Document:

SUBORDINATION AGREEMENT

      THIS  SUBORDINATION  AGREEMENT  (this  "AGREEMENT")  is entered into as of
December 15, 2004, by and among PNC BANK, NATIONAL  ASSOCIATION,  for itself and
as  agent  (collectively,  the  "BANK")  under  the  "Loan  Agreement"  and  the
"Guaranty"  (as those terms are defined  below),  SMALL  WORLD KIDS,  INC.  (the
"DEBTOR"), and SWT, LLC (the "CREDITOR").

                                    RECITALS

      The Bank, the Lenders,  and Small World Toys ("BORROWER") are parties to a
Revolving Credit and Security  Agreement,  dated on or about the date hereof (as
amended,  supplemented or replaced from time to time, the "LOAN Agreement"). The
Debtor has provided a Continuing Guaranty (the "GUARANTY") of the obligations of
the Borrower, in favor of the Bank, for itself and as agent for the Lenders (the
"LENDERS")  described therein,  a security agreement securing the Guaranty,  and
various other documents, instruments and agreements all between the Bank and the
Debtor  (collectively,  and as amended,  supplemented  or replaced  from time to
time, the "DEBTOR DOCUMENTS").

      The Creditor has  extended or is  extending to the Debtor  certain  loans,
advances and extensions of credit,  as evidenced by a promissory  note dated May
20, 2004 in the original  principal  amount of  $5,000,000  and having an unpaid
principal  balance  of  $5,000,000  (the  "SUBORDINATED  NOTE")  and  the  other
agreements, documents and instruments between Creditor and Debtor (collectively,
with the Subordinated Note, the "CREDITOR DOCUMENTS").

      The Bank and the Creditor hereby desire to set forth the respective rights
and obligations each has as against the other with respect to the Debtor.

      NOW, THEREFORE,  the parties hereto, intending to be legally bound, hereby
agree as follows:

      1.    DEFINITIONS.

            "COLLATERAL"  means any collateral now or in the future securing the
Obligations,  including but not limited to claims  against any guarantors of the
Obligations and any collateral securing such guarantees.  In addition,  Creditor
agrees that any funds of the Debtor which Creditor  obtains through the exercise
of any right of setoff or other similar right, constitute Collateral.

            "OBLIGATIONS"  means  all  loans,  advances,   debts,   liabilities,
obligations,  covenants  and  duties  owing by the Debtor to the Bank (or to any
other direct or indirect  subsidiary of PNC Bank Corp.),  or owing by the Debtor
to the other Lenders  pursuant to the Debtor  Documents,  of any kind or nature,
present or future  (including  any interest  accruing  thereon after maturity or
after the filing of any  petition  in  bankruptcy,  or the  commencement  of any
insolvency, reorganization or like proceeding relating to the Debtor, whether or
not a claim  for  post-filing  or  post-petition  interest  is  allowed  in such
proceeding), whether or not evidenced by any note, guaranty or other instrument,
whether arising under any agreement,  instrument or

<PAGE>

document,  whether or not for the payment of money, whether arising by reason of
an extension of credit,  opening of a letter of credit, loan, equipment lease or
guarantee, under any interest or currency swap, future, option or other interest
rate protection or similar  agreement,  or in any other manner,  whether arising
out of overdrafts on deposit or other  accounts or  electronic  funds  transfers
(whether through automated clearing houses or otherwise) or out of the Bank's or
any Lender's non-receipt of or inability to collect funds or otherwise not being
made  whole in  connection  with  depository  transfer  check  or other  similar
arrangements, whether direct or indirect (including those acquired by assignment
or participation),  absolute or contingent,  joint or several,  due or to become
due, now existing or hereafter arising, and any amendments, extensions, renewals
or increases  and all costs and  expenses of the Bank or any Lender  incurred in
the  documentation,   negotiation,  modification,   enforcement,  collection  or
otherwise  in  connection  with  any  of  the  foregoing,  including  reasonable
attorneys' fees and expenses.

            "OTHER NOTES" means, collectively,  (a) the Secured Promissory Note,
dated May 20, 2004,  by Savon Team Sports,  Inc. (now known as Small World Kids,
Inc.),  in  favor  of  Eddy  Goldwasser,  in  the  stated  principal  amount  of
$1,000,000,  (b) the Promissory  Note, dated May 20, 2004, by Savon Team Sports,
Inc. (now known as Small World Kids, Inc.), in favor of Eddy Goldwasser,  in the
stated  principal  amount  of  "$700,000  (Subject  to  Adjustment)",   (c)  the
promissory  note,  dated  September  17,  2004,  by Grantor,  in favor of Strome
Hedgecap Ltd. and/or Strome  Investment  Management,  in the principal amount of
$1,200,000 (the "STROME  NOTE"),  (d) the promissory  note,  dated September __,
2004, by Grantor,  in favor of St. Cloud Capital Partners L.P., in the principal
amount of $2,000,000 (the "ST. CLOUD NOTE").

            "SUBORDINATED DEBT" means any loans, advances,  debts,  liabilities,
obligations,  covenants  and duties  owing by the Debtor to the  Creditor of any
kind or  nature,  present  or  future,  whether  or not  evidenced  by any note,
guaranty or other instrument, whether arising under any agreement, instrument or
document,  whether or not for the payment of money, whether arising by reason of
an extension of credit, loan or guarantee or in any other manner, whether direct
or indirect, absolute or contingent, joint or several, due or to become due, now
existing or  hereafter  arising  (including  any such  obligations  purchased or
otherwise  acquired by Creditor),  whether  consisting  of principal,  interest,
expense payments,  management and consulting fees, liquidation costs, attorneys'
fees and costs or otherwise,  and all whether arising or created pursuant to the
Creditor Documents or otherwise.

            "SUBORDINATE INTEREST" means any lien, ownership interest,  security
interest or other  interest or claim now held or hereafter  acquired by Creditor
in the Collateral.

      2.    SUBORDINATION.

            (a) Subject to Section 3 hereof,  the  Creditor  hereby  irrevocably
subordinates  and  postpones  the  payment  and the time of  payment  of all the
Subordinated   Debt  and  all  claims  and  demands  arising  therefrom  to  the
Obligations  and  directs  that  the  Obligations  be paid in  full  before  the
Subordinated  Debt, and Creditor agrees not to ask for, demand, sue for, take or
receive all or any part of the  Subordinated  Debt nor any  additional  security
therefor unless and until all of the Obligations have been paid and performed in
full, in cash.

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            (b) Creditor shall:  (i) make notations on the books of the Creditor
beside all accounts or on such other  statements  evidencing  or  recording  any
Subordinated  Debt to the effect that such  Subordinated  Debt is subject to the
provisions of this  Agreement,  (ii) furnish the Bank,  upon Bank's request from
time to time,  a statement  of the account  between the  Creditor and the Debtor
representing the Subordinated Debt and copies of each of the Creditor Documents,
and  (iii)  give the  Bank,  upon its  request,  full  and  free  access  to the
Creditor's  books pertaining only to such accounts with the right to make copies
thereof.  Each  and  every  Creditor  Document  that is a  promissory  note or a
negotiable  instrument  shall  bear a legend  as set  forth in  paragraph  13(c)
hereof,  but this Agreement shall be fully effective,  even if no such legend is
affixed.

            (c) Creditor  represents and warrants that as of the date hereof the
Debtor is not  indebted to Creditor  except  under the  Subordinated  Note in an
amount not  exceeding  $5,000,000,  and that Creditor has not executed any other
subordination  agreement  with  respect  to such debt or the  Collateral  or the
Debtor.

            (d) All security  interests now or hereafter acquired by Bank in any
or all of the Collateral,  in which the Debtor now has or hereafter acquires any
ownership, leasehold or other interest, shall at all times be prior and superior
to the Subordinate Interest.  Said priority shall be applicable  irrespective of
the time or order of attachment  or  perfection of any security  interest or the
time or order of filing of any financing  statements or other documents,  or any
statutes,  rules or law, or court decisions to the contrary.  Creditor shall not
collect,  take  possession of,  foreclose  upon, or exercise any other rights or
remedies  with respect to, the  Collateral,  judicially  or  non-judicially,  or
attempt to do any of the foregoing,  without the prior written  consent of Bank,
which shall be a matter of Bank's sole discretion.

      3.  PAYMENTS TO  CREDITOR.  Notwithstanding  any other  provision  of this
Agreement,  the  Debtor  shall  be  entitled  to pay and the  Creditor  shall be
entitled to receive each of the following  payments,  provided that (i) no Event
of Default  exists  under the Debtor  Documents  or the Loan  Agreement or would
result  from such  payment,  and that  neither  Debtor nor  Creditor  shall have
breached any of their representations,  warranties, or covenants hereunder, (ii)
Borrower  would have been in  compliance  with the Fixed Charge  Coverage  Ratio
requirements  of Section 6.5(b) of the Loan Agreement for the quarter that ended
immediately  preceding  such  payment if all amounts  paid by Borrower to Debtor
since the end of such  quarter  had been  given  effect as of such  quarter  for
purposes of calculating the Fixed Charge  Coverage  Ratio,  and (iii) based upon
Borrower's  financial  trends,  Borrower will be in  compliance  with said Fixed
Charge Coverage Ratio requirements for future quarters (as determined by Bank in
its good faith business judgment based upon information provided by Borrower):

            (a) The regularly scheduled payments of interest (at the non-default
rate),  in the amounts and when due in the ordinary course of business under the
terms of the Subordinated Note (as in effect on the date hereof), provided that,
at the time of such payments,  the Borrower has "Adjusted Undrawn  Availability"
(as defined in the Loan Agreement) of not less than $500,000,

                                      -3-
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            (b) The regularly  scheduled  payments of principal,  in the amounts
and  when  due in the  ordinary  course  of  business,  under  the  terms of the
Subordinated  Note (as in  effect  on the  date  hereof),  provided  that (i) no
"Seasonal Advance" (as defined in the Loan Agreement) is outstanding and (ii) at
the time of such payments,  the Borrower has "Undrawn  Availability" (as defined
in the Loan Agreement) of not less than $1,000,000, and

            (c) Prepayments of principal and interest (at the non-default  rate)
owed under the  Subordinated  Note (as in effect on the date  hereof),  provided
that  (i)  no  "Seasonal   Advance"  (as  defined  in  the  Loan  Agreement)  is
outstanding,  (ii) at the  time of such  payments,  the  Borrower  has  "Undrawn
Availability"  (as defined in the Loan  Agreement) of not less than  $1,000,000,
(iii) the aggregate of the payments allowed  pursuant to this  subsection,  when
aggregated  with all  prepayments  of principal  and interest  made on the Other
Notes,  shall not at any time exceed an amount equal to 75% of the  aggregate of
the cash  consideration,  net of related expenses,  that Debtor has received for
the issuance of equity  securities of Debtor after the date hereof and for which
Debtor has  delivered to Bank evidence  satisfactory  to Bank that such cash has
been received, and (iv) no payments shall be allowed pursuant to this subsection
until all  indebtedness  under the St.  Cloud Note and the Strome  Note has been
paid in full.

Except for  payments  expressly  allowed  pursuant to this  Section,  if any, no
payments of  principal  on the  Subordinated  Debt,  or  interest,  or costs and
expenses, or other payments, shall be permitted or made.

      4.  SECURITY.  The Debtor shall not grant and the Creditor  shall not take
any additional lien on or security interest in any of the Debtor's property, now
owned or hereafter acquired or created, without the prior written consent of the
Bank.

      5. DEFAULT;  STANDSTILL LIMITATION.  The Creditor shall promptly give Bank
written  notice of any  default  under any  document,  instrument  or  agreement
evidencing,  securing  or  relating  to  any  of the  Subordinated  Debt  or the
Subordinate Interest.  Notwithstanding any breach or default by the Debtor under
the Creditor Documents, the Creditor shall not at any time or in any manner: (a)
commence  or  join  in  any  proceeding  to  recover  any  amounts  due  on  the
Subordinated Debt,  commence or join in any involuntary  bankruptcy  petition or
similar judicial proceeding against Debtor,  foreclose upon, take possession of,
or attempt to realize on any  Collateral,  or proceed in any way to enforce  any
claims it has or may have  against  the Debtor  under the  Subordinated  Debt or
otherwise,  or (b) contest,  protest or object to any action taken by Bank under
the Debtor  Documents,  the Loan  Agreement or  otherwise,  unless and until the
Obligations have been fully and indefeasibly paid and satisfied in full.

      6.  BANKRUPTCY/PROBATE  OF DEBTOR.  In the event a petition  or action for
relief  shall be filed by or against  the Debtor  under any  federal  bankruptcy
statute  in effect  from  time to time,  or under  any  other  law  relating  to
bankruptcy, insolvency, reorganization, receivership, general assignment for the
benefit of creditors,  moratorium,  creditor  composition,  arrangement or other
relief  for  debtors,  the  claims  of the  Bank  and the  Lenders  (secured  or
unsecured)  against  the  assets or estate of the Debtor  for  repayment  of the
Obligations shall be indefeasibly paid in full before any payment is made to the
Creditor on the Subordinated Debt,  whether such payment is in cash,  securities
or any other form of property or rights. The Bank may, in its discretion, file a
proof of claim for or collect the Creditor's  claim first for the benefit of the
Bank and/or the other Lenders to the extent of the unpaid  Obligations  and then
for the benefit of the Creditor  (but without  creating any duty or liability to
the Creditor other than to remit to the Creditor distributions, if any, actually
received in such proceedings  after the Obligations have been paid and satisfied
in  full)  directly  from  the  receiver,  trustee,  custodian,   liquidator  or
representative  of the Debtor's  estate in such  proceeding.  The Debtor and the
Creditor shall furnish all assignments,  powers or other documents  requested by
the Bank to facilitate such direct collection by the Bank.

                                      -4-
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      7.  RECEIPT OF  PAYMENTS  BY  CREDITOR.  Should the  Creditor  directly or
indirectly  receive any payment or distribution  not permitted by the provisions
of this  Agreement or any  Collateral or proceeds  thereof  (including,  without
limitation,  any funds  obtained  through the exercise of any right of setoff or
similar right),  prior to the full and indefeasible  payment and satisfaction of
the Obligations and the  termination of all financing  arrangements  between the
Bank and the Debtor,  the Creditor will deliver the same to the Bank in the form
received  (except  for the  endorsement  or  assignment  of the  Creditor  where
necessary),  for  application to the Obligations in such order and manner as the
Bank may elect. Until so delivered,  the Creditor shall hold the same, in trust,
for the Bank as property of the Bank,  and shall not commingle  such property of
the Bank with any other property held by the Creditor. In the event the Creditor
fails  to make any such  endorsement  or  assignment,  the  Bank,  or any of its
officers or employees on behalf of the Bank, is hereby irrevocably authorized in
its own  name or in the  name  of the  Creditor  to  make  such  endorsement  or
assignment   and   is   hereby   irrevocably   appointed   as   the   Creditor's
attorney-in-fact for those purposes.

      8.    BANK'S RIGHTS.

            (a) The Creditor  hereby  consents that at any time and from time to
time,  without  further  consent of or notice to the Creditor and without in any
manner  affecting,  impairing,  lessening or releasing any of the  provisions of
this Agreement,  the Bank and Lenders may, in their sole discretion:  (i) renew,
compromise,  extend, expand, postpone, waive, accelerate,  terminate, change the
payment terms of, or otherwise modify the Obligations or amend,  renew,  replace
or  terminate  the  Debtor  Documents  or any and all  other  agreements  now or
hereafter  related  to the  Obligations;  (ii)  extend  credit to the  Debtor or
Borrower  in  whatever  amount on a secured  or  unsecured  basis or take  other
support for the  Obligations  and  exchange,  enforce,  waive,  sell,  transfer,
collect,  adjust or  release  any such  security  or other  support  or any part
thereof;  (iii) apply any and all payments or proceeds of such security or other
support  and in  any  order  or  manner  as the  Bank,  in its  discretion,  may
determine;  and (iv) release or substitute any party liable on the  Obligations,
any guarantor of the Obligations,  or any other party providing  support for the
Obligations.

            (b) This Agreement will not be affected, impaired or released by any
delay or  failure of the Bank or Lenders  to  exercise  any of their  rights and
remedies  against the Debtor or any guarantor or under any of the Obligations or
against any  Collateral,  by any failure of the Bank or Lenders to take steps to
perfect or maintain any lien on, or to preserve any rights to, any Collateral by
any  irregularity,  unenforceability  or invalidity of any of the Obligations or
any part thereof or any security or guarantee therefor, or by any other event or
circumstance  which  otherwise  might  constitute a defense  available  to, or a
discharge of, the Debtor or a subordinated  creditor. The Creditor hereby waives
demand, presentment for performance,  protest, notice of

                                      -5-
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dishonor  and  of  protest  with  respect  to  the  Subordinated  Debt  and  the
Collateral,  notice of acceptance of this Agreement, notice of the making of any
of the  Obligations  and notice of  default  under any of the  Obligations.  The
Creditor  waives any right to require  Bank or Lenders to marshal  any assets in
favor of the Creditor or against or in payment of any or all of the Obligations.
Creditor  further  waives any defense  arising by reason of any claim or defense
based  upon an  election  of  remedies  by Bank or  Lenders  which in any manner
impairs, affects, reduces, releases, destroys and/or extinguishes the Creditor's
subrogation  rights,  rights to proceed  against  the Debtor for  reimbursement,
and/or any other rights of the Creditor.

            (c) Nothing in this  Agreement  will obligate the Bank or Lenders to
grant  credit to, or continue  financing  arrangements  with,  the Debtor or the
Borrower.

      9. CONTINUING AGREEMENT. This is a continuing agreement and will remain in
full force and effect  until all of the  Obligations  and all of the  Creditor's
obligations  and  undertakings to the Bank and Lenders have been fully performed
and until all the Debtor  Documents  have been  terminated.  This Agreement will
continue to be effective or will be  automatically  reinstated,  as the case may
be, if at any time payment of all or any part of the Obligations is rescinded or
must otherwise be returned by the Bank or Lenders upon  insolvency,  bankruptcy,
or reorganization of the Debtor or otherwise, all as though such payment had not
been made.

      10. NO CHALLENGE TO LIENS.  The Creditor  agrees that it will not make any
assertion,  claim or argument in any action,  suit or  proceeding  of any nature
whatsoever in any way challenging the priority, validity or effectiveness of the
liens and security interests granted to the Bank or the Lenders.

      11.   DISPOSITION OR RELEASE OF COLLATERAL.

            (a) The  Creditor  agrees that,  until Bank has received  payment in
full of all Obligations, now existing or hereafter arising, Bank may dispose of,
and exercise  any other  rights with  respect to, any or all of the  Collateral,
free of the Subordinate Interest,  provided that the Creditor retains any rights
it may have as a junior  secured  creditor with respect to the surplus,  if any,
arising from any such disposition or enforcement.

            (b) If at any  time or from  time to  time  the  Collateral,  or any
portion thereof, is in any manner sold or otherwise transferred,  the Creditor's
consent to such disposition  shall be automatically and irrevocably given if the
Bank, in its sole discretion and for any reason,  consents to such  disposition,
and in any event the  Creditor  shall not be entitled  to receive  any  proceeds
(cash or non-cash) of such  disposition  unless and until the  Obligations  have
been indefeasibly paid in full.

            (c) If, at any time and for any reason,  the Bank  releases any lien
on the Collateral,  or any portion thereof,  the Creditor shall likewise release
its lien on the property so released, if the Creditor has obtained such a lien.

                                      -6-
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            (d) Upon any disposition of any of the Collateral by Bank, or by the
Debtor with Bank's written consent,  the Creditor hereby authorizes Bank to file
Uniform  Commercial  Code  termination  statements with respect to any financing
statements in favor of Creditor with respect to Borrower and the Collateral, and
Creditor  agrees,  if requested by Bank, to execute and immediately  deliver any
and all other releases,  terminations  and other  documents or agreements  which
Bank deem necessary to accomplish a disposition  of the  Collateral  free of the
Subordinate  Interest;  provided  that  Creditor  shall  retain its  Subordinate
Interest in the proceeds of the Collateral so disposed of.

      12. ORDER OF PROCEEDINGS.  Nothing in this Agreement is intended to compel
the Bank,  the  Lenders or the  Creditor  at any time to  declare  the Debtor in
default  or compel the Bank or  Lenders  to  proceed  against  or  refrain  from
proceeding  against  any  Collateral  in any order or  manner.  All  rights  and
remedies of the Bank and Lenders with respect to the Collateral, the Debtor, and
any  other  obligors   concerning  the   Obligations   are  cumulative  and  not
alternative.

      13.   ASSIGNMENT OF SUBORDINATED DEBT.

            (a)  The  provisions  hereof  shall  inure  to  the  benefit  of any
financial  institution  obtained by the Debtor,  the Bank,  or the Lenders which
receives a guaranty from Debtor in connection with providing replacement working
capital or other  financing  for the  Borrower  in place of the Bank or Lenders,
regardless of whether any such replacement  lender provides its own financing or
succeeds to the Bank's or Lenders' financing by assignment. If requested by such
replacement  lender,  the Creditor shall execute with such replacement  lender a
subordination agreement substantially similar to this Agreement.

            (b) The  Creditor  also  agrees  that as a  prior  condition  of any
assignment  of any of its  interests  under any of the Creditor  Documents,  the
Creditor shall require the assignee to acknowledge  this Agreement and agree, in
writing, to be bound by the terms and conditions hereof.

            (c)  Each  Creditor  Document  which  is  a  promissory  note  or  a
negotiable  instrument  shall bear the  following  legend,  or a similar  legend
acceptable to Bank, in boldface type:

            THIS NOTE IS SUBJECT TO THE TERMS OF A  SUBORDINATION  AGREEMENT  IN
      FAVOR  OF PNC  BANK,  NATIONAL  ASSOCIATION,  FOR  ITSELF  AND  AS  AGENT.
      NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN INSTRUMENT,
      NO PAYMENT ON ACCOUNT OF ANY OBLIGATION ARISING FROM OR IN CONNECTION WITH
      THE WITHIN  INSTRUMENT  OR ANY RELATED  AGREEMENT  (WHETHER OF  PRINCIPAL,
      INTEREST OR OTHERWISE) SHALL BE MADE, PAID, RECEIVED OR ACCEPTED EXCEPT IN
      ACCORDANCE WITH THE TERMS OF SAID SUBORDINATION AGREEMENT.

      14. FINANCING OF FIDUCIARY. In the event of a bankruptcy,  reorganization,
other insolvency or court  proceeding for the Debtor and/or Borrower  commences,
the Bank  and  Lenders  shall  have  the  option  (in  their  sole and  absolute
discretion) to continue to provide financial accommodations (on terms acceptable
to the Bank and  Lenders)  to the  trustee,  other  fiduciary,  or of the Debtor
and/or Borrower as a debtor-in-possession, if the Bank deems such accommodations
to be in its best interests.  The subordination and lien priority  provisions of
this Agreement  shall continue to apply to all advances made during the pendency
of such  court  proceedings,  so that the Bank (for  itself  and/or on behalf of
Lenders)  shall have a prior lien on all  Collateral,  created  before or during
such court  proceeding,  to secure all  Obligations,  whether  created before or
during such court  proceeding.  The Creditor hereby waives any right it may have
to object to  financing  by the Bank or the Lenders  during the pendency of such
court  proceeding  and the  Creditor's  consent to such  financing  shall not be
required  regardless of whether the court supervising such proceeding  approves,
grants or allows adequate protection to the Creditor.

                                      -7-
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      15.  INVESTIGATION OF PARTIES.  The Creditor has entered into the Creditor
Documents  with the Debtor and the Bank has  entered  into the Debtor  Documents
with the Debtor and the Creditor  and the Bank have entered into this  Agreement
each upon its own  independent  investigation,  and each  makes no  warranty  or
representation  as to each other with respect to the financial  condition of the
Debtor,  or its  ability  to repay  its loans to the  Creditor  or the Bank (and
Lenders) in the future.  Nothing in this Agreement shall be deemed to constitute
this  Agreement as a security or create a joint venture or  partnership  between
the Creditor and the Bank for any purpose.

      16.  IMPROPER  ACTION BY CREDITOR.  If the  Creditor,  the Debtor or both,
contrary to this Agreement,  make,  attempt to or threaten to allow the Creditor
to exercise its remedies  against the Debtor  under the Creditor  Documents,  or
make any  payment or take any action  contrary to this  Agreement,  the Bank may
restrain or enjoin the Creditor and the Debtor from so doing, it being expressly
understood  and agreed by the Creditor  and the Debtor that:  (i) the Bank's (or
Lenders')  damages from their actions may at that time be difficult to ascertain
and may be  irreparable,  and (ii) the Creditor and the Debtor waive any defense
or claim that the Bank (or Lenders) or the Debtor cannot demonstrate  damages or
can be made whole by the awarding of damages.

      17.  INDEMNIFICATION OF BANK. The Creditor agrees to indemnify and to hold
the Bank and the  Lenders,  and each of their  officers,  directors,  agents and
employees, harmless from any and all losses, damages, liabilities,  expenses and
obligations,  including attorneys' fees and expenses, as they arise, relating to
actions of the Creditor taken contrary to this Agreement.

      18. NOTICES. All notices, demands, requests, consents, approvals and other
communications  required or permitted  hereunder  must be in writing and will be
effective  upon  receipt.   Such  notices  and  other   communications   may  be
hand-delivered,  sent by facsimile  transmission  with  confirmation of delivery
with a copy sent by first-class mail, or sent by nationally recognized overnight
courier  service,  to a party's address set forth below or to such other address
as any party may give to the other in writing for such purpose:

TO THE BANK:                    PNC BANK, NATIONAL ASSOCIATION
                                2 NORTH LAKE AVENUE, SUITE 440
                                PASADENA, CALIFORNIA  91101
                                ATTENTION:  PORTFOLIO MANAGER
                                FACSIMILE NO.: (626) 432-4589

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<PAGE>

TO THE CREDITOR:                SWT, LLC
                                5711 BUCKINGHAM PARKWAY
                                CULVER CITY, CALIFORNIA 90230
                                ATTENTION:  BOB RANKIN
                                FACSIMILE NO.: (310) 410-9606

TO THE DEBTOR:                  SMALL WORLD KIDS, INC.
                                5711 BUCKINGHAM PARKWAY
                                CULVER CITY, CALIFORNIA 90230
                                ATTENTION:  BOB RANKIN
                                FACSIMILE NO.: (310) 410-9606

      19.  PRESERVATION  OF  RIGHTS.  No delay or  omission  on the  Bank's  (or
Lenders') part to exercise any right or power arising  hereunder will impair any
such right or power or be  considered  a waiver of any such right or power,  nor
will the Bank's (or Lenders') action or inaction impair any such right or power.
The Bank's (and Lenders')  rights and remedies  hereunder are cumulative and not
exclusive of any other  rights or remedies  which the Bank (or Lenders) may have
under  other  agreements,  at law or in  equity.  Nothing in this  Agreement  is
intended  to  modify,  alter,  reduce or impair  any  rights  which the Bank (or
Lenders) or the Creditor may have against the Debtor under the Debtor  Documents
or the Creditor  Documents,  respectively,  or under any other agreement between
them, or either of them, and the Debtor.

      20.  ILLEGALITY.  In case any one or more of the  provisions  contained in
this Agreement should be invalid,  illegal or unenforceable in any respect,  the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein shall not in any way be affected or impaired thereby.

      21.  CHANGES  IN  WRITING.  No  modification,  amendment  or waiver of any
provision of this  Agreement  nor consent to any  departure by the Debtor or the
Creditor therefrom, will be effective unless made in a writing and signed by the
Bank,  and then such waiver or consent  shall be effective  only in the specific
instance and for the purpose for which given.

      22.  ENTIRE  AGREEMENT.   This  Agreement  (including  the  documents  and
instruments  referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings,  both written and oral, among the
parties with respect to the subject matter hereof.

      23.  COUNTERPARTS.   This  Agreement  may  be  signed  in  any  number  of
counterpart copies and by the parties hereto on separate  counterparts,  but all
such  copies  shall  constitute  one and the  same  instrument.  Delivery  of an
executed  counterpart  of a  signature  page  to  this  Agreement  by  facsimile
transmission shall be effective as delivery of a manually executed  counterpart.
Any party so executing this Agreement by facsimile  transmission  shall promptly
deliver a manually  executed  counterpart,  provided  that any  failure to do so
shall  not  affect  the  validity  of  the  counterpart  executed  by  facsimile
transmission.

      24. SUCCESSORS AND ASSIGNS.  This Agreement will be binding upon and inure
to the benefit of the Debtor,  the  Creditor  and the Bank and their  respective
heirs,  executors,  administrators,  successors and assigns (including,  without
limitation, the Lenders and any of their participants);  provided, however, that
neither the Debtor nor the  Creditor  may assign this  Agreement  in whole or in
part  without  the Bank's  prior  written  consent  and the Bank at any time may
assign this  Agreement in whole or in part.  No claims or rights are intended to
be created  hereunder  for the benefit of the Debtor or any alleged  third party
beneficiary hereof.

                                      -9-
<PAGE>

      25. INTERPRETATION.  In this Agreement, unless the parties otherwise agree
in writing, the singular includes the plural and the plural the singular;  words
importing any gender include the other genders; the word "or" shall be deemed to
include  "and/or",  the words  "including",  "includes"  and "include"  shall be
deemed to be followed by the words "without limitation"; references to articles,
sections  (or  subdivisions  of  sections)  or  exhibits  are to  those  of this
Agreement  unless  otherwise  indicated;  and references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments and
other modifications to such instruments,  but only to the extent such amendments
and other  modifications  are not  prohibited  by the  terms of this  Agreement.
Section  headings in this  Agreement are included for  convenience  of reference
only and shall not constitute a part of this Agreement for any other purpose. If
this  Agreement is executed by more than one party as Debtor or by more than one
party as Creditor, the obligations of such persons or entities hereunder will be
joint and several.

      26.  GOVERNING LAW AND  JURISDICTION.  This Agreement shall be governed by
and  construed in  accordance  with the laws of the State of New York applied to
contracts  to be  performed  wholly  within the State of New York.  Any judicial
proceeding  brought by or against Creditor or Debtor with respect this Agreement
or any related  agreement may be brought in any court of competent  jurisdiction
in New York  County,  State of New York,  United  States  of  America,  and,  by
execution and delivery of this  Agreement,  Creditor and Debtor each accepts for
itself and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any  judgment  rendered  thereby  in  connection  with this  Agreement.
Creditor and Debtor each hereby waives  personal  service of any and all process
upon it and consents  that all such service of process may be made by registered
mail (return  receipt  requested) and service so made shall be deemed  completed
five (5) days after the same shall  have been so  deposited  in the mails of the
United States of America. Nothing herein shall affect the right to serve process
in any  manner  permitted  by law or  shall  limit  the  right  of Bank to bring
proceedings  against Creditor or Debtor in the courts of any other jurisdiction.
Creditor and Debtor each waives any objection to  jurisdiction  and venue of any
action  instituted  hereunder  in such  courts in New York  County and shall not
assert any defense with respect  thereto based on lack of  jurisdiction or venue
or based upon forum non conveniens. Creditor and Debtor each waives the right to
remove  any  judicial   proceeding   brought  against  Creditor  or  Debtor  (as
applicable) in connection  with this Agreement in any state court to any federal
court. Any judicial proceeding by Creditor or Debtor against Agent or any Lender
involving,  directly or  indirectly,  any matter or claim in any way arising out
of, related to or connected with this Agreement or any related agreement,  shall
be brought  only in a federal or state court  located in the County of New York,
State of New York.

      27.  WAIVER OF JURY TRIAL.  EACH OF THE DEBTOR,  THE CREDITOR AND THE BANK
IRREVOCABLY  WAIVES  ANY AND ALL  RIGHT  IT MAY  HAVE TO A TRIAL  BY JURY IN ANY
ACTION,  PROCEEDING  OR CLAIM OF ANY  NATURE  RELATING  TO THIS  AGREEMENT,  ANY
DOCUMENTS  EXECUTED  IN  CONNECTION  WITH  THIS  AGREEMENT  OR  ANY  TRANSACTION
CONTEMPLATED  IN ANY OF SUCH  DOCUMENTS.  THE DEBTOR,  THE CREDITOR AND THE BANK
ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

                                      -10-
<PAGE>

      WITNESS the due execution  hereof as a document under seal, as of the date
first written above.

DEBTOR:                              CREDITOR:

SMALL WORLD KIDS, INC.               SWT, LLC

By:                                  By:
     ----------------------------         ------------------------------

Name:                                Name:
       --------------------------          -----------------------------

Title:                               Title:
        -------------------------           -----------------------------

                                     BANK:

                                     PNC BANK, NATIONAL ASSOCIATION,
                                     FOR ITSELF AND AS AGENT

                                     By:
                                          ------------------------------

                                     Name:
                                           -----------------------------

                                     Title:
                                            -----------------------------

                                      -11-
<PAGE>

                    ACKNOWLEDGEMENT RE SIGNATORY FOR CREDITOR

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

CONTINUING GUARANTY

BORROWER:                  SMALL WORLD TOYS

GUARANTOR:                 DEBRA FINE

DATE:                      DECEMBER 15, 2004

      THIS  CONTINUING  GUARANTY  is executed  by the  above-named  guarantor(s)
(jointly and severally, the "Guarantor"),  as of the above date, in favor of PNC
BANK,  NATIONAL  ASSOCIATION  ("PNC"),  with an address at 2 North Lake  Avenue,
Suite 440,  Pasadena,  California  91101,  as agent ("Agent") for itself and the
other  Lenders  (PNC,   the  other  Lenders  and  Agent  shall  be  referred  to
collectively  and  individually,  as  "Bank")  under the  Revolving  Credit  and
Security  Agreement  (the  "Loan  Agreement")  among  Bank  and the  above-named
borrower ("Borrower"), with respect to the Indebtedness of Borrower.

      1. CONTINUING GUARANTY.  Guarantor hereby  unconditionally  guarantees and
promises to pay on demand to Agent (BUT SUBJECT TO THE  PROVISIONS OF SECTION 1B
BELOW),  for the benefit of Bank,  at the address  indicated  above,  or at such
other address as Agent may direct, in lawful money of the United States,  and to
perform for the benefit of Bank, all  Indebtedness  of Borrower now or hereafter
owing to or held by PNC, and all Indebtedness of Borrower now or hereafter owing
to or held by Bank pursuant to or in connection with the Loan Agreement. As used
herein,  the term  "Indebtedness"  is used in its most  comprehensive  sense and
shall mean and include  without  limitation,  BUT SUBJECT TO THE  PROVISIONS  OF
SECTION  1A BELOW:  (a) any and all  debts,  duties,  obligations,  liabilities,
representations,  warranties  and  guaranties  of Borrower or any one or more of
them, heretofore, now, or hereafter made, incurred, or created, whether directly
or acquired by  assignment or  otherwise,  or held on behalf of others,  however
arising,  whether  voluntary  or  involuntary,  due  or  not  due,  absolute  or
contingent,  liquidated or  unliquidated,  certain or  uncertain,  determined or
undetermined, monetary or nonmonetary, written or oral, and whether Borrower may
be liable  individually  or  jointly  with  others,  and  regardless  of whether
recovery   thereon  may  be  or  hereafter  become  barred  by  any  statute  of
limitations,  discharged or uncollectible in any bankruptcy, insolvency or other
proceeding,  or  otherwise  unenforceable;  and  (b)  any  and  all  amendments,
modifications, renewals and extensions of any or all of the foregoing, including
without limitation amendments,  modifications, renewals and extensions which are
evidenced by any new or additional  instrument,  document or agreement;  and (c)
any and all attorneys'  fees,  court costs,  and collection  charges incurred in
endeavoring  to  collect  or  enforce  any of the  foregoing  against  Borrower,
Guarantor,  or any other person liable thereon  (whether or not suit be brought)
and any other  expenses of, for or  incidental to  collection  thereof.  As used
herein,  the term  "Borrower"  shall  include any  successor to the business and
assets of Borrower,  and shall also include Borrower in its capacity as a debtor
or debtor in  possession  under the federal  Bankruptcy  Code,  and any trustee,
custodian  or  receiver  for  Borrower  or any of its  assets,  should  Borrower
hereafter  become  the  subject  of any  bankruptcy  or  insolvency  proceeding,
voluntary or  involuntary;  and all  indebtedness,  liabilities  and obligations
incurred by any such person  shall be  included in the  Indebtedness  guaranteed
hereby.  This Guaranty is given in consideration  for credit and other financial
accommodations  which may,  from time to time,  be given by Bank to  Borrower in
Bank's sole discretion, but Guarantor acknowledges and agrees that acceptance by
Bank of this Guaranty  shall not  constitute a commitment of any kind by Bank to
extend such  credit or other  financial  accommodation  to Borrower or to permit
Borrower to incur Indebtedness to Bank.

      1A. LIMIT ON INDEBTEDNESS;  RELEASE OF GUARANTY.  NOTWITHSTANDING ANYTHING
TO THE CONTRARY IN THE  DEFINITION  OF  "INDEBTEDNESS"  OR  OTHERWISE  CONTAINED
HEREIN,  THE  GUARANTOR'S  LIABILITY  HEREUNDER  SHALL BE  LIMITED TO THE SUM OF
$1,000,000,  PLUS ALL  ATTORNEYS  FEES AND OTHER COSTS AND EXPENSES  INCURRED IN
COLLECTING THE FOREGOING FROM THE GUARANTOR OR OTHERWISE IN CONNECTION  WITH THE
ENFORCEMENT  OF THE RIGHTS AND  REMEDIES OF AGENT AND BANKS WITH  RESPECT TO THE
GUARANTOR.  THE GUARANTOR'S LIABILITY HEREUNDER SHALL NOT BE REDUCED OR AFFECTED
BY THE FACT THAT THE  INDEBTEDNESS  MAY EXCEED  SAID AMOUNT OR THE FACT THAT THE
INDEBTEDNESS  MAY BE REDUCED BELOW SAID AMOUNT AND  SUBSEQUENTLY  INCREASED.  IN
ADDITION,  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, AGENT (ON ITS BEHALF
AND ON BEHALF OF LENDERS) AGREES TO RELEASE GUARANTOR FROM HER OBLIGATIONS UNDER
THIS  GUARANTY,  UPON WRITTEN  REQUEST FROM THE  GUARANTOR  MADE AFTER THE FIRST
ANNIVERSARY OF THE INITIAL  REVOLVING ADVANCE MADE BY BANK TO BORROWER UNDER THE
LOAN  AGREEMENT,  PROVIDED  THAT NO  DEFAULT  OR EVENT OF  DEFAULT

                                      -1-
<PAGE>

        CONTINUING GUARANTY
--------------------------------------------------------------------------------

SHALL EXIST HEREUNDER OR UNDER THE LOAN AGREEMENT,  AND PROVIDED FURTHER THAT BY
SUCH FIRST ANNIVERSARY THE "SUBORDINATED  INDEBTEDNESS" (AS DEFINED BELOW) SHALL
HAVE BEEN  REPAID IN FULL FROM  PROCEEDS  RECEIVED  BY SMALL  WORLD  KIDS,  INC.
("SWK") AFTER THE DATE HEREOF FROM THE ISSUANCE OF EQUITY  SECURITIES OF SWK. IF
THE SUBORDINATED  INDEBTEDNESS  SHALL NOT HAVE BEEN SO REPAID BY SUCH DATE, THEN
AGENT (ON ITS BEHALF AND ON BEHALF OF LENDERS) AGREES TO RELEASE  GUARANTOR FROM
HER OBLIGATIONS UNDER THIS GUARANTY, UPON WRITTEN REQUEST FROM GUARANTOR MADE NO
EARLIER  THAN 20 DAYS AFTER SWK HAS  PROVIDED  AGENT WITH A COPY OF SWK'S ANNUAL
REPORT ON FORM 10-K TO THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED
DECEMBER 2005,  PROVIDED NO DEFAULT OR EVENT OF DEFAULT SHALL EXIST HEREUNDER OR
UNDER THE LOAN  AGREEMENT.  FOR THE  PURPOSES  OF THE  FOREGOING,  "SUBORDINATED
INDEBTEDNESS" SHALL MEAN, COLLECTIVELY, THE INDEBTEDNESS OWED BY SWK PURSUANT TO
(I) THE  PROMISSORY  NOTE,  DATED MAY 20, 2004, BY SWK, IN FAVOR OF SWT, LLC, IN
THE PRINCIPAL  AMOUNT OF $5,000,000,  (II) THE PROMISSORY  NOTE, DATED SEPTEMBER
__, 2004, BY SWK, IN FAVOR OF ST. CLOUD CAPITAL  PARTNERS L.P., IN THE PRINCIPAL
AMOUNT OF $2,000,000,  AND (III) THE PROMISSORY  NOTE, DATED SEPTEMBER 17, 2004,
BY SWK, IN FAVOR OF STROME HEDGECAP LTD. AND/OR STROME INVESTMENT MANAGEMENT, IN
THE PRINCIPAL AMOUNT OF $1,200,000.

      1B.  GRACE  PERIOD.  NOTWITHSTANDING  ANYTHING TO THE  CONTRARY  CONTAINED
HEREIN,  BUT  SUBJECT TO AND EXCEPT AS SET FORTH IN SECTION 6 HEREOF,  GUARANTOR
SHALL  HAVE  NO  OBLIGATION  TO PAY TO  AGENT  THE  AMOUNT  OF ANY  INDEBTEDNESS
GUARANTEED  HEREUNDER UNTIL 120 DAYS AFTER THE DATE THAT SUCH  INDEBTEDNESS  HAS
COME DUE BY ITS TERMS OR BY ACCELERATION PURSUANT TO THE LOAN AGREEMENT.

      2. WAIVERS.  Guarantor hereby waives: (a) presentment for payment,  notice
of dishonor,  demand, protest, and notice thereof as to any instrument,  and all
other  notices  and  demands to which  Guarantor  might be  entitled,  including
without  limitation notice of all of the following:  the acceptance  hereof; the
creation,  existence,  or  acquisition  of any  Indebtedness;  the amount of the
Indebtedness  from  time to time  outstanding;  any  foreclosure  sale or  other
disposition  of any property  which  secures any or all of the  Indebtedness  or
which  secures  the  obligations  of any  other  guarantor  of any or all of the
Indebtedness;  any adverse change in Borrower's  financial  position;  any other
fact which might  increase  Guarantor's  risk; any default,  partial  payment or
non-payment of all or any part of the Indebtedness;  the occurrence of any other
Event  of  Default  (as  hereinafter  defined);   any  and  all  agreements  and
arrangements  between  Bank and  Borrower  and any  changes,  modifications,  or
extensions thereof, and any revocation,  modification or release of any guaranty
of any or all of the Indebtedness by any person  (including  without  limitation
any other  person  signing  this  Guaranty);  (b) any right to  require  Bank to
institute suit against, or to exhaust its rights and remedies against,  Borrower
or any other  person,  or to  proceed  against  any  property  of any kind which
secures all or any part of the Indebtedness,  or to exercise any right of offset
or other right with respect to any reserves, credits or deposit accounts held by
or maintained with Bank or any indebtedness of Bank to Borrower,  or to exercise
any other  right or power,  or pursue any other  remedy  Bank may have,  and any
rights or  defenses  by reason of any  election  of  remedies  by Bank;  (c) any
defense  arising by reason of any disability or other defense of Borrower or any
other guarantor or any endorser,  co-maker or other person,  or by reason of the
cessation  from any cause  whatsoever  of any liability of Borrower or any other
guarantor or any endorser,  co-maker or other person, with respect to all or any
part of the Indebtedness,  or by reason of any act or omission of Bank or others
which directly or indirectly  results in the discharge or release of Borrower or
any other  guarantor  or any other  person or any  Indebtedness  or any security
therefor,  whether by operation of law or otherwise;  (d) any defense arising by
reason of any failure of Bank to obtain, perfect,  maintain or keep in force any
security  interest in, or lien or encumbrance  upon, any property of Borrower or
any  other  person;  (e) any  defense  based  upon any  failure  of Bank to give
Guarantor notice of any sale or other  disposition of any property  securing any
or all of the Indebtedness, or any defects in any such notice that may be given,
or any  failure  of Bank to  comply  with any  provision  of  applicable  law in
enforcing any security interest in or lien upon any property securing any or all
of the  Indebtedness  including,  but not  limited  to,  any  failure by Bank to
dispose  of  any  property  securing  any  or  all  of  the  Indebtedness  in  a
commercially reasonable manner; (f) any defense based upon or arising out of any
bankruptcy,  insolvency,  reorganization,  arrangement,  readjustment  of  debt,
liquidation or dissolution  proceeding  commenced by or against  Borrower or any
other  guarantor or any endorser,  co-maker or other person,  including  without
limitation any discharge of, or bar against collecting,  any of the Indebtedness
(including without  limitation any interest  thereon),  in or as a result of any
such proceeding;  and (g) the benefit of any and all statutes of limitation with
respect to any action  based upon,  arising out of or related to this  Guaranty.
Until all of the Indebtedness has been paid, performed,  and discharged in full,
nothing shall discharge or satisfy the liability of Guarantor  hereunder  except
the full  performance  and payment of all of the  Indebtedness.  If any claim is
ever made upon Bank for repayment or recovery of any amount or amounts  received
by Bank prior to the release of this Guaranty pursuant to Section 1A, in payment
of or on account of any of the Indebtedness,  because of any claim that any such
payment constituted a preferential transfer or fraudulent conveyance, or for any
other reason whatsoever, and Bank repays all or part of said amount by reason of
any  judgment,  decree  or order  of any  court or  administrative  body  having
jurisdiction over Bank or any of its property, or by reason of any settlement or
compromise of any such claim effected by Bank with any such claimant  (including
without limitation the Borrower),  then and in any such event,

                                      -2-
<PAGE>

        CONTINUING GUARANTY
--------------------------------------------------------------------------------

Guarantor  agrees  that  any  such  judgment,   decree,  order,  settlement  and
compromise  shall be binding upon Guarantor,  notwithstanding  any revocation or
release of this  Guaranty or the  cancellation  of any note or other  instrument
evidencing any of the  Indebtedness,  or any release of any of the Indebtedness,
and the Guarantor shall be and remain liable to Bank under this Guaranty for the
amount so repaid or  recovered,  to the same  extent as if such amount had never
originally  been received by Bank,  and the  provisions  of this sentence  shall
survive,  and continue in effect,  notwithstanding  any revocation or release of
this Guaranty.  Guarantor hereby expressly and unconditionally  waives (i) until
all of the  Indebtedness  has been  irrevocably  paid and performed in full, all
rights of subrogation,  reimbursement,  indemnity and contribution of every kind
against  Borrower,  and all  rights of  recourse  to any assets or  property  of
Borrower,  and all rights to any collateral or security held for the payment and
performance  of any  Indebtedness,  including  (but not  limited  to) any of the
foregoing  rights which  Guarantor may have under any present or future document
or agreement  with any Borrower or other person,  and including (but not limited
to) any of the  foregoing  rights which  Guarantor  may have under any equitable
doctrine of subrogation,  implied contract,  or unjust enrichment,  or any other
equitable or legal doctrine,  and (ii) any other rights and defenses that are or
may  become  available  to the  Guarantor  by reason of  Sections  2787 to 2855,
inclusive, of the California Civil Code. Neither Bank, nor any of its directors,
officers,  employees,  agents,  attorneys or any other person affiliated with or
representing Bank shall be liable for any claims, demands, losses or damages, of
any kind  whatsoever,  made,  claimed,  incurred or suffered by Guarantor or any
other party through the ordinary  negligence  of Bank, or any of its  directors,
officers,  employees,  agents,  attorneys or any other person affiliated with or
representing Bank.

      3. CONSENTS.  Guarantor hereby consents and agrees that, without notice to
or by Guarantor and without affecting or impairing in any way the obligations or
liability of Guarantor  hereunder,  Bank may, from time to time, before or after
revocation of this Guaranty,  do any one or more of the following in Bank's sole
and absolute discretion: (a) accelerate,  accept partial payments of, compromise
or settle, renew, extend the time for the payment, discharge, or performance of,
refuse  to  enforce,  and  release  all or  any  parties  to,  any or all of the
Indebtedness;  (b) grant any other indulgence to Borrower or any other person in
respect  of any or all of the  Indebtedness  or any other  matter;  (c)  accept,
release, waive, surrender, enforce, exchange, modify, impair, or extend the time
for the performance,  discharge, or payment of, any and all property of any kind
securing  any or all of the  Indebtedness  or any  guaranty of any or all of the
Indebtedness, or on which Bank at any time may have a lien, or refuse to enforce
its rights or make any compromise or settlement or agreement therefor in respect
of any or all of such  property;  (d)  substitute  or add, or take any action or
omit to take  any  action  which  results  in the  release  of,  any one or more
endorsers  or  guarantors  of all or any  part of the  Indebtedness,  including,
without  limitation  one or more  parties to this  Guaranty,  regardless  of any
destruction  or  impairment  of any  right of  contribution  or  other  right of
Guarantor;  (e) amend,  alter or change in any  respect  whatsoever  any term or
provision  relating  to any or all of the  Indebtedness,  including  the rate of
interest  thereon;  (f)  apply  any  sums  received  from  Borrower,  any  other
guarantor,  endorser, or co-signer, or from the disposition of any collateral or
security,  to any  indebtedness  whatsoever owing from such person or secured by
such collateral or security,  in such manner and order as Bank determines in its
sole  discretion,  and  regardless of whether such  indebtedness  is part of the
Indebtedness,  is secured,  or is due and payable;  (g) apply any sums  received
from Guarantor or from the  disposition  of any collateral or security  securing
the  obligations  of Guarantor,  to any of the  Indebtedness  in such manner and
order as Bank  determines in its sole  discretion,  regardless of whether or not
such  Indebtedness  is secured or is due and  payable.  Guarantor  consents  and
agrees that Bank shall be under no  obligation to marshal any assets in favor of
Guarantor, or against or in payment of any or all of the Indebtedness. Guarantor
further  consents and agrees that Bank shall have no duties or  responsibilities
whatsoever with respect to any property securing any or all of the Indebtedness.
Without limiting the generality of the foregoing,  Bank shall have no obligation
to monitor,  verify,  audit,  examine,  or obtain or maintain any insurance with
respect to, any property securing any or all of the Indebtedness.

      4. ACCOUNT STATED. Bank's books and records showing the account between it
and the Borrower  shall be admissible in evidence in any action or proceeding as
prima facie  proof of the items  therein set forth.  Bank's  monthly  statements
rendered to the Borrower shall be binding upon the Guarantor (whether or not the
Guarantor  receives  copies  thereof),  and shall  constitute an account  stated
between Bank and the Borrower,  unless Bank receives a written  statement of the
Borrower's  exceptions  within 30 days  after the  statement  was  mailed to the
Borrower. The Guarantor assumes full responsibility for obtaining copies of such
monthly statements from the Borrower, if the Guarantor desires such copies.

      5. EXERCISE OF RIGHTS AND REMEDIES;  FORECLOSURE OF TRUST DEEDS. Guarantor
consents  and  agrees  that,  without  notice  to or by  Guarantor  and  without
affecting  or  impairing  in any way the  obligations  or liability of Guarantor
hereunder,  Agent  may,  on behalf of Bank,  from time to time,  before or after
revocation  of this  Guaranty,  exercise  any  right or  remedy it may have with
respect to any or all of the Indebtedness or any property securing any or all of
the Indebtedness or any guaranty thereof,  including without limitation judicial
foreclosure,  nonjudicial foreclosure, exercise of a power of sale, and taking a
deed, assignment or transfer in lieu of foreclosure as to any such property, and
Guarantor expressly waives any defense based upon the exercise of any such right
or remedy,  notwithstanding  the

                                      -3-
<PAGE>

        CONTINUING GUARANTY
--------------------------------------------------------------------------------

effect thereof upon any of Guarantor's rights, including without limitation, any
destruction  of  Guarantor's  right  of  subrogation  against  Borrower  and any
destruction  of  Guarantor's  right of  contribution  or other right against any
other  guarantor of any or all of the  Indebtedness or against any other person,
whether by operation of Sections  580a,  580d or 726 of the  California  Code of
Civil  Procedure,  or any  comparable  provisions  of  the  laws  of  any  other
jurisdiction,  or any other statutes or rules of law now or hereafter in effect,
or otherwise.  Without  limiting the generality of the foregoing,  (a) Guarantor
waives  all  rights  and  defenses  that  the  Guarantor  may have  because  the
Indebtedness is secured by real property.  This means,  among other things:  (1)
Agent may collect from the Guarantor  without first  foreclosing  on any real or
personal property collateral pledged by the Borrower. (2) If Agent forecloses on
any real  property  collateral  pledged by the  Borrower:  (A) The amount of the
Indebtedness  may be reduced only by the price for which that collateral is sold
at the  foreclosure  sale,  even if the  collateral  is worth more than the sale
price. (B) Agent may collect from the Guarantor even if Agent, by foreclosing on
the real property collateral,  has destroyed any right the Guarantor may have to
collect from the Borrower.  This is an unconditional  and irrevocable  waiver of
any rights and  defenses the  Guarantor  may have  because the  Indebtedness  is
secured by real property. These rights and defenses include, but are not limited
to, any rights or defenses  based upon Section 580a,  580b,  580d, or 726 of the
Code of Civil  Procedure.  (b) The Guarantor waives all rights and defenses that
the Guarantor  may have because the guaranty of another  guarantor is secured by
real property.  This means,  among other things:  (1) Agent may collect from the
Guarantor without first foreclosing on any real or personal property  collateral
pledged by the other  guarantor.  (2) If Agent  forecloses  on any real property
collateral  pledged by the other  guarantor:  (A) The amount of the Indebtedness
may be  reduced  only by the  price  for which  that  collateral  is sold at the
foreclosure  sale, even if the collateral is worth more than the sale price. (B)
Agent may collect from the Guarantor  even if Agent,  by foreclosing on the real
property  collateral,  has  destroyed any right the Guarantor may have to obtain
contribution from the other guarantor.  This is an unconditional and irrevocable
waiver of any rights and defenses the Guarantor may have because the obligations
of the other  guarantor are secured by real property.  These rights and defenses
include, but are not limited to, any rights or defenses based upon Section 580a,
580b, 580d, or 726 of the Code of Civil Procedure.

      6.  ACCELERATION.  Notwithstanding  the  terms  of all or any  part of the
Indebtedness,  the obligations of the Guarantor hereunder to pay and perform all
of the Indebtedness shall, immediately upon the occurrence of an event described
in "f" below,  and immediately at the option of Agent upon the occurrence of any
other of the  following  events,  become due and payable,  without  notice,  and
without  regard to the expressed  maturity of any of the  Indebtedness:  (a) any
warranty, representation, statement, report, or certificate made or delivered to
Bank by Guarantor is incorrect,  false,  untrue, or misleading when given in any
material  respect;  or (b) Guarantor  shall default in the performance of any of
its obligations hereunder; or (c) any event shall occur which may or does result
in the acceleration of the maturity of any material indebtedness of Guarantor to
others  (regardless of any  requirement of notice,  opportunity to cure or other
condition prior to the exercise of any right of acceleration);  or (d) Guarantor
shall  fail  promptly  to perform or comply  with any term or  condition  of any
agreement  with any third party  which does or may result in a material  adverse
effect on the  business  of  Guarantor;  or (e) there shall be made or exist any
levy,  assessment,  attachment,  seizure,  lien, or encumbrance for any cause or
reason  whatsoever  upon all or any  material  part of the property of Guarantor
(unless discharged by payment, release or bond not more than ten days after such
event has occurred);  or (f) Guarantor shall (i) apply for, consent to or suffer
the  appointment  of, or the taking of  possession  by, a  receiver,  custodian,
trustee,  liquidator  or similar  fiduciary of itself or of all or a substantial
part  of its  property,  (ii)  make a  general  assignment  for the  benefit  of
creditors, (iii) commence a voluntary case under any state or federal bankruptcy
laws  (as now or  hereafter  in  effect),  (iv) be  adjudicated  a  bankrupt  or
insolvent,  (v) file a  petition  seeking  to take  advantage  of any  other law
providing  for  the  relief  of  debtors,  (vi)  acquiesce  to,  or fail to have
dismissed,  within  thirty  (30)  days,  any  petition  filed  against it in any
involuntary  case under such  bankruptcy  laws, or (vii) take any action for the
purpose of effecting any of the foregoing; or (g) Guarantor shall be deceased or
declared  incompetent  by any  court  or a  guardian  or  conservator  shall  be
appointed  for  Guarantor or for any of its  property;  or (h)  Guarantor  shall
generally not pay its debts as they become due or shall enter into any agreement
(whether  written or oral), or offer to enter into any such agreement,  with all
or a  significant  number of its  creditors  regarding  any  moratorium or other
indulgence with respect to its debts or the  participation  of such creditors or
their  representatives  in  the  supervision,  management,  or  control  of  its
business;  or (i) Guarantor  shall conceal,  remove or permit to be concealed or
removed any part of its  property,  with intent to hinder,  delay or defraud its
creditors,  or make or suffer any transfer of any of its  property  which may be
fraudulent under any bankruptcy,  fraudulent conveyance or similar law, or shall
make any  transfer of its  property  to or for the benefit of any  creditor at a
time  when  other  creditors  similarly  situated  have  not been  paid;  or (j)
Guarantor  shall revoke this  Guaranty or contest or deny  liability  under this
Guaranty.  All of the  foregoing  are  hereinafter  referred  to as  "Events  of
Default".

      7. RIGHT TO ATTACHMENT REMEDY. Guarantor agrees that,  notwithstanding the
existence of any property  securing any or all of the  Indebtedness,  Agent,  on
behalf  of Bank,  shall  have all of the  rights  of an  unsecured  creditor  of
Guarantor,  including  without  limitation  the  right  to  obtain  a  temporary
protective  order and writ of attachment  against  Guarantor with respect to any
sums due under this  Guaranty.

                                      -4-
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Guarantor  further agrees that in the event any property secures the obligations
of  Guarantor  under this  Guaranty,  to the extent that Agent,  in its sole and
absolute  discretion,  determines prior to the disposition of such property that
the amount to be realized by Agent  therefrom may be less than the  indebtedness
of the Guarantor under this Guaranty,  Agent, on behalf of Bank,  shall have all
the  rights  of an  unsecured  creditor  against  Guarantor,  including  without
limitation the right of Agent,  prior to the  disposition  of said property,  to
obtain a temporary  protective order and writ of attachment  against  Guarantor.
Guarantor  waives the benefit of Section  483.010(b) of the  California  Code of
Civil  Procedure  and of any and all  other  statutes  and  rules  of law now or
hereafter  in effect  requiring  Agent to first  resort to or  exhaust  all such
collateral before seeking or obtaining any attachment remedy against  Guarantor.
Bank shall have no liability to  Guarantor as a result  thereof,  whether or not
the actual deficiency  realized by Bank is less than the anticipated  deficiency
on the basis of which  Agent  obtains a  temporary  protective  order or writ of
attachment.

      8. INDEMNITY. Subject to the limits of Section 1A, Guarantor hereby agrees
to indemnify  Bank and hold Bank  harmless  from and against any and all claims,
debts, liabilities,  demands, obligations, actions, causes of action, penalties,
costs and expenses  (including  without  limitation  attorneys'  fees), of every
nature, character and description, which Bank may sustain or incur based upon or
arising out of any of the Indebtedness, any actual or alleged failure to collect
and pay over any withholding or other tax relating to Borrower or its employees,
any relationship or agreement  between Bank and Borrower,  any actual or alleged
failure of Bank to comply with any writ of  attachment  or other  legal  process
relating to Borrower or any of its property, or any other matter, cause or thing
whatsoever  occurred,  done,  omitted or suffered to be done by Bank relating in
any way to Borrower or the  Indebtedness  (except any such amounts  sustained or
incurred as the result of the gross negligence or willful  misconduct of Bank or
any of its  directors,  officers,  employees,  agents,  attorneys,  or any other
person affiliated with or representing Bank).

      9. SUBORDINATION. Any and all rights of Guarantor under any and all debts,
liabilities  and  obligations  owing from Borrower to  Guarantor,  including any
security for and  guaranties  of any such  obligations,  whether now existing or
hereafter  arising,  are  hereby  subordinated  in right of payment to the prior
payment  in full of all of the  Indebtedness.  No payment in respect of any such
subordinated  obligations  shall at any time be made to or accepted by Guarantor
if at the time of such payment any Indebtedness is outstanding.  If any Event of
Default  has  occurred,  Borrower  and  any  assignee,  trustee  in  bankruptcy,
receiver,  or any other  person  having  custody or  control  over any or all of
Borrower's  property  are hereby  authorized  and  directed  to pay to Agent the
entire unpaid balance of the Indebtedness  before making any payments whatsoever
to Guarantor,  whether as a creditor,  shareholder, or otherwise; and insofar as
may be necessary for that  purpose,  Guarantor  hereby  assigns and transfers to
Agent, for the benefit of Bank, all rights to any and all debts, liabilities and
obligations  owing from  Borrower to  Guarantor,  including any security for and
guaranties of any such obligations,  whether now existing or hereafter  arising,
including without limitation any payments, dividends or distributions out of the
business or assets of Borrower.  Any amounts  received by Guarantor in violation
of the  foregoing  provisions  shall be  received  and held as  trustee  for the
benefit of Bank and shall  forthwith  be paid over to Agent to be applied to the
Indebtedness  in such order and  sequence as Agent shall in its sole  discretion
determine,  without  limiting or affecting  any other right or remedy which Bank
may have hereunder or otherwise and without otherwise affecting the liability of
Guarantor  hereunder.  Guarantor hereby expressly waives any right to set-off or
assert any counterclaim against Borrower.

      10.  REVOCATION.  This is a  Continuing  Guaranty  relating  to all of the
Indebtedness, including Indebtedness arising under successive transactions which
from  time to time  continue  the  Indebtedness  or  renew  it after it has been
satisfied.  Guarantor waives all benefits of California Civil Code Section 2815,
and agrees that the obligations of Guarantor  hereunder may not be terminated or
revoked  in any  manner  except  by giving 90 days'  advance  written  notice of
revocation to Agent at its address above by registered  first-class  U.S.  mail,
postage prepaid, return receipt requested, and only as to new loans made by Bank
to Borrower  more than 90 days after actual  receipt of such  written  notice by
Agent. No termination or revocation of this Guaranty shall be effective until 90
days  following the date of actual  receipt of said written notice of revocation
by Agent.  Notwithstanding such written notice of revocation or any other act of
Guarantor  or any  other  event or  circumstance,  Guarantor  agrees  that  this
Guaranty and all consents, waivers and other provisions hereof shall continue in
full force and effect as to any and all Indebtedness  which is outstanding on or
before  the  90th  day  following  actual  receipt  of said  written  notice  of
revocation by Agent,  and all  extensions,  renewals and  modifications  of said
Indebtedness (including without limitation amendments,  extensions, renewals and
modifications which are evidenced by new or additional instruments, documents or
agreements  executed before or after expiration of said 90-day period),  and all
interest thereon, accruing before or after expiration of said 90-day period, and
all attorneys'  fees,  court costs and collection  charges,  incurred  before or
after expiration of said 90-day period, in endeavoring to collect or enforce any
of the foregoing against Borrower,  Guarantor or any other person liable thereon
(whether or not suit be brought) and any other expenses of, for or incidental to
collection thereof.

      11.  INDEPENDENT  LIABILITY.  Guarantor  hereby  agrees  that  one or more
successive or concurrent actions may be brought hereon against Guarantor, in the
same action in which  Borrower may be sued or in separate  actions,  as often as
deemed advisable by Agent. The liability of Guarantor

                                      -5-
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        CONTINUING GUARANTY
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hereunder is exclusive and  independent  of any other  guaranty of any or all of
the  Indebtedness  whether  executed  by  Guarantor  or by any  other  guarantor
(including  without  limitation any other persons  signing this  Guaranty).  The
liability of Guarantor hereunder shall not be affected,  revoked,  impaired,  or
reduced by any one or more of the following:  (a) the fact that the Indebtedness
exceeds the maximum amount of Guarantor's liability, if any, specified herein or
elsewhere (and no agreement specifying a maximum amount of Guarantor's liability
shall be enforceable  unless set forth in a writing signed by Agent or set forth
in this  Guaranty);  or (b) any  direction as to the  application  of payment by
Borrower  or by any other  party;  or (c) any other  continuing  or  restrictive
guaranty  or  undertaking  or any  limitation  on  the  liability  of any  other
guarantor (whether under this Guaranty or under any other agreement); or (d) any
payment on or reduction of any such other  guaranty or  undertaking;  or (e) any
revocation,  amendment,  modification  or release of any such other  guaranty or
undertaking; or (f) any dissolution or termination of, or increase, decrease, or
change in membership of any Guarantor which is a partnership.  Guarantor  hereby
expressly  represents  that he was not induced to give this Guaranty by the fact
that  there  are or may be  other  guarantors  either  under  this  Guaranty  or
otherwise,  and  Guarantor  agrees  that any  release of any one or more of such
other  guarantors  shall  not  release  Guarantor  from  his or her  obligations
hereunder  either in full or to any lesser  extent.  If  Guarantor  is a married
person,  Guarantor  hereby expressly agrees that recourse may be had against his
or her separate property for all of his or her obligations hereunder.

      12.  FINANCIAL  CONDITION  OF  BORROWER.  Guarantor  is fully aware of the
financial condition of Borrower and is executing and delivering this Guaranty at
Borrower's  request and based solely upon her own independent  investigation  of
all matters  pertinent  hereto,  and Guarantor is not relying in any manner upon
any  representation  or  statement  of  Bank  with  respect  thereto.  Guarantor
represents and warrants that he is in a position to obtain, and Guarantor hereby
assumes full responsibility for obtaining, any additional information concerning
Borrower's  financial  condition  and  any  other  matter  pertinent  hereto  as
Guarantor  may desire,  and  Guarantor is not relying upon or expecting  Bank to
furnish to him any information now or hereafter in Bank's possession  concerning
the same or any other matter.  By executing this Guaranty,  Guarantor  knowingly
accepts  the full range of risks  encompassed  within a contract  of  continuing
guaranty,  which risks Guarantor  acknowledges  include  without  limitation the
possibility that Borrower will incur additional Indebtedness for which Guarantor
will be liable hereunder after Borrower's  financial condition or ability to pay
such  Indebtedness  has  deteriorated  and/or  after  bankruptcy  or  insolvency
proceedings have been commenced by or against Borrower.  Guarantor shall have no
right to require Bank to obtain or disclose any information  with respect to the
Indebtedness, the financial condition or character of Borrower, the existence of
any collateral or security for any or all of the Indebtedness,  the filing by or
against  Borrower of any bankruptcy or insolvency  proceeding,  the existence of
any  other  guaranties  of all or any part of the  Indebtedness,  any  action or
non-action  on the part of Bank,  Borrower,  or any other  person,  or any other
matter, fact, or occurrence.

      13. REPORTS AND FINANCIAL STATEMENTS OF GUARANTOR. Guarantor shall, at its
sole cost and expense, at any time and from time to time, prepare or cause to be
prepared, and provide to Bank upon Agent's request (i) such financial statements
and  reports  concerning  Guarantor  for  such  periods  of  time as  Agent  may
designate, (ii) any other information concerning Guarantor's business, financial
condition  or  affairs  as Agent may  request,  and (iii)  copies of any and all
foreign,  federal,  state and local tax  returns  and  reports of or relating to
Guarantor as Agent may from time to time request. Guarantor hereby intentionally
and  knowingly  waives  any and all  rights  and  privileges  it may have not to
divulge or deliver said tax  returns,  reports and other  information  which are
requested by Agent  hereunder or in any litigation in which Bank may be involved
relating  directly or indirectly to Borrower or to Guarantor.  Guarantor further
agrees  immediately  to give  written  notice to Agent of any adverse  change in
Guarantor's  financial condition and of any condition or event which constitutes
an Event of Default under this Guaranty.  All reports and information  furnished
to Bank  hereunder  shall be  complete,  accurate  and correct in all  respects.
Whenever  requested  by  Agent,  Guarantor  shall  further  deliver  to  Agent a
certificate  signed by Guarantor  (and,  if Guarantor is a  partnership,  by all
general partners of Guarantor, in their individual capacities, and, if Guarantor
is a  corporation,  by the  president  and  secretary  of  Guarantor,  in  their
individual capacities)  warranting and representing that all reports,  financial
statements  and  other  documents  and  information  delivered  or  caused to be
delivered to Bank under this Guaranty, are complete,  correct and thoroughly and
accurately present the financial  condition of Guarantor,  and that there exists
on the date of delivery of said certificate to Agent no condition or event which
constitutes an Event of Default under this Guaranty.

      14.  REPRESENTATIONS  AND  WARRANTIES.  Guarantor  hereby  represents  and
warrants that (i) it is in  Guarantor's  direct  interest to assist  Borrower in
procuring credit, because Borrower is an affiliate of Guarantor, furnishes goods
or  services  to  Guarantor,  purchases  or  acquires  goods  or  services  from
Guarantor,  and/or  otherwise  has a direct or  indirect  corporate  or business
relationship  with  Guarantor,  (ii) this  Guaranty  has been  duly and  validly
authorized,  executed  and  delivered  and  constitutes  the valid  and  binding
obligation of Guarantor, enforceable in accordance with its terms, and (iii) the
execution and delivery of this Guaranty does not violate or constitute a default
under (with or without the giving of notice,  the passage of time,  or both) any
order, judgment,  decree,  instrument or agreement to which Guarantor is a party
or by which it or its assets are affected or bound.

                                      -6-
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        CONTINUING GUARANTY
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      15.  COSTS.  Whether  or not  suit  be  instituted,  Guarantor  agrees  to
reimburse  Bank on  demand  for all  reasonable  attorneys'  fees and all  other
reasonable  costs and expenses  incurred by Bank in enforcing this Guaranty.  In
the  event  either  Bank or  Guarantor  files  any  lawsuit  against  the  other
predicated on a breach of this  Guaranty,  the  prevailing  party in such action
shall be  entitled  to recover  its  attorneys'  fees and costs of suit from the
non-prevailing party.

      16. NOTICES. Any notice which a party shall be required or shall desire to
give to the other  hereunder  (except for notice of  revocation,  which shall be
governed by Section 10 of this Guaranty) shall be given by personal  delivery or
by telecopier or by depositing  the same in the United States mail,  first class
postage pre-paid,  addressed to Agent at its address set forth in the heading of
this  Guaranty  and to  Guarantor  at her address set forth under her  signature
hereon,  and such  notices  shall be deemed  duly given on the date of  personal
delivery or one day after the date  telecopied or 3 business days after the date
of mailing as  aforesaid.  Agent and  Guarantor  may change  their  address  for
purposes of receiving  notices hereunder by giving written notice thereof to the
other party in accordance herewith. Guarantor shall give Agent immediate written
notice of any change in her address.

      17.  CLAIMS.  Guarantor  agrees  that any  claim or  cause  of  action  by
Guarantor against Bank, or any of Bank's directors, officers, employees, agents,
accountants  or  attorneys,  based  upon,  arising  from,  or  relating  to this
Guaranty,  or any other  transaction  contemplated  hereby or  relating  hereto,
occurred,  done, omitted or suffered to be done by Bank, or by Bank's directors,
officers,  employees,  agents,  accountants  or attorneys,  whether  sounding in
contract or in tort or otherwise,  shall be barred unless  asserted by Guarantor
by  the  commencement  of an  action  or  proceeding  in a  court  of  competent
jurisdiction  within  the  County of New  York,  New  York,  by the  filing of a
complaint within one year after the first act, occurrence or omission upon which
such claim or cause of action,  or any part  thereof,  is based and service of a
summons and  complaint on an officer of Bank or any other person  authorized  to
accept  service  of  process  on  behalf  of Bank,  within  30 days  thereafter.
Guarantor  agrees that such one year period is a reasonable and sufficient  time
for Guarantor to investigate and act upon any such claim or cause of action. The
one year period provided herein shall not be waived,  tolled, or extended except
by a specific  written  agreement  of Bank.  This  provision  shall  survive any
termination of this Guaranty or any other agreement.

      18.  RIGHT OF SETOFF.  In  addition to all liens upon and rights of setoff
against the Guarantor's money, securities or other property given to the Bank by
law,  Bank shall  have,  with  respect to the  Guarantor's  obligations  to Bank
hereunder and to the extent permitted by law, a contractual  possessory security
interest in and a contractual right of setoff against,  and the Guarantor hereby
assigns, conveys, delivers, pledges and transfers to Bank all of the Guarantor's
right,  title and interest in and to, all of the Guarantor's  deposits,  moneys,
securities  and other  property  now or  hereafter  in the  possession  of or on
deposit with, or in transit to, Bank including without  limitation any direct or
indirect subsidiary of The PNC Financial Services Group, Inc., whether held in a
general or special  account or deposit,  whether held jointly with someone else,
or whether held for  safekeeping  or  otherwise,  excluding,  however,  all IRA,
Keogh, and trust accounts.  Every such security interest and right of setoff may
be exercised without demand upon or notice to the Guarantor.

      19. EQUAL CREDIT  OPPORTUNITY  ACT. If the  Guarantor is not an "applicant
for credit" under Section 202.2 (e) of the Equal Credit  Opportunity Act of 1974
("ECOA"), the Guarantor acknowledges that (i) this Guaranty has been executed to
provide  credit  support for the  Obligations,  and (ii) the  Guarantor  was not
required to execute this Guaranty in violation of Section 202.7(d) of the ECOA.

      20. CONSTRUCTION;  SEVERABILITY. If more than one person has executed this
Guaranty,  the term  "Guarantor"  as used herein shall be deemed to refer to all
and any one or more such persons and their obligations  hereunder shall be joint
and several.  Without limiting the generality of the foregoing, if more than one
person has  executed  this  Guaranty,  this  Guaranty  shall in all  respects be
interpreted  as though each person  signing this  Guaranty had signed a separate
Guaranty, and references herein to "other guarantors" or words of similar effect
shall include without limitation other persons signing this Guaranty. As used in
this Guaranty,  the term "property" is used in its most comprehensive  sense and
shall mean all property of every kind and nature  whatsoever,  including without
limitation real property,  personal property, mixed property,  tangible property
and intangible property. Words used herein in the masculine gender shall include
the neuter and  feminine  gender,  words used herein in the neuter  gender shall
include the  masculine  and  feminine,  words used herein in the singular  shall
include  the plural and words used in the plural  shall  include  the  singular,
wherever the context so reasonably  requires.  If any provision of this Guaranty
or the application  thereof to any party or circumstance is held invalid,  void,
inoperative or unenforceable, the remainder of this Guaranty and the application
of such  provision  to other  parties  or  circumstances  shall not be  affected
thereby, the provisions of this Guaranty being severable in any such instance.

      21. GENERAL PROVISIONS.  Agent, on behalf of Bank, shall have the right to
seek recourse  against  Guarantor to the full extent  provided for herein and in
any other instrument or agreement  evidencing  obligations of Guarantor to Bank,
and against Borrower to the full extent of the Indebtedness.  No election in one
form of action or proceeding, or against any party, or on any obligation,  shall
constitute  a waiver of Bank's  right to  proceed in any other form of action or
proceeding or against any other party. The failure of Bank to enforce any of the
provisions  of this  Guaranty at any time or

                                      -7-
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        CONTINUING GUARANTY
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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 Bank by law or under any other instrument or agreement.  Time is of the
essence in the performance by Guarantor of each and every  obligation under this
Guaranty. If Borrower is a corporation,  partnership or other entity,  Guarantor
hereby  agrees that Bank shall have no  obligation  to inquire into the power or
authority of Borrower or any of its  officers,  directors,  partners,  or agents
acting or purporting to act on its behalf,  and any Indebtedness made or created
in reliance upon the professed  exercise of any such power or authority shall be
included in the Indebtedness  guaranteed hereby. This Guaranty is the entire and
only  agreement  between  Guarantor and Bank with respect to the guaranty of the
Indebtedness  of Borrower by  Guarantor,  and all  representations,  warranties,
agreements,  or undertakings heretofore or contemporaneously made, which are not
set forth  herein,  are  superseded  hereby.  No course of dealings  between the
parties, no usage of the trade, and no parol or extrinsic evidence of any nature
shall be used or be  relevant  to  supplement  or  explain or modify any term or
provision of this Guaranty. There are no conditions to the full effectiveness of
this  Guaranty.  The terms and  provisions  hereof may not be  waived,  altered,
modified,  or  amended  except in a writing  executed  by  Guarantor  and a duly
authorized officer of Agent. All rights, benefits and privileges hereunder shall
inure to the benefit of Bank and its successors and assigns and shall be binding
upon   Guarantor   and   her   heirs,   executors,   administrators,    personal
representatives,  successors  and assigns.  Neither the death of  Guarantor  nor
notice  thereof to Bank shall  terminate  this  Guaranty as to her estate,  and,
notwithstanding  the death of Guarantor or notice thereof to Bank, this Guaranty
shall  continue  in full force and  effect  with  respect  to all  Indebtedness,
including without limitation Indebtedness incurred or created after the death of
Guarantor  and notice  thereof to Bank.  Section  headings  are used  herein for
convenience  only.  Guarantor  acknowledges  that  the  same  may  not  describe
completely the subject matter of the applicable Section,  and the same shall not
be used in any  manner  to  construe,  limit,  define or  interpret  any term or
provision hereof.

      22.  GOVERNING LAW; VENUE AND  JURISDICTION.  This instrument and all acts
and  transactions  pursuant or relating hereto and all rights and obligations of
the parties hereto shall be governed,  construed,  and interpreted in accordance
with the internal laws of the State of New York. Any judicial proceeding brought
by or against Guarantor with respect to any of the Indebtedness,  this Guaranty,
or any related  agreement may be brought in any court of competent  jurisdiction
in the State of New York,  United  States of  America,  and,  by  execution  and
delivery of this Guaranty,  Guarantor  accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive jurisdiction of
the  aforesaid  courts,  and  irrevocably  agrees  to be bound  by any  judgment
rendered  thereby in  connection  with this  Guaranty.  Guarantor  hereby waives
personal  service  of any and all  process  upon it and  consents  that all such
service of process may be made by  registered  mail (return  receipt  requested)
directed to  Guarantor  and service so made shall be deemed  completed  five (5)
days  after the same  shall  have been so  deposited  in the mails of the United
States of America. Nothing herein shall affect the right to serve process in any
manner  permitted  by law or shall limit the right of Bank to bring  proceedings
against Guarantor in the courts of any other jurisdiction.  Guarantor waives any
objection to jurisdiction and venue of any action instituted hereunder and shall
not  assert any  defense  based on lack of  jurisdiction  or venue or based upon
forum  non  conveniens.  Guarantor  waives  the  right to  remove  any  judicial
proceeding  brought  against  Guarantor in any state court to any federal court.
Any  judicial  proceeding  by  Guarantor  against  Bank  involving,  directly or
indirectly,  any  matter  or  claim in any way  arising  out of,  related  to or
connected with this Guaranty or any related agreement,  shall be brought only in
a federal or state court located in the County of New York, State of New York.

      23. MUTUAL WAIVER OF RIGHT TO JURY TRIAL.  BANK AND GUARANTOR HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION,  CLAIM,  LAWSUIT OR  PROCEEDING  BASED
UPON,  ARISING  OUT OF, OR IN ANY WAY  RELATING  TO: (I) THIS  GUARANTEE  OR ANY
SUPPLEMENT OR AMENDMENT THERETO;  OR (II) ANY OTHER PRESENT OR FUTURE INSTRUMENT
OR AGREEMENT BETWEEN BANK AND GUARANTOR ; OR (III) ANY BREACH,  CONDUCT, ACTS OR
OMISSIONS OF BANK OR GUARANTOR OR ANY OF THEIR RESPECTIVE  DIRECTORS,  OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSON AFFILIATED WITH OR REPRESENTING
BANK OR GUARANTOR;  IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.

      24.  RECEIPT  OF COPY.  Guarantor  acknowledges  receipt of a copy of this
Guaranty.

----------------------------------------------
DEBRA FINE

Address:  c/o Small World Toys
          5711 Buckingham Parkway
          Culver City, California  90230
          Facsimile:  (310) 410-9606

                                      -8-
<PAGE>

STATE OF ______________    )
                           ) ss.
COUNTY OF ____________     )

      On  _______________,  2004, before me,  _________________________,  Notary
Public,  personally appeared Debra Fine, personally known to me (or proved 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  in  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.

                                                --------------------------------
                                                         (Seal)

                                      -9-

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