Document:

EXHIBIT
        10.2

       

      FIRST
        AMENDED AND RESTATED

      REGISTRATION
        RIGHTS AGREEMENT

       

      THIS
        FIRST AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (“Agreement”) is made
        and entered into as of ____________, 2007 by and among Small World Kids,
        Inc., a
        Nevada corporation (the “Company”), and the investors listed on Exhibit A
        attached hereto (each a “Purchaser” and collectively the
“Purchasers”).

       

      RECITALS

       

      A. 
Certain
        of the Purchasers purchased Secured Subordinated Convertible Notes (the “October
        2006 Notes”) in the aggregate Face Amount of $330,000 pursuant to the terms of
        that certain Note Purchase Agreement, dated as of October 6, 2006 (the “Original
        Purchase Agreement”), as amended as of the date hereof (the “April 2007
        Amendment”, which together with the Original Purchase Agreement is referred to
        as the “October 2006 Purchase Agreement”). In connection with the October 2006
        Notes, the Company issued to those Purchasers Common Stock Purchase Warrants,
        which were subsequently substituted with Class A-2 Preferred Stock Warrants
        (the
“October 2006 Warrants”) exercisable for shares of the Company’s Class A-2
        Convertible Preferred Stock (the “Class A-2 Preferred Stock”). The Class A-2
        Preferred Stock is convertible into shares of the Company’s Common
        Stock.

       

      B. 
The
        Company and the Purchasers who acquired the October 2006 Notes and the October
        2006 Warrants entered into that certain Registration Rights Agreement, dated
        as
        of October 6, 2006 (the “Original Registration Rights Agreement”). Those parties
        intend that the Original Registration Rights Agreement shall be amended and
        restated in its entirety by this Agreement.

       

      C. 
Certain
        of the Purchasers purchased Secured Subordinated Convertible Notes (the “April
        2007 Notes”) in the aggregate Face Amount of at least $750,000 pursuant to the
        terms of that certain Note Purchase Agreement, dated as of the date hereof
        (the
“April 2007 Purchase Agreement”). In connection with the April 2007 Notes, the
        Company issued to those Purchasers Class A-2 Preferred Stock Warrants
        exercisable for shares of the Company’s Class A-2 Preferred Stock (the “April
        2007 Warrants”).

       

      D. 
The
        October 2006 Purchase Agreement and the April 2007 Purchase Agreement are
        collectively referred to as the “Purchase Agreements.” The October 2006 Notes
        and the April 2007 Notes are collectively referred to as the “Notes.” The
        October 2006 Warrants and the April 2007 Warrants are collectively referred
        to
        as the “Warrants.”

       

      E. 
Entering
        into this Agreement is required pursuant to the terms of the April 2007
        Amendment and is a condition precedent to the obligation of the Purchasers
        to
        purchase the April 2007 Notes under the April 2007 Purchase
        Agreement.

       

      F. 
The
        capitalized terms used in this Agreement that are not defined herein shall
        have
        the meanings ascribed to them in the Purchase Agreements.

      

      TERMS
        AND CONDITIONS

       

      NOW
        THEREFORE, in consideration of the mutual agreements, covenants and conditions
        and releases contained herein, the Company and THE Purchasers hereby agree
        as
        follows:

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      1.  
Definitions.
        As used
        herein:

       

      1.1  The
        term
“Holder” means any person owning or having the right to acquire Registrable
        Shares or any assignee thereof in accordance with Section 2.8
        hereof.

       

      1.2  The
        terms
“register,” “registered,” and “registration” refer to a registration effected by
        preparing and filing a registration statement in compliance with the Securities
        Act (as defined below) and the applicable rules and regulations thereunder,
        and
        the declaration or ordering of the effectiveness of such registration
        statement.

       

      1.3  For
        the
        purposes hereof, the term “Registrable Shares” means and includes (i) the shares
        of Common Stock of the Company issued or issuable, directly or indirectly,
        upon
        conversion of the Class A-2 Preferred Shares, and (ii) any shares or other
        securities issued or issuable as a result of a stock split, dividend or other
        distribution with respect to or in exchange for or in replacement of the
        shares
        referenced in (i), excluding in all cases, however, any Registrable Shares
        sold
        by a Person in a transaction in which his or her rights under Section 2 are
        not
        assigned.

       

      1.4  The
        term
“Ownership Percentage” means and includes, with respect to each Holder of
        Registrable Shares requesting inclusion of Registrable Shares in an offering
        pursuant to this Agreement, the number of Registrable Shares held by such
        Holder
        divided by the aggregate of (i) all Registrable Shares held by all Holders
        requesting registration in such offering and (ii) the total number of all
        other
        securities entitled to registration pursuant to any agreement with the Company
        and held by others participating in the underwriting.

       

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

       

      1.6  The
        term
“Exchange Act” means the Securities Exchange Act of 1934, as
        amended.

       

      1.7  The
        term
“SEC” means the Securities and Exchange Commission.

       

      1.8  The
        term
“Public Offering” means and includes the closing of an underwritten public
        offering pursuant to an effective registration statement under the Securities
        Act, covering the offer and sale of securities to the general public for
        the
        account of the Company.

       

      2.  
Registration
        Rights.

       

      2.1  
“Piggy
        Back” Registration.
        If at
        any time the Company shall determine to register under the Securities Act
        (including pursuant to a demand of any stockholder of the Company exercising
        registration rights) any of its Common Stock (other than a registration relating
        solely to the sale of securities to participants in a Company employee benefits
        plan, a registration on any form which does not include substantially the
        same
        information as would be required to be included in a registration statement
        covering the sale of the Registrable Shares), it shall send to each Holder
        written notice of such determination and, if within twenty (20) days after
        receipt of such notice, such Holder shall so request in writing, the Company
        shall use its best efforts to include in such registration statement all
        of the
        Registrable Shares that such Holder requests to be registered, except that
        if,
        in connection with any offering involving an underwriting of Common Stock
        to be
        issued by the Company, the managing underwriter shall impose a limitation
        on the
        number of shares of Common Stock included in any such registration statement
        because, in such underwriter’s judgment, such limitation is necessary based on
        market conditions, the Company shall be obligated to include in such
        registration statement, with respect to the requesting Holder, only an amount
        of
        Registrable Shares equal to the product of (i) the number of Registrable
        Shares
        that remain available for registration after the underwriter’s cut back and (ii)
        such Holder’s Ownership Percentage, as that term is defined in Section 1.4. If
        any Holder disapproves of the terms of such underwriting, he may elect to
        withdraw therefrom by written notice to the Company and the underwriter.
        Notwithstanding anything herein to the contrary, the amount of Registrable
        Securities to otherwise be included in any registration statement shall be
        subject to the limitations imposed by Rule 415 under the Securities Act as
        determined by counsel to the Company.

       

      
        
           

        

        
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      2.2  
Effectiveness.

       

      (a)  The
        Company will use its best efforts to maintain the effectiveness for the period
        described in the plan of distribution set forth in the registration
        statement.

       

      (b)  The
        Company will from time to time amend or supplement such registration statement
        and the prospectus contained therein as and to the extent necessary to comply
        with the Securities Act and any applicable state securities statute or
        regulation.

       

      2.3  
Indemnification.

       

      (a)  
Indemnification
        of Holders.
        In the
        event that the Company registers any of the Registrable Shares under the
        Securities Act, the Company will indemnify and hold harmless each Holder
        and
        each underwriter of the Registrable Shares so registered (including any broker
        or dealer through whom such shares may be sold) and each person, if any,
        who
        controls such Holder within the meaning of the Securities Act or any such
        underwriter within the meaning of Section 15 of the Securities Act from and
        against any and all losses, claims, damages, expenses or liabilities (or
        any
        action in respect thereof), joint or several, to which they or any of them
        become subject under the Securities Act or under any other statute or at
        common
        law or otherwise, and, except as hereinafter provided, will reimburse each
        such
        Holder, such Holder’s directors and officers, each such underwriter and each
        such controlling person, if any, for any legal or other expenses reasonably
        incurred by them or any of them, as such expenses are incurred, in connection
        with investigating, defending, or settling any actions whether or not resulting
        in any liability, insofar as such losses, claims, damages, expenses, liabilities
        or actions arise out of or are based upon (i) any untrue statement or alleged
        untrue statement of a material fact contained in the registration statement,
        in
        any preliminary or amended preliminary prospectus or in the prospectus (or
        the
        registration statement or prospectus as from time to time amended or
        supplemented by the Company); (ii) arise out of or are based upon the omission
        or alleged omission to state therein a material fact required to be stated
        therein or necessary in order to make the statements therein not misleading;
        or
        (iii) any violation by the Company of the Securities Act, the Exchange Act,
        a
        state securities law or any rule or regulation under the Securities Act,
        the
        Exchange Act or any state securities law; provided, however, that the indemnity
        contained in this Section 2.3(a) will not apply where such untrue statement
        or
        omission was made in such registration statement, preliminary or amended,
        preliminary prospectus or prospectus in reliance upon and in conformity with
        information furnished in writing to the Company in connection therewith by
        such
        Holder of Registrable Shares, any such underwriter or any such controlling
        person expressly for use therein. Promptly after receipt by any Holder of
        Registrable Shares, any underwriter or any controlling person of notice of
        the
        commencement of any action in respect of which indemnity may be sought against
        the Company, such Holder of Registrable Shares, or such underwriter or such
        controlling person, as the case may be, will notify the Company in writing
        of
        the commencement thereof, and, subject to the provisions hereinafter stated,
        the
        Company shall assume the defense of such action (including the employment
        of
        counsel, who shall be counsel reasonably satisfactory to such Holder of
        Registrable Shares, such underwriter or such controlling person, as the case
        may
        be), and the payment of expenses insofar as such action shall relate to any
        alleged liability in respect of which indemnity may be sought against the
        Company. Such Holder of Registrable Shares, any such underwriter or any such
        controlling person shall have the right to employ separate counsel in any
        such
        action and to participate in the defense thereof in the event the representation
        of such Holder, underwriter or controlling person by counsel retained by
        or on
        the behalf of the Company would be inappropriate due to conflicts of interest
        between any such person and any other party represented by such counsel in
        such
        proceeding or action, in which case the Company shall pay, as incurred, the
        fees
        and expenses of such separate counsel. The Company shall not be liable to
        indemnify any person under this Section 2.3(a) for any settlement of any
        such
        action effected without the Company’s consent (which consent shall not be
        unreasonably withheld). The Company shall not, except with the approval of
        each
        party being indemnified under this Section 2.3(a) (which approval will not
        be
        unreasonably withheld), consent to entry of any judgment or enter into any
        settlement that does not include as an unconditional term thereof the giving
        by
        the claimant or plaintiff to the parties being so indemnified of a release
        from
        all liability in respect to such claim or litigation.

       

      
        
           

        

        
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      (b)  
Indemnification
        of Company.
        In the
        event that the Company registers any of the Registrable Shares under the
        Securities Act, each Holder of the Registrable Shares so registered will
        indemnify and hold harmless the Company, each of its directors, each of its
        officers who have signed the registration statement, each underwriter of
        the
        Registrable Shares so registered (including any broker or dealer through
        whom
        any of such shares may be sold) and each person, if any, who controls the
        Company within the meaning of Section 15 of the Securities Act from and against
        any and all losses, claims, damages, expenses or liabilities (or any action
        in
        respect thereof), joint or several, to which they or any of them may become
        subject under the Securities Act or under any other statute or at common
        law or
        otherwise, and, except as hereinafter provided, will reimburse the Company
        and
        each such director, officer, underwriter or controlling person for any legal
        or
        other expenses reasonably incurred by them or any of them, as such expenses
        are
        incurred, in connection with investigating or defending any actions whether
        or
        not resulting in any liability, insofar as such losses, claims, damages,
        expenses, liabilities or actions arise out of or are based upon any untrue
        statement or alleged untrue statement of a material fact contained in the
        registration statement, in any preliminary or amended preliminary prospectus
        or
        in the prospectus (or the registration statement or prospectus as from time
        to
        time amended or supplemented) or arise out of or are based upon the omission
        or
        alleged omission to state therein a material fact required to be stated therein
        or necessary in order to make the statements therein not misleading, but
        only
        insofar as any such statement or omission was made in reliance upon and in
        conformity with information furnished in writing to the Company in connection
        therewith by such Holder, expressly for use therein; provided, however, that
        such Holder’s obligations hereunder shall be limited to an amount equal to the
        net proceeds to such Holder of the Registrable Shares sold in such registration.
        Promptly after receipt of notice of the commencement of any action in respect
        of
        which indemnity may be sought against such Holder of Registrable Shares,
        the
        Company will notify such Holder of Registrable Shares in writing of the
        commencement thereof, and such Holder of Registrable Shares shall, subject
        to
        the provisions hereinafter stated, assume the defense of such action (including
        the employment of counsel, who shall be counsel reasonably satisfactory to
        the
        Company) and the payment of expenses insofar as such action shall relate
        to the
        alleged liability in respect of which indemnity may be sought against such
        Holder of Registrable Shares. The Company and each such director, officer,
        underwriter or controlling person shall have the right to employ separate
        counsel in any such action and to participate in the defense thereof in the
        event the representation of the Company, any of its officers or directors
        or any
        underwriter or controlling person by counsel retained by or on the behalf
        of
        such Holder would be inappropriate due to conflicts of interest between any
        such
        person and any other party represented by such counsel in such proceeding
        or
        action, in which case such Holder shall pay, as incurred, the fees and expenses
        of such separate counsel, but only one such counsel. Notwithstanding the
        two
        preceding sentences, if the action is one in which the Company may be obligated
        to indemnify any Holder of Registrable Shares pursuant to Section 2.3, the
        Company shall have the right to assume the defense of such action, subject
        to
        the right of such Holders to participate therein as permitted by Section
        2.3.
        Such Holder shall not be liable to indemnify any person for any settlement
        of
        any such action effected without such Holder’s consent (which consent shall not
        be unreasonably withheld). Such Holder shall not, except with the approval
        of
        the Company (which approval shall not be unreasonably withheld), consent
        to
        entry of any judgment or enter into any settlement that does not include
        as an
        unconditional term thereof the giving by the claimant or plaintiff to the
        party
        being so indemnified of a release from all liability in respect to such claim
        or
        litigation.

       

      2.4  
Contribution.
        If the
        indemnification provided for in Section 2.3 is held by a court of competent
        jurisdiction to be unavailable to an indemnified party with respect to any
        loss,
        liability, claim, damage, or expense referred to therein, then the indemnifying
        party, in lieu of indemnifying such indemnified party hereunder, shall
        contribute to the amount paid or payable by such indemnified party as a result
        of such loss, liability, claim, damage, or expense in such proportion as
        is
        appropriate to reflect the relative fault of the indemnifying party on the
        one
        hand and of the indemnified party on the other in connection with the statements
        or omissions that resulted in such loss, liability, claim, damage, or expense
        as
        well as any other relevant equitable considerations. The relative fault of
        the
        indemnifying party and of the indemnified party shall be determined by reference
        to, among other things, whether the untrue or alleged untrue statement of
        a
        material fact or the omission to state a material fact relates to information
        supplied by the indemnifying party or by the indemnified party and the parties’
relative intent, knowledge, access to information, and opportunity to correct
        or
        prevent such statement or omission.

       

      
        
           

        

        
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      2.5  
Exchange
        Act Registration.
        With a
        view to making available to the Holders the benefits of Rule 144 promulgated
        under the Act and any other rule or regulation of the SEC that may at any
        time
        permit a Holder to sell securities of the Company to the public without
        registration or pursuant to a registration on Form S-3, the Company agrees,
        unless and until a decision to the contrary is made by the Board of Directors
        in
        the exercise of its business judgment, to:

       

      (a)  
file
        on a
        timely basis with the Securities and Exchange Commission all information
        that
        the Commission may require under either of Section 13 or Section 15(d) of
        the
        Exchange Act and, so long as it is required to file such information, take
        all
        action that may be required as a condition to the availability of Rule 144
        under
        the Securities Act (or any successor exemptive rule hereinafter in effect)
        with
        respect to the Company’s Common Stock; and

       

      (b)  
furnish
        to any Holder forthwith upon request (i) a written statement by the Company
        as
        to its compliance with the reporting requirements of Rule 144, (ii) a copy
        of
        the most recent annual or quarterly report of the Company as filed with the
        Securities and Exchange Commission, and (iii) any other reports and documents
        that a Holder may reasonably request in availing itself of any rule or
        regulation of the SEC allowing a Holder to sell any such Registrable Shares
        without registration.

       

      2.6  
Further
        Obligations of the Company.
        Whenever the Company is required hereunder to register Registrable Shares,
        it
        agrees that it shall also do the following:

       

      (a)  
Furnish
        to each selling Holder such copies of each preliminary and final prospectus
        and
        any other documents that such Holder may reasonably request to facilitate
        the
        public offering of its Registrable Shares;

       

      (b)  
Use
        its
        best efforts to register or qualify the Registrable Shares to be registered
        pursuant to this Agreement under the applicable securities or “blue sky” laws of
        such jurisdictions as any selling Holder may reasonably request and keep
        such
        registration or qualification effective during the period set forth in Section
        2.2(a) above; provided, however, that the Company shall not be obligated
        to
        qualify to do business in any jurisdiction where it is not then so qualified
        or
        to take any action that would subject it to the service of process in suits
        other than those arising out of the offer or sale of the securities covered
        by
        the registration statement in any jurisdiction where it is not then so
        subject;

       

      (c)  
Notify
        each Holder of Registrable Shares covered by such registration statement
        at any
        time when a prospectus relating thereto is required to be delivered under
        the
        Act of the happening of any event as a result of which the prospectus included
        in such registration statement, as then in effect, includes an untrue statement
        of a material fact or omits to state a material fact required to be stated
        therein or necessary to make the statements therein not misleading in the
        light
        of the circumstances then existing;

       

      (d)  
Cause
        all
        such Registrable Shares registered pursuant hereunder to be listed on each
        securities exchange on which similar securities issued by the Company are
        then
        listed;

       

      (e)  
Provide
        a
        transfer agent and registrar for all Registrable Shares registered pursuant
        hereunder and a CUSIP number for all such Registrable Shares, in each case
        not
        later than the effective date of such registration;

       

      
        
           

        

        
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      (f)  
In
        the
        event of any underwritten public offering, enter into and perform its
        obligations under an underwriting agreement and other customary agreements,
        in
        usual and customary form, with the managing underwriter of such offering.
        Each
        Holder participating in such underwriting shall also enter into and perform
        its
        obligations under such an agreement;

       

      (g)  
Furnish,
        at the request of any Holder requesting registration of Registrable Shares
        pursuant to this Section 2, on the date that such Registrable Shares are
        delivered to the underwriters for sale in connection with a registration
        pursuant to this Section 2, if such securities are being sold through
        underwriters, or, if such securities are not being sold through underwriters,
        on
        the date that the registration statement with respect to such securities
        becomes
        effective:

       

      (i)  
at
        the
        request of any Holder, to furnish on the effective date of the Registration
        Statement or, if the offering is underwritten, on the date that Registrable
        Shares are delivered to the underwriters for sale, an opinion of counsel,
        dated
        such date, representing the Company for the purposes of such registration,
        addressed to the underwriters and to such Holder, stating that such registration
        statement has become effective under the Securities Act and that (i) to the
        best
        knowledge of such counsel, no stop order suspending the effectiveness thereof
        has been issued and no proceedings for that purpose have been instituted
        or are
        pending or contemplated under the Securities Act, (ii) the registration
        statement, the related prospectus and each amendment or supplement thereof
        comply as to form in all material respects with the requirements of the
        Securities Act (except that such counsel need not express any opinion as
        to
        financial statements or other financial data contained therein), and (iii)
        such
        other opinions as reasonably may be requested by counsel for the underwriters
        or
        by such Holder or its counsel;

       

      (ii)  
“comfort”
        letters signed by the Company’s independent public accountants who have examined
        and reported on the Company’s financial statements included in the registration
        statement, to the extent permitted by the standards of the American Institute
        of
        Certified Public Accountants, covering substantially the same matters with
        respect to the registration statement (and the prospectus included therein)
        and
        (in the case of the accountants’ “comfort” letters) with respect to events
        subsequent to the date of the financial statements, as are customarily covered
        in opinions of issuer’s counsel and in accountants’ “comfort” letters delivered
        to the underwriters in underwritten public offerings of securities, but only
        if
        and to the extent that the Company is required to deliver or cause the delivery
        of such opinion or “comfort” letters to the underwriters in an underwritten
        public offering of securities;

       

      (h)  
Make
        available for inspection by any seller of Registrable Shares, any underwriter
        participating in any disposition pursuant to such registration statement,
        and
        any attorney, accountant or other agent retained by any such seller or
        underwriter, all financial and other records, pertinent corporate documents
        and
        properties of the Company, and cause the Company’s officers, directors,
        employees and independent accountants to supply all information reasonably
        requested by any such seller, underwriter, attorney, accountant or agent
        in
        connection with such registration statement;

       

      (i)
          
        Furnish
        to each selling Holder, upon request, a copy of all documents filed and all
        correspondence from or to the Securities and Exchange Commission in connection
        with any such offering unless confidential treatment of such information
        has
        been requested of the Securities and Exchange Commission;

       

      (j)
          
        Keep
        such
        registration continuously effective for the period of time specified in Section
        2.2(a) above;

       

      (k)  
promptly
        prepare and file with the SEC such amendments and supplements to such
        registration statement and the prospectus used in connection therewith as
        may be
        necessary to comply with the provisions of the Securities Act, and to keep
        such
        registration statement effective for that period of time specified in Section
        2.2(a) above;

       

      
        
           

        

        
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      (l)  
use
        best
        efforts to obtain the withdrawal of any order suspending the effectiveness
        of a
        registration statement, or the lifting of any suspension of the qualification
        of
        any of the Registrable Shares for sale in any jurisdiction, at the earliest
        possible moment; and

       

      (m)  
Take
        such
        other actions as shall be reasonably requested by any Holder.

       

      2.7  
Expenses.
        In the
        case of a registration under Section 2.1 the Company shall bear all costs
        and
        expenses of each such registration, including, but not limited to, printing,
        legal and accounting expenses, Securities and Exchange Commission filing
        fees
        and “blue sky” fees and expenses; provided, however, that the Company shall have
        no obligation to pay or otherwise bear (i) any portion of the fees or
        disbursements of more than one counsel for the Holders in connection with
        the
        registration of their Registrable Shares, which in no event shall exceed
        $25,000, (ii) any portion of the underwriter’s commissions or discounts
        attributable to the Registrable Shares being offered and sold by the Holders
        of
        Registrable Shares, or (iii) any of such expenses if the payment of such
        expenses by the Company is prohibited by the laws of a state in which such
        offering is qualified and only to the extent so prohibited.

       

      2.8  
Transfer
        of Registration Rights.
        The
        registration rights of a Holder of Registrable Shares under this Agreement
        may
        be transferred as set forth below provided (1) the transferee is bound by
        the
        terms of this Agreement and (2) the Company is given written notice prior
        to
        such transfer. Accordingly, the registration rights of a Holder of Registrable
        Shares may be transferred (i) to any partner or affiliate of a Holder, (ii)
        in
        the case of an individual, to any member of the immediate family of such
        individual or to any trust for the benefit of the individual or any such
        family
        member or members, or (iii) to any other transferee which receives at least
        50%
        of the Registrable Shares held by the transferror. Notwithstanding the
        foregoing, the registration rights of a Holder under this Agreement may not
        be
        transferred to an entity, or a person controlled by, under common control
        with
        or controlling such entity, which is a direct competitor of the
        Company.

       

      2.9  
Market
        Stand-Off Agreement.
        Provided that all Holders are treated equally and all officers and directors
        of
        the Company are also so bound, no Holder shall, to the extent requested by
        any
        managing underwriter of the Company, sell or otherwise transfer or dispose
        of
        (other than to donees who agree to be similarly bound) any Registrable Shares
        during a period (the “Stand-Off Period”) not to exceed 180 days following the
        effective date of a registration statement of any secondary offering of the
        Company under the Securities Act, (or in each case such shorter period as
        the
        Company or managing underwriter may authorize), and except in each case,
        for
        securities sold as part of the offering covered by such registration statement
        in accordance with the provisions of this Agreement. In order to enforce
        the
        foregoing covenant, the Company may impose stock transfer restrictions with
        respect to the Registrable Shares of each Holder until the end of the Stand-Off
        Period; provided, that (a) the Holders shall not be subject to this provision
        unless each officer, director and each person then owning greater than one
        percent (1%) of the outstanding Common Stock (on a fully diluted basis) has
        executed and remains bound by a comparable obligation; and (b) nothing herein
        shall prevent any Holder from making a distribution of Registrable Shares
        to an
        affiliate of such Holder that is otherwise in compliance with applicable
        securities laws, so long as such distributee agrees to be so bound.

       

      Notwithstanding
        the foregoing, the obligations described in this Section 2.9 shall not apply
        to
        a registration relating solely to employee benefit plans on Form S-1 or Form
        S-8
        or similar forms which may be promulgated in the future, or a registration
        relating solely to an SEC Rule 145 transaction on Form S-4 or similar forms
        which may be promulgated in the future.

       

      2.10  
Termination
        of Registration Rights.
        The
        obligations of the Company to register any Holder’s Registrable Shares pursuant
        to this Section 2 shall terminate at such time as all of a Holder’s Registrable
        Shares may immediately be sold under Rule 144 during any ninety (90) day
        period,
        free of any lock-up or market stand-off restrictions.

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      3.  
Assignability.
        This
        Agreement shall be binding upon and inure to the benefit of the respective
        heirs, successors and assigns of the parties hereto.

       

      4.  
Law.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of California.

       

      5.  
Amendment.
        Any
        modification, amendment, or waiver of this Agreement or any provision hereof,
        either retroactively or prospectively, shall be in writing and executed by
        the
        Company and the holders of not less than fifty percent (50%) of the Registrable
        Shares which shall be binding upon all of the parties hereto.

       

      6.  
Counterparts.
        This
        Agreement may be executed in any number of counterparts and via facsimile,
        each
        of which shall be an original, but all of which together shall constitute
        one
        instrument.

       

      7.  
Notice.
        Any
        notices and other communications required or permitted under this Agreement
        shall be effective if in writing and delivered personally or sent by telecopier,
        federal express or registered or certified mail, postage prepaid, addressed
        as
        follows:

       

      
        	
                If
                  to the Purchasers, to:

              	
                The
                  names and addresses set forth in the signature block or on Exhibit
                  A

              
	 	 
	
                with
                  a copy to:

              	
                James
                  E. McCormick III, Esq.

                Allen
                  Matkins Leck Gamble Mallory & Natsis LLP

                1900
                  Main Street, 5th Floor

                Irvine,
                  California 92614-7321

                Facsimile:
                  (949) 553-8354

                Email:
                  kmccormick@allenmatkins.com

              
	 	 
	
                If
                  to the Company, to:

              	
                Small
                  World Kids, Inc.

                5711
                  Buckingham Parkway

                Culver
                  City, California 90230

                Facsimile:
                  (310) 252-1195

              
	 	 
	
                with
                  a copy to:

              	
                David
                  L. Ficksman, Esq.

                Troy
                  & Gould Professional Corporation

                1801
                  Century Park East, 16th Floor

                Los
                  Angeles, California 90067

              

      

      

      Unless
        otherwise specified herein, such notices or other communications shall be
        deemed
        effective (a) on the date delivered, if delivered personally, (b) two business
        days after being sent, if sent by Federal Express, (c) one business day after
        being sent, if sent by telecopier with confirmation of good transmission
        and
        receipt, and (d) three business days after being sent, if sent by registered
        or
        certified mail. Each of the parties herewith shall be entitled to specify
        another address by giving notice as aforesaid to each of the other parties
        hereto.

       

      IN
        WITNESS WHEREOF, the Company has caused this First Amended and Restated
        Registration Rights Agreement to be executed by its authorized officer as
        of the
        date first above written.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      
        	 	
                SMALL
                  WORLD KIDS, INC.

                 

              
	 	
                By:                                                                                               

                Name:
                  Debra Fine

                Title:
                  Chief Executive Officer

                 

              

      

      

      Each
        of
        the undersigned Purchasers has caused this counterpart signature page to
        the
        First Amended and Restated Registration Rights Agreement with Small World
        Kids,
        Inc., a Nevada corporation, to be signed by its authorized officer or person
        as
        of the date first above written.

       

      
        	
                PURCHASERS:

              	 
	 	
                HONG
                  KONG LEAGUE CENTRAL CREDIT UNION

                 

              
	 	
                By:              
                             

                Name:            
                        
                  

                Title:           
                  

              
	 	 
	 	
                Address:

                c/o
                  SBI Advisors, LLC

                610
                  Newport Center Drive, Suite 1205

                Newport
                  Beach, California 92660

                Attention:
                  Shelly Singhal

                Fax
                  Number: 949-679-7280

              
	 	 
	 	
                SBI
                  ADVISORS, LLC

              
	 	 
	 	
                
                  By:              
                               

                  Name:   
                                     
                    

                  Title:           
                    

                

              
	 	 
	 	
                Address:

                610
                  Newport Center Drive, Suite 1205

                Newport
                  Beach, California 92660

                Attention:
                  Shelly Singhal

                Fax
                  Number: 949-679-7280

              
	 	 
	 	
                KERSHAW
                  MACKIE & COMPANY

              
	 	 
	 	
                
                  By:                          

                

                Name: David
                  Kershaw

                Title: Sole
                  Proprietor

              
	 	 
	 	
                Address:

                2405
                  S. Broadway

                Santa
                  Ana, California

                Attention:
                  David S. Kershaw

                Fax
                  Number: (949) 709-1842

              

      

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      The
        undersigned Purchaser has caused this counterpart signature page to the First
        Amended and Restated Registration Rights Agreement with Small World Kids,
        Inc.,
        a Nevada corporation, to be signed by its authorized officer or person as
        of the
        date first above written.

       

      
        	 	 
	 	
                
                  By:              
                               

                  Name:    
                                    
                    

                  Title:           
                    

                

                Address:

                 

                                                                                                
                  

                                                                                                
                  

              
	 	
                Attention:                                                                                        
                  

                Fax
                  Number:
                  (____)                                                                       
                  

              

      

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      EXHIBIT
        A

       

      LIST
        OF PURCHASERS

       

      
        	
                Name
                  of Purchaser

              	 	
                Face
                  Amount of Notes

              	 	
                Initial
                  Number of

                Shares
                  Subject of 

                Warrants

              	 
	
                Hong
                  Kong League Central Credit Union

              	 	
                $

              	
                302,500

              	 	 	
                --

              	 
	
                Kershaw/Mackie
                  & Company

              	 	
                $

              	
                27,500

              	 	 	
                12,500

              	 
	
                SBI
                  Advisors, LLC

              	 	 	
                --

              	 	 	
                137,500

              	 
	
                SBI
                  Ventures, LLC

              	 	
                $

              	
                166,667

              	 	 	
                83,333

              	 
	
                Dennis
                  L. Pelino

              	 	
                $

              	
                111,111

              	 	 	
                55,555

              	 
	
                C.E.
                  Unterberg, TowbinCapital Partners I, L.P.

              	 	
                $

              	
                111,111

              	 	 	
                55,555

              	 
	
                Trinad
                  Capital Master Fund Ltd.

              	 	
                $

              	
                277,777

              	 	 	
                138,885

              	 
	
                Fine
                  Family Trust

              	 	
                $

              	
                111,111

              	 	 	
                55,555

              	 
	
                David
                  Marshall, Inc.

              	 	
                $

              	
                111,111

              	 	 	
                55,555

              	 
	
                The
                  Levy Family Trust of 1997

              	 	
                $

              	
                111,111

              	 	 	
                55,555

              	 
	
                George
                  Karfunkel

              	 	
                $

              	
                111,111

              	 	 	
                55,555

              	 
	
                Yehuda
                  Neuberger

              	 	
                $

              	
                111,111

              	 	 	
                55,555EXHIBIT
      10.3

     

    AMENDED
      AND RESTATED INTERCREDITOR AND SUBORDINATION AGREEMENT

     

    THIS
      AMENDED AND RESTATED INTERCREDITOR AND SUBORDINATION
      AGREEMENT
      is
      entered into as of _____________, 2007, among ST. CLOUD CAPITAL PARTNERS, L.P.
      (“Senior
      Creditor”),
      and
      the subordinated creditors executing this Agreement (each hereinafter referred
      to as a “Subordinated
      Creditor”
and
      collectively, as the “Subordinated
      Creditors”),
      and
      SBI Advisors, LLC, a California limited liability company, in its capacity
      as
      administrative agent for the Original Subordinated Creditors (“Administrative
      Agent”),
      in
      light of the following:

     

    R
      E C I T A L S

     

    A. 
This
      Agreement amends and restates the Intercreditor and Subordination Agreement
      entered into as of February __, 2007, effective as of November 6, 2006, among
      (i) Senior Creditor, (ii) Hong Kong League Central Credit Union, a Hong Kong
      credit union (“HKLCCU”), (iii) Kershaw/Mackie & Company, a sole
      proprietorship (“KM&C”) (HKLCCU and KM&C are hereafter referred to as
      the “Original
      Subordinated Creditors.”
For
      purposes hereof, the term “New
      Subordinated Creditors”
means
      and refers to those Subordinated Creditors other than the Original Subordinated
      Creditors.

     

    B. 
Senior
      Creditor and SMALL WORLD KIDS, INC., a Nevada corporation (“Debtor”),
      have
      entered into that certain Note Purchase Agreement dated as of September 7,
      2004
      (as amended and modified by (i) that certain Amendment to Note Purchase
      Agreement dated as of July 20, 2005, (ii) that certain Second Amendment Note
      Purchase Agreement dated as of November 9, 2005, and (iii) that certain Third
      Amendment to Note Purchase Agreement dated as of May 31, 2006) (the
“Note
      Purchase Agreement”).

     

    C. 
Pursuant
      to the Note Purchase Agreement, Senior Creditor made a loan to Debtor in the
      amounts set forth in the Note Purchase Agreement.

     

    D. 
To
      secure
      repayment of the amounts loaned to Debtor and performance of the other
      covenants, agreements and undertakings of Debtor under the Note Purchase
      Agreement, Debtor executed a Commercial Security Agreement pursuant to which
      Debtor granted to Senior Creditor a lien upon and security interest in certain
      “Collateral” as therein defined.

     

    E. 
The
      Original Subordinated Creditors have made loans to Debtor in the principal
      amount of $330,000 and the New Subordinated Creditors intend to make loans
      to
      Debtor in the minimum principal amount of $833,333 and the maximum principal
      amount of $1,333,333 (collectively, the “Subordinated
      Creditor Obligations”),
      and,
      as security for the prompt payment and performance of the Subordinated Creditor
      Obligations, Debtor has granted Subordinated Creditor a lien upon and security
      interest in certain property of Debtor, which property constitutes the
      Collateral.

     

    F. 
Debtor,
      Subordinated Creditors and Administrative Agent have requested that Senior
      Creditor consent to Debtor’s incurrence of the Subordinated Creditor Obligations
      and the grant to Subordinated Creditor of a security interest in property of
      Debtor which comprises the Collateral.

     

    G. 
On
      or
      about September 6, 2006, Debtor and KM&C entered into an agreement (the
“KM&C
      Agreement”)
      pursuant to which KM&C agreed to provide certain services to Debtor in
      consideration for which Debtor agreed to pay certain fees and commissions to
      the
      KM&C as set forth in the KM&C Agreement.

     

    H. 
Senior
      Creditor, Subordinated Creditors, and the Administrative Agent wish to agree
      as
      to the respective rights of Senior Creditor and Subordinated Creditors to
      repayment by, and rights to, liens upon and security interests in the assets
      of
      Debtor, and as to certain other rights, priorities, and interests as between
      Senior Creditor and Subordinated Creditor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    A
      G R E E M E N T

     

    In
      consideration of the foregoing, the mutual covenants contained herein, and
      for
      other good and valuable considerations, the receipt of which Senior Creditor
      and
      Subordinated Creditors hereby acknowledge, Senior Creditor, Subordinated
      Creditors and the Administrative Agent hereby agree as follows:

     

    1.   
      Definitions.
      The
      following terms, as used in this Agreement, shall have the following
      meanings:

     

    “Agreement”
means
      this Amended and Restated Intercreditor and Subordination Agreement together
      with any and all amendments, extensions, modifications, riders, addenda,
      exhibits, and schedules hereto.

     

    “Bankruptcy
      Case”
means
      any proceeding commenced by or against Debtor, under any provision of the
      Bankruptcy Code or under any other federal or state bankruptcy or insolvency
      law, including assignments for the benefit of creditors, the appointment of
      a
      receiver, formal or informal moratoria, compositions, extensions generally
      with
      its creditors, or proceedings seeking reorganization, arrangement, liquidation,
      dissolution, or the winding up of Debtor, or other similar relief, and all
      converted or succeeding cases in respect thereof.

     

    “Bankruptcy
      Code”
means
      the United States Bankruptcy Code (11 U.S.C. Section 101, et seq.) as amended,
      and any successor statute.

     

    “Collateral”
means
      all of Debtor’s presently existing and hereafter acquired personal property as
      described in the Commercial Security Agreement between Senior Creditor and
      Debtor.

     

    “Enforcement
      Action”
means
      any action by Subordinated Creditors or the Administrative Agent to enforce
      payment or performance by Debtor of any of its Subordinated Creditor Obligations
      or Subordinated Creditor Agreements, including, but not limited to, any of
      the
      following: (a) acceleration of the maturity of Subordinated Creditor
      Obligations; (b) commencement of, prosecution of, or participation in any
      lawsuit, action or proceeding, whether private, judicial, equitable,
      administrative, or otherwise (including the commencement or joining with any
      other creditors in the commencement of any Bankruptcy Case) against Debtor;
      (c)
      exercise of any right of setoff for the collection of any amounts due in respect
      of the Subordinated Creditor Obligations; (d) exercise of any Security Creditor
      Remedy; or (e) in the event of a Bankruptcy Case: (i) prosecuting a motion
      for
      relief from the automatic stay to exercise an Enforcement Action; (ii) objecting
      to Senior Creditor’s motion for relief from the automatic stay to foreclose on
      and sell any of the Collateral; (iii) seeking to provide debtor-in-possession
      loans or advances to Debtor wherein Senior Creditor’s liens would be
      subordinated in priority; (iv) seeking or acquiesce in any request to convert
      the Bankruptcy Case under chapter 11 of Title 11 of the Bankruptcy Code to
      a
      case under chapter 7 of Title 11 of the Bankruptcy Code; (v) seeking the
      appointment of a trustee or examiner with expanded powers for Debtor or any
      of
      its subsidiaries or affiliates, if any; (vi) opposing the confirmation of
      Debtor’s plan of reorganization if such action might adversely affect Debtor’s
      business or Debtor’s ability to repay the Senior Creditor Obligations.
      Notwithstanding the foregoing, none of the following shall constitute an
“Enforcement Action” for purposes of this Agreement: (x) the delivery of any
      notice of default or other notice to Debtor pursuant to or in connection with
      the Subordinated Creditor Agreements, (y) the acceleration of the Subordinated
      Creditor Obligations if Senior Creditor has already notified Subordinated
      Creditors and Debtor in writing that it has accelerated the Senior Creditor
      Obligations and has not rescinded such notice in writing, (z) the filing by
      Subordinated Creditors of a proof of claim in a Bankruptcy Case, which proof
      of
      claim indicates Subordinated Creditors’ subordination hereunder.

     

    “Secured
      Creditor”
means
      either of Senior Creditor or Subordinated Creditors, or any successor or
      assignee of any of them, in its capacity as a secured creditor under the Senior
      Creditor Agreements or the Subordinated Creditor Agreements,
      respectively.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Secured
      Creditor Remedies”
means
      any action by a Secured Creditor in furtherance of the sale, foreclosure,
      realization upon, or the repossession or liquidation of any of the Collateral,
      including without limitation, (i) the exercise of any remedies or rights of
      a
“Secured Creditor” under Division 9 of the UCC, such as, without limitation, the
      notification of account debtors; (ii) the exercise of any remedies available
      to
      a judgment creditor; or (iii) any other remedy available in respect of the
      Collateral available to such Secured Creditor under the Senior Creditor
      Agreements or the Subordinated Creditor Agreements, as the case may
      be.

     

    “Senior
      Creditor Agreements”
means,
      collectively, the Note Purchase Agreement, the Commercial Security Agreement
      and
      any other document, instrument, or agreement entered into by or in favor of
      Senior Creditor and Debtor in connection with the Senior Creditor Obligations
      and the Collateral, together with any amendments, replacements, substitutions,
      or restatements thereof.

     

    “Senior
      Creditor Obligations”
means
      any and all presently existing or hereafter arising indebtedness, claims, debts,
      liabilities, and obligations of Debtor owing to Senior Creditor under the Senior
      Creditor Agreements (including but not limited to debtor-in-possession loans
      or
      advances, any obligation to make adequate protection payments relative to
      proceedings involving the use of cash collateral or motions for relief from
      the
      automatic stay in a Bankruptcy Case, or otherwise, whether direct or indirect,
      contingent or of any other nature, character, or description, including all
      interest accruing after commencement of any case, proceeding, or other action
      relating to the bankruptcy, insolvency, or reorganization of Debtor, including
      both amounts and interest that are allowable claims in such proceeding and
      all
      amounts and interest that, but for the provision of the Bankruptcy Code, would
      have accrued and become due).

     

    “Subordinated
      Creditor Agreements”
means,
      collectively, any other document, instrument, or agreement now existing or
      in
      the future entered into by or in favor of Subordinated Creditors and Debtor
      in
      connection with the Subordinated Creditor Obligations or the Collateral,
      together with any amendments, replacements, substitutes, or restatements
      thereof.

     

    “Subordinated
      Creditor Obligations”
means
      any and all presently existing or hereafter arising indebtedness, claims, debts,
      liabilities, and obligations of Debtor owing to Subordinated Creditor under
      the
      Subordinated Creditor Agreements, or otherwise, whether direct or indirect,
      whether contingent or of any other nature, character, or description (including
      all interest accruing after commencement of any case, proceeding, or other
      action relating to the bankruptcy, insolvency, or reorganization of Debtor
      to
      the extent such interest is an allowable claim in any such
      proceedings).

     

    “UCC”
means
      the Uniform Commercial Code as adopted in the State of California, or in such
      other jurisdiction as governs the perfection of the liens and security interests
      in the Collateral for the purposes of the provisions hereof relating to such
      perfection or effect of perfection.

     

    2.   
      Subordination
      and Standstill.

     

    (a)  
Indebtedness.
      Subordinated Creditors hereby subordinate any and all Subordinated Creditor
      Obligations to the Senior Creditor Obligations. Except as provided in
Section
      2(b) and 2(c)
      hereof,
      until the Senior Creditor Obligations has been indefeasibly paid in full, in
      cash, and the Senior Creditor Agreements have been irrevocably terminated,
      Subordinated Creditors and the Administrative Agent shall not accept or receive,
      by payment, setoff, or in any other manner, from Debtor or any other obligor
      under the Subordinated Creditor Obligations, the whole or any part of any sums,
      however such payments are characterized or denominated, including but not
      limited to payment of or for adequate protection in a Bankruptcy Case, which
      may
      now or hereafter be owing to Subordinated Creditors on account of the
      Subordinated Creditor Obligations. In the event that, notwithstanding the
      foregoing, Debtor shall make any payment to Subordinated Creditors prohibited
      by
      the foregoing provisions of this Section
      2(a),
      then
      and in such event such payment shall be segregated by Subordinated Creditors
      and
      held in trust for the benefit of and immediately shall be paid over to Senior
      Creditor (in the same form received, with all necessary endorsements) for
      application against the Senior Creditor Obligations remaining unpaid until
      the
      Senior Creditor Obligations is indefeasibly paid in full, in cash, and the
      Senior Creditor Agreements have been irrevocably terminated. Notwithstanding
      any
      provision of this Agreement to the contrary, so long as the Senior Creditor
      Obligations have not been indefeasibly paid in full, Subordinated Creditors
      may
      accrue, but not accept or retain, default interest on or with respect to the
      Subordinated Creditor Obligations in the event of any default
      thereunder.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b)   
      Payment
      of Interest and Legal Fees on Creditor Obligations.
      Notwithstanding any other provision of this Agreement, so long as no event
      of
      default has occurred in respect of the Senior Creditor Obligations, Debtor
      may
      pay to Subordinated Creditors, and Subordinated Creditors may accept from Debtor
      and retain, (i) monthly payments of contract rate (and not default rate)
      interest on account of the Subordinated Creditor Obligations, and (ii)
      reimbursement of legal fees and costs incurred or to be incurred with respect
      to
      the negotiation and execution of, and as permitted under, the Subordinated
      Creditor Agreements.

     

    (c)   
      Exclusion
      for Payments under the KM&C Agreement.
      Notwithstanding any other provision of this Agreement, Debtor may make, and
      KM&C may receive, payments in accordance with the terms of the KM&C
      Agreement for services rendered by KM&C to Debtor in accordance therewith
      The term of the KM&C Agreement may, upon prior notice to Senior Creditor, be
      extended at any time or from time to time; provided, however, that any such
      extension or extensions, shall not, in the aggregate, operate to extend the
      term
      of the KM&C Agreement for a date more than one (1) year, and, further,
      provided, that such payment, and the frequency thereof, shall be limited to
      the
      amounts presently set forth in the KM&C Agreement without amendment,
      revision or modification thereof. During the term of the KM&C Agreement, and
      any extension thereof, KM&C shall provide copies of all billings to
      Debtor.

     

    (d)   
      Enforcement.
      Until
      the Senior Creditor Obligations has been indefeasibly paid in full, in cash,
      and
      the Senior Creditor Agreements have been irrevocably terminated, Subordinated
      Creditors and the Administrative Agent shall not (i) commence, prosecute, or
      participate in any Enforcement Action, (ii) sell, assign, exchange, redeem,
      transfer, pledge, or grant a security interest in the Subordinated Creditor
      Obligations other than to pursuant to a transaction in which the buyer,
      assignee, transferee, pledgee or secured party acknowledges in writing and
      takes
      subject to this Agreement, (iii) incur any obligation to, or receive any loans,
      advances, or gifts from, Debtor except as permitted in Sections 2(b) and (c)
      hereof, or (iv) commence, prosecute, or participate in any action or proceeding
      that in Senior Creditor’s sole judgment might adversely affect Debtor’s business
      or Debtor’s ability to repay the Senior Creditor Obligations.

     

    (e)  
Guaranties.
      In the
      event Subordinated Creditors or the Administrative Agent acquire any guaranty
      with respect to the Subordinated Creditor Obligations, whether secured or
      unsecured, from any affiliate of Debtor, Subordinated Creditors and the
      Administrative Agent agree that all rights with respect to such guaranty
      (including any collateral therefor) shall at all times be junior, subordinate,
      and subject to the rights of Senior Creditor with respect to any guaranties
      (including any collateral therefor) Senior Creditor may receive from such
      affiliates with respect to the Senior Creditor Obligations.

     

    3.  
Permitted
      Liens and Relative Priorities.
      As
      between the Secured Creditors, notwithstanding: 

     

    (a)  
the
      terms
      (including the description of collateral), dating, execution, or delivery of
      any
      document, instrument, or agreement, the time, order, occurrence, method, or
      manner of granting, or perfection of any security interest or lien, the time
      of
      filing or recording of any financing statements, assignments, deeds of trust,
      mortgages, or any other documents, instruments, or agreements under the UCC
      or
      any other applicable law; 

     

    (b)  
the
      existence of (or the order in which any Secured Creditor becomes a party to
      or a
      beneficiary of) any collateral agency arrangement with any party other than
      a
      Secured Creditor, or the appointment of such other party as a collateral agent
      to perfect the Secured Creditors’ liens and security interests, in all or any
      part of the Collateral; 

     

    (c) 
 the
      existence of any control agreement in favor of any Secured Creditor; or

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d) 
 whether
      the Subordinated Creditor Obligations or the liens or security interests
      securing the Senior Creditor Obligations, are held to be unperfected, deficient,
      invalid, void, voidable, voided, unenforceable, subordinated, reduced, or
      discharged, or are set aside by a court of competent jurisdiction, including,
      without limitation, pursuant to any Bankruptcy Case; 

     

    (e)  
any
      provision of the UCC or any other applicable statute, rule, laws, or court
      decision to the contrary, the Secured Creditors agree that, as to the Collateral
      of Debtor:

     

    (i)  
Senior
      Creditor shall have a security interest in and lien on the Collateral to secure
      the Senior Creditor Obligations which is prior to any security interest in
      and
      lien on the Collateral of the Subordinated Creditors; and

     

    (ii) 
 Subordinated
      Creditors shall have a security interest in and lien on the Collateral to secure
      the Subordinated Creditor Obligations which is junior and subordinate to the
      lien and security interest therein of Senior Creditor.

     

    For
      purposes of the foregoing allocation of priorities, any claim or a right to
      a
      set-off shall be treated in all respects as a security interest, and no claimed
      right of set-off shall be asserted to defeat or diminish the rights or
      priorities provided for herein.

     

    4.  
No
      Alteration of Priority.
      The
      lien and security interest priorities provided in Section 3 shall not be altered
      or otherwise affected by any amendment, modification, supplement, extension,
      renewal, restatement, or refinancing of any of the Secured Creditor Obligations,
      nor by any action or inaction which either Secured Creditor may take or fail
      to
      take in respect of the Collateral, or otherwise. Each Secured Creditor consents
      to Debtor’s granting to each other Secured Creditor the liens and security
      interests reflected in Section
      3.
      Subordinated Creditor agrees that it will not directly or indirectly take any
      action to contest or challenge the validity, legality, perfection, priority,
      avoidability, or enforceability of the liens or security interests of Senior
      Creditor upon the Collateral or seek to have the same avoided, disallowed,
      set
      aside, or otherwise invalidated in any judicial proceeding or
      otherwise.

     

    5. 
 Perfection.
      Subordinated Creditors shall be solely responsible for perfecting and
      maintaining the perfection of their lien or security interest in any of the
      Collateral.

     

    6. 
 Management
      of Collateral.
      Notwithstanding anything to the contrary contained in any of the Senior Creditor
      Agreements or the Subordinated Creditor Agreements, until the Senior Creditor
      Obligations has been indefeasibly paid in full, in cash, and the Senior Creditor
      Agreements have been irrevocably terminated: (i) Senior Creditor shall have
      the
      exclusive right to manage the Collateral, including the exclusive right to
      perform and enforce the terms of the Senior Creditor Agreements with respect
      to
      the Collateral and to exercise and enforce all privileges and rights thereunder
      according to Senior Creditor’s reasonable discretion, including, without
      limitation, the exclusive right to enforce or settle insurance claims with
      respect to the Collateral, to pay, compromise, or settle competing claims,
      liens, or security interests affecting the Collateral, to take or retake control
      or possession of the Collateral, and to hold, prepare for sale, sell, lease,
      or
      liquidate the Collateral; (ii) neither Subordinated Creditor nor any party
      acting on its behalf, shall exercise any Secured Creditor Remedies with respect
      to the Collateral; and (iii) any and all Collateral or proceeds thereof which
      shall come into the possession, control, or custody of Subordinated Creditors
      will be deemed to have been received for the account of Senior Creditor and
      shall be immediately delivered or paid, as applicable, over to Senior Creditor.
      In connection with the provisions of clause 6(i) above, Subordinated Creditors
      waive any and all rights to affect the method or challenge the appropriateness
      of any action by any Senior Creditor with respect to the Collateral, and waive
      any claims or defenses it may have against Senior Creditor, including any such
      claims or defenses based on any actions or omissions of any such person, in
      connection with the perfection, maintenance, enforcement, foreclosure, sale,
      liquidation, or release of any lien or security interest therein by Senior
      Creditor, or any modification or waiver of any Senior Creditor Agreements,
      except as provided or limited under this Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    7. 
 Sale
      of Collateral.
      Until
      the Senior Creditor Obligations has been indefeasibly paid in full, in cash,
      and
      the Senior Creditor Agreements have been irrevocably terminated: (i) only Senior
      Creditor shall have the right to restrict or permit, or approve or disapprove,
      the sale or disposition of the Collateral; and (ii) Subordinated Creditor will,
      immediately upon the request of Senior Creditor, release, reconvey, or otherwise
      terminate its liens and security interests upon the Collateral, to the extent
      such Collateral is sold or disposed of by Debtor with the consent of Senior
      Creditor in accordance with the Senior Creditor Agreements, or is sold by or
      on
      behalf of Senior Creditor in connection with the exercise of its Secured
      Creditor Remedies, and Subordinated Creditors will promptly deliver (at Debtor’s
      expense) such release, reconveyance, and termination documents as Senior
      Creditor or any Debtor may reasonably require in connection
      therewith.

     

    8. 
 Insurance.
      In the
      event of the occurrence of a fire or other casualty resulting in damage to
      all
      or any portion of any Collateral (collectively, a “Casualty”):

     

    (a) 
 Subordinated
      Creditors and the Administrative Agent hereby waive any right to participate
      or
      join in any adjustment, compromise, or settlement of any claim resulting from
      a
      Casualty with respect to any Collateral;

     

    (b)  
all
      proceeds received or to be received on account of a Casualty shall be applied
      in
      the manner or manners provided for in the Senior Creditor Agreements;
      and

     

    (c) 
 Subordinated
      Creditor and the Administrative Agent agree to execute and deliver to Senior
      Creditor any documents, instruments, agreements or further assurances reasonably
      required to effectuate any of the foregoing.

     

    9. 
 Bankruptcy
      Issues.

     

    (a) 
 This
      Agreement (including all rights and priorities set forth herein) shall continue
      in full force and effect upon the commencement of a Bankruptcy Case as
      contemplated under Section 510(a) of the Bankruptcy Code (all references herein
      to Debtor being deemed to apply to debtor as a debtor-in-possession and to
      a
      trustee for Debtor’s estate in a Bankruptcy Case), and irrespective of the terms
      of any plan of reorganization adopted therein, and shall apply with full force
      and effect with respect to all Collateral acquired by Debtor, and to all Senior
      Creditor Obligations and Subordinated Creditor Obligations incurred by Debtor,
      subsequent to such commencement. 

     

    (b) 
 If
      Debtor
      shall become subject to a Bankruptcy Case, and if Senior Creditor shall desire
      to permit the use of cash collateral or to provide or consent to any
      post-petition financing to Debtor, Subordinated Creditors and the Administrative
      Agent agree as follows: (i) adequate notice to each Subordinated Creditor and
      the Administrative Agent shall be deemed to have been provided for such use
      of
      cash collateral or post-petition financing if such Subordinated Creditor and
      the
      Administrative Agent receive notice thereof at least one business day prior
      to
      the earlier of (y) any hearing on a request to approve such use of cash
      collateral or post-petition financing or (z) the date of entry of an order
      approving the same; and (ii) no objection will be raised by such Subordinated
      Creditor or the Administrative Agent to any such use of cash collateral or
      such
      post-petition financing on any grounds, including, without limitation, the
      failure to provide adequate protection for the Subordinated Creditor’s junior
      liens and security interests in the Collateral, provided that Senior Creditor
      makes no objection if such Subordinated Creditor seeks to be granted the same
      rights, benefits, and protections as Senior Creditor, including the same liens
      and security interests on the post-petition Collateral, that may be granted
      to
      or for the benefit of Senior Creditor, junior only to the liens or security
      interests of Senior Creditor therein.

     

    (c) 
 If
      Debtor
      shall become subject to a Bankruptcy Case, Subordinated Creditors and the
      Administrative Agent shall not (i) contest or object to any motion on behalf
      of
      any Senior Creditor for relief from the automatic stay in a Bankruptcy Case
      to
      exercise any rights with respect to the Collateral, including without
      limitation, foreclosure on and selling any of the Collateral; (ii) seek to
      provide debtor-in-possession loans or advances to any Debtor wherein Senior
      Creditor’s liens would be subordinated in priority; (iii) oppose the
      confirmation of any Debtor’s plan of reorganization if such action might
      adversely affect such Borrower’s business or ability to repay the Senior Debt;
      (iv) take an action against or vote a claim or right in connection with a plan
      of reorganization in a Bankruptcy Case of Borrower which Secured Creditor
      otherwise supports; or (v) take any other act in connection with any Bankruptcy
      Case that can directly or indirectly negatively affect the Collateral, the
      rights and remedies of Senior Creditor in such proceeds or with respect to
      the
      Collateral, or the exercise of such rights and remedies.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (d)  
In
      the
      event of (i) any Bankruptcy Case, or (ii) any proceedings for voluntary
      liquidation, assignment for the benefit or creditors, dissolution, or other
      winding up of Debtor, then, in each case, (1) all Senior Creditor Obligations
      shall first be paid in full in cash before any payment is made by or on behalf
      of Debtor on the Subordinated Creditor Obligations; (2) any payment or
      distribution of any kind or character (whether in cash, securities, assets,
      by
      set-off, or otherwise), including but not limited to those intended to be for
      adequate protection (irrespective of whether an Event of Default has occurred)
      or as provided for in a plan of reorganization or otherwise, to which
      Subordinated Creditor would be entitled but for the provisions of this
      Agreement, shall be paid or delivered by the person making such payment or
      distribution, whether a trustee in bankruptcy, a receive, a liquidating trustee,
      or otherwise, directly to Senior Creditor to the extent necessary to make
      payment in full in cash of all Senior Creditor Obligations remaining unpaid.
      In
      the event that, notwithstanding the provisions of this Agreement, Subordinated
      Creditor shall have received any payment or distribution of any kind or
      character (whether in cash, securities, assets, by setoff, or otherwise) that
      it
      is not entitled to receive by the foregoing provisions, before all Senior
      Creditor Obligations is paid in full, then and in such event such payment or
      distribution shall be segregated and held in trust for the benefit of and
      immediately shall be paid over to Senior Creditor for application against the
      payment of all Senior Creditor Obligations remaining unpaid until all such
      Senior Creditor Obligations shall have been indefeasibly paid in full, in cash,
      and all obligations of Senior Creditor to extend credit under the Senior
      Creditor Agreements have been irrevocably terminated.

     

    10.  
Notice
      of Default and Certain Events.
      Each
      Subordinated Creditor and the Administrative Agent shall promptly notify Senior
      Creditor in writing of the occurrence of any of the following as applicable
      to
      such Subordinated Creditor: (i) any default or event of default under the
      Subordinated Creditor Agreements; or (ii) the demand for payment of,
      acceleration of, or termination of any Subordinated Creditor
      Obligations.

     

    11.  
Further
      Assurances.

     

    (a)  
Additional
      Documents.
      Subordinated Creditors and the Administrative Agent agree to execute and
      deliver, upon the request of Senior Creditor, such documents and instruments
      (appropriate for filing, if requested) as may be necessary or appropriate to
      fully implement or to fully evidence the understandings and agreements contained
      in this Agreement. Without limiting the foregoing, in the event that all or
      part
      of any of the Senior Creditor Obligations is hereafter refinanced, Subordinated
      Creditor and the Administrative Agent agree to enter into one or more new
      agreements with the refinancing lender or lenders on terms identical to those
      of
      this Agreement.

     

    (b)  
Attorney
      in Fact.
      Senior
      Creditor is hereby irrevocably constituted and appointed the attorney-in-fact
      of
      Subordinated Creditor on the Subordinated Creditor Obligations and to take
      all
      other action either in Senior Creditor’s name or in the name of Subordinated
      Creditors, which in Senior Creditor’s opinion is necessary or desirable to
      enable Senior Creditor to obtain all payments on the Subordinated Creditor
      Obligations(other than payments permitted to be paid to and accepted and
      retained by the Subordinated Creditors as provided in Sections 2(b) and 2(c)
      hereof) that are to be turned over to Senior Creditor pursuant to this
      Agreement, including, in the event of a Bankruptcy Case: (i) filing a proof
      of
      claim, or any other document required under the Bankruptcy Code, in such
      Bankruptcy Case; and (ii) voting any or all of Subordinated Creditors’ claims in
      such Bankruptcy Case; provided however, that in either case, such power shall
      only be exercised if Subordinated Creditor does not file a proper proof of
      claim
      or other document or vote its claim in the Bankruptcy Case, prior to 15 days
      before the expiration of time to file such claim or other document or to vote
      such claim, and in no event shall Senior Creditor be obligated to file such
      claim or document or vote such claim.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    12.  
Representations;
      Warranties.
      Subordinated Creditor and the Administrative Agent represent and warrant to
      Senior Creditor that: (a) Subordinated Creditor and the Administrative Agent
      are
      currently informed of the financial condition of Debtor and of all other
      circumstances which a diligent inquiry would reveal and which bear upon the
      risk
      of nonpayment of the Senior Creditor Obligations; and that Subordinated Creditor
      and the Administrative Agent will continue to keep informed of Debtor’s
      financial condition and of all other circumstances which bear upon the risk
      of
      nonpayment of nonperformance of the Senior Creditor Obligations; (b) they have
      full right, power, and authority to enter into this Agreement and shall fully
      bind all such other parties; and (c) as of the date of this Agreement, the
      outstanding balance of the Subordinated Creditor Obligations is
      $_____________.

     

    13.  
Modification
      of Senior Creditor Obligations.
      Subordinated Creditors and the Administrative Agent agree that Senior Creditor
      shall have absolute power and discretion, without notice to Subordinated
      Creditors or to the Administrative Agent, to deal in any manner with the Senior
      Creditor Obligations, including, but not by way of limitation, the power and
      discretion to do any of the following: (a) any demand for payment of any Senior
      Creditor Obligations may be rescinded in whole or in part, and any Subordinated
      Creditor Obligations may be continued, and the Senior Creditor Obligations
      or
      the liability of Debtor upon or for any part thereof, or any Collateral or
      guaranty therefor, or right of offset with respect thereto, may, from time
      to
      time, in whole or in part, be renewed, modified, accelerated, compromised,
      waived, surrendered, or released; and (b) the Senior Creditor Agreements may
      be
      amended, modified, supplemented, or terminated, in whole or in part, as Senior
      Creditor may deem advisable from time to time, and any Collateral may be sold,
      exchanged, waived, surrendered, or released. Subordinated Creditors and the
      Administrative Agent will remain bound under this Agreement, and the
      subordination provided for herein shall not be impaired, abridged, released,
      or
      otherwise affected notwithstanding any such renewal, modification, acceleration,
      compromise, amendment, supplement, termination, sale, exchange, waiver,
      surrender, or release. All dealings between Senior Creditor and Debtor shall
      be
      deemed to have been consummated in reliance upon this Agreement.

     

    14.  
Modification
      of Subordinated Creditor Obligations.
      No
      Subordinated Creditor Agreement may be amended or modified without the prior
      written consent of Senior Creditor.

     

    15.  
Subordinated
      Creditors’ and the Administrative Agent’s Waivers.
      Subordinated Creditor and the Administrative Agent: (a) waive any and all notice
      of the creation, modification, renewal, extension, or accrual of any of the
      Senior Creditor Obligations and notice of or proof of reliance by Senior
      Creditor upon this Agreement; (b) waive and agree not to assert against Senior
      Creditor any rights which a guarantor or surety could exercise, but nothing
      in
      this Agreement shall constitute Subordinated Creditors a guarantor or surety;
      (c) waive and agree not to assert any right of subrogation, contribution,
      reimbursement, or indemnity which it may have against Debtor arising directly
      or
      indirectly out of this Agreement; and (d) waive any right to compel Senior
      Creditor to marshal any of the Collateral or to seek payment from any particular
      assets of Debtor or from any third party.

     

    16.  
Continuing
      Agreement; Other.
      This
      Agreement shall be a continuing agreement, shall be irrevocable, and shall
      remain in full force and effect until the Senior Creditor Obligations has been
      indefeasibly paid in full, in cash. To the extent that the Debtor or any
      guarantor makes a payment on the Senior Creditor Obligations that is
      subsequently invalidated, declared to be fraudulent or preferential or set
      aside, or is required to be repaid to a trustee, receiver, or any other party
      under the Bankruptcy Code or any bankruptcy, insolvency, or reorganization
      act,
      state or federal law, common law or equitable cause, including, without
      limitation, any Bankruptcy Case (such payment being hereinafter referred to
      as a
“Voided Payment”), then to the extent of such Voided Payment, that portion of
      the Senior Creditor Obligations that had previously been satisfied by such
      Voided Payment shall be revived and continue in full force and effect as if
      such
      Voided Payment had not been made, and, an Event of Default shall be deemed
      to
      have existed and to be continuing under the Senior Creditor Agreements from
      the
      date of the Senior Creditor’s initial receipt of such Voided Payment until the
      full amount of such Voided Payment is restored to the Senior Creditor. During
      any continuance of any such Event of Default, this Agreement shall be in full
      force and effect with respect to the Subordinated Creditor Obligations. To
      the
      extent that the Subordinated Creditor or the Administrative Agent has received
      any payments with respect to the Subordinated Creditor Obligations subsequent
      to
      the date of the Senior Creditor’s initial receipt of such Voided Payment and
      such payments to the Subordinated Creditor have not been invalidated, declared
      to be fraudulent or preferential, or set aside or are required to be repaid
      to a
      trustee, receiver, or any other party under any bankruptcy act, state or federal
      law, common law, or equitable cause, the Subordinated Creditor and the
      Administrative Agent shall be obligated and hereby agree that any such payment
      so made or received shall be deemed to have been received in trust for the
      benefit of the Senior Creditor, and the Subordinated Creditor hereby agrees
      to
      pay to Senior Creditor, upon demand, the full amount so received by the
      Subordinated Creditor or the Administrative Agent to the extent necessary to
      fully restore to the Senior Creditor the amount of such Voided
      Payment.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    17.  
Parties
      Intended to be Benefited.
      All of
      the understandings, covenants, and agreements contained herein are solely for
      the benefit of Senior Creditor, Subordinated Creditors and the Administrative
      Agent, and there are no other parties, including Debtor or any of the creditors,
      successors, or assigns of Debtor, which are intended to be benefited, in any
      way, by this Agreement.

     

    18.  
No
      Limitation Intended.
      Nothing
      contained in this Agreement is intended to or shall affect or limit, in any
      way,
      the rights that the Secured Creditors have with respect to any third parties.
      The Secured Creditors hereby specifically reserve all of their respective rights
      against Debtor and all other third parties.

     

    19.  
Notice.
      Whenever it is provided herein that any notice, demand, request, consent,
      approval, declaration, or other communication shall or may be given to or served
      upon any of the parties hereto, or whenever any of the parties desires to give
      or serve upon the other communication with respect to this Agreement, each
      such
      notice, demand, request, consent, approval, declaration, or other communication
      shall be in writing and shall be delivered either in person, with respect
      acknowledged, or by regular, registered, or certified United States mail,
      postage prepaid, or by facsimile, addressed as follows or to the address set
      forth on the signature page hereto:

     

    (a)
        If
      to
      Senior Creditor, at:

     

    
      ST.
        CLOUD
        CAPITAL PARTNERS, L.P.

      10866
        Wilshire Boulevard

      Suite
        1450

      Los
        Angeles, CA 90024

      Fax:
        (310)-475-0550

      Attn:
        Robert Lautz

    

     

    (b)
        If
      to
      Subordinated Creditor, at:

     

    
      Hong
        Kong
        League Central Credit Union

      c/o
        SBI
        Advisors, LLC

      610
        Newport Center Drive, Suite 1205

      Newport
        Beach, CA 92660

      Fax:
        (949) 679-7280

      Attn:
        David Wang

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      Kershaw/Mackie
        & Company

      2405
        South Broadway

      Santa
        Ana, CA 92707

      Fax:
        (714) 709-1842

      Attn:
        David S. Kershaw

    

    

    (c)
        If
      to
      Administrative Agent, at:

     

    
      SBI
        Advisors, LLC

      610
        Newport Center Drive, Suite 1205

      Newport
        Beach, CA 92660

      Fax:
        (949) 679-7280

      Attn:
        Shelly Singhal

    

     

    (d)
        If
      to
      other Subordinated Creditors

    (at
      address indicated on signature page)

     

    Or
      at
      such other address as may be substituted by notice given as hereby provided.
      Giving of any notice required hereunder may be waived in writing by the party
      entitled to receive such notice. Every notice, demand, request, consent,
      approval, declaration or other communication hereunder shall be deemed to have
      been duly given or served on the date on which personally delivered, with
      receipt acknowledged, or actually received via telefacsimile transmission,
      or
      three days after the same shall have been deposited in the United States
      mail.

     

    20.  
Severability.
      Whenever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision of the remaining provisions
      of this Agreement.

     

    21.  
Jury
      Trial Waiver; Venue.
      TO THE
      EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT
      TO
      A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY
      OUT
      OF THIS AGREEMENT, OR ANY OTHER AGREEMENT OR TRANSACTION BETWEEN THE PARTIES
      HERETO. NOTWITHSTANDING THE PLACE OF EXECUTION HEREOF, EACH PARTY HERETO AGREES
      THAT THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND ALL
      RIGHTS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
      CALIFORNIA.

     

    The
      parties to this Agreement prefer that any dispute between or among them be
      resolved in litigation subject to the above jury trial waiver. Litigation to
      resolve any dispute, claim, cause of action or controversy under this Agreement
      or any other document (each, a “Claim”) shall be conducted in the state or
      federal court in Los Angeles County (the “Court”). Notwithstanding the
      foregoing, nothing in this paragraph shall limit the right of any party at
      any
      time to exercise self-help remedies, foreclose against collateral or obtain
      provisional remedies (including without limitation, requests for temporary
      restraining orders, preliminary injunctions, writs of possession, writs of
      attachment, appointment of a receiver, or any orders that a court may issue
      to
      preserve the status quo, to prevent irreparable injury or to allow a party
      to
      enforce its liens and security interests). 

     

    22.  
Complete
      Agreement.
      This
      Agreement constitutes the complete agreement and understanding of each of the
      Secured Creditors and supersedes all prior or contemporaneous oral and written
      negotiations, agreements and understandings, express or implied, with respect
      to
      the subject matter hereof.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    23.  
Successors
      and Assigns.
      This
      Agreement shall be binding upon, and inure to the benefit of, the successors
      and
      assigns of Senior Creditor and Subordinated Creditors. Each Subordinated
      Creditor agrees that it shall not assign or transfer any of its Subordinated
      Creditor Obligations or any of its rights under the Subordinated Credit
      Agreement (including any liens and security interests in the Collateral) without
      (i) prior notice being given to Senior Creditor and (ii) such assignment or
      transfer being made expressly subject to the terms of this
      Agreement.

     

    24.  
Waivers,
      Amendments, Choice of Law, etc.
      Any
      waiver or amendment hereunder must be evidenced by a signed writing of a party
      to be bound thereby, and shall only be effective in the specific instance.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of California. The parties agree that actions may be tried and litigated
      in the state and federal courts located in the County of Los Angeles, in the
      State of California. The headings in this Agreement are for convenience of
      reference only, and shall not alter or otherwise affect the meaning
      hereof.

     

    25.  
Construction.
      Unless
      the context of this Agreement clearly requires otherwise, references to the
      plural include the singular, the singular includes the plural, the part includes
      the whole, “including” is not limiting, and “or” has the inclusive meaning
      represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement refer to this Agreement as a
      whole and not to any particular provision of this Agreement. Article, section,
      subsection, exhibit, and schedule references are to this Agreement unless
      otherwise specified.

     

    26.  
Counterparts.
      This
      Agreement may be executed in any number of counterparts, and by Senior Creditor
      and Subordinated Creditor in separate counterparts, each of which shall be
      an
      original, but all of which shall together constitute one and the same
      Agreement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed as of the date first hereinabove set forth.

     

     

    
      	
              SENIOR
                CREDITOR:

            	ST. CLOUD CAPITAL PARTNERS,
              L.P.	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	 	 
	 	Title: 	 	 

    

     

     

    
      	
              SUBORDINATED
                CREDITOR:

            	Hong Kong League Central
              Credit
              Union, a Hong Kong credit union	 
	 	 	 	 
	 	By:	 	 
	 	
            	 	 
	 	Title:	 	 

    

     

     

    
      	
               

            	Kershaw/Mackie &
              Company	 
	 	 	 	 
	 	By:	 	 
	 	
            	 	 
	 	Title:	 	 

    

     

     

    
      	
               

            	SBI Advisors, LLC, a California
              limited liability company	 
	 	 	 	 
	 	By:	 	 
	 	
            	 	 
	 	Title:	 	 

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      LOS ANGELES

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

     

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

    

    (Seal)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      ORANGE

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

     

    (Seal)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      ORANGE

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

     

    (Seal)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      ORANGE

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

     

    (Seal)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	
              SBI
                VENTURES, LLC

            
	 	 
	 	
              By:                                                                                                  
                

              Name: Shelly
                Singhal

              Title: Manager

            
	 	 
	 	
              Address:

              610
                Newport Center Drive, Suite 1205

              Newport
                Beach, CA 92660

              Attention: Shelly
                Singhal

              Fax
                Number: (949)
                679-7280

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      ORANGE

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

    

    

    (Seal)

     

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	
              C.
                E. UNTERBERG, TOWBIN CAPITAL

              PARTNERS
                I, L.P.

            
	 	 
	 	
              By:                                                                                                  
                

              Name: 

              Title: 

            
	 	 
	 	
              Address:

              350
                Madison Avenue

              New
                York, NY 10017

              Attention:         
                ____________________

              Fax
                Number:       ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      NEW YORK

     

    COUNTY
      OF
      NEW YORK CITY

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

     

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	
              TRINAD
                CAPITAL MASTER

              FUND
                LTD.

            
	 	 
	 	
              By:                                                                                                  

              Name: 

              Title: 

            
	 	 
	 	
              Address:

              2121
                Avenue of the Stars, Suite 1650

              Los
                Angeles, CA 90067

              Attention:  
                    ____________________

              Fax
                Number:    ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      LOS ANGELES

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

     

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	
              DAVID
                MARSHALL, INC.

            
	 	 
	 	
              By:                                                                                                  

              Name: 

              Title: 

            
	 	 
	 	
              Address:

              9229
                Sunset Boulevard, Suite 505

              Los
                Angeles, CA 90069

              Attention:    
                  ____________________

              Fax
                Number:    ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      LOS ANGELES

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

    

    

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	
              THE
                LEVY FAMILY TRUST

            
	 	 
	 	
              By:                                                                                                  

              Name: 

              Title: 

            
	 	 
	 	
              Address:

              815
                Moraga Drive

              Los
                Angeles, CA 90049

              Attention:     
                  ____________________

              Fax
                Number:     ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      LOS ANGELES

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

     

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	
              FINE
                FAMILY TRUST

               

            
	 	 
	 	
              By:                                                                                                  

              Name: Debra
                Fine

              Title: Trustee

            
	 	 
	 	
              Address:

              371
                Dalkeith Avenue

              Los
                Angeles, CA 90049

              Attention:    
                   ____________________

              Fax
                Number:     ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      LOS ANGELES

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    

    Signature
      _________________________________

    

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	
              DENNIS
                L. PELINO FAMILY TRUST

            
	 	 
	 	
              By:                                                                                                  

              Name: Dennis
                L. Pelino

              Title: Trustee

            
	 	 
	 	
              Address:

              c/o
                New China Media

              10560
                Wilshire Boulevard, Suite 1802

              Los
                Angeles, CA 90024

              Attention:     
                 ____________________

              Fax
                Number:    ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      CALIFORNIA

     

    COUNTY
      OF
      LOS ANGELES

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

    

    Signature
      _________________________________

    

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	 
	
               

            	
              GEORGE
                KARFUNKEL

            
	 	
              Address:

              1671
                52nd
                Street

              Brooklyn,
                NY 11204

              Fax
                Number:        ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      NEW YORK

     

    COUNTY
      OF
      KINGS

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

     

    Signature
      _________________________________

     

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              OTHER
                SUBORDINATED CREDITORS:

            	 
	
               

            	
              YEHUDA
                NEUBERGER

            
	 	
              Address:

              224
                Avenue J

              Brooklyn,
                NY 11230

              Fax
                Number:        ____________________

            

    

    

    ACKNOWLEDGEMENT

     

    STATE
      OF
      NEW YORK

     

    COUNTY
      OF
      KINGS

     

    On
      _________________________, before me, ____________________________________,
      

    (insert
      name and title of the officer)

     

    personally
      appeared
      ___________________________________________________________

     

    ____________________________________________________________________________

     

    ____________________________________________________________________________,

    
 

    personally
      known to me (or provided to me on the basis of satisfactory evidence) to be
      the
      person(s) whose name(s) is/are subscribed to the within instrument and
      acknowledged to me that he/she/they executed the same is his/her/their
      authorized capacity(ies), and that by his/her/their signature(s) on the
      instrument the person(s), or the entity upon behalf of which the person(s)
      acted, executed the instrument.

     

    WITNESS
      my hand and official seal.

    

    Signature
      _________________________________

    

    (Seal)

    

    [COUNTERPART
      SIGNATURE PAGE TO AMENDED AND RESTATED INTERCREDITOR

    AND
      SUBORDINATION AGREEMENT]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    ACKNOWLEDGEMENT

     

    The
      undersigned, SMALL WORLD KIDS, INC., a Nevada corporation (the “Debtor”) hereby
      acknowledges receipt of a copy of the foregoing Amended and Restated
      Intercreditor and Subordination Agreement and consents thereto, and agrees
      to
      recognize all rights granted thereby to the parties thereto, and will not do
      any
      act or perform any obligation which is not in accordance with the agreements
      set
      forth in such Amended and Restated Intercreditor and Subordination Agreement.
      Debtor further acknowledges that Debtor is not an intended beneficiary under
      the
      Amended and Restated Intercreditor and Subordination Agreement.

     

    Dated
      as
      of April 23, 2007.

    
      	 	 	 
	 	SMALL
              WORLD KIDS,
              INC., a Nevada corporation
	 
 	 
 	 
 
	 	By:  	 
	 	 	
              

            
	 	
              Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]