Document:

CERTIFICATE OF DETERMINATION OF PREFERENCES
                                     OF THE
                            SERIES E CONVERTIBLE PREFERRED STOCK,
                      SERIES F CONVERTIBLE PREFERRED STOCK
                                       AND
                      SERIES G CONVERTIBLE PREFERRED STOCK
                                       OF
                                    THE RIGHT START, INC.

                     (Pursuant to Section 401 of the General
                         Corporation Law of the State of California)

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

               The undersigned hereby certify that (1) they hold the offices for
The Right Start, Inc., a California corporation (the "Corporation") indicated
below their names, and (2) under authority given by the Corporation's Second
Amended and Restated Articles of Incorporation (the "Restated Articles"), the
Board of Directors of the Corporation has duly adopted the following recitals
and resolutions:

               WHEREAS, the Restated Articles provide for a class of shares
known as "Preferred Stock," issuable from time to time in one or more series;

               WHEREAS, the Board of Directors of the Corporation is authorized
to determine the rights, preferences, privileges, and restrictions granted to or
imposed on any wholly unissued series of Preferred Stock, to fix the number of
shares constituting any such series, and to determine the designation thereof,
or any of them;

               WHEREAS, the Restated Articles provide that the Corporation is
authorized to issue Two Hundred and Fifty Thousand (250,000) shares of Preferred
Stock;

               WHEREAS, the Corporation has issued one-hundred thirty thousand
five hundred twenty-nine (130,529) shares of Preferred Stock and the Board of
Directors of the Corporation desires to determine the rights, preferences,
privileges, and restrictions relating to three (3) additional series of
Preferred Stock and the number of shares constituting and the designation of
such series;

               WHEREAS, the Board of Directors of the Corporation has determined
that 16,818.815 shares of Preferred Stock shall be designated as Series E
Convertible Preferred Stock;

               WHEREAS, the Board of Directors of the Corporation has determined
that one thousand eight hundred (1,800) shares of Preferred Stock shall be
designated as Series F Convertible Preferred Stock;

               WHEREAS, the Board of Directors of the Corporation has determined
that two thousand five hundred (2,500) shares of Preferred Stock shall be
designated as Series G Convertible Preferred Stock; and

               WHEREAS, a majority of the holders of the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock have approved the
authorization of the Series E Convertible Preferred Stock, Series F Convertible
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Preferred Stock, and Series G Convertible Preferred Stock with the rights,
preferences, privileges, and restrictions relating to each as described below.

SERIES E CONVERTIBLE PREFERRED STOCK

               NOW, THEREFORE, BE IT RESOLVED, that pursuant to Article III of
the Restated Articles, the Board of Directors hereby creates the Corporation's
Series E Convertible Preferred Stock and determines the designation of, number
of shares constituting, and the rights, preferences, privileges, and
restrictions relating to the Series E Convertible Preferred Stock as follows:

I.  Designation  and  Amount.  The  number of shares  constituting  the Series E
Convertible  Preferred  Stock, par value $.01 per share (the "Series E Preferred
Stock"), shall be 16,818.815 shares.

II.     Dividends and Distributions.

          A.  Dividends.  The holders of Series E  Preferred  Stock shall not be
          entitled to receive dividends.

           B. Liquidation Preference. In the event of any liquidation,
           dissolution or winding up of the Corporation, whether voluntary or
           involuntary, the holders of Series E Preferred Stock shall be
           entitled to receive with respect to each share, out of the assets of
           the Corporation, whether such assets are stated capital or surplus of
           any nature, a sum equal to One Thousand Dollars ($1000.00) per share
           (the "Series E Preferred Liquidation Preference"), and no more,
           before any payment shall be made or any assets distributed to holders
           of Common Stock or any other capital stock of the Corporation ranking
           junior as to the payment upon liquidation, dissolution or winding up
           including, without limitation, all series of Preferred Stock
           hereafter issued by the Corporation (unless such later issued series
           has parity or is senior in priority, and has been permitted under
           Section III) (collectively, "Junior Liquidation Stock") and, after
           June 1, 2002, after all liquidation preference payments to which
           holders of the Series A Preferred Stock are entitled shall have been
           made. The Series E Preferred Stock shall be (i) senior as to
           liquidation to the Common Stock, the Corporation's Series F
           Convertible Preferred Stock, par value $0.01 per share (the "Series F
           Preferred Stock"), and all Junior Liquidation Stock, (ii) junior as
           to liquidation to the Series A Convertible Preferred Stock, par value
           $.01 per share ("Series A Preferred Stock"), Series B Convertible
           Preferred Stock, par value $.01 per share ("Series B Preferred
           Stock"), Series C Convertible Preferred Stock, par value $.01 per
           share ("Series C Preferred Stock") and Series D Convertible
           Pay-in-Kind Preferred Stock, par value $.01 per share ("Series D
           Preferred Stock"), until such time as the holders of the Series A
           Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
           and Series D Preferred Stock have consented to parity of liquidation
           with the Series E Preferred Stock, and, from the time consent is
           given, on a parity as to liquidation with the Series A Preferred
           Stock, Series B Preferred Stock, Series C Preferred Stock and Series
           D Preferred Stock, (iii) in any case after June 1, 2002, junior to
           the Series A Preferred Stock and (iv) from and after the date hereof,
           on a parity with the Corporation's Series G Convertible Preferred
           Stock, $.01 per share (the "Series G Preferred Stock"), to the extent
           set forth in the Series G Preferred Stock Certificate of
           Determination of Preferences. In the event the assets of the
           Corporation available for distribution to shareholders upon any
           liquidation, dissolution or winding up of the Corporation, whether
           voluntary or involuntary, shall be insufficient to pay in full the
           amounts payable with respect to the Series E Preferred Stock and any
           other class or series of the Corporation's capital stock which has or
           may hereafter have parity as to liquidation rights with the Series E

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           Preferred Stock (including, the Series A Preferred Stock (prior to
           June 1, 2002 only), the Series B Preferred Stock, the Series C
           Preferred Stock, and the Series D Preferred Stock, in each case at
           and after such time as the holders thereof have consented to such
           parity of liquidation preference, the "Parity Liquidation Stock"),
           the holders of the Series E Preferred Stock and the holders of the
           Parity Liquidation Stock shall share ratably in any distribution of
           assets of the Corporation in proportion to the full respective
           preferential amounts to which they are entitled (but only to the
           extent of such preferential amounts). After payment in full of the
           liquidation preference of the Series E Preferred Stock, the holders
           of such shares shall not be entitled to any further participation in
           any distribution of assets by the Corporation. Neither a merger,
           consolidation, or other business combination of the Corporation with
           or into another corporation or other entity nor a sale or transfer of
           all or part of the Corporation's assets for cash, securities or other
           property shall be considered a liquidation, dissolution or winding up
           of the Corporation for purposes of this Section II.B. (unless in
           connection therewith the liquidation of the Corporation is
           specifically approved by the shareholders of the Corporation). The
           holder of any shares of Series E Preferred Stock shall not be
           entitled to receive any payment owed for such shares under this
           Section II.B. until such holder shall cause to be delivered to the
           Corporation (i) certificate(s) representing such shares of Series E
           Preferred Stock and (ii) transfer instruments satisfactory to the
           Corporation and sufficient to transfer such shares to the Corporation
           free and clear of any adverse interest.

    III. Voting Rights. If the aggregate liquidation preference of the
    outstanding Series E Preferred Stock equals or exceeds $4 million, any (i)
    merger, acquisition or sale of all or substantially all assets to which the
    Corporation is a party and (ii) equity issuance by the Corporation (other
    than (a) an issuance of 1,800 shares of Series F Preferred Stock to the
    owners of the Corporation's online and internet business, (b) an issuance of
    1,100,000 shares in connection with the bankruptcy of Zany Brainy, Inc. and
    its Affiliates, (c) pursuant to the conversion of outstanding convertible
    equity of the Corporation and (d) an issuance of 2,200 shares of Series G
    Preferred Stock), shall require the consent of the holders of at least a
    majority of the outstanding shares of Series E Preferred Stock, voting
    together as a separate class. If the aggregate liquidation preference of the
    outstanding Series E Preferred Stock is less than $4 million, the holders of
    the Series E Preferred Stock shall be entitled to vote with the holders of
    the Common Stock with respect to matters set forth in clauses (i) and (ii)
    in the preceding sentence and such vote shall be determined on an
    as-converted basis with each share of Series E Preferred Stock providing its
    holder with a number of votes equal to the number of shares of Common Stock
    into which such share of Series E Preferred Stock is convertible. At all
    times, consent of the holders of at least a majority of the outstanding
    shares of Series E Preferred Stock, voting together as a separate class,
    shall be required to authorize the issuance of additional shares of Series E
    Preferred Stock.

    In addition, consent of the holders of at least a majority of the shares of
    Series E Preferred Stock (unless the consent of a greater percentage is
    required by applicable law or the Corporation's articles of incorporation as
    then in effect), voting together as a single class, will be required for (a)
    each amendment of the Corporation's articles of incorporation as then in
    effect which adversely affects the relative rights, preferences,
    qualifications, limitations or restrictions of the Series E Preferred Stock,
    or (b) any reclassification of the Series E Preferred Stock. Except for such
    consent rights and such voting rights as may be provided by applicable law
    or herein, the Series E Preferred Stock shall have no voting rights as a
    separate series except the right to vote as a separate series within the
    class of preferred stock as to any matters regarding the modification of the
    rights, privileges or terms of the Series E Preferred Stock. Any required
    vote of the Series E Preferred Stock as a separate series will be
    accomplished by the vote of a majority of the shares of such series. A class

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    vote on the part of the Series E Preferred Stock specifically shall not be
    required (except as otherwise required by law or resolution of the
    Corporation's Board of Directors) in connection with the authorization,
    issuance or increase in the amount of any notes, bonds, mortgages,
    debentures or other obligations of the Corporation not convertible into or
    exchangeable, directly or indirectly, for equity of the Corporation.

    IV.    Conversion

           A.  Automatic and Voluntary Conversion.

               (i)  Conversion,

               (a) Automatic  Conversion.  Subject to the immediately  following
               sentence,  the  Series  E  Preferred  Stock  shall  automatically
               convert  into Common  Stock  (without a  liquidation  preference)
               immediately  upon (and not before) (1) approval of the conversion
               feature  in the  Series E  Preferred  Stock by the  Corporation's
               holders   of   Common   Stock  and  (2)   authorization   by  the
               Corporation's  holders of Common Stock of  sufficient  additional
               Common Stock to permit such conversion as well as the exercise of
               any outstanding  warrants to purchase Common Stock (collectively,
               "Shareholder Authorization").

               If any  convertible  securities  of the  Corporation  (other than
               employee or director  options,  outstanding  warrants to purchase
               Common Stock or the Series E Preferred Stock) remain  outstanding
               (the "Remaining Convertible Securities") at the time the Series E
               Preferred Stock would otherwise  automatically convert under this
               section, that portion of the Series E Preferred Stock convertible
               into a number of shares of Common  Stock  equal to the  number of
               shares of Common Stock issuable upon  conversion of the Remaining
               Convertible  Securities shall not automatically convert except to
               the  extent  the  Remaining  Convertible   Securities  are  later
               converted  or as  provided  in  paragraph  (b)  of  this  Section
               IV.(A).(i).

               (b) Conversion Right.  Notwithstanding the foregoing, the holders
               of the Series E Preferred  Stock at their option and from time to
               time,  may convert any or all of their  Series E Preferred  Stock
               into  Common  Stock once the  conditions  in (a)(1) and (2) above
               (the "Automatic Conversion  Conditions") have been met regardless
               of  whether   any   Remaining   Convertible   Securities   remain
               outstanding,  but  that  Series  E  Preferred  Stock  outstanding
               because of the foregoing  shall be  automatically  converted into
               Common  Stock as, and to the extent,  the  Remaining  Convertible
               Securities are converted into Common Stock.

                  (ii) Conversion Rate. Series E Preferred Stock shall be
                  convertible into that number of fully paid and non-assessable
                  shares of Common Stock (calculated as to each conversion to
                  the nearest 1/100th of a share) obtained by dividing the
                  Series E Preferred Liquidation Preference by $1.43, as
                  adjusted from time to time as provided herein (the "Conversion
                  Rate") and by surrender of such shares of Series E Preferred
                  Stock so to be converted in the manner provided in Section
                  IV.A.(iii) or (iv). The Conversion Rate shall initially be

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                  $1.43 as set forth above and shall be subject to adjustment
                  and readjustment from time to time as set forth in Section
                  IV.C.

                  (iii) Mechanics of Automatic Conversion. Notice of automatic
                  conversion of the Series E Preferred Stock ("Automatic
                  Conversion Notice") specifying the time of conversion, the
                  Conversion Rate, the fact of Shareholder Authorization or
                  conversion of Remaining Convertible Securities, as applicable,
                  and the paragraph pursuant to which such conversion occurred,
                  shall be sent via facsimile to the holder not more one
                  Business Day after such Shareholder Authorization or receipt
                  of notice by the Corporation of a conversion of Remaining
                  Convertible Securities, as the case may be, and mailed by
                  certified or registered mail, return receipt requested, at the
                  address for such holder shown on the Corporation's records not
                  more five (5) Business Days after such Shareholder
                  Authorization or receipt of notice by the Corporation of a
                  conversion of Remaining Convertible Securities, as the case
                  may be. For the purpose of this section only, if receipt of
                  notice by the Corporation of a conversion of Remaining
                  Convertible Securities occurs after 4:00pm Eastern Standard
                  Time, then receipt of such notice shall be deemed to have
                  occurred on the following Business Day. Upon mailing any
                  Automatic Conversion Notice, the Corporation shall issue and
                  deliver at its principal offices to such holder of Series E
                  Preferred Stock, or to his nominee or nominees, a certificate
                  or certificates representing the number of shares of Common
                  Stock and a check or cash with respect to any fractional
                  interest in a share of Common Stock to which he shall be
                  entitled as aforesaid in accordance with the Section IV.B.
                  Automatic conversion shall be deemed to have been made on the
                  date the later of the two Automatic Conversion Conditions
                  occurs or on the date of the conversion of Remaining
                  Convertible Securities, as applicable, and the person or
                  persons entitled to receive the Common Stock issuable upon
                  conversion shall be treated for all purposes as the record
                  holder or holders of such Common Stock on such date. On the
                  date of such mailing, the certificates representing the Series
                  E Preferred Stock shall be null and void and shall no longer
                  represent an interest in the Corporation. Any Automatic
                  Conversion Notice that is mailed as provided in this
                  subsection (iii) shall be conclusively presumed to have been
                  duly given, whether or not the holder of the Series E
                  Preferred Stock receives such notice; and failure to give such
                  notice or any defect in such notice shall not affect the
                  validity of the proceedings for the automatic conversion of
                  Series E Preferred Stock.

                  (iv) Mechanics of Voluntary Conversion. In order to exercise
                  the voluntary conversion privilege set forth in Section
                  IV.A.(i)(b) the holder of one or more shares of Series E
                  Preferred Stock to be converted shall surrender such shares to
                  the Secretary of the Corporation at the Corporation's
                  principal offices, accompanied by the funds, if any, required
                  to pay transfer or similar taxes and shall give written notice
                  (the "Conversion Notice") to the Corporation that such holder
                  elects to convert all or a specified number of such shares and
                  stating in such Conversion Notice, his name or the name or
                  names of his nominees in which he wishes the certificate or
                  certificates for Common Stock to be issued, together with
                  instruments of transfer, in form satisfactory to the
                  Corporation, duly executed by the holder or his duly
                  authorized attorney. As promptly as practicable after the
                  surrender of such shares of Series E Preferred Stock, the
                  receipt of the Conversion Notice, instruments of transfer and
                  funds to pay any transfer or similar tax, if any, and if the
                  Automatic Conversion Conditions have been met as aforesaid,
                  the Corporation shall issue and deliver at such offices to
                  such holder of Series E Convertible Preferred Stock, or to his

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                  nominee or nominees, a certificate or certificates
                  representing the number of shares of Common Stock and a check
                  or cash with respect to any fractional interest in a share of
                  Common Stock to which he shall be entitled as aforesaid in
                  accordance with Section IV.B and, if less than the full number
                  of shares of Series E Preferred Stock evidenced by such
                  surrendered certificate or certificates are being converted, a
                  new certificate or certificates, of like tenor, for the number
                  of shares of Series E Preferred Stock evidenced by such
                  surrendered certificate less the number of such shares of
                  Series E Preferred Stock being converted. Any conversion made
                  at the election of a holder of Series E Preferred Stock shall
                  be deemed to have been made immediately prior to the close of
                  business on the date of such surrender of such shares to be
                  converted, and the person or persons entitled to receive the
                  Common Stock issuable upon conversion shall be treated for all
                  purposes as the record holder or holders of such Common Stock
                  on such date.

           B. Fractional Shares. No fractional shares or scrip representing
           fractions of shares of Common Stock shall be issued upon conversion
           of the Series E Preferred Stock. In lieu of any fractional interest
           in a share of Common Stock which would otherwise be deliverable upon
           the conversion of any shares of Series E Preferred Stock, the
           Corporation shall pay to the holder of such shares an amount in cash
           (computed to the nearest cent) equal to the closing price of the
           Common Stock (as reported on the national exchange or quotation
           system on which the Common Stock is then traded; or, if the Common
           Stock is not then traded on such an exchange or system, as determined
           in good faith by the Board of Directors of the Corporation) on the
           Business Day next preceding the day of conversion, multiplied by the
           fractional interest that otherwise would have been deliverable upon
           conversion of such shares.

           C.  Adjustments to Conversion Rate:

               1. Stock Dividends, Subdivisions and Combinations. In case at any
               time or from time to time after the Preferred Stock Issuance Date
               the Corporation  shall,  subject to the restrictions set forth in
               Section IV.D.:

                    (i) pay a  dividend  or make a  distribution  on its  Common
                    Stock in shares of Common Stock,

                    (ii) subdivide its outstanding shares of Common Stock into a
                    greater number of shares, or

                    (iii) combine its outstanding  shares of Common Stock into a
                    smaller number of shares,

               then in each such case the Conversion Rate in effect immediately
               prior to such action shall be adjusted so that the holder of any
               share of Series E Preferred Stock thereafter surrendered for
               conversion shall be entitled to receive the number of shares of
               Common Stock or other capital stock of the Corporation which he
               would have owned or been entitled to receive immediately
               following such action had such share been converted immediately
               prior to the occurrence of such event. An adjustment made
               pursuant to this subsection shall become effective immediately
               after the record date, in the case of a dividend or distribution,

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               or immediately after the effective date, in the case of a
               subdivision or combination.

           D. No impairment. The Corporation will not through any
           reorganization, transfer of assets, consolidation, merger,
           dissolution, issue or sale of securities or any other voluntary
           action, avoid the observance or performance of any of the terms to be
           observed or performed hereunder by the Corporation but will at all
           times in good faith assist in the carrying out of all the provisions
           of this Section IV and in the taking of all such action as may be
           necessary or appropriate in order to protect the conversion rights of
           the holders of shares of Series E Preferred Stock against impairment.
           Without limiting the generality of the foregoing, the Corporation (i)
           will take all such action as may be necessary or appropriate in order
           that the Corporation may validly and legally issue fully paid
           nonassessable shares of stock on the conversion of the Series E
           Preferred Stock, and (ii) will not take any action which results in
           any adjustment of the Conversion Rate if the total number of shares
           of Common Stock issuable after the action upon the conversion of all
           of the shares of Series E Preferred Stock will exceed the total
           number of shares of Common Stock then authorized by the Restated
           Articles and available for the purpose of issue upon such conversion.

           E. Certificate as to Adjustments. Upon the occurrence of each
           adjustment or readjustment of the Conversion Rate pursuant to this
           Section IV, the Corporation shall promptly compute such adjustment or
           readjustment in accordance with the terms hereof and furnish to each
           holder of shares of Series E Preferred Stock a certificate setting
           forth such adjustment or readjustment and showing in detail the facts
           upon which such adjustment or readjustment is based, including a
           statement of (i) the number of shares of Common Stock then
           outstanding or deemed to be outstanding, and (ii) the Conversion Rate
           in effect immediately prior to such issue or sale and as adjusted and
           readjusted on account thereof, showing how such Conversion Rate was
           calculated. The Corporation shall, as promptly as practicable
           following its receipt of the written request of any holder of shares
           of Series E Preferred Stock, furnish or cause to be furnished to such
           holder a like certificate setting forth (i) the Conversion Rate at
           the time in effect, showing how it was calculated and (ii) the number
           of shares of Common Stock which at the time would be received upon
           the conversion of the Series E Preferred Stock.

           F. Notices of Record Date. In the event of any taking by the
           Corporation of a record of the holders of any class of securities for
           the purpose of determining the holders thereof who are entitled to
           receive any dividend (other than a cash dividend which is the same as
           cash dividends paid in previous quarters) or other distribution, or
           any right to subscribe for, purchase or otherwise acquire any shares
           of stock of any class or any other securities or property, or to
           receive any other right, the Corporation shall mail to each holder of
           Series E Preferred Stock at least ten days prior to the date
           specified therein, a notice specifying the date on which any such
           record is to be taken for the purpose of such dividend or
           distribution.

V.  Miscellaneous.  This Certificate of Determination  shall also be governed by
the following:

           A. Amendment and Waiver. This Certificate of Determination may be
           amended or otherwise altered in accordance with applicable law and
           Section III. No amendment, modification or waiver of any provision
           hereof shall extend to or affect any obligation not expressly
           amended, modified or waived or impair any right consequent thereon.
           No course of dealing, and no failure to exercise or delay in

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           exercising any right, remedy, power or privilege hereunder, shall
           operate as a waiver, amendment or modification of any provision of
           this Certificate of Determination.

           B. Reacquired Shares. Any shares of Series E Preferred Stock
           purchased or otherwise acquired by the Corporation in any manner
           whatsoever shall be retired and cancelled promptly after the
           acquisition thereof. All such shares shall, upon their cancellation,
           become authorized but unissued shares of Preferred Stock of the
           Corporation, undesignated as to series.

           C. Registration. The Corporation shall keep at its principal office
           (or such other place as the Corporation reasonably designates) a
           register for the registration of Series E Preferred Stock. Upon the
           surrender of any certificate representing Series E Preferred Stock at
           such place, the Corporation shall, at the request of the registered
           holder of such certificate, execute and deliver a new certificate or
           certificates in exchange therefor representing in the aggregate the
           number of shares of Series E Preferred Stock represented by the
           surrendered certificate (and the Corporation forthwith shall cancel
           such surrendered certificate), subject to the requirements of
           applicable securities laws and any other applicable restrictions.
           Each such new certificate shall be registered in such name and shall
           represent such number of shares of Series E Preferred Stock as shall
           be requested by the holder of the surrendered certificate and shall
           be substantially identical in form to the surrendered certificate.

          D. Replacement.  Upon receipt of evidence  reasonably  satisfactory to
          the Corporation (an affidavit and indemnity of the registered  holder,
          including  a  bond  if so  requested  by  the  Corporation,  shall  be
          satisfactory)  of the ownership and the loss,  theft,  destruction  or
          mutilation of any certificate  evidencing one or more shares of Common
          Stock,  Series E Preferred  Stock and,  in the case of loss,  theft or
          destruction,  upon receipt of indemnity reasonably satisfactory to the
          Corporation  (provided  that if the  registered  holder is a financial
          institution,  its own agreement of indemnity  shall be  satisfactory),
          or, in the case of mutilation, upon surrender of such certificate, the
          Corporation shall (at its expense) execute and deliver in lieu of such
          certificate a new certificate of like kind  representing the number of
          shares of Common Stock or Series E Preferred Stock represented by such
          lost, stolen, destroyed or mutilated certificate and dated the date of
          such lost, stolen, destroyed or mutilated certificate.

          E. Definitions. The following terms shall have the following meanings,
          which meanings shall be equally  applicable to the singular and plural
          forms of such terms:

                      "Affiliate" of a Person means a Person that directly or
           indirectly controls, or is controlled by, or is under common control
           with such Person. The term "control" means the possession, directly
           or indirectly, of the power to direct or cause the direction of the
           management and policies of a Person, whether through the ownership of
           voting securities, by contract or otherwise.

                      "Business Day" means any day which is not a Saturday or a
           Sunday or a public holiday or a day on which banks are required or
           permitted to close under the laws of the State of California.

                      "Common Stock" means the Common Stock of the Corporation
           without par value.

                      "Conversion Rate" shall have the meaning set forth in
           Section IV.A.(ii).

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                      "Exchange Act" means the Securities Exchange Act of 1934,
           as amended, and any similar or successor federal statute, and the
           rules and regulations of the Commission promulgated thereunder, all
           as the same shall be in effect at any applicable time.

                      "Person" shall include an individual, a corporation, a
           limited liability company, an association, a partnership, a limited
           liability partnership, a trust or estate, a government or any agency
           or political subdivision thereof, or any other entity.

                      "Preferred Stock Issuance Date" means the date on which
           the Corporation first issues any shares of Series E Preferred Stock.

          F. Preemptive  Rights. The Series E Preferred Stock is not entitled to
          any preemptive or subscription  rights in respect of any securities of
          the Corporation.

VI.  Notices.  All notices  provided  hereunder shall be in writing and shall be
delivered by courier,  messenger,  registered or certified mail,  return receipt
requested, postage prepaid or by facsimile, receipt confirmed by sender and will
be deemed to have been given when so mailed (or receipt confirmed in the case of
a facsimile) (i) to the Corporation, at its principal executive offices and (ii)
to the  holder of Series E  Preferred  Stock,  at such  holder's  address  as it
appears in the stock records of the Corporation  (unless otherwise  indicated by
any such holder in notice to the Corporation conforming with this Section VI).

VII.  Common  Stock  Reserved.  The  Corporation  shall at all  times  after the
Automatic  Conversion  Conditions are met, reserve and keep available out of its
authorized  but  unissued  Common Stock such number of shares of Common Stock as
shall  from time to time be  sufficient  to effect  conversion  of the  Series E
Preferred Stock.

SERIES F CONVERTIBLE PREFERRED STOCK

               NOW, THEREFORE, BE IT RESOLVED, that pursuant to Article III of
the Restated Articles, the Board of Directors hereby creates the Corporation's
Series F Convertible Preferred Stock and determines the designation of, number
of shares constituting, and the rights, preferences, privileges, and
restrictions relating to the Series F Convertible Preferred Stock as follows:

     I. Designation and Amount.  The number of shares  constituting the Series F
     Convertible  Preferred  Stock,  par  value  $.01 per share  (the  "Series F
     Preferred Stock"), shall be One Thousand Eight Hundred (1,800) shares.

    II.    Dividends and Distributions.

          A.  Dividends.  The holders of Series F  Preferred  Stock shall not be
          entitled to receive dividends.

           B. Liquidation Preference. In the event of any liquidation,
           dissolution or winding up of the Corporation, whether voluntary or
           involuntary, the holders of Series F Preferred Stock shall be
           entitled to receive with respect to each share, out of the assets of
           the Corporation, whether such assets are stated capital or surplus of
           any nature, a sum equal to $0.01 per share (the "Series F Preferred

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           Liquidation Preference"), and no more, before any payment shall be
           made or any assets distributed to holders of Common Stock and, after
           all liquidation preference payments to which holders of the any other
           series of Preferred Stock are entitled shall have been made. The
           Series F Preferred Stock shall be (i) senior as to liquidation to the
           Common Stock, (ii) junior as to liquidation to the Series A
           Convertible Preferred Stock, par value $.01 per share ("Series A
           Preferred Stock"), Series B Convertible Preferred Stock, par value
           $.01 per share ("Series B Preferred Stock"), Series C Convertible
           Preferred Stock, par value $.01 per share ("Series C Preferred
           Stock") and Series D Convertible Pay-in-Kind Preferred Stock, par
           value $.01 per share ("Series D Preferred Stock"), Series E
           Convertible Preferred Stock, par value $.01 per share, ("Series E
           Preferred Stock"), and Series G Convertible Preferred Stock, par
           value $.01 per share ("Series G Preferred Stock"). In the event the
           assets of the Corporation available for distribution to shareholders
           upon any liquidation, dissolution or winding up of the Corporation,
           whether voluntary or involuntary, shall be insufficient to pay in
           full the amounts payable with respect to the Series F Preferred Stock
           then the holders of the Series F Preferred Stock shall receive
           amounts available for distribution to them pro-rata based on the
           number of shares held by them. After payment in full of the
           liquidation preference of the Series F Preferred Stock, the holders
           of such shares shall not be entitled to any further participation in
           any distribution of assets by the Corporation. Neither a merger,
           consolidation or other business combination of the Corporation with
           or into another corporation or other entity nor a sale or transfer of
           all or part of the Corporation's assets for cash, securities or other
           property shall be considered a liquidation, dissolution or winding up
           of the Corporation for purposes of this Section II.B. (unless in
           connection therewith the liquidation of the Corporation is
           specifically approved by the shareholders of the Corporation). The
           holder of any shares of Series F Preferred Stock shall not be
           entitled to receive any payment owed for such shares under this
           Section II.B. until such holder shall cause to be delivered to the
           Corporation (i) certificate(s) representing such shares of Series F
           Preferred Stock and (ii) transfer instruments satisfactory to the
           Corporation and sufficient to transfer such shares to the Corporation
           free and clear of any adverse interest.

    III. Voting Rights. Consent of the holders of at least a majority of the
    shares of Series F Preferred Stock (unless the consent of a greater
    percentage is required by applicable law or the Corporation's articles of
    incorporation as then in effect), voting together as a single class, will be
    required for (a) each amendment of the Corporation's articles of
    incorporation as then in effect which adversely affects the relative rights,
    preferences, qualifications, limitations or restrictions of the Series F
    Preferred Stock, or (b) any reclassification of the Series F Preferred
    Stock. Except for such consent rights and such voting rights as may be
    provided by applicable law or herein, the Series F Preferred Stock shall
    have no voting rights as a separate series except the right to vote as a
    separate series within the class of preferred stock as to any matters
    regarding the modification of the rights, privileges or terms of the Series
    F Preferred Stock. Any required vote of the Series F Preferred Stock as a
    separate series will be accomplished by the vote of a majority of the shares
    of such series. A class vote on the part of the Series F Preferred Stock
    specifically shall not be required (except as otherwise required by law or
    resolution of the Corporation's Board of Directors) in connection with the
    authorization, issuance or increase in the amount of any notes, bonds,
    mortgages, debentures or other obligations of the Corporation not
    convertible into or exchangeable, directly or indirectly, for equity of the
    Corporation.

    IV.    Conversion

           A.  Automatic Conversion.

                                       10
<PAGE>

                  (i) Shareholder Authorization. The Series F Preferred Stock
                  shall automatically convert into Common Stock (without a
                  liquidation preference) immediately upon (and not before)
                  approval of the conversion feature in the Series F Preferred
                  Stock by the Corporation's holders of Common Stock (the
                  "Shareholder Authorization").

                  (ii) Conversion Rate. Series F Preferred Stock shall be
                  convertible into that number of fully paid and non-assessable
                  shares of Common Stock (calculated as to each conversion to
                  the nearest 1/100th of a share) obtained by multiplying the
                  number of shares of Series F Preferred Stock by 1,000, as
                  adjusted from time to time as provided in Section IV.C. (the
                  "Conversion Rate"), and by surrender of such shares of Series
                  F Preferred Stock so to be converted in the manner provided in
                  Section IV.A.(iii).

                  (iii) Mechanics of Automatic Conversion. Notice of automatic
                  conversion of the Series F Preferred Stock ("Automatic
                  Conversion Notice") specifying the time of conversion, the
                  Conversion Rate, and the fact of Shareholder Authorization
                  shall be sent via facsimile to the holder not more than (5)
                  five Business Days after such Shareholder Authorization and
                  mailed by certified or registered mail, return receipt
                  requested, at the address for such holder shown on the
                  Corporation's records not more than five (5) Business Days
                  after such Shareholder Authorization. Upon mailing any
                  Automatic Conversion Notice, the Corporation shall issue and
                  deliver at its principal offices to such holder of Series F
                  Preferred Stock, or to his nominee or nominees, a certificate
                  or certificates representing the number of shares of Common
                  Stock and a check or cash with respect to any fractional
                  interest in a share of Common Stock to which he shall be
                  entitled as aforesaid in accordance with the Section IV.B.
                  Automatic conversion shall be deemed to have been made on the
                  date the later of the two Automatic Conversion Conditions
                  occurs, and the person or persons entitled to receive the
                  Common Stock issuable upon conversion shall be treated for all
                  purposes as the record holder or holders of such Common Stock
                  on such date. On the date of such mailing, the certificates
                  representing the Series F Preferred Stock shall be null and
                  void and shall no longer represent an interest in the
                  Corporation. Any Automatic Conversion Notice that is mailed as
                  provided in this subsection (iii) shall be conclusively
                  presumed to have been duly given, whether or not the holder of
                  the Series F Preferred Stock receives such notice; and failure
                  to give such notice or any defect in such notice shall not
                  affect the validity of the proceedings for the automatic
                  conversion of Series F Preferred Stock.

           B. Fractional Shares. No fractional shares or scrip representing
           fractions of shares of Common Stock shall be issued upon conversion
           of the Series F Preferred Stock. In lieu of any fractional interest
           in a share of Common Stock which would otherwise be deliverable upon
           the conversion of any shares of Series F Preferred Stock, the
           Corporation shall pay to the holder of such shares an amount in cash
           (computed to the nearest cent) equal to the closing price of the
           Common Stock (as reported on the national exchange or quotation
           system on which the Common Stock is then traded; or, if the Common
           Stock is not then traded on such an exchange or system, as determined
           in good faith by the Board of Directors of the Corporation) on the
           Business Day next preceding the day of conversion, multiplied by the
           fractional interest that otherwise would have been deliverable upon
           conversion of such shares.

                                       11
<PAGE>

           C.  Adjustments to Conversion Rate:

               1. Stock Dividends, Subdivisions and Combinations. In case at any
               time or from time to time after the Preferred Stock Issuance Date
               the Corporation  shall,  subject to the restrictions set forth in
               Section IV.D.:

                    (i) pay a  dividend  or make a  distribution  on its  Common
                    Stock in shares of Common Stock,

                    (ii) subdivide its outstanding shares of Common Stock into a
                    greater number of shares, or

                    (iii) combine its outstanding  shares of Common Stock into a
                    smaller number of shares,

               then in each such case the Conversion Rate in effect immediately
               prior to such action shall be adjusted so that the holder of any
               share of Series F Preferred Stock thereafter surrendered for
               conversion shall be entitled to receive the number of shares of
               Common Stock or other capital stock of the Corporation which he
               would have owned or been entitled to receive immediately
               following such action had such share been converted immediately
               prior to the occurrence of such event. An adjustment made
               pursuant to this subsection shall become effective immediately
               after the record date, in the case of a dividend or distribution,
               or immediately after the effective date, in the case of a
               subdivision or combination.

           D. No impairment. The Corporation will not through any
           reorganization, transfer of assets, consolidation, merger,
           dissolution, issue or sale of securities or any other voluntary
           action, avoid the observance or performance of any of the terms to be
           observed or performed hereunder by the Corporation but will at all
           times in good faith assist in the carrying out of all the provisions
           of this Section IV and in the taking of all such action as may be
           necessary or appropriate in order to protect the conversion rights of
           the holders of shares of Series F Preferred Stock against impairment.
           Without limiting the generality of the foregoing, the Corporation (i)
           will take all such action as may be necessary or appropriate in order
           that the Corporation may validly and legally issue fully paid
           nonassessable shares of stock on the conversion of the Series F
           Preferred Stock, and (ii) will not take any action which results in
           any adjustment of the Conversion Rate if the total number of shares
           of Common Stock issuable after the action upon the conversion of all
           of the shares of Series F Preferred Stock will exceed the total
           number of shares of Common Stock then authorized by the Restated
           Articles and available for the purpose of issue upon such conversion.

           E. Certificate as to Adjustments. Upon the occurrence of each
           adjustment or readjustment of the Conversion Rate pursuant to this
           Section IV, the Corporation shall promptly compute such adjustment or
           readjustment in accordance with the terms hereof and furnish to each
           holder of shares of Series F Preferred Stock a certificate setting
           forth such adjustment or readjustment and showing in detail the facts
           upon which such adjustment or readjustment is based, including a
           statement of (i) the number of shares of Common Stock then
           outstanding or deemed to be outstanding, and (ii) the Conversion Rate
           in effect immediately prior to such issue or sale and as adjusted and
           readjusted on account thereof, showing how such Conversion Rate was
           calculated. The Corporation shall, as promptly as practicable
           following its receipt of the written request of any holder of shares

                                       12
<PAGE>

           of Series F Preferred Stock, furnish or cause to be furnished to such
           holder a like certificate setting forth (i) the Conversion Rate at
           the time in effect, showing how it was calculated and (ii) the number
           of shares of Common Stock which at the time would be received upon
           the conversion of the Series F Preferred Stock.

           F. Notices of Record Date. In the event of any taking by the
           Corporation of a record of the holders of any class of securities for
           the purpose of determining the holders thereof who are entitled to
           receive any dividend (other than a cash dividend which is the same as
           cash dividends paid in previous quarters) or other distribution, or
           any right to subscribe for, purchase or otherwise acquire any shares
           of stock of any class or any other securities or property, or to
           receive any other right, the Corporation shall mail to each holder of
           Series F Preferred Stock at least ten days prior to the date
           specified therein, a notice specifying the date on which any such
           record is to be taken for the purpose of such dividend or
           distribution.

V.  Miscellaneous.  This Certificate of Determination  shall also be governed by
the following:

           A. Amendment and Waiver. This Certificate of Determination may be
           amended or otherwise altered in accordance with applicable law and
           Section III. No amendment, modification or waiver of any provision
           hereof shall extend to or affect any obligation not expressly
           amended, modified or waived or impair any right consequent thereon.
           No course of dealing, and no failure to exercise or delay in
           exercising any right, remedy, power or privilege hereunder, shall
           operate as a waiver, amendment or modification of any provision of
           this Certificate of Determination.

           B. Reacquired Shares. Any shares of Series F Preferred Stock
           purchased or otherwise acquired by the Corporation in any manner
           whatsoever shall be retired and cancelled promptly after the
           acquisition thereof. All such shares shall, upon their cancellation,
           become authorized but unissued shares of Preferred Stock of the
           Corporation, undesignated as to series.

           C. Registration. The Corporation shall keep at its principal office
           (or such other place as the Corporation reasonably designates) a
           register for the registration of Series F Preferred Stock. Upon the
           surrender of any certificate representing Series F Preferred Stock at
           such place, the Corporation shall, at the request of the registered
           holder of such certificate, execute and deliver a new certificate or
           certificates in exchange therefor representing in the aggregate the
           number of shares of Series F Preferred Stock represented by the
           surrendered certificate (and the Corporation forthwith shall cancel
           such surrendered certificate), subject to the requirements of
           applicable securities laws and any other applicable restrictions.
           Each such new certificate shall be registered in such name and shall
           represent such number of shares of Series F Preferred Stock as shall
           be requested by the holder of the surrendered certificate and shall
           be substantially identical in form to the surrendered certificate.

          D. Replacement.  Upon receipt of evidence  reasonably  satisfactory to
          the Corporation (an affidavit and indemnity of the registered  holder,
          including  a  bond  if so  requested  by  the  Corporation,  shall  be
          satisfactory)  of the ownership and the loss,  theft,  destruction  or
          mutilation of any certificate  evidencing one or more shares of Common
          Stock,  Series F Preferred  Stock and,  in the case of loss,  theft or
          destruction,  upon receipt of indemnity reasonably satisfactory to the
          Corporation  (provided  that if the  registered  holder is a financial
          institution,  its own agreement of indemnity  shall be  satisfactory),

                                       13
<PAGE>

          or, in the case of mutilation, upon surrender of such certificate, the
          Corporation shall (at its expense) execute and deliver in lieu of such
          certificate a new certificate of like kind  representing the number of
          shares of Common Stock or Series F Preferred Stock represented by such
          lost, stolen, destroyed or mutilated certificate and dated the date of
          such lost, stolen, destroyed or mutilated certificate.

          E. Definitions. The following terms shall have the following meanings,
          which meanings shall be equally  applicable to the singular and plural
          forms of such terms:

                      "Business Day" means any day which is not a Saturday or a
           Sunday or a public holiday or a day on which banks are required or
           permitted to close under the laws of the State of California.

                      "Common Stock" means the Common Stock of the Corporation
           without par value.

                      "Conversion Rate" shall have the meaning set forth in
           Section IV.A.(ii).

                      "Exchange Act" means the Securities Exchange Act of 1934,
           as amended, and any similar or successor federal statute, and the
           rules and regulations of the Commission promulgated thereunder, all
           as the same shall be in effect at any applicable time.

                      "Person" shall include an individual, a corporation, a
           limited liability company, an association, a partnership, a limited
           liability partnership, a trust or estate, a government or any agency
           or political subdivision thereof, or any other entity.

                      "Preferred Stock Issuance Date" means the date on which
           the Corporation first issues any shares of Series F Preferred Stock.

          F. Preemptive  Rights. The Series F Preferred Stock is not entitled to
          any preemptive or subscription  rights in respect of any securities of
          the Corporation.

VI.  Notices.  All notices  provided  hereunder shall be in writing and shall be
delivered by courier,  messenger,  registered or certified mail,  return receipt
requested, postage prepaid or by facsimile, receipt confirmed by sender and will
be deemed to have been given when so mailed (or receipt confirmed in the case of
a facsimile) (i) to the Corporation, at its principal executive offices and (ii)
to the  holder of Series F  Preferred  Stock,  at such  holder's  address  as it
appears in the stock records of the Corporation  (unless otherwise  indicated by
any such holder in notice to the Corporation conforming with this Section VI).

VII.  Common  Stock  Reserved.  The  Corporation  shall at all  times  after the
Shareholder Authorization,  reserve and keep available out of its authorized but
unissued  Common  Stock such number of shares of Common Stock as shall from time
to time be sufficient to effect conversion of the Series F Preferred Stock.

SERIES G CONVERTIBLE PREFERRED STOCK

               NOW, THEREFORE, BE IT RESOLVED, that pursuant to Article III of
the Restated Articles, the Board of Directors hereby creates the Corporation's

                                       14
<PAGE>

Series G Convertible Preferred Stock and determines the designation of, number
of shares constituting, and the rights, preferences, privileges, and
restrictions relating to the Series G Convertible Preferred Stock as follows:

     I. Designation and Amount.  The number of shares  constituting the Series G
     Convertible  Preferred  Stock,  par  value  $.01 per share  (the  "Series G
     Preferred Stock"), shall be two thousand five hundred (2,500) shares.

    II.    Dividends and Distributions.

          A.  Dividends.  The holders of Series G  Preferred  Stock shall not be
          entitled to receive dividends.

           B. Liquidation Preference. In the event of any liquidation,
           dissolution or winding up of the Corporation, whether voluntary or
           involuntary, the holders of Series G Preferred Stock shall be
           entitled to receive with respect to each share, out of the assets of
           the Corporation, whether such assets are stated capital or surplus of
           any nature, a sum equal to One Thousand Dollars ($1000.00) per share
           (the "Series G Preferred Liquidation Preference"), and no more,
           before any payment shall be made or any assets distributed to holders
           of Common Stock or any other capital stock of the Corporation ranking
           junior as to the payment upon liquidation, dissolution or winding up
           including, without limitation, all series of Preferred Stock
           hereafter issued by the Corporation (unless such later issued series
           has parity or is senior in priority, and has been permitted under
           Section III) (collectively, "Junior Liquidation Stock") and, after
           June 1, 2002, after all liquidation preference payments to which
           holders of the Series A Preferred Stock are entitled shall have been
           made. The Series G Preferred Stock shall be (i) senior as to
           liquidation to the Common Stock, , the Corporation's Series F
           Convertible Preferred Stock, par value $0.01 per share (the "Series F
           Preferred Stock"), and all Junior Liquidation Stock, (ii) junior as
           to liquidation to the Series A Convertible Preferred Stock, par value
           $.01 per share ("Series A Preferred Stock"), Series B Convertible
           Preferred Stock, par value $.01 per share ("Series B Preferred
           Stock"), Series C Convertible Preferred Stock, par value $.01 per
           share ("Series C Preferred Stock") and Series D Convertible
           Pay-in-Kind Preferred Stock, par value $.01 per share ("Series D
           Preferred Stock"), until such time as the holders of the Series A
           Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
           and Series D Preferred Stock have consented to parity of liquidation
           with the Series G Preferred Stock, and, from the time consent is
           given, on a parity as to liquidation with the Series A Preferred
           Stock, Series B Preferred Stock, Series C Preferred Stock and Series
           D Preferred Stock; provided however, that the Series G Preferred
           Stock shall be on a parity with the Series A Preferred Stock, Series
           B Preferred Stock, Series C Preferred, Series D Preferred only if and
           to the extent that the Series E Preferred Stock has achieved equal
           parity with the Series A Preferred Stock, Series B Preferred Stock,
           Series C Preferred Stock and/or Series D Preferred Stock, as the case
           may be, on all matters for which the Series G Preferred Stock has
           achieved parity with such series and, from the date hereof, on a
           parity as to liquidation with the Series E Preferred Stock, and (iii)
           in any case after June 1, 2002, junior to the Series A Preferred
           Stock. In the event the assets of the Corporation available for
           distribution to shareholders upon any liquidation, dissolution or
           winding up of the Corporation, whether voluntary or involuntary,
           shall be insufficient to pay in full the amounts payable with respect
           to the Series G Preferred Stock and any other class or series of the
           Corporation's capital stock which has or may hereafter have parity as
           to liquidation rights with the Series G Preferred Stock (including,
           the Series A Preferred Stock (prior to June 1, 2002 only), the Series
           B Preferred Stock, the Series C Preferred Stock and the Series D
           Preferred Stock, in each case at and after such time as the holders

                                       15
<PAGE>

           thereof have consented to such parity of liquidation preference but
           only to the extent that the Series E Preferred Stock has achieved
           such parity, and the Series E Preferred Stock, collectively the
           "Parity Liquidation Stock"), the holders of the Series G Preferred
           Stock and the holders of the Parity Liquidation Stock shall share
           ratably in any distribution of assets of the Corporation in
           proportion to the full respective preferential amounts to which they
           are entitled (but only to the extent of such preferential amounts).
           After payment in full of the liquidation preferences of the Series G
           Preferred Stock, the holders of such shares shall not be entitled to
           any further participation in any distribution of assets by the
           Corporation. Neither a merger, consolidation, or other business
           combination of the Corporation with or into another corporation or
           other entity nor a sale or transfer of all or part of the
           Corporation's assets for cash, securities or other property shall be
           considered a liquidation, dissolution or winding up of the
           Corporation for purposes of this Section II.B. (unless in connection
           therewith the liquidation of the Corporation is specifically approved
           by the shareholders of the Corporation). The holder of any shares of
           Series G Preferred Stock shall not be entitled to receive any payment
           owed for such shares under this Section II.B. until such holder shall
           cause to be delivered to the Corporation (i) certificate(s)
           representing such shares of Series G Preferred Stock and (ii)
           transfer instruments satisfactory to the Corporation and sufficient
           to transfer such shares to the Corporation free and clear of any
           adverse interest.

    III. Voting Rights. If the Series E Preferred Stock retains a separate class
    vote on such matters ("Separate Class Vote Matters"), any (i) merger,
    acquisition or sale of all or substantially all assets to which the
    Corporation is a party and (ii) equity issuance by the Corporation (other
    than (a) 1,800 shares of Series F Convertible Preferred Stock to the owners
    of the Corporation's online and internet business, (b) an issuance of
    1,100,000 shares of Common Stock (or shares convertible into such number of
    shares of Common Stock) in connection with the bankruptcy of Zany Brainy,
    Inc. and its Affiliates, (c) pursuant to the conversion of outstanding
    convertible equity of the Corporation and (d) issuance of shares of Series E
    Preferred Stock), shall require the consent of the holders of at least a
    majority of the outstanding shares of Series G Preferred Stock, voting
    together as a separate class. If the Series E Preferred Stock ceases to
    retain a separate class vote on Separate Class Vote Matters, the holders of
    the Series G Preferred Stock shall be entitled to vote with the holders of
    the Common Stock with respect to matters set forth in clauses (i) and (ii)
    in the preceding sentence and such vote shall be determined on an
    as-converted basis with each share of Series G Preferred Stock providing its
    holder with a number of votes equal to the number of shares of Common Stock
    into which such share of Series G Preferred Stock is convertible.

    In addition, consent of the holders of at least a majority of the shares of
    Series G Preferred Stock (unless the consent of a greater percentage is
    required by applicable law or the Corporation's articles of incorporation as
    then in effect), voting together as a single class, will be required for (a)
    each amendment of the Corporation's articles of incorporation as then in
    effect which adversely affects the relative rights, preferences,
    qualifications, limitations or restrictions of the Series G Preferred Stock,
    or (b) any reclassification of the Series G Preferred Stock. Except for such
    consent rights and such voting rights as may be provided by applicable law
    or herein, the Series G Preferred Stock shall have no voting rights as a
    separate Series except the right to vote as a separate series within the
    class of preferred stock as to any matters regarding the modification of the
    rights, privileges or terms of the Series G Preferred Stock. Any required
    vote of the Series G Preferred Stock as a separate series will be
    accomplished by the vote of a majority of the shares of such series. A class
    vote on the part of the Series G Preferred Stock specifically shall not be
    required (except as otherwise required by law or resolution of the
    Corporation's Board of Directors) in connection with the authorization,
    issuance or increase in the amount of any notes, bonds, mortgages,
    debentures or other obligations of the Corporation not convertible into or
    exchangeable, directly or indirectly, for equity of the Corporation.

                                       16
<PAGE>

    IV.    Conversion

           A.  Automatic and Voluntary Conversion.

                  (i) Automatic Conversion. The Series G Preferred Stock shall
                  automatically convert into Common Stock (without a liquidation
                  preference) immediately upon (and not before) (1) approval of
                  the conversion feature in the Series G Preferred Stock by the
                  Corporation's holders of Common Stock and (2) authorization by
                  the Corporation's holders of Common Stock of sufficient
                  additional Common Stock to permit such conversion
                  (collectively, "Shareholder Authorization").

                  (ii) Conversion Rate. Series G Preferred Stock shall be
                  convertible into that number of fully paid and non-assessable
                  shares of Common Stock (calculated as to each conversion to
                  the nearest 1/100th of a share) obtained by multiplying the
                  number of shares of Series G Preferred Stock by 1,000, as
                  adjusted from time to time as provided in Section IV.C. (the
                  "Conversion Rate"), and by surrender of such shares of Series
                  G Preferred Stock so to be converted in the manner provided in
                  Section IV.A.(iii).

                  (iii) Mechanics of Automatic Conversion. Notice of automatic
                  conversion of the Series G Preferred Stock ("Automatic
                  Conversion Notice") specifying the time of conversion, the
                  Conversion Rate, the fact of Shareholder Authorization and the
                  paragraph pursuant to which such conversion occurred, shall be
                  sent via facsimile to the holder not more than five (5)
                  Business Days after such Shareholder Authorization and mailed
                  by certified or registered mail, return receipt requested, at
                  the address for such holder shown on the Corporation's records
                  not more than five (5) Business Days after such Shareholder
                  Authorization. Upon mailing any Automatic Conversion Notice,
                  the Corporation shall issue and deliver at its principal
                  offices to such holder of Series G Preferred Stock, or to his
                  nominee or nominees, a certificate or certificates
                  representing the number of shares of Common Stock and a check
                  or cash with respect to any fractional interest in a share of
                  Common Stock to which he shall be entitled as aforesaid in
                  accordance with the Section IV.B. Automatic conversion shall
                  be deemed to have been made on the date the later of the two
                  Automatic Conversion Conditions occurs and the person or
                  persons entitled to receive the Common Stock issuable upon
                  conversion shall be treated for all purposes as the record
                  holder or holders of such Common Stock on such date. On the
                  date of such mailing, the certificates representing the Series
                  G Preferred Stock shall be null and void and shall no longer
                  represent an interest in the Corporation. Any Automatic
                  Conversion Notice that is mailed as provided in this
                  subsection (iii) shall be conclusively presumed to have been
                  duly given, whether or not the holder of the Series G
                  Preferred Stock receives such notice; and failure to give such
                  notice or any defect in such notice shall not affect the
                  validity of the proceedings for the automatic conversion of
                  Series G Preferred Stock.

           B. Fractional Shares. No fractional shares or scrip representing
           fractions of shares of Common Stock shall be issued upon conversion
           of the Series G Preferred Stock. In lieu of any fractional interest
           in a share of Common Stock which would otherwise be deliverable upon
           the conversion of any shares of Series G Preferred Stock, the
           Corporation shall pay to the holder of such shares an amount in cash
           (computed to the nearest cent) equal to the closing price of the

                                       17
<PAGE>

           Common Stock (as reported on the national exchange or quotation
           system on which the Common Stock is then traded; or, if the Common
           Stock is not then traded on such an exchange or system, as determined
           in good faith by the Board of Directors of the Corporation) on the
           Business Day next preceding the day of conversion, multiplied by the
           fractional interest that otherwise would have been deliverable upon
           conversion of such shares.

           C.  Adjustments to Conversion Rate:

               1. Stock Dividends, Subdivisions and Combinations. In case at any
               time or from time to time after the Preferred Stock Issuance Date
               the Corporation  shall,  subject to the restrictions set forth in
               Section IV.D.:

                    (i) pay a  dividend  or make a  distribution  on its  Common
                    Stock in shares of Common Stock,

                    (ii) subdivide its outstanding shares of Common Stock into a
                    greater number of shares, or

                    (iii) combine its outstanding  shares of Common Stock into a
                    smaller number of shares,

               then in each such case the Conversion Rate in effect immediately
               prior to such action shall be adjusted so that the holder of any
               share of Series G Preferred Stock thereafter surrendered for
               conversion shall be entitled to receive the number of shares of
               Common Stock or other capital stock of the Corporation which he
               would have owned or been entitled to receive immediately
               following such action had such share been converted immediately
               prior to the occurrence of such event. An adjustment made
               pursuant to this subsection shall become effective immediately
               after the record date, in the case of a dividend or distribution,
               or immediately after the effective date, in the case of a
               subdivision or combination.

           D. No impairment. The Corporation will not through any
           reorganization, transfer of assets, consolidation, merger,
           dissolution, issue or sale of securities or any other voluntary
           action, avoid the observance or performance of any of the terms to be
           observed or performed hereunder by the Corporation but will at all
           times in good faith assist in the carrying out of all the provisions
           of this Section IV and in the taking of all such action as may be
           necessary or appropriate in order to protect the conversion rights of
           the holders of shares of Series G Preferred Stock against impairment.
           Without limiting the generality of the foregoing, the Corporation (i)
           will take all such action as may be necessary or appropriate in order
           that the Corporation may validly and legally issue fully paid
           nonassessable shares of stock on the conversion of the Series G
           Preferred Stock, and (ii) will not take any action which results in
           any adjustment of the Conversion Rate if the total number of shares
           of Common Stock issuable after the action upon the conversion of all
           of the shares of Series G Preferred Stock will exceed the total
           number of shares of Common Stock then authorized by the Restated
           Articles and available for the purpose of issue upon such conversion.

           E. Certificate as to Adjustments. Upon the occurrence of each
           adjustment or readjustment of the Conversion Rate pursuant to this
           Section IV, the Corporation shall promptly compute such adjustment or
           readjustment in accordance with the terms hereof and furnish to each

                                       18
<PAGE>

           holder of shares of Series G Preferred Stock a certificate setting
           forth such adjustment or readjustment and showing in detail the facts
           upon which such adjustment or readjustment is based, including a
           statement of (i) the number of shares of Common Stock then
           outstanding or deemed to be outstanding, and (ii) the Conversion Rate
           in effect immediately prior to such issue or sale and as adjusted and
           readjusted on account thereof, showing how such Conversion Rate was
           calculated. The Corporation shall, as promptly as practicable
           following its receipt of the written request of any holder of shares
           of Series G Preferred Stock, furnish or cause to be furnished to such
           holder a like certificate setting forth (i) the Conversion Rate at
           the time in effect, showing how it was calculated and (ii) the number
           of shares of Common Stock which at the time would be received upon
           the conversion of the Series G Preferred Stock.

           F. Notices of Record Date. In the event of any taking by the
           Corporation of a record of the holders of any class of securities for
           the purpose of determining the holders thereof who are entitled to
           receive any dividend (other than a cash dividend which is the same as
           cash dividends paid in previous quarters) or other distribution, or
           any right to subscribe for, purchase or otherwise acquire any shares
           of stock of any class or any other securities or property, or to
           receive any other right, the Corporation shall mail to each holder of
           Series G Preferred Stock at least ten days prior to the date
           specified therein, a notice specifying the date on which any such
           record is to be taken for the purpose of such dividend or
           distribution.

V.  Miscellaneous.  This Certificate of Determination  shall also be governed by
the following:

           A. Amendment and Waiver. This Certificate of Determination may be
           amended or otherwise altered in accordance with applicable law and
           Section III. No amendment, modification or waiver of any provision
           hereof shall extend to or affect any obligation not expressly
           amended, modified or waived or impair any right consequent thereon.
           No course of dealing, and no failure to exercise or delay in
           exercising any right, remedy, power or privilege hereunder, shall
           operate as a waiver, amendment or modification of any provision of
           this Certificate of Determination.

           B. Reacquired Shares. Any shares of Series G Preferred Stock
           purchased or otherwise acquired by the Corporation in any manner
           whatsoever shall be retired and cancelled promptly after the
           acquisition thereof. All such shares shall, upon their cancellation,
           become authorized but unissued shares of Preferred Stock of the
           Corporation, undesignated as to series.

           C. Registration. The Corporation shall keep at its principal office
           (or such other place as the Corporation reasonably designates) a
           register for the registration of Series G Preferred Stock. Upon the
           surrender of any certificate representing Series G Preferred Stock at
           such place, the Corporation shall, at the request of the registered
           holder of such certificate, execute and deliver a new certificate or
           certificates in exchange therefor representing in the aggregate the
           number of shares of Series G Preferred Stock represented by the
           surrendered certificate (and the Corporation forthwith shall cancel
           such surrendered certificate), subject to the requirements of
           applicable securities laws and any other applicable restrictions.
           Each such new certificate shall be registered in such name and shall
           represent such number of shares of Series G Preferred Stock as shall
           be requested by the holder of the surrendered certificate and shall
           be substantially identical in form to the surrendered certificate.

                                       19
<PAGE>

          D. Replacement.  Upon receipt of evidence  reasonably  satisfactory to
          the Corporation (an affidavit and indemnity of the registered  holder,
          including  a  bond  if so  requested  by  the  Corporation,  shall  be
          satisfactory)  of the ownership and the loss,  theft,  destruction  or
          mutilation of any certificate  evidencing one or more shares of Common
          Stock,  Series G Preferred  Stock and,  in the case of loss,  theft or
          destruction,  upon receipt of indemnity reasonably satisfactory to the
          Corporation  (provided  that if the  registered  holder is a financial
          institution,  its own agreement of indemnity  shall be  satisfactory),
          or, in the case of mutilation, upon surrender of such certificate, the
          Corporation shall (at its expense) execute and deliver in lieu of such
          certificate a new certificate of like kind  representing the number of
          shares of Common Stock or Series G Preferred Stock represented by such
          lost, stolen, destroyed or mutilated certificate and dated the date of
          such lost, stolen, destroyed or mutilated certificate.

          E. Definitions. The following terms shall have the following meanings,
          which meanings shall be equally  applicable to the singular and plural
          forms of such terms:

                      "Affiliate" of a Person means a Person that directly or
           indirectly controls, or is controlled by, or is under common control
           with such Person. The term "control" means the possession, directly
           or indirectly, of the power to direct or cause the direction of the
           management and policies of a Person, whether through the ownership of
           voting securities, by contract or otherwise.

                      "Business Day" means any day which is not a Saturday or a
           Sunday or a public holiday or a day on which banks are required or
           permitted to close under the laws of the State of California.

                      "Common Stock" means the Common Stock of the Corporation
           without par value.

                      "Conversion Rate" shall have the meaning set forth in
           Section IV.A.(ii).

                      "Exchange Act" means the Securities Exchange Act of 1934,
           as amended, and any similar or successor federal statute, and the
           rules and regulations of the Commission promulgated thereunder, all
           as the same shall be in effect at any applicable time.

                      "Person" shall include an individual, a corporation, a
           limited liability company, an association, a partnership, a limited
           liability partnership, a trust or estate, a government or any agency
           or political subdivision thereof, or any other entity.

                      "Preferred Stock Issuance Date" means the date on which
           the Corporation first issues any shares of Series G Preferred Stock.

          F. Preemptive  Rights. The Series G Preferred Stock is not entitled to
          any preemptive or subscription  rights in respect of any securities of
          the Corporation.

VI.  Notices.  All notices  provided  hereunder shall be in writing and shall be
delivered by courier,  messenger,  registered or certified mail,  return receipt
requested, postage prepaid or by facsimile, receipt confirmed by sender and will
be deemed to have been given when so mailed (or receipt confirmed in the case of
a facsimile) (i) to the Corporation, at its principal executive offices and (ii)
to the  holder of Series G  Preferred  Stock,  at such  holder's  address  as it

                                       20
<PAGE>

appears in the stock records of the Corporation  (unless otherwise  indicated by
any such holder in notice to the Corporation conforming with this Section VI).

VII.  Common  Stock  Reserved.  The  Corporation  shall at all  times  after the
Automatic  Conversion  Conditions are met, reserve and keep available out of its
authorized  but  unissued  Common Stock such number of shares of Common Stock as
shall  from time to time be  sufficient  to effect  conversion  of the  Series G
Preferred Stock.

        The undersigned further certify that (i) the number of shares of Series
E Convertible Preferred Stock is 16,818.815 shares, none of which shares have
been issued, (ii) the number of shares of Series F Convertible Preferred Stock
is 1,800 shares, none of which shares have been issued, (iii) the number of
shares of Series G Convertible Preferred Stock is 2,500 shares, none of which
shares have been issued, (iv) the holders of a majority of the Corporation's
Series A Mandatorily Redeemable Preferred Stock, Series B Convertible Preferred
Stock, and Series C Convertible Preferred Stock, voting together as a class,
have approved this Amendment to the Corporation's Articles of Incorporation
pursuant to Section 902 of the General Corporation Law of the State of
California, (v) the total number of outstanding shares of the Corporation's
Series A Mandatorily Redeemable Preferred Stock is 30,000, of the Series B
Convertible Preferred Stock is 16,500 and of the Series C Convertible Preferred
Stock is 37,333, for a total of 83,833, (vi) the number of shares of the
Corporation's Series A Mandatorily Redeemable Preferred Stock, Series B
Convertible Preferred Stock and Series C Convertible Preferred Stock, voting
together as a class, voting in favor of this amendment exceeded the vote
required, which was a majority and (vii) the Corporation's Series A Mandatorily
Redeemable Preferred Stock, Series B Convertible Preferred Stock, and Series C
Convertible Preferred Stock, voting together as a class, have approved the
parity of liquidation preference of the Series E Preferred Stock and the Series
G Preferred Stock. The undersigned declares under penalty of perjury under the
laws of the State of California that the matters set forth in this certificate
are true and correct of his or her own knowledge.

                                       21
<PAGE>

                                 SIGNATURE PAGE

Date:   September 5, 2001                          /s/ Jerry R. Welch
                                                  --------------------
                                                      Jerry R. Welch
                                                  President and Chief Executive
                                                         Officer

Date:   September 5, 2001                          /s/ Raymond P. Springer
                                                  ------------------------
                                                     Raymond P. Springer
                                                  Secretary and Chief Financial
                                                          Officer

                                       22
<PAGE>INTELLECTUAL PROPERTY SECURITY AGREEMENT

               This Intellectual Property Security Agreement (as amended,
supplemented or otherwise modified from time to time, the "Intellectual Property
Security Agreement") is made and effective as of September 5, 2001, by ZB
Company, Inc., a Delaware corporation (including any successors or permitted
assignees thereof, the "Grantor"), in favor of Wells Fargo Retail Finance, LLC,
as Agent for each of the Lenders from time to time party to the Loan Agreement
referred to below (the "Agent"). Capitalized terms used in this Intellectual
Property Security Agreement and not otherwise defined shall have the respective
meanings ascribed to such terms in the Loan Agreement.

                                    RECITALS

               WHEREAS, pursuant to the Loan and Security Agreement (as amended,
supplemented or otherwise modified from time to time, the "Loan Agreement")
dated as of the date hereof by and among the Grantor, the Agent and the Lenders
from time to time party thereto (the "Lenders"), the Lenders have agreed,
subject to the terms and conditions set forth therein, to make certain advances,
cause the issuance of letters of credit and provide other financial
accommodations to the Grantor (collectively, the "Loans"); and

               WHEREAS, it is a condition precedent to the obligation of the
Agent and the Lenders to execute and perform under the Loan Agreement that
Grantor shall have executed and delivered this Intellectual Property Security
Agreement to the Agent, for the ratable benefit of each of the Lenders;

               NOW, THEREFORE, in consideration of the willingness of the Agent
and the Lenders to enter into the Loan Agreement and to agree, subject to the
terms and conditions set forth therein, to make the Loans to the Grantor
pursuant thereto, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

1. Grant of Security Interest. To secure the Grantor's prompt, punctual and
faithful performance of all and each of the Obligations, the Grantor hereby
grants to Agent, for its benefit and the ratable benefit of each of the Lenders,
a continuing first priority security interest in all of the right, title and
interest of such Grantor in and to the Intellectual Property Collateral (as
defined below), whether now owned or hereafter acquired:

(a)  The U.S and foreign  copyrights,  associated  copyright  registrations  and
     applications  for copyright  registration,  and copyright  licenses (to the
     extent  permitted under the terms thereof) set forth on Schedule A attached
     hereto (collectively, the "Copyrights"); and

(b)  The U.S. and foreign patents and patent  applications,  and patent licenses
     set forth on Schedule B attached  hereto,  including,  without  limitation,
     divisions,    continuations,    renewals,    reissues,    extensions    and
     continuations-in-part of the same (collectively, the "Patents"); and

<PAGE>

(c)  The U.S.,  state and  foreign  trademark  and service  mark  registrations,
     trademark  and service mark  applications,  and  trademark and service mark
     licenses  (to the extent  permitted  under the terms  thereof) set forth on
     Schedule C attached  hereto and all goodwill  associated with the foregoing
     (collectively, the "Trademarks"); and

(d)  The domain names and  registrations set forth on Schedule D attached hereto
     and all goodwill associated with the foregoing  (collectively,  the "Domain
     Names"); and

(e)  Any and all  claims  and  causes of  action  for  past,  present  or future
     infringement  of any of the  Intellectual  Property  Collateral,  with  the
     right,  but  not  the  obligation,  to sue  for  and  collect  damages  for
     infringement of the Intellectual Property Collateral; and

(f)  Any and all  licenses  or  rights  granted  under  any of the  Intellectual
     Property  Collateral,  and all license fees and royalties arising from such
     licenses or rights,  in each case to the extent  permitted by such licenses
     or rights; and

(g)  Any and all amendments, renewals, extensions,  reissuances and replacements
     of any of the Intellectual Property Collateral; and

(h)     Any and all products and proceeds of any of the foregoing.

2. Requested Recordation. Grantor authorizes and requests that the Register of
Copyrights and the Commissioner of Patents and Trademarks (and any state,
foreign or other authorities to which this Intellectual Property Security
Agreement is submitted) to file and record this Intellectual Property Security
Agreement (and any corresponding or separate application forms of such
jurisdiction) in order to publicly reflect the interests of the Agent and the
Lenders in the Intellectual Property Collateral.

3.  Assignment.  Upon the occurrence of and during  continuation  of an Event of
Default,  the Grantor shall execute and deliver to Agent an absolute  assignment
transferring  its entire right,  title,  and interest in and to the Intellectual
Property Collateral to the Agent, for its benefit and the ratable benefit of the
Lenders.

4. Power of Attorney. The Grantor hereby irrevocably grants the Agent for its
benefit and for the ratable benefit of the Lenders a power of attorney, to act
as the Grantor's attorney-in-fact, with full authority in the name, place and
stead of the Grantor, from time to time in the Agent's discretion, to take any
action and to execute any instrument which the Agent may deem reasonably
necessary or advisable to accomplish the purposes of this Intellectual Property
Security Agreement. This authority includes, without limitation, the following:

(a)  To modify or amend (in sole  discretion  of the Agent and the  Lenders  and
     without first  obtaining the  Grantor's  approval of or signature  thereto)
     Schedule  A,  Schedule  B,  Schedule  C,  and/or  Schedule  D  hereof,   as
     appropriate,  to include references to any registered intellectual property
     (or  application  or license  therefor)  acquired by the Grantor  after the

                                       2
<PAGE>

     execution  hereof or to delete any reference to any  Intellectual  Property
     Collateral in which the Grantor no longer has or claims any right, title or
     interest; and

(b)  To  execute,  file and  pursue  (in sole  discretion  of the  Agent and the
     Lenders and without first obtaining the Grantor's  approval of or signature
     thereto,  unless  otherwise  prohibited by applicable law) any application,
     form or other document in order to perfect, maintain, continue or otherwise
     protect the Agent's  interest or the Grantor's  rights in the  Intellectual
     Property Collateral,  including,  without limitation,  executing and filing
     (i) any financing  statement,  any continuation  statement or any amendment
     thereto,  and (ii) any document in any proceeding  before the United States
     Patent and  Trademark  Office,  the United States  Copyright  Office or the
     relevant office of any state or foreign  jurisdiction  (including,  without
     limitation,  the filing of  applications  for renewal,  affidavits  of use,
     affidavits   of   incontestability   and   opposition,   interference   and
     cancellation  proceedings)  and to pay any  fees and  taxes  in  connection
     therewith or otherwise; and

(c)  To execute any document  required to  acknowledge,  register or perfect the
     interest  of the  Agent  and the  Lenders  in any part of the  Intellectual
     Property  Collateral without the signature of the Grantor unless prohibited
     by applicable law.

The foregoing power of attorney is coupled with an interest and is irrevocable.

5. Release. Unless otherwise agreed in writing by the parties, the security
interests granted herein will terminate (and all rights to the Intellectual
Property Collateral will revert to the Grantor) upon satisfaction of the
following conditions: (a) payment and performance in full of all the Obligations
secured hereby (unconditionally and indefeasibly) and (b) the termination of the
Loan Agreement. Upon any such termination, the Agent (at the Grantor's request
and sole expense) will promptly execute and deliver to the Grantor (without any
representation, warranty or recourse of any kind whatsoever) such documents as
the Grantor may reasonably request and provided to the Agent to evidence such
termination.

6.      Miscellaneous.

(a)  This  Intellectual  Property  Security  Agreement  has been entered into in
     conjunction with the provisions of and the security interest granted to the
     Agent,  for its benefit and the ratable  benefit of the Lenders,  under the
     Loan  Agreement.  The rights and remedies of the Grantor and the Agent with
     respect  to the  security  interests  granted  herein are in  addition  and
     without  prejudice to those set forth in the Loan Agreement,  all terms and
     provisions of which are hereby  incorporated  herein by  reference.  In the
     event that any provisions of this Intellectual  Property Security Agreement
     are deemed to conflict with the Loan Agreement or the other Loan Documents,
     the  provisions  of the Loan  Agreement or the other Loan  Documents  shall
     govern.

(b)  This Intellectual Property Security Agreement may be executed in any number
     of  counterparts  with the same  effect  as if all the  signatures  on such
     counterparts appeared on one document; each such counterpart will be deemed
     to be an original but all counterparts together will constitute one and the
     same instrument.

                                       3
<PAGE>

                           [Signatures appear on following pages.]

                                       4
<PAGE>

               IN WITNESS WHEREOF, the parties hereto have executed this
Intellectual Property Security Agreement, as an instrument under seal, through
their duly authorized officers, as of the date first written above.

                                    GRANTOR:
                                    ZB COMPANY, INC.

                                    By:  /s/ Raymond P. Springer
                                        ------------------------
                                    Name:  Raymond P. Springer
                                    Title:  Chief Financial Officer

                                    AGENT:

                                    WELLS FARGO RETAIL FINANCE, LLC,
                                    as Agent

                                    By:  /s/ Patrick J. Norton
                                         ---------------------
                                    Name:  Patrick J. Norton
                                    Title: Vice President

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF  Pennsylvania   :
                         : SS
COUNTY OF Philadelphia   :

               Before me, the undersigned, a Notary Public, on this 31st day of
August, 2001, personally appeared Ray Springer to me known personally,
who, being by me duly sworn, did say that he/she is the Vice President
of ZB Company, Inc., as Borrower, and that said Intellectual Property Security
Agreement was signed on behalf of said ZB Company, Inc., as Borrower, by
authority of its board of directors, and the said Ray Springer
acknowledged said instrument to be his/her free act and deed.

                                       /s/ Loreena Kay Tinneny
                                      -------------------------
                                      Notary Public
                                      My Commission Expires:  Apr. 7, 2003
                                                             --------------

<PAGE>

                                   SCHEDULE A

                              COPYRIGHT COLLATERAL

                              Registered Copyrights

                                      NONE

                         Pending Copyright Applications

                                      NONE

<PAGE>

                                   SCHEDULE B

                                PATENT COLLATERAL

                               Registered Patents

                                      NONE

                           Pending Patent Applications

                                      NONE

<PAGE>

                                   SCHEDULE C

                              TRADEMARK COLLATERAL

                              Registered Trademarks

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------

                                                       REGISTERED TRADEMARKS
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
                 Trademark                   Registration  Registration             Registered Owner

                                                                                                                    Country of
                                                Number         Date                                                Registration
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                            <C>           <C>         <C>                                      <C>
 A ZILLION NEAT THINGS FOR KIDS                1,730,089     11/03/92    Children's Development Inc.              United States

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

 DOLLS TO LOVE                                2,322,480      02/22/00    Children's Concept, Inc.                 United States
                                                                         (former name of Zany Brainy, Inc.)

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

 DREAM DOUGH                                   2,439,498     03/27/01    Children's Development Inc.              United States

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

 FREE FUN EVERY DAY                            2,346,949     05/02/00    Children's Development Inc.              United States

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

 HUGS N' SNUGS AND DESIGN                     2,449,637      05/08/01    Children's Concept, Inc.                 United States
                                                                         (former name of Zany Brainy, Inc.)
-----------------------------------------------------------------------------------------------------------------------------------

 KIDS LEARN BEST WHEN THEY'RE HAVING FUN       2,010,223     10/22/96    Greenman Bros., Inc.                     United States

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

 KIDSTRUMENTS                                  2,324,283     02/29/00    Children's Development Inc.              United States

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

 KIDSULTANT                                   2,223,839      02/16/99    Children's Concept, Inc.                 United States
                                                                         (former name of Zany Brainy, Inc.)

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

 MY LITTLE PLAY PALS                          2,322,479      02/22/00    Children's Concept, Inc.                 United States
                                                                         (former name of Zany Brainy, Inc.)

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

 NOODLE KID DESIGN                             1,872,949     01/10/95    Greenman Bros., Inc.                     United States

                                                                         The  change  of  name   document  from
                                                                         Greenman   Bros.,   Inc.   to   Noodle
                                                                         Kidoodle,   Inc.   was  not   recorded
                                                                         against  this  registration.   It  was
                                                                         instead   filed   against   Reg.   No.
                                                                         1,872,944,    a   totally    unrelated
                                                                         registration   owned  by  a  different
                                                                         entity.  Noodle  Kidoodle will need to
                                                                         update  the  chain of  title  for this
                                                                         registration  by recording  the change
                                                                         of name  document  and should  correct
                                                                         its incorrect  filing against Reg. No.
                                                                         1,872,944.

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

 NOODLE KIDOODLE                               1,971,605     04/30/96    Greenman Bros., Inc.                     United States

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

 OCEANMOTION                                   2,426,455     02/06/01    Children's Development Inc.              United States

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

 OODLES & ODDLES OF FUN THINGS TO LEARN        1,898,336     06/06/95    Greenman Bros., Inc.                     United States

                                                                         Chain of title  needs to be  completed
                                                                         by   recording   the  change  of  name
                                                                         document from Greenman Bros.,  Inc. to
                                                                         Noodle     Kidoodle,      Inc.     (NY
                                                                         Corporation)  and then the  merger  of
                                                                         Noodle  Kidoodle,  Inc. (NY) to Noodle
                                                                         Kidoodle,  Inc. (DE Corporation).  The
                                                                         change  of  name   document   and  the
                                                                         merger were recorded  against Reg. No.
                                                                         1,989,336     instead    (a    totally
                                                                         unrelated  reg.  and  entity),   which
                                                                         should  be   corrected  to  clear  the
                                                                         registration owned by a third party.

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

 PRICE CHOMPER                                2,184,879      08/25/98    Children's Concept, Inc.                 United States
                                                                         (former name of Zany Brainy, Inc.)

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

 WHY TAKE AN EXTRA-ORDINARY KID TO AN          2,338,200     04/04/00    Children's Development Inc.              United States
 ORDINARY TOY STORE?

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

 ZANY BRAINY                                   1,735,825     11/24/92    Children's Development Inc.              United States

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

 ZANY BRAINY                                   2,394,856     10/17/00    Children's Development Inc.              United States

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

 ZANY BRAINY                                    319242       01/12/98    Children's Development Inc.                  Mexico

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

 ZANY BRAINY                                     7491          1998      Children's Development Inc.                  Japan

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

 ZANY BRAINY                                    751819       12/24/97    Children's Development Inc.                Australia

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

 ZANY BRAINY                                    707794       12/15/97    Children's Development Inc.                  Europe

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

 ZANY BRAINY AND DESIGN                        1,781,919     07/13/93    Children's Development Inc.              United States

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

 ZANY BRAINY.COM                               2,439,127     03/27/01    Children's Concept, Inc.                 United States
                                                                         (former name of Zany Brainy, Inc.)

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

 ZANY BRAINY.COM and DESIGN                    2,412,354     12/12/00    Children's Development Inc.              United States

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

 ZANY PRICE CHOMPER and Design                 2,429,187     02/20/01    Children's Development Inc.              United States
 (Head looking left with broken $ in mouth
 with words over and under head)

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

 ZANY ZONE                                    2,185,796      09/01/98    Children's Concept, Inc.                 United States
                                                                         (former name of Zany Brainy, Inc.)

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

<PAGE>

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

                                                  PENDING TRADEMARK APPLICATIONS

-----------------------------------------------------------------------------------------------------------------------------------
                 Trademark                      Serial     Application                 Applicant

                                                                                                                    Country of
                                                Number         Date                                                Application
-----------------------------------------------------------------------------------------------------------------------------------

 DREAM DOUGH AND DESIGN                        75-824712     10/15/99    Children's Development Inc.              United States

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

 I GOT YOU BABY                               76-032176      04/24/00    Noodle Kidoodle, Inc.                    United States

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

 MISCELLANEOUS "PRICE CHOMPER" DESIGN         75-611593      12/23/98    Children's Concept, Inc.                 United States
 (Standing With Broken $ in mouth looking                                (former name of Zany Brainy, Inc.)
 left)

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

 ZANY BRAINY                                    864671       12/17/97    Children's Development Inc.                  Canada

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

 WHAT YOU WANT YOUR CHILD TO BECOME            75-663413     03/19/99    Children's Development Inc.              United States

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

<PAGE>

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

                                                     NON-REGISTERED TRADEMARKS

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Status of Trademark
                            Trademark

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

 BLUE SKY                                                                   AWAITING APPLICATION TO BE SIGNED AND FILED

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

 BLUE SKY DESIGN                                                            AWAITING APPLICATION TO BE SIGNED AND FILED

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

 BRAINY GAMES ICON                                                                              ---

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

 BRIGHT START                                                                                   ---

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

 BRIGHT START ICON                                                                              ---

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

 CREATIVITY ICON                                                                                ---

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

 CRITTERS NAME ICON                                                                             ---

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

 DEPART-MENTAL ICON DESIGN (15)                                                                 ---

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

 DOLLS ICON                                                                                     ---

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

 GOOD SPORTS NAME ICON                                                                          ---

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

 GREEN ORBIT                                                                AWAITING APPLICATION TO BE SIGNED AND FILED

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

 GREEN ORBIT DESIGN                                                         AWAITING APPLICATION TO BE SIGNED AND FILED

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

 GRANDTASTIC                                                                                    ---

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

 HOBBIES ICON                                                                                   ---

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

 IMAGINATION                                                                AWAITING APPLICATION TO BE SIGNED AND FILED

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

 IMAGINATION DESIGN                                                         AWAITING APPLICATION TO BE SIGNED AND FILED

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

 KIDSTRUMENTS DESIGN                                                        AWAITING APPLICATION TO BE SIGNED AND FILED

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

 KIDTRONICS NAME ICON                                                                           ---

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

 LET'S PRETEND NAME ICON                                                                        ---

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

 OUR PLANET NAME ICON                                                                           ---

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

 OUT OF THE BOX                                                             AWAITING APPLICATION TO BE SIGNED AND FILED

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

 OUT OF THE BOX DESIGN                                                      AWAITING APPLICATION TO BE SIGNED AND FILED

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

 OUT TO PLAY                                                                AWAITING APPLICATION TO BE SIGNED AND FILED

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

 OUT TO PLAY DESIGN                                                         AWAITING APPLICATION TO BE SIGNED AND FILED

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

 PLAY PALS NAME ICON                                                                            ---

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

 PLAYSHOP PLANNER                                                                               ---

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

 PRETENDABLES                                                                                   ---

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

 PUZZLEMANIA NAME ICON                                                                          ---

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

 READY, SET...GROW!                                                           AWAITING APPLICATION TO BE SIGNED AND FILED

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 READY, SET...GROW! DESIGN                                                    AWAITING APPLICATION TO BE SIGNED AND FILED

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 SMART SUPPLIES                                                             AWAITING APPLICATION TO BE SIGNED AND FILED

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 SMART SUPPLIES DESIGN                                                      AWAITING APPLICATION TO BE SIGNED AND FILED

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 SOFTWARE ICON                                                                                  ---

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

 STATIONERY ICON                                                                                ---

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 SUPER STARS NAME ICON                                                                          ---

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 TEACHER'S RESOURCE  NAME ICON                                                                  ---

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 TECHNO KIDS                                                                AWAITING APPLICATION TO BE SIGNED AND FILED

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 TECHNO KIDS DESIGN                                                         AWAITING APPLICATION TO BE SIGNED AND FILED

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 VIDEO ICON                                                                                     ---

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 WORDS & MUSIC (OR SIGHTS & SOUNDS) NAME ICON                                                   ---

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 YOUNG BUILDERS NAME ICON                                                                       ---

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 ZANY ALPHABET DESIGNS (26)                                                                     ---

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 ZANY BRAINY COMPUTER BUGZ                                                                      ---

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</TABLE>

<PAGE>

10.12 IP.DOC

                                   SCHEDULE D

                                  DOMAIN NAMES

<TABLE>
<CAPTION>

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

                                                     REGISTERED DOMAIN NAMES

---------------------------------------------- --------------------------- --------------------------------------------------------
             Domain Name                             Registered Owner                              Registrar

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

<S>                                               <C>                                         <C>
EXCHANGETOYS.COM                                   Zany Brainy, Inc.                          Network Solutions

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

MYZB.COM                                           Zany Brainy, Inc.                          Network Solutions

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

NOODLEKABOODLE.COM                               Noodle Kidoodle, Inc.                        Network Solutions

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

NOODLEKADOODLE.COM                               Noodle Kidoodle, Inc.                        Network Solutions

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

NOODLEKIDODDLE.COM                               Noodle Kidoodle, Inc.                        Network Solutions

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

NOODLEKIDOODLE.COM                                 Zany Brainy, Inc.                          Network Solutions

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

TOZB.COM                                           Zany Brainy, Inc.                          Network Solutions

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

TRADE-A-TOY.COM                                    Zany Brainy, Inc.                          Network Solutions

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

ZAINYBRAINY.COM                                    Zany Brainy, Inc.                          Network Solutions

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

ZANIEBRAINY.COM                                    Zany Brainy, Inc.                          Network Solutions

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

ZANYBRAINY.COM                                     Zany Brainy, Inc.                          Network Solutions

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

ZANYBRAINY.CO.UK                                   Zany Brainy, Inc.                      REGISTER.COM / COMPUSOLVE

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

ZANYBRAINY.NET                                     Zany Brainy, Inc.                            REGISTER.COM

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

ZANYBRAINY.ORG                                     Zany Brainy, Inc.                            REGISTER.COM

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

ZANYBRAINY.TV                                      Zany Brainy. Inc.                                dotTV

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

ZANYBRAINYCATALOG.COM                              Zany Brainy, Inc.                          Network Solutions

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

ZANYBRAINYINC.COM                                  Zany Brainy, Inc.                          Network Solutions

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

ZANYBRAINYONLINE.COM                               Zany Brainy, Inc.                          Network Solutions

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

ZANYBRAINYSTORES.COM                               Zany Brainy, Inc.                          Network Solutions

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

ZANYBRANY.COM                                    Zanybrainyinc.com LLC                        Network Solutions

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

ZANYINC.COM                                        Zany Brainy, Inc.                          Network Solutions

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

ZB.COM                                             Zany Brainy, Inc.                          Network Solutions

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

ZBBOOKS.COM                                        Zany Brainy, Inc.                          Network Solutions

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

ZBCATALOG.COM                                      Zany Brainy, Inc.                          Network Solutions

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

ZBMUSIC.COM                                        Zany Brainy, Inc.                          Network Solutions

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

ZBSOFTWARE.COM                                     Zany Brainy, Inc.                          Network Solutions

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

ZBSTORES.COM                                       Zany Brainy, Inc.                          Network Solutions

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

ZBTOY.COM                                          Zany Brainy, Inc.                              directNIC

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

ZBTOYS.COM                                         Zany Brainy, Inc.                          Network Solutions

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

ZBVIDEO.COM                                        Zany Brainy, Inc.                          Network Solutions

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

</TABLE>

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