Document:

kl02054_ex4-1.htm

    
      

    

    Exhibit
4.1

     

     

    WARRANT
CERTIFICATE

     

    THESE
WARRANTS AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY APPLICABLE STATE SECURITIES LAWS.  THESE WARRANTS AND SUCH SHARES
AND ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS.

    

     

     

    WARRANT
CERTIFICATE

    To
Purchase Shares of Common Stock of

    Kidville,
Inc.

     

    No.[   ]                                                                                                        [   ]
Warrants

     

    THIS
CERTIFIES THAT, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged [________], with an address at [________], or
its registered assigns (the “Holder”), is the registered owner of the number of
warrants specified above (collectively, the “Warrants”), each of which Warrants
entitles the Holder, subject to the adjustment provisions and the conditions and
limitations hereinafter set forth, to purchase from Kidville, Inc. (together
with its successors and assigns, the “Company”), a corporation organized and
existing under the laws of the State of Delaware, one share, as adjusted
pursuant to Section 4 hereof, of the Common Stock at a purchase price of $0.65
per share, as adjusted pursuant to Section 4 hereof (the “Exercise
Price”).  The Warrants shall not be terminable by the Company prior to
the Expiration Date.  The shares of Common Stock issuable upon
exercise of the Warrants (and any other or additional shares, securities or
property that may hereafter be issuable upon exercise of the Warrants) are
sometimes referred to herein as the “Warrant Shares,” and the maximum number of
shares so issuable under this Warrant Certificate is sometimes referred to as
the “Aggregate Number” (as such  number may be increased or decreased,
as more fully set forth herein).

     

    The
Warrants shall be void and all rights represented hereby shall cease after 5:00
p.m. Eastern Time on the Expiration Date.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    The
Warrants are part of an authorized issue of warrants (the “Authorized
Warrants”), initially exercisable for an aggregate of 2,187,500 shares of Common
Stock, issued on the date hereof pursuant to the terms of the Purchase
Agreement.

     

    Certain
terms used in this Warrant Certificate are defined in Section 9
hereof.

     

    The
Warrants are subject to the following provisions, terms and
conditions:

     

    1.    Exercise; Issue of
Certificates; Payment for Shares.  The Warrants represented by
this Warrant Certificate may be exercised by the Holder, in whole or in part
(but not as to fractional shares of Common Stock), to purchase the Aggregate
Number of shares (initially equal to
[       ] shares) of Common Stock at all
times on or prior to 5:00 p.m. Eastern Time on the Expiration Date.

     

    (a)    Conditions of
Exercise.  The Warrants shall be exercisable in whole at any
time or in part from time to time by surrendering this Warrant Certificate on
any Business Day (with the Exercise Form annexed hereto as Schedule 1 properly
completed and executed) to the Company at its principal office specified in
Section 14, or its then current address, and upon payment to the Company of the
Exercise Price for the Warrant Shares being purchased.

     

    (b)    Payment of Exercise
Price.  Payment of the aggregate Exercise Price with respect to
an exercise in whole or in part of any Warrants may be made, in the sole
discretion of the Holder, in the form of any of the following: (a) by cash or a
check or bank draft in New York Clearing  House funds, (b) by the
surrender of the applicable Warrant or Warrants, and without the payment of the
Exercise Price in cash, for such number of Warrant Shares equal to the product
of (1) the number of Warrant Shares for which such Warrant or Warrants are
exercisable with payment in cash of the Exercise Price as of the date of
exercise and (2) the Cashless Exercise Ratio, or (c) by any combination of (a)
and (b) above.

     

    (c)    Delivery of Share
Certificates; New Warrant Certificate. A certificate or certificates for
the shares so purchased shall be delivered to the Holder within a reasonable
time, not exceeding five (5) Business Days, after this Warrant Certificate shall
have been so exercised.  Such certificate or certificates shall be
deemed to have been issued and any Person so designated to be named therein
shall be deemed for all purposes to have become a holder of record of the
Warrant Shares represented thereby as of the close of business on the Business
Day of the surrender of this Warrant Certificate and payment of the Exercise
Price as aforesaid.  Unless the Warrants represented by this Warrant
Certificate have expired or been fully exercised, a new Warrant Certificate
representing the number of shares with respect to which this Warrant Certificate
shall not then have been exercised shall also be delivered to the Holder within
such time.

     

    2.    Shares to be Fully Paid;
Reservation of Shares; Listing.  The Company covenants and
agrees that:  (a) all Warrant Shares will, upon issuance, be
original-issue shares (and not treasury stock), fully paid and nonassessable and
free from all taxes, claims, liens,

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    charges
and other encumbrances with respect to the issue thereof; (b) without limiting
the generality of the foregoing, it will from time to time take all such action
as may be required to assure that the par value per share of Common Stock shall
at all times be less than or equal to the Exercise Price; (c) during the period
within which the Warrants represented by this Warrant Certificate may be
exercised, the Company will at all times have authorized and reserved for the
purpose of issue or transfer upon exercise of the Warrants represented by this
Warrant Certificate a sufficient number of original-issue shares of its Common
Stock to provide for the exercise of all the Warrants represented by this
Warrant Certificate; and (d) upon the exercise of the Warrants represented by
this Warrant Certificate, it will, at its expense, promptly notify each
securities exchange on which any Common Stock is at the time listed of such
issuance, and use its reasonable best efforts to maintain an approval by such
exchange for listing upon issuance of all shares of Common Stock from time to
time issuable upon the exercise of the Warrants represented by this Warrant
Certificate to the extent such shares can be so approved.

     

    3.    Intentionally
Omitted.

     

    4.    Adjustments to Exercise
Price and Aggregate Number.  The Exercise Price and the
Aggregate Number of shares of Common Stock issuable upon the exercise of each
Warrant (the “Exercise Rate”) are subject to adjustment from time to time upon
the occurrence of the events enumerated in this Section 4.

     

    (a)    Adjustment for Change in
Capital Stock.  If the Company:

     

    (1)    pays a
dividend or makes any other distribution on its Common Stock in shares of its
Common Stock or other capital stock of the Company; or

     

    (2)    subdivides,
combines or reclassifies its outstanding shares of Common Stock,

     

    then, in
each case, the Exercise Rate and the Exercise Price in effect immediately prior
to such action shall be proportionately adjusted so that the Holder may upon
payment of the same aggregate Exercise Price payable immediately prior to such
action receive the Aggregate Number and kind of shares of capital stock of the
Company which the Holder would have owned immediately following such action if
such Warrants had been exercised immediately prior to such action.

     

    Any such
adjustment shall become effective immediately after the record date of such
dividend or distribution or the effective date of such subdivision, combination
or reclassification.

     

    If after
such an adjustment the Holder upon exercise of any Warrants may receive shares
of two or more classes of capital stock of the Company, the board of directors
of the Company shall determine the allocation of the adjusted Exercise Price
between the classes of capital stock.  After such allocation, the
Exercise Rate and the Exercise Price of each such class

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section 4.

     

    (b)    [Intentionally
Omitted.]

     

    (c)    Adjustment for Certain
Distributions.  If the Company distributes to holders of its
Common Stock (i) any evidences of indebtedness of the Company or any of its
subsidiaries, (ii) any properties or assets of the Company or any of its
subsidiaries (whether in cash, property or otherwise), or (iii) any rights,
options or warrants to acquire any of the foregoing or to acquire any other
securities of the Company, a Holder may elect to receive a distribution from the
Company of its proportionate share of the evidences of indebtedness, assets,
rights, options or warrants or other securities of the Company, as the case may
be, which would have been distributed to such Holder had such Warrants been
exercised immediately prior to the record date for such distribution; provided
that such Holder shall have notified the Company in writing of such election no
later than 10 days after receipt of notice thereof from the Company pursuant to
Section 4(f).

     

    (d)    Specific Adjustment
Provisions.  The following provisions shall be applicable to
the making of adjustments of the Exercise Price and Exercise Rate hereinbefore
provided for in this Section 4:

     

    (i)    The sale
or other disposition of any issued shares of Common Stock owned or held by or
for the account of the Company shall be deemed an issuance thereof for the
purposes of this Section 4.

     

    (ii)    The
adjustments required by the preceding paragraphs of this Section 4 shall be made
whenever and as often as any specified event requiring an adjustment shall
occur, except as otherwise expressly provided herein.  For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.

     

    (iii)    In
computing adjustments under this Section 4, fractional interests in Common Stock
shall be taken into account to the nearest one-thousandth (.001) of a share and
shall be aggregated until they equal one whole share.

     

    (iv)    If the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive any item described in Sections 4(a) through 4(c)
hereof, but abandon its plan to pay or deliver such item, then no adjustment
shall be required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.

     

    (e)    Non-Impairment;
Reorganization.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (i)    If any
event occurs as to which the other provisions of this Section 4 are not strictly
applicable but the lack of any provision for the exercise of the rights of the
Holder would not fairly protect the exercise rights of such Holder in accordance
with the essential intent and principles of such provisions, or, if strictly
applicable, would not fairly protect the exercise rights of such Holder in
accordance with the essential intent and principles of such provisions, then the
Company shall appoint a firm of independent certified public accountants in the
United States (which may be the regular auditors of the Company), of recognized
national standing in the United States and reasonably satisfactory to the
Required Holders, which shall give their opinion as to the adjustments, if any,
necessary to preserve, without dilution, on a basis consistent with the
essential intent and principles established in the other provisions of this
Section 4, the exercise rights of such Holder.  Upon receipt of such
opinion, the Company shall forthwith make the adjustments described
therein.

     

    (ii)    In case
of any capital reorganization, other than in the cases referred to in Section
4(a) or (c) hereof and other than any capital reorganization that does not
result in any reclassification of the outstanding shares of Common Stock into
shares of other stock or other securities or property, or the consolidation or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and which does
not result in any reclassification of the outstanding shares of Common Stock
into shares of other stock or other securities or property), or the sale of all
or substantially all of the assets of the Company, including any sale of all or
substantially all of the assets of any subsidiary of the Company whose equity
interests constitute all or substantially all of the assets of the Company
(collectively such actions being hereinafter referred to as “Reorganizations”),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of shares of Common Stock theretofore deliverable) the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock that would otherwise have been deliverable upon the
exercise of such Warrant would have been entitled upon such Reorganization if
such Warrant had been exercised in full immediately prior to such
Reorganization.  In case of any Reorganization, appropriate
adjustment, as determined in good faith by the board of directors of the
Company, whose determination shall be described in a duly adopted resolution
certified by the Company’s Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any such shares
or other securities or property thereafter deliverable upon exercise of
Warrants.

     

    The
Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such Reorganization or any parent company
thereof or the corporation or other entity purchasing such assets shall
expressly assume, by a supplemental warrant or other acknowledgment executed and
delivered to the Holder, the obligation to deliver to the Holder

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase, and the due and punctual
performance and observance of each and every covenant, condition, obligation and
liability under this Warrant Certificate to be performed and observed by the
Company in the manner prescribed herein.

     

    The
foregoing provisions of this Section 4(e) shall apply to successive
Reorganization transactions.

     

    (f)    Notice of
Action.  In case:

     

    (A)           the
Company shall authorize the issuance to holders of shares of Common Stock of
rights, options or warrants to subscribe for or purchase shares of Common Stock
or of any other subscription rights or warrants; or

     

                   
(B)           the Company
shall authorize the distribution to holders of shares of Common Stock of
evidences of its indebtedness or assets or of rights, options or warrants to
subscribe for or purchase any of the foregoing; or

     

    (C)           of
any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale of all
or substantially all of the assets of the Company, or of any reclassification or
change of Common Stock issuable upon exercise of the Warrants, or a tender offer
or exchange offer for shares of Common Stock; or

     

    (D)           of
the voluntary or involuntary dissolution, liquidation or winding up of the
Company; or

     

    (E)           the
Company proposes to take any action that would require an adjustment to the
Exercise Rate or Exercise Price pursuant to this Section 4;

     

    then the
Company shall give prompt written notice to the Holder at least 15 days prior to
the applicable record date hereinafter specified, or the date on which a
stockholder vote will be held or written consent in lieu thereof will be
solicited in the case of events for which there is no record date, by
first-class mail, postage prepaid, such written notice stating (i) the record
date, if applicable, or the date on which a stockholder vote will be held or
written consent in lieu thereof will be solicited in the case of events for
which there is no record date, (ii) the initial expiration date set forth in any
tender offer or exchange offer for shares of Common Stock, or (iii) the date on
which any such reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up.  The failure by the
Company to give such notice or any defect therein shall not affect the legality
or validity of any consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up or other action, or the vote upon any
action.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    (g)    Notice of Adjustment.  Within
ten (10) days after the occurrence of an event resulting in an adjustment
pursuant to this Section 4, the Company shall cause to be mailed to the Holder
(and upon the exercise hereof, to the exercising Holder) by first-class mail,
postage prepaid, notice of each adjustment to the Exercise Price and Exercise
Rate effected since the date of the last such notice and a certificate of the
Company’s Chief Financial Officer or Chief Accounting Officer, setting forth the
Exercise Price and Exercise Rate after such adjustment(s), a brief statement of
the facts requiring such adjustment(s) and the computation by which such
adjustment(s) was made.

     

    (h)    No Duplicative
Adjustment.  Notwithstanding any other provision of this
Warrant Certificate, the occurrence of a single event shall not trigger an
adjustment of the Exercise Price and Exercise Rate under more than one paragraph
of this Section 4.

     

    5.    Taxes on
Conversion.  The issuance of certificates for Warrant Shares
upon the exercise of the Warrants shall be made without charge to the Holder
exercising the Warrants for any issue or stamp tax in respect of the issuance of
such certificates, and such certificates shall be issued in the respective names
of, or in such names as may be directed by, the Holder; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the Holder, and the Company shall not be required to
issue or deliver such certificates unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the reasonable satisfaction of the Company
that such tax has been paid.

     

    6.    Limitation of
Liability.  No provision hereof in the absence of the exercise
of the Warrants by the Holder and no enumeration herein of the rights or
privileges of the Holder shall give rise to any liability on the part of the
Holder for the Exercise Price of the Warrant Shares or as a stockholder of the
Company, whether such liability is asserted by the Company or by any creditor of
the Company.  Upon exercise of Warrants the Holder will have the right
to vote the Common Stock received upon such exercise.  No Holder shall
be entitled to vote or be deemed the holder of Common Stock (or any other
securities as may be issuable upon the exercise of the Warrants) nor shall
anything contained herein be construed to confer upon the Holder the rights of a
stockholder of the Company or the right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting stockholders or to receive dividends, distributions or
subscription rights or otherwise (except as provided herein), by virtue of his,
her or its ownership of the Warrants until the Warrants shall have been
exercised in accordance with the terms and conditions of the
Warrants.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    7.    Closing of
Books.  The Company will at no time close its transfer books
against the transfer of the Warrants or of any Warrant Shares issued or issuable
upon the exercise of the Warrants in any manner that interferes with the timely
exercise hereof, except as may be required by applicable laws, rules or
regulations.  The Company shall deem and treat the Holder as the
absolute owner of the Warrants for all purposes, including without limitation
for the purpose of exercise thereof.  The Company agrees that, upon
exercise of the Warrants in accordance with the terms hereof (including receipt
by the Company of payment of the aggregate Exercise Price payable therefor in
accordance with the terms hereof), the shares so purchased shall be deemed to be
issued to such Holder as the record owner of such shares as of the close of
business on the date on which the Warrants shall have been exercised, and the
Holder shall be deemed for all purposes a stockholder of the Company with
respect to such shares as though the certificate for such shares had been issued
on the date of such exercise.

     

    8.    Restrictions.

     

    A.    Securities Law Restrictive
Legends.  Each certificate for any Warrant Shares issued upon
the exercise of the Warrants, and each stock certificate issued upon the
transfer of any such Warrant Shares (except as otherwise permitted by this
Section 8) shall be stamped or otherwise imprinted with legends in substantially
the following form:

     

    THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS.  SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE  ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION THEREFROM UNDER
SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS.

     

    Each
Warrant Certificate issued in substitution for any Warrant Certificate pursuant
to Section 10, 11 or 12 hereof and each Warrant Certificate issued upon the
transfer of any Warrant (except as otherwise permitted by this Section 8) shall
be stamped or otherwise imprinted with legends in substantially the following
form:

     

    THESE
WARRANTS AND ANY SHARES ACQUIRED UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY APPLICABLE STATE SECURITIES LAWS.  THESE WARRANTS AND SUCH SHARES
AND ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS.

     

    B.    Termination of Securities
Law Legend Restrictions.  The legend restrictions imposed by
Section 8.A shall apply as to the Warrants and any Warrant Shares until (a) such
securities shall have been effectively registered under the Securities Act and
disposed of

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    in
accordance with the registration statement covering such securities, or (b) such
time as, in the reasonable opinion of counsel for the Company, or in the written
opinion of counsel for the Holder reasonably acceptable to the Company, such
restrictions are not required in order to comply with the Securities
Act.  Whenever such restrictions shall terminate as to any Warrants or
Warrant Shares, the Holder shall be entitled to receive from the Company,
without expense, new certificates of like tenor not bearing the restrictive
securities law legends set forth in Section 8.A.

     

    9.    Definitions.  As
used in this Warrant Certificate, unless the context otherwise requires, the
following terms have the following respective meanings:

     

    Affiliate:  shall
mean, as applied to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with, that
Person.  For the purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling”, “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities
or by contract or otherwise.  For purposes of this definition, a
Person shall be deemed to be “controlled by” a Person if such latter Person
possesses, directly or indirectly, power to vote 10% or more of the securities
having ordinary voting power for the election of directors of such former
Person.

     

    Aggregate
Number:  shall have the meaning set forth in the first
paragraph of this Warrant Certificate.

     

    Authorized Warrant
Shares:  shall mean the Warrant Shares and all shares of Common
Stock (and any other or additional shares, securities or property issued upon
exercise of any other Authorized Warrants) issued upon exercise of any other
Authorized Warrants.

     

    Authorized
Warrants:  shall have the meaning set forth in the third
paragraph of this Warrant Certificate.

     

    Business
Day:  shall mean any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.

     

    capital stock: shall
mean any and all shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interest in (however designated)
capital stock.

     

    Cashless Exercise
Ratio:  shall mean a fraction, the numerator of which is the
excess of the Current Market Value of one share of Common Stock on the date of
exercise over the Exercise Price as of the date of exercise and the denominator
of which is the Current Market Value of one share of Common Stock on the date of
exercise.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    closing bid
price:  for any Security on any trading day shall mean (A) if
such Security is listed or admitted to trading on any securities exchange, the
closing price, regular way, on such day on the principal exchange on which such
Security is traded, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, (B) if such Security is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as reported by
a reputable quotation source designated by the Company or (C) if neither clause
(A) nor (B) is applicable, the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service, or a newspaper
of general circulation in the Borough of Manhattan, City of New York,
customarily published on each trading day, in each case as designated by the
Company.  If there are no such prices on a trading day, then the
closing bid price shall not be determinable for such trading day.

     

    Common
Stock:  shall mean the shares of Common Stock, par value $0.001
per share, of the Company, currently provided for in the Amended and Restated
Certificate of Incorporation of the Company, and including, for all purposes
hereunder, any other capital stock of the Company into which such shares of
Common Stock may be converted or reclassified or that may be issued in respect
of, in exchange for, or in substitution of, such Common Stock by reason of any
stock splits, stock dividends, distributions, mergers, consolidations or like
events.

     

    Company:  shall
have the meaning set forth in the first paragraph of this Warrant
Certificate.

     

    Current Market Value:
as per share of Common Stock or of any other security (herein collectively
referred to as a “Security”) at any date shall mean:

     

    (1)    if the
Security is not registered under the Exchange Act, the value of the Security
determined by (A) the legally adopted vote or consent of the board of directors
of the Company and certified in a board resolution, or, (B) if the Board of
Directors is unable or unwilling to determine such value within a period of 30
days, by an Independent Financial Expert, or

     

    (2)    if the
Security is registered under the Exchange Act, the average of the daily closing
bid prices of such Security for the 20 consecutive trading days preceding such
date, but only if such Security shall have been listed on a national securities
exchange or traded through an automated quotation system during such entire 20
trading day period.  If such Security shall have not been so listed or
traded for such entire 20 trading day period, the Current Market Value of such
Security shall be determined as if the Security was not registered under the
Exchange Act.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Exercise
Price:  shall have the meaning set forth in the first paragraph
of this Warrant Certificate.

     

    Exercise
Rate:  shall have the meaning set forth in the preamble to
Section 4.

     

    Exchange
Act:  means the Securities Exchange Act of 1934, as
amended.

     

    Expiration
Date:  shall mean the earlier of (i) February 19, 2014 and (ii)
any time after August 8, 2010, upon thirty (30) days written notice to the
Holder that the aggregate market value of the Common Stock, (as determined by
multiplying (a) the number of shares of Common Stock outstanding (excluding (x)
the shares of Common Stock issuable upon the exercise of all outstanding
warrants and other convertible securities or instruments issued by the
Corporation, (y) all shares of capital stock issued, issuable or reserved for
issuance pursuant to or under the Corporation’s 2008 Incentive Compensation Plan
and (z) the shares of Common Stock issuable upon conversion of the Corporation’s
Series A Preferred Stock), by (b) the closing sale price of a share of Common
Stock, as reported on the over-the-counter bulletin board, or, if the Common
Stock has been admitted to trading on a nationally recognized stock exchange or
market quotation system (including, without limitation, the NYSE Alternext US),
as reported on such exchange or market quotation system), shall, during any
forty-five (45) trading days within any consecutive ninety (90) day period,
equal or exceed One Hundred Fifty Million Dollars
($150,000,000.00).

     

    Holder:  shall
have the meaning set forth in the first paragraph of this Warrant
Certificate.

     

    Holder Distribution
Election:  shall have the meaning set forth in Section
4(c).

     

    Independent:  shall
mean, with respect to any Person, that such Person (i) is in fact independent,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Company or any of its subsidiaries, or in any
Affiliate of the Company or any of its subsidiaries (other than as a result of
holding securities of the Company in trading accounts) and (iii) is not an
officer, employee, promoter, trustee, partner, director or Person performing
similar functions for the Company or any of its subsidiaries or any Affiliate of
the Company or any of its subsidiaries.

     

    Independent Financial
Expert:  shall mean a reputable accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the board of
directors of the Company, qualified to perform the task for which such firm has
been engaged as contemplated hereunder, is nationally recognized, is
disinterested and Independent with

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    respect
to the Company and its Affiliates, and is reasonably acceptable to the Required
Holders.

     

    Person:  shall
mean an individual, corporation, partnership, limited liability company, trust
or trustee thereof, estate or executor thereof, unincorporated organization or
joint venture, court or governmental unit or any agency or subdivision thereof,
or any other legally recognizable entity.

     

    Purchase
Agreement:  shall mean the Securities Purchase Agreement dated
February 19, 2009 among the Company and the purchasers named therein, pursuant
to which the initial holder of this Warrant Certificate acquired shares of the
Company’s 13.0% Series A Cumulative Convertible Preferred Stock, and the
Warrants and the other Authorized Warrants were issued.

     

    Reorganization:  shall
have the meaning set forth in Section 4(e).

     

    Required
Holders:  shall mean any registered holder or holders holding
at least a majority of the outstanding Authorized Warrants (including the
Warrants) and Authorized Warrant Shares, collectively as a group.

     

    Securities
Act:  shall mean the Securities Act of 1933, as
amended.

     

    Warrants:  shall
have the meaning set forth in the first paragraph of this Warrant
Certificate.

     

    Warrant
Shares:  shall have the meaning set forth in the first
paragraph of this Warrant Certificate.

     

    10.    Register of
Warrants.  This Warrant Certificate is issued as a Warrant
Certificate for which there is a register maintained by the
Company.  Subject to the provisions of Section 8, the transfer of the
Warrants represented by this Warrant Certificate and all rights hereunder, in
whole or in part, is registerable at the office of the Company referred to in
Section 1 hereof by the Holder in person or by duly authorized attorney, upon
surrender of this Warrant Certificate with a properly completed Form of
Assignment in the form annexed hereto as Schedule
2.  Any transfer tax relating to a transfer of this Warrant
Certificate shall be paid by the Holder who transfers such Warrant
Certificate.

     

    11.    Warrant Certificates
Exchangeable for Different Denominations.  Subject to the
provisions of Section 8, this Warrant Certificate is exchangeable, upon the
surrender hereof by the Holder hereof at such office of the Company, for new
Warrant Certificates of like tenor representing in the aggregate the number of
Warrants represented hereby, each of such new Warrant Certificates to represent
the number of Warrants as shall be designated by said Holder at the time of such
surrender.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.    Replacement of Warrant
Certificates.  Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity bond (or, in the case of the original Holder hereof or
any substantial financial institution to which any Warrants represented by this
Warrant Certificate may be transferred, an unsecured indemnity agreement)
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant Certificate,
the Company will execute and deliver, subject to the provisions of Section 8, in
lieu thereof, a new Warrant Certificate of like tenor to the Holder of such
Warrant, at such Holder’s expense.

     

    13.    Certificate Rights and
Obligations Survive Exercise of Warrants.  The rights and
obligations of the Company contained in this Warrant Certificate shall survive
the exercise or repurchase of the Warrants represented by this Warrant
Certificate to the extent that such survival is necessary to give effect to any
provision hereof.

     

    14.    Notices.  All
notices, requests and other communications required or permitted to be given or
delivered to the Holder under this Warrant Certificate shall be in writing, and
shall be  delivered, or shall be sent by certified or registered mail
postage prepaid and addressed, to such Holder at the address shown on this
Warrant Certificate, or at such other address as shall have been furnished to
the Company by notice from such Holder.  All notices, requests and
other communications required or permitted to be given or delivered to the
Company hereunder shall be in writing, and shall be delivered, or shall be sent
by certified or registered mail, postage prepaid, or overnight courier, and
addressed to the office of the Company (return receipt requested) at 163 East
84th Street, New York, New York 10028, Attention: Andy Stenzler.  All
notices shall be deemed to have been given either at the time of the delivery
thereof, or, if mailed as provided above, at the completion of the third full
day following the time of such mailing thereof to such address, or, if delivered
by overnight courier, upon the day specified for delivery by such courier, as
the case may be.

     

    15.    Amendments;
Waivers.  Neither this Warrant Certificate nor any term or
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the Company and the
Holder.  No failure or delay on the part of either of the parties in
exercising any right, power or privilege hereunder and/or under any applicable
laws or the exercise of such right or power in a manner inconsistent with the
provisions of this Warrant or applicable law shall operate as a waiver
thereof.  Any waiver must be evidenced in writing signed by the party
against whom the waiver is sought to be enforced.

     

    16.    Remedies.  The
Holder may seek to enforce the terms of this Warrant Certificate by seeking a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or
otherwise.  If any default under the terms of this Warrant Certificate
shall occur and be continuing, the Holder may proceed to protect and enforce its
rights under this Warrant Certificate by exercising such remedies as are
available to such Holder in respect thereof under applicable law, either by suit
in

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    equity or
by action at law, or both, whether for specific performance of any covenant or
other agreement contained in this Warrant Certificate or in aid of the exercise
of any power granted in this Warrant Certificate.  No remedy conferred
in this Warrant Certificate or the Purchase Agreement upon the Holder is
intended to be exclusive of any other remedy available to such Holder, and each
and every such remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law or in equity
or by statute or otherwise.

     

    17.    Governing
Law.  THIS WARRANT CERTIFICATE AND THE RIGHTS GRANTED HEREIN
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED UNDER THE LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW RULES OR
PRINCIPLES).  ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST THE
COMPANY WITH RESPECT TO THIS WARRANT CERTIFICATE OR ANY RELATED AGREEMENT SHALL
BE BROUGHT IN ANY FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITTING IN
WILMINGTON, DELAWARE, AND, BY EXECUTION AND DELIVERY OF THIS WARRANT
CERTIFICATE, THE PARTIES HERETO ACCEPT THE EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS WARRANT CERTIFICATE.  THE PARTIES
FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTIES AT
THEIR RESPECTIVE NOTICE ADDRESSES SET FORTH HEREIN, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE
RIGHT OF A PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.

     

    18.    Entire Agreement;
Headings. This Warrant Certificate
sets forth the entire understanding of the parties with respect to the subject
matter hereof and supersedes all existing agreements among them concerning such
subject matter.  All article and section headings herein are inserted
for convenience only and shall not modify or affect the construction or
interpretation of any provision of this Warrant Certificate.

     

    19.    Successors and
Assigns. This Warrant Certificate
shall bind and inure to the benefit of the Company and its successors and
assigns, and the Holder and its successors and assigns.

     

    

     

    [Signatures on next page.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be executed
by its duly authorized officer as of February [  ], 2009.

     

                    KIDVILLE,
INC.

     

                    By: __________________________                     

                   Name: Andy
Stenzler

                   Title: Chief Executive
Officer

    

    

                    AGREED TO AND
ACCEPTED:

     

                    By: __________________________                     

                   [HOLDER]

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
1

     

    EXERCISE
FORM

     

    [To
be executed only upon exercise of Warrants]

     

    To:           [                           ]

     

    The
undersigned irrevocably exercises _______________ of the Warrants, each
representing the right to purchase one share (subject to adjustment) of Common
Stock, par value $.001 per share, of KIDVILLE, INC.  (the “Company”)
represented by the within Warrant Certificate, and herewith makes payment of
$____ (such payment being (a) in cash or by check or bank draft in New York
Clearing House funds payable to the order of the Company, (b) by the surrender
of the applicable Warrant or Warrants, and without the payment of the Exercise
Price in cash, for such number of Warrant Shares equal to the product of (1) the
number of Warrants Shares for which such Warrant or Warrants are exercisable
with payment in cash of the Exercise Price as of the date hereof and that are
hereby being exercised and (2) the Cashless Exercise Ratio, or (c) by any
combination of (a) and (b) above, all at the Exercise Price and on the terms and
conditions specified in the within Warrant Certificate), surrenders the within
Warrant Certificate and all right, title and interest therein (except as to any
unexercised Warrants) to the Company, and directs that the Warrant Shares
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto.

     

    Date:_________________                                                                           ____________________________

    

    

    Name:
_____________________________

    

    

    Address:
____________________________

    

                   ____________________________

    

                   ____________________________

     

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
2

     

    FORM OF
ASSIGNMENT

     

    FOR VALUE
RECEIVED, the undersigned registered holder of the within Warrant Certificate
hereby sells, assigns and transfers unto the Assignee(s) named
below  all of the rights of the undersigned under the within Warrant
Certificate with respect to the number of Warrants set forth below:

     

    
      	
               

               

              Name(s) of

              Assignee(s)

            	
               

               

               

              Address

            	
               

              Social Security or 

              Other Identifying 

              Number of Assignee(s)

            	
               

               

              Number of

              Warrants

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      

    

    

    and does
hereby irrevocably constitute and appoint ___________ the undersigned’s attorney
to make such transfer on the books of KIDVILLE, INC. maintained for that
purpose, with full power of substitution in the premises.

     

    Dated:  ___________________

     

    ________________________________1

    (Signature
of Owner)

     

    

     

    ________________________________

    (Street
Address)

     

    

     

    ________________________________

    (City)     (State)     (Zip
Code)

     

     

     

    ___________________________

    1The
signature must correspond with the name as written upon the face of the within
Warrant Certificate in every particular, without alteration or enlargement or
any change whatever.ex10-2.htm

    

    FEDERAL
DEPOSIT INSURANCE CORPORATION

    

    WASHINGTON,
D.C.

    

    CALIFORNIA
DEPARTMENT OF FINANCIAL INSTITUTIONS

    

    SAN
FRANCISCO, CALIFORNIA

    

    
      	 
      	 
      	 
      	 
      
	 
      	
              )

            	 
      	 
      
	 
      	
              )

            	 
      	 
      
	
              IN THE MATTER
      OF

            	
              )

            	 
      	
              STIPULATION AND
      CONSENT

            
	 
      	
              )

            	 
      	
              TO THE
    ISSUANCE

            
	
              IMPERIAL CAPITAL
      BANK

            	
              )

            	 
      	
              OF AN
  ORDER

            
	
              LA
      JOLLA, CALIFORNIA

            	
              )

            	 
      	
              TO CEASE AND
      DESIST

            
	 
      	
              )

            	 
      	 
      
	
              (INSURED STATE NONMEMBER
      BANK)

            	
              )

            	 
      	
              Docket
      FDIC-08-392b

            
	 
      	
              )

            	 
      	 
      
	 
      	
              )

            	 
      	 
      

    

    

    

    Subject to the acceptance of this
STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST
("CONSENT AGREEMENT") by the Federal Deposit Insurance Corporation ("FDIC") and
the California Department of Financial Institutions (“CDFI”), it is hereby stipulated and agreed by
and between a representative of the Legal Division of FDIC, a representative of
the CDFI, and Imperial Capital Bank, La Jolla, California ("Bank"), as follows:

    1.           The Bank has been advised of its right to
receive a NOTICE OF CHARGES AND OF HEARING (“NOTICE”) detailing the unsafe or
unsound banking practices alleged to have been committed by the Bank and of its right to a public hearing on
the alleged charges under section 8(b)(1) of the Federal Deposit Insurance Act
("Act"), 12 U.S.C. § 1818(b)(1), and Section 1912 of the California
Financial Code (“CFC”), and has
waived those rights.

     

    
 

    
      
         

      

      
         

        
        

      

      
         

      

    

    -2-

        2.           The Bank, solely for the purpose of this
proceeding and without admitting or denying any of the alleged charges of unsafe
or unsound banking practices, hereby consents and agrees to the issuance of an
ORDER TO CEASE AND DESIST ("ORDER") by the FDIC and the CDFI.  The Bank further stipulates and agrees that such
ORDER will be deemed to be an order which has become final under the Act and the
CFC, and that said ORDER
shall become effective upon its issuance by the FDIC and the CDFI, and fully enforceable by the FDIC and
the CDFI pursuant to the
provisions of the Act and the CFC.

    3.           In the event the FDIC and the
CDFI accepts the CONSENT
AGREEMENT and issues the ORDER, it is agreed that no action to enforce said
ORDER in the United States District Court will be taken by the FDIC, and no
action to enforce said ORDER in State Superior Court will be taken by the
CDFI, unless the
Bank or any
institution-affiliated party, as such term is defined in section 3(u) of the
Act, 12 U.S.C. § 1813(u), has violated or is about to violate any provision of
the ORDER.

    4.           The Bank hereby waives:

    (a)           The receipt of a
NOTICE;

    (b)           All defenses in this
proceeding;

    (c)           A public hearing for the purpose of
taking evidence on such alleged charges;

    (d)           The filing of Proposed Findings of Fact
and Conclusions of Law;

    (e)           A recommended decision of an
Administrative Law Judge; and

    

    
      
         

      

      
         

        
        

      

      
         

      

    

    -3-

     

    (f)           Exceptions and briefs with respect to
such recommended decision.

     

    Dated:  February 12,
2009.

    

    
      	
              FEDERAL
      DEPOSIT INSURANCE

              |CORPORATION,
      LEGAL DIVISION

            	 
      	 
      	
              IMPERIAL
      CAPITAL BANK

              LA
      JOLLA, CALIFORNIA

            
	
              BY:

            	 
      	
              BY:

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              /s/
      James L. Miller

            	 
      	 
      	
              /s/
      Norval L. Bruce

            
	
              James
      L. Miller

            	 
      	 
      	
              Norval
      L. Bruce

            
	
              Counsel

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              California
      Department of

              Financial
      Institutions

            	 
      	 
      	
              /s/
      George W. Haligowski

            
	
              BY:

            	 
      	 
      	
              George
      W. Haligowski

            
	 
      	 
      	 
      	 
      
	
              /s/
      Paul Crayton

            	 
      	 
      	
              /s/
      Jeffrey L. Lipscomb

            
	
              Paul
      Crayton

            	 
      	 
      	
              Jeffrey
      L. Lipscomb

            
	
              Senior
      Counsel

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              /s/
      Sandor X. Mayuga

            
	 
      	 
      	 
      	
              Sandor
      X. Mayuga

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              /s/
      Hirotaka Oribe

            
	 
      	 
      	 
      	
              Hirotaka
      Oribe

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              /s/
      Robert R. Reed

            
	 
      	 
      	 
      	
              Robert
      R. Reed

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Comprising
      the Board of Directors of

              Imperial
      Capital Bank

              La
      Jolla, California

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