Document:

<PAGE>

                              PLAN OF DISSOLUTION

                         Dated as of December 4, 2000

                                 By and Among

                              ZANYBRAINY.COM LLC,

                               ZB HOLDINGS LLC,

                            CHILDREN'S EQUITY LLC,

                            ZANY BRAINY DIRECT LLC,

                              ZANY BRAINY, INC.,

                                      and

                          ONLINE RETAIL PARTNERS INC.
<PAGE>

                              PLAN OF DISSOLUTION

     THIS PLAN OF DISSOLUTION (this "Agreement") is made and entered into as of
                                     ---------
4th day of December, 2000 (the "Effective Date"), by and among ZanyBrainy.com
                                --------------
LLC, a Delaware limited liability company ("ZB.com"), ZB Holdings LLC, a
                                            ------
Delaware limited liability company ("ZB Holdings"), Children's Equity LLC, a
                                     -----------
Delaware limited liability company ("Children's Equity"), Zany Brainy Direct
                                     -----------------
LLC, a Delaware limited liability company ("ZB Direct"), Zany Brainy, Inc., a
                                            ---------
Pennsylvania corporation ("Zany"), and Online Retail Partners Inc., a Delaware
                           ----
corporation ("ONRP").
              ----

     WHEREAS, (i) ONRP owns 5,000,000 Voting Common Interests of ZB Holdings,
which constitute all of the Voting Common Interests of ZB Holdings, (ii) ZB
Direct owns 5,000,000 Voting Preferred Interests of ZB Holdings (by virtue of
the transfer of said interests from Zany as detailed in Section 1(d)(iii)
below), which constitute all of the Voting Preferred Interests of ZB Holdings,
(iii) ZB Direct (by virtue of the transfer of 12,889,457 interests from Zany as
detailed in Section 1(d)(iii) below), Children's Equity (533,501) and Messrs.
Keith C. Spurgeon (102,500),  Thomas G. Vellios (102,500) and Robert A. Helpert
(41,000) own all of the 13,668,958 Non-Voting Preferred Interests of ZB
Holdings, and (iv) ONRP owns 8,977,440 Non-Voting Common Interests of ZB
Holdings, which constitute all of the Non-Voting Common Interests of ZB Holdings
(each such capitalized term which is not otherwise defined herein has the
meaning given thereto in the Second Amended and Restated Limited Liability
Company Agreement of ZB Holdings, dated as of December 4, 2000 (the "ZB Holdings
                                                                     -----------
Operating Agreement")).
-------------------

     WHEREAS, (i) ZB Holdings owns 32,646,398 Preferred Interests of ZB.com,
which constitute all of the Preferred Interests of ZB.com, (ii) various other
persons may have rights to (or, prior to the effectuation of the actions set
forth in Article 1 below, have had rights to) options (the "Options") to
                                                            -------
purchase 1,250,630 Common Interests of ZB.com, and (iii) Ramsey Beirne
Associates, Inc. ("Ramsey") may have rights to (or, prior to the effectuation of
                   ------
the actions set forth in Article 1 below, have had rights to) warrants (the

"Warrants") to purchase 515,460 Common Interests of ZB.com (each such
---------
capitalized term which is not otherwise defined herein has the meaning given
thereto in the Limited Liability Company Agreement of ZB.com, dated as of March
20, 2000 (the "ZB.com Operating Agreement")).  A full list of the persons who
               --------------------------
own or may have rights to Options prior to the effectuation of the actions set
forth in Article 1 below is attached as Schedule 1 hereto, together with an
indication for each such holder of the number of Common Interests heretofore
issued with respect to each holder and the number of Options that will be
terminated upon the dissolution of ZB.com.

     WHEREAS, (i) ZB Direct owns the sole Voting Interest of Children's Equity
(by virtue of the transfer of said interest from Zany as detailed in Section
1(d)(iii) below) and is the sole manager of Children's Equity and (ii)
Entertainment Industry Foundation (162,500) and various other persons own all of
the Non-Voting Interests of Children's Equity (each such capitalized term which
is not otherwise defined herein has the meaning given thereto in the Limited
Liability Company Agreement of Children's Equity, dated as of April 16, 2000
(the "Children's Equity Operating Agreement")).  A full list of the owners of
      -------------------------------------
Non-Voting Interests of Children's Equity is attached as Schedule 2 hereto.

                                       1
<PAGE>

     WHEREAS, Zany, ONRP (directly or through its affiliate, Online Retail
Partners LLC (the successor in interest to ONRP Services LLC) ("ONRP
                                                                ----
Services")), ZB Holdings and ZB.com have previously entered into a series of
--------
agreements in furtherance of the formation and operation of a joint venture for
the purpose of operating under ZB.com an e-commerce site on the World Wide Web.

     WHEREAS, the joint venture has proven unprofitable and the parties hereto
desire to effect the dissolution, liquidation and winding-up of ZB.com, ZB
Holdings and Children's Equity in accordance with the terms of this Agreement.

     NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

1.   ACTIONS PRECEDING DISSOLUTION.

     Each of the parties understands and agrees that the following actions have
been taken by the following parties prior to the date and time of execution of
this Agreement in contemplation of, and in preparation for, the actions
contemplated in Articles 2 and 3 hereof:

          (a)  Actions of ZB.com.
               -----------------

               (i)   Consent of Members. The sole member of ZB.com executed a
                     ------------------
consent, dated November 30, 2000, which, inter alia, approved an amendment to
                                         ----- ----
the ZB.com Operating Agreement clarifying and modifying the dissolution
procedures set forth therein.

               (ii)  Consent of Directors. The directors of ZB.com executed a
                     --------------------
unanimous consent, dated November 30, 2000, wherein the board, inter alia,
                                                               ----- ----
approved the amendment referenced in paragraph (a)(i) above.

               (iii) Consent of Members. The sole member of ZB.com executed a
                     ------------------
consent, dated the Effective Date, which, inter alia, approved the execution,
                                          ----- ----
delivery and performance of this Agreement and the dissolution of ZB.com
effective upon the execution of this Agreement by each of the parties hereto.

               (iv)  Consent of Directors. The directors of ZB.com executed a
                     --------------------
unanimous consent, dated the Effective Date, which, inter alia, approved the
                                                    ----- ----
execution, delivery and performance of this Agreement and the dissolution of
ZB.com effective upon the execution of this Agreement by each of the parties
hereto.

               (v)   Consummation of Agreement to Constitute Winding-Up.
                     --------------------------------------------------
Pursuant to the consent referenced in paragraph (a)(iv) above, the directors of
ZB.com have unanimously determined that ZB.com shall be wound-up by operation of
the performance of this Agreement.

               (vi)  Preparation and Execution of Certificate of Cancellation.
                     --------------------------------------------------------
Pursuant to the consents referenced in paragraphs (a)(iii) and (iv) above, the
members and directors of ZB.com have approved, and the officers of ZB.com have
prepared and executed, a certificate of cancellation to be filed in accordance
with Section 2(a)(vi) below.

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          (b)  Actions of ZB Holdings.
               ----------------------

               (i)   Consent of Members. A majority in voting power of the
                     ------------------
members of ZB approved Holdings executed a consent, dated the Effective Date,
which, inter alia,approved (x) an amendment and restatement to the ZB Holdings
       ----- ----
Operating Agreement clarifying and modifying the dissolution procedures set
forth therein, (y) the execution, delivery and performance of this Agreement,
and (z) the dissolution of ZB Holdings effective upon the filing of the
certificate of cancellation of ZB.com in accordance with paragraph (a)(vi)
above.

               (ii)  Consent of Directors. The directors of ZB Holdings executed
                     --------------------
a unanimous consent, dated the Effective Date, which, inter alia, approved (x)
                                                      ----- ----
an amendment and restatement to the ZB Holdings Operating Agreement clarifying
and modifying the dissolution procedures set forth therein, (y) the execution,
delivery and performance of this Agreement, and (z) the dissolution of ZB
Holdings effective upon the filing of the certificate of cancellation of ZB.com
in accordance with paragraph (a)(vi) above.

               (iii) Consummation of Agreement to Constitute Winding-Up.
                     --------------------------------------------------
Pursuant to the consent referenced in paragraph (b)(ii) above, the directors of
ZB Holdings have unanimously determined that ZB Holdings shall be wound-up by
operation of the performance of this Agreement.

               (iv)  Preparation and Execution of Certificate of Cancellation.
                     --------------------------------------------------------
Pursuant to the consents referenced in paragraphs (b)(i) and (ii) above, the
members and directors of ZB Holdings have approved, and the officers of ZB
Holdings have prepared and executed, a certificate of cancellation to be filed
in accordance with Section 2(b)(v) below.

          (c)  Actions of Children's Equity.
               ----------------------------

               (i)   Consent of Voting Member. The voting member of Children's
                     ------------------------
Equity executed a consent, dated the Effective Date, which, inter alia, approved
                                                            ----- ----
the execution, delivery and performance of this Agreement and the dissolution of
Children's Equity effective upon the filing of the certificate of cancellation
of ZB Holdings in accordance with paragraph (b)(iv) above.

               (ii)  Consent of Manager. The sole manager of Children's Equity
                     ------------------
executed a consent, dated the Effective Date, which, inter alia, approved the
                                                     ----- ----
execution, delivery and performance of this Agreement and the dissolution of
Children's Equity effective upon the filing of the certificate of cancellation
of ZB Holdings in accordance with paragraph (b)(iv) above.

               (iii) Consummation of Agreement to Constitute Winding-Up.
                     --------------------------------------------------
Pursuant to the consent referenced in paragraph (c)(ii) above, the manager of
Children's Equity has determined that Children's Equity shall be wound-up by
operation of the performance of this Agreement.

               (iv)  Preparation and Execution of Certificate of Cancellation.
                     --------------------------------------------------------
Pursuant to the consents referenced in paragraphs (c)(i) and (ii) above, the
voting member and manager of Children's Equity have approved, and the manager of
Children's Equity has prepared and executed, a certificate of cancellation to be
filed in accordance with Section 2(c)(iv) below.

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<PAGE>

          (d)  Actions of Zany.
               ---------------

               (i)   Consent of Joint Venture Committee. At meetings held on
                     ----------------------------------
November 20, 2000 and December 4, 2000, the Joint Venture Committee approved,
inter alia, the execution, delivery and performance of this Agreement and the
Stock Purchase Agreement, the Warrant and the Termination Agreement (each as
defined in Article 4 below).

               (ii)  Consent of Board of Directors. At a meeting held November
                     -----------------------------
20, 2000, the board of directors of Zany approved, inter alia, (x) the
                                                   ----- ----
execution, delivery and performance of this Agreement, the Stock Purchase
Agreement, the Warrant and the Termination Agreement, (y) the formation of ZB
Direct and the contribution thereto of the membership interests held by Zany in
ZB Holdings, and (z) the issuance of stock and warrants pursuant to the Stock
Purchase Agreement.

               (iii) Formation of ZB Direct. ZB Direct was formed by Zany on the
                     ----------------------
date hereof by filing of a certificate of formation with the Secretary of State
of the State of Delaware, execution by Zany of a limited liability company
operating agreement for ZB Direct and the contribution by Zany to ZB Direct of
all membership interests held by Zany in ZB Holdings and Children's Equity.

          (e)  Actions of ZB Direct.
               --------------------

               (i)   Consent of Sole Member. The sole member of ZB Direct
                     ----------------------
executed a consent, dated the Effective Date, which, inter alia, approved the
                                                     ----- ----
execution, delivery and performance of this Agreement, the License Agreement,
the Escrow Agreement and the Termination Agreement (each as defined in Article 4
below).

2.   METHOD AND ORDER OF DISSOLUTION.

          (a)  Dissolution and Winding-Up of ZB.com.
               ------------------------------------

               (i)   Dissolution. Immediately upon the execution of this
                     -----------
Agreement, ZB.com shall be dissolved in accordance with the terms of the ZB.com
Operating Agreement. ZB.com represents and warrants to each other party hereto
that it has taken all necessary action to effectuate said dissolution, such that
no further action shall be necessary to effectuate such dissolution and such
dissolution shall occur automatically upon the terms and at the time set forth
herein.

               (ii)  Allocations. The ZB.com Operating Agreement provides that,
                     -----------
upon the dissolution of ZB.com, the board of directors of ZB.com shall liquidate
all assets of the Company that it does not intend to distribute in kind, and
allocate (pursuant to Article 5 of the ZB.com Operating Agreement) all income,
gain, loss and deductions resulting therefrom. Such allocations are reflected in
the financial statements of ZB.com prepared in connection with this Agreement
and referenced in Section 7(e) below.

               (iii) Assumption of ZB.com Liabilities. The ZB.com Operating
                     --------------------------------
Agreement provides that after the foregoing allocations, the board of directors
shall pay, or provide for the payment of, the obligations of ZB.com, the
expenses of liquidation, and the setting up of reserves for such contingencies
as the board may consider necessary. Effective

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<PAGE>

immediately upon the dissolution of ZB.com in accordance with paragraph (a)(i)
above, ZB Holdings hereby assumes and shall hereafter perform, pay and discharge
all liabilities and obligations of ZB.com, including, without limitation, all
liabilities and obligations pursuant to (i) contingent, conditional or unmatured
contractual claims against ZB.com, (ii) any claims against ZB.com which are the
subject of a pending action, suit or proceeding to which ZB.com is a party,
(iii) claims that are not yet known to ZB.com or that have not arisen but that
may become known or arise after the date hereof, and (iv) the expenses of
liquidation of ZB.com. ZB.com and ZB Holdings represent and warrant to each
other and to all other parties hereto that they have respectively taken all
necessary action to effectuate said assumption (including the receipt of any and
all necessary third party consents), such that no further action shall be
necessary to effectuate such assumption and such assumption shall occur
automatically upon the terms and at the time set forth herein.

               (iv)  [reserved]

               (v)   Payments in Respect of Membership Interests of ZB.com. The
                     -----------------------------------------------------
ZB.com Operating Agreement provides that after the provision for payment of
obligations, expenses of liquidation and setting up reserves, the board of
directors shall thereafter distribute the remaining assets of ZB.com to the
members of ZB.com in proportion to the positive Capital Account (as defined in
the ZB.com Operating Agreement) balances in the members' respective Capital
Accounts determined after giving effect to all contributions and distributions
for all periods, and after taking into account all Capital Account adjustments
for the ZB.com taxable year during which the liquidation occurs. After taking
into account the foregoing factors, the Capital Accounts of each member of
ZB.com as of October 28, 2000 are as listed in Schedule 3 hereto, therefore
entitling the members, based upon the book value of ZB.com as of October 28,
2000, to the dissolution amounts set forth in Schedule 3. After updating the
numbers in Schedule 3 to reflect applicable adjustments to the Capital Accounts
and the fair value of ZB.com through the date of the distribution of assets
under this paragraph (a)(v) (which adjustments shall be determined in the sole
discretion of the President of ZB.com based on the advice of ZB.com's
independent valuation expert), the officers of ZB.com shall pay, in cash or in
kind, as they shall determine in their sole discretion, the amounts to which
such members are entitled based upon such adjusted Capital Accounts under the
terms of the ZB.com Operating Agreement, all as soon as practicable after the
dissolution of ZB.com in accordance with paragraph (a)(i) above. It is
understood and agreed that in effectuating the distribution pursuant to this
paragraph (a)(v), ZB Holdings will first receive an amount of assets equal to
the value of the liabilities it assumed pursuant to paragraph (a)(iii) above,
and the remaining assets will be distributed to the members of ZB.com in
proportion to the positive Capital Account balances in the members' respective
Capital Accounts. In furtherance of the foregoing, effective immediately upon
the dissolution of ZB.com in accordance with paragraph (a)(i) above, ZB.com
hereby grants, sells, conveys, assigns, transfers, sets over to, and vests in ZB
Holdings, its successors and assigns, all of ZB.com's right, title and interest,
legal and equitable, in and to all of the assets other than cash of ZB.com,
including, without limitation, all of its rights and privileges under or
otherwise in respect of the same that are part of such assets, to have and to
hold the same, including the appurtenances thereof, forever, to its and their
own proper use. ZB.com and ZB Holdings represent and warrant to each other and
to all other parties hereto that they have respectively taken all necessary
action (including the receipt of any and all necessary third party consents) to
effectuate the assignment of all assets other than cash, such that no

                                       5
<PAGE>

further action shall be necessary to effectuate such assignment and such
assignment shall occur automatically upon the terms and at the time set forth
herein.

               (vi)  Certificate of Cancellation of ZB.com. As soon as
                     -------------------------------------
commercially practicable after the completion of the actions contemplated by
paragraphs (a)(i) through (a)(v) above, ZB.com shall file with the Secretary of
State of the State of Delaware a certificate of cancellation with respect to the
certificate of formation of ZB.com, which certificate of cancellation shall
comply in all respects with the provisions of Section 18-203 of the Delaware
Limited Liability Company Act (the "Act") and which certificate shall not
                                    ---
provide for a future effective date or time for such cancellation. ZB.com
represents and warrants to each other party hereto that it has taken all
necessary action to authorize the execution and filing of such certificate of
cancellation. The ZB.com Operating Agreement will terminate, and be of no
further force and effect, upon the effective time of such certificate of
cancellation.

          (b)  Dissolution and Winding-Up of ZB Holdings.
               -----------------------------------------

               (i)   Dissolution. Immediately upon the effective time of the
                     -----------
filing of the certificate of cancellation of ZB.com in accordance with the
paragraph (a)(vi) above, ZB Holdings shall be dissolved in accordance with the
terms of the ZB Holdings Operating Agreement. ZB Holdings represents and
warrants to each other party hereto that it has taken all necessary action to
effectuate said dissolution, such that no further action shall be necessary to
effectuate such dissolution and such dissolution shall occur automatically upon
the terms and at the time set forth herein.

               (ii)  Allocations. The ZB Holdings Operating Agreement provides
                     -----------
that, upon the dissolution of ZB Holdings, the board of directors of ZB Holdings
shall liquidate the assets of the Company that it does not intend to distribute
in kind, and allocate (pursuant to Article 5 of the ZB Holdings Operating
Agreement) all income, gain, loss and deductions resulting therefrom. Such
allocations are reflected in the financial statements of ZB Holdings prepared in
connection with this Agreement and referenced in Section 8(f) below.

               (iii) Assumption of ZB Holdings Liabilities. The ZB Holdings
                     -------------------------------------
Operating Agreement provides that after the foregoing allocations, the board of
directors shall pay, or provide for the payment of, the obligations of ZB
Holdings, the expenses of liquidation, and the setting up of reserves for such
contingencies as the board may consider necessary. Effective immediately upon
the dissolution of ZB Holdings in accordance with paragraph (b)(i) above, ZB
Direct hereby assumes and shall hereafter perform, pay and discharge all
liabilities and obligations of ZB Holdings, including, without limitation, all
liabilities and obligations pursuant to (i) contingent, conditional or unmatured
contractual claims against ZB Holdings, (ii) any claims against ZB Holdings
which are the subject of a pending action, suit or proceeding to which ZB
Holdings is a party, (iii) claims that are not yet known to ZB Holdings or that
have not arisen but that may become known or arise after the date hereof, and
(iv) the expenses of liquidation of ZB Holdings. ZB Direct and ZB Holdings
represent and warrant to each other and to all other parties hereto that they
have respectively taken all necessary action to effectuate said assumption
(including the receipt of any and all necessary third party consents), such that
no further action shall be necessary to effectuate such assumption and such
assumption shall occur automatically upon the terms and at the time set forth
herein.

                                       6
<PAGE>

               (iv)  Payments in Respect of Membership Interests of ZB Holdings.
                     ----------------------------------------------------------
The ZB Holdings Operating Agreement provides that after the provision for
payment of obligations, expenses of liquidation and setting up reserves, the
board of directors shall thereafter distribute the remaining assets of ZB
Holdings to the members of ZB Holdings in proportion to the positive Capital
Account (as defined in the ZB Holdings Operating Agreement) balances in the
members' respective Capital Accounts determined after giving effect to all
contributions and distributions for all periods, and after taking into account
all Capital Account adjustments for the ZB Holdings taxable year during which
the liquidation occurs. After taking into account the foregoing factors, the
Capital Accounts of each member of ZB Holdings as of October 28, 2000 are as
listed in Schedule 4 hereto, therefore entitling the members, based upon the
book value of ZB Holdings as of October 28, 2000, to the dissolution amounts set
forth in Schedule 4. After updating the numbers in Schedule 4 to reflect
applicable adjustments to the Capital Accounts and the fair value of ZB Holdings
through the date of the distribution of assets under this paragraph (b)(iv)
(which adjustments shall be determined in the sole discretion of the President
of ZB Holdings based upon the advice of ZB Holdings' independent valuation
expert), the officers of ZB Holdings shall pay, in cash or in kind, as they
shall determine in their sole discretion, the amounts to which such members are
entitled based upon such adjusted Capital Accounts and valuation under the terms
of the ZB Holdings Operating Agreement, all as soon as practicable after the
dissolution of ZB Holdings in accordance with paragraph (b)(i) above. The
officers of ZB Holdings shall pay, in cash or in kind, as they shall determine
in their sole discretion, the amounts to which such members are entitled based
upon such Capital Accounts under the terms of the ZB Holdings Operating
Agreement, all as soon as practicable after the dissolution of ZB Holdings in
accordance with paragraph (b)(i) above. It is understood and agreed that in
effectuating the distribution pursuant to this paragraph (b)(iv), ZB Direct will
first receive an amount of assets equal to the value of the liabilities it
assumed pursuant to paragraph (b)(iii) above, and the remaining assets will be
distributed to the members of ZB Holdings in proportion to the positive Capital
Account balances in the members' respective Capital Accounts. In furtherance of
the foregoing, effective immediately upon the dissolution of ZB Holdings in
accordance with paragraph (b)(i) above, ZB Holdings hereby grants, sells,
conveys, assigns, transfers, sets over to, and vests in ZB Direct, its
successors and assigns, all of ZB Holdings' right, title and interest, legal and
equitable, in and to all of the assets other than cash of ZB Holdings,
including, without limitation, all of its rights and privileges under or
otherwise in respect of the same that are part of such assets, to have and to
hold the same, including the appurtenances thereof, forever, to its and their
own proper use. ZB Direct and ZB Holdings represent and warrant to each other
and to all other parties hereto that they have respectively taken all necessary
action (including the receipt of any and all necessary third party consents) to
effectuate the assignment of all assets other than cash, such that no further
action shall be necessary to effectuate such assignment and such assignment
shall occur automatically upon the terms and at the time set forth herein.

               (v)   Certificate of Cancellation of ZB Holdings. As soon as
                     ------------------------------------------
commercially practicable after the completion of the actions contemplated by
paragraphs (a) and (b)(i) to (b)(iv) above, ZB Holdings shall file with the
Secretary of State of the State of Delaware a certificate of cancellation with
respect to the certificate of formation of ZB Holdings, which certificate of
cancellation shall comply in all respects with the provisions of Section 18-203
of the Act and which certificate shall not provide for a future effective date
or time for such dissolution. ZB Holdings represents and warrants to each other
party hereto that it has taken all necessary action to authorize the execution
and filing of such certificate of cancellation. The ZB

                                       7
<PAGE>

Holdings Operating Agreement will terminate, and be of no further force and
effect, upon the effective time of such certificate of cancellation; provided,
                                                                     --------
however, that the restrictions of Section 10.3 thereof shall continue and
-------
survive for a period of one year from such effective time.

          (c)  Dissolution and Winding-Up of Children's Equity.
               -----------------------------------------------

               (i)   Dissolution. Immediately upon the effective time of the
                     -----------
filing of the certificate of cancellation of ZB Holdings in accordance with
paragraph (b)(v) above, Children's Equity shall be dissolved in accordance with
the terms of the Children's Equity Operating Agreement. Children's Equity
represents and warrants to each other party hereto that it has taken all
necessary action to effectuate said dissolution, such that no further action
shall be necessary to effectuate such dissolution and such dissolution shall
occur automatically upon the terms and at the time set forth herein.

               (ii)  Assumption of Children's Equity Liabilities. The Children's
                     -------------------------------------------
Equity Operating Agreement provides that upon dissolution, Children's Equity
shall pay, or provide for the payment of, the obligations of Children's Equity.
While there are no known current obligations of Children's Equity, effective
immediately upon the dissolution of Children's Equity in accordance with
paragraph (c)(i) above, ZB Direct hereby assumes and shall hereafter perform,
pay and discharge all liabilities and obligations of Children's Equity,
including, without limitation, all liabilities and obligations pursuant to (i)
contingent, conditional or unmatured contractual claims against Children's
Equity, (ii) any claims against Children's Equity which are the subject of a
pending action, suit or proceeding to which Children's Equity is a party, (iii)
claims that are not yet known to Children's Equity or that have not arisen but
that may become known or arise after the date hereof, and (iv) expenses of
liquidation. ZB Direct and Children's Equity represent and warrant to each other
and to all other parties hereto that they have respectively taken all necessary
action to effectuate said assumption (including the receipt of any and all
necessary third party consents), such that no further action shall be necessary
to effectuate such assumption and such assumption shall occur automatically upon
the terms and at the time set forth herein.

               (iii) Payments in Respect of Membership Interests of Children's
                     ---------------------------------------------------------
Equity. The Children's Equity Operating Agreement provides that after the
------
provision for payment of obligations, Children's Equity shall thereafter
distribute the remaining assets of Children's Equity to its members in
accordance with their respective interest percentages in Children's Equity. The
number of membership interests held by each member of Children's Equity as of
the date hereof is listed in Schedule 2 hereto, therefore entitling the members,
based upon the distribution to which Children's Equity would be entitled under
Schedule 4, to the dissolution amounts set forth in Schedule 2. After updating
the numbers in Schedule 2 to reflect applicable adjustments to the membership
interests held and the fair value of Children's Equity through the date of the
distribution of assets under this paragraph (c)(iii) (which adjustments shall be
determined in the sole discretion of the manager of Children's Equity based upon
the advice of Children's Equity's independent valuation expert), the manager of
Children's Equity shall pay, in cash or in kind, as it shall determine in its
sole discretion, the amounts to which such members are entitled based upon such
adjusted membership interests and valuation under the terms of the Children's
Equity Operating Agreement, all as soon as practicable after the dissolution of
Children's Equity in accordance with paragraph (c)(i) above. The manager of
Children's Equity shall pay, in cash or in kind, as it shall determine in its
sole discretion, the

                                       8
<PAGE>

amounts to which such members are entitled based upon such membership interests
under the terms of the Children's Equity Operating Agreement, all as soon as
practicable after the dissolution of Children's Equity in accordance with
paragraph (c)(i) above.

               (iv)  Certificate of Cancellation of Children's Equity. As soon
                     ------------------------------------------------
as commercially practicable after the completion of the actions contemplated by
paragraphs (a), (b) and (c)(i) to (c)(iii) above, Children's Equity shall file
with the Secretary of State of the State of Delaware a certificate of
cancellation with respect to the certificate of formation of Children's Equity,
which certificate of cancellation shall comply in all respects with the
provisions of Section 18-203 of the Act and which certificate shall not provide
for a future effective date or time for such cancellation. Children's Equity
represents and warrants to each other party hereto that it has taken all
necessary action to authorize the execution and filing of such certificate of
cancellation. The Children's Equity Operating Agreement will terminate, and be
of no further force an effect, upon the effective time of such certificate of
cancellation.

3.   GUARANTY; WAIVERS.

          (a)  Guaranty. Zany hereby unconditionally guarantees to the creditors
               --------
and other persons or entities to whom obligations or liabilities are owed by ZB
Direct pursuant to the assumption of liabilities and obligations contemplated by
Section 2(b)(iii) and 2(c)(ii) above, for the benefit of such creditors and
other persons or entities and for the benefit of their respective permitted
successors and assigns, the full and prompt payment and performance of all such
obligations and liabilities of ZB Direct. This guaranty is a guaranty of payment
and not of collection. Zany agrees to pay any and all expenses or other amounts
that may be paid or incurred by any person, creditor or entity in enforcing any
rights under this guaranty.

          (b)  Waivers.  Other than with respect to payments specifically
               -------
contemplated in Section 2 of this Agreement, each party hereto which is a member
of ZB.com, ZB Holdings or Children's Equity, waives any right to payment in
respect of the membership interest held thereby in connection with the
dissolution of ZB.com, ZB Holdings or Children's Equity, as applicable. Each
party hereto waives any claim arising under Article 7 of ZB Holdings Operating
Agreement (transfer restrictions) and Article VIII of the Children's Equity
Operating Agreement (transfer restrictions) with respect to the transfer by Zany
to ZB Direct of membership interests in ZB Holdings and Children's Equity. Each
of Zany and ONRP waives the provision of Section 10.3 of the ZB Holdings
Operating Agreement to the extent, and only to the extent, that such provision
would otherwise restrict the ability of Zany, ZB Direct or ONRP to directly or
indirectly hire, solicit or attempt to solicit the services or business of any
present or former employee of ZB.com, ZB Holdings or Children's Equity.

4.   ADDITIONAL AGREEMENTS.

     It is contemplated that upon completion of the dissolutions of ZB.com, ZB
Holdings and Children's Equity, Zany will issue to ONRP shares of restricted
common stock and warrants to purchase additional shares thereof as well as cash,
all in consideration for the termination of those agreements under which Zany or
ZB Direct (by virtue of the assumption of liabilities under this Agreement or
otherwise) owe obligations to ONRP or ONRP Services. In furtherance thereof,
contemporaneously with the execution of this Agreement the following agreements
have been executed, in the forms attached hereto as Exhibits A through E
respectively:

                                       9
<PAGE>

          (a)  Stock Purchase Agreement, by and between Zany and ONRP (the
"Stock Purchase Agreement");
-------------------------

          (b)  Warrant for Purchase of Shares of Common Stock of Zany (the

"Warrant");
--------

          (c)  License Agreement, by and among ZB Direct, ONRP and ONRP Services
(the "License Agreement");
     ------------------

          (d)  Amendment and Termination Agreement, by and among Zany, ZB Direct
and ONRP Services(the"Termination Agreement"); and
                      ---------------------

          (e) Software Escrow Agreement, by and among ONRP Services, ZB Direct
and Fort Knox Escrow Services, Inc. (the "Escrow Agreement").
                                          ----------------

5.   REPRESENTATIONS AND WARRANTIES OF ONRP.

     ONRP represents and warrants to each of the other parties hereto that, as
of the Effective Date, except as set forth in the disclosure schedule, if any,
delivered by ONRP to the other parties prior to the execution and delivery of
this Agreement:

          (a)  Title; Agreements. ONRP owns 5,000,000 Voting Common Interests
               -----------------
and 8,977,440 Non-Voting Common Interests of ZB Holdings free and clear of any
and all encumbrances or other restrictions on transfer. ONRP is not a party to
any voting trust, proxy or other agreement or understanding with respect to any
membership interest of ZB Holdings. ONRP owns no other, and has no other right
to purchase any, membership interests in ZB.com, ZB Holdings or Children's
Equity.

          (b)  Organization, Standing and Power. ONRP is a corporation duly
               --------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. ONRP has the corporate power to own its properties
and to carry on its business as now being conducted. ONRP is not in violation of
any of the provisions of its certificate of incorporation or bylaws.

          (c)  Authority. ONRP has all requisite corporate power and authority
               ---------
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of ONRP. This Agreement has been
duly executed and delivered by ONRP and constitutes the legal, valid and binding
obligation of ONRP enforceable against ONRP in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforceability of creditors' rights generally and to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law) (the "Bankruptcy and Equity Exception").
                                           -------------------------------
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (a) any provision of the certificate
of incorporation or bylaws of ONRP or (b) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession,

                                      10
<PAGE>

franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to ONRP or any of its subsidiaries or their properties or
assets.

          (d)  No Violation. Neither the execution or delivery of this Agreement
               ------------
by ONRP nor the consummation by it of the transactions contemplated hereby, will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any court, administrative agency or commission
or governmental authority or instrumentality (a "Governmental Authority") to
                                                 ----------------------
which ONRP is a party or to which it is bound or subject, or the provisions of
the certificate of incorporation or bylaws of ONRP.

          (e)  Litigation; Claims. There is no litigation, claim, proceeding or
               ------------------
government investigation pending or, to ONRP's knowledge, threatened, against
ONRP relating to ZB.com, ZB Holdings or Children's Equity or the transactions
contemplated by this Agreement.

          (f)  Financial Statements. ONRP knows of no reason why the financial
               --------------------
statements of ZB.com and ZB Holdings prepared as of the Effective Date are not
(i) in compliance as to form in all material respects with applicable accounting
requirements, (ii) prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with each other, and (iii) a fair presentation in all material
respects of the consolidated financial condition and operating results of ZB.com
and ZB Holdings, respectively, and their subsidiaries at the dates and during
the periods indicated therein.

6.   REPRESENTATIONS AND WARRANTIES OF ZANY.

     Zany represents and warrants to each of the other parties hereto that, as
of the Effective Date, except as set forth in the disclosure schedule, if any,
delivered by Zany to each of the other parties hereto prior to the execution and
delivery of this Agreement:

          (a)  Title; Agreements. Zany owns its membership interest in ZB Direct
               -----------------
free and clear of any and all encumbrances or other restrictions on transfer.
Zany is not a party to any voting trust, proxy or other agreement or
understanding with respect to any membership interest of ZB Direct. Zany owns no
other, and has no other right to purchase any, membership interests in ZB.com,
ZB Holdings or Children's Equity.

          (b) Organization, Standing and Power. Zany is a corporation duly
              --------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Zany has the corporate power to own its properties
and to carry on its business as now being conducted. Zany is not in violation of
any of the provisions of its articles of incorporation or bylaws.

          (c)  Authority. Zany has all requisite corporate power and authority
               ---------
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of Zany. This Agreement has been
duly executed and delivered by Zany and constitutes the legal, valid and binding
obligation of Zany enforceable against Zany in accordance with its terms, except
as limited by the Bankruptcy and Equity Exception. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, conflict with,

                                      11
<PAGE>

or result in any violation of, or default under (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under (a) any provision of
the articles of incorporation or bylaws of Zany or (b) any material mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Zany or any of its subsidiaries or their properties or
assets.

          (d)  No Violation. Neither the execution or delivery of this Agreement
               ------------
by Zany nor the consummation by it of the transactions contemplated hereby, will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any Governmental Authority to which Zany is a
party or to which it is bound or subject, or the provisions of the articles of
incorporation or bylaws of Zany.

          (e)  Litigation; Claims. There is no litigation, claim, proceeding or
government investigation pending or, to Zany's knowledge, threatened, against
Zany relating to ZB.com, ZB Holdings, Children's Equity or the transactions
contemplated by this Agreement.

          (f)  Financial Statements. Zany knows of no reason why the financial
               --------------------
statements of ZB.com and ZB Holdings prepared as of the Effective Date are not
(i) in compliance as to form in all material respects with applicable accounting
requirements, (ii) prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with each other, and (iii) a fair presentation in all material
respects of the consolidated financial condition and operating results of ZB.com
and ZB Holdings, respectively, and their subsidiaries at the dates and during
the periods indicated therein.

7.   REPRESENTATIONS AND WARRANTIES OF ZB.COM.

     ZB.com represents and warrants to each of the other parties hereto that, as
of the Effective Date, except as set forth in the disclosure schedule, if any,
delivered by ZB.com to each of the other parties hereto prior to the execution
and delivery of this Agreement:

          (a)  Organization, Standing and Power. ZB.com is a limited liability
               --------------------------------
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization. ZB.com has the power under its certificate of
formation and the ZB.com Operating Agreement to own its properties and to carry
on its business as now being conducted. ZB.com is not in violation of any of the
provisions of its certificate of formation or the ZB.com Operating Agreement.

          (b)  Authority. ZB.com has all requisite power and authority under its
               ---------
certificate of formation and the ZB.com Operating Agreement to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action (corporate
or otherwise) on the part of ZB.com. This Agreement has been duly executed and
delivered by ZB.com and constitutes the legal, valid and binding obligation of
ZB.com enforceable against ZB.com in accordance with its terms, except as
limited by the Bankruptcy and Equity Exception. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of

                                      12
<PAGE>

time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under (a) any provision of
its certificate of formation or the ZB.com Operating Agreement or (b) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to ZB.com or any of its subsidiaries or
their properties or assets.

          (c)  No Violation. Neither the execution or delivery of this Agreement
               ------------
by ZB.com nor the consummation by it of the transactions contemplated hereby,
will violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any Governmental Authority to which ZB.com is a
party or to which it is bound or subject, or the provisions of its certificate
of formation or the ZB.com Operating Agreement.

          (d)  Litigation; Claims. There is no litigation, claim, proceeding or
               ------------------
government investigation pending or, to ZB.com's knowledge, threatened, against
ZB.com relating to the transactions contemplated by this Agreement.

          (e)  Financial Statements. The financial statements, including,
               --------------------
without limitation, the balance sheet, of ZB.com prepared as of the Effective
Date, to the knowledge of ZB.com (i) comply as to form in all material respects
with applicable accounting requirements, (ii) were prepared in accordance with
generally accepted accounting principles applied on a basis consistent
throughout the periods indicated and consistent with each other, and (iii)
fairly present in all material respects the consolidated financial condition and
operating results of ZB.com and its subsidiaries at the dates and during the
periods indicated therein.

8.   REPRESENTATIONS AND WARRANTIES OF ZB HOLDINGS.

     ZB Holdings represents and warrants to each of the other parties hereto
that, as of the Effective Date, except as set forth in the disclosure schedule,
if any, delivered by ZB Holdings to each of the other parties hereto prior to
the execution and delivery of this Agreement:

          (a)  Title; Agreements. ZB Holdings owns all of the Preferred
               -----------------
Interests of ZB.com free and clear of any and all encumbrances or other
restrictions on transfer. ZB Holdings is not a party to any voting trust, proxy
or other agreement or understanding with respect to any membership interest of
ZB.com. ZB Holdings owns no other, and has no other right to purchase any,
membership interests in ZB.com.

          (b)  Organization, Standing and Power. ZB Holdings is a limited
               --------------------------------
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. ZB Holdings has the power under
its certificate of formation and the ZB Holdings Operating Agreement to own its
properties and to carry on its business as now being conducted. ZB Holdings is
not in violation of any of the provisions of its certificate of formation or the
ZB Holdings Operating Agreement.

          (c)  Authority. ZB Holdings has all requisite power and authority
               ---------
under its certificate of formation and the ZB Holdings Operating Agreement to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of ZB Holdings. This

                                      13
<PAGE>

Agreement has been duly executed and delivered by ZB Holdings and constitutes
the legal, valid and binding obligation of ZB Holdings enforceable against ZB
Holdings in accordance with its terms, except as limited by the Bankruptcy and
Equity Exception. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under (a) any provision of
its certificate of formation or the ZB Holdings Operating Agreement or (b) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to ZB Holdings or any of its
subsidiaries or their properties or assets.

          (d)  No Violation. Neither the execution or delivery of this Agreement
               ------------
by ZB Holdings nor the consummation by it of the transactions contemplated
hereby, will violate any statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge or restriction of any Governmental Authority to which ZB
Holdings is a party or to which it is bound or subject, or the provisions of its
certificate of formation or the ZB Holdings Operating Agreement.

          (e)  Litigation; Claims. There is no litigation, claim, proceeding or
               ------------------
government investigation pending or, to ZB Holdings' knowledge, threatened,
against ZB Holdings relating to ZB.com or the transactions contemplated by this
Agreement.

          (f)  Financial Statements. The financial statements, including,
               --------------------
without limitation, the balance sheet, of ZB Holdings prepared as of the
Effective Date, to the knowledge of ZB Holdings (i) comply as to form in all
material respects with applicable accounting requirements, (ii) were prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other, and
(iii) fairly present in all material respects the consolidated financial
condition and operating results of ZB Holdings and its subsidiaries at the dates
and during the periods indicated therein.

9.   REPRESENTATIONS AND WARRANTIES OF CHILDREN'S EQUITY.

     Children's Equity represents and warrants to each of the other parties
hereto that, as of the Effective Date, except as set forth in the disclosure
schedule, if any, delivered by Children's Equity to each of the other parties
hereto prior to the execution and delivery of this Agreement:

          (a)  Title; Agreements. Children's Equity owns 533,501 Non-Voting
               -----------------
Preferred Interests of ZB Holdings free and clear of any and all encumbrances or
other restrictions on transfer. Children's Equity is not a party to any voting
trust, proxy or other agreement or understanding with respect to any membership
interest of ZB Holdings. Children's Equity owns no other, and has no other right
to purchase any, membership interests in ZB Holdings. Children's Equity has no
assets other than membership interests in ZB Holdings, and has no known
liabilities.

          (b)  Organization, Standing and Power. Children's Equity is a limited
               --------------------------------
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Children's Equity has the power
under its certificate of formation and the Children's Equity Operating Agreement
to own its properties and to carry on its business as now

                                      14
<PAGE>

being conducted. Children's Equity is not in violation of any of the provisions
of its certificate of formation or the Children's Equity Operating Agreement.

          (c)  Authority. Children's Equity has all requisite power and
               ---------
authority under its certificate of formation and the Children's Equity Operating
Agreement to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action (corporate or otherwise) on the part of Children's
Equity. This Agreement has been duly executed and delivered by Children's Equity
and constitutes the legal, valid and binding obligation of Children's Equity
enforceable against Children's Equity in accordance with its terms, except as
limited by the Bankruptcy and Equity Exception. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit
under (a) any provision of its certificate of formation or the Children's Equity
Operating Agreement or (b) any material mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Children's Equity or any of its subsidiaries or their properties or assets.

          (d)  No Violation. Neither the execution or delivery of this Agreement
               ------------
by Children's Equity nor the consummation by it of the transactions contemplated
hereby, will violate any statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge or restriction of any Governmental Authority to which
Children's Equity is a party or to which it is bound or subject, or the
provisions of its certificate of formation or the Children's Equity Operating
Agreement.

          (e) Litigation; Claims. There is no litigation, claim, proceeding or
              ------------------
government investigation pending or, to Children's Equity's knowledge,
threatened, against Children's Equity relating to ZB Holdings or the
transactions contemplated by this Agreement.

10.  REPRESENTATIONS AND WARRANTIES OF ZB DIRECT.

     ZB Direct represents and warrants to each of the other parties hereto that,
as of the Effective Date, except as set forth in the disclosure schedule, if
any, delivered by ZB Direct to each of the other parties hereto prior to the
execution and delivery of this Agreement:

          (a)  Title; Agreements. ZB Direct owns (i) all of the Voting Preferred
               -----------------
Interests and 12,889,457 Non-Voting Preferred Interests of ZB Holdings and (ii)
all of the Voting Interests of Children's Equity free and clear of any and all
encumbrances or other restrictions on transfer. ZB Direct is not a party to any
voting trust, proxy or other agreement or understanding with respect to any
membership interest of ZB Holdings or Children's Equity. ZB Direct owns no
other, and has no other right to purchase any, membership interests in
Children's Equity or ZB Holdings.

          (b)  Organization, Standing and Power. ZB Direct is a limited
               --------------------------------
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. ZB Direct has the power under its
certificate of formation and limited liability company operating agreement to
own its properties and to carry on its business as now being

                                      15
<PAGE>

conducted. ZB Direct is not in violation of any of the provisions of its
certificate of formation or limited liability company operating agreement.

          (c)  Authority. ZB Direct has all requisite power and authority under
               ---------
its certificate of formation and limited liability company operating agreement
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of ZB Direct. This Agreement has
been duly executed and delivered by ZB Direct and constitutes the legal, valid
and binding obligation of ZB Direct enforceable against ZB Direct in accordance
with its terms, except as limited by the Bankruptcy and Equity Exception. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (a) any provision of its certificate
of formation or limited liability company operating agreement or (b) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to ZB Direct or any of its subsidiaries
or their properties or assets.

          (d)  No Violation. Neither the execution or delivery of this Agreement
               ------------
by ZB Direct nor the consummation by it of the transactions contemplated hereby,
will violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any Governmental Authority to which ZB Direct
is a party or to which it is bound or subject, or the provisions of its
certificate of formation or limited liability company operating agreement.

          (e)  Litigation; Claims. There is no litigation, claim, proceeding or
               ------------------
government investigation pending or, to ZB Direct's knowledge, threatened,
against ZB Direct relating to ZB Holdings or the transactions contemplated by
this Agreement.

11.  LIQUIDATION CERTIFICATE.

     Each of the parties hereto agrees to deliver, if requested by any other
party hereto, a certificate executed by an authorized officer or representative
thereof stating that the representations and warranties made by such party on
the Effective Date were true and correct on the date made and were true and
correct on the dates of liquidation, as applicable, of each of ZB.com, ZB
Holdings and Children's Equity.

12.  COVENANTS.

     Each of the parties agrees to use their reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other parties, including by provision of
information.

13.  INDEMNIFICATION.

                                      16
<PAGE>

          (a)  Survival of Representations, Warranties and Covenants. The
               -----------------------------------------------------
representations, and warranties of ONRP in Section 5(f) and Zany in Section
6(f), as well as the covenant set forth in Article 12, and all rights of Zany,
ONRP or any other party with respect to the foregoing, shall survive for a
period of three (3) years from the Effective Date. No other representation,
warranty or covenant set forth in this Agreement shall survive the date of this
Agreement. The termination or non-survival of any representation, warranty or
covenant, however, shall not affect the right to indemnification for breach of
such representation or warranty if written notice of such breach is given prior
to such termination.

          (b)  Indemnification.
               ---------------

               (i)   From and after the Effective Date, and subject to the
limitations set forth in this Article 13, ONRP will indemnify and hold harmless
Zany and its officers, directors, agents and employees, and each person, if any,
who controls or may control it within the meaning of the Securities Act of 1933,
as amended (hereinafter referred to individually as an "Indemnified Person" and
                                                        ------------------
collectively as "Indemnified Persons") from and against any and all losses,
                 -------------------
costs, damages, liabilities and expenses arising from claims, demands, actions,
causes of action, including, without limitation, reasonable legal fees
(collectively, "Damages") resulting from any misrepresentation or breach of any
                -------
of the representations, warranties, covenants and agreements given or made by
ONRP in this Agreement or the disclosure schedule submitted by ONRP in
connection herewith.

               (ii) From and after the Effective Date, and subject to the
limitations set forth in this Article 13, Zany will indemnify and hold harmless
ONRP and each of its Indemnified Persons from and against any and all Damages
resulting any misrepresentation or breach of any of the representations,
warranties, covenants and agreements given or made by Zany in this Agreement or
the disclosure schedule submitted by Zany in connection herewith.

     "Damages" as used herein is not limited to matters asserted by third
parties, but includes Damages incurred, suffered or sustained in the absence of
claims by a third party.

          (c)  Certain Limitations.
               -------------------

               (i)   Zany's right to indemnification for Damages under Section
13(b)(i) shall accrue only if the aggregate of all such Damages exceeds $5,000
(the "Threshold Amount") and then only to the extent of any excess Damages over
      ----------------
the Threshold Amount. ONRP's right to indemnification for Damages under Section
13(b)(ii) shall accrue only if the aggregate of all such Damages exceeds the
Threshold Amount and then only to the extent of any excess Damages over the
Threshold Amount.

               (ii)  No indemnification shall be made (or Damages counted
against the Threshold Amount) to Zany or ONRP, as the case may be, for matters
to the extent that they are covered by insurance (after reduction for the
reasonable costs and expenses of obtaining such insurance payment).

          (d)  Certain Procedural Matters.
               --------------------------

               (i)   A party seeking indemnification (the "Indemnified Party")
shall give prompt written notice to the party from whom indemnification will be
sought (the "Indemnifying
             ------------

                                      17
<PAGE>

Party") of any claim for indemnification hereunder and shall provide to the
-----
Indemnifying Party as soon as practicable thereafter all information and
documentation necessary to support and verify the claim asserted (or which would
be asserted if not below the Threshold Amount), and the Indemnifying Party and
his or its representatives shall be given access to all personnel, properties,
books and records that the Indemnifying Party reasonably determines to be
related thereto.

               (ii)  If any legal proceeding is instituted or any claim or
demand is asserted by any person in respect of which an Indemnified Party may
seek to assert a claim for indemnification hereunder, the Indemnified Party
shall promptly cause written notice of the assertion of any such legal
proceeding, claim or demand to be made to the Indemnifying Party; provided that
the failure to so notify the Indemnifying Party shall not reduce or adversely
affect the right of the Indemnified Party to assert a claim for indemnification
hereunder with respect to such legal proceeding, claim or demand except to the
extent that the Indemnifying Party is materially prejudiced thereby. The
Indemnifying Party shall have the right at any time, at his or its option and
expense, to participate in (but not to control) the defense of any such legal
proceeding, claim or demand (including without limitation the right to
participate in negotiations and settlement discussions). The Indemnified Party
and the Indemnifying Party shall cooperate fully with each other in connection
with the defense, negotiation and settlement of any such legal proceeding, claim
or demand, and the Indemnifying Party shall be given access to all personnel,
properties, books and records that the Indemnifying Party reasonably determines
to be related thereto. No such legal proceeding, claim or demand may be settled
or compromised (nor shall any agreement be entered into or commitment made with
respect to any settlement or compromise) without the written consent of the
Indemnifying Party, which shall not be unreasonably withheld.

          (e)  Exclusive Remedy. This Article 13 sets forth the exclusive right
               ----------------
of the parties, from and after the Effective Date, to obtain indemnification or
other compensation for, or to assert any claim in respect of, any Damages
resulting from the transactions contemplated by this Agreement, and all other
rights are expressly waived for the benefit of the parties hereto and their
investors, shareholders, officers, directors and employees. The limitations
contained in this Article 13 however, shall not limit the liability of any party
hereto with respect to any actual fraud of such party.

          (f)  Resolution of Conflicts; Arbitration.
               ------------------------------------

               (i)   In case an Indemnifying Party shall object to any
indemnification claim or claims by an Indemnified Party, the Indemnifying Party
and the Indemnified Party shall attempt in good faith for thirty (30) days to
agree upon the rights of the respective parties with respect to each of such
claims.

               (ii)  If no such agreement can be reached after good faith
negotiation, either the Indemnifying Party or the Indemnified Party may, by
written notice to the other, demand arbitration of the matter unless the amount
of the Damages is at issue in pending litigation with a third party, in which
event arbitration shall not be commenced until such amount is ascertained or
both the Indemnifying Party and the Indemnified Party agree to arbitration; and
in such event the matter shall be settled by arbitration conducted by a single
arbitrator. The Indemnifying Party and the Indemnified Party shall jointly
select an arbitrator. If the

                                      18
<PAGE>

Indemnifying Party and the Indemnified Party fail to agree upon an arbitrator
within ten (10) days, an arbitrator shall be selected for them by the American
Arbitration Association. The decision of the arbitrator so selected as to the
validity and amount of any indemnification claim shall be binding and conclusive
upon the parties to this Agreement.

               (iii) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Montgomery County, Pennsylvania under the commercial rules then in effect of the
American Arbitration Association. The non-prevailing party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of the American Arbitration Association, and the expenses, including without
limitation, attorneys' fees and costs reasonably incurred by the other party to
the arbitration.

14.  GENERAL.

          (a)  Assignment and Binding Effect. All of the terms and provisions of
               -----------------------------
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the heirs, administrators, personal representatives, successors
and permitted assigns of the parties hereto.

          (b)  Entire Agreement; Amendment; Waiver. This Agreement, together
               -----------------------------------
with the other agreements referenced herein, sets forth the entire understanding
of the parties hereto with respect to the transactions contemplated hereby. Each
of the Schedules and Exhibits to this Agreement is incorporated herein by this
reference and expressly made a part hereof. Any and all previous agreements and
understandings between or among the parties regarding the subject matter hereof,
whether written or oral, are superseded by this Agreement. This Agreement shall
not be amended or modified except by a written instrument duly executed by each
of the parties hereto. Any extension or waiver by any party of any provision
hereto shall be valid only if set forth in an instrument in writing signed on
behalf of such party.

          (c)  Counterparts.  This Agreement may be executed in any number of
               ------------
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered (which deliveries may be made by telefax)
shall be deemed to be an original, and all of which counterparts taken together
shall constitute but one and the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.

          (d)  Expenses. Zany has paid and will pay the fees, expenses and
               --------
disbursements of Zany and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. ONRP has paid
and will pay the fees, expenses and disbursements of ONRP and its agents,
representatives, financial advisers, accountants and counsel incurred in
connection with the subject matter of this Agreement.

          (e)  Notices. Any notice, request, claim, demand, waiver, consent,
               -------
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
telefax (with confirmation of receipt), on the third business day after posted
by registered or certified mail, postage prepaid, or on the next business day
after sent by recognized overnight courier service, as follows:

     If to Zany, ZB.com, ZB Direct, ZB Holdings or Children's Equity to:

                                      19
<PAGE>

          c/o Zany Brainy, Inc.
          2520 Renaissance Boulevard
          King of Prussia, PA 19406
          Attention: Legal Department
          (Telecopy:  610-278-7800)

          with a required copy to:

           Morgan, Lewis & Bockius LLP
          1701 Market Street
          Philadelphia, PA  19103
          Attention: Joanne R. Soslow, Esq.
          (Telecopy:  215-963-5299)

     If to ONRP to:

          Online Retail Partners Inc.
         1440 Broadway
          New York, NY 10018
          Attention: Legal Department
          (Telecopy:  212-653-8401)

or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein.

          (f)  Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstance in any other jurisdiction or to
other persons or circumstances in any jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.

          (g)  No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Section 3(a), the creditors and other persons
or entities to whom ZB Direct owes liabilities or obligations pursuant to this
Agreement, and their heirs, administrators, personal representatives, successors
and assigns, and they shall not be construed as conferring any rights on any
other persons.

          (h)  Further Representations. Each party to this Agreement
               -----------------------
acknowledges and represents that it, he or she has been represented by its, his
or her own legal counsel in connection with the transactions contemplated by
this Agreement, with the opportunity to seek advice as to its, his or her legal
rights from such counsel. Each party further represents that it is being
independently advised as to the tax consequences of the transactions
contemplated by this Agreement.

          (i)  Governing Law. This Agreement will be governed by and construed
               -------------
under the laws of the State of Delaware, without regard to conflict of laws
principles applicable therein. All disputes arising from this Agreement will be
heard in the federal and state courts for

                                      20
<PAGE>

the Commonwealth of Pennsylvania, and the parties hereby agree to be bound by
the jurisdiction of such courts.

                                       21
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Plan of
Dissolution as of the day and year first above written.

                                    ZANY BRAINY, INC.

                                    By: _______________________________
                                    Name:
                                    Title:

                                    ONLINE RETAIL PARTNERS INC.

                                    By: _______________________________
                                    Name:
                                    Title:

                                    ZANYBRAINY.COM LLC

                                    By: _______________________________
                                    Name:
                                    Title:

                                    ZB HOLDINGS LLC

                                    By: _______________________________
                                    Name:
                                    Title:

                                    ZANY BRAINY DIRECT LLC

                                    By: Zany Brainy, Inc, its sole member

                                         By: __________________________
                                         Name:
                                         Title:

                                       22
<PAGE>

                                    CHILDREN'S EQUITY LLC

                                    By: Zany Brainy Direct LLC, its manager

                                          By: Zany Brainy, Inc., its member

                                           By: _______________________
                                           Name:
                                           Title:

                    [Signature Page to Plan of Dissolution]

                                       23<PAGE>

                            STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
                                         ---------
of the 4th day of December 2000, by and between Zany Brainy, Inc., a
Pennsylvania corporation ("Zany"), and Online Retail Partners Inc., a Delaware
                           ----
corporation ("ONRP").
              ----

     WHEREAS, Zany, ONRP, directly or through its wholly-owned subsidiary,
Online Retail Partners LLC (as the successor in interest to ONRP Services LLC)
("ONRP Services"), ZB Holdings LLC, a Delaware limited liability company ("ZB
  -------------                                                            --
Holdings"), and ZanyBrainy.com LLC, a Delaware limited liability company
--------
("ZB.com"), previously entered into a series of agreements in furtherance of the
 -------
formation and operation of a joint venture for the purpose of operating under
ZB.com an e-commerce site on the World Wide Web (the "Site");
                                                      ----

     WHEREAS, Zany, ONRP, ZB Holdings, ZB.com, Children's Equity LLC, a Delaware
limited liability company that holds certain non-voting interests in ZB Holdings
("Children's Equity"), and Zany Brainy Direct LLC, a Delaware limited liability
  -----------------
company and a wholly owned subsidiary of Zany ("ZB Direct"), determined to
                                                ---------
effect the dissolution, liquidation and winding-up of ZB.com, ZB Holdings and
Children's Equity in accordance with the terms of a Plan of Dissolution dated as
of the date hereof (the "Plan of Dissolution");
                         -------------------

     WHEREAS, ONRP Services and ZB.com entered into a Web Site Services
Agreement dated October 20, 1999 (the "WSSA") whereby ONRP Services agreed to
                                       ----
provide certain site development, hosting, and marketing services to ZB.com as
set forth in the WSSA for a term of five years;

     WHEREAS, ONRP Services, ZB.com and Zany also entered into a Data
Sharing/License Agreement dated October 20, 1999 (the "DSLA") whereby Zany,
                                                       ----
ZB.com and ONRP Services would share certain data and information gathered from
the Site and other similar sites (collectively "Data"), and ONRP Services would
                                                ----
provide certain services related to the Data;

     WHEREAS, the rights and obligations of Zany under the WSSA and the DSLA
have been transferred to ZB Direct;

     WHEREAS, under the terms of the Plan of Dissolution, (i) ZB Holdings has
agreed to assume all of the liabilities of ZB.com, and ZB Direct has agreed to
assume all of the liabilities of ZB Holdings, with such liabilities to include
certain amounts owed to ONRP Services under the WSSA and (ii) Zany has agreed to
guaranty the obligations of ZB Direct to ONRP Services; and

     WHEREAS, the parties have agreed that under the terms and conditions set
forth in this Agreement, Zany will issue to ONRP shares of its common stock, par
value $0.01 per share (the "Common Stock"), and a warrant to purchase shares of
                            ------------
Common Stock and pay ONRP an aggregate of one million dollars ($1,000,000) as
set forth in Sections 2.5(a) and (b) of this Agreement (the "Cash Payments"), in
                                                             -------------
consideration for (i) the execution and delivery of the amendment, and agreement
to terminate, the WSSA and DSLA and the full and complete satisfaction of all
liabilities of ZB.com (or ZB Direct) to ONRP Services under the WSSA and
<PAGE>

the DSLA, which events shall be evidenced by the execution and delivery of an
amendment and termination agreement in substantially the form attached as
Exhibit A (the "Amendment and Termination Agreement"), (ii) the execution and
---------       -----------------------------------
delivery of a new license agreement by and among ZB Direct, ONRP and ONRP
Services in substantially the form attached hereto as Exhibit B (the "New
                                                      ---------       ---
License Agreement"), and (iii) the execution and delivery of a Software Escrow
-----------------
Agreement between ONRP Services and ZB Direct, substantially in the form
attached hereto as Exhibit C (the "Software Escrow Agreement").
                   ---------       -------------------------

     NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

1.   ACTIONS PRECEDING EXECUTION.

     Each of the parties understands and agrees that the following actions have
been taken by the following parties prior to the date and time of the execution
and delivery of this Agreement in contemplation of, and preparation for, the
transactions contemplated by this Agreement:

     1.1  Authorization of Common Stock. Zany has authorized the issuance and
          ------------------------------
sale to ONRP of 1,250,000 shares of its Common Stock (the "Shares").
                                                           ------

     1.2  Authorization of Issuance of Warrant. Zany has authorized the issuance
          -------------------------------------
to ONRP of a warrant to purchase 1,000,000 shares of its Common Stock, in
substantially the form attached hereto as Exhibit D (the "Warrant").
                                          ---------       -------

     1.3  Listing of Additional Shares. Zany will file with the Nasdaq National
          ----------------------------
Market a Notification Form for Listing of Additional Shares with respect to the
Shares and the Warrant Shares (as defined below).

     1.4  Blue Sky. Zany has obtained all necessary Blue Sky law permits and
          ---------
qualifications, or has the availability of exemptions therefrom, required by any
state for the offer and sale of the Shares and the Warrant Shares.

2.   CONSIDERATION; SALE OF SHARES; deliverables

     2.1  Consideration. The consideration for the issuance and sale of the
          --------------
Shares, the issuance of the Warrant to ONRP and the Cash Payments, shall be:

          (a)  The execution and delivery of the Amendment and Termination
Agreement;

          (b)  The execution and delivery of the New License Agreement,
providing for the transfer of certain technology as more specifically detailed
on Annex I hereto; and
   -------

          (c)  The execution and delivery of the Software Escrow Agreement.

     2.2  Issuance of Shares and Warrant. Upon the execution and delivery of
          -------------------------------
this Agreement, Zany will issue and sell to ONRP the Shares and the Warrant. The
Shares issued

                                       2
<PAGE>

hereunder and the Common Stock issuable upon the exercise of the Warrant (the
"Warrant Shares") are issued in a transaction that is exempt from registration
 --------------
under the Securities Act of 1933, as amended (the "Securities Act"), by reason
                                                   --------------
of Section 4(2) thereof and under applicable state securities laws.

     2.3  Location. The consummation of the purchase and sale of the Shares and
          --------
the other transactions contemplated by this Agreement shall take place on and as
of the date hereof at the offices of Morgan, Lewis & Bockius LLP, 1701 Market
Street, Philadelphia, PA 19103.

     2.4  Items Delivered Simultaneously With the Execution of this Agreement.
          -------------------------------------------------------------------

          (a)  ONRP has, and has caused ONRP Services to, execute and deliver to
Zany the Amendment and Termination Agreement;

          (b)  Zany has delivered to ONRP (i) a stock certificate representing
ONRP's ownership of the Shares and (ii) the executed Warrant;

          (c)  Zany has, and has caused ZB Direct to, execute and deliver to
ONRP the Amendment and Termination Agreement;

          (d)  ZB Direct, ONRP and ONRP Services have executed and delivered the
New License Agreement; and

          (e)  ZB Direct, ONRP Services and Fort Knox Escrow Services, Inc. have
executed and delivered the Software Escrow Agreement.

     2.5  Cash Payments.  Zany agrees to pay ONRP:
          -------------

          (a)  three hundred fifty thousand dollars ($350,000) on January 3,
2001, provided that ONRP is then in compliance with the terms of the WSSA as
amended by the Amendment and Termination Agreement; and

          (b)  six hundred fifth thousand dollars ($650,000) on February 5,
2001, provided that ONRP is then in compliance with the terms of the WSSA as
amended by the Amendment and Termination Agreement.

     2.6  Retail Technology Delivery.  ONRP will cause ONRP Services to deliver
          --------------------------
to Zany, within thirty (30) days of the execution of this Agreement, the Retail
Technology in the object code and source code form and the documentation related
thereto which is reasonably required for a person of normal skill in the
industry to use the object code and source code. Such delivery will be made in
electronic and written format.

3.   REPRESENTATIONS AND WARRANTIES OF ONRP.

     To induce Zany to enter into this Agreement and consummate the transactions
contemplated hereby, ONRP represents and warrants to Zany that, except as set
forth in the disclosure schedule, if any, delivered by ONRP to Zany prior to the
execution and delivery of this Agreement (the "ONRP Disclosure Schedule"):
                                               ------------------------

                                       3
<PAGE>

     3.1  Organization, Standing and Power. ONRP is a corporation duly
          --------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. ONRP has the corporate power to own its properties
and to carry on its business as now being conducted. ONRP is not in violation of
any of the provisions of its certificate of incorporation or bylaws.

     3.2  Authority. ONRP has all requisite corporate power and authority to
          ---------
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of ONRP. This Agreement has been
duly executed and delivered by ONRP and constitutes the legal, valid and binding
obligation of ONRP enforceable against ONRP in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforceability of creditors' rights generally and to
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law) (the "Bankruptcy and Equity Exception").
                                           -------------------------------
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (a) any provision of the certificate
of incorporation or bylaws of ONRP or (b) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ONRP or any of its subsidiaries or their properties or assets,
except where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of clause (b) would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below) on ONRP. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority, is
required by or with respect to ONRP in connection with the execution and
delivery of this Agreement by ONRP or the consummation by Zany of the
transactions contemplated hereby, except for such consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
have a Material Adverse Effect on ONRP and would not prevent, materially alter
or delay any of the transactions contemplated by this Agreement.  A "Material
                                                                     --------
Adverse Effect" with respect to any entity means any event, change or effect
--------------
that is materially adverse to the financial condition, properties, assets
(including intangible assets), business, operations or products (including
planned business, operations or products) of such entity and its subsidiaries,
taken as a whole, except for (A) matters generally effecting the industry in
which the such entity operates and (B) changes in general economic conditions.

     3.3  No Violation. Neither the execution or delivery of this Agreement by
          -------------
ONRP nor the consummation by it of the transactions contemplated hereby, will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any court, administrative agency or commission
or governmental authority or instrumentality (a "Governmental Authority") to
                                                 ----------------------
which ONRP is a party or to which it is bound or subject, or the provisions of
the certificate of incorporation or bylaws of ONRP.

     3.4  Litigation; Claims.  There is no litigation, claim, proceeding or
          ------------------
government investigation (i) pending or, to ONRP's knowledge, threatened,
against ONRP relating to the

                                       4
<PAGE>

transactions contemplated by this Agreement, or (ii) to ONRP's knowledge, except
as set forth in Schedule 3.4 hereto, pending or threatened against ZB.com or ZB
                ------------
Holdings.

     3.5  No Brokers.  Neither ONRP nor any individual, partnership,
          ----------
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture or other entity of whatever
nature (a "Person") acting on behalf of ONRP has obligated ONRP to pay any
           ------
brokerage or finders' fee or agents' commissions or investment bankers' or
financial advisory fee or similar charges in connection with this Agreement or
any transaction contemplated hereby to any Person, nor has ONRP or any such
Person taken any action on which a claim for any such payment could be based.

     3.6  Investment Representations. ONRP has knowledge and experience in
          --------------------------
financial and business matters sufficient to enable it to evaluate the merits
and risks of an investment in Zany and was not formed for the purpose of
investing in Zany's Common Stock. ONRP has assets sufficient to enable it to
bear the economic risk of its investment in the Shares and has assets in excess
of Five Million Dollars ($5,000,000). ONRP is acquiring the Shares and the
Warrant (including the underlying Warrant Shares) for its own account, and not
with a present view to, or for sale in connection with, any distribution
thereof. ONRP understands that the Shares have not been registered under the
Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to the exemption
provided in Section 4(2) thereof, that the Shares have not been registered under
applicable state securities laws by reason of their issuance in a transaction
exempt from such registration requirements, and that the Shares may not be sold
or otherwise disposed of unless registered under the Securities Act and
applicable state securities laws, or exempted from registration, and that the
certificates representing the Shares will bear the legends required by
applicable securities and blue sky laws. ONRP further understands that the
exemption from registration afforded by Rule 144 promulgated under the
Securities Act is not presently available with respect to the Shares.

     3.7  ONRP's Acknowledgement as to Information. ONRP or its representatives
          ----------------------------------------
have received from Zany, or Zany has made available, (i) the Schedules to this
Agreement, (ii) the Exhibits to this Agreement, (iii) such documents referred to
in this Agreement or in the Schedules or Exhibits hereto and (iv) any other
information as they have requested with respect to Zany as ONRP has deemed
necessary and relevant in connection with the transactions contemplated by this
Agreement, and ONRP has had the opportunity, directly or through its
representatives, to ask questions of and receive answers from persons acting on
behalf of Zany necessary to verify the information so obtained.

     3.8  Intellectual Property Representations. Any capitalized terms used but
          -------------------------------------
not defined in this Section 3.8 shall have the meanings ascribed to such terms
in the WSSA.

          (a)  All Retail Technology which is being transferred is identified in
Annex II and there is no other Retail Technology used in the Site or developed
--------
by or on behalf of ONRP Services and/or ONRP except for that set forth on Annex
                                                                          -----
II;
--

          (b)  All Common Technology is identified in Annex I and there is no
                                                      -------
other Common Technology used in the Site or developed by or on behalf of ONRP
Services and/or ONRP except for that set forth on Annex I. The Common Technology
                                                  -------
and the Retail Technology shall be collectively referred to herein as the
"Technology";
 ----------

                                       5
<PAGE>

          (c)  No other software in addition to the Technology listed on Annex I
                                                                         -------
and Annex II is required to operate the Site to the same extent, with the same
    --------
functionality and in the same manner as the Site currently exists as of the date
of this Agreement and as it has consistently operated during the past ninety
days;

          (d)  ONRP and/or ONRP Services owns, or has a license to use, all of
the Technology. The Technology (exclusive of the software provided pursuant to
the Third Party Agreements (as defined below)) was developed independently by
ONRP Services without reference to the intellectual property of any third party.
The Technology is provided by ONRP free of any liens or encumbrances. There are
no claims or demands of any other entity pertaining to any such intellectual
property and no proceedings have been instituted, or are pending or, to the
knowledge of ONRP and/or ONRP Services, threatened, which challenge the rights
of ONRP and/or ONRP Services in respect thereof. ONRP and/or ONRP Services has
no knowledge of any infringement by others of any intellectual property rights
in the Technology. To the knowledge of ONRP and/or ONRP Services, the operation
of the Site and/or the Technology does not infringe any intellectual property
rights of any other entity. No proceeding charging ONRP and/or ONRP Services
with infringement of any adversely held intellectual property rights has been
filed or, to the knowledge of ONRP and/or ONRP Services, is threatened to be
filed. To the knowledge of ONRP and/or ONRP Services, there exists no unexpired
patent or patent application which includes claims that would be infringed by or
otherwise adversely affect the operation of the Site or the use of the
Technology;

          (e)  All patents, patent applications, trademark registrations,
trademark applications and registered copyrights related to the Technology and
the Site (exclusive of any of the foregoing related to software provided
pursuant to Third Party Agreements) are identified on Annex I and Annex II. All
                                                      -------     --------
patents, patent applications, trademark registrations, trademark applications
and registered copyrights identified on Annex I and Annex II have been duly
                                        -------     --------
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on Annex I and Annex II, and have been
                                        -------     --------
properly maintained and renewed in accordance with all applicable laws and
administrative regulations of the United States and each such jurisdiction;

          (f)  All licenses or other agreements under which ONRP and/or ONRP
Services is granted intellectual property rights relating to the Technology
("Third Party Agreements") are listed in Annex I(a) and Annex II(a),
  ----------------------                 ----------     -----------
respectively. All of said licenses or other agreements are in full force and
effect, there is no material default by ONRP and/or ONRP Services or, to the
knowledge of ONRP and/or ONRP Services, any other party thereto. To the
knowledge of ONRP and/or ONRP Services, the licensors under said licenses and
other agreements have and had all requisite power and authority to grant the
rights purported to be conferred thereby. The transfers of the Technology
contemplated in this Agreement and the other agreements contemplated herein will
not violate any provision of any Third Party Agreements, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), render the transfers invalid, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit
under any Third Party Agreement. True and complete copies of all such licenses
or other agreements, and any amendments thereto, have been provided to Zany;

                                       6
<PAGE>

          (g)  ONRP and/or ONRP Services has taken all steps required in
accordance with sound business practice to establish and preserve its ownership
of all intellectual property rights in the Technology, except where failure to
take such steps would not have a material adverse effect on the operation of the
Site. Such practices include, without limitation, requiring all professional and
technical employees to execute agreements under which such employees are
required to convey to ONRP and/or ONRP Services ownership of all inventions and
developments conceived or created by them in the course of their employment;

          (h)  The Technology as delivered to Zany and/or ZB Direct shall not
contain "threats" known as viruses, time bombs, logic bombs, Trojan horses, trap
doors, or other malicious computer instructions, intentional devices or
techniques that can or were designed to threaten, infect, attack, assault,
vandalize, defraud, disrupt, damage, disable, or shut down a computer system or
any component thereof, including its security or user data; and

          (i)  There are no (i) actions, suits, claims or proceedings pending
or, to the knowledge of ONRP or ONRP Services, threatened against or affecting
the Technology, at law or in equity, or before or by and any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding relating to
the Technology or (iii) governmental inquiry pending or, to the knowledge of
ONRP or ONRP Services, threatened against, involving or affecting the
Technology; provided, that, with respect to software provided pursuant to Third
            --------  ----
Party Agreements, the foregoing representations are limited to actions, suits,
claims, proceedings, arbitrations and governmental inquiries, or threats
thereof, known to ONRP or ONRP Services. There are no outstanding orders, writs,
judgments, injunctions or decrees of any court, governmental agency or
arbitration tribunal against, involving or affecting, the Technology; provided,
                                                                      --------
that, with respect to software provided pursuant to Third Party Agreements, the
----
foregoing representation is limited to orders, writs, judgments, injunctions and
decrees known to ONRP or ONRP Services.

     3.9  Representations Complete. None of the representations or warranties
          ------------------------
made by ONRP herein contains any untrue statement of a material fact, or omits
to state any material fact necessary in order to make the statements contained
herein, in light of the circumstances with which they were made, not misleading.

     3.10 Financial Statements.  ONRP knows of no reason why the financial
          --------------------
statements of ZB.com and ZB Holdings prepared as of the date hereof are not (i)
in compliance as to form in all material respects with applicable accounting
requirements, (ii) prepared in accordance with generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with each other, and (iii) a fair presentation in all material
respects of the consolidated financial condition and operating results of ZB.com
and ZB Holdings, respectively, and their subsidiaries at the dates and during
the periods indicated therein.

4.   REPRESENTATIONS OF ZANY.

     To induce ONRP to enter into this Agreement and consummate the transactions
contemplated hereby, Zany represents and warrants to ONRP that, except as set
forth in the disclosure schedule, if any, delivered by Zany to ONRP prior to the
execution and delivery of this Agreement (the "Zany Disclosure Schedule"):
                                               ------------------------

                                       7
<PAGE>

     4.1 Organization, Standing and Power. Zany is a corporation duly organized,
         --------------------------------
validly existing and in good standing under the laws of its jurisdiction of
organization.  Zany has the corporate power to own its properties and to carry
on its business as now being conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the failure to be so qualified
and in good standing would have a Material Adverse Effect on Zany.  Zany has
made available to ONRP a true and correct copy of the articles of incorporation
and bylaws or other charter documents, as applicable, of Zany, as amended to
date.  Zany is not in violation of any of the provisions of its articles of
incorporation or bylaws.

     4.2  Authority. Zany has all requisite corporate power and authority to
          ---------
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action (corporate or otherwise) on the part of Zany. This Agreement has been
duly executed and delivered by Zany and constitutes the legal, valid and binding
obligation of Zany enforceable against Zany in accordance with its terms, except
as limited by the Bankruptcy and Equity Exception. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit
under (a) any provision of the articles of incorporation or bylaws of Zany or
(b) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Zany or any of its
subsidiaries or their properties or assets), except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions of clause (b) would not, individually or in the
aggregate, have a Material Adverse Effect on Zany. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority, is required by or with respect to Zany or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
Zany or the consummation by Zany of the transactions contemplated hereby, except
for (w) any filings as may be required under applicable federal and state
securities laws, (x) the filing with the Nasdaq National Market of a
Notification Form for Listing of Additional Shares with respect to the Shares
and the Warrant Shares, and (y) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Zany and would not prevent, materially alter or delay
any of the transactions contemplated by this Agreement.

     4.3  No Violation.  Neither the execution or delivery of this Agreement by
          ------------
Zany nor the consummation by it of the transactions contemplated hereby, will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any Governmental Authority to which Zany is a
party or to which it is bound or subject, or the provisions of the articles of
incorporation or bylaws of Zany.

     4.4  Capital Structure.  The authorized capital stock of Zany consists of
          -----------------
100,000,000 shares of Zany Common Stock, and 5,000,000 shares of preferred
stock, par value $0.01 per share, of which there were issued and outstanding as
of the close of business on December 1, 2000, approximately 32,172,000 shares of
Zany Common Stock and no shares of preferred stock. All outstanding shares of
Zany Common Stock have been duly authorized, validly issued, fully paid and are
nonassessable and free of any liens or

                                       8
<PAGE>

encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof. The shares of Zany Common Stock to be issued pursuant to this
Agreement and the Warrant Shares to be issued pursuant to the terms of the
Warrant will be duly authorized, validly issued, fully paid and nonassessable,
and no stockholder of Zany will have any preemptive right of subscription or
purchase in respect thereof.

     4.5  SEC Documents; Financial Statements.  As of their respective filing
          -----------------------------------
dates, each statement, report, registration statement (with the prospectus in
the form filed pursuant to Rule 424(b) of the Securities Act), definitive proxy
statement and other filing filed with the Securities and Exchange Commission
("SEC") by Zany (collectively, the "Zany SEC Documents") complied in all
  ---                               ------------------
material respects with the applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Securities Act, and none
                              ------------
of the Zany SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in which they
were made, not misleading, except to the extent corrected by a subsequently
filed Zany SEC Document. All documents required to be filed as exhibits to the
Zany SEC Documents have been so filed. The financial statements of Zany,
including the notes thereto, included in the Zany SEC Documents (the "Zany
                                                                      ----
Financial Statements") were complete and correct in all material respects as of
--------------------
their respective dates, complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto as of their respective dates, and were prepared
in accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
under the Exchange Act). The Zany Financial Statements fairly present in all
material respects the consolidated financial condition and operating results of
Zany and its subsidiaries at the dates and during the periods indicated therein
(subject, in the case of unaudited statements, to normal, recurring year-end
audit adjustments). There has been no material change in Zany's accounting
policies except as described in the notes to the Zany Financial Statements.

     4.6  No Brokers.  Zany has not incurred, nor will it incur, directly or
          ----------
indirectly, any liability for brokerage or finders' fees or agents' commissions
or investment bankers' or financial advisory fees or any similar charges in
connection with this Agreement to any Person, nor has Zany or any Person taken
any action on which a claim for such payment could be based.

     4.7  Representations Complete. None of the representations or warranties
          ------------------------
made by Zany herein contains any untrue statement of a material fact, or omits
to state any material fact necessary in order to make the statements contained
herein, in light of the circumstances with which they were made, not misleading.

5.   INDEMNIFICATION.

     5.1  Survival of Representations, Warranties and Covenants.  All the
          -----------------------------------------------------
representations, warranties and covenants set forth in this Agreement or in any
instrument delivered in connection herewith, and all rights of Zany and ONRP
with respect thereto, shall survive until the date that is three (3) years
following the date of this Agreement and shall terminate on such date.  The
termination of any representation or warranty, however, shall not

                                       9
<PAGE>

affect the right to indemnification for breach of such representation or
warranty if written notice of such breach is given prior to such termination.

     5.2  Indemnification.
          ---------------

          (a)  From and after the date of this Agreement, and subject to the
limitations set forth in this Section 5, ONRP will indemnify and hold harmless
Zany and its officers, directors, agents and employees, and each person, if any,
who controls or may control Zany within the meaning of the Securities Act
(hereinafter referred to individually as an "Indemnified Person" and
                                             ------------------
collectively as "Indemnified Persons") from and against any and all losses,
                 -------------------
costs, damages, liabilities and expenses arising from claims, demands, actions,
causes of action, including, without limitation, reasonable legal fees and
including any of the foregoing incurred in settlement of any litigation
commenced or threatened (collectively, "Damages") resulting from, arising out of
                                        -------
or based on (i) any misrepresentation or breach of any of the representations,
warranties, covenants and agreements given or made by ONRP in this Agreement or
the ONRP Disclosure Schedule or (ii) any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus or offering circular, or any amendment or supplement thereof,
incident to any such registration, qualification or compliance, based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances in which they were made, to the extent that such
untrue statement or omission or allegation thereof is made in reliance upon and
in conformity with written information furnished to Zany by or on behalf of the
Holder (as defined herein) and stated to be specifically for use in preparation
of such registration statement, prospectus or offering circular; provided that
the indemnity shall not apply to the extent that such claim, loss, damage or
liability results from the fact that a current copy of the prospectus was not
made available to the Holder and such current copy of the prospectus would have
cured the defect giving rise to such loss, claim, damage or liability.

          (b)  From and after the date of this Agreement, and subject to the
limitations set forth in this Section 5, Zany will indemnify and hold harmless
ONRP and each of its Indemnified Persons from and against any and all Damages
resulting from, arising out of or based on (i) any misrepresentation or breach
of any of the representations, warranties, covenants and agreements given or
made by Zany in this Agreement or the Zany Disclosure Schedule or (ii) any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement, prospectus or offering circular, or any amendment or
supplement thereof, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances in which they were made,
and will reimburse each Holder of the Registrable Securities (as defined herein)
and each person controlling such Holder, for reasonable legal and other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred; provided that Zany will
not be liable in any such case to the extent that any untrue statement or
omission or allegation thereof is made in reliance upon and in conformity with
written information furnished to Zany by or on behalf of such Holder and stated
to be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided, further, that Zany will not be liable
in any such case where the claim, loss, damage or liability arises out of or is
related to the failure of the Holder to comply with the covenants and agreements
contained in this Agreement respecting sales of Registrable Securities, and
except

                                       10
<PAGE>

that the foregoing indemnity agreement is subject to the condition that, insofar
as it relates to any such untrue statement or alleged untrue statement or
omission or alleged omission made in the preliminary prospectus but eliminated
or remedied in (i) the amended prospectus on file with the SEC at the time the
registration statement becomes effective, (ii) in the amended prospectus filed
with the SEC pursuant to Rule 424(b) of the Securities Act, or (iii) in the
prospectus subject to completion under Rule 434 of the Securities Act, which
together meet the requirements of Section 10(a) of the Securities Act (the
"Final Prospectus"), such indemnity agreement shall not inure to the benefit of
 ----------------
any such Holder or any such controlling person, if a copy of the Final
Prospectus furnished by Zany to the Holder for delivery was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Securities Act and the Final
Prospectus would have cured the defect giving rise to such loss, liability,
claim or damage.

     "Damages" as used herein is not limited to matters asserted by third
parties, but includes Damages incurred, suffered or sustained in the absence of
claims by a third party.

     5.3  Certain Limitations.
          -------------------

          (a)  Zany's right to indemnification for Damages under Section 5.2(a)
shall accrue only if the aggregate of all such Damages exceeds $5,000 (the
"Threshold Amount") and then only to the extent of any excess Damages over
 ----------------
the Threshold Amount. ONRP's right to indemnification for Damages under Section
5.2(b) shall accrue only if the aggregate of all such Damages exceeds the
Threshold Amount and then only to the extent of any excess Damages over the
Threshold Amount.

          (b)  No indemnification shall be made (or Damages counted against the
Threshold Amount) to Zany or ONRP, as the case may be, for matters to the extent
that they are covered by insurance (after reduction for the reasonable costs and
expenses of obtaining such insurance payment).

     5.4  Certain Procedural Matters.
          --------------------------

          (a)  A party seeking indemnification (the "Indemnified Party") shall
                                                     -----------------
give prompt written notice to the party from whom indemnification will be sought
(the "Indemnifying Party") of any claim for indemnification hereunder and shall
      ------------------
provide to the Indemnifying Party as soon as practicable thereafter all
information and documentation necessary to support and verify the claim asserted
(or which would be asserted if not below the Threshold Amount), and the
Indemnifying Party and his or its representatives shall be given access to all
personnel, properties, books and records that the Indemnifying Party reasonably
determines to be related thereto.

          (b)  If any legal proceeding is instituted or any claim or demand is
asserted by any person in respect of which and Indemnified Party may seek to
assert a claim for indemnification hereunder, the Indemnified Party shall
promptly cause written notice of the assertion of any such legal proceeding,
claim or demand to be made to the Indemnifying Party; provided that the failure
to so notify the Indemnifying Party shall not reduce or adversely affect the
right of the Indemnified Party to assert a claim for indemnification hereunder
with respect to such legal proceeding, claim or demand except to the extent that
the Indemnifying Party is materially prejudiced thereby. The Indemnifying Party
shall have the right at any time, at his or

                                       11
<PAGE>

its option and expense, to participate in (but not to control) the defense of
any such legal proceeding, claim or demand (including without limitation the
right to participate in negotiations and settlement discussions). The
Indemnified Party and the Indemnifying Party shall cooperate fully with each
other in connection with the defense, negotiation and settlement of any such
legal proceeding, claim or demand, and the Indemnifying Party shall be given
access to all personnel, properties, books and records that the Indemnifying
Party reasonably determines to be related thereto. No such legal proceeding,
claim or demand may be settled or compromised (nor shall any agreement be
entered into or commitment made with respect to any settlement or compromise)
without the written consent of the Indemnifying Party, which shall not be
unreasonably withheld.

     5.5  Exclusive Remedy. This Section 5 sets forth the exclusive right of the
          ----------------
parties, from and after the date hereof, to obtain indemnification or other
compensation for, or to assert any claim in respect of, any Damages resulting
from the transactions contemplated by this Agreement, and all other rights are
expressly waived for the benefit of the parties hereto and their investors,
shareholders, officers, directors and employees.  The limitations contained in
this Section 5 however, shall not limit the liability of any party hereto with
respect to any actual fraud of such party.

     5.6  Resolution of Conflicts; Arbitration.
          ------------------------------------

          (a)  In case an Indemnifying Party shall object to any indemnification
claim or claims by an Indemnified Party, the Indemnifying Party and the
Indemnified Party shall attempt in good faith for thirty (30) days to agree upon
the rights of the respective parties with respect to each of such claims.

          (b)  If no such agreement can be reached after good faith negotiation,
either the Indemnifying Party or the Indemnified Party may, by written notice to
the other, demand arbitration of the matter unless the amount of the Damages is
at issue in pending litigation with a third party, in which event arbitration
shall not be commenced until such amount is ascertained or both the Indemnifying
Party and the Indemnified Party agree to arbitration; and in such event the
matter shall be settled by arbitration conducted by a single arbitrator. The
Indemnifying Party and the Indemnified Party shall jointly select an arbitrator.
If the Indemnifying Party and the Indemnified Party fail to agree upon an
arbitrator within ten (10) days, an arbitrator shall be selected for them by the
American Arbitration Association. The decision of the arbitrator so selected as
to the validity and amount of any indemnification claim shall be binding and
conclusive upon the parties to this Agreement.

          (c)  Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Montgomery County, Pennsylvania under the commercial rules then in effect of the
American Arbitration Association. The non-prevailing party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of the American Arbitration Association, and the expenses, including without
limitation, attorneys' fees and costs reasonably incurred by the other party to
the arbitration.

6.   REGISTRATION RIGHTS

                                       12
<PAGE>

     6.1  Definitions. As used in this Agreement, the following terms shall have
          -----------
the following meanings:

          (a)  "Affiliate" shall mean, with respect to any Person (as defined
                ---------
below), any other Person controlling, controlled by or under direct or indirect
common control with such Person (for the purposes of this definition "control,"
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing).

          (b)  "Business Day" shall mean a day Monday through Friday on which
                ------------
banks are generally open for business in New York.

          (c)  "Holders" shall mean ONRP and any person holding Registrable
                -------
Securities or any person to whom the rights under Section 6 have been
transferred in accordance with Section 6.7 hereof.

          (d)  "Person" shall mean any person, individual, corporation, limited
                ------
liability company, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).

          (e)  The terms "register," "registered" and "registration" refer to
                          --------    ----------       ------------
the registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

          (f)  "Registrable Securities" shall mean not more than 312,500 shares
                ----------------------
of 1,250,000 Shares sold hereunder; provided, however, that securities shall
                                    --------  -------
only be treated as Registrable Securities if and only for so long as they (A)
have not been disposed of pursuant to a registration statement declared
effective by the SEC, (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale, (C) are held by a Holder or a
permitted transferee pursuant to Section 6.7, or (D) have not become eligible
for sale pursuant to Rule 144 (or any successor thereto) under the Securities
Act.

          (g)  "Registration Expenses" shall mean all expenses incurred by Zany
                ---------------------
in complying with Section 6.2 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for Zany, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
and all expenses incurred by any Holder, including, without limitation, all
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities and all fees and expenses of legal counsel for any
Holder.

          (h)  "Registration Statement" shall have the meaning ascribed to such
                ----------------------
term in Section 6.2.

          (i)  "Registration Period" shall have the meaning ascribed to such
                -------------------
term in Section 6.2.

                                       13
<PAGE>

     6.2  Registration Statement. Subject to the last sentence of this Section
          ----------------------
6.2, Zany will, upon the request of ONRP, but in no event prior to the later of
(a) the receipt by Zany of either (i) a waiver from each holder, other than ONRP
(a "Private Placement Holder"), of outstanding registration rights on the date
    ------------------------
hereof of all existing rights with respect to the registration of shares of Zany
Common Stock in connection with the registration of shares of Zany Common Stock
pursuant to this section 6.2 or (ii) a request that the shares of non-waiving
Private Placement Holders be included in the Registration Statement (in no event
shall the process of obtaining waivers or accepting such registration requests
take longer than forty-five (45) days after ONRP's request) and (b) three months
following the date of this Agreement, (x) file a registration statement on Form
S-3, or if Zany is ineligible to use Form S-3, then on Form S-1 (the
"Registration Statement") with respect to (i) the resale of not more than
 ----------------------
312,500 shares of Common Stock sold pursuant to this Agreement and use its best
efforts to have such Registration Statement declared effective by the SEC prior
to the date which is ninety (90) days after the date on which the Registration
Statement is filed; provided, however, that Zany will have no obligation to
                    --------  --------
request that the Registration Statement be declared effective prior to the date
that is six (6) months after the date of this Agreement, and (y) cause such
Registration Statement to remain effective until the earlier of (i) such date as
the holders of the securities have completed the distribution described in the
Registration Statement or (ii) at such time that such shares are no longer, by
reason of Rule 144 under the Securities Act, required to be registered for the
sale thereof by such holders.  The period of time during which Zany is required
hereunder to keep the Registration Statement effective is referred to herein as
the "Registration Period."  Notwithstanding the foregoing, in the event a
     -------------------
Private Placement Holder in lieu of delivering a waiver of registration rights,
requests that his shares be included in the Registration Statement, then the
number of shares to be registered by the Holders shall be reduced, on a pro rata
basis with such Private Placement Holder(s), so that the total number of shares
required to be registered pursuant to this Section 6.2 does not exceed 312,500
shares; provided, that in the event the number of shares held by the Holders is
reduced by 50% or more, then the Holders shall have the right, one time only, to
request that Zany file another Registration Statement pursuant to this Section
6.2.  Within sixty (60) days of the date hereof, Zany agrees, regardless of
whether ONRP has exercised its rights under this Section 6.2, to use reasonable
efforts to seek a waiver of registration rights from the Private Placement
Holders in connection with the registration of shares of Zany Common Stock
pursuant to this Section 6.2.

     6.3  Expenses.  All Registration Expenses, regardless of whether the
          --------
registration statement is declared effective, incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 6.2,
including, without limitation, all Registration Expenses relating to the sale of
securities registered by or on behalf of any Holder shall be borne by the
Holders, on a pro rata basis.

     6.4  Further Agreements.  In the case of the registration, qualification,
          ------------------
exemption or compliance effected by Zany pursuant to this Agreement, Zany shall,
upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance.  Zany shall at ONRP's
expense:

          (a)  use its reasonable best efforts to keep such registration, and
any qualification, exemption or compliance under state securities laws which
Zany determines to obtain, continuously effective until the Holders have
completed the distribution described in the registration statement relating
thereto. Notwithstanding the foregoing, at Zany's election, Zany

                                       14
<PAGE>

may cease to keep such registration, qualification, exemption or compliance
effective with respect to any Registrable Securities, and the registration
rights of a Holder shall expire, at such time as they are no longer, by reason
of Rule 144 of the Securities Act (or other exemption from registration
acceptable to Zany) required to register for the sale thereof;

          (b)  advise the Holders:

               (i)   when the Registration Statement or any amendment thereto
     has been filed with the SEC and when the Registration Statement or any
     post-effective amendment thereto has become effective;

               (ii)  of any request by the SEC for amendments or supplements to
     the Registration Statement or the prospectus included therein or for
     additional information;

               (iii) of the issuance by the SEC of any stop order suspending the
     effectiveness of the Registration Statement or the initiation of any
     proceedings for such purpose;

               (iv)  of the receipt by Zany of any notification with respect to
     the suspension of the qualification of the Registrable Securities included
     therein for sale in any jurisdiction or the initiation or threatening of
     any proceeding for such purpose; and

               (v)   of the happening of any event that requires the making of
     any changes in the Registration Statement or the prospectus so that, as of
     such date, the statements therein are not misleading and do not omit to
     state a material fact required to be stated therein or necessary to make
     the statements therein (in the case of the prospectus, in the light of the
     circumstances under which they were made) not misleading;

          (c)  make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;

          (d)  furnish to each Holder at least one copy of such Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits (including those incorporated by reference) in the form filed with the
SEC;

          (e)  during the Registration Period, deliver to each Holder as many
copies of the prospectus included in such Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request; and Zany
consents to the use, consistent with the provisions hereof, of the prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or supplement
thereto;

          (f)  during the Registration Period, deliver to each Holder (i) as
soon as practicable, one copy of the following documents, other than those
documents available via EDGAR: (A) its annual report to its shareholders, if any
(which annual report shall contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified public accountants of recognized standing); (B) if

                                       15
<PAGE>

not included in substance in its annual report to shareholders, its annual
report on Form 10-K (or similar form); (C) each of its quarterly reports to its
shareholders, and, if not included in substance in its quarterly reports to
shareholders, its quarterly report on Form 10-Q (or similar form), and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;

          (g)  prior to any sale of Registrable Securities by a Holder pursuant
to the Registration Statement, register or qualify or obtain an exemption for
offer and sale under the securities or blue sky laws of such jurisdictions as
any such Holders reasonably request in writing, provided that Zany shall not for
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction, and do any and
all other acts or things reasonably necessary or advisable to enable the offer
and sale in such jurisdictions of the Registrable Securities covered by such
Registration Statement;

          (h)  cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to any Registration Statement free of any restrictive legends to the
extent not required at such time and in such denominations and registered in
such names as Holders may request at least three (3) business days prior to
sales of Registrable Securities pursuant to such Registration Statement;

          (i)  upon the occurrence of any event contemplated by Section
6.4(b)(v) above, Zany shall promptly prepare a post-effective amendment to the
Registration Statement or a supplement to the related prospectus, or file any
other required document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and

          (j)  use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC, and will make generally available to the
Holders not later than 45 days (or 90 days if the fiscal quarter is the fourth
fiscal quarter) after the end of its fiscal quarter in which the first
anniversary date of the effective date of the Registration Statement occurs, an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act.

     6.5  Covenants of Holder.
          -------------------

          (a)  Each Holder agrees that, upon receipt of any notice from Zany of
the happening of any event requiring the preparation of a supplement or
amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement contemplated by Section 6.2 until its receipt of
copies of the supplemented or amended prospectus from Zany and, if so directed
by Zany, each Holder shall deliver to Zany all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.

                                       16
<PAGE>

          (b)  Each Holder shall suspend, upon request of Zany, any disposition
of Registrable Securities pursuant to the Registration Statement and prospectus
contemplated by Section 6.2 during (i) any period not to exceed two 46-day
periods within any one 12-month period Zany requires in connection with a
primary underwritten offering of equity securities and (ii) any period, not to
exceed one 60-day period per circumstance or development, when Zany determines
in good faith that offers and sales pursuant thereto should not be made by
reason of the presence of material undisclosed circumstances or developments
with respect to which the disclosure that would be required in such a prospectus
is premature, would have an adverse effect on Zany or is otherwise inadvisable.

          (c)  As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to Zany with such information regarding such Holder
and the distribution proposed by such Holder as Zany may request in writing or
as shall be required in connection with any registration, qualification or
compliance referred to in this Section 6.

          (d)  Each Holder hereby covenants with Zany (i) not to make any sale
of the Registrable Securities without effectively causing the prospectus
delivery requirements under the Securities Act to be satisfied, and (ii) if such
Registrable Securities are to be sold by any method or in any transaction other
than on a national securities exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market or in the over-the-counter market, in privately negotiated
transactions, or in a combination of such methods, to notify Zany by letter at
least five (6) business days prior to the date on which the Holder first offers
to sell any such Registrable Securities.

          (e)  Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement described in this Section
are not transferable on the books of Zany unless the stock certificate submitted
to the transfer agent evidencing such Registrable Securities is accompanied by a
certificate reasonably satisfactory to Zany to the effect that (i) the
Registrable Securities have been sold in accordance with such Registration
Statement and (ii) the requirement of delivering a current prospectus has been
satisfied.

          (f)  Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to such registration statement which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.

          (g)  At the end of the period during which Zany is obligated to keep
the Registration Statement current and effective as described above, the Holders
of Registrable Securities included in the Registration Statement shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from Zany of its intention to remove from registration the shares
covered by such Registration Statement which remain unsold, and such Holders
shall notify Zany of the number of shares registered which remain unsold
immediately upon receipt of such notice from Zany.

     6.6  Covenants of Zany.  With a view to making available to the Holders the
          -----------------
benefits of certain rules and regulations of the SEC which at any time permit
the sale of the Registrable Securities to the public without registration, Zany
shall use its reasonable best efforts to:

          (a)  make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;

                                       17
<PAGE>

          (b)  file with the SEC in a timely manner all reports and other
documents required of Zany under the Exchange Act; and

          (c)  so long as a Holder owns any unregistered Registrable Securities,
furnish to such Holder, upon any reasonable request, a written statement by Zany
as to its compliance with Rule 144 under the Securities Act, and of the Exchange
Act, a copy of the most recent annual or quarterly report of Zany, and such
other reports and documents of Zany as such Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing a Holder to sell
any such securities without registration.

     6.7  Assignment.  The rights to cause Zany to register Registrable
          ----------
Securities granted to the Holders by Zany under Section 6.1 may be assigned in
full by a Holder in connection with a transfer by such Holder of all, but not
less than all, of its Registrable Securities to a Person, provided, however,
that (i) such transfer may otherwise be effected in accordance with applicable
securities laws; (ii) such Holder gives prior written notice to Zany; and (iii)
such transferee agrees to comply with the terms and provisions of this
Agreement, and such transfer is otherwise in compliance with this Agreement.
Except as specifically permitted by this Section 6.7, the rights of a Holder
with respect to Registrable Securities as set out herein shall not be
transferable to any other Person, and any attempted transfer shall cause all
rights of such Holder therein to be forfeited.

7.   RELEASE.

     ONRP and Zany hereby release and forever discharge each other, and each
other's applicable successors, assigns and affiliates, and its and their
respective directors, officers, employees and representatives of and from any
and all past or present causes of action, actions, damages, losses, liabilities,
obligations, claims, and demands, known or unknown, including, without
limitation those arising out of any past performance, breach or alleged breach
of the WSSA or DSLA; provided, however, that such release shall not prevent ONRP
                     --------  -------
or Zany from seeking recovery of any damages, losses, liabilities or obligations
relating to the other's (or the other's affiliates') future performance, breach
or alleged breach of this Agreement or any other ongoing agreement between ONRP
and Zany (or their respective affiliates), or seeking recovery under the
indemnification provisions of this Agreement or any such other ongoing
agreement.

8.   GENERAL.

     8.1  Additional Agreements; Best Efforts. Each of the parties agrees to use
          -----------------------------------
their reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including cooperating fully with
the other party, including by provision of information.  In case at any time
after the date of this Agreement any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary action.

     8.2  Assignment and Binding Effect. All of the terms and provisions of this
          -----------------------------
Agreement shall be binding upon and inure to the benefit of parties and their
successors and permitted assigns of the parties hereto; provided, however, that
                                                        --------  -------
no assignment, delegation or

                                       18
<PAGE>

other use of any right or duty may be made by either party without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.

     8.3 Entire Agreement; Amendment; Waiver. This Agreement sets forth the
         -----------------------------------
entire understanding of the parties hereto with respect to the transactions
contemplated hereby. Each of the Schedules and Exhibits to this Agreement is
incorporated herein by this reference and expressly made a part hereof. Any and
all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement. This Agreement shall not be amended or modified except by a
written instrument duly executed by each of the parties hereto. Any extension or
waiver by any party of any provision hereto shall be valid only if set forth in
an instrument in writing signed on behalf of such party.

     8.4  Counterparts. This Agreement may be executed in any number of
          ------------
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered (which deliveries may be made by telefax)
shall be deemed to be an original, and all of which counterparts taken together
shall constitute but one and the same instrument. It shall not be necessary in
making proof of this Agreement or any counterpart hereof to produce or account
for any of the other counterparts.

     8.5  Expenses.  Zany has paid and will pay the fees, expenses and
          --------
disbursements of Zany and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. ONRP has paid
and will pay the fees, expenses and disbursements of ONRP and its agents,
representatives, financial advisers, accountants and counsel incurred in
connection with the subject matter of this Agreement.

     8.6  Notices. Any notice, request, claim, demand, waiver, consent, approval
          -------
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by telefax
(with confirmation of receipt), on the third business day after posted by
registered or certified mail, postage prepaid, or on the next business day after
sent by recognized overnight courier service, as follows:

     If to Zany to:

          Zany Brainy, Inc.
          2520 Renaissance Boulevard
          King of Prussia, PA 19406
          Attention.: Legal Department
          (Telecopy: 610-278-7800)

          with a required copy to:

          Morgan, Lewis & Bockius LLP
          1701 Market Street
          Philadelphia, PA 19103
          Attention: Joanne R. Soslow, Esq.
          (Telecopy: 215-963-5299)

     If to ONRP to:

                                       19
<PAGE>

          Online Retail Partners Inc.
          1440 Broadway
          New York, NY 10018
          Attention: Legal Department
          (Telecopy: 212-653-8401)

or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein.

     8.7  Governing Law.  This Agreement and the rights and obligations of the
          -------------
parties under this Agreement shall be governed by, and construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania.

     8.8  Severability. If any provision of this Agreement or the application
          ------------
thereof to any person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such person or circumstance in any other jurisdiction or to other persons or
circumstances in any jurisdiction, shall not be affected thereby, and to this
end the provisions of this Agreement shall be severable.

     8.9  No Benefit to Others.  The representations, warranties, covenants and
          --------------------
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article 5, the Zany Indemnified Persons and the ONRP
Indemnified Persons, and their heirs, administrators, personal representatives,
successors and assigns, and they shall not be construed as conferring any rights
on any other persons.

     8.10 Further Representations. Each party to this Agreement acknowledges and
          -----------------------
represents that it, he or she has been represented by its, his or her own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its, his or her legal rights from such
counsel.  Each party further represents that it is being independently advised
as to the tax consequences of the transactions contemplated by this Agreement.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       20
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

                                            ZANY BRAINY, INC.
                                            By:_____________________________
                                            Name:
                                            Title:

                                            ONLINE RETAIL PARTNERS INC.
                                            By:_____________________________
                                            Name:
                                            Title:

                  [Signature page to Stock Purchase Agreement]

                                       21

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