<PAGE>
GUARANTY Exhibit 10.1
MILBERG FACTORS, INC.
99 Park Avenue
New York, NY 10016
Gentlemen:
In order to induce you to enter into, or continuing to make available
certain financing arrangements set forth in, a certain Factoring or Financing
Agreement bearing the effective date as of July 26, 1995 with Just Toys, Inc.
having an address at 20 Livingstone Avenue, Dobbs Ferry, New York 10522
(hereinafter referred to as the "Client"), and/or to induce you to refrain at
this time from terminating said agreement and/or in consideration of any loans,
advances, payment, extensions of credit, benefits or financial accommodations
heretofore or hereafter made, granted or extended by you or which you have or
will become obligated to make, grant or extend to or for the account of the
Client, the undersigned (and each of them if more than one) guarantees without
deduction by reason of set-off, defense, or counterclaim of any party, or loss
of contribution from any co-guarantor hereunder, the due performance of all the
Client's contracts and agreements with you, both present and future and any and
all subsequent renewals, extensions, continuations, modifications, supplements
and amendments thereof, and the prompt payment to you with interest of any and
all sums which may be presently due and owing or which shall in the future
become due and owing to you from the Client. This joint and several primary
liability shall include but not be limited to any and all amounts charged or
chargeable to the account of the Client and any and all existing and future
obligations and indebtedness of the Client, whether acquired by you by
assignment, transfer, or otherwise, and whether or not such obligations and
indebtedness shall arise under the aforesaid Factoring Agreement or under any
other contract or agreement or any renewal, modification, supplement or
amendment thereof, or shall be represented by or payable under instruments of
indebtedness or otherwise, and whether or not such obligations and indebtedness
shall be acquired by you from any concern which is your parent or subsidiary or
the co-subsidiary of your parent or for which you may now or in the future act
as a factor and/or lender, and in addition, the undersigned shall be liable to
you for reasonable attorneys' fees, if any claim hereunder is referred to an
attorney for collection.
The undersigned hereby waives notice of acceptance hereof and of all
notices and demands of any kind to which the undersigned may be entitled,
including without limitation, notice of adverse change in Client's financial
condition or of any other fact which might materially increase the risk of the
undersigned; all demands of payment on, and notice of nonpayment, protest and
dishonor to the undersigned, or the Client, or the makers, or endorsers of any
notes or other instruments for which the undersigned is or may be liable
hereunder. The undersigned hereby further waives the right to renounce any
disposition or transfer of assets whether created under a will, trust agreement
or intestacy statute, with respect to any devise, bequest, distributive share,
trust account, life insurance or annuity contract, employee benefit plan
(including, without limitation, any pension, retirement, death benefit, stock
bonus or profit sharing plan, system or trust), or any other disposition or
transfer created by any testamentary or nontestamentary instrument or by
operation of law, and any of the foregoing created or increased by reason of a
renunciation made by another person. All sums at any time to the credit of the
undersigned and any property of the undersigned in your
<PAGE>
possession shall be deemed held by you as security for any and all of the
undersigned's obligations to you and to any company or companies which may now
or at any time be your parent or subsidiary, or the co-subsidiary of your
parent, no matter how or when arising and whether under this or any other
instrument, agreement or otherwise. The undersigned further waives notice of and
hereby consents to any agreement or arrangements whatever with the Client or any
one else including, without limitation, agreements and arrangements for payment
extension, subordination, composition, arrangement, discharge or release of the
whole or any part of said obligations or of said indebtedness, contracts or
agreements or other guarantors, or of the making of any election of rights or
remedies you may deem desirable under any Bankruptcy Code or similar law or
regulation, or for the change or surrender of any and all security, or for
compromise, whether by way of acceptance of part payment or of dividends or in
any other way whatsoever, and the same shall in no way impair the undersigned's
liability hereunder. Nothing shall discharge or satisfy the liability of the
undersigned hereunder except the full performance and payment of the said
obligations and indebtedness with interest. The undersigned expressly waives any
and all rights of subrogation, reimbursement, indemnity, exoneration,
contribution or any other claim which the undersigned may now or hereafter have
against the Client or any other person directly or contingently liable for the
obligations guarantied hereunder, or against or with respect to the Client's
property (including, without limitation, property collateralizing the
undersigned's obligations to you), arising from the existence or performance of
this guaranty. In furtherance, and not in limitation, of the preceding waiver,
the undersigned agrees that any payment to you by the undersigned pursuant to
this guaranty shall be deemed a contribution to the capital of the Client or
other obligated party and any such payment shall not constitute the undersigned
a creditor of any such party. Any and all present and future debts and
obligations of the Client to any of the undersigned are hereby waived and
postponed in favor of, and subordinated to the full payment and performance of,
all present and future debts and obligations of the Client to you. The
undersigned agrees that if the Client or any of the undersigned should at any
time become insolvent, or make a general assignment, or if a proceeding in
bankruptcy or any insolvency or reorganization proceeding shall be filed or
commenced by, or in respect of the Client or any of the undersigned, any and all
obligations of the undersigned shall, at your option, forthwith become due and
payable without notice. If you receive any payment or payments on account of the
liabilities guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, or any other party under
any bankruptcy act or code, state or federal law, common law or equitable
doctrine, then to the extent of any sum not finally retained by you, our
obligations to you shall be reinstated and this guaranty shall remain in full
force and effect (or be reinstated) until we shall have made payment to you,
which payment shall be due on demand.
Your books and records showing the account between you and the Client
shall be admissible in evidence in any action or proceeding, shall be binding
upon the undersigned for the purpose of establishing the items therein set forth
and shall constitute prima facie proof thereof. This instrument is and shall be
construed to be an absolute, continuing, unconditional and unlimited guaranty of
payment, and shall continue in full force and effect, until terminated by the
actual receipt by you from the undersigned by registered mail of written notice
of termination; such termination shall be applicable only to transactions having
their inception thereafter, and rights and obligations arising out of
transactions having their inception prior to such termination shall not be
affected. Termination by one or more of the undersigned shall not affect the
liability of such of the undersigned who do not give such notice of termination.
2
<PAGE>
This guaranty shall be enforceable before or after proceeding against
the Client or simultaneously therewith, and without recourse to any security,
and shall be effective regardless of the subsequent incorporation, merger or
consolidation of the Client, or any change in the composition, nature, personnel
or location of the Client. This guaranty shall inure to and shall be enforceable
by you, any concern which is or may at any time be your parent or subsidiary or
the co- subsidiary of your parent and your and their successors and assigns and
shall be binding upon the heirs, executors, administrators, successors and
assigns of the undersigned. The undersigned does hereby waive any and all right
to a trial by jury in any action or proceeding based hereon. This instrument
cannot be changed or terminated orally, and shall be governed, construed and
interpreted as to validity, enforcement and in all other respects in accordance
with the laws of the State of New York, the jurisdiction of such state's courts
being hereby consented to for all purposes in connection herewith.
Dated: July 31, 2000
Attest: /s/ Just Toys Products Limited
-------------------------
By: /s/ Jerry Carroll
-----------------------------------
Name: Jerry Carroll
Title: Director
Attest: /s/ Joyful World Enterprises Limited
------------------------
By:/s/ Jerry Carroll
------------------------------------
Name: Jerry Carroll
Title: Director
3
