AMENDMENT NO. 3 TO
                           LOAN AND SECURITY AGREEMENT

         THIS AMENDMENT NO. 3 TO LOAN AND SECURITY  AGREEMENT (this "Amendment")
is dated as of January  19,  1999 and is entered  into by and among  BankAmerica
Business Credit, Inc. (the "Lender"),  The Great Train Store Partners, L.P. (the
"Borrower"),  and The Great Train  Store  Company,  GTS  Partner,  Inc.  and GTS
Limited Partner,  Inc. as members of the GTS Consolidated Group. All capitalized
terms used herein but not otherwise  defined shall have the meanings ascribed to
them in the Agreement (as hereinafter defined).

                                   WITNESSETH:

         WHEREAS,  the Borrower,  the members of the GTS Consolidated  Group and
the Lender have entered into that certain Amended and Restated Loan and Security
Agreement  dated as of January  27,  1998,  as  amended  and  supplemented  (the
"Agreement"); and

         WHEREAS,  the  Borrower and the members of the GTS  Consolidated  Group
have  requested the Lender to amend the Agreement in certain  respects,  and the
Lender is willing to do so, subject to the terms and conditions stated herein;

         NOW,  THEREFORE,  in consideration of the premises herein contained and
other good and  valuable  consideration,  the receipt and  adequacy of which are
hereby acknowledged, the Borrower, the members of the GTS Consolidated Group and
the Lender hereby agree as follows:

         Section 1. Amendment to the Agreement. The Lender, the Borrower and the
members of the GTS  Consolidated  Group agree that,  effective as of February 1,
1999 (unless otherwise indicated), the Agreement shall be amended as follows:

                  (a) The  definition  of  "Applicable  Inventory  Advance Rate"
         contained in Section 1 of the Agreement is hereby  amended and restated
         to read in its entirety as follows:

                   "`Applicable Inventory Advance Rate' means:

                           (i) during the period  beginning  on February 1, 1999
                  through  and  including  March 31,  1999,  fifty-five  percent
                  (55%); and

                           (ii) during the period beginning on April 1, 1999 and
                  thereafter,  the lesser of (x) fifty  percent  (50%) and (y) a
                  percentage   equal  to   eighty-five   percent  (85%)  of  the
                  going-out-of-business   appraised   value  of  the  Borrower's
                  inventory,  net  of  liquidating  expenses,   expressed  as  a
                  percentage  of inventory  cost,  as reflected on the then most
                  recently completed  appraisal  delivered to the Lender. By way
                  of example,  if the most  recent  appraisal  delivered  to the
                  Lender showed that the  going-out-of-business  appraised value
                  of the Borrower's inventory,  net of liquidating expenses, was
                  seventy   percent  (70%)  of  the  inventory  cost,  then  the
                  percentage  described  in clause (y) above  would be 85% times
                  70%, or 59.5%.

                  (b) The definition of "Availability" contained in Section 1 of
         the Agreement is hereby amended and restated to read in its entirety as
         follows:

                           "`Availability' means at any time the lesser of:

                                    (a)    The  amount of  Eight Million Dollars
                  ($8,000,000)  (the  `Maximum Revolving Credit Line') or

                                    (b)    the   value  of  Eligible   Inventory
                  multiplied  by  the   Applicable Inventory Advance Rate;

                                    provided,   however,   that  at   all  times
                  Availability shall be reduced by the sum of:

                                    (a)  the unpaid balance  of  Revolving Loans
                  at that time;

                                    (b) the aggregate undrawn face amount of all
                  outstanding  Letters of Credit  which the Lender has caused to
                  be issued or obtained for the Borrower's account;

                                    (c)    reserves for  accrued interest on the
                  Revolving Loans;

                                    (d)    the Environmental Compliance Reserve;
                  and

                                    (e) all other  reserves  which the Lender in
                  its  reasonable  discretion  deems  necessary  or desirable to
                  maintain with respect to the  Borrower's  account,  including,
                  without  limitation,  any  amounts  which  the  Lender  may be
                  obligated  to  pay  in  the  future  for  the  account  of the
                  Borrower."

                  (c)  Section  2.1  of  the  Agreement is  hereby  amended  and
         restated to read in its entirety as follows:

                           "2.1 Total Facility.  Subject to all of the terms and
                  conditions of this Agreement,  the Lender shall make available
                  a  total  credit  facility  of up to  $8,000,000  (the  `Total
                  Facility')  for  Borrower's  use from time to time  during the
                  term of this Agreement.  The Total Facility shall be comprised
                  of a  revolving  line  of  credit  up to  the  limits  of  the
                  Availability,  consisting  of  revolving  loans and letters of
                  credit as described in Sections 2.2 and 2.3."

                  (d) Sections  3.1(a)(i)  and  3.1(a)(ii)  of the Agreement are
         hereby amended and restated to read in their entirety as follows:

                           "(i) For all Obligations,  other than LIBOR Revolving
                  Loans,  then at a fluctuating  per annum rate equal to one and
                  three-quarters  percent  (1.75%) (the `Reference Rate Margin')
                  plus the Reference Rate; and

                           (ii) If the Loans are LIBOR Revolving Loans,  then at
                  a per annum  rate  equal to three and  three-quarters  percent
                  (3.75%) (the `LIBOR  Margin')  plus the LIBOR Rate  determined
                  for the applicable Interest Period."

                  (e)  Section  7.8  of  the  Agreement  is  hereby  amended and
         restated to read in its entirety as follows:

                           "7.8 Collateral Reporting.  The Borrower will provide
                  the Lender with the following documents at the following times
                  in form  satisfactory  to the  Lender:  (a)  weekly  perpetual
                  inventory  reports by  category  and  location,  no later than
                  Tuesday of the following  week; (b) weekly sales  reports,  no
                  later than Tuesday of the following  week;  (c) monthly agings
                  of  accounts  payable,  no  later  than  the  10th  day of the
                  following month; (d) upon request,  copies of purchase orders,
                  invoices, and delivery documents for Inventory acquired by the
                  Borrower;  (e) such other reports as to the  Collateral as the
                  Lender shall request from time to time;  and (f)  certificates
                  of an officer of the Borrower  certifying as to the foregoing.
                  If any of the Borrower's  records or reports of the Collateral
                  are  prepared by an  accounting  service or other  agent,  the
                  Borrower  hereby  authorizes  such service or agent to deliver
                  such records, reports, and related documents to the Lender."

                  (f)   Section  10.19 of  the  Agreement is hereby  amended and
         restated to read in its entirety as follows:

                           "10.19  Intentionally Omitted"

                  (g)  Effective as of December 30, 1998,  Section  10.20 of the
         Agreement  is hereby  amended and  restated to read in its  entirety as
         follows:

                           "10.20  Intentionally Omitted"

                  (h)   Section  10.21 of  the  Agreement is hereby  amended and
         restated to read in its entirety as follows:

                           "10.21  New Store  Openings.  The Borrower  shall not
         make  any  New Store  Opening  except for the  following  two New Store
         Openings: Providence  Place in  Providence,  Rhode Island,  and Mall of
         Georgia, near Atlanta, Georgia."

                  (i)  Effective as of December 30, 1998,  Section  10.22 of the
         Agreement  is hereby  amended and  restated to read in its  entirety as
         follows:

                           "10.22  Intentionally Omitted"

                  (j)  Effective  as of the  date of the  effectiveness  of this
         Amendment,  Section  10 of  the  Agreement  is  hereby  amended  by the
         addition of a new Section 10.24  immediately  following  Section 10.23,
         which new Section 10.24 shall read in its entirety as follows:

                           "10.24  Minimum  Availability. The Borrower shall not
         permit  Availability  to  be less  than the following amounts as of any
         day of each of the following periods:

                                                          Minimum Daily
                    Period                                Availability
                    ------                                -------------
                    January 1, 1999 through and
                      including February 28, 1999           $   500,000
                    March 1, 1999 through and
                      including March 31, 1999              $   500,000
                    April 1, 1999 and each
                      day thereafter                        $   500,000"

                  (k)  Section  14 of the  Agreement  is hereby  amended  by the
         addition  of a new  sentence at the end of said  Section 14,  which new
         sentence shall read in its entirety as follows:

                  "Notwithstanding  anything to the  contrary  contained in this
                  Section 14, the fees  described  in clause (c) of this Section
                  14 (other than the fees  required by Section 6.4) shall not be
                  payable if the effective date of termination of this Agreement
                  results from a  refinancing  of the  Obligations  on or before
                  March 31, 1999 on terms satisfactory to the Lender."

         Section 2. Agreements.  In consideration of the Lender's  entering into
this  Agreement,  the  Borrower  and the members of the GTS  Consolidated  Group
hereby agree as follows:

                  (a)  notwithstanding  any  provisions  of  Section  7.5 of the
         Agreement  to the  contrary,  the  Borrower  shall  be  liable  for all
         expenses   relating  to  the  updated   inventory   appraisal  that  is
         concurrently herewith being ordered by the Lender;

                  (b) the Borrower agrees to cooperate fully with the Lender and
         the appraiser in connection with the updated  inventory  appraisal that
         is concurrently herewith being ordered by the Lender; and

                  (c)  notwithstanding  any  provisions  of Section  7.10 of the
         Agreement to the contrary,  effective immediately and for the remainder
         of the term of the Agreement all funds deposited into a Payment Account
         shall  be wire  transferred  each  day to the  Lender  for  application
         against the  outstanding  Revolving  Loans in accordance with the other
         provisions of Section 7.10 of the Agreement.

         Section  3.  Consents  and  Reaffirmations.  The  members  of  the  GTS
Consolidated  Group hereby consent to the terms and conditions of this Amendment
and reaffirm  their  obligations  under the Parent  Guaranty  and the  Affiliate
Guaranties  dated as of January  27,  1998 made by such  members in favor of the
Lender,  and  acknowledge  and agree that the Parent  Guaranty and the Affiliate
Guaranties remain in full force and effect.

         Section 4. Conditions.  The  effectiveness of this Amendment is subject
to the satisfaction of the following conditions precedent:

                  (a) Amendment.  Fully executed copies of this Amendment signed
         by the Borrower and the members of the GTS Consolidated  Group shall be
         delivered to the Lender.

                  (b) Other  Documents.  The Borrower and the members of the GTS
         Consolidated Group shall have executed and delivered to the Lender such
         other documents and instruments as the Lender may require.

                  (c) Amendment  Fee. The Borrower shall have paid to the Lender
         an amendment fee in the amount of $10,000.  The Lender and the Borrower
         agree  that this  amendment  fee shall be  financed  by the Lender as a
         Reference Rate Revolving Loan.

                  (d)  Documentation  Fee. The  Borrower  shall have paid to the
         Lender a documentation  fee (for this Amendment and for Amendment No. 2
         to the Agreement) in the amount of $1,000.  The Lender and the Borrower
         agree that this  documentation fee shall be financed by the Lender as a
         Reference Rate Revolving Loan.

         Section 5. Miscellaneous.

                  (a)   Survival  of   Representations   and   Warranties.   All
         representations  and  warranties  made in the  Agreement  or any  other
         document or documents relating thereto, including,  without limitation,
         any Loan Document  furnished in connection with this  Amendment,  shall
         survive the execution and delivery of this Amendment and the other Loan
         Documents,  and no  investigation  by the Lender or any  closing  shall
         affect the representations and warranties or the right of the Lender to
         rely thereon.

                  (b) Reference to Agreement.  The  Agreement,  each of the Loan
         Documents,  and any and all other agreements,  documents or instruments
         now or hereafter  executed and delivered  pursuant to the terms hereof,
         or pursuant to the terms of the Agreement as amended hereby, are hereby
         amended so that any  reference  therein to the  Agreement  shall mean a
         reference to the Agreement as amended hereby.

                  (c)  Agreement  Remains in Effect.  The Agreement and the Loan
         Documents remain in full force and effect, and each of the Borrower and
         the members of the GTS  Consolidated  Group  ratifies  and confirms its
         agreements  and  covenants  contained  therein.   The  Borrower  hereby
         confirms  that,  after  giving  effect to this  Amendment,  no Event of
         Default or Event exists as of such date.

                  (d)  Severability.  Any provision of this  Amendment held by a
         court of competent  jurisdiction to be invalid or  unenforceable  shall
         not impair or invalidate the remainder of this Amendment and the effect
         thereof  shall be  confined to the  provision  so held to be invalid or
         unenforceable.

                  (e)  APPLICABLE   LAW.  THIS  AMENDMENT  AND  ALL  OTHER  LOAN
         DOCUMENTS  EXECUTED  PURSUANT  HERETO SHALL BE DEEMED TO HAVE BEEN MADE
         AND TO BE PERFORMABLE IN THE STATE OF MISSOURI AND SHALL BE GOVERNED BY
         AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MISSOURI.

                  (f) Successors and Assigns. This Amendment is binding upon and
         shall inure to the benefit of the parties  hereto and their  respective
         successors and assigns;  provided,  however,  that the Borrower and the
         members of the GTS Consolidated Group may not assign or transfer any of
         their  respective  rights or  obligations  hereunder  without the prior
         written consent of the Lender.

                  (g)  Counterparts.  This  Amendment  may be executed in one or
         more counterparts, each of which when so executed shall be deemed to be
         an original,  but all of which when taken together shall constitute one
         and the same instrument.

                  (h) Headings. The headings,  captions and arrangements used in
         this  Amendment  are for  convenience  only and  shall not  affect  the
         interpretation of this Amendment.

                  (i)  Expenses of the  Lender.  The  Borrower  agrees to pay on
         demand (i) all costs and expenses  reasonably incurred by the Lender in
         connection  with the  preparation,  negotiation  and  execution of this
         Amendment and the other Loan Documents executed pursuant hereto and any
         and all subsequent amendments, modifications, and supplements hereto or
         thereto,  including,  without  limitation,  the  costs  and fees of the
         Lender's legal counsel and the allocated cost of the Lender's  in-house
         counsel,  and (ii) all costs and  expenses  reasonably  incurred by the
         Lender in connection with the enforcement or preservation of any rights
         under the Agreement,  this Amendment  and/or the other Loan  Documents,
         including, without limitation, the costs and fees of the Lender's legal
         counsel and the allocated cost of the Lender's in-house counsel.

                  (j) NO ORAL  AGREEMENTS.  THIS  AMENDMENT,  TOGETHER  WITH THE
         OTHER  LOAN  DOCUMENTS  AS  WRITTEN,  REPRESENTS  THE FINAL AND  ENTIRE
         AGREEMENT  AMONG THE  PARTIES  HERETO  AND MAY NOT BE  CONTRADICTED  BY
         EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
         PARTIES.  THERE ARE NO  UNWRITTEN  ORAL  AGREEMENTS  AMONG THE  PARTIES
         HERETO.

                    [signatures continued on following page]



<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first written above.

                                    THE GREAT TRAIN STORE PARTNERS, L.P.

                                    By:  GTS PARTNER, INC., its General Partner


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


                                    THE GREAT TRAIN STORE COMPANY


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


                                    GTS PARTNER, INC.


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


                                    GTS LIMITED PARTNER, INC.


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



                                    BANKAMERICA BUSINESS CREDIT, INC.


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