kl12079_ex10-1.htm


    
      

    

     

    
      Exhibit
10.1


      


      


      


      ASSET
PURCHASE AGREEMENT

      


      dated
as of December 31, 2008

      


      among

      


      KIDVILLE
JWT, LLC,

      


      KIDVILLE,
INC.,

      


      JWT
KIDS INC.,

      


      JWT
IP, INC.,

      


      and

      


      ASH
ROBINSON

       

       

       

      


       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      ASSET
PURCHASE AGREEMENT

       

      This
ASSET PURCHASE AGREEMENT is dated as of December 31, 2008 (this “Agreement”) among
Kidville JWT, LLC, a New York limited liability Company (the “Purchaser”),
Kidville, Inc., a Delaware corporation (the “Kidville”), JWT Kids,
Inc., a California corporation (“JWT Kids”) and JWT
IP, Inc., a California corporation (“JWT IP”) (JWT Kids
and JWT IP are sometimes each hereinafter referred to as a “Seller” and
collectively as, the “Sellers”), and Ash
Robinson (“Robinson” and/or
“Stockholder”).

       

      RECITALS

       

      WHEREAS,
JWT Kids is engaged in operating and franchising the JW Tumbles Kid’s gym
concept (the “Concept”) and JWT IP
is a single purpose entity and owner of all of the Intellectual Property
relating to the Concept (collectively, the “Business”);
and

       

      WHEREAS,
the Purchaser desires to purchase from the Sellers and each Seller desires to
sell to the Purchaser certain of the business, goodwill and underlying assets in
connection with the Business, which assets are further described herein, and
each Seller desires to transfer to the Purchaser and the Purchaser desires to
assume from each Seller certain liabilities in connection with such assets, all
upon the terms and conditions set forth in this Agreement.

       

      NOW,
THEREFORE, in consideration of the representations, warranties and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

       

       

                 ARTICLE
I                                  

       

       

      CERTAIN
DEFINITIONS; CONSTRUCTION

       

       

      1.1   Certain
Definitions.

       

       

                     
(a) The
following terms, when used in this Agreement, shall have the respective meanings
ascribed to them below:

       

      “Action” means any
claim, action, suit, inquiry, hearing, investigation or other
proceeding.

       

      “Additional
Consideration” has the meaning set forth in Section 2.4(b).

       

      “Affiliate” means,
with respect to any Person, any other Person that, directly or indirectly,
through one or more intermediaries, Controls, is Controlled by or is under
common Control with, such Person.  For purposes of this definition,
“Control”
(including, with correlative meanings, the terms “Controlled by” and “under
common Control with”) means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of stock, as trustee or executor, by Contract or
credit arrangement or otherwise.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      “Agreement” has the
meaning set forth in the preamble hereto.

       

      “Ancillary Agreements”
means, collectively, the Bill of Sale and General Assignment, the Assumption
Agreement, the Trademark Assignment, the Copyright Assignment, the Domain Name
Assignment and the Non-Compete Agreements.

       

      “Assets” has the
meaning set forth in Section 2.1.

       

      “Assigned Contracts”
has the meaning set forth in Section 2.1(a).

       

      “Assumed Liabilities”
has the meaning set forth in Section 2.3(a).

       

      “Assumption Agreement”
has the meaning set forth in Section 3.2(e).

       

      “Benefit Plan” means
any Plan established or to which contributions have at any time been made by a
Seller or any predecessor thereof, under which any employee, former employee or
director of a Seller, or any beneficiary thereof, is covered, is eligible for
coverage or has benefit rights in respect of service to a Seller.

       

      “Bill of Sale” has the
meaning set forth in Section 3.2(d).

       

      “Board” means the
Board of Directors of each Seller, respectively.

       

      “Business” has the
meaning set forth in the recitals hereto.

       

      “Business Day” means
any day other than Saturday, Sunday or any day on which banks in New York, New
York are required or authorized to be closed.

       

      “Cash Purchase
Consideration” means $500,000.

       

      “Claim Notice” means
written notification pursuant to Section 9.2(a) of a Third-Party Claim as to
which indemnity pursuant to Section 9.1 is sought by an Indemnified Party,
enclosing a copy of all papers served, if any, and specifying the nature of and
basis for such Third-Party Claim and for the Indemnified Party’s claim against
the Indemnifying Party under Section 9.1, together with the amount or, if not
then reasonably ascertainable, the estimated amount, determined in good faith,
of the Indemnified Party’s Losses in respect of such Third-Party
Claim.

       

      “Closing” has the
meaning set forth in Section 3.1.

       

      “Closing Date” has the
meaning set forth in Section 3.1.

       

      “COBRA” has the
meaning set forth in Section 4.17.

       

      “Code” means the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.

       

      “Common Stock” means
Kidville’s common stock, par value $0.001 per share.

       

       

       

      
        
          2

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Content” means any
text, images, video, audio (including music used in time relation with text,
images or video), data, products, services, advertisements, promotions, links,
banners, signage, applets, pointers, technology and Software.

       

      “Contract” means any
agreement, Lease, debenture, note, bond, evidence of Indebtedness, mortgage,
indenture, security agreement, option or other contract or commitment (whether
written or oral).

       

      “Copyright Assignment”
has the meaning set forth in Section 3.2(h).

       

      “Dispute Notice” means
a written notice provided by any party against which indemnification is sought
pursuant to Section 9.1 to the effect that such party disputes its
indemnification obligation under this Agreement.

       

      “Dispute Period” means
the period ending thirty calendar days following receipt by an Indemnifying
Party of either a Claim Notice or an Indemnity Notice.

       

      “Domain Name
Assignment” has the meaning set forth in Section 3.2(f).

       

      “Employees” has the
meaning set forth in Section 4.18(b).

       

      “Environment” means
all air, surface water, groundwater or land (including land surface or
subsurface) including all fish, wildlife and biota and all other natural
resources.

       

      “Environmental Law”
means any and all Laws, Orders or Contracts with any Governmental Entity,
relating to the protection of health and the Environment, worker health and
safety, and/or governing the handling, use, generation, treatment, storage,
transportation, disposal, manufacture, distribution, formulation, packaging,
labeling or Release of any Hazardous Materials.

       

      “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder.

       

      “ERISA Affiliate”
means any Person who is or was a member of a controlled group (within the
meaning of section 412(n)(6)(B) of the Code) that includes, or at any time
included, a Seller or any of its respective predecessors.

       

      “Exchange Act” has the
meaning set forth in Section 4.2.

       

      “Excluded Assets” has
the meaning set forth in Section 2.2.

       

      “Financial Statements”
has the meaning set forth in Section 4.5(a).

       

      “Franchise Agreement”
means, with respect to the Sellers, a Contract detailing the rights and
obligations of a franchisor of the Concept.

       

       “FTC Disclosures”
shall have the meaning set forth in Section 4.28(a).

       

       

       

      
        
          3

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      “GAAP” means United
States generally accepted accounting principles as in effect from time to time,
consistently applied throughout the specified period and all prior comparable
periods.

      
 

      “Governmental Entity”
means any government or political subdivision thereof, whether foreign or
domestic, federal, state, provincial, county, local, municipal or regional, or
any other governmental entity, any agency, authority, department, division or
instrumentality of any such government, political subdivision or other
governmental entity, any court, arbitral tribunal or arbitrator, and any
nongovernmental regulating body to the extent that the rules, regulations or
orders of such body have the force of Law.

       

      “Hazardous Material”
means petroleum, petroleum hydrocarbons or petroleum products, petroleum
by-products, radioactive materials, asbestos or asbestos-containing materials,
gasoline, diesel fuel, pesticides, radon, urea formaldehyde, lead or
lead-containing materials, polychlorinated biphenyls and any other chemicals,
materials, substances or wastes in any amount or concentration which are now or
hereafter become defined as or included in the definition of “hazardous
substances,” “hazardous materials,” “hazardous wastes,” “extremely hazardous
wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,”
“pollutants,” “regulated substances,” “solid wastes” or “contaminants” or words
of similar import under any Environmental Law.

       

      “Indebtedness” means,
with respect to any Person:  (i) all obligations, whether or not
contingent, of such Person for borrowed money (including reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers’
acceptances, whether or not matured), (ii) all obligations of such Person
evidenced by notes, bonds, debentures, capitalized leases or similar
instruments, (iii) all obligations of such Person representing the balance
of deferred purchase price of property or services, (iv) all interest rate
and currency swaps, caps, collars and similar agreements or hedging devices
under which payments are obligated to be made by such Person, whether
periodically or upon the happening of a contingency, (v) all indebtedness
created or arising under any conditional sale or other title retention Contract
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such Contract in the event of default are
limited to repossession or sale of such property), (vi) all indebtedness
secured by any Lien on any property or asset owned or held by such Person
regardless of whether the indebtedness secured thereby shall have been assumed
by such Person or is non-recourse to the credit of such Person, and
(vii) all indebtedness referred to in the immediately preceding
clauses (i) through (vi) of any other Person that is guaranteed,
directly or indirectly, by such Person.

       

      “Indemnified Party”
means any Person claiming indemnification under any provision of Article
IX.

       

      “Indemnifying Party”
means any Person against whom a claim for indemnification is being asserted
under any provision of Article IX.

       

      “Indemnity and Offset
Escrowed Securities” has the meaning set forth in Section
2.4(c).

       

       

       

      
        
          4

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      “Indemnity Notice”
means written notification pursuant to Section 9.2(b) of a claim for
indemnification under Article IX by an Indemnified Party, specifying the nature
of and basis for such claim, together with the amount or, if not then reasonably
ascertainable, the estimated amount, determined in good faith, of the
Indemnified Party’s Losses in respect of such claim.

       

      “Independent Accounting
Firm” means (i) an independent certified public accounting firm in the
United States of international recognition mutually acceptable to the Sellers
and the Purchaser or (ii) if the Sellers and the Purchaser are unable to
agree on such a firm, then each of the Purchaser and the Sellers shall select
one such firm and those two firms shall select a third firm, which third firm
shall be the “Independent Accounting Firm”.

       

      “Intellectual
Property” means:  all (i) discoveries and inventions (whether
patentable or unpatentable and whether or not reduced to practice), patents,
patent applications (either filed or in preparation for filing) and statutory
invention registrations, including reissues, divisions, continuations,
continuations in part, extensions and reexaminations thereof, all rights therein
provided by international treaties or conventions, and all improvements thereto,
(ii) trademarks, service marks, trade dress, logos, trade names, corporate
names, and other source identifiers (whether or not registered) including all
common law rights, and registrations and applications for registration (either
filed or in preparation for filing) thereof, all rights therein provided by
international treaties or conventions, and all reissues, extensions and renewals
of any of the foregoing, (iii) Internet Rights and all Content embodied in all
World Wide Web sites and World Wide Web pages found at URLs containing such
Internet Rights, (iv) all copyrightable works, copyrights (whether or not
registered) and registrations and applications for registration thereof, all
rights therein provided by international treaties or conventions, and all
extensions and renewals of any of the foregoing, (v) confidential and
proprietary information, trade secrets, know-how (whether patentable or
unpatentable and whether or not reduced to practice), processes and techniques,
and research and development information, ideas, technical data, designs,
drawings and specifications, (vi) Software and Technology, (vii) coded
values, formats, data (including data collected from, through or otherwise by
means of the Internet Rights or the Internet) and historical or current
databases, in each case whether or not copyrightable, (viii) other proprietary
rights relating to any item described in the immediately preceding
clauses (i) through (vii), including associated goodwill, remedies against
infringements thereof and rights of protection of an interest therein under the
Laws of all jurisdictions, and (ix) copies and tangible embodiments of any item
described in the immediately preceding clauses (i)
through (viii).

       

      “Internet Rights” has
the meaning set forth in Section 4.14(d).

       

      “Inventory” has the
meaning set forth in Section 2.1(j).

       

      “Kidville” has the
meaning set forth in the preamble hereto.

       

       

       

      
        
          5

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      “Knowledge” means the
actual or constructive knowledge after due inquiry of Robinson.

       

      “Laws” means all laws,
statutes, rules, regulations, ordinances and other pronouncements having the
effect of law of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision or of any
Governmental Entity.

       

      “Lease” means all oral
and written leases, subleases and other use and occupancy agreements (and any
amendments, renewals, supplements, modifications or extensions thereto), in each
case affecting or relating to real property under which either Seller is a party
or to which any of its property is bound.

       

      “Liability” means all
Indebtedness, obligations and other liabilities of a Person, whether absolute,
accrued, contingent, fixed or otherwise, and whether due or to become
due.

       

      “License Agreement”
has the meaning set forth in Section 3.2(k).

       

      “Lien” means any
mortgage, pledge, assessment, security interest, lease, lien, adverse claim,
levy, charge or other encumbrance of any kind, whether voluntary or involuntary
(including any conditional sale Contract, title retention Contract or Contract
committing to grant any of the foregoing).

       

      “Loss” means any and
all damages, fines, fees, penalties, deficiencies, losses and expenses
(including all interest, court costs, fees and reasonable expenses of attorneys,
accountants and other experts or other expenses of litigation or other
proceedings or of any claim, default or assessment or pursuit of rights to
indemnification).

       

      “Material Adverse
Effect” means any material adverse effect on the condition (financial or
otherwise), operations, business, prospects, assets or results of operations of
a Person.

       

      “Non-Compete
Agreements” has the meaning set forth in Section 3.2(j).

       

      “Non-Disclosure
Agreement” means that certain letter agreement dated September 24, 2008
between Kidville and the Sellers.

       

      “Options” means all
issued and outstanding options and warrants to purchase Common
Stock.

       

      “Order” means any
writ, judgment, decree, injunction or similar order of any Governmental Entity
(in each case whether preliminary or final).

       

      “Performance Escrowed
Securities” has the meaning set forth in Section 2.4(d).

       

      “Performance Goals”
has the meaning set forth in Section 2.4(d).

       

       

       

      
        
          6

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      “Permits” means all
permits, licenses, franchises, exceptions, registrations, certificates,
approvals, consents or other similar authorizations affecting, or relating in
any way to, the Assets or the Business.

       

      “Permitted Liens”
means (i) any Lien for Taxes which are not yet due or delinquent, or which
are being contested in good faith by appropriate proceedings and, if so
contested, for which adequate reserves have been established in accordance with
GAAP, (ii) any minor imperfection of title, easement, right of way or similar
Lien as normally exists with respect to property similar in character to the
property affected thereby and which, individually or in the aggregate with other
such Liens, does not impair the value or marketability of the property subject
to such Lien or materially interfere with the use of such property in the
conduct of the Business and which does not secure obligations for borrowed money
and (iii) Liens imposed by any Law, such as mechanic’s, materialman’s,
landlord’s, warehouseman’s and carrier’s Liens, securing obligations incurred in
the ordinary course of business consistent with past practice which are not yet
overdue or which are being diligently contested in good faith by appropriate
proceedings and, with respect to such obligations which are being contested, for
which a Seller has established adequate reserves in accordance with
GAAP.

       

      “Person” means any
individual, general or limited partnership, limited liability company,
corporation, association, joint stock company, trust, estate, joint venture,
unincorporated organization, Governmental Entity or any other entity of any
kind.

       

      “Plan” means any
bonus, incentive compensation, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock appreciation
rights, phantom stock, leave of absence, layoff, vacation, day or dependent
care, legal services, cafeteria, life, health, accident, disability, workmen’s
compensation or other insurance, severance, separation or other employee benefit
plan, practice, policy or arrangement of any kind, whether written or oral, or
whether for the benefit of a single individual or more than one individual,
including any “employee benefit plan” within the meaning of Section 3(3) of
ERISA (whether or not subject thereto).

       

      “Purchase
Consideration” means the Cash Purchase Consideration and Shares, subject
to adjustment pursuant to Sections 2.4(c) and 2.4(d).

       

      “Purchaser” has the
meaning set forth in the preamble hereto.

       

      “Recipients” has the
meaning set forth in Section 6.10.

       

      “Release” means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of a Hazardous Material into the
Environment.

       

      “Representatives”
means, with respect to any Person, the directors, officers, employees, counsel,
accountants and other authorized representatives of such Person.

       

      “Resolution Period”
means the period ending thirty days following receipt by an Indemnified Party of
a Dispute Notice.

       

       

       

      
        
          7

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      “Retained Liabilities”
has the meaning set forth in Section 2.3(b).

       

      “Robinson” has the
meaning set forth in the preamble hereto.

       

      “SEC” shall mean the
United States Securities and Exchange Commission.

       

      “Securities Act” means the Securities Act
of 1933, as amended.

       

      “Seller” and “Sellers” have the
meaning set forth in the preamble hereto.

       

      “Shares” means the
2,000,000 shares of Common Stock comprising a portion of the Purchase
Consideration, subject to adjustment pursuant to Sections 2.4(c) and
2.4(d).

       

      “Site” means any real
property currently or previously owned, leased or operated by the Sellers or any
of its or their predecessors, including all soil, subsoil, surface water and
groundwater thereat.

       

      “Software” means all
computer software, including source code, object code, machine-readable code,
HTML, program listings, comments, user interfaces, menus, buttons and icons, and
all files, data, manuals, design notes and other items and documentation related
thereto or associated therewith.

       

      “Stockholder” has the
meaning set forth in the preamble hereto.

       

      “Stockholder Approval”
means the approval and authorization by the Sellers’ stockholders of the
transactions contemplated hereby and by the Ancillary Agreements as required
under the California Corporations Code and the Sellers’ certificates of
incorporation and bylaws.

       

      “Subsidiary” means,
with respect to any Person, any corporation, partnership, limited liability
company, joint venture or other legal entity of any kind of which such Person
(either alone or through or together with one or more of its other
Subsidiaries), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are (i) generally entitled to vote
for the election of the board of directors or other governing body of such legal
entity or (ii) generally entitled to share in the profits or capital of
such legal entity.

       

      “Tax Returns” means
all returns and reports (including elections, claims, declarations, disclosures,
schedules, estimates, computations and information returns) required to be
supplied to a Tax authority in any jurisdiction relating to Taxes.

       

      “Taxes” means all
federal, state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever together with all interest, penalties, fines and additions to
tax imposed with respect to such amounts and any interest in respect of such
penalties and additions to tax.

       

       

       

      
        
          8

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      “Taxing Authority”
means any governmental agency, board, bureau, body, department or authority of
any United States federal, state or local jurisdiction or any foreign
jurisdiction, having or purporting to exercise jurisdiction with respect to any
Tax.

       

      “Technology” means the
plans, designs, research data, inventions (whether patentable or unpatentable
and whether or not reduced to practice), trade secrets and other proprietary
know-how, recipes, formulae and manufacturing production and processes,
techniques, operating manuals, drawings, technology, manuals, data, records,
procedures, research and development records, supplier lists, pricing and cost
information, business and marketing plans and proposals, and all licenses or
other rights to use any technical information, know-how and trademarks of others
developed for the Business, used or held for use in connection with the Business
or necessary to conduct the Business.

       

      “Territorial Rights”
shall have the meaning set forth in Section 4.28(j).

       

      “Third-Party Claim”
has the meaning set forth in Section 9.2(a).

       

      “Trademark Assignment”
has the meaning set forth in Section 3.2(g).

       

      “Transaction
Proposals” has the meaning set forth in Section 6.6.

       

      “Transfer Taxes” means
sales, use, value added, excise, registration, documentary, stamp, transfer,
real property transfer, recording, gains, stock transfer and other similar Taxes
and fees.

       

      “Transferred
Employees” has the meaning set forth in Section 6.7(a).

       

      “Unearned Revenues”
has the meaning set forth in Section 2.1(j).

       

       

      (b) Construction.  For
purposes of this Agreement, except as otherwise expressly provided herein or
unless the context otherwise requires:  (i) words using the
singular or plural number also include the plural or singular number,
respectively, and the use of any gender herein shall be deemed to include the
other genders, (ii) references herein to “Articles,” “Sections,”
“subsections” and other subdivisions without reference to a document are to the
specified Articles, Sections, subsections and other subdivisions of this
Agreement, (iii) a reference to a subsection without further reference
to a Section is a reference to such subsection as contained in the same
Section in which the reference appears, and this rule shall also apply to other
subdivisions within a Section or subsection, (iv) the words “herein,”
“hereof,” “hereunder,” “hereby” and other words of similar import refer to this
Agreement as a whole and not to any particular provision, (v) the words
“include,” “includes” and “including” are deemed to be followed by the phrase
“without limitation” and (vi) all accounting terms used and not expressly
defined herein have the respective meanings given to them under
GAAP.

       

       

       

      
        
          9

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

                  ARTICLE
II                                  

       

       

      PURCHASE
AND SALE OF ASSETS

       

       

      2.1   Purchase and Sale of
Assets.  Upon the terms and conditions set forth in this
Agreement, and in consideration of the payment by the Purchaser of the Purchase
Consideration and the assumption by the Purchaser of the Assumed Liabilities,
the Sellers shall each sell, convey, transfer, assign, grant and deliver to the
Purchaser, and the Purchaser shall purchase, acquire and accept from the
Sellers, at the Closing, all of the Sellers’ right, title and interest in and to
the Concept and all assets and properties of every kind, nature, character and
description (whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, which either have been created in connection with the Concept
or are operated, owned, leased, used or held for use by either Seller in
connection with the Concept, other than the Excluded Assets (collectively, the
“Assets”), free
and clear of all Liens, other than the Permitted Liens.  The Assets
include all of the Sellers’ right, title and interest in and to the
following:

       

       

      (a) all
Contracts and their associated intangible rights related to the Concept,
including, but not limited to, author, producer, contributor and
work-made-for-hire Contracts, Software development Contracts, Software licenses,
site licenses, performance licenses, Franchise Agreements, author permissions
and other similar Contracts, license, sub-license, subsidiary rights and
translation rights Contracts (including all compensation for subsidiary rights
payable to a Seller after the Closing Date), distribution agreements, art and
photography agreements and licenses, and vendor, printing and supply agreements,
and all Contracts set forth on Schedule 2.1(a)
(collectively, the “Assigned
Contracts”);

       

       

      (b) all
original and digital artwork, film plates, film, camera-ready copy, master
tapes, CD-ROM masters, source code, documentation, archived materials, files (in
both electronic and hard copy format) and other reproductive materials related
to the Concept, including all Software embodied in the Concept or currently
being developed by or on behalf of either Seller for use in connection with the
Concept, illustrations and any other Content and any revisions or revision plans
thereof in print or digital form;

       

       

      (c) all
sales, support and promotional materials, advertising materials and production
and marketing files and records, in each case related to the
Concept;

       

      (d) all
customer lists and credit records, adoption lists or similar records of all
sales and potential sales of the Concept, editorial, sales, promotion, royalty,
manufacturing, production and permissions and rights files and records, and all
other files and records related to the Concept;

       

      (e) all
Intellectual Property related to the Concept or the Business;

       

      (f) all
manuscripts relating to the Business;

       

      (g) all
prepaid expenses and advances paid by the Sellers prior to the Closing Date in
respect of the Concept;

       

       

       

      
        
          10

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (h) all
production equipment, instruments, furniture and office products, computer
hardware and other similar fixed and tangible assets;

       

      (i) all real
property leased by the Sellers;

       

      (j) the
entire inventory of the Sellers, including, but not limited to, all assembled
and salable or otherwise useable inventory of, all sample materials, all
materials and supplies, all work in process relating to the Concept, whether
located at either Sellers’ or third-party facilities (collectively, the “Inventory”);

       

      (k) all
research data concerning historic and current research and development efforts
related to the Concept;

       

      (l) all cash,
commercial paper, certificates of deposit, bank deposits, treasury bills and
other cash equivalents relating to unearned fees and other revenues relating to
advanced sales of classes, parties, memberships and franchise sales, as set
forth on Schedule 2.1(l) above (the “Unearned
Revenues”).

       

      (m) any other
assets, properties or rights of either Seller related to the Concept, including
JWT Kids’ 51% limited liability company membership interest in Kids Rock, LLC, a
California limited liability company except to the extent identified herein as
an Excluded Asset.

       

      2.2   Excluded
Assets.  Notwithstanding anything in this Agreement to the
contrary, the following assets and properties of the Sellers (the “Excluded Assets”)
shall be excluded from, and shall not constitute, Assets:  

       

      (a) cash,
commercial paper, certificates of deposit, bank deposits, treasury bills and
other cash equivalents, other than Unearned Revenues;

       

      (b) all
insurance policies relating to the operation of the Business;

       

      (c) all of
the Sellers’ right, title and interest in and to those items set forth on Schedule
2.2;

       

      (d) all
assets owned or held by any Benefit Plan;

       

      (e) all
receivables with respect to Business for goods sold and shipped or services
performed prior to the Closing Date; provided, however, in the event Purchaser
shall receive any payments due Sellers with respect to the foregoing, Purchaser
shall promptly pay over to Sellers such receivables received and, provided,
further, the Sellers hereby acknowledge that Purchaser shall not be legally
responsible to Sellers for the collection of any such receivables;

       

      (f) all real
property owned by the Sellers;

       

      (g) the
corporate minute books and stock transfer books of the Sellers; and

       

       

      
        
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      (h) all of
the Sellers’ right, title and interest in and to this Agreement.

       

      2.3   Assumed and Retained
Liabilities.

       

      (a) Assumed
Liabilities.  The Purchaser shall assume and discharge when due
all obligations (A) of the Sellers under the Assigned Contracts arising and to
be performed on or after the Closing Date, other than (i) any such obligations
arising as a result of default by either Seller or its or their agents or
Affiliates occurring prior to the Closing Date and (ii) royalty obligations and
licensing fees with respect to the Business accruing prior to the Closing; and
(B)  arising from the conduct of the Business after the Closing Date
(collectively, the “Assumed
Liabilities”).  In particular, and not by way of limitation,
Purchaser and Purchaser’s Affiliates will honor all of Sellers’ existing
franchise agreements as well as the “protected territories” as may be set forth
therein.

       

      (b) Retained
Liabilities.  Except as expressly provided in Section 2.3(a),
the Purchaser assumes no Liabilities relating to the Business, the Assets or the
Sellers.  All such Liabilities, including without limitation
Liabilities of any kind with respect to employees, compensation, Plans, current
or long-term debt, accrued interest, Taxes (including any Taxes that may arise
from the execution of this Agreement or the consummation of the transactions
contemplated hereby), royalty obligations and licensing fees accruing prior to
the Closing, Actions, and claims for injuries to Persons or property or damages
to the Environment (collectively, the “Retained
Liabilities”), are, and shall at all times remain, the Liabilities of the
Sellers.  The Sellers hereby covenant to discharge in full in a timely
manner all of the Retained Liabilities; provided, however, that nothing
contained herein shall prevent the Sellers from contesting in good faith any of
the Retained Liabilities against any third party so long as such contest does
not result in a claim of liability or Lien against the Purchaser or any of its
assets and properties.

       

       

      2.4   Purchase Consideration;
Additional Consideration; Holdbacks; Right of Offset;
Allocation.  

       

      (a) Purchase
Consideration.

       

      (i) Payment of the Cash Purchase
Price.  The Purchaser shall pay the Cash Purchase Price at the
Closing by wire transfer of immediately available funds to the Sellers as set
forth in Schedule 2.4(a).

       

      (ii) Issuance of the
Shares.  At the Closing, Kidville shall deliver to Sellers, as
set forth in Schedule 2.4(a), one or more stock certificates representing the
Shares to be received by Sellers at Closing, or, in the alternative, a copy of
an irrevocable letter of instruction from Kidville to its transfer agent
concerning the issuance and delivery of stock certificates representing the
Shares to be received by Sellers at Closing.

       

      (b) Additional
Consideration. JWT Kids shall have the opportunity to earn additional
consideration (“Additional
Consideration”) based upon the international franchise fees earned by
Purchaser relating directly to franchising the Concept following the Closing
Date, as follows:

       

       

      
        
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      (i) Purchaser
shall pay to JWT Kids fifty percent (50%) of international franchise fees
actually received by Purchaser in connection with the Concept (1) during
the 4-month period immediately following the Closing Date as it relates to the
following franchisee candidates: Matrix Interactive and Catherine Morgan in
China, and Jignesh Ved in Dubai; and (2) during the 3-month period
immediately following the Closing Date for all other international franchise
fees.

       

      (ii) Purchaser
shall pay to JWT Kids seven and one-half percent (7.5%) of international
franchise fees actually received by Purchaser in connection with the Concept
during the 18-month period commencing immediately following the expiration of
the 4-month period described in Section 2.4(b)(i) above.

       

      (c) Indemnification and Offset
Holdback.  As security for the Sellers’ (i) indemnification
obligations under Article IX and (ii) obligations pursuant to Section 6.13,
Purchaser shall hold back ten percent (10.0%) of the Shares to be issued at
Closing (the “Indemnity and Offset
Escrowed Securities”).  The Indemnity and Offset Escrowed
Securities shall be held in escrow pursuant to an escrow agreement in the form
attached hereto as Exhibit A (the
“Escrow Agreement”) and released in accordance with the terms thereof on the
date that is 12 months after the Closing Date, except with respect to a number
of such Indemnity and Offset Escrowed Securities, as applicable, reasonably
determined to be necessary to satisfy any (i) written claim made pursuant to
Article IX and/or (ii) any customer returns, rebates or refunds relating to
products sold and shipped or services performed or to be performed by Sellers
prior to the Closing Date in accordance with Section 6.13 hereto prior to such
release date, which securities shall be held pursuant to the terms hereof until
such claim is fully and finally resolved.

       

      (d) Performance
Holdback.   500,000 of the Shares to be issued at Closing
(the “Performance
Escrowed Securities”) shall be held in escrow pursuant to the Escrow
Agreement and released in accordance with the terms thereof on the date that is
12 months after the Closing Date subject to the Business having earlier achieved
the domestic and international sales and financial goals set forth on Schedule
2.4(d) (the “Performance
Goals”).  Failure of the Business to satisfy the Performance
Goals shall result in cancellation of some or all of the Performance Escrowed
Shares by the Purchaser, in accordance with Schedule 2.4(d).

       

      (e) Right of
Offset.  The Purchaser shall have the right to offset against
the Additional
Consideration, Indemnity and Offset Escrowed Securities, the Performance
Escrowed Securities, or both, and any amounts due and owing to the Purchaser by
the Sellers pursuant to this Agreement or any Ancillary Agreement.

       

      (f) Allocation.  The
sum of the Purchase Consideration and the amount of the Assumed Liabilities
shall be allocated among the Assets and the non-competition covenant set forth
in Section 6.15(a) pursuant to the joint agreement of the Sellers and the
Purchaser prior to the Closing.  Such allocation shall be done in
accordance with Section 1060 of the Code.  The Sellers and the
Purchaser shall each report federal, state, local and other Tax consequences of
the purchase and sale contemplated hereby (including the filing of Internal
Revenue Service Form 8594) in a manner consistent with such allocation, and
neither of them shall take any 

       

       

       

      
        
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      position
in any Tax Return, or other filing, proceeding or audit or otherwise
inconsistent with such allocation.

       

      2.5   Third Party
Consents.  To the extent that any of the Assets is not
assignable without the consent, waiver or approval of another Person and such
consent, waiver or approval has not been obtained before or at the Closing, this
Agreement shall not constitute an assignment or an attempted assignment of such
Asset by either Seller or an assumption or an attempted assumption of such Asset
by the Purchaser.  The Sellers shall use their best efforts to obtain
such consents, waivers and approvals as soon as practicable following the date
hereof and the Purchaser shall cooperate with and assist the Sellers to this
end; provided,
however, that
the Sellers shall take no action to seek such consent, waiver or approval
without prior consultation with or approval by the Purchaser and the Purchaser
shall not be required to pay any sums in connection therewith.  If any
such consent, waiver or approval shall not be obtained (including Carmel Valley
and Point Loma leases), then the Sellers shall cooperate with the Purchaser in
any reasonable arrangement designed to provide the Purchaser with the benefits
intended to be assigned to the Purchaser with respect to the underlying Asset,
including in the case of any Asset that is a Contract, enforcement for the
account of the Purchaser of any and all rights of the Sellers against any other
party to such Contract arising out of the breach, nonfulfillment or cancellation
thereof by such other party or otherwise.

       

       

                    
ARTICLE
III                

      THE
CLOSING

       

       

      3.1   Closing.  The
closing of the transactions contemplated hereby (the “Closing”) shall take
place at Sellers’ offices at 312 South Cedros Avenue, Suite 329,
Solana Beach, California 92075 (and may be conducted by mail or overnight
delivery if the parties so elect, as long as all required deliveries are made to
on or before the Closing Date), commencing at 10:00 a.m. P.S.T., on
the first Business Day immediately following the satisfaction or waiver of all
conditions to the obligations of the parties hereto set forth in Article VII or
such other place or date as the parties hereto may mutually determine in writing
(the day on which the Closing takes place being the “Closing
Date”).

       

      3.2   Delivery of Items by the
Sellers.  The Sellers shall deliver to the Purchaser at the
Closing the items listed below:

       

       

      (a) a
certificate, duly executed by the Secretary of each the Seller, certifying
(i) the satisfaction of the conditions set forth in Section 7.1(d) and
copies of such resolutions adopted by the Board and the Stockholder,
(ii) the certificate of incorporation and bylaws of the Sellers and
(iii) the then-current officers of the Sellers and their respective
positions;

       

      (b) a
certificate, duly executed by an authorized officer of each of the Sellers,
certifying the satisfaction of the conditions set forth in Sections 7.1(a), (b)
and (f);

       

      (c) the
consents and approvals described in Schedule
7.1(e);

       

      (d) the
Escrow Agreement, duly executed by the Sellers;

       

       

      
        
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      (e) a Bill of
Sale and General Assignment (the “Bill of Sale”) for
the Assets, duly executed by each Seller, in the form attached hereto as Exhibit B;

       

      (f) an
Assumption Agreement (the “Assumption
Agreement”) for the Assumed Liabilities, duly executed by each Seller, in
the form attached hereto as Exhibit C;

       

      (g) a Domain
Name Assignment, (the “Domain Name
Assignment”), duly executed by each Seller, in the form attached hereto
as Exhibit D;

       

      (h) a
Trademark Assignment (the “Trademark
Assignment”), duly executed by each Seller, in the form attached hereto
as Exhibit E;

       

      (i) a
Copyright Assignment (the “Copyright
Assignment”), duly executed by each Seller, in the form attached hereto
as Exhibit F;

       

      (j) the
Non-Compete Agreements (the “Non-Compete
Agreements”), duly executed by the Persons identified on Schedule 3.2(i), in
the form attached hereto as Exhibit H;

       

      (k) a Lock-up
Agreement (the “Lock-up Agreement”),
duly executed on behalf of each Seller in the form attached hereto as Exhibit I;

       

      (l) an
Assignment of Membership Interest (the “Assignment of Membership
Interest”) duly executed on behalf of JWT Kids in the form attached
hereto as Exhibit J

       

      (m) releases
(in recordable form), pay-off letters and UCC-3 termination statements (in
recordable form) from all parties holding Liens (other than Permitted Liens)
with respect to any of the Assets;

      (n) a receipt
for the portion of the Purchase Consideration paid at Closing as provided for in
Section 2.4(a); and

       

      (o) such
other documents and instruments as the Purchaser may reasonably
request.

       

      3.3   Delivery of Items by the
Purchaser.  The Purchaser shall deliver to the Sellers at the
Closing the items listed below:

       

      (a) a
certificate, duly executed by the Secretary of the Purchaser, certifying
(i) the satisfaction of the condition set forth in Section 7.2(e) and
(ii) the then-current officers of the Purchaser and their respective
positions;

       

      (b) a
certificate duly executed by an authorized officer of the Purchaser, certifying
the satisfaction of the conditions set forth in Sections 7.2(a) and
(b);

       

      (c) the
Escrow Agreement, duly executed by the Purchaser;

       

       

      
        
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      (d) the
Domain Name Assignments, duly executed by the Purchaser;

       

      (e) the
Trademark Assignments, duly executed by the Purchaser;

       

      (f) the
Copyright Assignments, duly executed by the Purchaser;

       

      (g) the
Assumption Agreement, duly executed by the Purchaser;

       

      (h) the
Non-Compete Agreements, duly executed by the Purchaser;

       

      (i) the
Assignment of Membership Interest, duly executed by the Purchaser;

       

      (j) a wire
transfer of immediately available funds to an account(s) designated by the
Sellers at least five Business Days prior to the Closing Date, constituting the
payment of the Cash Purchase Price due at the Closing;

       

      (k) one or
more stock certificates representing the Shares, or, in the alternative, a copy
of an irrevocable letter of instruction from Kidville to its transfer agent
concerning the issuance and delivery of stock certificates representing
the  Shares; and

       

      (l) such
other documents and instruments as the Sellers may reasonably
request.

       

       

      ARTICLE
IV

      REPRESENTATIONS
AND WARRANTIES OF THE SELLERS AND THE 

      STOCKHOLDERS

       

      Each
Seller and the Stockholder represent and warrant to the Purchaser that the
statements contained in this Article IV are true and correct as of the date
hereof and will be true and correct as of the Closing Date.

       

      4.1   Organization, Qualification
and Corporate Power.  Each Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
California and has full corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted.  The
Seller is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties or assets owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.  The
Seller has heretofore furnished to the Purchaser complete and correct copies of
its certificate of incorporation and bylaws, including all amendments
thereto.  Such certificate of incorporation and bylaws are in full
force and effect and no other organizational documents are applicable to or
binding upon the Seller.  The Seller is not in violation of any of the
provisions of its certificate of incorporation or bylaws.

       

      4.2   Subsidiaries.  Other
than a 51% ownership interest in Kids Rock, LLC, neither Seller has Subsidiaries
or otherwise owns, directly or indirectly, any equity or debt investment in any
Person (other than ownership of 5% or less of any class of securities registered
under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).

       

       

       

      
        
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      4.3   Authorization.  Each
of the Sellers and the Stockholder has full power and authority, and Robinson
has the requisite legal capacity, to execute and deliver this Agreement and the
Ancillary Agreements and to perform its or his obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance by the Seller and
the Stockholder of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board, and no other action, other than the Stockholder
Approval, is required on the part of the Seller or any of its stockholders in
connection with the execution, delivery or performance of this Agreement and the
Ancillary Agreements or the consummation of the transactions contemplated hereby
and thereby.  This Agreement and the Ancillary Agreements have been
duly executed and delivered by each of the Seller and the Stockholder and,
assuming the due authorization, execution and delivery hereof and thereof by the
Purchaser, constitute the valid and legally binding obligations of each Seller
and the Stockholder enforceable in accordance with their respective terms,
except that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally and (ii) equitable principles which may limit the availability
of certain equitable remedies (such as specific performance) in certain
instances.

       

      4.4   Noncontravention;
Governmental Approvals.

       

      (a) Neither
the execution, delivery or performance of this Agreement or the Ancillary
Agreements nor the consummation of the transactions contemplated hereby or
thereby will, with or without the giving of notice or the lapse of time or both,
(i) violate any provision of the certificate of incorporation or bylaws of
either Seller or the constitutive or governing documents of any Stockholder that
is not a natural person, (ii) violate any Law or Order or other restriction
of any Governmental Entity to which either Seller, the Stockholder or the Assets
may be subject or (iii) except as set forth on Schedule 4.4,
conflict with, result in a breach of, constitute a default under, result in the
acceleration of any right or obligation under, create in any party the right to
accelerate, terminate, modify, cancel or require any notice under or result in
the creation of a Lien on any of the Assets under, any Contract or Permit to
which either Seller or any Stockholder is a party or by which it is bound or to
which it or any of its properties or assets is subject.

       

      (b) The
execution and delivery of this Agreement and the Ancillary Agreements by the
Sellers and the Stockholder do not, and the performance of this Agreement and
the Ancillary Agreements by the Sellers and the Stockholder and the consummation
of the transactions contemplated hereby and thereby will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity.

       

      4.5   Financial
Statements.

       

      (a) Set forth
on Schedule 4.5
are (i) the audited Balance Sheet, Income Statement and Cash Flow Statement of
each of the Sellers for the year ended December 31, 2007, and (ii) the
unaudited Balance Sheet, Income Statement and Cash Flow Statement of each of the
Sellers for the nine months ended September 30, 2008 (collectively, the “Financial
Statements”).  The Financial Statements have been prepared in
accordance with GAAP from the 

       

       

       

      
        
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      books and
records of the Sellers, are complete and correct and present fairly the
financial condition of each of the Sellers as of the indicated dates and the
results of operations and cash flows of the Sellers for the indicated periods,
in each case in accordance with GAAP.

       

      4.6   No Undisclosed
Liabilities.  Except as and to the extent disclosed in the
Financial Statements or as set forth on Schedule 4.6,
since December 31, 2007, there are no Liabilities against, relating to or
affecting the Sellers or the Business or any of the Assets, other than
Liabilities incurred in the ordinary course of business consistent with past
practice which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.  

       

      4.7   Brokers’
Fees.  No agent, broker, finder, investment banker, financial
advisor or other Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions contemplated by this
Agreement on the basis of any act or statement made or alleged to have been made
by either Seller, any of its or their Affiliates, or any investment banker,
financial advisor, attorney, accountant or other Person retained by or acting
for or on behalf of either Seller or any such Affiliate.

       

      4.8   Absence of Certain
Changes.  Except as disclosed on Schedule 4.8,
since December 31, 2007, the Sellers have conducted the Business in the ordinary
course consistent with past practice and there has not been (outside the
ordinary course of business):

       

      (a) any
amendment or other modification of the certificate of incorporation or bylaws of
either Seller;

       

      (b) (i) any
incurrence, assumption or guaranty by either Seller of any Indebtedness,
(ii) any loan made by either Seller to any Person or (iii) any
voluntary purchase, cancellation, prepayment or complete or partial discharge in
advance of a scheduled payment date with respect to, or waiver of any right of
either Seller under, any Indebtedness of or owing to either Seller, other than
(in the case of this clause (iii)) in the ordinary course of business in
amounts and on terms consistent with past practice;

       

      (c) any
damage, destruction or other casualty Loss (whether or not covered by insurance)
affecting the Business or any of the Assets;

       

      (d) any
revaluation in any material respect of any of the Assets;

       

      (e) any
material change in any pricing, investment, accounting, financial reporting,
inventory, credit or allowance practice or policy of the Sellers;

       

      (f) any
(i) grant of, or agreement to grant under certain circumstances, any
severance or termination pay to any director, officer or employee of either
Seller, (ii) entering into of any employment, deferred compensation or
other similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of either Seller, (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements or (iv) increase in compensation, bonus or other
benefits payable to directors, officers or employees of either
Seller;

       

       

       

      
        
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      (g) any
cancellation, modification, termination or grant of a waiver of any provision of
any Permit or Contract to which either Seller is a party, or any written or oral
notification to either Seller that any party to any such arrangement intends to
cancel or not renew such arrangement beyond its expiration date as in effect on
the date hereof;

       

      (h) any
failure to pay or satisfy when due any obligation of either Seller;

       

      (i) the
making of any election with respect to Taxes or the settling or compromising of
any Tax Liability;

       

      (j) any
acquisition or disposition of any business or any asset or property from or to
any Person (whether by merger, consolidation or otherwise) by either
Seller;

       

      (k) any
incurrence of any Lien, other than a Permitted Lien, on any of the Assets or any
other material assets or properties of either Seller;

       

      (l) any
capital expenditure or commitment for additions to property, plant or equipment
used or held for use in the conduct of the Business constituting capital assets
in an aggregate amount exceeding $10,000;

       

      (m) any
transaction with any officer, director or Affiliate of either Seller (i) outside
the ordinary course of business consistent with past practice or (ii) other than
on an arm’s length basis; or

      (n) the
entering into any agreement or commitment to do any of the
foregoing.

       

      4.9   Litigation.  Except
as set forth on Schedule 4.9,
there is no pending or, to the Knowledge of either Seller, threatened Action
against or affecting either Seller or any of its properties or assets before any
Governmental Entity.  Neither Seller nor any of its or their assets or
properties is subject to any Order restraining, enjoining or otherwise
prohibiting or making illegal any action by either Seller, this Agreement or any
of the transactions contemplated hereby.  No officer or director of
either Seller is a defendant in any Action commenced by any stockholder of
either Seller with respect to the performance of his or her duties as an officer
or a director of either Seller under any applicable Law.

       

      4.10   Taxes. 

       

      (a) All Tax
Returns of the Sellers required to be filed on or before the date hereof have
been duly and timely filed on or before such date, each such Tax Return is true,
complete and correct, and all Taxes upon the Business, the Assets or the Sellers
that are due and payable, whether or not shown thereon, have been
paid.  There are no Tax Liens on any of the Assets, and there is no
basis for the assertion of any such Tax Liens.  There are no actions
or proceedings currently pending or, to the Knowledge of either Seller,
threatened by any Taxing Authority against either Seller or the
Assets.  The Sellers have each collected and remitted all sales and
use Taxes as required by each local jurisdiction in which it does business as of
the date hereof.  The Sellers have each withheld and paid all Taxes
required to have been withheld 

       

       

       

      
        
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      and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.

       

      (b) Neither
Seller is a party to any agreement extending the time within which to file any
Tax Return.  There is no dispute or claim concerning any Tax Liability
of either Seller either (i) claimed or raised by any Tax Authority or (ii)
otherwise Known to either Seller.  No issues have been raised in any
examination by any Tax Authority with respect to either Seller which reasonably
could be expected to result in a proposed deficiency for any other period not so
examined.  To each of the Seller’s Knowledge, no claim has been made
by a jurisdiction in which either Seller does not file Tax Returns that a Seller
is or may be subject to taxation by that jurisdiction.

       

      (c) Neither
Seller has waived (and is not subject to a waiver of) any statute of limitations
in respect of the payment of Taxes and has not agreed to any extension of time
with respect to any Tax assessment or deficiency (other than with respect to
limitation periods that have since expired).

       

      (d) None of
the Assets is property that is required to be treated as owned by any other
person pursuant to the “safe harbor lease” provisions of former section
168(f)(8) of the Internal Revenue Code of 1954 as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986 and none of the
Assets is “tax-exempt use property” within the meaning of section 168(h) of the
Code.

       

      (e) None of
the Assets secures any debt, the interest on which is tax-exempt under section
103 of the Code.

       

      4.11   Compliance with
Laws.  Except as set forth on Schedule 4.11,
neither Seller is in violation of, has not violated and, to the Knowledge of
each Seller, is not under investigation with respect to any possible violation
of, and has not been threatened to be charged with any violation of, any Order
or Law applicable to either Seller, the Business or the Assets.

       

      4.12   Permits.  Schedule 4.12
contains a true and complete list of all Permits used or held for use in the
Business, setting forth the function and expiration and renewal date of
each.  Each such Permit is valid and in full force and
effect.  Neither Seller is in default under, and no condition exists
that with notice or lapse of time or both would constitute a default under, any
such Permit.  Neither Seller has received any notice of violation in
respect of any such Permit and, to the Sellers’ Knowledge, no proceeding is
threatened to revoke or limit any such Permit.  No such Permit will be
suspended, terminated, impaired, adversely modified or become terminable, in
whole or in part, as a result of the transactions contemplated hereby or by the
Ancillary Agreements.  The Sellers each have all Permits necessary to
conduct the Business as currently conducted and as proposed to be
conducted.  

       

      4.13   Contracts.  

       

      (a) Schedule 4.13
sets forth a true and complete list of all material Contracts of the each Seller
or the Business, including each of the following Contracts (whether or not
material):

       

       

       

      
        
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      (i) Contracts
relating to or evidencing any Indebtedness of either Seller or the
Business;

       

      (ii) Contracts
with any current Affiliate or current or former officer or director of either
Seller;

       

      (iii) Contracts
relating to the Internet Rights;

       

      (iv) partnership,
limited liability company and joint venture Contracts involving either Seller or
the Business;

       

      (v) Contracts
providing for payments to or from either Seller of $10,000 or more in any
consecutive twelve-month period, other than purchase orders entered into in the
ordinary course of business consistent with past practice;

       

      (vi) license,
subsidiary rights, distribution, franchise, manufacturer’s agent or sales agency
Contracts, or Contracts in respect of similar rights, granted to or held by or
granted by either Seller or the Business;

       

      (vii) Contracts
that limits the freedom of either Seller or the Business to compete in any line
of business, with any Person, in any geographical area or which could so limit
the freedom of either Seller or the Business so to compete after the
Closing;

       

      (viii) Tax
sharing Contracts or other arrangements;

       

      (ix) confidentiality
Contracts;

       

      (x) stockholders’,
investors’ or similar Contracts;

       

      (xi) Contracts
relating to the disposition or acquisition of any assets or properties, other
than dispositions or acquisitions of Inventory or purchase orders entered into
in the ordinary course of business consistent with past practice;

       

      (xii) author,
performer, contributor and work-made-for-hire Contracts;

       

      (xiii) employment
Contracts with any employee of either Seller, consulting Contracts with any
consultant to either Seller or Contracts pursuant to which severance or stay
payments may be payable to any employee of the Sellers; and

       

      (xiv) any other
Contracts not made in the ordinary course of business consistent with past
practice.

       

      (b) The
Sellers have each heretofore made available to the Purchaser true and complete
copies of each of the Contracts required to be disclosed on Schedule 4.13,
including all amendments, waivers and modifications thereto.  All
Contracts required to be disclosed on Schedule 4.13
are valid and binding Contracts of Seller being a party thereto, are in full
force and effect in accordance with their respective terms, and neither the
Seller nor, to the 

       

       

      
        
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      Knowledge
of the Seller, any other party thereto, is (or with notice or lapse of time or
both would be) in violation or breach of, or in default under, the terms of any
such Contract.

       

      4.14   Intellectual
Property. 

       

      (a) Schedule 4.14(a) sets
forth all domestic and foreign patents and patent applications and all license
agreements and other agreements which relate to inventions, discoveries and
Technology and any patent applications and patents thereon, in each case used or
held for use in connection with the Business or necessary to conduct the
Business (collectively, the “Patent
Rights”).  Except as set forth on Schedule 4.14(a), (i)
the Sellers own or is licensed or has a valid and subsisting right to use the
Patent Rights and the Technology, free and clear of all Liens, equities and
other restrictions, (ii) there are no pending or, to either Seller’s Knowledge,
threatened claims challenging the validity or ownership of the Patent Rights or
Technology or either Seller’s right to own or use the Patent Rights or
Technology, (iii) there are no license or sublicense Contracts in effect
respecting any of the Patent Rights or Technology, (iv) neither of the
Sellers nor any of the Patent Rights infringes, violates or constitutes a
misappropriation of any Intellectual Property or other right of any Person and
no claim is pending or, to the Knowledge of either Seller, threatened by or
against either Seller with respect to any of the Patent Rights or the Technology
or the use thereof and no valid basis exists for any such claim, and
(v) the Sellers have each taken reasonable security measures to protect the
security, confidentiality and value of the Technology.

       

      (b) Schedule 4.14(b) sets
forth all trademarks, trade names and service marks, and registrations thereof
and applications therefor, and any and all licenses or other rights to use any
such marks or names, in each case used or held for use in connection with the
Business or necessary to conduct the Business (collectively, the “Trademark
Rights”).  Except as set forth on Schedule 4.14(b),
(i) the Sellers own or are licensed or have a valid and subsisting right to use
the Trademark Rights, free and clear of all Liens, equities and other
restrictions, (ii) all of the Trademark Rights owned by the Sellers are free and
clear of any Liens and other encumbrances and rights of third parties which
would restrict the Purchaser’s right to use such Trademark Rights following the
Closing, (iii) there are no license or sublicense Contracts in effect
respecting any of the Trademark Rights, and (iv) neither of the Sellers nor
any of the Trademark Rights infringes, violates or constitutes a
misappropriation of any Intellectual Property or other right of any Person, no
Person is infringing, violating or misappropriating any of the Trademark Rights,
and there is no pending or, to either Seller’s Knowledge, threatened claim by or
against either Seller with respect to any of the Trademark Rights or the use
thereof and no valid basis exists for any such claim.

       

      (c) Schedule 4.14(c) sets
forth all copyright registrations and renewals thereof (including registration
numbers), copyright applications (including application numbers) and all
licenses or other rights to use copyrights, in each case used or held for use in
connection with the Business or necessary to conduct the Business (collectively,
the “Copyright
Rights”).  Except as set forth on Schedule 4.14(c),
(i) the Sellers own or are licensed or have a valid and subsisting right to
use the Copyright Rights, free and clear of all Liens, equities and other
restrictions, (ii) all of the Copyright Rights owed by the Seller are free
and clear of any Liens and other encumbrances and rights of third parties which
would restrict the Purchaser’s right to use such Copyright Rights following the
Closing, (iii) there are no license or sublicense 

       

       

       

      
        
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      Contracts
in effect respecting any of the Copyright Rights, and (iv) neither of the
Sellers nor any of the Copyright Rights infringes, violates or constitutes a
misappropriation of any Intellectual Property or other right of any Person, no
Person is infringing, violating or misappropriating any of the Copyright Rights,
and there is no pending or, to either Seller’s Knowledge, threatened claim by or
against either Seller with respect to any of the Copyright Rights or the use
thereof and no valid basis exists for any such claim.

       

      (d) Schedule 4.14(d) sets
forth all domain name registrations used, owned or reserved by the Seller in
connection with the Business or necessary to conduct the Business (the “Internet
Rights”).  Except as disclosed in Schedule 4.14(d), (i)
the Sellers own, are licensed or have the right to use and transfer the Internet
Rights, free and clear of all Liens, equities and other restrictions,
(ii) all of the Internet Rights are valid and subsisting, free and clear of
any Liens or rights of third parties which would restrict the Purchaser’s right
to use or transfer such Internet Rights following the Closing, (iii) there
are no license or sublicense Contracts in effect respecting any of the Internet
Rights, and (iv) neither of the Sellers nor any of the Internet Rights
infringes, violates or constitutes a misappropriation of any Intellectual
Property or other right of any Person, no Person is infringing, violating or
misappropriating any of the Internet Rights, and there is no pending or, to the
Knowledge of either Seller, threatened claim by or against either Seller with
respect to any Internet Rights or the use thereof and no valid basis exists for
any such claim.

       

      4.15   Board
Recommendation.  The Board of each Seller, by unanimous written
consent dated as of December 23, 2008, (a) determined that this Agreement
and the Ancillary Agreements and the transactions contemplated hereby and
thereby are fair to, and in the best interests of, all of the stockholders of
such Seller, (b) approved this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby and (c) resolved to
recommend approval and authorization of this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby by the
stockholders of such Seller. 

       

      4.16   Required
Vote.  The affirmative vote of a simple majority of the
outstanding shares of capital stock of each Seller is the only vote of the
holders of any class or series of the Sellers’ securities necessary to approve
and authorize this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby. 

       

      4.17   Benefit Plans;
COBRA.  All Benefit Plans are listed on Schedule 4.17.  Neither
Seller has and has not had any liabilities or obligations pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”).  

       

      4.18   Labor and Employment
Matters.  

       

      (a) To the
Knowledge of the Sellers, no executive, key employee or significant group of
employees plans to terminate employment with either Seller during the next
twelve months.  Neither Seller is a party to or bound by any
collective bargaining agreement nor has it experienced any strike or material
grievance, claim of unfair labor practices or other collective bargaining
dispute since its formation.  Neither Seller has committed any unfair
labor practice.  To the Knowledge of the Sellers, there is no
organizational effort presently being 

       

       

       

      
        
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      made or
threatened by or on behalf of any labor union with respect to employees of
either Seller.

       

      (b) Schedule 4.18(b)
contains a true and complete list of the name of each full-time employee of the
Sellers, whether actively employed or not, e.g., including employees on vacation
and leave of absence, including family, sick or short-term disability leave
(such employees, collectively, the “Employees”), together
with such employee’s position or function. Each Seller has heretofore delivered
to the Purchaser a true and accurate schedule of the annual base salary or wages
and any incentive or bonus arrangement with respect to such
Employees.  Neither Seller has received any information that would
lead it to believe that a material number of the Employees would refuse offers
of employment from the Purchaser after the Closing.

       

      (c) Each
employee, officer and consultant of either Seller that has had any involvement
or participation in the creation of any of the Assets has executed a proprietary
nondisclosure, nonsolicitation and assignment of intellectual property agreement
or similar agreement.  To each Seller’s Knowledge, none of its
employees, offices or consultants is in violation of the terms
thereof.

       

      4.19   Real
Property.  Schedule 4.19
sets forth and briefly describes all real property leased or owned by the
Sellers. 

       

      4.20   Environmental
Matters.  The Sellers hold all permits, licenses and
authorizations required under applicable Environmental Laws and is in compliance
with all terms, conditions and provisions of all such permits, licenses and
authorizations and all applicable Environmental Laws.  No Releases of
Hazardous Materials have occurred at, from, in, to, on or under any property
currently or formerly owned, operated or leased by the Sellers or any
predecessor thereof and no Hazardous Materials are present in, on, about or
migrating to or from any such property which could result in any Liability to
either Seller.  Neither of the Sellers nor any predecessor thereof has
transported or arranged for the treatment, storage, handling, disposal, or
transportation of any Hazardous Material to any off-Site location which could
result in any Liability to either Seller. 

       

      4.21   Books and
Records.  The books of account, minute books, stock record
books and other similar records of the Sellers have been made available to the
Purchaser prior to the execution of this Agreement, are complete and correct in
all material respects and have been maintained in accordance with sound business
practices.  The minute books contain a true and complete record in all
material respects of all actions taken at all meetings and by all written
consents in lieu of meetings of the Board (including all subcommittees and
committees thereof) and the stockholders of the
Sellers.  

       

      4.22   Tangible Personal
Property.  The Sellers each have good and marketable title to,
or holds valid leasehold interests in, all of the Assets, free and clear of all
Liens.  All of the Assets are in good repair and operating condition,
ordinary wear and tear excepted.  Schedule 4.22 lists
the names and addresses of all printers, typesetters, prep houses, art studios
and other vendors used by the Sellers in the storage, production and manufacture
of the Concept, identifying with reasonable specificity all film, plates,
typesetting files, art files, photoscans, 

       

       

       

      
        
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      custom
publishing files and similar materials included in the Assets and that are in
the possession of such printers and vendors.

       

      4.23   Insurance.  Schedule 4.23
contains a true and complete list of all insurance policies currently in effect
that insure the Business or the employees or directors of the Sellers or relate
to the ownership, use or operation of any of the Assets or any other assets or
properties of the Sellers. 

       

      4.24   Affiliate
Transactions.  Except as disclosed on Schedule 4.24, (a) no
officer, director or Affiliate of either Seller provides or causes to be
provided any assets, services or facilities used or held for use in connection
with the Business, and (b) the Business does not provide or cause to be provided
any assets, services or facilities to any such officer, director or
Affiliate.  Each of the transactions listed on Schedule 4.24 is
engaged in on an arm’s-length basis.

       

      4.25   Inventory.  The
finished Inventory is salable or usable in the ordinary course of business and
is not in excess of the normal purchasing patterns of the Sellers as they relate
to the Concept.  Schedule 4.25(a)
lists the location of all Inventory and Schedule 4.25(b)
lists all Inventory in transit, indicating the individual vendor thereof,
together with estimated dates of delivery.

       

      4.26   Advances.  There
are no outstanding unrecouped advances made to any party under the Assigned
Contracts, no advances or other similar payments due or to become due to any
parties under any of the Assigned Contracts for which either Seller would be
obligated.

       

      4.27   Customers, Vendors and
Suppliers.  Except as set forth on Schedule 4.27(c), there is
no actual or, to the Knowledge of either Seller, threatened termination,
cancellation, limitation or any modification or change in business relationship
of either Seller with any customer or group of customers of the
Business.  Within the six-month period prior to the date hereof,
neither Seller has received any notice from any vendor or supplier of an item
material to the Business that such vendor or supplier will not continue to make
deliveries on the same price, quality and delivery terms and conditions
consistent with past practices of such vendor or supplier.  Schedule 4.27(a) sets
forth the name of each vendor and other supplier who is engaged in performing
work in connection with the Concept as of the date hereof, together in each case
with the amount due to such vendor or supplier upon completion of such
work.  There are no claims against the Sellers to return merchandise
by reason of alleged over-shipments, defective merchandise or otherwise in
excess of $5,000 in the aggregate and, to the Knowledge of the Sellers, there is
no basis for any such claims.  There is no merchandise in the hands of
customers under an understanding that such merchandise would be returned other
than pursuant to each Seller’s customary returns and refunds policy, a copy of
which is attached hereto as Schedule 4.27
(b).

       

      4.28   Securities
Matters.

       

      (a) Investment
Intent.  The Sellers are each acquiring the Shares pursuant to
this Agreement for its own account and not as a nominee or agent for the account
of any other Person.  Except as provided herein, the Sellers are not
obligated to transfer any Shares to any 

       

       

       

      
        
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      other
Person, nor does either Seller have any agreement or understanding with any
other Person to do so.  The Sellers are acquiring the Shares for
investment purposes and not with a view to the sale or distribution by public or
private sale or other disposition, and the Sellers have no present intention of
selling, granting any participation in or otherwise distributing or disposing of
any of the Shares.  The Sellers do not intend to subdivide or transfer
to any other Person the Shares acquired by the Sellers
hereunder.  Except as prohibited under the Lock-up Agreement, nothing
herein shall prevent the distribution of any Shares to any affiliate, member,
partner or stockholders, former member, partner or stockholders of the Sellers
in compliance with the Securities Act and applicable state “blue sky”
laws.

       

      (b) No Public
Offering.  The Sellers are able to bear the economic risk of
their  acquisition of the Shares.  The Sellers are aware
that the Shares have not been, and when issued will not be, registered under the
Securities Act or registered or qualified under any state securities Law, on the
ground that the Shares are being issued by the Purchaser in reliance on a
specific exemption therefrom, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
Sellers’ representations as expressed herein.  The Sellers are not
acquiring the Shares as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio or any solicitation of a
subscription by any Person not previously known to the Sellers in connection
with investments in securities generally.

       

      (c) Certificates to be
Legended.  The Sellers understand that each certificate
representing the Shares will bear a legend on the face thereof (or on the
reverse thereof with a reference to such legend on the face thereof) as
follows:

       

      “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF REGISTRATION UNDER THE ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO KIDVILLE, INC., A DELAWARE CORPORATION (THE
“COMPANY”), AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT.  THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS AND AGREEMENTS AS SET FORTH IN A LOCK-UP AGREEMENT ENTERED
INTO BY THE REGISTERED OWNER OF THESE SHARES, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED BY THE COMPANY TO THE
HOLDER HEREOF WITHOUT CHARGE UPON THE WRITTEN REQUEST OF THE HOLDER HEREOF TO
THE COMPANY.”

       

      (d) Shares will be “Restricted
Securities”.  The Sellers understand that the Shares will be
“restricted securities” as that term is defined in Rule 144 promulgated under
the Securities Act and, accordingly, that the Shares must be held indefinitely
unless they are 

       

       

       

      
        
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      subsequently
registered under the Securities Act or an exemption from such registration is
available.  The Sellers understand and agree that the Purchaser is not
under any obligation to register the Shares under the Securities Act or to
comply with Regulation A or any other exemption and that Rule 144 is not
currently available for sales of the Shares.

       

      (e) Accredited
Investor.  The Sellers have been advised or are aware of the
provisions of Regulation D under the Securities Act relating to the
accreditation of investors, and the Sellers are each an “accredited investor” as
defined in Rule 501 of Regulation D promulgated under the Securities
Act.

       

      (f) Sophistication of the
Sellers.  The Sellers have such knowledge and experience in
financial and business matters that each Seller is capable of evaluating the
merits and risks of acquiring the Shares as contemplated by this
Agreement.

       

      4.29   Franchise
Operations.

       

      (a) Sellers
have provided Purchaser with a copy of each version of the multistate disclosure
document (the “Disclosure
Documents”) utilized by Sellers in connection with grants or sales of the
right to develop and/or operate Concept facilities. As set forth on Schedule 4.29(a), the
Sellers have prepared and maintained its Disclosure Documents in compliance with
Disclosure Requirements and Prohibitions Concerning Franchising, issued in 2007
by the Federal Trade Commission (the “FTC Disclosures”) and
the guidelines adopted by the North American Securities Administrators
Association, as amended from time to time (the “Guidelines”), and, except as set
forth on Schedule 4.29 (b), has registered the franchise offering or otherwise
qualified for applicable exemptions in the states which require registration and
approval prior to any offers or sales of franchises, and where Sellers did
business, and have filed all material changes, amendments and renewals thereto,
or have intentionally allowed same to lapse as described in Schedule 4.29(a), on
a timely and accurate basis and have paid all fees with respect
thereto.

       

      (b) Sellers
have heretofore made available to Purchaser correct and complete copies of all
franchise registration orders, franchise advertising or promotional materials,
Disclosure Documents or agreements filed with any Governmental Entity or
otherwise used by Sellers in connection with the offer, sale and operation of
franchises or business opportunities in any jurisdiction in which Sellers have
sold franchises.  Sellers have not, in any of the
aforementioned documents (including, without limitation, any Disclosure
Documents), made any untrue statement of a material fact, or omitted any
material fact necessary to make the statements made by either of the Sellers,
taken as a whole, not misleading, in connection with the offer or sale of any
franchise or business opportunity. To Sellers’ Knowledge, neither it, nor any of
its officers, directors, employees, agents or representatives made any untrue
statement of material fact, or omitted any material fact necessary to make the
statements made by such individual, taken as a whole, not misleading, in
connection with the offer or sale of any franchise or business
opportunity.

       

      (c) The
Sellers have not authorized its respective officers, directors, employees,
agents or representatives to furnish directly to prospective franchisees any
materials or information that is inconsistent with the “earnings claim”,
information or “financial 

       

       

      
        
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      performance
representation” disclosure set forth in Item 19 of any applicable Disclosure
Documents, and, to Sellers’ Knowledge, no unauthorized earnings claims financial
performance representations were ever made directly to prospective franchisees
by the Sellers or any of their respective officers, directors, employees, agents
or representatives.

       

      (d) Except as
set forth on Schedule 4.29 (b), each Franchise Agreement entered into by either
Seller complies, and the offer and sale thereof complied at the time such offer
and sale was made, in all material respects with all applicable Laws and all
applicable orders, consents or decrees from any Governmental
Entity.

       

      (e) Except
for franchise registration or exemption orders or notifications, no orders,
consents or decrees have, to Sellers’ Knowledge, been issued by any Governmental
Entity to either Seller, nor to Sellers’ Knowledge have letters of inquiry,
investigation or the like (other than comment letters in connection with
registrations or exemptions) been issued to either of the Sellers by such
Governmental Authorities relating, directly or indirectly, to the Sellers’ offer
and sale of franchises or business opportunities.  Sellers have
provided to Purchaser all material correspondence between the Sellers and such
Governmental Authorities relating to the offer and sale of franchises or
business opportunities.

       

      (f) Schedule 4.29 (f)-1
is a true and complete list of all of the Franchise Agreements to which either
Seller is a party, either directly or through assignment from a predecessor,
including the name and address of each franchisee, the franchised territory, the
location of the franchised unit, the date on which the franchise unit first
became open to the public (if applicable), the commencement and expiration date
of the initial term of the Franchise Agreement, the number and duration of any
permitted renewal terms, the ongoing or recurring fees payable by the
franchisee, and with respect to each Franchise Agreement that constitutes a
development agreement, the total number of Concept facilities authorized by such
Franchise Agreement, the number of Concept facilities currently established
pursuant to such Franchise Agreement, and the number of remaining undeveloped
Concept facilities that the franchisee is currently authorized to develop.
Except as set forth in Schedule 4.29(f)-2,
each Franchise Agreement executed by a Seller is substantially similar to the
form of Franchise Agreement incorporated into the applicable Disclosure Document
that was issued by such Seller to the franchisee prior to the sale of that
particular franchise.

       

      (g) Except as
set forth in Schedule
4.29(g)-1, each of the Franchise Agreements is valid, binding and
enforceable in accordance with its terms against the franchisee thereunder,
subject to any such franchisee’s bankruptcy, insolvency, receivership or similar
proceeding under applicable Law and subject to equitable
defenses.  Neither Seller is in material violation or default of any
Franchise Agreement, nor has there occurred any event or condition that with the
passage of time or giving of notice (or both) would constitute a material
default by a Seller or permit a franchisee to terminate or rescind such
Franchise Agreement for a material default.  Except as disclosed in
Schedule
4.29(g)-2, no franchisee has the contractual right to terminate the
Franchise Agreement except upon the occurrence of a material default by the
Franchisor Company.  Neither the execution of this Agreement nor the
consummation of the transactions contemplated herein would result in a violation
of or a default under, or give rise to a right of termination, modification,
cancellation or acceleration of any obligation or loss of benefits under, any
Franchise Agreement. No franchisee consent or approval is required in


       

       

       

      
        
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      connection
with the execution of this Agreement nor the consummation of the transactions
contemplated herein.

       

      (h) Except as
set forth in Schedule 4.29(h), no current franchisee has any outstanding notices
of financial default under a Franchise Agreement, which remains uncured, or is,
to Sellers’ Knowledge, in material default under a Franchise Agreement for any
other reason.  Except as set forth in Schedule 4.29(h), and
except for any waivers, alterations or modifications evidenced by amendments to
the Franchise Agreements that have heretofore been provided to Purchaser, no
Franchise Agreement has been subordinated and no provision regarding the
calculation and payment of royalty fees in any Franchise Agreement has been
waived, altered or modified in any material respect adverse to a Seller
thereunder. Neither Seller has waived any other default by a franchisee which
could be adverse in any material respect to it; and no notices of default have
been issued by either Seller with respect to any Franchise Agreement for
defaults that have not been cured.

       

      (i) Except as
set forth in Schedule
4.29(i), Neither Seller has waived the enforcement of any noncompetition,
nondisclosure or similar restriction under a Franchise Agreement, and to
Sellers’ Knowledge, no current or former franchisee is currently in violation of
any noncompetition, nondisclosure or similar covenant.

       

      (j) Except as
set forth in Schedule
4.29(j)-1, except as may be granted to a franchisee under an executed
Franchise Agreement that is substantially similar to the form of Franchise
Agreement incorporated into the applicable Disclosure Document that was issued
by a Seller to the franchisee prior to the sale of that particular franchise, or
except as may be granted by operation of applicable Law, no franchisee has a
protected territory, exclusive territory, covenant not to compete, right of
first refusal, right of first offer, option or other arrangement with such
Seller (collectively, the “Territorial Rights”)
pursuant to which (i) the either Seller is restricted in any way in its right to
own or operate, or license others to own or operate, any Seller facility or
other line of business or to otherwise sell any products or services; or (ii)
the franchisee is granted the right to acquire additional franchises or expand
such franchisee’s territory. Except as set forth in Schedule 4.29(j)-2,
no franchisee’s Territorial Rights conflict with the Territorial Rights of any
other franchisee (including the rights of any franchisee entity owned or under
common control with such other franchisee). Except as set forth in Schedule 4.29(j)-3,
to the extent a Seller has granted any such Territorial Rights (whether
disclosed or required to be disclosed herein), such Seller has complied with
such Territorial Rights and in the course of offering or selling franchises
establishing Seller facilities operated or owned by a Seller, or otherwise
selling products or services, such Seller has not violated the Territorial
Rights of any franchisee.

       

      (k) Schedule 4.29(k) is a
true and complete list of all written or oral agreements (and with respect to
oral agreements a description of the material terms thereof) with independent
sales representatives, contractors, brokers, consultants or agents with respect
to the offer or sale of franchises by any Seller, or any other agreements or
arrangements under which any Seller has authorized any Person to offer, sell or
promote franchises or licenses on behalf of any Seller or agreed to rebate or
share amounts receivable under any Franchise Agreement and indicating which of
such agreements are in default and may be terminated by a Seller by notice to
the other party.  Sellers have delivered to Purchaser correct and
complete 

       

       

       

      
        
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      copies of
(i) all written agreements described in Schedule 4.29(k) and
(ii) all written correspondence and memoranda evidencing such oral agreements
described in Schedule
4.29(k). The Sellers have not granted any United States franchisees any
right to offer and sell sub-franchises.

       

      (l) Except as
set forth in Schedule
4.29(l)-1, the Sellers have not entered into any contract, agreement or
arrangement, orally or in writing, whereby either of the Sellers or an affiliate
receives rebates, commissions, discounts or other payments or remuneration of
any kind from suppliers selling products or services to
franchisees.  Except as set forth in Schedule 4.29(l)-2,
neither Seller has made to any franchisee, or any of its franchisee’s employees
or agents, or to any other Person, any commitment to provide any special
discount allowance or accommodation other than as set forth in the Disclosure
Documents and standard form of Franchise Agreement offered by the Sellers at
that time.  There are no material agreements or special arrangements
with any franchisee that are prohibited by the particular Franchise Agreement or
not disclosed in accordance with the FTC Disclosures in the relevant Disclosure
Document.

       

      (m) Other
than the Franchise Advisory Council, no franchisee organization exists which
holds itself out as a representative of any group of franchisees.

       

      (n) Except as
set forth in Schedule
4.29(n), to each Seller’s Knowledge, it has complied in all material
respects with all applicable franchise Laws.

       

      (o) Except as
specified in Schedule
4.29(o), there is no action, proceeding, or investigation pending or, to
each Seller’s Knowledge, threatened against or involving it with respect to any
of its domestic franchises, and, to each Seller’s Knowledge, there is no basis
for any such action, proceeding or investigation except for actions, proceedings
or investigations that could not, in any individual case or in the aggregate,
reasonably be expected to have a material adverse effect on
it.  Neither Seller is subject to any judgment, order or decree
entered in any lawsuit or proceeding that has or may have a material adverse
effect on such Seller’s rights and interests in any Franchise
Agreement.

       

      4.30   Foreign Corrupt
Practices.                                                              Neither
any Seller nor any director, officer, agent, employee or other Person acting on
behalf of' any Seller has, in the course of its actions for, or on behalf of any
such Seller (i) used any corporate funds for any unlawful contribution, gift,
entertainment on other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of' any provision of the United States Foreign Corrupt Practices,
kickback; or (iv) made other unlawful payment to any foreign or domestic
government official or employee.

       

       

      4.31   Disclosure.  All
material facts regarding the Business, the Assets and the Sellers have been
disclosed to the Purchaser in or in connection with this
Agreement.  No representation or warranty on the part of the Sellers
or the Stockholder contained in this Agreement, and no statement contained in
any of the Schedules or in any certificate, list or other writing furnished to
the Purchaser pursuant to any provisions of this Agreement, including pursuant
to Article VII hereof, contains any untrue statement of a material fact or


       

       

      
        
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      omits to
state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.  

       

       

      ARTICLE
V

      REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER AND KIDVILLE

       

      The
Purchaser and Kidville represent and warrant to the Sellers and the Stockholder
that the statements contained in this Article V are true and correct as of the
date hereof and will be true and correct as of the Closing Date.

       

      5.1   Organization.  The
Purchaser is a limited liability company duly organized, validly existing, and
in good standing under the Laws of the State of New York and Kidville is a
corporation duly organized, validly existing and in good standing under the Laws
of the Sate of Delaware .  The Purchaser and Kidville are each duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the failure to
be so qualified will not have a material adverse effect on
Kidville.  The Purchaser and Kidville each has full corporate power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it. 

       

      5.2   Authorization.  The
Purchaser and Kidville each has full corporate power and authority to execute
and deliver this Agreement and the Ancillary Agreements and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  The execution, delivery and
performance by the Purchaser and Kidville of this Agreement and the Ancillary
Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action.  This Agreement and the Ancillary Agreements to
which each is a party have been duly executed and delivered by the Purchaser and
Kidville and, assuming the due authorization, execution and delivery thereof by
the Sellers and the Stockholder, constitute the valid and legally binding
obligation of the Purchaser and Kidville enforceable in accordance with their
respective terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and (ii) equitable principles which may
limit the availability of certain equitable remedies (such as specific
performance) in certain instances. 

       

      5.3   Noncontravention;
Governmental Approvals.

       

      (a) Neither
the execution, delivery or performance of this Agreement or the Ancillary
Agreements, nor the consummation of the transactions contemplated hereby or
thereby will, with or without the giving of notice or the lapse of time or both,
(i) violate any provision of the certificate of incorporation or bylaws of
the Purchaser or Kidville or (ii) violate any Law or Order or other
restriction of any Governmental Entity to which the Purchaser or Kidville may be
subject.

       

      (b) The
execution and delivery of this Agreement and the Ancillary Agreements by the
Purchaser and Kidville do not, and the performance of this Agreement and the
Ancillary Agreements by the Purchaser and Kidville and the consummation of the


       

       

       

      
        
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      transactions
contemplated hereby and thereby will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity.

       

      5.4   Authorized
Securities.

       

      (a) The
Shares issuable to Sellers hereunder shall be duly authorized and, when issued
in accordance with this Agreement, will be duly and validly issued, fully paid
and non-assessable, free and clear of all Liens and shall not be subject to
preemptive or similar rights of shareholders.

       

      (b) The
Shares will be issued pursuant to and in accordance with applicable U.S. and
other applicable securities Laws and no filing with, consent or approval of any
securities commission or regulatory authority in the United States or elsewhere
is required in connection with the Merger.

       

      5.5   Capitalization.  The
authorized capital stock of Kidville on the date hereof consists of 225,000,000
shares of Common Stock and 25,000,000 shares of preferred stock, of which
89,799,920 shares of Common Stock, no shares of preferred stock and 1,851,706
Options are issued and outstanding.  All issued and outstanding shares
of Kidville’s capital stock have been duly authorized and validly issued in
compliance with applicable Laws, and are fully paid and nonassessable and free
and clear of any and all Liens or third party rights and of any restrictions on
transfer.

       

      5.6   Compliance with Securities
Laws.

       

      (a) Purchaser
has provided or made available to Sellers copies of each of the periodic reports
and other documents filed by Kidville with the SEC.  Since January 1,
2005, Kidville has filed all reports, documents and other information required
of it to be filed with the SEC (the “SEC Reports”).  The SEC Reports
were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such SEC Reports.  None of Kidville’s
subsidiaries is required to file any form, reports or other documents with the
SEC.  No disclosure included in any of the SEC Reports included any
statement that, when made or, if such SEC Reports were subsequently amended,
when amended, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances in which such statements were made, not materially
misleading.

       

      (b) Kidville
has not been notified of any default or alleged default by Kidville under any
requirement of securities and corporate Laws.  Kidville has not
received any material comment letters that remain unresolved from any applicable
securities commissions or stock exchanges with respect to any SEC Reports or any
notice of investigation or similar notice from any such entities with respect to
any such documents or otherwise. 

       

      (c) The
financial statements of Kidville included in all filed or publicly available
forms, reports, statements and documents since January 1, 2005 (the “Kidville Financial
Statements”) comply in all material respects with applicable accounting
requirements and all rules and regulations with respect thereto as in effect at
the time of filing. Such financial 

       

       

       

      
        
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      statements
have been prepared in accordance with GAAP, and fairly present, in all material
respects, the financial condition, results of operations and cash flows of
Kidville as of the dates, and for the periods, indicated therein, subject, in
the case of unaudited statements, to normal, year-end audit
adjustments.

       

      (d) Except as
and to the extent reflected, disclosed or reserved against in the latest audited
financial statements included within the Kidville Financial Statements
(including the notes thereto) or as set forth in Schedule 5.6(d),
Kidville has not, since the date of such financial statements, incurred any
liabilities, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets, financial condition of Kidville which are required
by GAAP (consistently applied) to be disclosed in such financial statements or
the notes thereto, other than trade payables and accrued expenses incurred in
the ordinary course of business consistent with past practice.

       

      (e) Promptly
following the expiration of the restrictions on transferability relating to the
Shares set forth in the Lock-Up Agreement, and provided that at such time the
Shares are no longer “restricted securities” as that term is defined in Rule 144
promulgated under the Securities Act or there is available another exemption
from registration of the Shares under the Securities Act, the Kidville shall
cause its counsel to issue an opinion, upon such counsel’s receipt of an opinion
certificate confirming the facts and circumstances underlying such opinion,
enabling the Sellers to have the legend described in Section 4.28(c) removed
from the stock certificates representing the Shares.

       

      5.7   Absence of Certain Changes
or Events.  Since the date of the latest financial statements
included within the forms, reports, statements and documents filed under or in
accordance with securities Laws, except as disclosed:  (i) there has
been no event, occurrence or development that, individually or in the aggregate,
has resulted in a Material Adverse Effect on Kidville; and (ii) Kidville has not
declared or made any dividend or distribution of cash or other property to its
shareholders, or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock.

       

      5.8   Litigation.  There
is no pending or, to the Knowledge of the Purchaser or Kidville, threatened
Action against or affecting the Purchaser Kidville which is material to the
business, operations, assets or financial condition of Purchaser or Kidville or
any of their respective properties or assets before any Governmental
Entity.  Neither the Purchaser, Kidville nor any of their respective
assets or properties is subject to any Order restraining, enjoining or otherwise
prohibiting or making illegal any action by the Purchaser or Kidville, this
Agreement or any of the transactions contemplated hereby.  No officer
or director of the Purchaser or Kidville is a defendant in any Action commenced
by any stockholder of the Purchaser or Kidville with respect to the performance
of his or her duties as an officer or a director of the Purchaser or Kidville
under any applicable Law.

       

      5.9   Compliance with
Laws.  To the Knowledge of Purchaser and Kidville, neither is
in violation of, nor has either violated and, is neither is under investigation
with respect to any possible violation of, and has not been threatened to be
charged with any violation of, any Order or Law applicable to the Purchaser
which could reasonably be expected to give rise to a Material Adverse
Effect.

       

       

       

      
        
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      5.10   Board
Recommendation.  The Purchaser’s board of directors, at a
meeting duly called and held on November 3, 2008, unanimously
(a) determined that this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby is fair to, and in the best
interests of, the Purchaser, and (b) approved this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and
thereby.

       

      5.11   Environmental
Matters.  The Purchaser and Kidville each holds all permits,
licenses and authorizations required under applicable Environmental Laws and is
in compliance with all terms, conditions and provisions of all such permits,
licenses and authorizations and all applicable Environmental Laws.  No
Releases of Hazardous Materials have occurred at, from, in, to, on or under any
property currently or formerly owned, operated or leased by the Purchaser or
Kidville or any predecessor thereof and no Hazardous Materials are present in,
on, about or migrating to or from any such property which could result in any
Liability to the Sellers.  Neither the Purchaser, Kidville nor any
predecessor thereof has transported or arranged for the treatment, storage,
handling, disposal, or transportation of any Hazardous Material to any off-site
location which could result in any Liability to the Purchaser or
Kidville.

       

      5.12   Customers, Vendors and
Suppliers.  There is no actual or, to the Knowledge of the
Purchaser or Kidville, threatened termination, cancellation, limitation or any
modification or change in business relationship of the Purchaser or Kidville
with any customer or group of customers of its respective
business.  Within the six-month period prior to the date hereof,
neither the Purchaser not Kidville has not received any notice from any vendor
or supplier of an item material to the Purchaser’s or Kidville’s business that
such vendor or supplier will not continue to make deliveries on the same price,
quality and delivery terms and conditions consistent with past practices of such
vendor or supplier.

       

      5.13   Foreign Corrupt
Practices.  Neither any Purchaser, Kidville nor any director,
officer, agent, employee or other Person acting on behalf of' either Purchaser
or Kidville has, in the course of its actions for, or on behalf of Purchaser or
Kidville (i) used any corporate funds for any unlawful contribution, gift,
entertainment on other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of' any provision of the United States Foreign Corrupt Practices,
kickback; or (iv) made other unlawful payment to any foreign or domestic
government official or employee.

       

      5.14   Disclosure.  No
representation or warranty on the part of the Purchaser or Kidville contained in
this Agreement, and no statement contained in any of the Schedules or in any
certificate, list or other writing furnished to the Sellers pursuant to any
provisions of this Agreement, including pursuant to Article VII hereof,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.

       

      5.15   Brokers’
Fees.  No agent, broker, finder, investment banker, financial
advisor or other Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions contemplated by this
Agreement on the basis of any act or statement made by the Purchaser or
Kidville, any of its Affiliates, or any investment banker, financial


       

       

       

      
        
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      advisor,
attorney, accountant or other Person retained by or acting for or on behalf of
the Purchaser, Kidville or any such Affiliate.

       

      ARTICLE
VI

      COVENANTS;
ADDITIONAL AGREEMENTS

       

       

      6.1   Stockholder
Approval.  The Sellers, acting through their respective Boards,
shall, as promptly as possible following the date hereof and in consultation
with the Purchaser, take all action necessary in accordance with the California
Corporation Law and its certificate of incorporation and bylaws to
(a) obtain the Stockholder Approval and (b) include in the notice
mailed to the Stockholder the unanimous recommendation of the Board that the
Stockholder vote in favor of the approval and adoption of this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and
thereby.

       

      6.2   Notices and
Consents.  Each of the Sellers will (a) give any notices to any
Person in connection with the transactions contemplated hereby that the
Purchaser reasonably may request, and (b) use its best efforts to obtain all
consents to the performance by such Seller of its obligations under this
Agreement or to the consummation of the transactions contemplated hereby as are
required under any Contract to which such Seller is a party or by which any of
its assets and properties are bound.  Each such consent
shall:  (i) be in form and substance reasonably satisfactory to
the Purchaser in its sole discretion, (ii) not be subject to the
satisfaction of any condition that has not been satisfied or waived and
(iii) be in full force and effect.

       

      6.3   Operation of the
Business.  Except as otherwise set forth herein or on Schedule 6.3,
during the period commencing on the date hereof and ending on the Closing Date,
the Sellers will not engage in any practice, take any action or enter into any
transaction outside of the ordinary course of business consistent with past
practice.  Without limiting the generality of the foregoing, the
Sellers shall not take any action or enter into any transaction which would
result in:

       

      (a) any
amendment or other modification of the certificate of incorporation or bylaws of
either Seller;

       

      (b) (i) any
incurrence, assumption or guaranty by a Seller of any Indebtedness,
(ii) any loan made by a Seller to any Person or (iii) any voluntary
purchase, cancellation, prepayment or complete or partial discharge in advance
of a scheduled payment date with respect to, or waiver of any right of a Seller
under, any Indebtedness of or owing to a Seller, other than (in the case of this
clause (iii)) in the ordinary course of business in amounts and on terms
consistent with past practice;

       

      (c) any
damage, destruction or other casualty Loss (whether or not covered by insurance)
affecting the Business or any of the Assets;

       

      (d) any
revaluation in any material respect of any of the Assets;

       

       

       

      
        
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      (e) any
material change in any pricing, investment, accounting, financial, reporting,
inventory, credit or allowance practice or policy of a Seller;

       

      (f) any
(i) grant of, or agreement to grant under certain circumstances, any
severance or termination pay to any director, officer or employee of a Seller,
(ii) entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer or employee of a Seller, (iii) increase in benefits
payable under any existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of a Seller;

       

      (g) any
cancellation, modification, termination or grant of a waiver of any provision of
any Permit or Contract to which a Seller is a party, or any written or oral
notification to a Seller that any party to any such arrangement intends to
cancel or not renew such arrangement beyond its expiration date as in effect on
the date hereof;

       

      (h) any
failure to pay or satisfy when due any obligation of a Seller;

       

      (i) the
making of any election with respect to Taxes or the settling or compromising of
any Tax Liability;

       

      (j) any
acquisition or disposition of any business or any asset or property from or to
any Person (whether by merger, consolidation or otherwise) by a
Seller;

       

      (k) any
incurrence of any Lien, other than a Permitted Lien, on any of the Assets or any
other material assets or properties of a Seller;

       

      (l) the
entering into of any settlement of any litigation affecting a
Seller;

       

      (m) the
making of any capital expenditure or commitment for additions to property, plant
or equipment to be used or held for use in the conduct of the
Business;

       

      (n) the
entering into any transaction with any officer, director or Affiliate of a
Seller; or

       

      (o) the
entering into of any agreement or commitment to do any of the
foregoing.

       

      The
Sellers shall use their respective best efforts to preserve its existing
relationships with all parties to the Assigned Contracts including, without
limitation, authors, vendors, suppliers and customers, and to preserve the
goodwill and value of the Concept.

       

      6.4   Full
Access.  Subject to the terms and conditions of the
Non-Disclosure Agreement, the Sellers will permit the Purchaser, any of its
Affiliates and any of their respective Representatives to have full access at
all times, in a manner so as not to interfere unreasonably with the normal
business operations of the Sellers, to all premises, properties, personnel,
books, records (including Tax records), Contracts and documents of or pertaining
to the Sellers.  Without limiting the immediately preceding sentence,
in order to assure an orderly

       

       

       

      
        
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      transition
following the Closing, the Sellers agrees to make available to the Purchaser, at
the Purchaser’s reasonable request: (a) computer-generated customer lists and
recent sales history worldwide respecting the Assets, (b) copies of books,
records and other data related to sales of the Concept, including without
limitation royalty payments and rates and author advances and payments due under
the Assigned Contracts, and (c) data relating to rights and permissions
respecting the Concept, whether granted by or to the Sellers.

       

      6.5   Notice of
Developments.  Each party hereto will give prompt written
notice to the other parties hereto of any event which could reasonably be
expected to give rise to a Material Adverse Effect or could reasonably be
expected to cause a breach of any of its representations, warranties, covenants
or other agreements contained herein.  No disclosure by any party
pursuant to this Section 6.5 shall be deemed to amend or supplement any
Schedule, or to prevent or cure any misrepresentation, breach of warranty or
breach of covenant or other agreement.

       

      6.6   No
Solicitation.  From and after the date of this Agreement, until
the earlier of the Closing or the termination of this Agreement pursuant to
Article VIII, the Stockholder and the Sellers shall not, and the Sellers shall
cause their respective officers, directors, employees, agents, representatives,
advisors and other stockholders not to, (a) solicit, initiate or encourage
(including by way of furnishing information), or take any other action to
facilitate the submission of any inquiry, proposal or offer from any Person
relating to (i) any purchase, lease, pledge, license or other acquisition
of any of the assets of the Sellers or of any capital stock or options of, or
other equity interests in, the Sellers, whether by any merger, consolidation,
business combination, asset sale, stock issuance, recapitalization,
reorganization, liquidation, dissolution or any other transaction (other than
the transactions contemplated hereby), or (ii) any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or delay the transactions contemplated hereby or which would or could
reasonably be expected to dilute the benefits to the Purchaser of the
transactions contemplated hereby (collectively, “Transaction
Proposals”), (b) agree to or endorse any Transaction Proposal, or
(c) enter into or participate in any discussions or negotiations regarding
any Transaction Proposal, or furnish to any other Person any information with
respect to any Transaction Proposal or the Business, or otherwise cooperate in
any way with, or assist, participate in, facilitate or encourage, any effort or
attempt by any other Person to submit or otherwise act in furtherance of a
Transaction Proposal.  Without limiting any of the foregoing
provisions of this Section 6.6, it is understood that any violation of the
restrictions set forth in this Section 6.6 by any stockholder (other than
either Stockholder), director or executive officer of either of the Sellers or
by any investment banker, financial adviser, attorney, accountant or other
Representative of either of the Sellers shall be deemed to be a breach of this
Section 6.6 by the Sellers.

       

      6.7   Employees.  

       

      (a) Hiring of
Employees.  Kidville shall offer employment as of the Closing
Date to those Employees of the Sellers set forth on Schedule 6.7(a) on terms and
conditions determined by the Purchaser, but with initial compensation (whether
salary or hourly) at no less than what they are currently receiving from
Seller.  Prior to the date hereof, the Sellers have provided the
Purchaser reasonable access to the Employees and, to the extent permitted by


       

       

       

      
        
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      applicable
Law, such information regarding such Employees as is contained in personnel
records, for purposes of permitting the Purchaser to determine which Employees
to offer to employ.  All such Employees who accept such offer of
employment and thereafter commence work with the Purchaser are referred to
herein as “Transferred
Employees”.

       

      (b) Liabilities.  The
Sellers shall each retain, and the Purchaser shall have no responsibility for,
any and all Liabilities that have arisen or may arise with respect to (i) any
Benefit Plan, (ii) any Employee or former employee who is not a Transferred
Employee, and (iii) any Transferred Employee to the extent attributable to
events or circumstances occurring or existing on or prior to the Closing Date
(including Liabilities relating to stay or severance payments).

       

      (c) Welfare
Claims.  Without limiting the scope of Section 6.7(b), the
Sellers shall each retain and be responsible for (i) claims for workers
compensation or for the type of benefits described in section 3(1) of ERISA
(whether or not covered by ERISA) that are incurred on or prior to the Closing
Date by Transferred Employees, and (ii) claims relating to COBRA coverage
attributable to “qualifying events” occurring on or prior to the Closing Date
with respect to any Transferred Employees and their beneficiaries and
dependents.  The Purchaser shall be solely responsible for
(x) disability benefits and workers compensation benefits for Transferred
Employees for claims incurred after the Closing Date, and (y) claims
relating to COBRA coverage attributable to “qualifying events” occurring after
the Closing Date with respect to Transferred Employees and their beneficiaries
and dependents.  For purposes of this Section 6.7(c), a medical
or dental claim shall be considered incurred when the medical services are
rendered or medical supplies are provided, and not when the condition arose;
provided, however, that claims
relating to a hospital confinement that commences on or prior to the Closing
Date but continues thereafter shall be treated as incurred on or prior to the
Closing Date.  A disability or workers compensation claim shall be
considered incurred on or prior to the Closing Date if the injury or condition
giving rise to the claim occurs on or prior to the Closing Date.

       

      (d) Certain
Benefits.  The Sellers shall each provide each Transferred
Employee with the following:  (i) full vesting of any award or benefit
under any Benefit Plan where such vesting was otherwise conditioned upon the
future performance of services with either Seller, including under any Benefit
Plan that is intended to be tax-qualified under section 401(a) of the Code
and under any related non-qualified plan, (ii) payment, on or before the Closing
Date, of any annual bonus award that such employee would have earned under the
Sellers’ respective bonus programs for the fiscal year in which the Closing
occurs, assuming maximum performance was achieved, but prorated to reflect the
portion of the year actually worked for such Seller, as set forth on Schedule 6.7(d), and
(iii) payment, on or before the Closing Date hereof, of any accrued but
unused vacation days, as set forth on Schedule
6.7(d).

       

      (e) No Employee Rights;
Termination or Modification of Plans.  Nothing in this
Section 6.7, express or implied, shall confer upon any Employee, or any
legal representative or beneficiary thereof, any rights or remedies, including
any right to employment or continued employment for any specified period, or
compensation or benefits of any nature or kind whatsoever under this
Agreement.  Nothing in this Section 6.7, expressed or implied,
shall be 

       

       

       

      
        
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      construed
to prevent the Purchaser from terminating or modifying to any extent or in any
respect any benefit plan that the Purchaser may establish or
maintain.

       

      6.8   Tax
Matters.   

       

      (a) The
Sellers shall each, and shall cause their respective Affiliates to, provide the
Purchaser with such cooperation, assistance and information as it may reasonably
request in respect of Taxes relating to the Assets, the preparation of any Tax
Return, including Returns relating to Transfer Taxes, amended Tax Returns or
claim for refund in respect of the Assets, or the participation in or conduct of
any audit or other examination by any Taxing Authority or judicial or
administrative proceeding relating to liability for Taxes relating to the
Assets.  Such cooperation and information shall include (i) providing
copies of all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents relating to
rulings or other determinations by taxing authorities and relevant records
concerning the ownership and Tax basis of property, which the Sellers may
possess or control, and (ii) making employees or agents available on a mutually
convenient basis to provide explanations of any documents or information
provided.  For a period that is equal to the longer of (x) six
years and (y) the expiration of all relevant statutes of limitation, the
Sellers shall retain all relevant tax documents, including prior years’ Tax
Returns, supporting work schedules and other records or information that may be
relevant to such Tax Returns and shall not destroy or otherwise dispose of any
such records without the prior written consent of the Purchaser.

       

      (b) All
applicable Transfer Taxes imposed in connection with this Agreement and the
transactions contemplated hereby shall be borne by the Sellers, and the Sellers
and the Stockholder shall jointly and severally indemnify, defend, and hold
harmless the Purchaser and its Affiliates with respect to such Transfer
Taxes.  The Sellers and the Purchaser shall file all necessary
documentation and Tax Returns with respect to such Transfer Taxes.

       

      (c) The
Sellers acknowledge and agree that the purchase of the Assets hereunder is an
“applicable asset acquisition” within the meaning of section 1060(c) of the
Code.

       

      6.9   Corporate
Name.  After the Closing, neither of the Sellers nor any of
their respective current or future Affiliates will use or operate under a name
including the terms “JWT”, “JW Tumbles” or any variation or modification
thereof.  As soon as possible following the Closing, the Sellers and
the Stockholder will take all actions necessary to cause the name of each of the
Seller and each Affiliate of either of them, the name of which contains the name
“JWT”, “JW Tumbles” or any variation or modification thereof, to be changed to a
name that is not similar to or in any manner subject to confusion with its
present name.

       

      6.10   Confidentiality.  From
and after the Closing Date, the Sellers and the Stockholder shall, and shall
cause their Affiliates and their respective officers, directors, employees and
advisors (collectively, the “Recipients”) to, keep
confidential any information relating to the Assets or the Business, except for
any such information that (a) is available to the public on the Closing Date,
(b) thereafter becomes available to the public other than as a result of a
disclosure by the Sellers, the Stockholder or any of their respective
Recipients, or (c)

       

       

       

      
        
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      is or
becomes available to the Sellers, the Stockholder or any of their respective
Recipients on a non-confidential basis from a source that to the Sellers’ or
such Stockholder’s or Recipient’s knowledge, as applicable, is not prohibited
from disclosing such information to the Sellers or Stockholder or Recipient by a
legal, contractual or fiduciary obligation to any other
Person.  Should either Seller, any Stockholder or any such Recipient
be required to disclose any such information in response to an Order or as
otherwise required by Law or administrative process, it or he shall inform the
Purchaser in writing of such request or obligation as soon as possible after the
Sellers or Stockholder or Recipient, as applicable, is informed of it and, if
possible, before any information is disclosed, so that a protective order or
other appropriate remedy may be obtained by the Purchaser.  If either
Seller or the Stockholder or Recipient is obligated to make such disclosure, it
shall only make such disclosure to the extent to which it is so obligated, but
not further or otherwise.

       

      6.11   Further Assurances;
Post-Closing Cooperation. 

       

      (a) At any
time or from time to time after the Closing, at the Purchaser’s request and
without further consideration, the Sellers shall execute and deliver to the
Purchaser such other instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take such other actions
as the Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to the Purchaser, and to confirm the
Purchaser’s title to, all of the Assets, and, to the full extent permitted by
Law, to put the Purchaser in actual possession and operating control of the
Assets and to assist the Purchaser in exercising all rights with respect
thereto, and otherwise to cause the Sellers to fulfill its obligations under
this Agreement and the Ancillary Agreements.

       

      (b) Subject
to Section 6.8(a), following the Closing, each party hereto will afford the
other parties, their counsel and their accountants, during normal business
hours, reasonable access to the books, records and other data relating to the
Business in its possession with respect to periods prior to the Closing and the
right to make copies and extracts therefrom, to the extent that such access may
be reasonably required by the requesting party in connection with (i) the
determination or enforcement of rights and obligations under this Agreement or
the Ancillary Agreements, (ii) compliance with the requirements of any
Governmental or Regulatory Authority, (iii) the determination or enforcement of
the rights and obligations of any Indemnified Party or (iv) in connection with
any actual or threatened Action.  Subject to Section 6.8(a), for a
period extending six years after the Closing Date, no party hereto shall destroy
or otherwise dispose of any such books, records and other data unless such party
shall first offer in writing to surrender such books, records and other data to
the other parties hereto and such other parties shall not agree in writing to
take possession thereof during the ten-day period after such offer is
made.  Notwithstanding anything to the contrary contained in this
Section 6.11(b), if the parties hereto are in an adversarial relationship
in litigation or arbitration, the furnishing of information, documents or
records in accordance with Section 6.11(b) shall be subject to applicable rules
relating to discovery.

       

      (c) Following
the Closing, (i) the Sellers shall promptly remit to the Purchaser any
checks, cash, payments, mail or other communications relating to the Assets and
the Assumed Liabilities that are received by the Sellers after the Closing, and
(ii) the Purchaser shall promptly remit to the appropriate Seller any
checks, cash, payments, mail or other 

       

       

       

      
        
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      communications
relating to the Excluded Assets or Retained Liabilities that are received by the
Purchaser after the Closing.

       

      6.12   Delivery.  Within
ten Business Days following the Closing Date, the Sellers shall, and shall cause
or instruct any third party in possession of any Assets to, make available to
the Purchaser at the location(s) where the Business is currently operated by
Sellers, at the Sellers’ expense and in accordance with the Purchaser’s
instruction, the Assets, including (a) the Assigned Contracts, (b) editorial,
production (including photoscans, illustrations files, typesetting files, files
for custom published products and other work-in-process materials),
manufacturing, subsidiary rights, correspondence and permission files, (c)
computer-generated customer lists and recent sales history worldwide, (d)
copyright and trademark registration certificates and any related application
files, (e) books, records and other data related to the Concept, including
records relating to sales of products and services, royalty payments and
advances and payments due under the Assigned Contracts, (f) a schedule and
copies of all rights and permissions respecting the Business, whether granted by
or to the Sellers, and (g) the Inventory.

       

      6.13   Refunds and
Returns.  The Sellers shall accept returns of all products sold
and shipped by it prior to the Closing Date and the Sellers shall pay refunds to
the Purchaser’s customers in connection therewith and for services performed
prior to the Closing Date in accordance with the Sellers’ return policies
attached as Schedule
4.27(b) hereto.  The Purchaser shall forward to the Sellers any
return of any product received by the Purchaser but sold and shipped by the
Sellers prior to the Closing Date and the Sellers shall pay any refunds in
connection therewith.  In the event that it is unclear as to whether a
the Liability relative to a refund or return should be borne by the Sellers or
Purchaser, the Purchaser shall (1) first consult with the Sellers and obtain its
comments and input as to whether such products or services were sold and shipped
or performed prior to the Closing Date by the Sellers or after the Closing Date
by the Purchaser, and (2) after having obtained the Sellers’ comments and input,
allocate the Liability in a good faith manner, taking into account all
reasonable comments and input of the Sellers. The Purchaser may also, at the
request of the Sellers, contact the customer(s) requesting a refund to obtain
its comments and input.

       

      6.14   Work-in-Process.  Promptly
following the Closing Date, the Sellers will request all vendors or other
suppliers who are currently performing or who have performed work of any kind in
connection with the Concept, including without limitation the vendors and
suppliers set forth on Schedule 4.27(a), in
each case for which the Sellers will remain liable pursuant to Section 2.3, to
submit bills to the Sellers for the amounts payable by the Sellers pursuant to
Section 2.3.   

       

      6.15   Noncompetition.  

       

      (a) The
Sellers covenant and agree that for the five-year period immediately following
the Closing Date it will refrain from, directly or indirectly through any
Subsidiary, Affiliate, partnership, joint venture or agent, for its own account
or as an owner, stockholder, operator, manager, advisor or consultant of or to
any Person:  (i) employing, engaging or seeking to employ or
engage any Transferred Employee(s) or any other Person who at or prior to the
Closing had been an employee of either Seller, the Purchaser or any of their
respective 

       

       

       

      
        
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      Affiliates,
unless such employee (A) resigns voluntarily (without any solicitation from
either Seller or any of their respective Affiliates) or (B) is terminated by the
Purchaser or any of its Affiliates after the Closing Date;
(ii) participating or engaging in (other than through the ownership of 5%
or less of any class of securities registered under the Exchange Act), or
otherwise lending assistance (financial or otherwise) to any Person
participating or engaged in, any of the lines of business which comprised the
Business on the Closing Date in any jurisdiction in which the Sellers
participated or engaged in such lines of business on the Closing Date; or (iii)
otherwise competing with the Business as conducted by the Purchaser anywhere in
the United States.

       

      (b) The
parties hereto recognize that the Laws and public policies of various
jurisdictions may differ as to the validity and enforceability of covenants
similar to those set forth in this Section 6.15.  It is the
intention of the parties that the provisions of this Section 6.16 be
enforced to the fullest extent permissible under the Laws and policies of each
jurisdiction in which enforcement may be sought, and that the unenforceability
(or the modification to conform to such Laws or policies) of any provisions of
this Section 6.15 shall not render unenforceable, or impair, the remainder
of the provisions of this Section 6.15.  Accordingly, if at the
time of enforcement of any provision of this Section 6.15 a court of competent
jurisdiction holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographic area reasonable under such circumstances will be substituted
for the stated period, scope or geographical area and that such court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and geographical area permitted by Law.

       

      6.16           Financial Support of the
Business Post-Closing.   In support of the Business,
Purchaser agrees to make $250,000 available to the operation of the
Business.

       

      ARTICLE
VII

      CONDITIONS
TO OBLIGATION TO CLOSE

       

      7.1   Conditions to Closing by the
Purchaser.  The obligation of the Purchaser to effect the
transactions contemplated hereby is subject to the satisfaction or waiver by the
Purchaser of each of the following conditions:

       

      (a) The
representations and warranties of the Sellers and the Stockholder set forth in
this Agreement shall be true and correct in all material respects, with respect
to representations and warranties not qualified by materiality, or in all
respects, with respect to representations and warranties qualified by
materiality, as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date.

       

      (b) The
Sellers and the Stockholder shall have performed in all material respects the
covenants required to be performed by them under this Agreement at or prior to
the Closing Date.

       

      (c) The board
of directors of the Purchaser shall have approved this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and
thereby.

       

       

       

      
        
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      (d) This
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby shall have been approved by the Board and shall have received
Stockholder Approval.

       

      (e) The
Sellers shall have delivered to the Purchaser all consents to the performance by
the Sellers of their obligations under this Agreement and the Ancillary
Agreements or to the consummation of the transactions contemplated hereby and
thereby as are required under any Contract to which the Sellers are a party or
by which any of its assets or properties are bound, including those Contracts
listed on Schedule
7.1(e).  Each such consent shall:  (i) be in
form and substance satisfactory to the Purchaser in its sole discretion,
(ii) not be subject to the satisfaction of any condition that has not been
satisfied or waived and (iii) be in full force and effect.

       

      (f) Since the
date hereof, there shall not have been any event, occurrence or development that
has caused, or could reasonably be expected to cause, a Material Adverse
Effect.

       

      (g) Each of
the Sellers and the Stockholder shall have executed and delivered each of the
Ancillary Agreements to which it is a party.

       

      (h) There
shall be no effective or pending Law or Order that would prohibit the Closing,
and the Sellers and the Stockholder shall have obtained all necessary approvals
of any Governmental Entities in connection with the transactions contemplated
hereby and by the Ancillary Agreements.

       

      (i) The
Sellers shall have delivered to the Purchaser a duly completed and executed
certification pursuant to Section 1.445-2 of the Treasury regulations
certifying that neither Seller is a foreign person.

       

      (j) The
Sellers shall have delivered to the Purchaser an opinion of its counsel in the
form attached hereto as Exhibit
G.

       

      (k) The
Purchaser shall have received releases and UCC-3 termination statements, in each
case in recordable form, from all Persons holding Liens on the
Assets.

       

      (l) The
Sellers shall have delivered each of the items described in Section
3.2.

       

      (m) The
Stockholder and Kidville shall have entered into an employment agreement, the
terms of which being acceptable to Kidville.

       

      7.2   Conditions to Closing by the
Sellers.  The obligation of the Sellers to effect the
Transactions is subject to the satisfaction or waiver by the Sellers of each of
the following conditions:

       

      (a) The
representations and warranties of the Purchaser set forth in this Agreement
shall be true and correct in all material respects, with respect to
representations and warranties not qualified by materiality, or in all respects,
with respect to representations and 

       

       

       

      
        
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      warranties
qualified by materiality, in each case as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date.

       

      (b) The
Purchaser shall have performed in all material respects the covenants required
to be performed by it under this Agreement at or prior to the Closing
Date.

       

      (c) This
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby shall have received Stockholder Approval.

       

      (d) The
Purchaser shall have executed and delivered each of the Ancillary Agreements to
which it is a party.

       

      (e) The board
of directors of the Purchaser shall have approved this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and
thereby.

       

      (f) There
shall be no effective or pending Law or Order that would prohibit the Closing,
and the Purchaser shall have obtained all necessary approvals of any
Governmental Entities in connection with the transactions contemplated hereby
and by the Ancillary Agreements.

       

      (g) The
Purchaser shall have delivered each of the items described in
Section 3.3.

       

      (h) The
Stockholder and Kidville shall have entered into an employment agreement, the
terms of which being acceptable to the Stockholder.

       

       

      ARTICLE
VIII

      TERMINATION

       

       

      8.1   Termination of
Agreement.  Any party hereto may terminate this Agreement prior
to the Closing by written notice to the other party hereto as
follows:

       

      (a) by mutual
written consent at any time prior to the Closing;

       

      (b) by either
the Purchaser or the Sellers, if any Governmental Entity shall have issued an
Order or taken any other action permanently enjoining, restraining or otherwise
prohibiting the transactions contemplated hereby and such Order or other action
shall have become final and nonappealable;

       

      (c) by either
the Purchaser or the Sellers, if the transactions contemplated hereby shall not
have been consummated on or before the date that is 120 days following the
date hereof (other than due to the failure of the party seeking to terminate
this Agreement to perform any obligations under this Agreement required to be
performed at or prior to the Closing or to satisfy any Closing
condition);

       

       

      
        
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      (d) by the
Purchaser, if any Seller or Stockholder shall have breached any of its or his
representations and warranties or any covenant or other agreement to be
performed by it or him and such breach is incapable of being cured or is not
cured within ten days of receipt of written notice thereof from the Purchaser;
or

       

      (e) by the
Sellers, if the Purchaser shall have breached any of its representations and
warranties or any covenant or other agreement to be performed by it and such
breach is incapable of being cured or is not cured within ten days of receipt of
written notice thereof from the Sellers.

       

      8.2   Effect of
Termination.  In the event of termination of this Agreement by
either the Sellers or the Purchaser as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any Liability
on the part of the Purchaser, the Sellers or the Stockholder; provided, however, that the
provisions of Article IX, Article X, this Section 8.2 and the
Non-Disclosure Agreement shall survive any termination hereof pursuant to
Section 8.1.  Nothing contained in this Section 8.2 shall relieve
any party hereto of Liability that it may have for any breach of any
representation, warranty, covenant or agreement set forth in this Agreement
prior to any termination pursuant to Section 8.1. Notwithstanding anything in
this Agreement to the contrary, if this Agreement shall be terminated pursuant
to Section 8.1(d), the Sellers shall reimburse the Purchaser for all
reasonable out-of-pocket costs and expenses, including the reasonable fees and
expenses of investment banks, accountants, legal counsel and other
Representatives incurred by the Purchaser in connection with this Agreement or
the transactions contemplated hereby, and the expenses of any litigation
incurred in connection with collecting the fees and other amounts provided for
in this Section.

       

       

      ARTICLE
IX

      INDEMNIFICATION

       

      9.1   Indemnification
Obligations.

       

      (a) Indemnification by the
Sellers and the Stockholder.  The Sellers and the Stockholder
shall, jointly and severally, indemnify, defend and hold harmless the Purchaser
and its officers, directors, employees, agents and Affiliates against any and
all Losses suffered, incurred or sustained by any of them or to which any of
them becomes subject, resulting from, arising out of or relating to (i) any
misrepresentation or breach of representation or warranty on the part of either
Seller or the Stockholder contained in this Agreement, (ii) any nonfulfillment
of or failure to perform any covenant or agreement on the part of either Seller
or the Stockholder contained in this Agreement and (iii) in the event that the
Closing occurs, the Retained Liabilities.

       

      (b) Indemnification by the
Purchaser and Kidville.  The Purchaser and Kidville shall
indemnify, defend and hold harmless the Sellers and its officers, directors,
employees, agents and Affiliates and the Stockholder, against any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to (i) any misrepresentation
or breach of representation or warranty on the part of the Purchaser or Kidville
contained in this Agreement, (ii) any nonfulfillment of or 

       

       

       

      
        
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      failure
to perform any covenant or agreement on the part of the Purchaser or Kidville
contained in this Agreement and (iii) in the event that the Closing occurs, the
Assumed Liabilities, including, but not limited to, the personal guaranties
signed by Ash Robinson and Melissa Woods for the Carmel Valley location and by
Ash Robinson and Heather Erickson for the Point Loma location.

       

      9.2   Method of Asserting
Claims.  Claims for indemnification by an Indemnified Party
under Section 9.1 will be asserted and resolved as follows:

       

      (a) Third-Party
Claims.  In the event that any claim or demand in respect of
which an Indemnified Party might seek indemnification under Section 9.1 is
asserted against or sought to be collected from such Indemnified Party by a
Person other than the Sellers, the Stockholder, the Purchaser or any of their
respective Affiliates (a “Third-Party Claim”),
the Indemnified Party shall deliver a Claim Notice with reasonable promptness to
the Indemnifying Party.  If the Indemnified Party fails to provide the
Claim Notice with reasonable promptness after the Indemnified Party receives
notice of such Third-Party Claim, the Indemnifying Party will not be obligated
to indemnify the Indemnified Party with respect to such Third-Party Claim to the
extent that the Indemnifying Party’s ability to defend is actually prejudiced by
such failure of the Indemnified Party.  The Indemnifying Party will
notify the Indemnified Party as soon as practicable within the Dispute Period
whether the Indemnifying Party accepts or disputes its liability to the
Indemnified Party under Section 9.1 and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such
Third-Party Claim.

       

      (i) Defense by Indemnifying
Party.  If the Indemnifying Party notifies the Indemnified
Party within the Dispute Period that the Indemnifying Party desires to defend
the Indemnified Party with respect to the Third-Party Claim pursuant to this
Section 9.2, then the Indemnifying Party will have the right to defend, with
counsel reasonably satisfactory to the Indemnified Party, at the sole cost and
expense of the Indemnifying Party, such Third-Party Claim by all appropriate
proceedings, which proceedings will be vigorously and diligently prosecuted or
defended by the Indemnifying Party to a final conclusion or will be settled at
the discretion of the Indemnifying Party (but only with the prior written
consent of the Indemnified Party in its sole discretion in the case of any
settlement that provides for any relief other than the payment of monetary
damages or that provides for the payment of monetary damages as to which the
Indemnified Party will not be indemnified in full pursuant to Section
9.1).  Subject to the immediately preceding sentence, the Indemnifying
Party will have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that
(A) the Indemnified Party may, at the cost and expense of the Indemnifying
Party, at any time prior to the Indemnifying Party’s delivery of the notice
referred to in the first sentence of this Section 9.2(a)(i), file any motion,
answer or other pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate to protect its interests and
(B) the Sellers, in their capacity as the Indemnifying Party, shall not
settle or compromise any Third-Party Claim that relates to Taxes if such
settlement or compromise would result in any Tax detriment to the Purchaser or
any of its Affiliates without the prior written consent of the Indemnified
Party.  If requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third-Party Claim that
the Indemnifying Party elects to 

       

       

       

       

      
        
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      contest.  Notwithstanding
anything else contained in this Section 9.2(a)(i), the Purchaser shall
defend and control, pursuant to Section 9.2(a)(ii), any Third-Party Claim
that relates to Taxes for which it may be the Indemnified Party.

       

      (ii) Defense by Indemnified
Party.  If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Third-Party Claim, if the Indemnifying Party gives such notice but
any time thereafter fails to prosecute or defend vigorously and diligently or
settle the Third-Party Claim, or if the Indemnifying Party fails to give any
notice whatsoever within the Dispute Period, then the Indemnified Party will
have the right to defend, at the sole cost and expense of the Indemnifying Party
(including, with respect to Tax matters, internal costs and expenses of the
Purchaser, as the Indemnified Party), the Third-Party Claim by all appropriate
proceedings, which proceedings will be prosecuted by the Indemnified Party in
good faith or will be settled at the discretion of the Indemnified
Party.  The Indemnified Party will have full control of such defense
and proceedings, including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and its counsel in contesting any Third-Party Claim which
the Indemnified Party is contesting.  Notwithstanding the foregoing
provisions of this Section 9.2, if the Indemnifying Party has notified the
Indemnified Party within the Dispute Period that the Indemnifying Party disputes
its liability hereunder to the Indemnified Party with respect to such
Third-Party Claim and if such dispute is resolved in all respects in favor of
the Indemnifying Party in the manner provided in Section 9.2(a)(iii), the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party’s defense pursuant to this Section 9.2 or of the Indemnifying
Party’s participation therein at the Indemnified Party’s request.  The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 9.2, and
the Indemnifying Party will bear its own costs and expenses with respect to such
participation.

       

      (iii) Acceptance by Indemnifying
Party.  If the Indemnifying Party notifies the Indemnified
Party that it accepts its indemnification liability to the Indemnified Party
with respect to the Third-Party Claim under Section 9.1 or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes its liability to the Indemnified Party with respect to such Third-Party
Claim, the Loss identified in the Claim Notice will be conclusively deemed a
liability of the Indemnifying Party under Section 9.1 and the Indemnifying Party
shall pay the amount of such Loss to the Indemnified Party on
demand.  If the Indemnifying Party timely disputes its liability with
respect to such Third-Party Claim, the Indemnifying Party and the Indemnified
Party will proceed in good faith to negotiate a resolution of such dispute, and
if not resolved through negotiations within the Resolution Period, such dispute
shall be resolved by litigation in a court of competent
jurisdiction.

       

      (b) Non-Third Party
Claims.  In the event any Indemnified Party should have a claim
under Section 9.1 against any Indemnifying Party that does not involve a
Third-Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party.  The failure or delay
by any Indemnified Party to give the Indemnity Notice shall not impair such
party’s rights hereunder except to the extent that the Indemnifying Party is
actually prejudiced by such failure or delay.  If the Indemnifying
Party notifies the 

       

       

       

      
        
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      Indemnified
Party that it does not dispute the claim described in such Indemnity Notice or
fails to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity Notice, the
Loss identified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnified Party under Section 9.1 and the Indemnifying Party shall pay
the amount of such Loss to the Indemnified Party on demand.  If the
Indemnifying Party has timely disputed its liability with respect to such claim,
the Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.

       

      9.3   Further Items Relating to
Indemnification.  Notwithstanding the foregoing, the right of
any Indemnified Party to indemnification under this Article IX shall be subject
to the following terms:

       

      (a) For
purposes of indemnification under this Article IX only, all qualifications as to
materiality or Material Adverse Effect contained in any representation or
warranty shall be disregarded.

       

      (b) No party
hereto shall be required to indemnify or hold harmless any Person with respect
to (i) any claim for indemnification pursuant to Sections 9.1(a) or 9.1(b),
unless and until the Indemnified Parties’ aggregate Losses in respect of all
such claims exceed $10,000.

       

      (c) In the
event that the Closing occurs, the aggregate liability of the Sellers and the
Stockholder pursuant to clauses (i) and (ii) of Section 9.1(a) on the one hand,
and the Purchaser pursuant to clauses (i) and (ii) of Section 9.2(b) on the
other hand, for claims for indemnification under this Article IX shall not
exceed the Purchase Consideration.

       

      (d) Any
indemnity payment made under this Agreement following the Closing shall be
treated by the parties hereto as a purchase price adjustment, and the parties
agree to report such payments consistent therewith.

       

       

      ARTICLE
X

      MISCELLANEOUS

       

       

      10.1   Survival.  Notwithstanding
any right of the Purchaser (whether or not exercised) to investigate the affairs
of the Sellers or the accuracy of the representations and warranties of the
Sellers and the Stockholder (or of the Sellers to investigate those of the
Purchaser) contained in this Agreement or the waiver of any condition to
Closing, each of the Purchaser (with respect to the Sellers and the Stockholder)
and the Sellers (with respect to the Purchaser) has the right to rely fully upon
the representations, warranties, covenants and agreements of the other contained
in this Agreement.  The representations, warranties, covenants and
agreements of the parties contained in this Agreement and the Ancillary
Agreements and any certificate or other document provided hereunder or
thereunder will terminate at the Closing, except that (a) the representations
and warranties made in Articles IV and V shall survive in full force and effect
until the third anniversary of the Closing Date; provided, however, that (i) the
representations and warranties made in Sections 4.1, 4.3 and the first sentence
of Section 4.22 

       

       

       

      
        
          48

        

        
           

          
            

          

        

        
           

        

      

       

       

      shall
survive indefinitely and (ii) the representations and warranties made in
Sections 4.10, 4.17 and 4.20 shall survive until the sixtieth day immediately
following the expiration of all applicable statutes of limitation; (b) the
covenants and agreements made in this Agreement or any of the Ancillary
Agreements that are to be performed or that relate in whole or in part to
periods subsequent to the Closing Date and that do not, by their terms, expire
on a date certain, shall survive in full force and effect until the sixtieth day
immediately following the expiration of all applicable statutes of limitation
and, otherwise, indefinitely; (c) the covenants and agreements in Article II
shall survive in full force and effect until such time as they are fully
complied with; and (d) the covenants and agreements made in this Agreement or
any of the Ancillary Agreements that are to be performed or that relate in whole
or in part to periods subsequent to the Closing Date and that, by their terms
expire on a date certain, shall survive until such date certain; provided, that any
representation, warranty, covenant or agreement that would otherwise terminate
in accordance with this sentence will continue to survive if a Claim Notice or
Indemnity Notice (as applicable) shall have been timely given under
Article IX on or prior to such termination date, until the related claim
for indemnification has been satisfied or otherwise resolved as provided in
Article IX, but only with respect to matters described in such Claim Notice
or Indemnity Notice.

       

      10.2   Press Releases and Public
Announcement.  Neither the Purchaser, the Sellers nor either
Stockholder shall issue any press release or make any public announcement or,
prior to the Closing, any general announcement to the Employees or the Sellers’
customers, relating to this Agreement or the Ancillary Agreements or the
transactions contemplated hereby or thereby without the prior review and written
approval of the Sellers, in the case of the Purchaser, or the Purchaser, in the
case of the Sellers or the Stockholder; provided, however, that if such
release or announcement is required by Law or stock exchange or self-regulatory
organization regulation or rule in order to discharge the disclosure obligations
of the Purchaser, the Sellers or the Stockholder and it or he is unable after
good faith efforts to obtain timely the approval of the Sellers or the
Purchaser, as the case may be, then it may make or issue the legally required
release or announcement and promptly furnish the Sellers or the Purchaser, as
the case may be, with a copy thereof.

       

      10.3   No Third-Party
Beneficiaries.  The terms and provisions of this Agreement are
intended solely for the benefit of the parties hereto and their respective
successors and permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights, and this Agreement does not confer any
such rights, upon any other Person, except for any Person entitled to indemnity
under Article IX or Section 10.17.

       

      10.4   Entire
Agreement.  This Agreement (including the Exhibits and the
Schedules hereto), the Ancillary Agreements and the Non-Disclosure Agreement
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and thereof and supersede any prior understandings,
agreements or representations by or between the parties hereto, written or oral,
with respect to such subject matter.

       

      10.5   Succession and
Assignment.  Subject to the next sentence, this Agreement shall
be binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns.  No party hereto may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the Sellers, in 

       

       

       

      
        
          49

        

        
           

          
            

          

        

        
           

        

      

       

       

       

      the case
of Purchaser, or the Purchaser, in the case of the Sellers and the Stockholder,
except that the Purchaser may assign this Agreement or any of its rights,
interests or obligations hereunder to any Affiliate of the Purchaser or to any
post-Closing purchaser of the Business or a substantial part of the Assets
without such approval.

       

      10.6   Drafting.  The
parties have participated jointly in the negotiation and drafting of this
Agreement and, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this
Agreement.

       

      10.7   Notices.  All
notices, requests and other communications hereunder must be in writing and will
be deemed to have been duly given only if (a) delivered personally against
written receipt, (b) sent by facsimile transmission, (c) mailed by registered or
certified mail, postage prepaid, return receipt requested, or (d) mailed by
reputable international overnight courier, fee prepaid, to the parties hereto at
the following addresses or facsimile numbers:

       

      If to the
Sellers, to:

       

      JWT Kids,
Inc.

      312 South
Cedros Avenue, Suite 329

      San
Diego, California 92075

      Facsimile:       
(858) 794-0398

      Attention:      
Ash Robinson

       

      and:

       

      JWT IP,
Inc.

      312 South
Cedros Avenue, Suite 329

      San
Diego, California 92075

      Facsimile:        (858)
794-0398

      Attention:       Ash
Robinson

       

      with a
copy to:

       

      Schwartz
Semerdjian Haile Ballard & Cauley LLP

      101 West
Broadway, Suite 810

      San
Diego, California 92101

      Facsimile:        (619)
236-8827

      Attention:       Ross
J. Schwartz, Esq.

      


      If to the
Stockholder, to:

       

      Ash
Robinson

      312 South
Cedros Avenue, Suite 329

      San
Diego, California 92075

      Facsimile:       
(858) 794-0398

       

       

       

       

      
        
          50

        

        
           

          
            

          

        

        
           

        

      

       

       

      


      with a
copy to:

       

      Schwartz
Semerdjian Haile Ballard & Cauley LLP

      101 West
Broadway, Suite 810

      San
Diego, California 92101

      Facsimile:        (619)
236-8827

      Attention:       Ross
J. Schwartz, Esq.

      


      If to the
Purchaser, to:

       

      Kidville
JWT

      163 East
84th Street

      New York,
New York 10028

      Facsimile:        212-772-9010

      Attention:      
Andy Stenzler

       

      with a
copy to:

       

      Markowitz
& Roshco, LLP

      530 Fifth
Avenue, 23rd
Floor

      New York,
New York 10036

      Facsimile:        212-944-7630

      Attention:       Seth
P. Markowitz

       

      If to
Kidville, to:

      


      Kidville,
Inc.

      163 East
84th Street

      New York,
New York 10028

      Facsimile:        212-772-9010

      Attention:       Andy
Stenzler

       

      with a
copy to:

       

      Markowitz
& Roshco, LLP

      530 Fifth
Avenue, 23rd
Floor

      New York,
New York 10036

      Facsimile:        212-944-7630

      Attention:       Seth
P. Markowitz

       

      All such
notices, requests and other communications will be deemed given, (w) if
delivered personally as provided in this Section 10.7, upon delivery, (x) if
delivered by facsimile transmission as provided in this Section 10.7, upon
confirmed receipt, (y) if delivered by mail as provided in this Section 10.7,
upon the earlier of the fifth Business Day following mailing and receipt, and
(z) if delivered by overnight courier as provided in this Section 10.7, upon the
earlier of the second Business Day following the date sent by such overnight
courier and receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of such
notice is to be delivered pursuant to this Section
10.7).  

       

       

       

      
        
          51

        

        
           

          
            

          

        

        
           

        

      

       

       

      Any party
hereto may change the address to which notices, requests and other
communications hereunder are to be delivered by giving the other parties hereto
notice in the manner set forth herein.

       

      10.8   Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule that would cause the
application of the Laws of any jurisdiction other than the State of New
York.

       

      10.9   CONSENT TO JURISDICTION AND
SERVICE OF PROCESS.  EACH OF THE PARTIES HERETO CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY
OF NEW YORK IN THE STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE LITIGATED IN SUCH
COURTS.  EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.  EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 15 CALENDAR DAYS AFTER SUCH
MAILING.  NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF EITHER PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

       

      10.10   WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY AND FOR ANY COUNTERCLAIM RELATING THERETO.

       

      10.11   Amendments and
Waivers.  No amendment of any provision of this Agreement shall
be valid unless such amendment is in writing and signed by the Purchaser and the
Sellers.  No waiver by any party hereto of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.  No waiver shall be valid unless such waiver is in writing
and signed by the party against whom such waiver is sought to be
enforced.

       

       

       

      
        
          52

        

        
           

          
            

          

        

        
           

        

      

       

      10.12   Severability.  If
any provision of this Agreement is held to be under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
provision had never comprised a part hereof, (c) the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
such provision or its severance herefrom and (d) in lieu of
such  provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
provision as may be possible.

       

       

      10.13   Expenses.  Except
as otherwise expressly set forth herein, each of the parties hereto will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby, whether or not the transactions contemplated
hereby and thereby are consummated.

       

       

      10.14   Exhibits and
Schedules.  The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part
hereof.  No information contained in any particular Schedule shall be
deemed to be contained in any other Schedule unless expressly included therein
(by cross-reference or otherwise).

       

       

      10.15   Specific
Performance.  The parties hereto agree that irreparable damage
would occur in the event that any provision of this Agreement was not performed
in accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof in addition to any other remedy
available to them at law or equity.

       

       

      10.16   No Successor
Liability.  The Purchaser shall not be considered a successor
to either Seller, any of their respective Affiliates or any of their respective
predecessors by reason of any theory of Law or equity. 

       

       

      10.17   Bulk Sales
Laws.  The parties hereto hereby waive compliance with the bulk
sales Laws of any jurisdiction in which any of the Assets are located or in
which any operations relating to the Business are conducted.  The
Sellers and the Stockholder shall indemnify the Purchaser and its officers,
directors, employees, agents and Affiliates in respect of, and hold each of them
harmless from and against, any and all Losses suffered, occurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to the failure of the Sellers to comply with the terms of any
such provisions applicable to the transactions contemplated by this
Agreement.

       

       

      10.18   Headings.  The
descriptive headings contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.

       

       

      10.19   Counterparts.  This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.

       

      [Signature
page follows.]

       


      
        
          53 


        

        
           


          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date first written above.

       

      KIDVILLE
JWT, LLC

      


      


      By:           /s/ Andy
Stenzler

      Name:      Andy
Stenzler

      Title:        Chief
Executive Officer

      


      KIDVILLE
INC.

      


      


      By:           /s/ Andy
Stenzler

      Name:      Andy
Stenzler

      Title:
Chief Executive Officer

      


      JWT KIDS,
INC.

      


      


      By:           /s/ Ash
Robinson

      Name:      Ash
Robinson

      Title:        President

      


      JWT KIDS,
INC.

      


      


      By:           /s/ Ash
Robinson

      Name:      Ash
Robinson

      Title:        President

      


      


      /s/ Ash
Robinson

      ASH
ROBINSON

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EXHIBITS

      


      Exhibit
A                               Form
of Escrow Agreement

      


      Exhibit
B                                Form
of Bill of Sale and General Assignment

      


      Exhibit
C                                Form
of Assumption Agreement

      


      Exhibit
D                                Form
of Domain Name Assignment

      


      Exhibit
E                                Form
of Trademark Assignment

      


      Exhibit
F                                Form
of Copyright Agreement

      


      Exhibit
G                                Form
of Legal Opinion of the Sellers’ Counsel

      


      Exhibit
H                                Form
of Non-Compete Agreement

      


      Exhibit
I                                
Form of Lock-up Agreement

      


      Exhibit
J                                
Form of Assignment of Membership Interest