Under the terms of the agreement, Toys "R" Us will collaborate with DIC to develop a complete line of Liberty's Kids branded merchandise. The retailer will be directly responsible for the development and manufacturing of toys, school supplies, accessories, party goods and girls and boys apparel. Liberty's Kids will debut on PBS Kids on September 2, 2002. The products are planned to launch early Spring of 2003.

"DIC Entertainment's commitment to excellence with their Liberty's Kids property, coupled with the strong merchandising and marketing expertise of Toys "R" Us, is a sure formula for success," says Robert Margolis, Chairman and CEO of Cherokee Inc. "We are proud to have created this partnership. We are excited about this agreement and believe that there are many more opportunities for Cherokee to use our expertise to continue marrying the entertainment industry with strategic retail partners."

Liberty's Kids is an animated daily television series that chronicles the adventures of the American Revolution through the eyes of two teenagers working in Benjamin Franklin's print shop. Compelling story telling and animation bring America's fight for freedom and liberty to life. The series will introduce our country's heroes and stories to a new generation of young Americans.

"In today's cluttered world of licensing and retailing, it is important to position Liberty's Kids as a brand in the minds of consumer," said Andy Heyward, Chairman and CEO of DIC Entertainment. "To our knowledge, this is the first time a major retailer of this prominence has co-developed products for a children's entertainment property. Cherokee did a great job partnering us with the leading retailer, and we are delighted and honored to be working with Toy's "R" US on this precedent setting initiative."

"Toy's "R" Us is committed to developing this brand into a meaningful line of fun and interesting merchandise that captures the true spirit of American youth," stated Greg Staley, President, Toy's "R" Us. "We will also develop marketing, promotional support, event and entertainment opportunities, and tie-ins with the many celebrities and partners involved in Liberty's Kids."

Respected journalist Walter Cronkite as Benjamin Franklin and General Norman Schwarzkopf (George Rogers Clark) leads the all-star cast comprised of some of the biggest stars in Hollywood, who portray the roles of leading figures of the Revolutionary period, including Annette Bening (Abigail Adams) and Aaron Carter performing the title song. Other members of the all-star cast include Billy Crystal (John Adams), Michael Douglas (Patrick Henry), Whoopi Goldberg (Deborah Sampson), Dustin Hoffman (Benedict Arnold), Liam Neeson (John Paul Jones), Arnold Schwarzenegger (Baron von Steuben), Maria Shriver (Peggy Shippen), Sylvester Stallone (Paul Revere), Ben Stiller (Thomas Jefferson), Michael York (Admiral Lord Howe), and many others.

About Cherokee Inc.

Cherokee Inc., based in Van Nuys, is a leading global licensing and brand management company. Through its unique Retail Direct Licensing template, the Company receives royalties on brands it owns or represents with annual retail sales of $3 billion. Cherokee started out as a shoe and apparel manufacturing company in the 70's. The Company reinvented itself in 1995, taking advantage of its unique position and industry-wide relationships to completely transform its business model by creating radically innovative licensing strategies and business combinations.

About DIC Entertainment

DIC Entertainment is a leading global children's entertainment company with more than 3,000 half-hours of programming in its prolific library, ranked as the second largest library of American animation. An incomparable family of domestic and international broadcasters air DIC's shows in Europe, Asia, Latin America and Australia. Each week more than 25 million children watch DIC's popular programs, which include Inspector Gadget, Madeline, Where On Earth Is Carmen Sandiego?, Sonic The Hedgehog, Super Mario Bros, Captain Planet, Sailor Moon and such new shows as Super Duper Sumos, Alienators: Evolution Continues and MaryKate & Ashley, In Action! DIC is a full-service studio with production, development, distribution, home video, marketing and licensing divisions.

About Toys "R" Us

Toys "R" Us, one of the world's leading retailers of toys, children's apparel and baby products, currently sells merchandise through 1,608 stores worldwide: 700 toy stores in the United States; 512 international toy stores, including franchise stores; 183 Kids "R" Us children's clothing stores, 170 Babies "R" Us stores and 43 Imaginarium stores, and through its Internet sites at www.toysrus.com, www.babiesrus.com, and www.imaginarium.com.