Exhibit 4.4


 


THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SMALL WORLD KIDS, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.


 


Right to Purchase up 1,036,000 Shares of Common Stock
of

Small World Kids, Inc.

(subject to adjustment as provided herein)


 


COMMON STOCK
PURCHASE WARRANT


 


	
  No. 

  	
   

  	
  Issue Date: February 28, 2006

  



 


SMALL WORLD KIDS, INC., a corporation organized under
the laws of the State of Nevada (the “Company”), hereby certifies that, for
value received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company
(as defined herein) from and after the Issue Date of this Warrant and at any
time thereafter, up to 1,036,000 fully paid and nonassessable shares of Common
Stock (as hereinafter defined), $0.001 par value per share, at the applicable Exercise
Price per share (as defined below).  The
number and character of such shares of Common Stock and the applicable Exercise
Price per share are subject to adjustment as provided herein.


 


As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:


 


(a)           The
term “Company” shall include Small World Kids, Inc. and any person or
entity which shall succeed, or assume the obligations of, Small World Kids, Inc.
hereunder.


 


(b)           The
term “Common Stock” includes (i) the Company’s Common Stock, par value
$0.001 per share; and (ii) any other securities into which or for which
any of the securities described in the preceding clause (i) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.


 


(c)           The
term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the holder of the Warrant at any time shall be entitled to receive, or shall
have received, on the exercise of the Warrant, in lieu of or in addition to
Common Stock, or


 

















 


which at any time shall
be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 4 or otherwise.


 


(d)           The
“Exercise Price” applicable under this Warrant shall be $0.001 per share.


 


1.             Exercise
of Warrant.


 


1.1           Number
of Shares Issuable upon Exercise. 
From and after the date hereof, the Holder shall be entitled to receive,
upon exercise of this Warrant in whole or in part, by delivery of an original
or fax copy of an exercise notice in the form attached hereto as Exhibit A
(the “Exercise Notice”), shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4.


 


1.2           Fair
Market Value.  For purposes hereof,
the “Fair Market Value” of a share of Common Stock as of a particular date (the
“Determination Date”) shall mean:


 


(a)           If the
Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or Capital Market of The Nasdaq
Stock Market, Inc. (“Nasdaq”), then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.


 


(b)           If the
Company’s Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD Over The Counter
Bulletin Board, then the mean of the average of the closing bid and asked
prices reported for the last business day immediately preceding the
Determination Date.


 


(c)           Except as
provided in clause (d) below, if the Company’s Common Stock is not
publicly traded, then as the Holder and the Company agree or in the absence of
agreement by arbitration in accordance with the rules then in effect of
the American Arbitration Association, before a single arbitrator to be chosen
from a panel of persons qualified by education and training to pass on the
matter to be decided.


 


(d)           If the
Determination Date is the date of a liquidation, dissolution or winding up, or
any event deemed to be a liquidation, dissolution or winding up pursuant to the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the Determination
Date.


 


1.3           Company
Acknowledgment.  The Company will, at
the time of the exercise of this Warrant, upon the request of the holder hereof
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise
in accordance with the provisions of this Warrant. If the holder


 


2

















 


shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such rights.


 


1.4           Trustee
for Warrant Holders.  In the event
that a bank or trust company shall have been appointed as trustee for the holders
of this Warrant pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.


 


1.5           Common
Stock Sale Limitation. 
Notwithstanding anything contained herein to the contrary, the Holder
shall not be entitled to sell any shares of Common Stock issued upon exercise
of this Warrant, in whole or in part, prior to the date that is two hundred
seventy (270) days after the date hereof. 
The limitation described in this Section 1.5 shall automatically
become null and void without any notice to any Company upon the occurrence and
during the continuance of an Event of Default.


 


2.             Procedure
for Exercise.


 


2.1           Delivery
of Stock Certificates, Etc., on Exercise. 
The Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such shares in
accordance herewith.  As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.


 


2.2           Exercise.


 


(a)           Payment
may be made either (i) in cash or by certified or official bank check
payable to the order of the Company equal to the applicable aggregate Exercise
Price, (ii) by delivery of this Warrant, or shares of Common Stock and/or
Common Stock receivable upon exercise of this Warrant in accordance with the
formula set forth in subsection (b) below, or (iii) by a
combination of any of the foregoing methods, for the number of Common Shares
specified in such Exercise Notice (as such exercise number shall be adjusted to
reflect any adjustment in the total number of shares of Common Stock issuable
to the Holder per the terms of this Warrant) and the Holder shall thereupon


 


3

















 


be entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.


 


(b)           Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share of
Common Stock is greater than the Exercise Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being exercised) by surrender of this Warrant
at the principal office of the Company together with the properly endorsed
Exercise Notice in which event the Company shall issue to the Holder a number
of shares of Common Stock computed using the following formula:


 


	
  X=

  	
   

  	
  Y(A-B)

  	
   

  
	
   

  	
   

  	
  A

  	
   

  
	
   

  	
   

  	
   

  
	
  Where X =

  	
   

  	
  the number of
  shares of Common Stock to be issued to the Holder

  
	
   

  	
   

  	
   

  
	
  Y =

  	
   

  	
  the number of
  shares of Common Stock purchasable under this Warrant or, if only a portion
  of this Warrant is being exercised, the portion of this Warrant being
  exercised (at the date of such calculation)

  
	
   

  	
   

  	
   

  
	
  A =

  	
   

  	
  the Fair Market
  Value of one share of the Company’s Common Stock (at the date of such
  calculation)

  
	
   

  	
   

  	
   

  
	
  B =

  	
   

  	
  the Exercise
  Price per share (as adjusted to the date of such calculation)

  



 


3.             Effect
of Reorganization, Etc.; Adjustment of Exercise Price.


 


3.1           Reorganization,
Consolidation, Merger, Etc.  In case
at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.


 


3.2           Dissolution.  In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be delivered to the
Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder pursuant to Section 3.1, or, if the
Holder shall so instruct the


 


4

















 


Company, to a bank or trust company specified by the Holder and having
its principal office in New York, NY as trustee for the Holder.


 


3.3           Continuation
of Terms.  Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force
and effect and the terms hereof shall be applicable to the shares of stock and
other securities and property receivable on the exercise of this Warrant after
the consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may be,
and shall be binding upon the issuer of any such stock or other securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4.  In the event this
Warrant does not continue in full force and effect after the consummation of
the transactions described in this Section 3, then the Company’s
securities and property (including cash, where applicable) receivable by the
Holder will be delivered to the Holder or the Trustee as contemplated by Section 3.2.


 


4.             Extraordinary
Events Regarding Common Stock.  In
the event that the Company shall (a) issue additional shares of the Common
Stock as a dividend or other distribution on outstanding Common Stock or any
preferred stock issued by the Company, (b) subdivide its outstanding
shares of Common Stock, (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Exercise Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Exercise Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such event, and
the product so obtained shall thereafter be the Exercise Price then in effect.
The Exercise Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this Section 4.  The number of shares of Common Stock that the
holder shall thereafter, on the exercise hereof as provided in Section 1,
be entitled to receive shall be adjusted to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4) be issuable on such exercise by a fraction
of which (a) the numerator is the Exercise Price that would otherwise (but
for the provisions of this Section 4) be in effect, and (b) the
denominator is the Exercise Price in effect on the date of such exercise
(taking into account the provisions of this Section 4).


 


5.             Certificate
as to Adjustments.  In each case of
any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common Stock
(or Other Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed to
be outstanding, and (c) the Exercise Price and the number of shares of
Common Stock to be received upon exercise


 


5

















 


of this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this Warrant.  The Company will forthwith mail a copy of
each such certificate to the holder and any Warrant agent of the Company
(appointed pursuant to Section 11 hereof).


 


6.             Reservation
of Stock, Etc., Issuable on Exercise of Warrant.  The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of this
Warrant, shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of this Warrant.


 


7.             Assignment;
Exchange of Warrant.  Subject to
compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”)
in whole or in part.  On the surrender
for exchange of this Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, a legal opinion from
the Transferor’s counsel (at the Company’s expense) that such transfer is
exempt from the registration requirements of applicable securities laws, the
Company at its expense (but with payment by the Transferor of any applicable
transfer taxes) will issue and deliver to or on the order of the Transferor
thereof a new Warrant of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”),
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant so surrendered
by the Transferor.


 


8.             Replacement
of Warrant.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of
any such mutilation, on surrender and cancellation of this Warrant, the Company
at its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.


 


9.             Registration
Rights.  The Holder has been granted
certain registration rights by the Company. 
These registration rights are set forth in a Registration Rights
Agreement entered into by the Company and Holder dated as of the date hereof,
as the same may be amended, modified and/or supplemented from time to time.


 


10.           Maximum
Exercise.  Notwithstanding anything
contained herein to the contrary, the Holder shall not be entitled to exercise
this Warrant in connection with that number of shares of Common Stock which
would exceed the difference between (i) 4.99% of the issued and
outstanding shares of Common Stock and (ii) the number of shares of Common
Stock beneficially owned by the Holder. 
For purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.  The limitation described in the first
sentence of this Section 10 shall automatically become null and void
following notice to the Company upon the occurrence and during the continuance
of an Event of Default (as defined in the Security Agreement dated as of the
date hereof among the Holder, the Company


 


6

















 


and various subsidiaries of the Company (as amended, modified, restated
and/or supplemented from time to time, the “Security Agreement”)), or upon 75
days prior notice to the Company.


 


11.           Warrant
Agent.  The Company may, by written
notice to the each Holder of the Warrant, appoint an agent for the purpose of
issuing Common Stock (or Other Securities) on the exercise of this Warrant
pursuant to Section 1, exchanging this Warrant pursuant to Section 7,
and replacing this Warrant pursuant to Section 8, or any of the foregoing,
and thereafter any such issuance, exchange or replacement, as the case may be,
shall be made at such office by such agent.


 


12.           Transfer
on the Company’s Books.  Until this
Warrant is transferred on the books of the Company, the Company may treat the
registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.


 


13.           Notices,
Etc.  All notices and other
communications from the Company to the Holder shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such Holder or, until any such Holder
furnishes to the Company an address, then to, and at the address of, the last
Holder who has so furnished an address to the Company.


 


14.           Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.  ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY
IN STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF
NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS
PROVISION AND BRING AN ACTION OUTSIDE THE STATE OF NEW YORK.  The individuals executing this Warrant on
behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury.  The prevailing
party shall be entitled to recover from the other party its reasonable
attorneys’ fees and costs.  In the event
that any provision of this Warrant is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Warrant.  The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof.  The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision hereof.  The Company
acknowledges that legal counsel participated in the preparation of this Warrant
and, therefore, stipulates that the rule of construction that ambiguities
are to be resolved against the drafting party shall not be applied in the
interpretation of this Warrant to favor any party against the other party.


 


[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]


 


7

















 


IN WITNESS WHEREOF, the Company has executed this
Warrant as of the date first written above.


 


	
   

  	
  SMALL WORLD KIDS, INC.

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							



 


8

















 


EXHIBIT A


 


FORM OF
SUBSCRIPTION


(To Be Signed Only On Exercise Of Warrant)


 


TO:                            Small
World Kids, Inc.

5711 Buckingham Parkway 

Culver City, CA 90230


 


Attention:              Chief
Financial Officer


 


The undersigned, pursuant to the provisions set forth
in the attached Warrant (No.      ), hereby
irrevocably elects to purchase (check applicable box):


 


	
  o

  	
   

  	
                 
  shares of the common stock covered by such warrant; or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  the maximum number of shares of common
  stock covered by such warrant pursuant to the cashless exercise procedure

  
	
   

  	
   

  	
  set forth in Section 2.

  



 


The undersigned herewith makes payment of the full
Exercise Price for such shares at the price per share provided for in such
Warrant, which is $                   .  Such payment takes the form of (check
applicable box or boxes):


 


	
  o

  	
   

  	
  $                  in lawful money of the United States; and/or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  the cancellation of such portion of the
  attached Warrant as is exercisable for a total of                 
  shares of Common

  
	
   

  	
   

  	
  Stock (using a Fair Market Value of $               per share for purposes of this calculation); and/or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  the cancellation of such number of shares
  of Common Stock as is necessary, in accordance with the formula set forth

  
	
   

  	
   

  	
  in Section 2.2, to exercise this
  Warrant with respect to the maximum number of shares of Common Stock
  purchasable pursuant to the cashless exercise procedure set forth in
  Section 2.

  



 


The undersigned requests that the certificates for
such shares be issued in the name of, and delivered to
                                                                                                                                
whose address is                                                                                                                                                                                  .


 


The undersigned represents and warrants that all
offers and sales by the undersigned of the securities issuable upon exercise of
the within Warrant shall be made pursuant to registration of the Common Stock
under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant
to an exemption from registration under the Securities Act.


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform to name of holder
  as

  specified on the face of the Warrant)

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


9

















 


EXHIBIT B


 


FORM OF
TRANSFEROR ENDORSEMENT


(To Be Signed Only On Transfer Of Warrant)


 


For value received, the undersigned hereby sells,
assigns, and transfers unto the person(s) named below under the heading “Transferees”
the right represented by the within Warrant to purchase the percentage and
number of shares of Common Stock of Small World Kids, Inc. into which the
within Warrant relates specified under the headings “Percentage Transferred”
and “Number Transferred,” respectively, opposite the name(s) of such person(s)
and appoints each such person Attorney to transfer its respective right on the
books of Small World Kids, Inc. with full power of substitution in the
premises.


 


	
  Transferees

  	
   

  	
  Address

  	
   

  	
  Percentage

  Transferred

  	
   

  	
  Number

  Transferred

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform to name of holder
  as

  specified on the face of the Warrant)

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIGNED IN THE PRESENCE OF:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  [TRANSFEREE]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
							



 


10