RIGHT START INC /CA
EX. 10.5 GUARANTY CHICAGO NOTE
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>12
<FILENAME>guarantychicago.txt
<DESCRIPTION>EX. 10.5 GUARANTY CHICAGO NOTE
<TEXT>
                                    GUARANTY
                             (The Right Start, Inc.)



     This  GUARANTY,  dated as of January 6, 2002,  is made by The Right  Start,
Inc., a California corporation ("Guarantor"),  in favor of the holders from time
to  time   (collectively,   the  "Subordinated   Note  Holders")  of  a  certain
subordinated  note (the "Chicago Note") issued by Toy Soldier,  Inc., a Delaware
corporation ("Issuer") and wholly-owned subsidiary of Guarantor:

                                    RECITALS

     A.  Pursuant to the Letter  Agreement by and among  Guarantor,  the Issuer,
Royal Vendex KBB N.V., a Netherlands corporation ("Vendex"), Quality Fulfillment
Services, Inc. ("QFS") and KBB Retail Assets Corp. f/k/a F.A.O. Schwarz ("KBB"),
dated March 22, 2002 (the "Letter  Agreement"),  the  Subordinated  Note Holders
have agreed to accept the Chicago Note in payment of the purchase  price for the
inventories  and other property  related to the store located at 840 N. Michigan
Avenue,  Chicago,  Illinois (the  "Chicago  Store")  purchased  pursuant to that
certain  Interim  Operating  Agreement dated as of January 6, 2002, by and among
Issuer, Guarantor, KBB and Vendex (the "Interim Operating Agreement").

     B. As a condition to  acceptance  of the Chicago  Note by the  Subordinated
Note Holders,  Guarantor is required to enter into this Guaranty and to guaranty
the Guarantied Obligations as hereinafter provided.

                                    AGREEMENT

     NOW, THEREFORE,  in order to induce the Subordinated Note Holders to accept
the Chicago Note, and for other good and valuable consideration, the receipt and
adequacy  of  which  hereby  are  acknowledged,   Guarantor  hereby  represents,
warrants, covenants, agrees and guaranties as follows:

     1.  Definitions.  Guarantor is The Right Start,  Inc.  Terms defined in the
Chicago Note and not otherwise  defined in this Guaranty shall have the meanings
given those terms in the Chicago Note when used herein and such  definitions are
incorporated  herein as though set forth in full.  In addition,  as used herein,
the following terms shall have the meanings respectively set forth after each:

     "Guarantied  Obligations"  means any and all present and future obligations
of Issuer to  Subordinated  Note Holders arising under or related to the Chicago
Note and/or any one or more of them,  whether  due or to become due,  matured or
unmatured, or liquidated or unliquidated,  including interest that accrues after
the  commencement  of any bankruptcy or insolvency  proceeding by or against any
Subordinated Note Holder, Issuer or any other person.

     "Guaranty"  means  this  Guaranty,   and  any  extensions,   modifications,
renewals, restatements, reaffirmations, supplements or amendments hereof.

     2. Subordination Agreement.  This instrument and the rights and obligations
evidenced  hereby are  subordinate  in the manner and to the extent set forth in
that certain  Subordination and  Intercreditor  Agreement dated as of January 6,
2002 (as amended,  supplemented  or otherwise  modified  from time to time,  the
"Subordination  Agreement")  among  Vendex,  QFS,  KBB , Issuer and Wells  Fargo
Retail Finance, LLC, to the indebtedness  (including interest) owed by Guarantor
pursuant to the loan and security agreement between Guarantor,  Issuer and Wells
<PAGE>

Fargo  Retail  Finance,   LLC,  dated  as  of  January  23,  2001  (as  amended,
supplemented  or  otherwise   modified  from  time  to  time,  the  "Wells  Loan
Agreement") and to indebtedness  refinancing  the  indebtedness  under the Wells
Loan Agreement (the "Wells  Indebtedness")  as contemplated by the Subordination
Agreement, and to any other secured indebtedness of Guarantor for borrowed money
permitted by the Wells Loan  Agreement,  and each holder of the Chicago Note, by
acceptance   thereof,   has  agreed  to  be  bound  by  the  provisions  of  the
Subordination  Agreement.  In the event that any provisions of this Guaranty are
deemed to conflict  with the  Subordination  Agreement,  the  provisions  of the
Subordination Agreement shall govern.

     3. Guaranty of Guarantied  Obligations.  Guarantor  hereby  irrevocably and
unconditionally  guaranties  and  promises  to  pay  on  demand  the  Guarantied
Obligations  and  each  and  every  one  of  them,   including  all  amendments,
modifications,  supplements, renewals or extensions of any of them, whether such
amendments, modifications,  supplements, renewals or extensions are evidenced by
new or  additional  instruments,  documents or  agreements or change the rate of
interest on any Guarantied Obligation or the security therefor, or otherwise.

     4. Nature of Guaranty.  This  Guaranty is  irrevocable  and  continuing  in
nature and relates to any  Guarantied  Obligations  now  existing  or  hereafter
arising.  This Guaranty is a guaranty of prompt and punctual  payment and is not
merely a guaranty of collection.

     5. Relationship to Other Agreements. Nothing herein shall in any way modify
or limit the  effect  of terms or  conditions  set forth in any other  document,
instrument or agreement  executed by Guarantor in connection with the Guarantied
Obligations,  but each and every term and condition  hereof shall be in addition
thereto.  All provisions  contained in the Chicago Note are fully  applicable to
this Guaranty and are incorporated herein by this reference.

     6.  Waivers  and  Consents.  Guarantor  acknowledges  that the  obligations
undertaken  herein  involve the guaranty of  obligations  of persons  other than
Guarantor  and,  in full  recognition  of that fact,  consents  and agrees  that
Subordinated Note Holders,  together with Issuer, may, at any time and from time
to time,  without notice or demand,  and without affecting the enforceability or
continuing  effectiveness hereof (a) supplement,  modify,  amend, extend, renew,
accelerate  or  otherwise  change  the  time  for  payment  or the  terms of the
Guarantied  Obligations or any part thereof,  including any increase or decrease
of the rate of interest  thereon;  (b)  supplement,  modify,  amend or waive, or
enter into or give any  agreement,  approval  or consent  with  respect  to, the
Guarantied  Obligations  or any  part  thereof,  or the  Chicago  Note to  which
Guarantor  is not a party  or any  additional  security  or  guaranties,  or any
condition,  covenant,  default, remedy, right, representation or term thereof or
thereunder; (c) accept new or additional instruments, documents or agreements in
exchange for or relative to the Chicago Note or the  Guarantied  Obligations  or
any part thereof; (d) accept partial payments on the Guarantied Obligations; (e)
receive  and  hold   additional   security  or  guaranties  for  the  Guarantied
Obligations  or any part  thereof;  (f)  release,  reconvey,  terminate,  waive,
abandon, fail to perfect,  subordinate,  exchange,  substitute,  transfer and/or
enforce any security or guaranties,  and apply any security and direct the order
or manner of sale  thereof as  Subordinated  Note  Holders in  conjunction  with
Issuer may  determine;  (g) release any person from any personal  liability with
respect to the Guarantied  Obligations or any part thereof; (h) settle,  release
on terms satisfactory to Subordinated Note Holders or by operation of applicable
laws or  otherwise  liquidate  or enforce  any  Guarantied  Obligations  and any
security or guaranty  therefor  in any  manner,  consent to the  transfer of any
security  and bid and  purchase  at any sale;  and/or (i) consent to the merger,
change or any other  restructuring  or  termination  of the  corporate  or other
existence of Issuer and correspondingly  restructure the Guarantied Obligations,
and any such merger,  change,  restructuring or termination shall not affect the
liability  of  Guarantor  or  the  continuing   effectiveness   hereof,  or  the
enforceability  hereof  with  respect  to  all  or any  part  of the  Guarantied
Obligations.

                                       2
<PAGE>

     Upon the  occurrence  and during the  continuance  of any Event of Default,
Subordinated  Note Holders may enforce this Guaranty  independently of any other
remedy or  security  Subordinated  Note  Holders at any time may have or hold in
connection with the Guarantied Obligations. Guarantor expressly waives any right
to require the  Subordinated  Note Holders to marshal assets in favor of Issuer,
or to proceed against Issuer, or upon or against any security or remedy,  before
proceeding to enforce this Guaranty. Guarantor agrees that the Subordinated Note
Holders may proceed against  Issuer,  or upon or against any security or remedy,
in such order as they shall  determine  in their sole and  absolute  discretion.
Subordinated  Note Holders may file a separate  action or actions against Issuer
and/or Guarantor without respect to whether action is brought or prosecuted with
respect to any security or against any other person, or whether any other person
is joined in any such action or actions. Guarantor agrees that Subordinated Note
Holders,  Issuer,  any  other  obligors  and any  affiliates  of  Issuer or such
obligors may deal with each other in connection with the Guarantied  Obligations
or otherwise,  or alter any contracts or  agreements  now or hereafter  existing
between any of them, in any manner  whatsoever,  all without in any way altering
or affecting the security of this Guaranty.  Subordinated  Note Holders'  rights
hereunder  shall be  reinstated  and  revived,  and the  enforceability  of this
Guaranty shall continue,  with respect to any amount at any time paid on account
of  the  Guarantied  Obligations  which  thereafter  shall  be  required  to  be
disgorged,   restored  or  returned  by  Subordinated   Note  Holders  upon  the
bankruptcy,  insolvency  or  reorganization  of Issuer or any other  person,  or
otherwise,  all as  though  such  amount  had  not  been  paid.  The  rights  of
Subordinated  Note Holders created or granted herein and the  enforceability  of
this Guaranty  with respect to Guarantor at all times shall remain  effective to
guaranty  the full  amount of all the  Guarantied  Obligations  even  though the
Guarantied  Obligations,  or any  part  thereof,  or any  security  or  guaranty
therefor,  may be or hereafter may become invalid or otherwise  unenforceable as
against Issuer or any other  guarantor or surety or any other person and whether
or not Issuer or any other person shall have any personal liability with respect
thereto.  Guarantor  expressly  waives  any and all  defenses  now or  hereafter
arising or asserted by reason of (a) any  disability  or other defense of Issuer
or any  other  obligor  with  respect  to the  Guarantied  Obligations,  (b) the
unenforceability  or invalidity  of any security or guaranty for the  Guarantied
Obligations  or the lack of perfection  or  continuing  perfection or failure of
priority of any security for the Guarantied  Obligations,  (c) the cessation for
any cause whatsoever of the liability of Issuer or any other obligor (other than
by reason of the full payment and  performance of all  Guarantied  Obligations),
(d) any  failure of  Subordinated  Note  Holders  to marshal  assets in favor of
Issuer or any other person,  (e) except as otherwise  provided in this Guaranty,
any  failure  of  Subordinated  Note  Holders  to give  notice  of sale or other
disposition  of Collateral to Guarantor or any other person or any defect in any
notice  that  may be  given  in  connection  with  any  sale or  disposition  of
Collateral,  (f) except as otherwise  provided in this Guaranty,  any failure of
Subordinated  Note Holders to comply with applicable laws in connection with the
sale or other disposition of any Collateral or other security for any Guarantied
obligations,  including  without  limitation,  any failure of Subordinated  Note
Holders to conduct a commercially  reasonable  sale or other  disposition of any
Collateral  or other  security  for any  Guarantied  Obligation,  (g) any act or
omission of  Subordinated  Note  Holders or others that  directly or  indirectly
results in or aids the  discharge  or release of Issuer or any other  obligor or
the Guarantied  Obligations or any security or guaranty therefor by operation of
law or otherwise,  (h) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation,  (i) any failure of Subordinated Note
Holders to file or enforce a claim in any  bankruptcy or other  proceeding  with
respect to any person,  (j) the election by  Subordinated  Note Holders,  in any
bankruptcy  proceeding of any person, of the application or  non-application  of
Section  1111(b)(2) of the United States  Bankruptcy  Code, (k) any extension of
credit  or the  grant  of any  lien  under  Section  364  of the  United  States
Bankruptcy  Code, (1) any use of cash collateral under Section 363 of the United
States  Bankruptcy  Code, (m) any agreement or  stipulation  with respect to the
provision of adequate protection in any bankruptcy proceeding of any person, (n)

                                       3
<PAGE>

the avoidance of any lien in favor of Subordinated  Note Holders for any reason,
(o) any bankruptcy,  insolvency,  reorganization,  arrangement,  readjustment of
debt,  liquidation or dissolution proceeding commenced by or against any person,
including any discharge of, or bar or stay against collecting, all or any of the
Guarantied  Obligations (or any interest  thereon) in or as a result of any such
proceeding,  (p) to the extent permitted, the benefits of any form of one-action
rule under any  applicable  law, or (q) any action  taken by  Subordinated  Note
Holders that is authorized by this Section or any other provision of the Chicago
Note. Guarantor expressly waives demands for payment or performance,  notices of
nonpayment or nonperformance,  protests, notices of protest, notices of dishonor
and all other notices or demands of any kind or nature  whatsoever  with respect
to the Guarantied Obligations, and all notices of acceptance of this Guaranty or
of the  existence,  creation  or  incurrence  of new  or  additional  Guarantied
Obligations.

     7. Understandings With Respect to Waivers and Consents.  Guarantor warrants
and agrees that each of the waivers and  consents set forth herein are made with
full knowledge of their  significance and  consequences,  with the understanding
that events giving rise to any defense or right waived may diminish,  destroy or
otherwise  adversely  affect rights which  Guarantor  otherwise may have against
Issuer,  Subordinated  Note  Holders  or  others,  or  against  any  collateral.
Guarantor acknowledges that it has either consulted with legal counsel regarding
the effect of this  Guaranty and the waivers and consents set forth  herein,  or
has made an  informed  decision  not to do so.  If this  Guaranty  or any of the
waivers  or  consents  herein are  determined  to be  unenforceable  under or in
violation of applicable  law, this Guaranty and such waivers and consents  shall
be effective to the maximum extent permitted by law.

     8.  Corporate  Existence.  Except as set forth in this Section 8, Guarantor
will do or cause to be done all things  necessary  to preserve  and keep in full
force and effect its corporate  existence in accordance with its  organizational
documents,  rights  (charter and statutory),  licenses and franchises;  provided
however,  that  Guarantor  shall not be  required  to  preserve  any such right,
license or franchise,  if the Board of Directors of Guarantor shall determine in
good faith, which determination  shall be evidenced by a board resolution,  that
the  preservation  thereof is no longer desirable in the conduct of the business
of Guarantor and that the loss thereof is not adverse in any material respect to
Subordinated  Note  Holders.   Notwithstanding  the  other  provisions  of  this
Guaranty, Guarantor shall be permitted to merge with or into any other entity if
either (a) Guarantor  shall be the  continuing  corporation or (b) the merger is
with  and  into  a  wholly-owned  subsidiary  of  Guarantor  and  the  surviving
corporation of such merger expressly  assumes the performance of the obligations
of Guarantor under this Guaranty.

     9. Investment Company Act. Guarantor shall not become an investment company
subject to registration under the Investment Company Act of 1940, as amended.

     10. SEC  Reports,  Financial  Reports.  If the  following  information  and
documents  are not  available  through the  internet,  Guarantor  shall  provide
Subordinated  Note  Holders  within 15 days  after it files them with the United
States  Securities and Exchange  Commission  (the "SEC") copies of quarterly and
annual  reports and the  information,  documents and other reports (or copies of
such  portions of any of the  foregoing as the SEC may by rules and  regulations
prescribe)  that  Guarantor  files with the SEC  pursuant to Sections  13(a) and
13(c) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").  Guarantor  will  continue  to file  with the SEC and to  provide  to the
Subordinated  Note Holders,  on the same timely basis such reports,  information
and other  documents as  Guarantor  would be required to file with the SEC as if
Guarantor were subject to the  requirements  of such Sections 13(a) and 13(d) or
15(d) of the  Exchange  Act,  notwithstanding  that  Guarantor  may no longer be
subject  to  Section  13(a)  and  13(d) or 15(d)  of the  Exchange  Act and that
Guarantor  would be entitled  not to file such  reports,  information  and other
documents with the SEC.

     11.  Limitations  on  Liability.  Notwithstanding  anything to the contrary
elsewhere  contained  herein or in the Chicago Note, the aggregate  liability of
Guarantor  hereunder for payment of the Guarantied  Obligations shall not exceed
an amount which,  in the  aggregate,  is $1.00 less than that amount which if so
paid or  performed  would  constitute  or  result  in a  "fraudulent  transfer,"

                                       4
<PAGE>

"fraudulent  conveyance" or terms of similar import,  under  applicable state or
federal law,  including  without  limitation,  Section 548 of the United  States
Bankruptcy Code.

     12. THIS GUARANTY  SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE  WITH, THE
LAWS OF THE STATE OF NEW YORK.


                                       5
<PAGE>

         IN WITNESS WHEREOF, Guarantor has executed this Guaranty by its duly
authorized officer as of the date first written above.

                "Guarantor"

                                    THE RIGHT START, INC.,
                                    a California corporation

                                    Address for Guarantor:

                                    2520 Renaissance Boulevard,
                                    King of Prussia, Pennsylvania, 19406
                Attn.: Legal
                                    jgroner@rightstart.com
                                    Telephone: (610) 278-7800


                                    By:/s/ Jerry R. Welch
                                    Name: Jerry R. Welch
                                    Title: President and Chief Executive Officer


                                       6
<PAGE>



</TEXT>
</DOCUMENT>
