Document:

SEASONAL ADVANCE NOTE

$1,500,000                                               Date: December 15, 2004

      This Term Note is executed and  delivered  under and pursuant to the terms
of that certain Revolving Credit and Security Agreement dated as of December 15,
2004 (as amended,  restated,  supplemented  or modified  from time to time,  the
"Loan  Agreement")  by and among  SMALL  WORLD TOYS,  a  California  corporation
("Borrower"),  with its principal  place of business  located at 5711 Buckingham
Parkway,  Culver City, California 90230, PNC BANK, NATIONAL ASSOCIATION ("PNC"),
the various  financial  institutions  named therein or which hereafter  become a
party thereto (together with PNC, collectively, "Lenders"), and PNC as agent for
Lenders (in such capacity  "Agent").  Capitalized  terms not  otherwise  defined
herein shall have the meanings provided in the Loan Agreement.

      FOR VALUE  RECEIVED,  Borrower hereby promises to pay to the order of PNC,
at the office of Agent located at PNC Bank Center,  Two Tower Center, 8th Floor,
East Brunswick,  New Jersey 08816, or at such other place as Agent may from time
to time designate to Borrower in writing:

      (i)  the  principal  sum of One  Million  Five  Hundred  Thousand  Dollars
($1,500,000) or, if different from such amount,  the unpaid principal balance of
PNC's Commitment Percentage of the Seasonal Advances as may from time to time be
due and  owing  under  the  Loan  Agreement,  payable  in  accordance  with  the
provisions of the Loan Agreement and subject to acceleration upon the occurrence
of an Event of Default under the Loan  Agreement or earlier  termination  of the
Loan Agreement pursuant to the terms thereof; and

      (ii)  interest  on the  principal  amount  of this  Note from time to time
outstanding,  payable  at the  Seasonal  Advance  Rate in  accordance  with  the
provisions of the Loan Agreement.  In no event,  however,  shall interest exceed
the maximum  interest rate permitted by law. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, interest shall be payable
at the Default Rate.

      This Note is one of the  Seasonal  Advance  Notes  referred to in the Loan
Agreement.  This Note is secured,  inter alia, by the liens granted  pursuant to
the Loan Agreement and the Other  Documents,  is entitled to the benefits of the
Loan Agreement and the Other Documents, and is subject to all of the agreements,
terms and conditions therein contained.

      This  Note is  subject  to  mandatory  prepayment  and may be  voluntarily
prepaid,  in whole or in part, on the terms and conditions set forth in the Loan
Agreement.

      If an Event of Default  under  Section  10.7 of the Loan  Agreement  shall
occur, then this Note shall immediately become due and payable,  without notice,
together with  reasonable  attorneys' fees incurred to obtain or enforce payment
hereof.  If any other Event of Default  shall occur under the Loan  Agreement or
any of the Loan  Documents,  which is not  cured  within  any  applicable  grace
period, then this Note may, as provided in the Loan Agreement, be declared to be
immediately due and payable, without notice, together with reasonable attorneys'
fees incurred to obtain or enforce payment hereof.

<PAGE>

      This Note shall be construed and enforced in  accordance  with the laws of
the State of New York.

      Borrower  expressly waives any  presentment,  demand,  protest,  notice of
protest,  or  notice  of any  kind  except  as  expressly  provided  in the Loan
Agreement.

                                      SMALL WORLD TOYS

                                      By:
                                           -------------------------------------
                                      Name:
                                             -----------------------------------
                                      Title:
                                              ----------------------------------

STATE OF __________________________ )
                                    ) SS.:
COUNTY OF _________________________ )

      On  the  ___  day  of  ___________,   2004,   before  me  personally  came
_________________,  to me known,  who being by me duly sworn, did depose and say
that he/she is the _______________ of _______________,  the __________ described
in and which executed the foregoing  instrument;  and that he/she signed his/her
name  thereto as the act and deed of such  corporation  by order of the board of
directors of said corporation.

                                      ------------------------------------------
                                      Notary Public

                                      -2-GUARANTY BUSINESS CREDIT CORPORATION                            PLEDGE AGREEMENT
--------------------------------------------------------------------------------

                                PLEDGE AGREEMENT
                       (SUPPLEMENT TO SECURITY AGREEMENT)

PLEDGOR:        SMALL WORLD KIDS, INC.

ADDRESS:        5711 BUCKINGHAM PARKWAY
                CULVER CITY, CALIFORNIA 90230

DATE:           DECEMBER 15, 2004

THIS PLEDGE  AGREEMENT  ("Pledge  Agreement"),  dated the above date, is entered
into between the pledgor  named above  ("Pledgor"),  whose  address is set forth
above,  and PNC BANK,  NATIONAL  ASSOCIATION,  with an  address  at 2 North Lake
Avenue, Suite 440, Pasadena, California 91101, as agent ("Agent") for itself and
the lenders (the "Lenders")  under the Revolving  Credit and Security  Agreement
among such  Lenders,  Agent and Small World Toys (the  "Borrower").  This Pledge
Agreement is executed as a supplement to the Security  Agreement  (the "Security
Agreement") of substantially even date, between Pledgor and Agent.

      1. PLEDGE OF STOCK.  Pledgor shall concurrently deliver to Agent the stock
certificates and other securities  evidencing the stock and securities listed on
Exhibit A hereto,  together with duly executed instruments of assignment thereof
to Agent (which,  together with all replacements and substitutions  therefor are
hereinafter  referred to as the  "Securities").  Pledgor hereby pledges to Agent
and  grants  Agent  for the  benefit  of the Agent  and the  Lenders a  security
interest in the Securities,  and all rights and remedies relating to, or arising
out of, any and all of the foregoing,  and all proceeds  thereof  (collectively,
the  "Collateral")  to secure the  "Obligations"  (as  defined  in the  Security
Agreement),  including,  but not limited to, those arising under the  Continuing
Guaranty by the Pledgor in favor of Agent (the "Guaranty") relating to Borrower.
Any and all stock dividends,  rights, warrants, options, puts, calls, conversion
rights and other  securities  and any and all property and money  distributed or
delivered  with  respect to the  Securities  or issued upon the  exercise of any
puts, calls, conversion rights, options, warrants or other rights included in or
pertaining to the Securities shall be included in the term  "Securities" as used
herein and shall be subject to this Pledge Agreement,  and Pledgor shall deliver
the same to Agent  immediately  upon receipt thereof together with any necessary
instruments of transfer;  provided,  however, that until an Event of Default (as
hereinafter defined) shall occur, but subject to any other agreements by Pledgor
with or in favor of Agent,  Pledgor may retain any dividends paid in cash or its
equivalent,  with  respect  to any  stock  included  in the  Securities  and any
interest  paid with  respect  to any bonds,  debentures  or other  evidences  of
indebtedness  included in the Securities.  Pledgor hereby  acknowledges that the
acceptance  of the  pledge  of the  Securities  by Agent and  Lenders  shall not
constitute  a commitment  of any kind by Agent and Lenders to permit  Pledgor to
incur Obligations or to make loans to Borrower.

      2. VOTING AND OTHER  RIGHTS.  Pledgor shall have the right to exercise all
voting rights with respect to the  Securities,  provided no Event of Default (as
hereinafter defined) has occurred.  Upon the occurrence of any Event of Default,
Agent  shall  have the right (but not any  obligation)  to  exercise  all voting
rights  with  respect  to the  Securities.  Provided  no  Event of  Default  has
occurred,  Pledgor shall have the right to exercise all puts, calls,  straddles,
conversion rights, options, warrants, and other rights and remedies with respect
to the Securities,  provided  Pledgor obtains the prior written consent of Agent
thereto.  Agent shall have no  responsibility  or liability  whatsoever  for the
exercise  of, or failure to exercise,  any puts,  calls,  straddles,  conversion
rights,  options,  warrants,  rights to vote or  consent,  or other  rights with
respect to any of the  Securities.  If an Event of Default has  occurred,  Agent
shall  have  the  right  from  time to time to  transfer  all or any part of the
Securities to Agent's own name or the name of its nominee.

      3. REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represents and warrants
to Agent that Pledgor now has, and throughout the term of this Agreement will at
all times have, good title to the Securities and the other Collateral,  free and
clear  of any  and  all  security  interests,  liens  and  claims  of  any  kind
whatsoever.   Pledgor  further  represents  and  warrants  that  the  Collateral
represents 100% of the outstanding capital stock of the Borrower,  except as set
forth on Exhibit A hereto,  and Pledgor shall cause the  Collateral at all times
to include 100% of the outstanding capital stock of the Borrower now outstanding
or  hereafter  issued and 100% of all options and  warrants to acquire  stock of
said issuer hereafter issued,  except as set forth on Exhibit A hereto.  Pledgor
represents  and warrants  that there are no  outstanding  options or warrants to
acquire stock of the Borrower.

                                       -1-

<PAGE>

GUARANTY BUSINESS CREDIT CORPORATION                            PLEDGE AGREEMENT
--------------------------------------------------------------------------------

      4. EVENTS OF DEFAULT.  If any one or more of the  following  events  shall
occur,  any such event shall  constitute  an Event of Default and Pledgor  shall
provide Agent with immediate notice thereof:  (a) Any warranty or representation
delivered  to Agent or any  Lender  by  Pledgor  or any of  Pledgor's  officers,
employees or agents in  connection  herewith,  is  incorrect,  false,  untrue or
misleading in any material respect; or (b) Pledgor shall fail to promptly pay or
perform when due part or all of any of its obligations under this Agreement,  or
(c) any Event of Default shall occur under the Security Agreement.

      5. REMEDIES.  Upon the occurrence of an Event of Default,  and at any time
thereafter,  Agent  shall  have the  right,  without  notice to or  demand  upon
Pledgor,  to exercise  any one or more of the  remedies  provided  for under the
Security  Agreement  or that Agent has under law or equity.  Without  limitation
upon  the  terms  of the  Security  Agreement,  Pledgor  agrees  that  it  shall
conclusively be deemed commercially reasonable for Agent, in connection with any
sale or disposition of the Securities,  to impose restrictions and conditions as
to the investment intent of a purchaser or bidder, the ability of a purchaser or
bidder  to bear  the  economic  risk of an  investment  in the  Securities,  the
knowledge and  experience  in business and  financial  matters of a purchaser or
bidder, the access of a purchaser or bidder to information concerning the issuer
of the Securities,  as well as legend conditions and stop transfer  instructions
restricting subsequent transfer of the Securities, and any other restrictions or
conditions  which Agent believes to be necessary or advisable in order to comply
with any state or federal  securities or other laws.  Pledgor  acknowledges that
the foregoing restrictions may result in fewer proceeds being received upon such
sale then would otherwise be the case. Pledgor hereby agrees to provide to Agent
any and all  information  required  by Agent  in  connection  with any  sales of
Securities by Agent hereunder. If, after the occurrence of any Event of Default,
Rule 144  promulgated by the  Securities  and Exchange  Commission (or any other
similar rule) is available for use by Agent in connection  with the sales of any
Securities hereunder,  Pledgor agrees not to utilize Rule 144 in the sale of any
securities  held by  Pledgor of the same class as the  Securities,  without  the
prior written consent of Agent.

      6. REMEDIES, CUMULATIVE; NO WAIVER. The failure of Agent to enforce any of
the provisions of this Agreement at any time or for any period of time shall not
be construed to be a waiver of any such  provision  or the right  thereafter  to
enforce the same.  All remedies  hereunder  shall be cumulative  and shall be in
addition  to all  rights,  powers and  remedies  given to Agent by the  Security
Agreement, law or equity.

      7. TERM.  This  Agreement and Agent's rights  hereunder  shall continue in
full  force and  effect  until all of the  Obligations  have  been  fully  paid,
performed and  discharged  and the Security  Agreement and all other present and
future agreements between Borrower and Agent have terminated.  Upon termination,
Agent shall return the Collateral to Pledgor,  with any necessary instruments of
transfer.

      8.  GENERAL  PROVISIONS.   This  Agreement,  the  Guaranty,  the  Security
Agreement  and the  documents  referred  to therein  are the  entire  agreements
between  Pledgor and Agent with respect to the subject  matter  hereof,  and all
representations,  warranties,  agreements,  heretofore made, with respect to the
subject matter hereof, which are not set forth herein or therein, are superseded
hereby.  The  terms  hereof  may not be waived  or  amended  except in a writing
executed by Pledgor and Agent.  All rights  hereunder shall inure to the benefit
of and be  enforceable  by Agent and its  successors  and  assigns  and shall be
binding upon Pledgor and its successors  and assigns;  provided that Pledgor may
not transfer any of its rights  hereunder  without the prior written  consent of
Agent.  Pledgor  shall  upon  demand  reimburse  Agent for all  costs,  fees and
expenses  (including without limitation  attorneys' fees, whether or not suit be
brought),  which are incurred by Agent in  connection  with,  or arising out of,
this Agreement,  including,  without limitation,  from the enforcement of any of
Agent's rights hereunder.

      9.  MUTUAL  WAIVER OF RIGHT TO JURY TRIAL.  AGENT AND PLEDGOR  EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT
OR FUTURE  INSTRUMENT  OR  AGREEMENT  BETWEEN  AGENT AND  PLEDGOR;  OR (III) ANY
CONDUCT,  ACTS OR  OMISSIONS  OF AGENT  OR  PLEDGOR  OR ANY OF THEIR  DIRECTORS,
OFFICERS,  EMPLOYEES,  AGENTS,  ATTORNEYS OR ANY OTHER PERSONS  AFFILIATED  WITH
AGENT OR PLEDGOR;  IN EACH OF THE FOREGOING CASES,  WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.

     PLEDGOR:

     SMALL WORLD KIDS, INC.

     BY
       ---------------------------------------------------
     NAME
         -------------------------------------------------
     TITLE
          ------------------------------------------------

     AGENT:

     PNC BANK, NATIONAL ASSOCIATION

     BY
       ---------------------------------------------------
     NAME
         -------------------------------------------------
     TITLE
          ------------------------------------------------

                                       -2-

<PAGE>

GUARANTY BUSINESS CREDIT CORPORATION                            PLEDGE AGREEMENT
--------------------------------------------------------------------------------

                                    EXHIBIT A

8,333 shares of Common Stock of Small World Toys

The Securities with respect to which Pledgor is providing Agent a first-priority
security interest,  and possession of the stock  certificates,  do not as of the
date  hereof  constitute  100% of the  outstanding  capital  stock of  Borrower,
because 1,667 shares of the Common Stock of Small World Toys (the "Prior Pledged
Shares") have been pledged to Eddy  Goldwasser to secure two Secured  Promissory
Notes  payable to Eddy  Goldwasser,  both dated May 20, 2004,  in the  principal
amounts of $500,000 and $1,000,000,  respectively.  Pledgor represents, warrants
and  covenants  that Agent shall have a security  interest in the Prior  Pledged
Shares,  subject only to such security interest granted to Eddy Goldwasser,  and
Pledgor agrees that,  immediately upon the payment of such notes,  Pledgor shall
provide the stock  certificates  evidencing  the Prior Pledged  Shares to Agent,
together with duly executed instruments of assignment thereof.

                                      -3-

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