptible to adverse effects of earnings fluctuations that may result from changes in our operations specifically, and changes in the confectionery, trading card and other industries in which we operate generally;
  the likelihood that the proposed merger would be completed, in light of the financial capabilities and reputation of Tornante and Madison Dearborn, the absence of a financing condition to the consummation of the merger and the other terms and conditions of the merger agreement;
  the fact that we have engaged in discussions with various parties over the last two years with respect to possible sale transactions, including an auction process for our confectionery business, and such transactions have not resulted in a definitive agreement or any proposals that our Board considered attractive;
  the fact that a sale of either our entertainment business or our confectionery business as a stand-alone business would create a tax liability for Topps and might leave the Company with an unreasonably small business to justify being a public company;
  the timing of the merger and the risk that if the Company did not accept the Tornante-Madison Dearborn group’s offer at the time that it did, our Board might not have had another opportunity to do so, particularly if the financial markets fluctuate in a manner that makes it more difficult to finance an acquisition of the Company;
  the fact that, due to the different nature of our confectionery and entertainment businesses, there was no logical strategic buyer of the entire Company and no other buyer has emerged;
  the fact that the operating profits of the Company made it difficult for Topps to be acquired in a leveraged transaction without a substantial equity investment by the acquiror; and
  the opinion of Lehman Brothers that, from a financial point of view, the $9.75 per share cash merger consideration to be offered to our stockholders pursuant to the merger is fair to such stockholders.

Factors supporting our Board’s recommendation and determination as to the procedural fairness of the merger upon the terms and subject to the conditions set forth in the merger agreement include, among others, the following:

  our Board appointed an independent lead director to (with the assistance of the Company’s management, advisors and other directors) consider and negotiate the terms of the merger agreement on behalf of Topps, and our Board retained the services of independent counsel and an independent financial advisor;
  the lead director is not an officer or employee or representative and/or affiliate or principal stockholder of the Company, is independent from the Company as such term is defined and interpreted under applicable Delaware law, and has no economic interest or expectancy of an economic interest in Tornante, Madison Dearborn or any of their respective affiliates or the surviving corporation of the merger, and the lead director was given authority to, among other things, review, evaluate, negotiate, recommend and reject the terms of any proposed transaction on behalf of Topps;
  on various occasions during the negotiation process with Tornante and Madison Dearborn, Topps management, Willkie Farr, Lehman Brothers and Mr. Feder informally briefed our Board (orally and in writing) as to the status of the negotiations, including the material open issues and how they were resolved, during which briefings the members of our Board had the opportunity to, and did, question Topps management, Willkie Farr, Lehman Brothers and Mr. Feder;

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  representatives of Willkie Farr and Lehman Brothers made themselves available to directors who wished to contact them individually to ask questions;
  the merger requires the approval of the holders of a majority of the outstanding shares of our common stock entitled to vote at the special meeting;
  after the conclusion of the go-shop period and subject to certain conditions, including the payment of a termination fee of $12 million (or $8 million if the Company had entered into a definitive agreement with respect to a superior proposal within the meaning of the merger agreement during the go-shop period) under certain circumstances, the terms of the merger agreement allow our Board to exercise its fiduciary duties to consider potential alternative transactions, including if it believes that an unsolicited acquisition proposal it receives after the conclusion of the go-shop period is reasonably expected to result in a superior proposal;
  based on advice of the Company’s financial and legal advisors, that the termination fee and expense reimbursement amounts under the merger agreement are reasonable compared to other similar public company merger transactions, and would not unreasonably deter another potential purchaser from considering a transaction with the Company at a price higher than the $9.75 per share merger consideration;
  subject to certain conditions, the Company would be entitled to receive a termination fee of $12 million if the merger agreement is terminated by the Company due to the failure of Parent to consummate the transaction after the marketing period contemplated by the merger agreement if the conditions to merger contained in the merger agreement are satisfied; and
  stockholders who do not vote in favor of the merger proposal and follow the other procedures of Section 262 of the DGCL will have the right to require an appraisal of their shares of Topps common stock, in which case they would have the fair value of their shares determined by the Delaware Court and to receive payment based on that valuation.

Our Board also considered a number of risks and other potentially negative factors concerning the merger, including, among others, the following:

  our stockholders will have no ongoing equity participation in the surviving corporation following the merger, meaning that such stockholders will cease to participate in the Company’s future earnings or growth, or to benefit from any increases in the value of the Company’s common stock;
  our stockholders, upon completion of the merger, will receive in exchange for their shares (upon surrendering them) a cash price determined by our Board (subject to our stockholders’ right to pursue appraisal rights), and our stockholders will not have the right thereafter to liquidate their shares at a time and for a price of their choosing;
  if the merger is not consummated for certain reasons, including the failure of our stockholders to vote in favor of the merger, we may be required to reimburse Parent for its out-of-pocket fees and expenses incurred in connection with the transaction (up to a cap);
  if the merger is not consummated for certain reasons, we may be required to pay a termination fee to Parent (in addition to expense reimbursement);
  the merger is conditioned upon the receipt of certain regulatory and third party consents, which are beyond our control;
  between the signing of the merger agreement and the consummation of the merger, we will not be permitted to pay dividends (other than the $0.04 per share dividend referred to above for our fourth fiscal quarter ended March 3, 2007);
  between the signing of the merger agreement and the consummation of the merger, we will not be able to take certain actions without the consent of Parent;
  the merger agreement provides for a 15-day marketing period after all conditions to the merger are satisfied to enable Parent and Merger Sub to complete their financing, during which period we bear certain risks;

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  Parent and Merger Sub are newly formed entities with no substantial assets, and our recourse in the event of a breach by them of the merger agreement will be contractually limited to the amount of the termination fee payable by Parent;
  we did not undertake a full public auction of the entire Company prior to entering into the merger agreement; although our Board was satisfied that, in light of the more than two-year process leading up to the execution of the merger agreement, the merger agreement, and particularly the 40-day go-shop period, provided our Board with an adequate opportunity to conduct an affirmative post-signing market test to ensure that the $9.75 per share merger consideration is the best available to our stockholders;
  for U.S. income tax purposes, the merger will be a taxable transaction for our stockholders whose shares will be converted into the right to receive cash in the merger;
  a proposal to acquire either our confectionery or entertainment business individually would not be considered a superior proposal within the meaning of the merger agreement; and
  three of our directors voted against approval and adoption of the merger agreement by our Board.

In view of the wide variety of factors considered, our Board did not find it practicable to quantify or otherwise assign relative weights to, and did not make specific assessments of, the specific factors considered in reaching its determination. However, while individual members of our Board may have assigned different weights to various factors, the determination of our Board, as a whole, was made after considering all of the factors together.

After considering these and other factors, our Board concluded that the positive factors relating to the merger agreement and the transactions contemplated thereby (including the merger) outweigh the potential negative factors.

The foregoing discussion is not intended to be exhaustive but is believed to include all material factors considered by our Board.

Fairness Opinion of Lehman Brothers

In February 2005, we retained Lehman Brothers to evaluate potential sale opportunities for the Company and our Board decided to begin an auction process for the sale of our confectionery business. In light of the absence of an offer at an attractive price level, in September 2005 we announced that we had terminated our process to evaluate a possible sale of our confectionery business, at which time we also terminated our engagement of Lehman Brothers, and that we had instead launched a restructuring program. Beginning in May 2006, after we received several unsolicited preliminary indications of interest from third parties to acquire the entirety of Topps, we re-engaged Lehman Brothers as our financial advisor. After a due diligence review of the businesses of the Company by the interested parties, the merger agreement with Tornante and Madison Dearborn was executed. In February 2007, Lehman Brothers was asked by our Board to render an opinion with respect to the fairness, from a financial point of view, to our stockholders of the consideration to be offered to such stockholders in connection with the merger pursuant to the merger agreement.

On March 5, 2007, Lehman Brothers rendered its opinion to our Board that as of such date and, based upon and subject to the matters stated in its opinion, the $9.75 per share cash merger consideration payable to our stockholders in connection with the merger pursuant to the merger agreement was fair to our stockholders from a financial point of view.

Over the last two years, and pursuant to Lehman Brothers’ engagement letter with us, Lehman Brothers was paid a retainer fee of $100,000 and a fee of $750,000 upon delivery of its opinion. If the merger and the other transactions contemplated by the merger agreement are completed, Lehman Brothers will receive fees of $4,343,525, in the aggregate, including the retainer fee and the fee relating to its opinion. Lehman Brothers’ fee arrangement with respect to the merger is such that the aggregate fees received increase in value with increases in the consideration received in the

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transaction so as to provide Lehman Brothers with an incentive to seek out a buyer who will provide maximum value to our stockholders.

While negotiating the terms of the merger agreement, Mr. Feder polled the three other members of the second committee as to whether they believed it was necessary to obtain an additional fairness opinion from another financial advisor. With the agreement of Messrs. Greenberg, Ajdler and Brog, Mr. Feder determined that an additional fairness opinion from another financial advisor was not necessary or appropriate. In making this determination, Mr. Feder discussed with the members of the second committee Lehman Brothers’ (i) substantial familiarity with the Company and its operations, which it gained through, among other things, its work in connection with the auction process for the attempted sale of our confectionery business in 2005, as well as in connection with its re-engagement in May 2006, (ii) knowledge of the industries within which the Company operates and (iii) fee structure that provides an incentive for Lehman Brothers to seek out attractive offers to acquire the Company. The members of the second committee also took into account the fees that would be payable to an additional financial advisor and concluded that that the engagement of another financial advisor would not add sufficient value to the sale process.

The full text of Lehman Brothers’ written opinion, dated March 5, 2007, is included as Annex B to this proxy statement. Our stockholders are encouraged to read Lehman Brothers’ opinion carefully and in its entirety for a description of the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Lehman Brothers in rendering its opinion. The following is a summary of Lehman Brothers’ opinion and the methodology that Lehman Brothers used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion.

Lehman Brothers’ advisory services and opinion were provided for the information and assistance of our Board in connection with its consideration of the merger. Lehman Brothers’ opinion is not intended to be and does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote in connection with the merger. Lehman Brothers was not requested to opine as to, and Lehman Brothers’ opinion does not address, Topps’ underlying business decision to proceed with or effect the merger.

In arriving at its opinion, Lehman Brothers reviewed and analyzed, among other things:

  the merger agreement and the specific terms of the merger;
  such publicly available information concerning the Company that Lehman Brothers believed to be relevant to its analysis, including the Company’s Annual Reports on Form 10-K for the fiscal years ended on the Saturday closest to the end of February 1998 to 2006 and Quarterly Reports on Form 10-Q for the quarters ended May, August and November 2005 and February, May, August and November 2006;
  financial and operating information with respect to the business, operations and prospects of the Company furnished by us to Lehman Brothers, including financial projections of the Company and adjusted financial projections prepared by our management;
  the trading history of our common stock over recent months;
  a comparison of the current market valuation of the Company against selected operating metrics with those of other companies that Lehman Brothers deemed relevant;
  a comparison of the financial terms of the proposed merger against the financial terms of certain other recent transactions that Lehman Brothers deemed relevant; and
  a comparison of the historical financial results and present financial condition of the Company with the financial projections prepared by our management.

In addition, Lehman Brothers had discussions with Topps management concerning our businesses, operations, assets, financial conditions and prospects and undertook such other studies, analyses and investigations as Lehman Brothers deemed appropriate.

In arriving at its opinion, Lehman Brothers assumed and relied upon the accuracy and completeness of the financial and other information used by Lehman Brothers, including information

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provided by us, without assuming any responsibility for independent verification of such information. Lehman Brothers further relied upon the assurances of Topps management that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial projections and adjusted financial projections of the Company, upon advice of the Company, Lehman Brothers assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of Topps management as to the Company’s future financial performance and that Topps would perform substantially in accordance with such projections. In arriving at its opinion, Lehman Brothers did not conduct or obtain any evaluations or appraisals of the assets or liabilities of the Company, nor did it conduct a physical inspection of the properties and facilities of Topps. In addition, in 2005 we asked Lehman Brothers to conduct an auction process for our confectionery business, which process was terminated by us on September 12, 2005, but after such termination and prior to March 5, 2007, we did not authorize Lehman Brothers to solicit, and Lehman Brothers has not solicited, any indication of interest from any third party with respect to the purchase of all or a part of the Company’s business. Lehman Brothers’ opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, March 5, 2007.

The following is a summary of the material financial analyses used by Lehman Brothers in connection with providing its opinion to our Board. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by Lehman Brothers, the tables must be read together with the text of each summary. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Lehman Brothers’ opinion.

Historical Share Price Analysis

Lehman Brothers considered historical data with regard to the trading prices of our common stock for the period from March 1, 2002 to March 2, 2007. During this period the closing price of our common stock ranged from a high of $11.00 on May 23, 2002 to a low of $6.99 on December 19, 2005. Lehman Brothers noted the volatility of our common stock price in the last two years, from the $10.94 peak reached at the close of trading on June 21, 2005, after Topps, in response to market rumors, announced on May 17, 2005 that it had retained Lehman Brothers to explore various strategic alternatives, including a potential sale of our confectionery business, to the subsequent drop in share price to $8.92 when on September 12, 2005 we announced that we had terminated the sale process of our confectionery business. Also, Lehman Brothers noted that the price of our common stock had steadily risen following our 2006 annual meeting of stockholders held on July 28, 2006, when we announced that we had reached an agreement with Pembridge regarding its then pending proxy contest, and that, based on at least one analyst report, speculation had emerged in the analyst community that the Company might have been the subject of a transaction over the following months. As of the close of trading markets on March 2, 2007, the price of our common stock had appreciated by approximately 12.2% to $9.00 from its average closing price of $8.02 for the two-week period that preceded our 2006 annual meeting of stockholders. The foregoing historical share price analysis was presented to our Board to provide it with background information and perspective with respect to the historical share price of our common stock.

Analysis of Historical and Projected Financials

Lehman Brothers used a variety of analyses in connection with providing its opinion to our Board, some using latest twelve months (or ‘‘LTM’’) financial statements and information, which are the most recent financial results of the Company, and some using projected financial performance.

Lehman Brothers analyzed the historical consolidated financial performance of the Company over the last five fiscal years (or FY) and observed that from FY2002 to FY2006 consolidated net sales declined from $300.2 million in FY2002 to $294.8 million in FY2006, which corresponds to a total decline of approximately 1.8% and a compounded annual decline in consolidated net sales during the period considered of approximately 0.4%. It should be noted that FY2006 financials correspond to the

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internal reporting of the Company, and are marginally different from the reported FY2006 financials (reported FY2006 net sales were $293.8 million). Differences are related to the different treatment of thePit.com (a business disposed in FY2006). While in the reported FY2006 financials the results of thePit.com are included as a post-tax adjustment to net income from continuing operations, in the internal reporting for FY2006 the financial contribution of thePit.com is embedded within consolidated figures.

Lehman Brothers also observed that the profitability of the Company decreased over the period considered, with a decline in consolidated contribution margin from $102.3 million (approximately a 34.1% margin) in FY2002 to $78.9 million (approximately a 26.8% margin) in FY2006, which corresponds to a total decline of approximately 22.9% and to a compounded annual decline in the consolidated contribution margin for the period considered of approximately 6.3%. EBITDA declined from $39.7 million (approximately a 13.2% margin) in FY2002 to $5.6 million (approximately a 1.9% margin) in FY2006, which corresponds to a total decline of approximately 85.9% and to a compounded annual decline in the consolidated EBITDA for the period considered of approximately 38.7%. Diluted earnings per share (or EPS) from continuing operations declined from $0.60 per share in FY2002 to $0.10 per share in FY2006, which corresponds to a total decline of approximately 83.3% and to a compounded annual decline in the diluted EPS for the period considered of approximately 36.2%.

Lehman Brothers performed certain analyses based on the projected financial information prepared by Topps management for presentations made to Tornante and Madison Dearborn on December 12, 2006, which financial information was subsequently revised by management on February 26, 2007 as part of the diligence review of Topps by Tornante and Madison Dearborn. Such projections (which we refer to as the management case) were prepared in connection with the sale process that followed the unsolicited indications of interest by Tornante and Madison Dearborn and other third parties in May and June 2006. In the view of Topps management, the management case represented the projected financial performance of the Company assuming a very favorable predicted outcome for the growth and margin expansion initiatives planned for the period from FY2007 to FY2010. Lehman Brothers also considered projected financial information based on the management case, as adjusted by Topps management to reflect the projected financial performance of the Company assuming a predicted outcome for the growth and margin expansion initiatives planned for the period from FY2007 to FY2010 that, although favorable, was less favorable than in the management case (we refer to this adjusted financial information as the adjusted case).

In the management case, consolidated net sales are projected to grow from $294.8 million in FY2006 to $422.7 million in FY2010. Such growth corresponds to an approximately 9.4% compounded annual growth rate (or CAGR) for the period FY2006 to FY2010, which compares to an approximately 2.5% CAGR for the period from FY1998 to FY2006. In addition, under the management case, EBITDA is projected to grow from $5.6 million in FY2006 (approximately a 1.9% margin) to $51.2 million in FY2010 (approximately a 12.1% margin). In the adjusted case, consolidated net sales are projected to grow from $294.8 million in FY2006 to $383.1 million in FY2010, which corresponds to an approximately 6.3% CAGR for the period from FY2006 to FY2010. Moreover, under the adjusted case, EBITDA is projected to grow from $5.6 million in FY2006 (approximately a 1.9% margin) to $38.4 million in FY2010 (approximately a 10.0% margin).

Lehman Brothers also reviewed the financial projections of the management case and of the adjusted case by analyzing the assumptions for our confectionery and entertainment businesses underlying each of the two scenarios and comparing them with the historical financial performance of each of the two businesses. The management case predicts significant ‘‘top-line’’ growth and margin expansion across business units and is largely predicated on the success of new product launches in our confectionery business and, for the entertainment business, continued strong growth of U.S. sports in a reversal of the decline of the category over the last ten years and the successful turnaround of our WizKids unit. The adjusted case also assumes strong top-line growth and margin expansion for both the confectionery and the entertainment businesses although to a lesser extent than in the management case. Assumptions of the adjusted case are similar to the management case and based on

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new product launches for our confectionery business and growth in U.S. sports and a turnaround of WizKids for our entertainment business.

Lehman Brothers also noted in its analysis that most of the projected growth for the confectionery business in the management case and in the adjusted case was predicated on sales of ‘‘Vertigo,’’ a confectionery product that we launched only recently, and on other products that are in various stages of development and have not yet been launched.

Comparable Company Analysis

In order to assess how the public market values shares of similar publicly traded companies, Lehman Brothers, based on its consideration of the companies in the confectionery and in the entertainment industry, reviewed and compared specific financial and operating data relating to the Company with selected companies that Lehman Brothers deemed comparable to Topps. In light of the different nature of the confectionery and entertainment businesses of the Company, Lehman Brothers selected a set of comparable companies for the confectionery business and a set of comparable companies for the entertainment business of Topps. Such companies included:

Confectionery business:

  Lindt & Sprüngli AG
  Tootsie Roll Industries Inc.
  WM. Wrigley Jr. Co.
  Campbell Soup Co.
  H.J. Heinz Co.
  Cadbury Schweppes Plc
  General Mills Inc.
  Kellogg Co.
  Nestlé S.A.
  Kraft Foods Inc.
  J.M. Smucker Co.
  ConAgra Foods Inc.
  Del Monte Foods Co.

Entertainment business:

  Konami Corporation
  Marvel Entertainment Inc.
  Mattel Inc.
  Hasbro, Inc.
  RC2 Corporation
  Namco Bandai Holdings Inc.
  Jakks Pacific Inc.

As part of the comparable company analysis, Lehman Brothers calculated and analyzed Topps, and each comparable company’s ratio of current stock price to its historical and projected earnings per share (commonly referred to as a price-earnings ratio, or P/E) by calculating: (i) the weighted average of the mean P/E for the set of comparable companies for our confectionery business and for our entertainment business; and (ii) the weighted average of the median P/E for the set of comparable

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companies for our confectionery business and for our entertainment business. Lehman Brothers also calculated and analyzed Topps’ and each comparable company’s ratio of the enterprise value (or EV) to EBITDA (which ratio we refer to as EV/EBITDA) by calculating (i) the weighted average of the mean EV/EBITDA for the set of comparable companies for our confectionery business and for our entertainment business, and (ii) the weighted average of the median EV/EBITDA for the set of comparable companies for our confectionery business and for our entertainment business. Earnings after allocation of direct overhead for our confectionery business and for our entertainment business were used as weights in the calculation of the weighted averages described above. The calculation of the mean and median values was performed by considering only the U.S.-listed comparable companies, for comparability with Topps. The EV of each company was obtained by adding its short-term and long-term debt to the sum of the market value of its common equity, the value of in-the-money dilutive securities (like stock options and convertible debt) and the book value of any minority interest, and subtracting its cash and cash equivalents. All of these calculations were performed, and based on publicly available financial data (including First Call/I/B/E/S International, Inc. estimates for EPS) and closing prices, as of March 2, 2007, the last trading day prior to the date on which Lehman Brothers delivered its opinion to our Board.

The analysis of current stock price to earnings indicated that, for the selected comparable companies, the ratio of current stock price to last twelve months EPS ranged from 19.9x to 20.1x for the confectionery business and from 17.2x to 21.2x for the entertainment business. The resulting weighted average ratio of current stock price to last twelve months EPS ranged from 18.6x to 20.6x. The analysis of the EV as a multiple of the last twelve months EBITDA ranged from 11.0x to 11.5x for the confectionery business and from 9.7x to 10.6x for the entertainment business. The resulting weighted average multiple of EV as a multiple of the last twelve months EBITDA ranged from 10.3x to 11.1x.

Lehman Brothers indicated that it selected the comparable companies above because their businesses and operating profiles are reasonably similar to that of the Company. However, because of the inherent differences between the business, operations and prospects of the Company and the businesses, operations and prospects of the selected comparable companies, no comparable company is exactly the same as Topps. Therefore, Lehman Brothers believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the comparable company analysis. Accordingly, Lehman Brothers also made qualitative judgments concerning differences between the financial and operating characteristics and prospects of Topps and the companies included in the comparable company analysis that would affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels, strength of the brand portfolio and degree of operational risk between Topps and the companies included in the comparable company analysis.

In order to calculate the range of stock prices of our common stock implied by the comparable company analysis, a 20% premium was applied to the low end of the range and a 30% premium was applied to the high end of the range. After giving effect to these premiums, and based on the projections and assumptions set forth above, the comparable company analysis yielded a valuation range for our common stock of $6.86 to $10.25 per share.

Lehman Brothers used LTM financial statements and information in performing its comparable company analysis in order to reflect the most recent financial performance of the Company. Projected financial statements and information were used to perform the Leveraged Acquisition and the Discounted Cash Flow Analysis.

Comparable Transaction Analysis

Using publicly available information, Lehman Brothers reviewed and compared the purchase prices and financial multiples paid in a number of selected acquisitions of companies that Lehman Brothers, based on its experience with merger and acquisition transactions, deemed relevant to arriving at its opinion. Lehman Brothers chose the transactions used in the comparable transaction

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analysis based on the similarity of the target companies in the transactions to our confectionery and entertainment businesses (as applicable) in the size, mix, margins, portfolio of brands and other characteristics of their businesses. Lehman Brothers reviewed the transactions presented in the table below:

Confectionery Business


Date Announced Acquiror Target
July 2006 Perfetti SpA Chupa Chups
December 2004 CVC CSM Sugar Confectionery
November 2004 WM. Wrigley Jr. Co. Kraft Inc.’s Sugar Confectionery Business
August 2004 Tootsie Roll Industries Inc. Concord Confections Inc.
January 2004 WM. Wrigley Jr. Co. Joyco (Agrolimen)
December 2002 Cadbury Schweppes Plc Adams Gum (business of Pfizer Inc.)
September 2002 Cadbury Schweppes Plc Dandy’s Chewing Gum Unit
April 2001 CSM NV Socalbe Candy (CIR)
January 2001 Perfetti SpA Van Melle NV

Entertainment Business


Date Announced Acquiror Target
September 2006 MGA Entertainment Inc. Little Tikes (business of Newell Rubbermaid Inc.)
July 2006 Mattel Inc. Radica
May 2006 Royal Philips Avent Holdings
January 2006 Jakks Pacific Inc. Creative Designs International
September 2005 The Carlyle Group Britax Childcare
August 2005 Vista Capital de Expansion Famosa
June 2005 Mega Bloks Rose Art
May 2005 The Mustang Group Vermont Teddy Bear
May 2005 Tomy Takara
May 2005 Bandai Namco
June 2004 RC2 Corporation Playing Mantis
June 2004 RC2 Corporation First Years
April 2004 Jakks Pacific Inc. Play Along
February 2003 RC2 Corporation The Learning Curve
February 2002 Jakks Pacific Inc. Toymax International
April 2000 Dorel Industries Safety 1st

As part of its comparable transaction analysis, Lehman Brothers calculated and analyzed Topps’ and each comparable transaction’s ratio of EV to trailing net sales (which ratio we refer to as EV/Net Sales) by calculating: (i) the weighted average of the mean EV/Net Sales for the set of comparable transactions for our confectionery business and for our entertainment business; and (ii) the weighted average of the median EV/Net Sales for the set of comparable transactions for our confectionery business and for our entertainment business. Net sales for our confectionery business and for our entertainment business were used as weights in the calculation of the weighted averages described above. Lehman Brothers also calculated and analyzed Topps’ and each comparable transaction’s ratio of EV to trailing EBITDA (which ratio we refer to as EV/EBITDA) by calculating: (i) the weighted average of the mean EV/EBITDA for the set of comparable transactions for our confectionery business and for our entertainment business, and (ii) the weighted average of the median EV/EBITDA for the set of comparable transactions for our confectionery business and for our entertainment business. Earnings after allocation of direct overhead for our confectionery business and for our entertainment business were used as weights in the calculation of the weighted averages described above. The calculation of the mean and median values for comparable transactions for our

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confectionery business was performed excluding the Wrigley/Kraft’s Sugar Confectionery and the Cadbury/Adams Gum transactions, as the targets in those deals were significantly larger, had more profitable businesses and were characterized by a portfolio of stronger brands than our confectionery business. The calculation of the mean and median values for comparable transactions for our entertainment business was performed excluding the highest and the lowest values, to remove the influence of outlier values on the calculation.

The analysis of EV/Net Sales indicated that, for the selected comparable transactions, the ratio of EV to trailing net sales ranged from 1.50x to 1.64x for the confectionery business and from 0.92x to 0.98x for the entertainment business. The resulting weighted average ratio of EV to trailing net sales ranged from 1.18x to 1.28x. The analysis of the multiple of EV as a multiple of trailing EBITDA ranged from 12.8x to 14.3x for the confectionery business and from 7.1x to 7.5x for the entertainment business. The resulting weighted average multiple of EV as a multiple of the last twelve months EBITDA ranged from 10.2x-10.7x.

Lehman Brothers also noted that, although multiples for comparable transactions are generally higher than multiples for comparable companies, as they reflect an acquisition premium, in the case of our entertainment business, the EV/EBITDA range for the selected comparable companies was higher than the EV/EBITDA range for the selected comparable transactions. Lehman Brothers is of the opinion that such difference is due to the fact that the set of companies comparable to our entertainment business are significantly larger, more global and diversified businesses characterized by portfolios of stronger brands than our entertainment business. On the other hand, comparable transactions reflect target companies which are similar in size and strategic positioning to our entertainment business. Therefore, Lehman Brothers is of the opinion that the range of EV/EBITDA resulting from the analysis of comparable transactions provides a better sense of the value of our entertainment business.

Based on the projections and assumptions set forth above, the comparable transaction analysis yielded a valuation range for our common stock of $7.41 to $12.66 per share.

Lehman Brothers used ratios of EV/Net Sales and EV/EBITDA calculated on the basis of trailing, rather than forward-looking, financial statements and information as this is the convention generally applied in performing relative valuations as part of a comparable transaction analysis.

Status-Quo Valuation

Lehman Brothers performed a hypothetical analysis of the potential stock price of Topps today corresponding to ‘‘normalized’’ trading conditions in fiscal year 2010, assuming that the Company does not undertake a transaction or modify its capital structure but rather focuses on executing its business plan underlying the projected financials in the management case and in the adjusted case.

The analysis was performed by applying an EV/EBITDA multiple in the 8.5x to 10.0x range to the projected 2010 EBITDA under the two cases and discounting the resulting range of EV to a present value at a range of discount rates from 12.0% to 16.0% in the management case and from 11.5% to 13.5% in the adjusted case. The range of EV/EBITDA multiples was selected on the basis of the comparable company analysis and of the comparable transaction analysis discussed above. Lehman Brothers assumed the average of the weighted average of the median EV/EBITDA from the comparable company analysis as the high end of the range, to account for the fact that the set of comparable companies for our confectionery business and for our entertainment business includes companies which are larger, more profitable and characterized by stronger brands than our confectionery and entertainment businesses, respectively. The mid-point of the selected EV/EBITDA range reflects the weighted average of the median of the comparable company analysis for our confectionery business and of the median for the comparable transaction analysis for our entertainment business. This reflects the observation made in the comparable transaction analysis that the range of EV/EBITDA multiples from the comparable transaction analysis provides a better sense of the value of our entertainment business than the range of EV/EBITDA multiples from the comparable company analysis. The higher discount rate for the management case is intended to account for the higher risk inherent in the ability to achieve the financial projections contemplated by

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the management case. Lehman Brothers then calculated the corresponding per share equity values by subtracting from the EV the net debt (which is total debt minus cash) of the Company, and dividing those amounts by the number of fully diluted shares of the Company. Lehman Brothers also assumed an annual dividend of $6 million and calculated the value per share corresponding to the present value of such dividends for the fiscal years 2008 through 2010 assuming a range of discount rates from 12.0% to 16.0% in the management case and from 11.5% to 13.5% in the adjusted case.

Based on the projections and assumptions set forth above, the status-quo valuation analysis yielded a valuation range for our common stock of $9.57 to $11.75 per share in the management case and of $8.21 to $9.59 in the adjusted case.

Leveraged Acquisition Analysis

Additionally, Lehman Brothers performed a leveraged acquisition analysis in order to ascertain the price which would be attractive to a potential financial buyer based upon current market conditions. Lehman Brothers assumed the following in its analysis: (i) a capital structure corresponding to the one indicated by Tornante and Madison Dearborn and comprised of a $95 million seven-year term loan facility and a $45 million senior subordinated credit facility (based on discussions with representatives of Tornante and Madison Dearborn, Lehman Brothers also assumed that the $25 million revolving credit facility obtained by Merger Sub in connection with the merger would not be drawn for purposes of consummating the transaction); (ii) an equity investment that would achieve a rate of return in excess of 20%; (iii) a transaction closing on March 1, 2007 and an exit in year three, or at the end of fiscal year 2010; and (iv) a projected 2010 EBITDA exit multiple in the 8.5x to 10.0x range. Based on these assumptions, the range of implied leveraged acquisition prices per share of our common stock of was $9.50 to $10.50 in the management case and $8.25 to $9.25 in the adjusted case. Lehman Brothers also noted that as both the management case and the adjusted case reflect rather aggressive assumptions on the projected financial performance of our businesses, a potential financial buyer would likely target to achieve an expected rate of return in excess of the assumed 20%, and therefore the ranges above are likely at the higher end of what financial buyers would be prepared to pay for all issued and outstanding share capital of the Company.

Discounted Cash Flow Analysis

As part of its analysis, and in order to estimate the present value of our common stock, Lehman Brothers prepared a three-year discounted cash flow analysis for Topps, calculated as of March 1, 2007, of after-tax unlevered free cash flows for fiscal years 2008 through 2010 on the basis of the three-year projections of the management case and of the adjusted case.

A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the ‘‘present value’’ of estimated future cash flows of the asset. ‘‘Present value’’ refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors. Lehman Brothers performed a discounted cash flow analysis for Topps by adding (i) the present value of our projected after-tax unlevered free cash flows for fiscal years 2008 through 2010 to (ii) the present value of the ‘‘terminal value’’ of Topps as of 2010. ‘‘Terminal value’’ refers to the value of all future cash flows from an asset at a particular point in time.

Lehman Brothers estimated, after taking into account selected comparable confectionery and entertainment enterprise values to last twelve months EBITDA multiples, a range of terminal values in 2010 calculated based on last twelve months EBITDA multiples of 8.5x to 10.0x. Lehman Brothers discounted the unlevered free cash flow streams and the estimated terminal value to a present value at a range of discount rates from 12.0% to 16.0% in the management case and from 11.5% to 13.5% in the adjusted case. The higher discount rate for the management case is intended to account for the higher risk inherent in the ability of achieving the financial projections contemplated by the management case. The discount rates utilized in this analysis were chosen by Lehman Brothers based on its expertise and experience with the confectionery and entertainment industries and also on an

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analysis of the weighted average cost of capital of comparable companies and of the Company. The current cost of capital of Topps was estimated to be in the 11.5% to 12.0% range. Lehman Brothers calculated per share equity values by first determining a range of enterprise values of Topps by adding the present values of the after-tax unlevered free cash flows and terminal values for each EBITDA terminal multiple and discount rate scenario, and then subtracting from the enterprise values the net debt (which is total debt minus cash) of Topps, and dividing those amounts by the number of fully diluted shares of Topps.

Based on the projections and assumptions set forth above, the discounted cash flow analysis of Topps yielded an implied valuation range of our common stock of $10.31 to $12.57 per share in the management case and $8.76 to $10.16 in the adjusted case. Lehman Brothers noted that the price of our common stock as of March 2, 2007 was $9.00 per share, which was below the per share equity valuation range implied by the foregoing analysis in the management case and within the range of per share equity values in the adjusted case.

Breakup Analysis

Lehman Brothers performed a ‘‘breakup’’ analysis of the Company by valuing our confectionery business and our entertainment business individually and deriving therefrom a range of values for the Company as a whole. The value of our confectionery business was calculated by assuming a multiple of EV/Net Sales in the 1.25x to 1.50x range applied to the projected FY2007 net sales for the confectionery business. The selected range of EV/Net Sales multiple was chosen by comparison to selected comparable transactions for our confectionery business. The value of our entertainment business was calculated by assuming a multiple of EV/EBITDA in the 7.0x to 8.5x range applied to the projected FY2008 EBITDA for the entertainment business after allocation of indirect overhead on the basis of indications from Topps management, and discounting the result obtained for one year at a cost of capital in the 11.5% to 12.0% range, which corresponds to the estimated cost of capital for the Company. The selected range of EV/EBITDA multiple was chosen by comparison to selected comparable transactions for our entertainment business.

Breakage costs of $20 million to $30 million were also considered to account for severance costs, taxes, fees and other expenses associated with the separation of the entertainment and of the confectionery businesses of the Company.

Using the methodology described above under the financial projections in the management case, the analysis indicated a range of equity values per share of our common stock ranging from $8.89 to $10.14, as compared to a transaction price of $9.75 per share. Performing the same analysis described above by using the financial projections in the adjusted case resulted in a range of equity values per share of our common stock ranging from $8.70 to $9.90.

General

In connection with the review of the merger by our Board, Lehman Brothers performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. In arriving at its opinion, Lehman Brothers considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor considered by it. Furthermore, Lehman Brothers believes that the summary provided and the analyses described above must be considered as a whole and that selecting any portion of its analyses, without considering all of them, would create an incomplete view of the process underlying its analyses and opinion. In addition, Lehman Brothers may have given various analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Lehman Brothers’ view of the actual value of the Company.

In performing its analyses, Lehman Brothers made numerous assumptions with respect to industry risks associated with industry performance, general business and economic conditions and

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other matters, many of which are beyond the control of the Company. Any estimates contained in Lehman Brothers’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. The analyses performed were prepared solely as part of Lehman Brothers’ analysis of the fairness, from a financial point of view, of the $9.75 per share cash merger consideration payable to our stockholders in connection with the merger pursuant to the merger agreement, and were prepared in connection with the delivery by Lehman Brothers of its opinion, dated March 5, 2007, to our Board.

The terms of the merger were determined through arm’s length negotiations between the Company, on the one hand, and Tornante and Madison Dearborn, on the other hand, and were approved by our Board. Lehman Brothers did not recommend any specific form of consideration to our Board or that any specific form of consideration constituted the only appropriate consideration for the merger. Lehman Brothers’ opinion was provided to our Board to assist it in its evaluation of the consideration to be offered to our stockholders in the merger. Lehman Brothers’ advisory services and opinion were provided for the information and assistance of our Board in connection with its consideration of the merger. Lehman Brothers’ opinion is not intended to be and does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote in connection with the merger. Lehman Brothers’ opinion was one of the many factors taken into consideration by our Board in making its determination to approve the merger agreement. Lehman Brothers’ analyses summarized above should not be viewed as determinative of the opinion of our Board with respect to the value of Topps.

Lehman Brothers is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Our Board selected Lehman Brothers because of its expertise, reputation and familiarity with Topps and because its investment banking professionals have substantial experience in transactions comparable to the merger.

In the ordinary course of its business, Lehman Brothers may actively trade in the equity securities of the Company for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

Financial Projections

As part of the sale process, in connection with their due diligence review of Topps and, in the case of Tornante and Madison Dearborn, their negotiation of the terms of the merger agreement, Tornante, Madison Dearborn and other potential acquirors of the Company were provided with the management case projections, which contain non-public financial projections for our 2007, 2008, 2009 and 2010 fiscal years, that were prepared by the Company. The projections do not give effect to the merger.

Set forth below is a subset of these management case projections as well as a subset of the projections as per the adjusted case to give our stockholders access to certain nonpublic information that may be material to them for purposes of considering and evaluating the merger. The inclusion of this information should not be regarded as an indication that we, our Board, Lehman Brothers or any other recipient of this information considered, or now considers, it to be a reliable prediction of future results. The projections reflect numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, all of which are difficult to predict and beyond our control. The projections also reflect numerous estimates and assumptions related to our businesses that are inherently subject to significant economic, political, and competitive uncertainties, all of which are difficult to predict and many of which are beyond our control. As a result, there can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected.

The financial projections were not prepared with a view toward public disclosure or toward complying with U.S. generally accepted accounting principles, the published guidelines of the SEC

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regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Our independent registered public accounting firm has not examined or compiled any of the financial projections, expressed any conclusion or provided any form of assurance with respect to the financial projections and, accordingly, assumes no responsibility for them. The financial projections do not take into account any circumstances or events occurring after the date they were prepared. Projections of this type are based on estimates and assumptions that are inherently subject to factors such as industry performance, general business, economic, regulatory, market and financial conditions, as well as changes to the business, financial condition or results of operations of Topps, including the factors described under ‘‘SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS,’’ which factors may cause the financial projections or the underlying assumptions to be inaccurate. Since the projections cover multiple years, such information by its nature becomes less reliable with each successive year.

For the foregoing reasons, as well as the bases and assumptions on which the financial projections were compiled, the inclusion of specific portions of the financial projections in this proxy statement should not be regarded as an indication that such projections will be an accurate prediction of future events, and they should not be relied on as such.    Except as required by applicable securities laws, we do not intend to update, or otherwise revise the financial projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

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Four Year Projected Consolidated Operating Profit Summary – Management Case
(amounts in thousands, except earnings per share)


  Fiscal Year 2006 — Actual Fiscal Year 2007 Fiscal Year 2008
  Total Confectionery Entertainment WizKids Total Confectionery Entertainment WizKids Total Confectionery Entertainment WizKids
Gross Sales $ 348,320 $ 168,171 $ 153,193 $ 26,956 $ 378,380 $ 171,395 $ 191,168 $ 15,817 $ 393,445 $ 186,913 $ 181,150 $ 25,382
Net Sales 294,825 144,261 127,362 23,202 323,774 146,546 163,106 14,122 343,051 159,200 160,626 23,225
Contribution Margin 78,922 43,842 30,104 4,976 92,641 46,677 42,570 3,394 102,614 50,284 45,368 6,962
EBITDA, Segment 35,659 20,805 13,406 1,448 44,615 22,444 23,670 (1,499 )  53,354 25,400 26,327 1,627
EBITDA, Total 5,617       20,389       29,420      
Income Before Taxes (2,071 )        14,538       27,339      
Net Income 1,239 (1)        9,805 (2 )        19,028      
Earnings Per Share $ 0.03       $ 0.24       $ 0.48      

  Fiscal Year 2009 Fiscal Year 2010
  Total Confectionery Entertainment WizKids Total Confectionery Entertainment WizKids
Gross Sales $ 447,261 $ 222,100 $ 199,066 $ 26,095 $ 484,436 $ 255,292 $ 200,440 $ 28,704
Net Sales 387,929 188,717 174,872 24,340 422,661 217,007 178,817 26,837
Contributed Margin 117,972 61,259 49,483 7,230 132,309 71,411 52,880 8,018
EBITDA, Segment 65,675 34,072 29,681 1,922 76,801 42,025 32,332 2,444
EBITDA, Total 41,028       51,169      
Income Before Taxes 38,847       48,988