Document:

CREDIT AGREEMENT

                                   dated as of

                                  June 26, 2000

                                      among

                            THE TOPPS COMPANY, INC.,
                            TOPPS ENTERPRISES, INC.,

                            The Lenders Party Hereto

                                       and

                            THE CHASE MANHATTAN BANK,

                                    as Agent

<PAGE>

          CREDIT  AGREEMENT dated as of June 26, 2000,  among THE TOPPS COMPANY,
INC.,  a Delaware  corporation  (the  "Borrower"),  TOPPS  ENTERPRISES  INC.,  a
Delaware  corporation  ("Topps  Enterprises"),  the  Lenders  party  hereto (the
"Lenders"),  and THE  CHASE  MANHATTAN  BANK,  as Agent (in such  capacity,  the
"Agent").

                                   WITNESSETH
                                   ----------

          WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving  credit facility of up to $35,000,000,  the proceeds of
which are to be used as set forth herein; and

          WHEREAS,  the Lenders are willing to make such  facility  available to
the Borrower upon the terms and conditions set forth herein.

          NOW, THEREFORE, the Borrower,  Topps Enterprises,  the Lenders and the
Agent hereby agree as follows:

                                    ARTICLE I

                                   Definitions
                                   -----------

          SECTION 1.01. Defined Terms. As used in this Agreement,  the following
terms have the meanings specified below:

          "ABR",  when used in  reference  to any Loan or  Borrowing,  refers to
whether such Loan, or the Loans comprising such Borrowing,  are bearing interest
at the Alternate Base Rate.

          "Adjusted LIBO Rate" means,  with respect to any Eurodollar  Borrowing
for any  Interest  Period,  an interest  rate per annum.  (rounded  upwards,  if
necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

          "Administrative  Questionnaire" means an Administrative  Questionnaire
in a form supplied by the Agent.

          "Affiliate" means, with respect to a specified Person,  another Person
that directly, or indirectly through one or more intermediaries,  Controls or is
Controlled by or is under common Control with the Person specified.

          "Agent"   means  The  Chase   Manhattan   Bank,  in  its  capacity  as
administrative agent for the Lenders hereunder.

          "Alternate  Base  Rate"  means the  greatest  of (a) the Prime Rate in
effect on such day,  (b) the Base CD Rate in effect on such day plus 1%, and (c)
the  Federal  Funds  Effective  Rate in effect  on such day plus 1/2 of 1%.  Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Base CD
Rate or the Federal Funds  Effective  Rate shall be effective from and including
the  effective  date of such change in the Prime  Rate,  the Base CD Rate or the
Federal Funds Effective Rate, respectively.

<PAGE>

          "Applicable  Percentage"  means,  with  respect  to  any  Lender,  the
percentage  of the total  Revolving  Commitments  represented  by such  Lender's
Revolving  Commitment.  If the Revolving Commitments have terminated or expired,
the  Applicable  Percentages  shall  be  determined  based  upon  the  Revolving
Commitments most recently in effect, giving effect to any assignments.

          "Applicable  Rate" means, for any day, with respect to any ABR Loan or
Eurodollar  Loan,  or  with  respect  to  the  unused  Commitment  Fees  payable
hereunder,  as the case may be, the  applicable  rate per annum set forth  below
under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as
the case may be:

________________________________________________________________________________
     EBITDA              Eurodollar Spread        ABR Spread     Commitment Fee
                                                                 Rate
________________________________________________________________________________
>=$75,000,000                 100 bps                  0               25 bps
________________________________________________________________________________
>=$50,000,000                 125 bps                  0               25 bps
but <$75,000,000
________________________________________________________________________________
>=$25,000,000                 150 bps                  0               25 bps
but <$50,000,000
________________________________________________________________________________
>=$15,000,000                 175 bps                  0               25 bps
but <$25,000,000
________________________________________________________________________________
>=$5,000,000                  200 bps                  0               37.5 bps
but <$15,000,000
________________________________________________________________________________
<$5,000,000                   225 bps                  0               37.5 bps
________________________________________________________________________________

For these purposes, "EBITDA" shall be measured on a rolling four quarters basis,
looking  backward  beginning with the last fiscal quarter as to which  financial
reporting has been made pursuant to Section 3.04, 5.01(a) or Section 5.01(b).

          "Approved  Internet  Subsidiary"  means a Subsidiary (i) formed in the
United States,  engaged (or intended to be engaged) in a business that is (or is
intended to be) transacted primarily through the Internet,  (ii) in which any of
the equity therein (other than a nominal  amount) is owned (or, upon  conversion
pursuant to Section 5.14(b),  will be owned) by a Person or Persons unaffiliated
with the Borrower (prior to formation of such Subsidiary or conversion  pursuant
to Section 5.14(b)),  (iii) in which the Borrower or one or more Guarantors have
invested  (by  means of asset  transfer,  cash  investment,  the  assumption  or
incurrence of  Indebtedness,  including  Intercompany  Debt and  Guaranties,  or
otherwise), together with any previous or simultaneous investment in one or more
other such Subsidiaries, an aggregate amount of $10,000,000 or less (determined,
as of the date of each such  investment,  on the basis of fair market value,  in
accordance  with GAAP),  and (iv) as to which the Agent has  determined,  in its
reasonable discretion, that such investment would be unlikely in the foreseeable
future to have Material Adverse Effect.  (For these purposes,  the fact that one
or more Loan Documents  would cease to be enforceable  against a Subsidiary upon
its release as a Guarantor  pursuant to Section  5.14(b) shall not  constitute a
Material Adverse Effect.)

                                       2

<PAGE>

          "Assessment  Rate" means,  for any day, the annual  assessment rate in
effect  on such  day that is  payable  by a member  of the Bank  Insurance  Fund
classified  as  "well-capitalized"  and within  supervisory  subgroup  "B" (or a
comparable successor risk  classification)  within the meaning of 12 C.F.R. Part
327 (or any successor  provision) to the Federal Deposit  Insurance  Corporation
for  insurance  by such  Corporation  of time  deposits  made in  dollars at the
offices of such member in the United  States;  provided  that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid,  then the Assessment Rate shall be such annual
rate as shall be  determined  by the Agent to be  representative  of the cost of
such insurance to the Lenders.

          "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04),  and accepted by the Agent,  in the form of Exhibit A
or any other form approved by the Agent.

          "Base CD Rate" means the sum of (a) the Three-Month  Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

          "Board" means the Board of Governors of the Federal  Reserve System of
the United States of America.

          "Borrower" means The Topps Company, Inc., a Delaware corporation.

          "Borrowing" means Loans of the same Type, made, converted or continued
on the same  date and,  in the case of  Eurodollar  Loans,  as to which a single
Interest Period is in effect.

          "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

          "Business  Day" means any day that is not a Saturday,  Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term  "Business  Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

          "Capital  Expenditures" means, for any period, without duplication (a)
the additions to property, plant and equipment and other capital expenditures of
the Borrower and its consolidated  Subsidiaries that are (or would be) set forth
in a  consolidated  statement  of cash  flows of the  Borrower  for such  period
prepared in accordance with GAAP and (b) Capital Lease  Obligations  incurred by
the Borrower and its consolidated  Subsidiaries  during such period,  excluding,
however,  the  amount of any  Capital  Expenditures  paid for with  proceeds  of
casualty insurance as evidenced in writing and submitted to the Agent.

          "Capital  Lease  Obligations"  of any Person means the  obligations of
such  Person  to pay  rent  or  other  amounts  under  any  lease  of (or  other
arrangement  conveying  the  right  to use)  real  or  personal  property,  or a
combination  thereof,  which  obligations  are  required  to be  classified  and
accounted  for as capital  leases on a balance  sheet of such Person under GAAP,
and the  amount of such  obligations  shall be the  capitalized  amount  thereof
determined in accordance with GAAP.

                                       3

<PAGE>

          "Change in Control" means (a) the  acquisition of ownership,  directly
or  indirectly,  beneficially  or of record,  by any Person or group (within the
meaning of the  Securities  Exchange Act of 1934 and the rules of the Securities
and Exchange  Commission  thereunder  as in effect on the date hereof) of shares
representing more than 20% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Borrower; or (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i)  nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated.

          "Change in Law" means (a) the adoption of any law,  rule or regulation
after the date of this Agreement,  (b) any change in any law, rule or regulation
or in the  interpretation or application  thereof by any Governmental  Authority
after the date of this Agreement, or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.15(b),  by any lending office of such Lender
or by such  Lender's or the Issuing  Bank's  holding  company,  if any) with any
request  guideline or directive  (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

          "Code" means the Internal  Revenue Code of 1986,  as amended from time
to time.

          "Commitment Fee" has the meaning set forth in Section 2.12(a).

          "Consolidated Fixed Charge Ratio" means, on any date, the ratio of (i)
the sum of EBITDA minus unfinanced Capital  Expenditures to (ii) current portion
of long term debt (as per GAAP but excluding any Indebtedness arising under this
Agreement)  plus  interest  expense (as  certified  by a Financial  Officer on a
quarterly basis).  For purposes of calculating  Consolidated Fixed Charge Ratio,
EBITDA,  unfinanced Capital  Expenditures and interest expense shall be measured
for the four  fiscal  quarter  period  ending  on the date  such  ratio is being
tested.

          "Consolidated  Leverage  Ratio"  means,  on any  date,  the  ratio  of
Consolidated Total Liabilities to Consolidated Net Worth.

          "Consolidated  Net  Income"  means,  for  any  period  of  computation
thereof, the gross revenues from operations of the Borrower and its Subsidiaries
less  all  operating  and  non-operating   expenses  of  the  Borrower  and  its
Subsidiaries  including taxes on income,  all determined on a consolidated basis
in accordance with GAAP applied on a consistent basis.

          "Consolidated  Net  Worth"  means at any time as of which  the  amount
thereof is to be determined, the sum of the following in respect of the Borrower
and its  Subsidiaries  (determined on a consolidated  basis):  (i) the amount of
issued and outstanding share capital, plus (ii) the amount of additional paid-in
capital and  retained  income (or, in the case of a deficit  minus the amount of
such  deficit),  plus  (iii) the  amount  of any  foreign  currency  translation
adjustment (if positive,  or, if negative,  minus the amount of such translation
adjustment)  minus (iv) the amount of any treasury  stock,  all as determined in
accordance with GAAP applied on a consistent basis.

                                       4

<PAGE>

          "Consolidated Tangible Net Worth" means, on any date, Consolidated Net
Worth less capitalized  research and development  costs,  capitalized  interest,
debt  discount  and  expense,  goodwill,  trademarks,   copyrights,  franchises,
licenses  and such  other  assets  as are  properly  classified  as  "intangible
assets",  all  determined  on a  consolidated  basis  for the  Borrower  and its
Subsidiaries.

          "Consolidated  Total  Assets"  means,  on any date,  all amounts which
would,  in conformity  with GAAP, be included as assets on a balance sheet,  all
determined on a consolidated basis for the Borrower and its Subsidiaries.

          "Consolidated Total Liabilities" means, on any date, all amounts which
would,  in conformity  with GAAP, be included as liabilities on a balance sheet,
all determined on a consolidated basis for the Borrower and its Subsidiaries.

          "Contract  Notification Date" means the date which is 30 days prior to
(x) the date that any Material  License will, by its own terms,  expire,  or (y)
the date the Borrower intends to terminate any Material License.

          "Control" means the possession,  directly or indirectly,  of the power
to direct or cause the  direction  of the  management  or  policies of a Person,
whether  through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

          "Default" means any event or condition  which  constitutes an Event of
Default or which  upon  notice,  lapse of time or both  would,  unless  cured or
waived, become an Event of Default.

          "Disclosed  Matters" means the actions,  suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

          "Documentary Letter of Credit" means a documentary letter of credit in
form and substance customarily issued by the Issuing Bank from time to time.

          "dollars"  or "$"  refers  to  lawful  money of the  United  States of
America.

          "EBITDA" means, for any period,  Consolidated Net Income (or net loss)
of the  Borrower  and its  Subsidiaries  for  such  period  plus  the sum of (i)
depreciation  expense,  (ii)  amortization  expense,  (iii) net total income tax
expense and interest expense (as certified by a Financial Officer on a quarterly
basis) for such period,  all  determined on a  consolidated  basis in accordance
with GAAP applied on a consistent basis.

          "Effective  Date" means the date on which the conditions  specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

          "Eligible Assignee" means (i) a commercial bank having total assets in
excess of $250,000,000 and being governed by the Board;  (ii) a finance company,
insurance company or other financial institution or fund acceptable to the Agent
which in the ordinary course of business extends credit of the type evidenced by
this Agreement and has total assets in excess of $100,000,000 and being governed
by the Board, and if not so governed,  acceptable to the Borrower, whose consent
shall not be unreasonably  withheld;  and (iii) any other financial  institution
satisfactory  to both the Borrower and the Agent;  provided  that no such entity
that is organized  under the laws of a  jurisdiction  outside the United  States
shall be an Eligible  Assignee  unless such entity shall,  if legally able to do
so, prior to the  immediately  following due date of any payment by the Borrower
hereunder,  deliver  to the  Borrower  such  certificates,  documents  or  other
evidence,  as  required  by the Code or  Treasury  Regulations  issued  pursuant
thereto, including (A) Internal Revenue Service Form W-8 or W-9 and (B) Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement of
exemption  required  by  Treasury  Regulation  Section  1.1441-1,   1.1441-4  or
1.1441-6(c) or any subsequent  version thereof or successors  thereto,  properly
completed and duly executed by such entity establishing that such payment is (i)
not subject to United States Federal withholding tax under the Code because such
payment is  effectively  connected with the conduct by such entity of a trade or
business in the United  States,  or (ii) totally  exempt from the United  States
Federal withholding tax.

                                       5

<PAGE>

          "Environmental  Laws"  means  all  laws,  rules,  regulations,  codes,
ordinances,  orders,  decrees,  judgments,   injunctions,   notices  or  binding
agreements  issued,  promulgated or entered into by any Governmental  Authority,
relating in any way to the  environment,  preservation or reclamation of natural
resources,  the  management,  release or  threatened  release  of any  Hazardous
Material or to environmental protection matters.

          "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties  or  indemnities)  of the  Borrower  or any  Subsidiary,  directly  or
indirectly  resulting from or based upon (a) violation of any Environmental Law,
(b)  the  generation,  use,  handling,  transportation,  storage,  treatment  or
disposal of any Hazardous  Materials,  (c) exposure to any Hazardous  Materials,
(d) the  release or  threatened  release  of any  Hazardous  Materials  into the
environment,  or (e) any  contract  agreement  or other  consensual  arrangement
pursuant to which  liability  is assumed or imposed  with  respect to any of the
foregoing.

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
amended from time to time.

          "ERISA  Affiliate"  means  any  trade  or  business  (whether  or  not
incorporated)  that together with the Borrower,  is treated as a single employer
under  Section  414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and  Section  412 of the Code,  is treated as a single  employer  under
Section 414 of the Code.

          "ERISA Event" means (a) any "reportable  event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice  period is waived);  (b) the existence
with respect to any Plan of an "accumulated  funding  deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing  pursuant to Section  412(d) of the Code or Section 303(d) of ERISA of an
application  for a waiver of the minimum  funding  standard  with respect to any
Plan; (d) the  incurrence by the Borrower or any of its ERISA  Affiliates of any
liability  under Title IV of ERISA with respect to the  termination of any Plan;
(e) the receipt by the Borrower or any ERISA  Affiliate  from the PBGC or a plan
administrator  of any notice  relating to an intention to terminate  any Plan or
Plans or to appoint a trustee to administer  any Plan; (f) the incurrence by the
Borrower or any of its ERISA  Affiliates  of any  liability  with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the  Borrower or any ERISA  Affiliate  of any notice  concerning  the
imposition of Withdrawal  Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization,  within the meaning of
Title IV of ERISA.

                                       6

<PAGE>

          "Eurodollar",  when used in reference to any Loan or Borrowing, refers
to whether  such Loan,  or the Loans  comprising  such  Borrowing,  are  bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

          "Event of Default"  has the  meaning  assigned to such term in Article
VII.

          "Existing  Agreement" has the meaning assigned to such term in Section
4.01(f).

          "Excluded  Taxes" means,  with respect to the Agent,  any Lender,  the
Issuing  Bank or any other  recipient of any payment to be made by or on account
of any  obligation  of the Borrower  hereunder,  (a) income or  franchise  taxes
imposed on (or measured by) its income,  profits, or capital by any Governmental
Authority,  or by the  jurisdiction  under the laws of which such  recipient  is
organized  or in which its  principal  office is located  or, in the case of any
Lender,  in which its  applicable  lending  office is  located,  (b) any  branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other  jurisdiction  in which the Borrower is located and (c) in the case
of a Foreign  Lender  (other  than an  assignee  pursuant  to a  request  by the
Borrower under Section 2.19(b)),  any withholding tax that is imposed on amounts
payable to such Foreign  Lender at the time such Foreign  Lender becomes a party
to this Agreement (or  designates a new lending  office) or is  attributable  to
such  Foreign  Lender's  failure to comply with Section  2.17(e),  except to the
extent that such Foreign Lender (or its assignor,  if any) was entitled,  at the
time  of  designation  of a new  lending  office  (or  assignment),  to  receive
additional  amounts  from the  Borrower  with  respect to such  withholding  tax
pursuant to Section 2.17(a).

          "Federal  Funds  Effective  Rate"  means,  for any day,  the  weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged by Federal funds brokers,  as published on the next succeeding Business
Day by the  Federal  Reserve  Bank  of New  York,  or,  if  such  rate is not so
published for any day that is a Business Day, the average (rounded  upwards,  if
necessary,  to the  next  1/100 of 1%) of the  quotations  for such day for such
transactions  received  by  the  Agent  from  three  Federal  funds  brokers  of
recognized standing selected by it.

          "Financial  Officer"  means the  chief  financial  officer,  principal
accounting officer, treasurer or controller of the Borrower.

          "Financing Transactions" means the execution, delivery and performance
by the Borrower of the Loan  Documents,  the borrowing of Loans,  the use of the
proceeds thereof and the issuance of Letters of Credit hereunder.

          "Foreign  Lender" means any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes of
this  definition,  the United  States of  America,  each State  thereof  and the
District of Columbia shall be deemed to constitute a single jurisdiction.

                                       7

<PAGE>

          "Foreign  Subsidiary" means any Subsidiary that is organized under the
laws of a  jurisdiction  other  than the  United  States of America or any State
thereof or the District of Columbia.

          "GAAP" means generally  accepted  accounting  principles in the United
States of America.

          "Governmental  Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local,  and any agency,  authority,  instrumentality,  regulatory  body,  court,
central  bank or  other  entity  exercising  executive,  legislative,  judicial,
taxing,  regulatory  or  administrative  powers or functions of or pertaining to
government.

          "Guarantee"  of  or  by  any  Person  (the   "guarantor")   means  any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of  guaranteeing  any  Indebtedness  or other  obligation of any
other  Person  (the  "primary  obligor")  in any  manner,  whether  directly  or
indirectly,  and including any obligation of the guarantor,  direct or indirect,
(a) to purchase or pay (or advance or supply  funds for the  purchase or payment
of) such  Indebtedness  or other  obligation  or to  purchase  (or to advance or
supply funds for the purchase of) any security for the payment  thereof,  (b) to
purchase or lease  property,  securities or services for the purpose of assuring
the owner of such  Indebtedness or other obligation of the payment thereof,  (c)
to maintain  working  capital,  equity capital or any other financial  statement
condition  or  liquidity  of the  primary  obligor so as to enable  the  primary
obligor to pay such Indebtedness or other obligation, or (d) as an account party
in respect of any letter of credit or letter of guaranty  issued to support such
Indebtedness  or obligation;  provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.

          "Guarantor"  means (i) Topps  Enterprises and any domestic  Subsidiary
organized  or  acquired  after the date hereof  other than an Approved  Internet
Subsidiary,  or (ii) any other existing  domestic  Subsidiary which ceases to be
inactive (in any material  respect) at any time after the Effective Date; all of
whom shall jointly and severally guaranty payment of the Borrower's Obligations.

          "Hazardous Materials" means all explosive or radioactive substances or
wastes  and all  hazardous  or toxic  substances,  wastes  or other  pollutants,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials,  polychlorinated  biphenyls,  radon gas, infectious or medical wastes
and all other  substances  or wastes of any  nature  regulated  pursuant  to any
Environmental Law.

          "Hedging  Agreement"  means any interest  rate  protection  agreement,
foreign currency  exchange  agreement,  commodity price protection  agreement or
other interest or currency exchange rate or commodity price hedging arrangement.

          "Indebtedness"  of any  Person  means,  without  duplication,  (a) all
obligations  of such Person for borrowed  money or advances of any kind, (b) all
obligations  of such Person  evidenced  by bonds,  debentures,  notes or similar
instruments,  (c) all obligations of such Person upon which interest charges are
customarily  paid, (d) all obligations of such Person under  conditional sale or
other title retention  agreements  relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred  purchase price of
property  or  services  (excluding  current  accounts  payable  incurred  in the
ordinary course of business),  (f) all Indebtedness of others secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured  by) any Lien on  property  owned or  acquired by such
Persons,  whether or not the Indebtedness  secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness  of others,  (h) all Capital Lease
Obligations of such Person,  (i) all  obligations,  contingent or otherwise,  of
such  Person as an account  party in respect of letters of credit and letters of
guaranty,  and (j) all obligations,  contingent or otherwise,  of such Person in
respect of bankers acceptances. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general  partner) to the extent such Person is liable  therefor as a result
of such Person's  ownership  interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness  provide that such Person is
not liable therefor.

                                       8

<PAGE>

          "Indemnified Taxes" means Taxes other than Excluded Taxes.

          "Intercompany Debt" means loans,  advances and any other extensions of
credit made by the Borrower and/or any Guarantor to any Subsidiary.

          "Intercompany  Note" means any  promissory  note,  instrument or other
written  indicia of an  obligation by any  Subsidiary to repay any  Intercompany
Debt.

          "Interest Election Request" means a request by the Borrower to convert
or continue a Borrowing in accordance with Section 2.07.

          "Interest  Payment  Date" means (a) with respect to any ABR Loan,  the
first day of each month and (b) with respect to any  Eurodollar  Loan,  the last
day of the Interest  Period  applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar  Borrowing with an Interest Period of more
than three  months'  duration,  each day prior to the last day of such  Interest
Period that occurs at intervals of three months' duration after the first day of
such Interest Period.

          "Interest Period" means with respect to any Eurodollar Borrowing,  the
period  commencing on the date of such  Borrowing and ending on the  numerically
corresponding  day in the calendar  month that is one, two,  three or six months
(or, with the consent of each Lender, nine or twelve months) thereafter,  as the
Borrower may elect;  provided that (i) if any Interest Period would end on a day
other than a Business Day,  such  Interest  Period shall be extended to the next
succeeding  Business Day unless such next succeeding  Business Day would fall in
the next calendar  month,  in which case such  Interest  Period shall end on the
next preceding  Business Day, and (ii) any Interest Period that commences on the
last  Business  Day of a  calendar  month  (or on a day for  which  there  is no
numerically  corresponding  day in the  last  calendar  month  of such  Interest
Period) shall end on the last  Business Day of the last  calendar  month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and  thereafter  shall be the effective
date of the most recent conversion or continuation of such Borrowing.

          "Issuing Bank" means The Chase  Manhattan Bank, in its capacity as the
issuer of Letters of Credit  hereunder,  and its  successors in such capacity as
provided in Section  2.05(i).  The Issuing Bank may, in its discretion,  arrange
for one or more  Letters  of Credit to be issued by  Affiliates  of the  Issuing
Bank,  in which case the term "Issuing  Bank" shall  include any such  Affiliate
with respect to Letters of Credit issued by such Affiliate.

                                       9

<PAGE>

          "LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.

          "LC  Exposure"  means,  at  any  time,  the  aggregate  amount  of all
Documentary  Letter  of Credit  Outstandings  and all  Standby  Letter of Credit
Outstandings.  The LC Exposure of any Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.

          "Lenders"  means the  Persons  listed on  Schedule  2.01 and any other
Person  that shall have become a party  hereto  pursuant  to an  Assignment  and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.

          "Letter of Credit" means any letter of credit issued  pursuant to this
Agreement  which  Letter  of  Credit  shall be a  Documentary  Letter  of Credit
(including the Topps SA Letters of Credit) or a Standby Letter of Credit.

          "Letter of Credit Outstandings" means, at any time, the sum of (i) the
aggregate  undrawn stated amount of all Letters of Credit then  outstanding plus
(ii)  all  amounts  theretofore  drawn  under  Letters  of  Credit  and not then
reimbursed.

          "LIBO Rate" means,  with respect to any  Eurodollar  Borrowing for any
Interest  Period,  the rate  appearing  on Page 3750 of the Dow  Jones  Telerate
Service  (or on any  successor  or  substitute  page  of  such  Service,  or any
successor  to  or  substitute  for  such  Service,   providing  rate  quotations
comparable  to  those  currently  provided  on such  page of  such  Service,  as
determined  by the Agent from time to time for purposes of providing  quotations
of interest rates applicable to dollar deposits in the London interbank  market)
at  approximately  11:00  a.m.,  London  time,  two  Business  Days prior to the
commencement  of such Interest  Period,  as the rate for dollar  deposits with a
maturity  comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar  Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the  principal  London office of the Agent in  immediately  available
funds in the London interbank market at approximately  11:00 a.m.,  London time,
two Business Days prior to the commencement of such Interest Period.

          "Lien" means,  with respect to any asset,  (a) any  mortgage,  deed of
trust lien, pledge, hypothecation,  encumbrance, charge or security interest in,
on or of such  asset,  (b) the  interest  of a  vendor  or a  lessor  under  any
conditional sale agreement,  capital lease or title retention  agreement (or any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing)  relating  to such  asset,  and (c) in the  case of  securities,  any
purchase  option,  call or similar  right of a third party with  respect to such
securities.

          "Loan Documents" means this Agreement, the Topps Enterprises Guaranty,
the Topps SA Guaranty,  any letter of credit  application or any other agreement
submitted by the Borrower or Topps SA in connection with a Letter of Credit, and
any  Guarantee  or other  instrument  or  agreement  now  existing or  hereafter
executed and delivered in connection herewith or therewith.

          "Loans"  means the loans made by the Lenders to the Borrower  pursuant
to this Agreement.

                                       10

<PAGE>

          "LPT" means the incurrence or assumption of Indebtedness on account of
any  buyout,  acquisition  or  re-capitalization  of  the  Borrower  and/or  any
Subsidiary   (including  any  leveraged  buyout,   management  buyout,   merger,
acquisition,  significant  share  repurchase  or dividend  payout)  which causes
either (i) (x) the ratio of Consolidated Total Liabilities to Consolidated Total
Assets  to be  greater  than  .75  to  1.0  and  (y)  the  total  amount  of all
Indebtedness  related  to  the  transaction  in  question  or to any  buyout  or
acquisition in the past, or to any  re-capitalization  completed within one year
prior to the date of the  transaction in question,  to constitute 25% or more of
Consolidated  Total  Liabilities,  or (ii) (x) a doubling of Consolidated  Total
Liabilities  and (y) a ratio of Consolidated  Total  Liabilities to Consolidated
Total Assets of greater than .50 to 1.0. For purposes of this  definition  only,
the term Consolidated  Total  Liabilities shall be deemed to include  contingent
liabilities on account of non-perpetual preferred stock.

          "Margin  Stock"  means  "Margin  Stock"  as that  term is  defined  in
Regulation U of the Board.

          "Material  Adverse Effect" means a material  adverse effect on (a) the
business,  assets,  operations  or  condition,  financial or  otherwise,  of the
Borrower and the Subsidiaries  taken as a whole, (b) the ability of the Borrower
to perform any of its obligations under any Loan Document or (c) the validity or
enforceability  of any Loan  Document or the rights of or benefits  available to
the Lenders under any Loan Document.

          "Material  Indebtedness"  means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the  Borrower  and its  Subsidiaries,  in each case with a
principal amount outstanding of at least $1,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower
or any  Subsidiary in respect of any Hedging  Agreement at any time shall be the
maximum  aggregate  amount  (giving effect to any netting  agreements)  that the
Borrower or such Subsidiary  would be required to pay if such Hedging  Agreement
were terminated at such time.

          "Material Licenses" means the licenses set forth on Schedule 5.04.

          "Material Subsidiary" means any Subsidiary whose assets constituted 5%
or more of  Consolidated  Total  Assets  on the  balance  sheet  submitted  most
recently (to the date in question) to the Agent  pursuant to Section  5.01(a) or
Section 5.01(b).

          "Maturity Date" means June 25, 2004.

          "Moody's" means Moody's Investors Service, Inc.

          "Multiemployer  Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

          "Net Proceeds" means, with respect to any Permitted Asset Sale (a) the
gross sales  price paid in any form in respect of such sale,  net of (b) the sum
of (i) all reasonable fees and  out-of-pocket  expenses paid by the Borrower and
the  Subsidiaries  to third parties (other than  Affiliates) in connection  with
such sale,  (ii) the amount of all payments  required to be made by the Borrower
and the Subsidiaries as a result of such sale to repay Indebtedness  (other than
Loans) secured by such asset or otherwise  subject to mandatory  prepayment as a
result of such sale (other than any such mandatory  prepayment  pursuant to this
Agreement),  and (iii) the amount of all taxes paid (or reasonably  estimated to
be payable) by the Borrower and the Subsidiaries, and the amount of any reserves
established by the Borrower and the Subsidiaries to fund contingent  liabilities
reasonably  estimated to be payable, in each case during the year that such sale
occurred or the next succeeding year and that are directly  attributable to such
sale (as determined  reasonably and in good faith by the chief financial officer
of the Borrower).

                                       11

<PAGE>

          "Obligations"  means  the  collective  reference  to  (i)  the  unpaid
principal of and interest on the Loans and all other obligations and liabilities
of the  Borrower  to the Agent or any  Lender  (including,  without  limitation,
interest accruing at the then-applicable rate provided herein after the maturity
of the Loans and interest accruing at the  then-applicable  rate provided herein
after the filing of any  petition  in  bankruptcy,  or the  commencement  of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether
or not a claim for  post-filing  or  post-petition  interest  is allowed in such
proceeding),  whether  direct or  indirect,  absolute or  contingent,  due or to
become due, now existing or hereafter incurred, that may arise under, out of, or
in connection  with this  Agreement,  the other Loan  Documents,  the Letters of
Credit (including,  without  limitation,  the Topps SA Letters of Credit) or any
other  documents made,  delivered or given in connection  herewith or therewith,
whether on account  of  principal,  interest  reimbursement  obligations,  fees,
indemnities,  costs, expenses or otherwise (including,  without limitation,  all
fees and  disbursements of counsel to the Agent or the Lenders that are required
to be paid by the  Borrower  or any  Subsidiary  pursuant  to the  terms of this
Agreement or any other Loan Document),  and (ii) all obligations and liabilities
of the Borrower to any Lender or any  affiliate of a Lender,  whether  direct or
indirect,  absolute  or  contingent,  due or to  become  due,  now  existing  or
hereafter  incurred,  that may arise under,  out of, or in  connection  with any
Hedging  Agreement or any other document made,  delivered or given in connection
therewith.

          "Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property  taxes,  charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document, but Other Taxes
shall not include Excluded Taxes.

          "PBGC" means the Pension Benefit Guaranty  Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

          "Permitted Acquisitions" means an acquisition of the stock (or another
investment  in the equity) or assets of another  Person who is not a  Subsidiary
(an "Acquisition")  which meets the following  criteria:  (i) the Acquisition in
question  would  not  cause  the  aggregate  gross  purchase  price  paid to the
acquiree(s) (in cash,  stock,  assumption of Indebtedness  and/or  otherwise) on
account of (A) all Acquisitions  since the Effective Date to exceed  $50,000,000
or (B) all Foreign  Acquisitions  (defined  below) since the  Effective  Date to
exceed $15,000,000, (ii) the proposed acquiree is in the same or related line of
business as the  Borrower or any  Subsidiary  (or the assets to be acquired  are
utilized  in the  same  or  related  line of  business  as the  Borrower  or any
Subsidiary),  (iii) the  Acquisition is to be friendly in nature (e.g.  approved
and  recommended  by  the  target's  board  of  directors),  (iv)  prior  to and
immediately  following the Acquisition,  and after giving effect thereto,  there
shall not have  occurred  a Default  or an Event of  Default,  (v) all  material
third-party  consents and approvals necessary in connection with the Acquisition
shall have been obtained and copies of thereof shall have been  delivered to the
Agent,  (vi)  evidence  (reasonably  satisfactory  to the Agent) shall have been
delivered  to the Agent  that such  stock (or other  equity) or assets are to be
purchased free and clear of any Liens other than Permitted  Encumbrances and, in
the case of stock (or other  equity) free of any  restrictions  other than those
reasonably  acceptable to the Agent,  (vii) if the proposed  acquiree  becomes a
Subsidiary of the Borrower or any Guarantor, such Subsidiary shall timely comply
with  Section  5.14 (if  required  by the terms of Section  5.14),  (viii)  such
Acquisition  shall not result in an LPT, (ix) in the case of an Acquisition of a
Person organized outside of the United States (a "Foreign Acquisition"), (A) the
acquirer shall also be organized outside of the United States,  and (B) any cash
paid on account of such Acquisition shall originate from a source outside of the
United States.  With regard to the foregoing clause (viii), the Agent shall have
received prior to the consummation of said Permitted Acquisition,  copies of all
documentation  (including  financial  information  and  other  information  with
respect to the Borrower, the Guarantors,  the proposed acquiree and the proposed
transaction,  in detail reasonably satisfactory to the Agent, including evidence
of  existing  and  continuing  compliance  with this  Agreement,  based upon the
Borrower's own projections of the effect of the Acquisition in question) related
to the Permitted Acquisition as may be reasonably required by the Agent.

                                       12

<PAGE>

          "Permitted  Asset Sales" means "arm's  length"  sales of assets by the
Borrower or a Subsidiary  which do not cause a Default,  provided that if one or
more Loans are outstanding at the time, then in the case of any such sale having
a gross sale  price of  greater  than  $5,000,000  (aggregated  in the case of a
series of contemporaneous  asset sales to the same purchaser or to more than one
purchaser  who are  Affiliates  of each  other),  not  less  than 25% of any Net
Proceeds that are paid in cash or cash equivalents  (including any cash received
in respect of non-cash proceeds) is applied, on or before the fifth Business Day
following  each date of receipt of any such Net  Proceeds  (whether  received at
closing or  thereafter),  to pay down (or satisfy,  if applicable) the principal
amount of all Loans then outstanding.

          "Permitted Encumbrances" means the following:

          (a) Liens  imposed  by law for taxes that are not yet due or are being
contested in compliance with Section 5.05;

          (b) carriers', warehousemen's,  mechanics', materialmen's, repairmen's
and other like Liens imposed by law,  arising in the ordinary course of business
and securing  obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05;

          (c) pledges and deposits  made in the  ordinary  course of business in
compliance with workers'  compensation,  unemployment insurance and other social
security laws or regulations;

          (d)  deposits  to secure the  performance  of bids,  trade  contracts,
leases,  statutory obligations,  surety and appeal bonds,  performance bonds and
other  obligations  of a like  nature,  in each case in the  ordinary  course of
business;

          (e) judgment  liens in respect of judgments  that do not constitute an
Event of Default under clause (k) of Article VII; and

          (f)  easements,   zoning   restrictions,   rights-of-way  and  similar
encumbrances  on real property  imposed by law or arising in the ordinary course
of business that do not secure any monetary  obligations  and do not  materially
detract from the value of the affected  property or interfere  with the ordinary
conduct of business of the Borrower or any Subsidiary;

provided  that the term  "Permitted  Encumbrances"  shall not  include  any Lien
securing Indebtedness.

                                       13

<PAGE>

          "Permitted Investments" means the following:

          (a)  direct  obligations  of,  or  obligations  the  principal  of and
interest  on which are  unconditionally  guaranteed  by,  the  United  States of
America (or by any agency thereof to the extent such  obligations  are backed by
the full  faith  and  credit of the  United  States  of  America),  in each case
maturing within one year from the date of acquisition thereof,

          (b) investments in commercial  paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's;

          (c) investments in certificates of deposit,  banker's  acceptances and
time  deposits  maturing  within 180 days from the date of  acquisition  thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic  office of any commercial  bank organized  under the
laws of the United  States of America or any State  thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

          (d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities  described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;

          (e) shares of mutual  funds which invest in  obligations  described in
paragraphs  (a) through (d) above,  the shares of which  mutual funds are at all
times rated "AAA" by S&P;

          (f) shares of "money market funds" of financial institutions rated "A"
or better by S&P or "A2" or better by Moody's and shares of the Strong Municipal
Money Market Fund;

          (g)  investments   received  in  connection  with  the  bankruptcy  or
reorganization  of, or  settlement  of  delinquent  accounts and disputes  with,
customers and suppliers, in each case in the ordinary course of business; and

          (h) shares of auction rate municipal  preferred  securities rated A or
better by S&P.

          "Person"  means any natural  person,  corporation,  limited  liability
company, trust, joint venture, association,  company, partnership,  Governmental
Authority or other entity.

          "Plan"  means  any  employee   pension  benefit  plan  (other  than  a
Multiemployer  Plan)  subject to the  provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA  Affiliate is (or, if such plan were  terminated,  would under Section
4069 of ERISA be deemed to be) an  "employer"  as  defined  in  Section  3(5) of
ERISA.

                                       14

<PAGE>

          "Prime Rate" means the rate of interest per annum  publicly  announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal  office in New York  City;  each  change in the  Prime  Rate  shall be
effective from and including the date such change is publicly announced as being
effective.

          "Register" has the meaning set forth in Section 9.04.

          "Related Parties" means,  with respect to any specified  Person,  such
Person's Affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's Affiliates.

          "Required  Lenders"  means,  at any  time,  Lenders  having  Revolving
Exposures and unused Revolving Commitments  representing at least 57% of the sum
of the total Revolving Exposures and unused Revolving Commitments at such time.

          "Restricted  Payment"  means (i) any  dividend  or other  distribution
(whether in cash,  securities or other  property)  with respect to any shares of
any  class of  capital  stock of the  Borrower  or any  Subsidiary,  or (ii) any
payment (whether in cash,  securities or other property),  including any sinking
fund or similar  deposit,  on account of the purchase,  redemption,  retirement,
acquisition,  cancellation or termination of any such shares of capital stock of
the Borrower or any Subsidiary, or any option, warrant or other right to acquire
any such shares of capital stock of the Borrower or any Subsidiary.

          "Revolving  Availability  Period"  means the period from and including
the  Effective  Date to but  excluding  the earlier of the Maturity Date and the
date of termination of the Revolving Commitments.

          "Revolving  Commitment"  means,  with  respect  to  each  Lender,  the
commitment,  of such  Lender to make  Loans  and to  acquire  participations  in
Letters of Credit  hereunder,  expressed as an amount  representing  the maximum
aggregate  amount  of  such  Lender's  Revolving  Exposure  hereunder,  as  such
commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b)
reduced or  increased  from time to time  pursuant to  assignment  by or to such
Lender  pursuant  to  Section  9.04.  The  amount  of  each  Lender's  Revolving
Commitment is set forth on Schedule  2.01, or in the  Assignment  and Acceptance
pursuant to which such Lender shall have assumed its  Revolving  Commitment,  as
applicable.  The  aggregate  amount of the  Lenders'  Revolving  Commitments  is
$35,000,000.

          "Revolving  Exposure"  means,  with respect to any Lender at any time,
the sum of the  outstanding  principal  amount of such Lender's Loans and its LC
Exposure at such time.

          "S&P" means Standard & Poor's.

          "Standby  Letter of Credit"  means a standby  letter of credit in form
and  substance  customarily  issued by the Issuing Bank from time to time and in
form and substance  acceptable to the Agent and the Issuing Bank, and issued for
such purposes for which the Borrower has  historically  obtained standby letters
of credit, or for such other purposes as are reasonably  acceptable to the Agent
and the Issuing Bank.

                                       15

<PAGE>

          "Statutory  Reserve  Rate" means a fraction  (expressed as a decimal),
the  numerator  of which is the number one and the  denominator  of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal,  special,  emergency or supplemental  reserves) expressed as a decimal
established  by the Board to which the Agent is subject (a) with  respect to the
Base CD Rate,  for new negotiable  nonpersonal  time deposits in dollars of over
$100,000  with  maturities  approximately  equal  to three  months  and (b) with
respect to the Adjusted LIBO Rate, for eurocurrency  funding (currently referred
to as  "Eurocurrency  Liabilities"  in Regulation D of the Board).  Such reserve
percentages   shall  include  those  imposed  pursuant  to  such  Regulation  D.
Eurodollar  Loans shall be deemed to constitute  eurocurrency  funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions  or  offsets  that may be  available  from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

          "subsidiary"  means,  with respect to any Person (the "parent") at any
date, any corporation,  limited liability company,  partnership,  association or
other  entity the  accounts  of which  would be  consolidated  with those of the
parent in the  parent's  consolidated  financial  statements  if such  financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership,  association or other
entity (a) of which securities or other ownership  interests  representing  more
than 50% of the equity or more than 50% of the ordinary  voting power or, in the
case of a partnership,  more than 50% of the general partnership  interests are,
as of such date,  owned,  controlled  or held,  or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

          "Subsidiary" means any subsidiary of the Borrower.

          "Taxes"  means any and all present or future taxes,  levies,  imposts,
duties,  deductions,   charges  or  withholdings  imposed  by  any  Governmental
Authority.

          "Three-Month  Secondary  CD Rate" means,  for any day,  the  secondary
market rate for three-month  certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding  Business
Day) by the Board through the public  information  telephone line of the Federal
Reserve  Bank of New York (which rate will,  under the current  practices of the
Board, be published in Federal Reserve Statistical Release H. 15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding  Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at  approximately  10:00 a.m.,  New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the Agent
from three  negotiable  certificate  of deposit  dealers of recognized  standing
selected by it.

          "Topps   Enterprises"  means  Topps  Enterprises,   Inc.,  a  Delaware
corporation.

          "Topps Enterprises  Guaranty" means a guaranty of payment of even date
herewith  (in the form of Exhibit C hereto),  made by Topps  Enterprises  to the
Agent with respect to the Obligations.

                                       16

<PAGE>

          "Topps SA" means Topps Latin America SA, a corporation organized under
the laws of Uruguay.

          "Topps SA  Guaranty"  means the  Guaranty,  dated as of the  Effective
Date, between the Borrower and the Agent.

          "Topps SA  Letters  of  Credit"  means  Documentary  Letters of Credit
issued for the account of Topps SA for the benefit of its vendors, reimbursement
obligations in respect of which are guaranteed by the Borrower.

          "Topps SA Letter of Credit  Outstandings"  means, at any time, the sum
of (i) the  aggregate  undrawn  stated  amount of all Topps SA Letters of Credit
then outstanding plus (ii) all amounts  theretofore drawn under Topps SA Letters
of Credit and not then reimbursed.

          "Travelers  Letter of Credit" means a Standby  Letter of Credit issued
under the Existing Agreement by The Chase Manhattan Bank.

          "Type",  when used in  reference to any Loan or  Borrowing,  refers to
whether  the rate of  interest  on such Loan,  or on the Loans  comprising  such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.

          "Withdrawal  Liability"  means liability to a Multiemployer  Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

          SECTION 1.02. Classification of Loans and Borrowings.  For purposes of
this  Agreement,  Loans and Borrowings may be classified and referred to by Type
(e.g., a "Eurodollar Loan" or an "ABR Borrowing").

          SECTION 1.03. Terms  Generally.  The definitions of terms herein shall
apply  equally to the singular and plural forms of the terms  defined.  Whenever
the context may require, any pronoun shall include the corresponding  masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed  by the phrase  "without  limitation".  The word "will"
shall be  construed  to have the same  meaning  and effect as the word  "shall".
Unless the context requires  otherwise (a) any definition of or reference to any
agreement,  instrument or other document  herein shall be construed as referring
to such  agreement  instrument  or other  document as from time to time amended,
restated,  supplemented or otherwise  modified  (subject to any  restrictions on
such amendments,  restatements,  supplements or modifications set forth herein),
(b) any  reference  herein to any Person  shall be  construed  to  include  such
Person's  successors  and  assigns,   (c)  the  words  "herein",   "hereof"  and
"hereunder",  and words of similar  import,  shall be construed to refer to this
Agreement in its entirety and not to any particular  provision  hereof,  (d) all
references  herein  to  Articles,  Sections,  Exhibits  and  Schedules  shall be
construed to refer to Articles and Sections of, and Exhibits and  Schedules  to,
this  Agreement and (e) the words "asset" and  "property"  shall be construed to
have the same  meaning  and  effect  and to  refer to any and all  tangible  and
intangible  assets and  properties,  including  cash,  securities,  accounts and
contract rights.

                                       17

<PAGE>

          SECTION  1.04.   Accounting  Terms,  GAAP.  (a)  Except  as  otherwise
expressly  provided herein, all terms of an accounting or financial nature shall
be construed in accordance  with GAAP, as in effect from time to time;  provided
that if the Borrower  notifies the Agent that the Borrower requests an amendment
to any provision  hereof to eliminate the effect of any change  occurring  after
the date hereof in GAAP or in the  application  thereof on the operation of such
provision  (or if the Agent  notifies  the Borrower  that the  Required  Lenders
request an amendment to any provision  hereof for such  purpose),  regardless of
whether any such  notice is given  before or after such change in GAAP or in the
application  thereof,  then such provision  shall be interpreted on the basis of
GAAP as in effect and applied  immediately  before such change shall have become
effective until such notice shall have been withdrawn or such provision  amended
in accordance herewith.

          (b) All consolidated  financial data contemplated in Article VI shall,
for purposes of such portions of this Agreement,  exclude any data  attributable
to any Approved Internet Subsidiary.

                                   ARTICLE II

                                   The Credits
                                   -----------

          SECTION  2.01.  Revolving  Commitments.   Subject  to  the  terms  and
conditions  set forth  herein,  each Lender agrees to make Loans to the Borrower
from time to time  during  the  Revolving  Availability  Period in an  aggregate
principal  amount  that will not  result  in such  Lender's  Revolving  Exposure
exceeding such Lender's  Revolving  Commitment.  Within the foregoing limits and
subject to the terms and conditions  set forth herein,  the Borrower may borrow,
prepay and reborrow Loans.

          SECTION  2.02.  Loans and  Borrowings.  (a) Each Loan shall be made as
part of a  Borrowing  consisting  of Loans of the same Type made by the  Lenders
ratably in accordance with their respective Revolving  Commitments.  The failure
of any Lender to make any Loan  required  to be made by it shall not relieve any
other  Lender  of  its  obligations  hereunder;   provided  that  the  Revolving
Commitments  of the Lenders are several and no Lender shall be  responsible  for
any other Lender's failure to make Loans as required.

          (b)  Subject  to  Section  2.14,  each  Revolving  Borrowing  shall be
comprised  entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance  herewith.  Each Lender at its option may make any Eurodollar Loan
by causing any  domestic or foreign  branch or  Affiliate of such Lender to make
such  Loan;  provided  that any  exercise  of such  option  shall not affect the
obligation  of the Borrower to repay such Loan in  accordance  with the terms of
this Agreement.

          (c) At the  commencement  of each Interest  Period for any  Eurodollar
Borrowing,  such Borrowing  shall be in an aggregate  amount that is an integral
multiple of  $100,000  and not less than  $1,000,000.  At the time that each ABR
Borrowing is made,  such  Borrowing  shall be in an aggregate  amount that is an
integral multiple of $100,000 and not less than $1,000,000; provided that an ABR
Borrowing  may be in an  aggregate  amount  that is equal to the  entire  unused
balance of the total  Revolving  Commitments  or that is required to finance the
reimbursement  of  an  LC  Disbursement  as  contemplated  by  Section  2.05(e).
Borrowings of more than one Type may be outstanding at the same time.

                                       18

<PAGE>

          (d)  Notwithstanding  any  other  provision  of  this  Agreement,  the
Borrower  shall not be entitled to request,  or to elect to convert or continue,
any Borrowing if the Interest  Period  requested with respect  thereto would end
after the Maturity Date.

          (e) Loans must be for general corporate purposes,  including Permitted
Acquisitions, but only a total principal amount of $30,000,000 of money borrowed
hereunder for Permitted  Acquisitions  may be outstanding at any time during the
Revolving Availability Period.

          SECTION 2.03.  Requests for  Borrowings.  To request a Borrowing,  the
Borrower  shall notify the Agent of such request by telephone (a) in the case of
a Eurodollar  Borrowing,  not later than 11:00 a.m.,  New York City time,  three
Business Days before the date of the proposed Borrowing or (b) in the case of an
ABR  Borrowing,  not later than 11:00 a.m., New York City time, one Business Day
before the date of the proposed  Borrowing;  provided that any such notice of an
ABR Borrowing to finance the reimbursement of an LC Disbursement as contemplated
by Section  2.05(e) may be given not later than 10:00 a.m.,  New York City time,
on the date of the proposed  Borrowing.  Each such telephonic  Borrowing Request
shall be  irrevocable  and  shall be  confirmed  promptly  by hand  delivery  or
telecopy to the Agent of a written  Borrowing  Request in a form approved by the
Agent and signed by the Borrower.  Each such  telephonic  and written  Borrowing
Request shall specify the following information in compliance with Section 2.02:

          (i) the aggregate amount of such Borrowing;

          (ii) the date of such Borrowing, which shall be a Business Day;

          (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;

          (iv) in the  case of a  Eurodollar  Borrowing,  the  initial  Interest
Period to be applicable  thereto,  which shall be a period  contemplated  by the
definition of the term "Interest Period"; and

          (v) the location and number of the  Borrower's  account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.06.

If no election as to the Type of  Borrowing  is  specified,  then the  requested
Borrowing  shall be an ABR  Borrowing.  If no Interest  Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration.  Promptly following
receipt of a Borrowing Request in accordance with this Section,  the Agent shall
advise  each Lender of the  details  thereof and of the amount of such  Lender's
Loan to be made as part of the requested Borrowing.

          SECTION 2.04. [This Section intentionally left blank.].

                                       19

<PAGE>

          SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and
conditions  set  forth  herein,   the  Borrower  may  request  the  issuance  of
Documentary Letters of Credit (including Topps SA Letters of Credit) and Standby
Letters of Credit for its own  account  and for the  account of Topps SA (in the
case of the Topps SA Letters of Credit), in a form reasonably  acceptable to the
Agent  and the  Issuing  Bank,  at any  time and from  time to time  during  the
Revolving  Availability  Period. In the event of any  inconsistency  between the
terms and  conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrower to,
or entered into by the Borrower with, the Issuing Bank relating to any Letter of
Credit the terms and  conditions of this Agreement  shall control.  The Borrower
shall not be obligated  under any such letter of credit  application  or related
documents  to  provide  collateral  to the  Issuing  Bank  other than a security
interest in the goods in respect of which such Letter of Credit is being issued,
in the case of a  Documentary  Letter of Credit,  which  security  interest will
terminate  upon  reimbursement  of a drawing  under such  Documentary  Letter of
Credit.  Standby  Letters of Credit may only be issued as security  for worker's
compensation  insurance  or for another  purpose  approved by the Agent,  in its
reasonable discretion.

          (b)  Notice  of  Issuance,   Amendment,  Renewal,  Extension,  Certain
Conditions.  To request the  issuance  of a Letter of Credit (or the  amendment,
renewal or extension of an  outstanding  Letter of Credit),  the Borrower  shall
hand  deliver  or  telecopy  (or  transmit  by  electronic   communication,   if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Agent  (reasonably  in advance of the  requested  date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended,  renewed or extended,
and specifying the date of issuance, amendment renewal or extension (which shall
be a Business  Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this  Section),  the amount of such Letter of
Credit;  the  name  and  address  of the  beneficiary  thereof  and  such  other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit.  If requested by the Issuing  Bank,  the Borrower also shall submit a
letter of credit  application on the Issuing Bank's  standard form in connection
with any  request  for a Letter of Credit.  A Letter of Credit  shall be issued,
amended,  renewed  or  extended  only if (x) in the case of a Standby  Letter of
Credit,  the same shall be for the purpose permitted in paragraph (a) above, and
(y) after giving effect to such  issuance,  amendment,  renewal or extension (i)
the Letter of Credit Outstandings shall not exceed  $15,000,000,  (ii) the Topps
SA Letter of Credit  Outstandings  shall not exceed  $15,000,000,  and (iii) the
total Revolving Exposures shall not exceed the total Revolving Commitments.

          (c) Expiration Date. Each Letter of Credit other than a Standby Letter
of Credit  shall  expire at or prior to the close of  business on the earlier of
(i) the date one year after the date of the  issuance  of such  Letter of Credit
(or,  in the case of any  renewal  or  extension  thereof,  one year  after such
renewal or extension)  and (ii) the date that is five Business Days prior to the
Maturity Date.

          (d)  Participations.  By the  issuance  of a Letter of  Credit  (or an
amendment to a Letter of Credit  increasing the amount  thereof) and without any
further action on the part of the Issuing Bank or the Lenders,  the Issuing Bank
hereby grants to each Lender,  and each Lender hereby  acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender's Applicable
Percentage  of the aggregate  amount  available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Agent for the account of the
Issuing Bank, such Lender's  Applicable  Percentage of each LC Disbursement made
by the  Issuing  Bank  and not  reimbursed  by the  Borrower  on the date due as
provided in  paragraph  (e) of this  Section,  or of any  reimbursement  payment
required to be refunded to the Borrower for any reason. Each Lender acknowledges
and agrees  that its  obligation  to  acquire  participations  pursuant  to this
paragraph  in respect of Letters of Credit is  absolute  and  unconditional  and
shall not be affected by any  circumstance  whatsoever,  including any amendment
renewal or extension of any Letter of Credit or the occurrence  and  continuance
of a Default or reduction or termination of the Revolving Commitments,  and that
each such payment  shall be made without any offset  abatement,  withholding  or
reduction whatsoever.

                                       20

<PAGE>

          (e) Reimbursement.  If the Issuing Bank shall make any LC Disbursement
in  respect  of a  Letter  of  Credit,  the  Borrower  shall  reimburse  such LC
Disbursement by paying to the Agent an amount equal to such LC Disbursement  not
later than 12:00 noon, New York City time, on the date that such LC Disbursement
is made,  if the Borrower  shall have  received  notice of such LC  Disbursement
prior to 10:00 a.m.,  New York City time,  on such date,  or, if such notice has
not been  received  by the  Borrower  prior to such time on such date,  then not
later than 12:00  noon,  New York City time,  on (i) the  Business  Day that the
Borrower  receives such notice,  if such notice is received prior to 10:00 a.m.,
New York City time, on the day of receipt,  or (ii) the Business Day immediately
following the day that the Borrower  receives such notice, if such notice is not
received  prior to such time on the day of receipt;  provided  that the Borrower
may,  subject  to the  conditions  to  borrowing  set forth  herein,  request in
accordance with Section 2.03 that such payment be financed with an ABR Borrowing
in an  equivalent  amount  and,  to  the  extent  so  financed,  the  Borrower's
obligation  to make  such  payment  shall  be  discharged  and  replaced  by the
resulting ABR  Borrowing.  If the Borrower  fails to make such payment when due,
the Agent shall  notify  each  Lender of the  applicable  LC  Disbursement,  the
payment  then  due  from the  Borrower  in  respect  thereof  and such  Lender's
Applicable  Percentage thereof.  Promptly following receipt of such notice, each
Lender shall pay to the Agent its Applicable  Percentage of the payment then due
from the  Borrower,  in the same manner as provided in Section 2.06 with respect
to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Agent shall promptly pay to the
Issuing Bank the amounts so received by it from the Lenders.  Promptly following
receipt  by the  Agent  of any  payment  from  the  Borrower  pursuant  to  this
paragraph,  the Agent shall  distribute  such payment to the Issuing Bank or, to
the extent  that  Lenders  have made  payments  pursuant  to this  paragraph  to
reimburse the Issuing  Bank,  then to such Lenders and the Issuing Bank as their
interests may appear. Any payment made by a Lender pursuant to this paragraph to
reimburse  the Issuing Bank for any LC  Disbursement  (other than the funding of
ABR  Loans as  contemplated  above)  shall not  constitute  a Loan and shall not
relieve the Borrower of its obligation to reimburse such LC Disbursement.

          (f) Obligations  Absolute.  The Borrower's  obligation to reimburse LC
Disbursements  as provided in paragraph  (e) of this Section  shall be absolute,
unconditional  and  irrevocable,  and shall be performed  strictly in accordance
with the terms of this Agreement under any and all circumstances  whatsoever and
irrespective  of (i) any lack of  validity  or  enforceability  of any Letter of
Credit or this Agreement,  or any term or provision  therein,  (ii) any draft or
other  document  presented  under a  Letter  of  Credit  proving  to be  forged,
fraudulent  or invalid in any respect or any  statement  therein being untrue or
inaccurate  in any respect  (iii)  payment by the Issuing Bank under a Letter of
Credit  against  presentation  of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever,  whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against the Borrower's obligations hereunder.  Neither
the Agent,  the Lenders nor the Issuing Bank, nor any of their Related  Parties,
shall have any liability or  responsibility  by reason of or in connection  with
the  issuance  or  transfer of any Letter of Credit or any payment or failure to
make any payment thereunder  (irrespective of any of the circumstances  referred
to in the preceding sentence),  or any error,  omission,  interruption,  loss or
delay in  transmission or delivery of any draft,  notice or other  communication
under or relating to any Letter of Credit  (including  any document  required to
make a drawing  thereunder),  any error in  interpretation of technical terms or
any  consequence  arising  from causes  beyond the control of the Issuing  Bank;
provided  that the  foregoing  shall not be construed to excuse the Issuing Bank
from  liability to the Borrower to the extent of any direct  damages (as opposed
to  consequential  damages,  claims in respect of which are hereby waived by the
Borrower to the extent  permitted by  applicable  law)  suffered by the Borrower
that are caused by the Issuing Bank's failure to exercise care when  determining
whether  drafts and other  documents  presented  under a Letter of Credit comply
with the terms thereof.  The parties hereto expressly agree that, in the absence
of gross  negligence  or wilful  misconduct  on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have  exercised care in each such  determination  in furtherance of
the foregoing and without  limiting the  generality  thereof,  the parties agree
that,  with respect to documents  presented  which appear on their face to be in
substantial  compliance  with the terms of a Letter of Credit,  the Issuing Bank
may, in its sole discretion,  either accept and make payment upon such documents
without  responsibility for further  investigation,  regardless of any notice or
information  to the  contrary,  or refuse to accept and make  payment  upon such
documents if such documents are not in strict  compliance with the terms of such
Letter of Credit.

                                       21

<PAGE>

          (g)  Disbursement   Procedures.   The  Issuing  Bank  shall,  promptly
following its receipt thereof,  examine all documents  purporting to represent a
demand for payment  under a Letter of Credit.  The Issuing  Bank shall  promptly
notify the Agent and the Borrower by telephone  (confirmed  by telecopy) of such
demand for payment  and  whether  the  Issuing  Bank has made or will make an LC
Disbursement  thereunder;  provided  that any failure to give or delay in giving
such notice shall not relieve the Borrower of its  obligation  to reimburse  the
Issuing Bank and the Lenders with respect to any such LC Disbursement.

          (h)  Interim  Interest.   If  the  Issuing  Bank  shall  make  any  LC
Disbursement,  then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC  Disbursement  is made, the unpaid amount thereof shall
bear interest,  for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC Disbursement
at the rate per annum  then  applicable  to ABR  Loans;  provided  that,  if the
Borrower fails to reimburse such LC Disbursement  when due pursuant to paragraph
(e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant
to this  paragraph  shall be for the  account of the Issuing  Bank,  except that
interest  accrued on and after the date of payment  by any  Lender  pursuant  to
paragraph  (e) of this  Section to  reimburse  the Issuing Bank shall be for the
account of such Lender to the extent of such payment.

          (i)  Replacement of the Issuing Bank. The Issuing Bank may be replaced
at any time by written  agreement  among the Borrower,  the Agent,  the replaced
Issuing  Bank  and the  successor  Issuing  Bank;  provided,  however,  that the
opportunity to serve as the  replacement  Issuing Bank shall be offered first to
LaSalle Bank National Association (A) for as long as it shall be the only Lender
other than the bank which is the  Issuing  Bank being  replaced,  and (B) at any
other time as long as it holds a Revolving  Commitment of  $15,000,000  or more.
The Agent shall notify the Lenders of any such  replacement of the Issuing Bank.
At the time any such replacement shall become effective,  the Borrower shall pay
all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section  2.12(b).  From and after the effective date of any such replacement (i)
the  successor  Issuing  Bank shall have all the rights and  obligations  of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter,  and (ii)  references  herein to the term  "Issuing  Bank"  shall be
deemed to refer to such  successor or to any previous  Issuing  Bank, or to such
successor and all previous  Issuing Banks,  as the context shall require.  After
the  replacement of an Issuing Bank hereunder,  the replaced  Issuing Bank shall
remain a party hereto and shall continue to have all the rights and  obligations
of an Issuing Bank under this Agreement with respect to Letters of Credit issued
by it prior to such  replacement,  but shall not be required to issue additional
Letters of Credit.

                                       22

<PAGE>

          (j) Cash Collateralization.  Subject to the provision of the following
sentence,  the Borrower  shall,  on or before the Maturity  Date,  deposit in an
account  with the  Agent in the name of the  Agent  and for the  benefit  of the
Lenders, an amount in cash equal to 105% of the sum of (i) the aggregate undrawn
stated amount of any Standby  Letter of Credit  having an expiration  date later
than the Maturity  Date plus (ii) all amounts  theretofore  drawn under any such
Standby  Letter of Credit and not then  reimbursed  plus (iii) any  accrued  and
unpaid interest thereon.  If any Event of Default shall occur and be continuing,
on the  Business  Day that the  Borrower  receives  notice from the Agent or the
Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders
with LC Exposure  representing  greater  than  66-2/3% of the total LC Exposure)
demanding  the  deposit  of cash  collateral  pursuant  to this  paragraph,  the
Borrower shall deposit in such cash collateral  account, an amount in cash equal
to 105% of the LC Exposure as of such date plus any accrued and unpaid  interest
thereon;  provided  that the  obligation to deposit such cash  collateral  shall
become effective immediately,  and such deposit shall become immediately due and
payable,  without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower  described in clause (h) or (i) of
Section 7.01. Each such deposit shall be held by the Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement.
The Agent shall have  exclusive  dominion and control,  including  the exclusive
right of withdrawal,  over such account.  Other than any interest  earned on the
investment of such deposits,  which  investments shall be made at the option and
sole  discretion  of the  Agent and at the  Borrower's  risk and  expense,  such
deposits  shall  not  bear  interest.  Interest  or  profits,  if  any,  on such
investments  shall  accumulate in such account.  Moneys in such account shall be
applied by the Agent to  reimburse  the Issuing  Bank for LC  Disbursements  for
which it has not been  reimbursed  and, to the extent not so  applied,  shall be
held for the satisfaction of the  reimbursement  obligations of the Borrower for
the LC  Exposure  at such  time  or,  if the  maturity  of the  Loans  has  been
accelerated (but subject to the consent of Lenders with LC Exposure representing
greater  than  66-2/3% of the total LC  Exposure),  be applied to satisfy  other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral  hereunder as a result of the occurrence of
an Event of Default,  such amount (to the extent not applied as aforesaid) shall
be returned  to the  Borrower  within  three  Business  Days after all Events of
Default have been cured or waived. It is expressly agreed that amounts deposited
into such  account  in  respect of a Standby  Letter of Credit  shall  remain on
deposit after the termination of this Agreement so long as such Letter of Credit
remains outstanding,  and to the extent that such funds have not been applied to
the Obligations,  shall be returned to the Borrower  following the expiration of
such  Letter of Credit or the  return  thereof,  in each case  without  the same
having been drawn.

          (k) Any  Letter of Credit  which has been  issued  under the  Existing
Agreement  (including the Travelers Letter of Credit) which remains  outstanding
as of the  Effective  Date  shall be deemed  to have been  issued as a Letter of
Credit  pursuant to this  Agreement  except that no fronting fees (under Section
2.12(b)) shall be payable on account of such carried over Letters of Credit.

                                       23

<PAGE>

          SECTION 2.06.  Funding of Borrowings.  (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Agent  most  recently  designated  by it for such  purpose  by notice to the
Lenders.  The Agent will make such Loans  available  to the Borrower by promptly
crediting the amounts so received,  in like funds, to an account of the Borrower
maintained with the Agent in New York City and designated by the Borrower in the
applicable  Borrowing  Request;  provided  that ABR Loans  made to  finance  the
reimbursement  of an LC  Disbursement  as provided in Section  2.05(e)  shall be
remitted by the Agent to the Issuing Bank.

          (b) Unless the Agent shall have received notice from a Lender prior to
the proposed date of any Borrowing  that such Lender will not make  available to
the Agent such Lender's share of such Borrowing,  the Agent may assume that such
Lender has made such share  available on such date in accordance  with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding  amount. In such event, if a Lender has not in fact
made its share of the  applicable  Borrowing  available  to the Agent,  then the
applicable Lender and the Borrower severally agree to pay to the Agent forthwith
on demand such corresponding amount with interest thereon, for each day from and
including  the  date  such  amount  is made  available  to the  Borrower  to but
excluding  the date of payment  to the Agent at (i) in the case of such  Lender,
the greater of the Federal  Funds  Effective  Rate and a rate  determined by the
Agent in accordance with banking  industry rules on interbank  compensation,  or
(ii) in the case of the Borrower,  the interest rate  applicable to the Loans so
funded by the Agent.  If such Lender  pays such  amount to the Agent,  then such
amount shall constitute such Lender's Loan included in such Borrowing.

          SECTION 2.07. Interest  Elections.  (a) Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case of
a Eurodollar  Borrowing,  shall have an initial  Interest Period as specified in
such  Borrowing  Request.  Thereafter,  the  Borrower  may elect to convert such
Borrowing to a different  Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing,  may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected  Borrowing,  in which case each such  portion  shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans  comprising  each such  portion  shall be  considered  a  separate
Borrowing.

          (b) To make an election  pursuant to this Section,  the Borrower shall
notify the Agent of such  election  by  telephone  by the time that a  Borrowing
Request would be required  under Section 2.03 if the Borrower were  requesting a
Borrowing of the Type  resulting  from such election to be made on the effective
date of such election.  Each such telephonic  Interest Election Request shall be
irrevocable and shall be confirmed  promptly by hand delivery or telecopy to the
Agent of a written Interest Election Request in a form approved by the Agent and
signed by the Borrower.

          (c) Each  telephonic  and  written  Interest  Election  Request  shall
specify the following  information in compliance with Section 2.02 and paragraph
(f) of this Section:

                                       24

<PAGE>

          (i) the Borrowing to which such Interest Election Request applies and,
if  different  options are being  elected  with  respect to  different  portions
thereof,  the portions  thereof to be allocated to each resulting  Borrowing (in
which case the  information  to be specified  pursuant to clauses (iii) and (iv)
below shall be specified for each resulting Borrowing);

          (ii) the effective date of the election made pursuant to such Interest
Election Request which shall be a Business Day;

          (iii) whether the  resulting  Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and

          (iv)  if  the  resulting  Borrowing  is a  Eurodollar  Borrowing,  the
Interest  Period to be applicable  thereto after giving effect to such election,
which shall be a period  contemplated  by the  definition of the term  "Interest
Period".

If any such Interest  Election Request requests a Eurodollar  Borrowing but does
not  specify  an  Interest  Period,  then the  Borrower  shall be deemed to have
selected an Interest Period of one month's duration.

          (d) Promptly  following receipt of an Interest  Election Request,  the
Agent shall advise each Lender,  in writing,  of the details thereof and of such
Lender's portion of each resulting Borrowing.

          (e) If the  Borrower  fails  to  deliver  a timely  Interest  Election
Request with respect to a Eurodollar  Borrowing prior to the end of the Interest
Period  applicable  thereto,  then,  unless such Borrowing is repaid as provided
herein at the end of such Interest Period,  such Borrowing shall be converted to
an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of
Default has  occurred  and is  continuing  and the Agent,  at the request of the
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar  Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted  to an ABR  Borrowing  at the end of the  Interest  Period  applicable
thereto.

          SECTION 2.08. Termination and Reduction of Revolving Commitments.

          (a) Unless  previously  terminated,  the Revolving  Commitments  shall
terminate on the Maturity Date.

          (b) The  Borrower  may at any  time  terminate,  or from  time to time
reduce,  the  Revolving  Commitments;  provided  that (i) each  reduction of the
Revolving  Commitments  shall be in an amount  that is an  integral  multiple of
$100,000 and not less than $1,000,000, and (ii) the Borrower shall not terminate
or reduce the Revolving  Commitments  if, after giving effect to any  concurrent
prepayment  of the  Loans  in  accordance  with  Section  2.11,  the  sum of the
Revolving Exposures would exceed the total Revolving Commitments.

                                       25

<PAGE>

          (c) The  Borrower  shall notify the Agent of any election to terminate
or reduce the Revolving Commitments under paragraph (b) of this Section at least
three  Business  Days  prior  to the  effective  date  of  such  termination  or
reduction,  specifying  such election and the effective  date thereof.  Promptly
following receipt of any notice, the Agent shall advise the Lenders, in writing,
of the contents thereof.  Each notice delivered by the Borrower pursuant to this
Section  shall be  irrevocable;  provided  that a notice of  termination  of the
Revolving  Commitments  delivered  by the Borrower may state that such notice is
conditioned  upon the  effectiveness of other credit  facilities,  in which case
such notice may be revoked by the  Borrower  (by notice to the Agent on or prior
to the  specified  effective  date)  if such  condition  is not  satisfied.  Any
termination or reduction of the Revolving  Commitments shall be permanent.  Each
reduction of the Revolving  Commitments  shall be made ratably among the Lenders
in accordance with their respective Revolving Commitments.

          (d) The Lenders, at the option of the Required Lenders, shall have the
right upon notice to the  Borrower,  to  permanently  reduce (or  terminate,  if
applicable)  the  Revolving  Commitments  by an  amount  equal  to each  payment
required  to be made to the  Agent  on  account  of any  Permitted  Asset  Sale;
provided that such notice of such  reduction  shall be made within five Business
Days after the Agent has been notified of the receipt of a payment on account of
such a sale,  during  which  period  the  Borrower  may not  borrow or cause the
issuance of any Letter of Credit  hereunder  if such  borrowing or new Letter of
Credit would cause the total  Revolving  Exposures to exceed the total amount to
which the Revolving  Commitments may be reduced  pursuant to this paragraph (d).
Notwithstanding the foregoing,  the Revolving  Commitments may not be reduced so
as to cause the total LC  Exposures  to exceed  the  resulting  total  Revolving
Commitments.

          SECTION 2.09.  Repayment of Loans,  Evidence of Debt. (a) The Borrower
hereby  unconditionally  promises  to pay to the Agent for the  account  of each
Lender (i) the then unpaid principal amount of each Loan of such Lender,  on the
Maturity  Date,  and (ii) the  amount  of Net  Proceeds  required  to be paid on
account of a Permitted Asset Sale, as and when required hereunder.

          (b) Each Lender shall  maintain in accordance  with its usual practice
an account or  accounts  evidencing  the  Indebtedness  of the  Borrower to such
Lender  resulting  from each Loan made by such Lender,  including the amounts of
principal  and  interest  payable  and  paid to such  Lender  from  time to time
hereunder.

          (c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made  hereunder,  the Type thereof and the  Interest  Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable  from the  Borrower to each  Lender  hereunder  and
(iii) the amount of any sum received by the Agent  hereunder  for the account of
the Lenders and each Lender's share thereof.

          (d) The entries made in the accounts  maintained pursuant to paragraph
(b) or (c) of this Section  shall be prima facie  evidence of the  existence and
amounts of the obligations  recorded  therein;  provided that the failure of any
Lender or the Agent to maintain  such accounts or any error therein shall not in
any  manner  affect  the  obligation  of the  Borrower  to  repay  the  Loans in
accordance with the terms of this Agreement.

          (e) Any Lender may  request  that Loans made by it be  evidenced  by a
grid  promissory  note (in the form of  Exhibit  D  hereto).  In such  event the
Borrower shall prepare,  execute and deliver to such Lender such promissory note
payable to the order of such Lender (or, if requested  by such  Lender,  to such
Lender and its  registered  assigns).  Thereafter,  the Loans  evidenced by such
promissory  note and  interest  thereon  shall  at all  times  (including  after
assignment  pursuant  to  Section  9.04)  be  represented  by one or  more  grid
promissory  notes in such form  payable to the order of the payee named  therein
(or,  if such  promissory  note is a  registered  note,  to such  payee  and its
registered assigns).

                                       26

<PAGE>

          SECTION 2.10. [This Section has been intentionally omitted.]

          SECTION  2.11.  Prepayment of Loans.  (a) The Borrower  shall have the
right at any time and from time to time to prepay any  Borrowing  in whole or in
part, subject to the requirements of this Section.

          (b) In the event and on each occasion that Net Proceeds in the form or
cash or cash  equivalents  are  received by or on behalf of the  Borrower or any
Subsidiary  (with respect to a Permitted  Asset Sale),  the Borrower  shall make
payment to the Agent of the amount(s),  required in order for the transaction in
question to comply with the  definition  of a "Permitted  Asset Sale" in Section
1.01,  as and  when  such  payments  are  required  in order  to  maintain  such
compliance.

          (c)  Prior to any  optional  or  mandatory  prepayment  of  Borrowings
hereunder,  the Borrower  shall select the Borrowing or Borrowings to be prepaid
and shall specify such  selection in the notice of such  prepayment  pursuant to
paragraph (d) of this Section; provided that each prepayment of Borrowings shall
be applied to prepay ABR Borrowings before any other Borrowings.

          (d) The Borrower  shall notify the Agent by  telephone  (confirmed  by
telecopy)  of any  prepayment  hereunder  (i) in the  case  of  prepayment  of a
Eurodollar  Borrowing,  not later than  11:00  a.m.,  New York City time,  three
Business Days before the date of prepayment or (ii) in the case of prepayment of
an ABR  Borrowing,  not later than 11:00 a.m.,  New York City time, one Business
Day before the date of  prepayment.  Each such notice shall be  irrevocable  and
shall specify the  prepayment  date,  the principal  amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of optional prepayment
is given in connection with a conditional notice of termination of the Revolving
Commitments as  contemplated by Section 2.08, then such notice of prepayment may
be revoked if such notice of termination  is revoked in accordance  with Section
2.08.  Promptly following receipt of any such notice, the Agent shall advise the
Lenders,  in writing,  of the contents thereof.  Each partial  prepayment of any
Borrowing  shall be in the  minimum  amount  of  $500,000  and  (thereafter)  in
$100,000  increments thereof (or such other amount as may be needed to satisfy a
mandatory  repayment  requirement  under Section  2.11(b).  Each prepayment of a
Borrowing  shall  be  applied  ratably  to the  Loans  included  in the  prepaid
Borrowing.  Prepayments  shall be accompanied by accrued  interest to the extent
required by Section 2.13.

          SECTION 2.12.  Fees. (a) In addition to any "up front"  commitment fee
paid on the  Effective  Date,  the  Borrower  agrees to pay to the Agent for the
account of each Lender a  commitment  fee (the  "Commitment  Fee"),  which shall
accrue  at the  Applicable  Rate  on the  average  daily  unused  amount  of the
Revolving  Commitment  of such Lender  during the period from and  including the
Effective  Date to but excluding the date on which such  Commitment  terminates.
Accrued  Commitment  Fees  shall be  payable  in arrears on the last day of May,
August,  November  and  February  of each  year  and on the  date on  which  the
Revolving  Commitments  terminate,  commencing  on the first  such date to occur
after the date hereof.  All Commitment  Fees shall be computed on the basis of a
year of 360 days and shall be  payable  for the  actual  number of days  elapsed
(including  the first day but excluding the last day). For purposes of computing
Commitment  Fees, a Revolving  Commitment of a Lender shall be deemed to be used
to the extent of the outstanding Loans and LC Exposure of such Lender.

                                       27

<PAGE>

          (b) The  Borrower  agrees to pay (i) to the Agent for the  account  of
each  Revolving   Lender  (on  the  basis  of  its   Applicable   Percentage)  a
participation fee with respect to its participations in Letters of Credit, which
shall be  calculated  at the rate of .25% of the full  amount of each draw under
each Documentary  Letter of Credit, and shall accrue at a per annum rate of .75%
of the face amount of each Standby Letter of Credit,  during the period from and
including  the  Effective  Date to but  excluding the later of the date on which
such Lender's Revolving Commitment  terminates and the date on which such Lender
ceases to have any LC  Exposure,  and (ii) to the  Issuing  Bank a fronting  fee
which shall be calculated and payable as set forth in a separate  letter of even
date herewith. In addition to the fees in the nature of those referred to in the
preceding sentence (without duplication), the Borrower agrees to pay the Issuing
Bank's  standard  fees  with  respect  to the  issuance,  amendment  renewal  or
extension  of any  Letter  of  Credit  or  processing  of  drawings  thereunder.
Participation  fees and fronting fees accrued through and including the last day
of May, August, November and February of each year shall be payable on the third
Business Day following such last day, commencing on the first such date to occur
after the  Effective  Date;  provided that all such fees shall be payable on the
date on which the  Revolving  Commitments  terminate  and any such fees accruing
after the date on which the Revolving  Commitments terminate shall be payable on
demand.  Any other fees payable to the Issuing Bank  pursuant to this  paragraph
shall be  payable  within  10 days  after  demand.  All  participation  fees and
fronting  fees shall be computed on the basis of a year of 360 days and shall be
payable  for the  actual  number of days  elapsed  (including  the first day but
excluding the last day).

          (c) The Borrower agrees to pay to the Agent, for its own account, fees
payable in the  amounts  and at the times  separately  agreed  upon  between the
Borrower and the Agent.

          (d) All fees  payable  hereunder  shall be paid on the dates  due,  in
immediately  available  funds, to the Agent (or to the Issuing Bank, in the case
of fees  payable to it) for  distribution,  in the case of  Commitment  Fees and
participation  fees,  to the Lenders  entitled  thereto.  Fees paid shall not be
refundable under any circumstances, absent arithmetic error.

          SECTION 2.13.  Interest.  (a) The Loans  comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the Applicable Rate.

          (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest  Period in effect for such  Borrowing
plus the Applicable Rate.

          (c) Notwithstanding the foregoing,  if any principal of or interest on
any Loan or any fee or other  amount  payable by the  Borrower  hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise,  such
overdue amount shall bear interest,  after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise  applicable to such Loan as provided in the preceding  paragraphs
of this  Section  or (ii) in the  case of any  other  amount,  2% plus  the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

                                       28

<PAGE>

          (d) Accrued  interest on each Loan shall be payable in arrears on each
Interest  Payment  Date for such  Loan and  upon  termination  of the  Revolving
Commitments;  provided  that (i) interest  accrued  pursuant to paragraph (c) of
this Section  shall be payable on demand,  (ii) in the event of any repayment or
prepayment  of any Loan (other than a prepayment of an ABR Loan prior to the end
of the Revolving Availability Period),  accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such  repayment or prepayment,
and (iii) in the event of any conversion of any Eurodollar Loan prior to the end
of the current Interest Period therefor,  accrued interest on such Loan shall be
payable on the effective date of such conversion.

          (e) All interest hereunder shall be computed on the basis of a year of
360 days,  except that interest computed by reference to the Alternate Base Rate
at times  when the  Alternate  Base  Rate is based on the  Prime  Rate  shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed  (including the
first day but excluding the last day).  The  applicable  Alternate  Base Rate or
Adjusted  LIB0 Rate shall be  determined  by the Agent,  and such  determination
shall be conclusive absent manifest error.

          SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

          (a) the Agent  determines  (which  determination  shall be  conclusive
absent  manifest  error) that  adequate  and  reasonable  means do not exist for
ascertaining the Adjusted LIBO Rate for such Interest Period;

          (b) the Agent is advised by the  Required  Lenders  that the  Adjusted
LIBO Rate for such Interest  Period will not  adequately  and fairly reflect the
cost to such  Lenders of making or  maintaining  their  Loans  included  in such
Borrowing  for  such  Interest  Period,  to a degree  which  such  Lenders  have
determined to be material; or

          (c) the Agent  determines  (which  determination  shall be  conclusive
absent  manifest  error)  that it would  be  illegal  to  conduct  a  Eurodollar
Borrowing at the time in question;

then the Agent  shall give  notice  thereof to the  Borrower  and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer  exist,  (i) any Interest  Election  Request that  requests the
conversion of any Borrowing to, or continuation of any Borrowing as a Eurodollar
Borrowing,  shall be ineffective,  and (ii) if any Borrowing  Request requests a
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

          SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

          (i) impose, modify or deem applicable any reserve,  special deposit or
similar  requirement  against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or the Issuing Bank; or

          (ii) impose on any Lender or the Issuing Bank or the London  interbank
market any other condition  affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit or participation therein;

                                       29

<PAGE>

and the result of any of the  foregoing  shall be to  increase  the cost to such
Lender of making or  maintaining  any  Eurodollar  Loan (or of  maintaining  its
obligation to make any such Loan), or to increase the cost to such Lender or the
Issuing Bank of  participating  in, issuing or maintaining any Letter of Credit,
or to reduce the amount of any sum received or  receivable by such Lender or the
Issuing Bank hereunder (whether of principal,  interest or otherwise),  then the
Borrower  will pay to such Lender or the Issuing  Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.

          (b) If any Lender or the Issuing  Bank  determines  that any Change in
Law regarding capital  requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing  Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or  participations  in Letters of Credit
held by, such Lender,  or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing  Bank or such  Lender's or the
Issuing  Bank's  holding  company could have achieved but for such Change in Law
(taking into  consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding  company with respect to
capital  adequacy),  then from time to time the Borrower will pay to such Lender
or the Issuing  Bank, as the case may be, such  additional  amount or amounts as
will  compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.

          (c) A  certificate  of a Lender or the Issuing Bank setting  forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding  company,  as the case may be, as specified  in paragraph  (a) or (b) of
this Section shall be delivered to the Borrower and shall be  conclusive  absent
manifest  error.  The Borrower shall pay such Lender or the Issuing Bank, as the
case may be,  the  amount  shown as due on any such  certificate  within 10 days
after receipt thereof

          (d) Failure or delay on the part of any Lender or the Issuing  Bank to
demand  compensation  pursuant to this Section shall not  constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation;  provided
that the  Borrower  shall not be required to  compensate a Lender or the Issuing
Bank  pursuant to this Section for any increased  costs or  reductions  incurred
more than 270 days prior to the date that such  Lender or the Issuing  Bank,  as
the case may be,  notifies the Borrower of the Change in Law giving rise to such
increased  costs  or  reductions  and of such  Lender's  or the  Issuing  Bank's
intention to claim compensation  therefor;  provided further that, if the Change
in Law giving rise to such increased  costs or reductions is  retroactive,  then
the 270-day period  referred to above shall be extended to include the period of
retroactive effect thereof.

          SECTION 2.16. Break Funding Payments.  In the event of (a) the payment
of any  principal  of any  Eurodollar  Loan  other  than on the  last  day of an
Interest  Period  applicable  thereto  (including  as a  result  of an  Event of
Default),  (b) the  Borrower's  election  to convert a  Borrowing  or continue a
Borrowing  as a  Eurodollar  Borrowing  which  results  in the  Interest  Period
therefor commencing before and ending after a date on which any principal of the
Loans is to be repaid and the payment of such  principal  during  such  Interest
Period,  (c) the conversion of any Eurodollar Loan other than on the last day of
the Interest  Period  applicable  thereto,  (d) the failure to borrow,  convert,
continue  or  prepay  any Loan on the date  specified  in any  notice  delivered

                                       30
<PAGE>

pursuant hereto  (regardless of whether such notice may be revoked under Section
2.11(d) and is revoked in accordance  therewith),  or (e) the  assignment of any
Eurodollar  Loan other than on the last day of the  Interest  Period  applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event,  the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event (and in the case of clause (b) above, the
Borrower  will make such  compensation  on the  applicable  principal  repayment
date).  In the case of a  Eurodollar  Loan,  such  loss,  cost or expense to any
Lender shall be deemed to include an amount  determined by such Lender to be the
excess,  if any, of (i) the amount of interest  which would have  accrued on the
principal amount of such Loan had such event not occurred,  at the Adjusted LIBO
Rate that would have been  applicable to such Loan, for the period from the date
of such event to the last day of the then current  Interest Period therefor (or,
in the case of a failure to borrow,  convert or  continue,  for the period  that
would  have been the  Interest  Period for such  Loan),  over (ii) the amount of
interest  which  would  accrue on such  principal  amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period,  for dollar  deposits of a comparable  amount and period from other
banks in the  Eurodollar  market.  A certificate of any Lender setting forth any
amount or amounts  that such  Lender is  entitled  to receive  pursuant  to this
Section  shall be  delivered  to the  Borrower  and shall be  conclusive  absent
manifest  error.  The Borrower  shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof

          SECT10N 2.17.  Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower  hereunder or under any other Loan Document  shall be
made free and clear of and without  deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
Taxes or Other  Taxes  from such  payments,  then (i) the sum  payable  shall be
increased as necessary so that after making all required  deductions  (including
deductions  applicable to additional sums payable under this Section) the Agent,
Lender or Issuing  Bank (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower shall
make such deductions,  and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.

          (b) In  addition,  the  Borrower  shall  pay any  Other  Taxes  to the
relevant Governmental Authority in accordance with applicable law.

          (c) The  Borrower  shall  indemnify  the  Agent,  each  Lender and the
Issuing Bank, within 10 days after written demand therefor,  for the full amount
of any  Indemnified  Taxes or Other Taxes paid by the Agent,  such Lender or the
Issuing  Bank,  as the case may be, on or with  respect to any  payment by or on
account of any  obligation  of the  Borrower  hereunder  or under any other Loan
Document  (including  Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties,  interest
and reasonable  expenses arising  therefrom or with respect thereto,  whether or
not such  Indemnified  Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental  Authority. A certificate as to the amount
of such  payment  or  liability  delivered  to the  Borrower  by a Lender or the
Issuing  Bank, or by the Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.

          (d) As soon as practicable  after any payment of Indemnified  Taxes or
Other Taxes by the Borrower to a  Governmental  Authority,  the  Borrower  shall
deliver to the Agent the  original  or a certified  copy of a receipt  issued by
such  Governmental  Authority  evidencing  such  payment,  a copy of the  return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.

                                       31

<PAGE>

          (e) Any  Foreign  Lender  that is  entitled  to an  exemption  from or
reduction  of  withholding  tax under the law of the  jurisdiction  in which the
Borrower is located,  or any treaty to which such  jurisdiction is a party, with
respect to payments under this  Agreement  shall deliver to the Borrower (with a
copy to the Agent),  at the time or times  prescribed  by  applicable  law, such
properly  completed and executed  documentation  prescribed by applicable law or
reasonably  requested  by the  Borrower as will permit such  payments to be made
without withholding or at a reduced rate.

          SECTION  2.18.  Payments  Generally;  Pro Rata  Treatment,  Sharing of
Setoffs.  (a) The  Borrower  shall make each  payment  required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements,  or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately  available funds, without set-off or counterclaim.  Any
amounts  received  after  such time on any date may,  in the  discretion  of the
Agent, be deemed to have been received on the next  succeeding  Business Day for
purposes of calculating interest thereon. All such payments shall be made to the
Agent at its offices at 4 MetroTech  Center,  Brooklyn,  New York 11245,  except
payments to be made directly to the Issuing Bank as expressly  provided  herein,
and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be
made directly to the Persons entitled  thereto,  and payments  pursuant to other
Loan Documents shall be made to the Persons specified  therein.  The Agent shall
distribute any such payments  received by it for the account of any other Person
to the appropriate  recipient promptly following receipt thereof. If any payment
under any Loan  Document  shall be due on a day that is not a Business  Day, the
date for payment shall be extended to the next succeeding  Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such  extension.  All payments  under each Loan Document  shall be
made in dollars.

          (b) If at any time insufficient funds are received by and available to
the Agent to pay fully all amounts of principal,  unreimbursed LC Disbursements,
interest  and fees then due  hereunder,  such funds  shall be applied  (i) first
towards  payment of  interest  and fees then due  hereunder,  ratably  among the
parties  entitled  thereto in  accordance  with the amounts of interest and fees
then due to such  parties,  and (ii) second,  towards  payment of principal  and
unreimbursed  LC  Disbursements  then due  hereunder,  ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

          (c) If any  Lender  shall,  by  exercising  any  right of  set-off  or
counterclaim  or  otherwise,  obtain  payment in respect of any  principal of or
interest on any of its Loans, or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and  participations  in LC Disbursements  and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and  participations  in LC  Disbursements  of other  Lenders to the extent
necessary  so that the  benefit  of all such  payments  shall be  shared  by the
Lenders  ratably in  accordance  with the  aggregate  amount of principal of and

                                       32

<PAGE>

accrued   interest  on  their  respective   Loans  and   participations   in  LC
Disbursements;  provided that (i) if any such  participations  are purchased and
all or any  portion  of the  payment  giving  rise  thereto is  recovered,  such
participations  shall be rescinded and the purchase price restored to the extent
of such recovery,  without  interest,  and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower  pursuant to
and in  accordance  with the  express  terms of this  Agreement  or any  payment
obtained  by a  Lender  as  consideration  for  the  assignment  of or sale of a
participation in any of its Loans or  participations  in LC Disbursements to any
assignee  or  participant  other  than  to the  Borrower  or any  Subsidiary  or
Affiliate  thereof (as to which the provisions of this  paragraph  shall apply).
The  Borrower  consents  to the  foregoing  and  agrees,  to the  extent  it may
effectively  do  so  under   applicable   law,  that  any  Lender   acquiring  a
participation  pursuant to the foregoing  arrangements  may exercise against the
Borrower rights of set-off and counterclaim  with respect to such  participation
as fully as if such Lender were a direct  creditor of the Borrower in the amount
of such participation.

          (d) Unless the Agent  shall have  received  notice  from the  Borrower
prior to the date on which any  payment  is due to the Agent for the  account of
the Lenders or the Issuing Bank  hereunder  that the Borrower will not make such
payment,  the Agent may assume that the  Borrower  has made such payment on such
date  in  accordance  herewith  and  may,  in  reliance  upon  such  assumption,
distribute  to the Lenders or the Issuing  Bank,  as the case may be, the amount
due. In such event, if the Borrower has not in fact made such payment, then each
of the  Lenders or the Issuing  Bank,  as the case may be,  severally  agrees to
repay to the Agent  forthwith on demand the amount so distributed to such Lender
or Issuing Bank with interest thereon,  for each day from and including the date
such amount is  distributed  to it to but  excluding  the date of payment to the
Agent at the greater of the Federal Funds  Effective Rate and a rate  determined
by  the  Agent  in  accordance   with  banking   industry   rules  on  interbank
compensation.

          (e) If any Lender  shall fail to make any payment  required to be made
by it pursuant to Section 2.05(d) or (e), 2.06(b),  2.18(d) or 9.03(c), then the
Agent may, its discretion (notwithstanding any contrary provision hereof), apply
any amounts  thereafter  received by the Agent for the account of such Lender to
satisfy such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.

          SECTION 2.19. Mitigation  Obligations,  Replacement of Lenders. (a) If
any Lender  requests  compensation  under  Section  2.15,  or if the Borrower is
required  to pay  any  additional  amount  to  any  Lender  or any  Governmental
Authority  for the  account of any Lender  pursuant to Section  2.17,  then such
Lender shall use reasonable  efforts to designate a different lending office for
funding or booking its Loans  hereunder or to assign its rights and  obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender,  such  designation or assignment  (i) would  eliminate or reduce
amounts  payable  pursuant to Section  2.15 or 2.17,  as the case may be, in the
future,  and (ii) would not  subject  such  Lender to any  unreimbursed  cost or
expense and would not otherwise be  disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

                                       33

<PAGE>

          (b) If any Lender requests  compensation under Section 2.15, or if the
Borrower  is  required  to  pay  any  additional  amount  to any  Lender  or any
Governmental  Authority for the account of any Lender  pursuant to Section 2.17,
or if any Lender  defaults in its obligation to fund Loans  hereunder,  then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Agent  require  such  Lender  to  assign  and  delegate,  without  recourse  (in
accordance with and subject to the restrictions  contained in Section 9.04), all
its interests,  rights and obligations  under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the
prior  written  consent of the Agent (and,  if a Revolving  Commitment  is being
assigned,  the Issuing Bank),  which consent shall not unreasonably be withheld,
(ii)  such  Lender  shall  have  received  payment  of an  amount  equal  to the
outstanding  principal  of its Loans  and  participations  in LC  Disbursements,
accrued  interest  thereon,  accrued  fees and all other  amounts  payable to it
hereunder,  from the assignee (to the extent of such  outstanding  principal and
accrued  interest and fees) or the Borrower (in the case of all other  amounts),
and  (iii)  in the  case of any  such  assignment  resulting  from a  claim  for
compensation  under  Section  2.15 or payments  required to be made  pursuant to
Section 2.17, such assignment will result in a reduction in such compensation or
payments.  A Lender  shall  not be  required  to make any  such  assignment  and
delegation  if,  prior  thereto,  as a result  of a  waiver  by such  Lender  or
otherwise,  the circumstances  entitling the Borrower to require such assignment
and delegation cease to apply.

                                   ARTICLE III

                         Representations and Warranties
                         ------------------------------

          The Borrower represents and warrants to the Lenders that:

          SECTION  3.01.  Organization;  Powers.  Each of the  Borrower  and its
Subsidiaries is duly organized,  validly existing and in good standing under the
laws of the  jurisdiction  of its  organization,  has all  requisite  power  and
authority  to carry on its  business  as now  conducted  and,  except  where the
failure to do so,  individually  or in the  aggregate,  could not  reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good  standing  in, every  jurisdiction  where such  qualification  is
required.

          SECTION   3.02.   Authorization,    Enforceability.    The   Financing
Transactions to be entered into by the Borrower and Topps Enterprises are within
their respective corporate powers and have been duly authorized by all necessary
corporate  and, if required,  stockholder  action.  This Agreement has been duly
executed and delivered by the Borrower and Topps  Enterprises  and  constitutes,
and each other Loan  Document  to which the  Borrower or Topps  Enterprises  (as
applicable)  is to be a party,  when  executed and  delivered by the Borrower or
Topps  Enterprises (as applicable) will constitute,  a legal,  valid and binding
obligation of the Borrower or Topps Enterprises (as applicable),  enforceable in
accordance  with  its  terms,  subject  to  applicable  bankruptcy,  insolvency,
reorganization,  moratorium or other laws affecting  creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

                                       34

<PAGE>

          SECTION 3.03.  Governmental  Approvals,  No  Conflicts.  The Financing
Transactions  (a) do not require any consent or  approval  of,  registration  or
filing with, or any other action by, any Governmental Authority,  except such as
have  been  obtained  or made and are in full  force  and  effect,  (b) will not
violate  any  applicable  law or  regulation  or the  charter,  bylaws  or other
organizational documents of the Borrower or any of its Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any of
its  Subsidiaries or its assets,  or give rise to a right  thereunder to require
any payment to be made by the Borrower or any of its Subsidiaries,  and (d) will
not  result  in the  creation  or  imposition  of any  Lien on any  asset of the
Borrower or any of its Subsidiaries.

          SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower  has  heretofore   furnished  to  the  Lenders  its   consolidated  and
consolidating  balance sheet and statements of income,  stockholders  equity and
cash flows (i) as of and for the fiscal year ended February 27, 1999, (A) in the
case of the consolidated  financials,  reported on by Deloitte & Touche, L.L.P.,
independent  public  accountants,  and  (B) in  the  case  of the  consolidating
financials,  certified by the Borrower's chief financial officer, and (ii) as of
and for the  fiscal  quarter  ended  November  27,  1999  (A) in the case of the
consolidated  financials,  reviewed  by Deloitte & Touche,  L.L.P.,  independent
public accountants,  and (B) in the case of consolidating financials,  certified
by the Borrower's chief financial  officer.  Such financial  statements  present
fairly,  in all  material  respects,  the  financial  position  and  results  of
operations and cash flows of the Borrower and its  consolidated  Subsidiaries as
of such dates and for such periods in accordance with GAAP.

          (b) Except as disclosed in the financial  statements referred to above
or the notes thereto and except for the Disclosed  Matters,  after giving effect
to the Financing Transactions,  none of the Borrower or its Subsidiaries has, as
of the  Effective  Date,  any  Material  Indebtedness  (except  as set  forth on
Schedule  3.04) or contingent  liabilities,  unusual  long-term  commitments  or
unrealized losses.

                                       35

<PAGE>

          (c) Since November 27, 1999 there has been no material  adverse change
in the  business,  assets,  operations,  prospects  or  condition,  financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.

          SECTION   3.05.   Properties.   (a)  Each  of  the  Borrower  and  its
Subsidiaries  has good title to, or valid  leasehold  interests in, all the real
and  personal  property  material  to  its  business,  subject  to  no  transfer
restrictions  or Liens of any kind (other  than as set forth on Schedule  6.02),
except  for minor  defects in title that do not  interfere  with its  ability to
conduct its business as currently  conducted or to utilize such  properties  for
their intended purposes.

          (b) Each of the Borrower and its Subsidiaries  owns, or is licensed to
use, all  trademarks,  tradenames,  copyrights,  patents and other  intellectual
property  material to its business,  and the use thereof by the Borrower and its
Subsidiaries  does not infringe upon the rights of any other Person,  except for
any  such  infringements  that,  individually  or in the  aggregate,  could  not
reasonably be expected to result in a Material Adverse Effect.

          (c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by the Borrower or any of its  Subsidiaries  as of the Effective
Date after giving effect to the Financing Transactions.

          (d) Neither the Borrower nor any of its Subsidiaries is a party to any
contract,  agreement,  lease or instrument,  the  performance  of which,  either
unconditionally or upon the happening of an event, will result in or require the
creation  of a Lien  on any  assets  of the  Borrower  or its  Subsidiaries,  or
otherwise  result in a violation  of this  Agreement,  other than Liens  arising
under documentation with respect to Documentary Letters of Credit.

          SECTION 3.06.  Litigation and Environmental  Matters. (a) There are no
actions,  suits or  proceedings  by or before  any  arbitrator  or  Governmental
Authority  pending  against or, to the  knowledge  of the  Borrower,  threatened
against or  affecting  the Borrower or any of its  Subsidiaries  (i) as to which
there  is a  reasonable  likelihood  of an  adverse  determination  and  that if
adversely  determined,  could  reasonably  be expected,  individually  or in the
aggregate,  to result in a Material  Adverse  Effect  (other than the  Disclosed
Matters),  or (ii)  that  involve  any of the Loan  Documents  or the  Financing
Transactions.

          (b) Except for the  Disclosed  Matters and except with  respect to any
other matters that,  individually  or in the aggregate,  could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its  Subsidiaries  (i) has  failed to comply  with any  Environmental  Law or to
obtain,  maintain or comply with any permit,  license or other approval required
under any  Environmental  Law,  (ii) has  become  subject  to any  Environmental
Liability,  (iii)  has  received  notice  of  any  claim  with  respect  to  any
Environmental  Liability  or (iv)  knows  of any  basis  for  any  Environmental
Liability.

          (c) Since the date of this Agreement,  there has been no change in the
status of the Disclosed  Matters that,  individually  or in the  aggregate,  has
resulted in, or  materially  increased  the  likelihood  of, a Material  Adverse
Effect.

          SECTION  3.07.  Compliance  with  Laws  and  Agreements.  Each  of the
Borrower and its  Subsidiaries is in compliance  with all laws,  regulations and
orders of any  Governmental  Authority  applicable to it or its property and all
indentures,  agreements and other  instruments  binding upon it or its property,
except where the failure to do so,  individually or in the aggregate,  could not
reasonably  be  expected  to result in a Material  Adverse  Effect.  Neither the
Borrower nor any Subsidiary is (a) a party to any judgment, order, decree or any
agreement or instrument  or subject to  restrictions  which could  reasonably be
likely to have a Material  Adverse Effect or to materially  adversely affect the
ability of the Borrower to observe the covenants and agreements contained herein
or with respect to any other Indebtedness, or (b) in default in the performance,
observance or  fulfillment  of any of the  obligations,  covenants or conditions
contained in any agreement or  instrument to which it is a party,  which default
has, or if not remedied within any applicable  grace period could  reasonably be
likely to have, a Material Adverse Effect or to materially  adversely affect the
ability of the  Borrower  or Topps  Enterprises  to observe  the  covenants  and
agreements contained herein or any other Loan Document.

                                       36

<PAGE>

          SECTION  3.08.  Investment  and Holding  Company  Status.  Neither the
Borrower  nor  any of its  Subsidiaries  is (a) an  "investment  company"  or an
"affiliated  Person"  of, or  "promoter"  or  "principal  underwriter"  for,  an
"investment  company,"  as  defined  in, or  subject to  regulation  under,  the
Investment  Company  Act of 1940,  or (b) a "holding  company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.

          SECTION 3.09.  Taxes.  Each of the Borrower and its  Subsidiaries  has
timely filed or caused to be filed all tax returns and reports  required to have
been  filed and has paid or caused  to be paid all Taxes  required  to have been
paid by it,  except  (a)  Taxes  that  are  being  contested  in good  faith  by
appropriate  proceedings  and for  which the  Borrower  or such  Subsidiary,  as
applicable,  has set aside on its books adequate  reserve,  or (b) to the extent
that the  failure  to do so could  not  reasonably  be  expected  to result in a
Material Adverse Effect.  Each of the Borrower and its Subsidiaries has paid, or
has provided adequate  reserves for the payment of, all material Federal,  state
and foreign  income  taxes  applicable  for all prior  fiscal  years and for the
current fiscal year to the date hereof.

          SECTION  3.10.  ERISA.  No ERISA Event has  occurred or is  reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a  Material  Adverse  Effect.  The  present  value of all  accumulated
benefit  obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial  Accounting  Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts,  exceed by more
than  $3,000,000  the fair  market  value of the  assets of such  Plan,  and the
present value of all accumulated  benefit  obligations of all underfunded  Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards  No.  87)  did  not,  as of the  date  of the  most  recent  financial
statements  reflecting  such amounts,  exceed by more than  $3,000,000  the fair
market value of the assets of all such underfunded Plans.

          SECTION  3.11.  Disclosure.  The Borrower has disclosed to the Lenders
all  agreements,  instruments  and corporate or other  restrictions to which the
Borrower or any of its  Subsidiaries is subject,  and all other matters known to
any of  them,  that,  individually  or in the  aggregate,  could  reasonably  be
expected to result in a Material Adverse Effect. None of the reports,  financial
statements,  certificates or other information  furnished by or on behalf of the
Borrower to the Agent or any Lender in connection  with the  negotiation of this
Agreement or any other Loan Document,  or delivered  hereunder or thereunder (as
modified  or  supplemented  by other  information  so  furnished)  contains  any
material  misstatement  of fact or omits to state any material fact necessary to
make the statements  therein, in the light of the circumstances under which they
were made,  not  misleading;  provided that with respect to projected  financial
information,  the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

          SECTION 3.12. Subsidiaries and Affiliates. Schedule 3.12 sets forth as
of the Effective  Date the name of, and the  ownership  interest of the Borrower
in, each Subsidiary and each Affiliate of the Borrower.  The outstanding  shares
or other equity  interests of each such  Subsidiary and each Affiliate have been
duly authorized and validly issued and are fully paid and nonassessable; and the
Borrower and each such Subsidiary owns beneficially and of record all the shares
and other  interests it is listed as owning in Schedule 3.12,  free and clear of
any Lien.  Schedule  3.12 also sets  forth as of the  Effective  Date a complete
description  of  all  Intercompany  Notes  and  Intercompany  Debt  held  by the
Borrower. The Borrower owns beneficially and legally all such Intercompany Notes
and Intercompany Debt, free and clear of any Lien.

                                       37

<PAGE>

          SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all
insurance  maintained by or on behalf of the Borrower and its Subsidiaries as of
the Effective  Date. As of the Effective  Date,  all premiums in respect of such
insurance have been paid.

          SECTION 3.14. Labor Matters.  As of the Effective Date, except for the
Disclosed  Matters,  none of the employees of the Borrower or any  Subsidiary is
subject  to any  collective  bargaining  agreement  and  there  are no  strikes,
lockouts or slowdowns against the Borrower or any Subsidiary  pending or, to the
knowledge of the  Borrower,  threatened,  that are  reasonably  likely to have a
Material  Adverse Effect.  The hours worked by and payments made to employees of
the Borrower  and the  Subsidiaries  have not been in material  violation of the
Fair  Labor  Standards  Act or any other  applicable  Federal,  state,  local or
foreign  law  dealing  with  such  matters  except to the  extent  that any such
violation  could not  reasonably  be  expected  to result in a Material  Adverse
Effect.  All payments due from the Borrower or any Subsidiary,  or for which any
claim may be made  against the Borrower or any  Subsidiary,  on account of wages
and employee health and welfare insurance and other benefits,  have been paid or
accrued as a  liability  on the books of the  Borrower or such  Subsidiary.  The
consummation  of the Financing  Transactions  will not give rise to any right of
termination  or  right  of  renegotiation  on the part of any  union  under  any
collective bargaining agreement to which the Borrower or any Subsidiary is bound
that is reasonably likely to have a Material Adverse Effect.

          SECTION 3.15.  Solvency.  Immediately  after the  consummation  of the
Financing  Transactions to occur on the Effective Date and immediately following
the making of any Loan made on the  Effective  Date,  and after giving effect to
the  application  of the  proceeds  of such  Loans,  (a) the  fair  value of the
respective assets of the Borrower at a fair valuation, will exceed its debts and
liabilities,  subordinated,  contingent  or  otherwise;  (b)  the  present  fair
saleable value of the  respective  property of the Borrower will be greater than
the amount that will be required to pay the probable  liability of its debts and
other  liabilities,  subordinated,  contingent or  otherwise,  as such debts and
other liabilities become absolute and matured;  (c) the Borrower will be able to
pay its debts and liabilities,  subordinated,  contingent or otherwise,  as such
debts and liabilities become absolute and matured; and (d) the Borrower will not
have  unreasonably  small capital with which to conduct the business in which it
is engaged as such  business is now  conducted  and is proposed to be  conducted
following the Effective Date.

          SECTION 3.16. No Default. As of the date hereof,  there does not exist
any Default or Event of Default hereunder.

          SECTION 3.17. Place of Business.  As of the date hereof,  the Borrower
has no office, mailing address or other place of business in the United Kingdom.

                                       38

<PAGE>

          SECTION  3.18.  Year 2000.  Any  reprogramming  required to permit the
proper  functioning,  in and  following  the  year  2000 of (i)  the  Borrower's
computer systems and (ii) equipment  containing embedded  microchips  (including
systems  and  equipment  supplied  by others or with  which  Borrower's  systems
interface)  and  the  testing  of  all  such  systems  and   equipment,   as  so
reprogrammed, was substantially complete by December 31, 1999. No matter arising
out of any changes necessitated by the so-called "Y2K" problem has resulted in a
Material Adverse Effect.

          SECTION 3.19. Federal Reserve Regulations. The Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.

                                   ARTICLE IV

                                   Conditions
                                   ----------

          SECTION 4.01.  Effective  Date. The obligations of the Lenders to make
Loans and of the Issuing  Bank to issue  Letters of Credit  hereunder  shall not
become  effective  until the date on which each of the  following  conditions is
satisfied (or waived in accordance with Section 9.02):

          (a) The Agent (or its  counsel)  shall have  received  from each party
hereto  either  (i) a  counterpart  of this  Agreement  signed on behalf of such
party,  or (ii) written  evidence  satisfactory  to the Agent (which may include
telecopy  transmission  of a signed  signature page of this Agreement) that such
party has signed a counterpart of this Agreement.

          (b)  The  Agent  shall  have  received  a  favorable  written  opinion
(addressed to the Agent and the Lenders and dated the Effective Date) of Willkie
Farr & Gallagher,  counsel for the Borrower,  covering such matters  relating to
the  Borrower,   Topps   Enterprises,   the  Loan  Documents  or  the  Financing
Transactions  as the Required  Lenders shall  reasonably  request.  The Borrower
hereby requests such counsel to deliver such opinion.

          (c) The Agent shall have received such documents and  certificates  as
the Agent or its counsel may reasonably  request  relating to the  organization,
existence  and  good  standing  of  the  Borrower  and  Topps  Enterprises,  the
authorization of the Financing Transactions and any other legal matters relating
to the  Borrower,  Topps  Enterprises,  the  Loan  Documents  or  the  Financing
Transactions,  all in form  and  substance  satisfactory  to the  Agent  and its
counsel.

          (d) The Agent shall have received a  certificate,  dated the Effective
Date and signed by the President, a Vice President or a Financial Officer of the
Borrower,  confirming compliance with the conditions set forth in paragraphs (a)
and (b) of Section 4.02.

          (e) The Agent shall have  received all fees and other  amounts due and
payable on or prior to the Effective Date,  including,  to the extent  invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder or under any other Loan Document.

                                       39

<PAGE>

          (f) All amounts outstanding under the Credit Agreement dated as of May
11, 1998 among the  Borrower,  the Agent and the  "Lenders"  party  thereto,  as
amended (the "Existing Agreement"),  shall have been satisfied or disposed of to
the satisfaction of the Agent.

          (g) The Agent shall have received evidence satisfactory to it that the
insurance required by Section 5.07 is in effect.

          (h) The  Borrower  and the  Subsidiaries  shall have granted the Agent
access  to and the right to  inspect  all  reports,  audits  and other  internal
information  of the  Borrower  and the  Subsidiaries  relating to  environmental
matters,  and any  third-party  verification  of  certain  matters  relating  to
compliance with  Environmental  Laws requested by the Agent, and the Agent shall
be satisfied  that the Borrower and the  Subsidiaries  are in  compliance in all
material respects with all applicable  Environmental  Laws and be satisfied with
the costs of maintaining such compliance.

          (i) All  consents  and  approvals  required  to be  obtained  from any
Governmental  Authority or other Person as shall be required to  consummate  the
transactions  contemplated  hereby shall have been obtained,  and all applicable
waiting periods and appeal periods shall have expired,  in each case without the
imposition of any burdensome conditions.

          (j) The Lenders shall have received (i) audited consolidated financial
statements of the Borrower for the fiscal year ended February 27, 1999,  (ii) if
available,   satisfactory  audited  consolidated  financial  statements  of  the
Borrower  for the fiscal  year  ended  February  26,  2000,  (iii)  satisfactory
reviewed  interim  consolidated  financial  statements  of the  Borrower for the
quarterly  period  ended  November 27, 1999,  and (iv)  unaudited  consolidating
financial statements for all statements above.

          (k) The Agent shall have  received the Topps SA Guaranty and the Topps
Enterprises  Guaranty  duly  executed  by the  Borrower  and Topps  Enterprises,
respectively.

          (l)  The  Agent  and  the  Lenders  shall  have  received  such  other
documents,   instruments,   certificates  and  opinions  as  are  customary  for
transactions of this type or as the Agent or any Lender may reasonably  request,
and shall be satisfied with such other conditions as it may reasonably require.

          The Agent shall notify the  Borrower and the Lenders of the  Effective
Date,  and such notice  shall be  conclusive  and binding.  Notwithstanding  the
foregoing, the obligations of the Lenders to make Loans, and of the Issuing Bank
to issue Letters of Credit hereunder,  shall not become effective unless each of
the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or
prior to 3:00 p.m., New York City time, on June 30, 2000 (and, in the event such
conditions  are not so  satisfied or waived,  the  Revolving  Commitments  shall
terminate at such time).

          SECTION 4.02. Each Credit Event. The obligation of each Lender to make
a Loan on the  occasion  of any  Borrowing,  and of the  Issuing  Bank to issue,
amend,  renew or extend any Letter of Credit,  is subject to the satisfaction of
the following conditions:

                                       40

<PAGE>

          (a) The  representations  and  warranties of the Borrower set forth in
the  Loan  Documents  shall be true  and  correct  on and as of the date of such
Borrowing  or the date of  issuance,  amendment,  renewal or  extension  of such
Letter of Credit,  as applicable,  except to the extent they expressly relate to
an earlier date (it being understood that references to a specific date, to "the
date hereof" and to "the Effective Date" are not repeated as of the date of such
Borrowing).

          (b) At the  time  of and  immediately  after  giving  effect  to  such
Borrowing  or the  issuance,  amendment,  renewal or extension of such Letter of
Credit,  as  applicable,  no Default shall have (or would have)  occurred and be
continuing.

          (c)  Each  condition  to  the  making  of a  Loan,  or  the  issuance,
amendment,  renewal or extension  of a Letter of Credit,  as  applicable,  under
Article II, shall have been satisfied .

          (d) If a certification  is required under Section  5.04(c),  the Agent
shall have  received  such  certificate  which must state that the  Borrower has
determined  that the  termination  or lapse of the Material  License in question
will not have a Material Adverse Effect.

          (e) If as of the  close  of the most  recent  reporting  period  under
Section   5.01(a)  or  (b),  the  Borrower  was  not  required  to  provide  the
certification  required  under  Section  5.01(c) with respect to Sections  6.04,
6.07,  6.13 and 6.14,  such a certificate  must be provided (based upon the data
from the most recent reporting period) prior to the making of any Loan, together
with the Borrowing Request for such Loan.

          Each Borrowing  Request shall be  accompanied by a certificate,  dated
the date of the Borrowing Request,  signed by the President, a Vice President or
a Financial  Officer of the Borrower as to the matters  specified in  paragraphs
(a), (b) and (c) of this Section.

          SECTION 4.03. Additional Condition For Each Loan. If at any time prior
to a Borrowing Request an LPT shall have occurred, the obligation of the Lenders
to make any Loan which is requested by such Borrowing Request is further subject
to the  condition  that the  Agent  shall  have  determined,  in its  reasonable
judgment,  that the effect of the transaction  which gave rise to such LPT is no
longer  continuing  (i.e.,  the  Borrower  and its  Subsidiaries  do not  remain
leveraged by reason of such  transaction to the extent required to constitute an
LPT).

                                    ARTICLE V

                              Affirmative Covenants
                              ---------------------

          Until the Revolving  Commitments  have expired or been  terminated and
the principal of and interest on each Loan and all fees payable  hereunder shall
have  been paid in full,  and all  Letters  of  Credit  shall  have  expired  or
terminated,  and all LC Disbursements  shall have been reimbursed,  the Borrower
covenants and agrees with the Lenders that:

          SECTION 5.01. Financial Statements and Other Information. The Borrower
will furnish to the Agent and each Lender:

                                       41

<PAGE>

          (a) Within 90 days after the end of each fiscal year of the  Borrower,
its audited consolidated and unaudited  consolidating  balance sheet and related
statements of  operations,  stockholders  equity and cash flows as of the end of
and for such year,  setting forth in each case in  comparative  form the figures
for the  previous  fiscal  year,  (i) in the  case of the  audited  consolidated
financial  statements,  reported  on by  Deloitte  &  Touche,  L.L.P.  or  other
independent public accountants of recognized national standing (without a "going
concern" or like  qualification  or exception and without any  qualification  or
exception as to the scope of such audit),  and (ii) in the case of the unaudited
consolidating financial statements,  certified by the Borrower's chief financial
officer,  to the effect  that such  consolidated  financial  statements  present
fairly  in  all  material  respects  the  financial  condition  and  results  of
operations of the Borrower and its  consolidated  Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;

          (b)  Within 45 days  after the end of each of the first  three  fiscal
quarters of each fiscal year of the Borrower, its consolidated and consolidating
balance sheet and related statements of operations (including a schedule setting
forth the results of operations by business segment),  stockholders'  equity and
cash flows as of the end of and for such  fiscal  quarter  and the then  elapsed
portion of the fiscal year,  setting forth in each case in comparative  form the
figures  for the  corresponding  period or  periods  of (or,  in the case of the
balance sheet as of the end of) the previous fiscal year, (i) in the case of the
consolidated  financial  statements,  reviewed by Deloitte & Touche,  L.L.P.  or
other independent public accountants of recognized  national standing,  and (ii)
in the case of the unaudited  consolidating  financial statements,  certified by
the  Borrower's  chief  financial  officer as presenting  fairly in all material
respects the  financial  condition and results of operations of the Borrower and
its  consolidated  Subsidiaries on a consolidated  basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments;

          (c)  Concurrently  with any  delivery of  financial  statements  under
clause (a) or (b) above, a certificate of a Financial Officer,  substantially in
the form of Exhibit B (or such other form reasonably  satisfactory to the Agent)
(i)  certifying  as to whether a Default  has  occurred  and,  if a Default  has
occurred,  specifying the details thereof and any action taken or proposed to be
taken with respect thereto,  (ii) setting forth reasonably detailed calculations
showing  performance  in respect of Sections  6.06,  6.16 and 6.17 (and  Section
6.04,  6.07,  6.13 and 6.14 if any Loan is outstanding at the time of the making
of such  certificate or was outstanding as of the close of the reporting  period
in question), and (iii) stating whether any change in GAAP or in the application
thereof  has  occurred  since  the  date  of the  Borrower's  audited  financial
statements  referred to in Section  3.04 and,  if any such change has  occurred,
specifying  the effect of such change on the financial  statements  accompanying
such certificate;

          (d)  Concurrently  with any  delivery of  financial  statements  under
clause (a) above,  a certificate  of the  accounting  firm that reported on such
financial  statements  stating whether they obtained knowledge during the course
of  their  examination  of  such  financial  statements  of any  Default  (which
certificate  may be  limited  to the  extent  required  by  accounting  rules or
guidelines);

          (e) Within 45 days after the end of each fiscal quarter, a list of any
Intercompany Debt (whether or not evidenced by an Intercompany Note) outstanding
as of the end of such fiscal quarter;

                                       42

<PAGE>

          (f) [This clause has been intentionally omitted];

          (g) by May 1 of each  calendar  year,  financial  projections  for the
current fiscal year on a quarterly basis, in each case setting forth among other
things, the Borrower's projected gross sales,  projected net sales and projected
results of operations of each business segment  (domestic and foreign),  for the
Borrower and its  Subsidiaries  in form and content  consistent  with Borrower's
official plan as presented to its Board of Directors;

          (h) within 45 days after the end of each fiscal quarter,  any revision
of projections  previously delivered to the Agent or the projections referred to
in clause (g) above, such revised projected balance sheets, projected statements
of operations and projected  statements of cash flows with an explanation of all
material variances to the profit and loss statement from the projections as they
existed prior to such revision;

          (i) promptly after the same become publicly  available,  copies of all
periodic and other reports,  proxy  statements and other  materials filed by the
Borrower or any Subsidiary with the Securities and Exchange  Commission,  or any
Governmental  Authority  succeeding  to any or all  of  the  functions  of  said
Commission,  or with any national  securities  exchange,  or  distributed by the
Borrower to its shareholders generally, as the case may be; and

          (j) promptly  following any request  therefor,  such other information
regarding  the  operations,  business  affairs and  financial  condition  of the
Borrower or any  Subsidiary,  or compliance with the terms of any Loan Document,
as the Agent or any Lender may reasonably request.

          SECTION 5.02. Notices of Material Events. The Borrower will furnish to
the Agent and each Lender prompt written notice of the following:

               (a) the occurrence of any Default;

               (b) the filing or commencement of any action,  suit or proceeding
               by or before any arbitrator or Governmental  Authority against or
               affecting  the  Borrower  or  any  Affiliate   thereof  that,  if
               adversely determined, could reasonably be expected to result in a
               Material Adverse Effect;

               (c) the occurrence of any ERISA Event that alone or together with
               any other ERISA Events that have  occurred,  could  reasonably be
               expected  to  result  in   liability  of  the  Borrower  and  its
               Subsidiaries in an aggregate amount exceeding $750,000; and

               (d) any other development that results in, or could reasonably be
               expected to result in, a Material Adverse Effect.

                                       43

<PAGE>

Each notice  delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or  development  requiring such notice and any action taken
or proposed to be taken with respect thereto.

          SECTION 5.03. [This Section has been intentionally omitted].

          SECTION 5.04. Existence,  Conduct of Business.  The Borrower will, and
will  cause  each of its  Subsidiaries  to,  do or cause  to be done all  things
necessary  to  preserve,  renew and keep in full  force and effect (a) its legal
existence  and  (b)  the  rights,  licenses,  permits,  privileges,  franchises,
patents,  copyrights,  trademarks  and trade  names  which are  material  to the
conduct of its business taken, in case of the Borrower,  individually and in the
case of any Subsidiary,  as a whole with the other  Subsidiaries;  provided that
the  foregoing  shall not prohibit  any merger,  consolidation,  liquidation  or
dissolution  to the extent the same is  permitted  under  Section  6.03 and,  if
applicable, 6.04 (i); provided, further, that the Borrower shall be permitted to
terminate,  or allow to lapse,  any  Material  License  in the  exercise  of its
reasonable  business  judgment  to the extent  that the  Borrower  (a)  provides
written notice on the Contract Notification Date that such Material License will
terminate or may be  terminated,  or allowed to lapse  without  renewal,  (b) if
requested  by the Agent,  advises  the Agent of the  status of any  negotiations
which may be transpiring in respect of such Material License,  and (c) furnishes
to the Agent a certificate  stating the determination by the Borrower of whether
such lapse or termination  will or will not have a Material  Adverse Effect,  by
the sooner of (x) the date of the first  Borrowing  Request  or request  for the
issuance,  amendment,  renewal or extension of a Letter of Credit under  Section
2.05 following the date that such Material  License  terminates or is allowed to
lapse, or (y) 30 days following the date that such Material  License  terminates
or is allowed to lapse.

          SECTION 5.05.  Payment of  Obligations.  The Borrower  will,  and will
cause each of its Subsidiaries  to, pay its  Indebtedness and other  obligations
(for which the failure to pay would constitute an Event of Default under Section
7.01(f)), including Tax liabilities,  before the same shall become delinquent or
in default,  except where (a) the validity or amount thereof is being  contested
in good faith by appropriate  proceedings,  (b) the Borrower or such  Subsidiary
has set aside on its books adequate  reserves with respect thereto in accordance
with GAAP,  (c) such contest  effectively  suspends  collection of the contested
obligation and the enforcement of any Lien securing such obligation, and (d) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.

          SECTION 5.06.  Maintenance of Properties.  The Borrower will, and will
cause each of its  Subsidiaries  to, keep and  maintain or replace all  property
material to the conduct of its  (respective)  business in good working order and
condition, ordinary wear and tear excepted.

          SECTION 5.07. Insurance. (a) The Borrower will, and will cause each of
its Subsidiaries to, maintain,  with financially  sound and reputable  insurance
companies:

               (i) fire and extended coverage  insurance,  on a replacement cost
               basis,  with respect to all personal property and improvements to
               real property,  in such amounts as are customarily  maintained by
               companies in the same or similar  business  operating in the same
               or similar locations;

                                       44

<PAGE>

               (ii) commercial  general  liability  insurance against claims for
               bodily injury,  death or property damage occurring upon, about or
               in connection with the use of any properties  owned,  occupied or
               controlled by it providing coverage on an occurrence basis with a
               combined single limit of not less than  $10,000,000 and including
               the broad form CGL endorsement;

               (iii) business interruption  insurance,  insuring against loss of
               gross  earnings  for a period of not less than 12 months  arising
               from any risks or occurrences required to be covered by insurance
               pursuant to clause (i) above; and

               (iv) such other insurance as may be required by law.

Deductibles or  self-insured  retention  shall not exceed  $500,000 for fire and
extended coverage policies, $1,000,000 for commercial general liability policies
or 30 days for business interruption policies.

     (b) Each such policy  referred to in this paragraph also shall provide that
it shall not be  canceled,  materially  modified or not renewed (i) by reason of
nonpayment of premium  except upon not less than 10 days' prior  written  notice
thereof by the insurer to the Agent (giving the Agent the right to cure defaults
in the payment of  premiums),  or (ii) for any other reason except upon not less
than 30 days' prior  written  notice  thereof by the  insurer to the Agent.  The
Borrower shall deliver to the Agent, prior to the cancellation,  modification or
non-renewal of any such policy of insurance,  a copy of a renewal or replacement
policy (or other  evidence of renewal of a policy  previously  delivered  to the
Agent)  together  with  evidence  satisfactory  to the Agent of  payment  of the
premium therefor.

     SECTION  5.08.  Notice of Asset Sale;  LPT;  Approved  Internet  Subsidiary
Investment; and Foreign Investment.

     (a) The Borrower will, and will cause each of its  Subsidiaries  to, notify
the Agent (i) of the Borrower's or any such Subsidiary's having entered into any
agreement  for the sale of any asset which sale could trigger a reduction of the
Revolving  Commitments  under Section  2.08(d),  promptly upon entering into any
such  agreement,  (ii) of the  closing of any such sale,  immediately  upon such
closing,  and (iii) of the receipt of any payment of any kind on account of such
asset.

     (b)  The  Borrower  will  notify  the  Agent  of  the  consummation  of any
transaction  giving  rise to an LPT,  promptly  upon the  consummation  thereof,
whether or not the same constitutes a Default at the time in question.

                                       45

<PAGE>

     (c) The  Borrower  will  notify  the Agent of each  investment  made by the
Borrower or any Guarantor in an Approved  Internet  Subsidiary,  upon the making
thereof. Such notice shall set forth the amount of such investment and the basis
for such computation.

     (d) The Borrower will notify the Agent of any Permitted  Acquisition of the
type  defined as a "Foreign  Acquisition"  (within the  definition  of Permitted
Acquisition in Section 1.01), and shall simultaneously certify to the Agent that
the cash paid on account of such Foreign  Acquisition  originates  from a source
outside the United States.

     SECTION 5.09. Books and Records,  Inspection and Audit Rights. The Borrower
will,  and will cause each of its  Subsidiaries  to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities.  The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Agent or any Lender,  upon reasonable prior notice, to visit and inspect its
properties,  to examine and make  extracts  from its books and  records,  and to
discuss its affairs,  finances and condition  with its officers and  independent
accountants, all at such reasonable times and as often as reasonably requested.

     SECTION 5.10.  Compliance with Laws. The Borrower will, and will cause each
of its Subsidiaries to, comply with all laws,  rules,  regulations and orders of
any Governmental  Authority  applicable to it or its property,  except where the
failure to do so,  individually  or in the  aggregate,  could not  reasonably be
expected to result in a Material Adverse Effect.

     SECTION 5.11.  Notice of Discharge of Hazardous  Material or  Environmental
Complaint.  The  Borrower  will,  and will  cause each of its  Subsidiaries  to,
promptly provide to the Agent true,  accurate and complete copies of any and all
notices,  complaints,  orders,  directives,  claims or citations received by the
Borrower or any Subsidiary relating to any (a) violation or alleged violation by
the Borrower or any Subsidiary of any applicable  Environmental Law; (b) release
or threatened  release by the Borrower or any Subsidiary,  or at any facility or
property owned or operated by the Borrower or any  Subsidiary,  of any Hazardous
Material,  except where occurring legally; or (c) liability or alleged liability
of the  Borrower  or any  Subsidiary  for the costs of  cleaning  up,  removing,
remediating or responding to a release of Hazardous Materials.

     SECTION 5.12. Environmental  Compliance.  If the Borrower or any Subsidiary
shall receive letter, notice,  complaint,  order,  directive,  claim or citation
alleging that the Borrower or any Subsidiary has violated any  Environmental Law
or is liable for the costs of cleaning up,  removing,  remediating or responding
to a release of Hazardous Materials,  the Borrower shall, within the time period
permitted by the  applicable  Environmental  Law or the  Governmental  Authority
responsible for enforcing such Environmental Law, remove or remedy, or cause the
applicable  Subsidiary to remove or remedy, such violation or release or satisfy
such  liability,  except where the failure to do so is not reasonably  likely to
result  in a  Material  Adverse  Effect  or  unless  the  applicability  of  the
Environmental Law, the fact of such violation or liability,  or what is required
to remove or remedy such  violation,  is being  contested by the Borrower or the
applicable  Subsidiary by appropriate  proceedings  diligently conducted and all
reserves with respect  thereto as may be required  under GAAP, if any, have been
made.

                                       46

<PAGE>

     SECTION  5.13.  Use of Proceeds and Letters of Credit.  The proceeds of the
Loans and Letters of Credit will be used for general  working  capital  needs of
the  Borrower  and (in the case of Standby  Letters of Credit) to  guaranty  the
payment of workers' compensation insurance in the ordinary course of business or
for another purpose approved by the Agent in its reasonable discretion.  No part
of the proceeds of any Loan will be used, whether directly or indirectly, (i) to
purchase or carry Margin Stock or to extend  credit to others for the purpose of
purchasing  or  carrying  Margin  Stock  or to  refund  Indebtedness  originally
incurred for such  purpose,  or (ii) for any purpose that entails a violation of
any of the Regulations of the Board, including Regulations T, U and X.

     SECTION 5.14. Additional Subsidiaries.  (a) If any additional Subsidiary is
formed or acquired or if any inactive existing Subsidiary shall become active in
any material  respect,  after the Effective  Date,  the Borrower will notify the
Agent and the Lenders  thereof,  and the Borrower  will,  if such  Subsidiary is
formed in the United States (or organized under the laws of the United States or
any State or subdivision  thereof) and is not an Approved  Internet  Subsidiary,
cause such  Subsidiary  to become a guarantor  of the  Obligations,  jointly and
severally  with all  other  Guarantors,  within  10  Business  Days  after  such
Subsidiary  is formed,  acquired  or  activated  (as  applicable),  pursuant  to
documentation reasonably satisfactory to the Agent.

     (b) If the  Borrower  wishes  to  convert  an  existing  Guarantor  into an
Approved Internet Subsidiary, the Borrower shall provide the Agent with at least
30 days prior  written  notice of the intended  date of such  conversion,  which
notice shall include a detailed explanation of all of the proposed  transactions
associated with such conversion, including the investment by the third-party (or
parties) in the Subsidiary in question (the "Conversion Transactions"),  as well
as a detailed  statement  of the  reasons  for the  Borrower's  belief that upon
consummation of the Conversion  Transactions,  such Subsidiary should qualify as
an Approved  Internet  Subsidiary.  If the  Subsidiary  qualifies as an Approved
Internet Subsidiary,  such Subsidiary will be released from its obligations as a
Guarantor upon consummation of the Conversion Transactions. For purposes of this
paragraph (b), the amount invested by the Borrower (and one or more  Guarantors,
if applicable)  shall include (i) any new investment made or intended to be made
by the Borrower or any  Guarantor  in such  Subsidiary,  and (ii) the  aggregate
amount  of all  investments  in such  Subsidiary  made by the  Borrower  and all
Guarantors prior to the Conversion Transactions (determined, on the date of each
such investment, on the basis of fair market value, in accordance with GAAP).

     (c) An Approved  Internet  Subsidiary shall cease to qualify as such if all
Persons  unaffiliated  with the Borrower  except through such  Subsidiary  shall
cease to own an equity interest in such Subsidiary, whereupon the Borrower shall
cause such Subsidiary to comply with Section 5.14(a) as if it were newly formed.

     SECTION  5.15.  Further  Assurances.  The Borrower will execute any and all
further documents, agreements and instruments, and take all such further actions
which  may be  required  under  any  applicable  law,  or which the Agent or the
Required  Lenders  may  reasonably   request,  to  effectuate  the  transactions
contemplated by the Loan Documents, all at the expense of the Borrower.

                                       47

<PAGE>

     SECTION 5.16. Changes to Loan Documents.  The Borrower will, and will cause
its  Subsidiaries  to: (i) provide  further  assurances  of any kind  reasonably
requested  by any Lender  purchasing  an interest in the Letters of Credit,  the
Loans and/or  Revolving  Commitments  after the  Effective  Date;  and (ii) make
amendments,  if reasonably  required by any Lender  purchasing any such interest
after the Effective Date; provided,  however,  that no such amendment (which the
Borrower or any Subsidiary is required to make) shall: (A) increase any interest
rate or fees for which any of them is responsible  hereunder;  (B) reduce any of
the Revolving Commitments or shorten the Maturity Date; (C) require the Borrower
or any  Subsidiary to obtain any consent or estoppel  certificate  from a Person
not  Controlled  by any of them and having no legal  obligation  to provide  the
same; (D) provide any  collateral;  (E) add any new and  burdensome  covenant or
increase more than nominally any obligation of any of them under any affirmative
or negative  covenant  hereunder;  (F) require the Borrower or any Subsidiary to
make any  representation  or warranty  which it cannot in good faith  make;  (G)
shorten any cure  period with  respect to any Default or create any new Event of
Default; or (H) add any new and burdensome conditions of lending or issuance.

                                   ARTICLE VI

                               Negative Covenants
                               ------------------

     The  Borrower  covenants  and agrees with the Lenders that (i) at the times
indicated in Sections  6.04(a),  6,05,  6.07(b),  6.13, 6.14, 6.16 and 6.17, and
(ii)  otherwise at all times from (and  including)  the Effective Date until the
Revolving Commitments have expired or terminated,  the principal of and interest
on each Loan and all fees payable  hereunder have been paid in full, all Letters
of Credit  have  expired or  terminated,  all LC  Disbursements  shall have been
reimbursed and all other Obligations satisfied in full:

     SECTION 6.01. [This Section has been intentionally omitted.]

     SECTION 6.02. Liens.  The  Borrower  will not,  and  will  not  permit  any
Subsidiary  to,  create,  incur,  assume  or permit to exist (A) any Lien on any
property or asset now owned or  hereafter  acquired by it, or (B) assign or sell
any income or revenues (including  accounts  receivable) or rights in respect of
any portion  thereof as part of a factoring or other type of "off balance sheet"
financing arrangement, except:

          (i)  Liens or assets  of,  or  assignments  or sales of  assets  by, a
               Subsidiary  which is not  required  to be a  Guarantor  under the
               terms of this Agreement;

          (ii) Permitted Encumbrances;

          (iii)any  Lien  on  any  property  or  asset  of the  Borrower  or any
               Subsidiary  existing on the date hereof and set forth in Schedule
               6.02;  provided  that (i) such Lien  shall not apply to any other
               property or asset of the Borrower or any Subsidiary and (ii) such
               Lien shall secure only those  obligations which it secures on the
               date hereof;

                                       48

<PAGE>
          (iv) Liens  on  fixed  or  capital  assets  acquired,  constructed  or
               improved by the  Borrower or any  Subsidiary;  provided  that (A)
               such security interests and the Indebtedness  secured thereby are
               incurred prior to or within 90 days after such acquisition or the
               completion  of  such   construction  or   improvement,   (B)  the
               Indebtedness  secured  thereby does not exceed 95% of the cost of
               acquiring,  constructing  or  improving  such  fixed  or  capital
               assets,  and (C) such security  interests  shall not apply to any
               other property or assets of the Borrower or any Subsidiary; and

          (v)  Liens on property of the Borrower  shipped under or in connection
               with Documentary Letters of Credit permitted under this Agreement
               (if such  Liens are in favor of the  issuer  of such  Documentary
               Letters of Credit) and all property of the Borrower in the actual
               or  constructive  possession  of the Issuing Bank with respect to
               Documentary  Letters of Credit,  other  than  property  held in a
               fiduciary capacity of such Issuing Bank.

     SECTION 6.03.  Fundamental Changes. (a) The Borrower will not, and will not
permit any Subsidiary to, merge into or  consolidate  with any other Person,  or
permit any other  Person to merge into or  consolidate  with it, or liquidate or
dissolve,  except  that,  if at the time  thereof and  immediately  after giving
effect  thereto  no  Default  shall  have  occurred  and be  continuing  (i) any
Subsidiary may merge into the Borrower in a transaction in which the Borrower is
the surviving corporation,  (ii) any Subsidiary may merge into any Subsidiary in
a  transaction  in which the  surviving  entity is a  Subsidiary,  and (iii) any
Subsidiary  may  liquidate or dissolve if the Borrower  determines in good faith
that such  liquidation  or  dissolution is in the best interests of the Borrower
and is not  materially  disadvantageous  to the Lenders;  provided that any such
merger  involving a Person  that is not a wholly  owned  Subsidiary  immediately
prior to such merger  shall not be  permitted  unless also  permitted by Section
6.04.

     (b) The Borrower will not, and will not permit any of its  Subsidiaries to,
engage to any material  extent in any business other than businesses of the type
conducted by the Borrower and its  Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.

     SECTION 6.04.  Investments,  Loans, Advances,  Guarantees and Acquisitions.
(a) At any  time  when any  principal  or  interest  on  account  of any Loan is
outstanding  in whole or in part:  (A) the Borrower will not and will not permit
any  Guarantor  to make or permit to exist any  investment  in the equity of any
Subsidiary  which was a Subsidiary  prior to such  investment but which is not a
Guarantor  (or which is not required to be a  Guarantor)  other than an Approved
Internet Subsidiary, unless the aggregate amount of such investments at the time
in question shall not exceed  $12,000,000  (amounts  subject to such calculation
are to be  determined by reference to the  Borrower's  balance  sheet);  (B) the
Borrower  will not and will not permit any Guarantor to incur or permit to exist
any  Intercompany  Debt (whether or not evidenced by an  Intercompany  Note), or
Guarantee any obligation of any Subsidiary which is not a Guarantor (or which is
not required to be a Guarantor),  unless the aggregate  principal  amount of all
such items at the time in question shall not exceed  $40,000,000 plus any amount
guaranteed   pursuant  to  the  Topps  SA  Guaranty  (amounts  subject  to  such
calculation  shall be determined by reference to the principal  amount  actually
owing or for which the  Borrower  or a  Guarantor  is  contingently  liable  (as
applicable) at the time of calculation, and not to the original principal amount

                                       49

<PAGE>

thereof  if  different);  (C) the  Borrower  will not and will  not  permit  any
Guarantor to make any loan or advance to, or Guarantee  any  obligation  of, any
officer,  employee  or director of the  Borrower or any  Subsidiary,  except for
loans,  advances to (or Guarantees for the benefit of) such officers,  directors
and  employees  made in the ordinary  course of business  (including  to finance
relocation  expenses) not exceeding an aggregate  principal amount of $1,000,000
at any time  outstanding;  and (D) the Borrower will not and will not permit any
Subsidiary to purchase,  hold or acquire (including  pursuant to any merger with
any Person  that was not a  wholly-owned  Subsidiary  prior to such  merger) any
capital stock, evidence of Indebtedness or other equity or securities (including
any  option,  warrant or other  right to acquire  any of the  foregoing)  of any
Person other than a Subsidiary  which was a Subsidiary  prior to such event,  or
make or permit to exist any investment or any other interest in any Person other
than a  Subsidiary  which was a Subsidiary  prior to such event,  or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person  constituting a business unit, except (in any case contemplated
by this clause (D)) Permitted Investments and Permitted Acquisitions.

     (b) The Borrower  will not, and will not permit any Guarantor to invest (by
means of asset  transfer,  cash  investment,  the  assumption  or  incurrence of
Indebtedness or otherwise) more than an aggregate (for all such investments made
at any time) of $10,000,000 in all Approved Internet Subsidiaries.  The value of
each such  investment  shall be  determined  as set forth in the  definition  of
"Approved Internet Subsidiary" in Section 1.01.

     (c) The  Borrower  will  not and  will  not  permit  any  Guarantor  to (i)
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a  wholly-owned  Subsidiary  prior to such  merger) any  capital  stock,
evidence of  Indebtedness  or other equity or securities  (including any option,
warrant or other right to acquire  any of the  foregoing)  of any Person  (other
than a Subsidiary  which was a  Subsidiary  prior to such event) which is either
not  organized  in the  United  States or not in the same or a  related  line of
business as the  Borrower  or a  Subsidiary  which is not an  Approved  Internet
Subsidiary, or (ii) make or permit to exist any investment or any other interest
in any such Person,  or (iii) purchase or otherwise  acquire (in one transaction
or a series of  transactions)  any  assets  of any such  Person  constituting  a
business  unit unless the assets to be acquired  are  intended to be utilized in
the same or a related line of business as the Borrower or a Subsidiary  which is
not an Approved Internet Subsidiary.

     SECTION  6.05.  Asset Sales.  At any time when any principal or interest on
account of any Loan is  outstanding  in whole or in part, the Borrower will not,
and will  not  permit  any of its  Subsidiaries  to,  sell,  transfer,  lease or
otherwise  dispose of any  asset,  including  any  capital  stock,  nor will the
Borrower permit any of its  Subsidiaries  to issue any additional  shares of its
capital stock or other ownership interest in such Subsidiary, except:

          (a)  sales of  inventory,  used,  surplus or  obsolete  equipment  and
               Permitted Investments in the ordinary course of business;

          (b)  the  granting  of licenses in  trademarks  or other  intellectual
               property owned by the Borrower or any of its Subsidiaries;

                                       50

<PAGE>

          (c)  sales,   transfers  and   dispositions   to  the  Borrower  or  a
               Subsidiary;   provided   that  any  such  sales,   transfers   or
               dispositions  made in compliance with Section 6.08 (other than in
               reliance on Section 6.08 (d)); and

          (d)  Permitted Asset Sales;

          provided  that all sales,  transfers,  leases  and other  dispositions
          permitted hereby shall be made for fair value.

          SECTION 6.06. Hedging  Agreements.  The Borrower will not and will not
permit any of its Subsidiaries to, enter into any Hedging Agreements, other than
Hedging  Agreements  entered into in the ordinary course of business to hedge or
mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its  liabilities  in an aggregate  notional
amount not to exceed $75,000,000.

          SECTION 6.07.  Restricted Payments,  Certain Payments of Indebtedness.
(a) The Borrower  will not, and will not permit any  Subsidiary  to,  declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment of
the type described in clause (i) of the  definition of "Restricted  Payments" in
Section 1.01, except (i) the Borrower may declare and pay dividends with respect
to its capital stock payable solely in additional shares of its common stock, or
other equity  securities not redeemable at the option of a holder thereof,  (ii)
Subsidiaries may declare and pay dividends ratably with respect to their capital
stock (or  equivalent)  and  (iii) the  Borrower  may make  Restricted  Payments
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees or consultants of the Borrower and its Subsidiaries.

          (b) At any time  (from and  including  the  Effective  Date)  when any
Obligation  with respect to any Loan or Letter of Credit shall be unsatisfied in
whole or in part, or any Letter of Credit shall not have  terminated or expired,
or otherwise be outstanding,  the Borrower will not make any Restricted  Payment
of the type described in clause (ii) of the  definition of "Restricted  Payment"
in Section 1.01, unless after making such Restricted Payment (x) an aggregate of
$25,000,000 or less of such  Restricted  Payments will have been made during (A)
the three fiscal  quarters  ending prior to the quarter in which the  Restricted
Payment in  question  is to be made (but  excluding  any  portion of such fiscal
quarters  occurring  prior to the  Effective  Date) and (B) such current  fiscal
quarter,  (y) an aggregate of  $50,000,000 or less of such  Restricted  Payments
will have been made from (and  including) the Effective Date to (and  including)
the date of the Restricted  Payment in question,  and (z) the Restricted Payment
in question will not result in an LPT.

          SECTION 6.08.  Transactions with Subsidiaries.  The Borrower will not,
and will not permit any  Subsidiary  to, sell,  lease or otherwise  transfer any
property or assets to, or purchase,  lease or otherwise  acquire any property or
assets from,  or otherwise  engage in any other  transactions  with,  any of its
Subsidiaries,  except (a)  transactions  in the ordinary course of business that
are at prices and on terms and  conditions not less favorable to the Borrower or
such  Subsidiary  than could be obtained on an arm's length basis from unrelated
third parties,  (b) any  Restricted  Payment not prohibited by Section 6.07, (c)
the  transactions  described in Section 6.04, when not prohibited  under Section
6.04,  and (d) the  transactions  described in Section 6.05 when not  prohibited
under Section 6.05.

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<PAGE>

          SECTION 6.09. Restrictive Agreements.  The Borrower will not, and will
not permit any  Subsidiary  to,  directly or  indirectly,  enter into,  incur or
permit to exist any agreement or other arrangement that prohibits,  restricts or
imposes any condition  upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other  distributions  with
respect  to any  shares  of its  capital  stock,  or to make or  repay  loans or
advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of
the Borrower or any other Subsidiary;  provided that (i) the foregoing shall not
apply to  restrictions  and  conditions  imposed by law or by any Loan Document,
(ii) the foregoing shall not apply to  restrictions  and conditions (A) applying
solely to one or more  Subsidiaries  which are not (and are not  required to be)
Guarantors  or (B) existing on the date hereof and  identified  on Schedule 6.09
(but  shall  apply  to  any  extension  or  renewal  of,  or  any  amendment  or
modification   expanding  the  scope  of,  any  such  restriction  or  condition
identified on Schedule  6.09),  (iii) the foregoing shall not apply to customary
restrictions  and conditions  contained in agreements  relating to the sale of a
Subsidiary  pending such sale,  provided such  restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted  hereunder,
(iv) foregoing clause (a) shall not apply to restrictions or conditions  imposed
by any agreement relating to secured Indebtedness permitted by this Agreement if
such  restrictions  or conditions  apply only to the property or assets securing
such Indebtedness, and (v) the foregoing clause (a) shall not apply to customary
provisions in leases restricting the assignment thereof

          SECTION 6.10. Amendment of Material Documents.  The Borrower will not,
and will not permit any Subsidiary to, amend,  modify or waive any of its rights
under  its  certificate  of  incorporation,   by-laws  or  other  organizational
documents if the same is reasonably  likely to have a Material Adverse Effect or
would result in an Event of Default under any of the Loan Documents.

          SECTION 6.11.  Limitations on Sales and Leasebacks.  The Borrower will
not, and will not permit any Subsidiary to, enter into any arrangement  with any
Person  providing  for the leasing by the Borrower or any  Subsidiary of real or
personal property which has been or is to be sold or transferred by the Borrower
or any Subsidiary to such Person, or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such  property or rental
obligations  of the  Borrower  or any  Subsidiary,  unless  the  transaction  in
question is determined by the Agent, in its reasonable discretion, to constitute
(or to be tantamount to) a financing  lease of the type permitted  under Section
6.02(iv).

          SECTION 6.12.  Fiscal Year. The Borrower will not, and will not permit
any Subsidiary to, change its fiscal year.

          SECTION  6.13.  Consolidated  Leverage  Ratio.  At any  time  when any
principal or interest with respect to any Loan shall be  outstanding in whole or
in part,  the Borrower  will not permit the  Consolidated  Leverage  Ratio to be
greater  than  1.6 to 1.0,  determined  on the  basis of the  then  most  recent
financial statements provided under Section 5.01(a) or Section 5.01(b).

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<PAGE>

          SECTION 6.14.  Consolidated  Fixed Charge Ratio.  At any time when any
principal or interest with respect to any Loan shall be  outstanding in whole or
in part, the Borrower will not permit the Consolidated  Fixed Charge Ratio to be
less than 2.5 to 1.0,  determined on the basis of the then most recent financial
statements provided under Section 5.01(a) or Section 5.01(b).

          SECTION 6.15. [This Section has been intentionally omitted.]

          SECTION 6.16.  Consolidated  Net Loss. At any time (from and including
the  Effective  Date) when any principal or interest with respect to any Loan or
any  Obligation  with  respect to any Letter of Credit shall be  unsatisfied  in
whole or in part, or any Letter of Credit shall not have  terminated or expired,
or otherwise be outstanding,  the Borrower and its  Subsidiaries  will not incur
(and shall not have incurred since the Effective  Date) a consolidated  net loss
(i) in any amount for any three consecutive fiscal quarters, or (ii) for any two
consecutive  fiscal  quarters  combined,   in  an  amount  greater  than  8%  of
Consolidated  Net Worth as of the close of the fiscal quarter prior to the first
such quarter in which the  consolidated  net loss in question was incurred.  For
purposes of the foregoing sentence,  consolidated net losses shall be determined
as of the end of a fiscal quarter.

          SECTION 6.17.  Consolidated  Tangible Net Worth. At any time (from and
including the Effective Date) when any principal or interest with respect to any
Loan or any Obligation with respect to any Letter of Credit shall be unsatisfied
in whole or in part,  or any  Letter of  Credit  shall  not have  terminated  or
expired, or otherwise be outstanding, the Borrower and its Subsidiaries will not
permit  Consolidated  Tangible  Net  Worth to be less  than the  greater  of (i)
$10,000,000 or (ii) (w) Consolidated Tangible Net Worth as set forth on the last
quarterly  financial  statement provided to the Bank prior to the Effective Date
plus (x) 50% of aggregate  Consolidated  Net Income (as long as Consolidated Net
Income is greater  than zero) from the  Effective  Date through the close of the
last fiscal  quarter or year  (whichever  is later) for which the  Borrower  has
reported pursuant to Section 5.01(a) or Section 5.01(b), minus (y) the aggregate
amount of  Restricted  Payments (on account of common  stock) from and including
the  Effective  Date of the type  described in clause (ii) of the  definition of
"Restricted  Payments"  in Section  1.01 (to the extent the same were  permitted
under Section 6.07 (b) at the time they were made),  and minus (z) the aggregate
amount of write-offs of intangible assets from and including the Effective Date;
(y) being calculated in the manner  prescribed by clause (x) of Section 6.07(b),
and (z) being calculated in the manner  prescribed in clause (x) of this Section
6.17.

          SECTION 6.18. [This Section has been intentionally omitted.]

          SECTION 6.19. [This Section has been intentionally omitted.]

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<PAGE>

                                   ARTICLE VII

                                Events of Default
                                -----------------

          SECTION  7.01.  Events  of  Default.  If any of the  following  events
("Events of Default") shall occur:

          (a) the  Borrower  shall fail to pay any  principal of any Loan or any
reimbursement  obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

          (b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other  amount  (other  than an amount  referred  to in clause (a) of this
Section)  payable under this Agreement or any other Loan Document,  within three
days after the same shall become due and payable;

          (c) any representation or warranty made or deemed made by or on behalf
of the  Borrower  or  any  Subsidiary  (including  Topps  Enterprises)  in or in
connection  with any Loan Document or any amendment or  modification  thereof or
waiver thereunder, or in any report,  certificate,  financial statement or other
document furnished  pursuant to or in connection with any Loan Document,  or any
amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect when made or deemed made;

          (d) the  Borrower  shall  fail to observe  or  perform  any  covenant,
condition or  agreement  contained in Section  5.02,  5.04 (with  respect to the
existence of the Borrower), 5.09, 5.13 or 5.14 or in Article VI;

          (e) the  Borrower  shall  fail to observe  or  perform  any  covenant,
condition  or  agreement  contained  in any  Loan  Document  (other  than  those
specified in clause (a),  (b) or (d) of this  Section),  and such failure  shall
continue unremedied for a period of 30 days;

          (f) Topps  Enterprises  shall  default  beyond  applicable  periods of
notice and grace, if any, under the Topps  Enterprises  Guaranty,  or any Person
shall be in  default  under  any  other  Guarantee  with  respect  to any of the
Obligations,  or the Borrower or any  Subsidiary  shall fail to make any payment
(whether of principal or interest  and  regardless  of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;

          (g) any  event  or  condition  occurs  that  results  in any  Material
Indebtedness  becoming  due prior to its  scheduled  maturity or that enables or
permits  (with or without  the giving of notice,  the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity;  provided  that  this  clause  (g)  shall  not  apply  to (i)  secured
Indebtedness  that becomes due as a result of the voluntary  sale or transfer of
the property or assets  securing such  Indebtedness or (ii) events or conditions
cured within 30 days from occurrence  unless the related  Material  Indebtedness
has become due within such 30 day period;

                                       54

<PAGE>

          (h) an  involuntary  proceeding  shall be commenced or an  involuntary
petition shall be filed seeking (i) liquidation,  reorganization or other relief
in respect of the  Borrower or any  Material  Subsidiary  or its debts,  or of a
substantial part of its assets, under any Federal,  state or foreign bankruptcy,
insolvency,  receivership or similar law now or hereafter in effect, or (ii) the
appointment  of a receiver,  trustee,  custodian,  sequestrator,  conservator or
similar  official  for  the  Borrower  or  any  Material  Subsidiary  or  for  a
substantial  part of its  assets,  and,  in any such case,  such  proceeding  or
petition shall continue  undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;

          (i) the  Borrower or any  Material  Subsidiary  shall (A)  voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other  relief  under any Federal,  state or foreign  bankruptcy,  insolvency,
receivership  or similar  law now or  hereafter  in effect,  (B)  consent to the
institution  of, or fail to  contest  in a timely and  appropriate  manner,  any
proceeding or petition described in clause (h) of this Article, (C) apply for or
consent to the  appointment  of a receiver,  trustee,  custodian,  sequestrator,
conservator or similar official for the Borrower or any Material Subsidiary,  or
for a substantial part of its assets,  (D) file an answer admitting the material
allegations  of a petition filed against it in any such  proceeding,  (E) make a
general as  assignment  for the benefit of  creditors or (F) take any action for
the purpose of effecting any of the foregoing;

          (j) the Borrower or any Material Subsidiary shall become unable, admit
in writing its inability or fall generally to pay its debts as they become due;

          (k) one or more  judgments  for the  payment of money in an  aggregate
amount in excess of  $2,000,000  shall be  rendered  against the  Borrower,  any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 30 consecutive  days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the  Borrower  or any  Subsidiary  to  enforce  any such
judgment;

          (l) an ERISA  Event  shall have  occurred  that in the  opinion of the
Required  Lenders,  when taken  together  with all other ERISA  Events that have
occurred,  could  reasonably  be expected to result in liability of the Borrower
and its Subsidiaries in an aggregate amount exceeding $750,000 in any year;

          (m)  any  Lien  purported  to  be  created  under  any   documentation
pertaining to a  Documentary  Letter of Credit shall be asserted by the Borrower
not to be a valid Lien,  except as a result of (i) the sale or other disposition
of the applicable assets in a transaction  permitted under the Loan Documents or
(ii) the termination of the Lien in accordance with Section 2.05(a).

          (n) a Change in Control shall occur; or

          (o) if any Loan Document  ceases to be in full force and effect (other
than by reason of any action by the Agent,  including  any  release  pursuant to
Section  5.14(b)),  or if  without  the  written  consent of the  Lenders,  this
Agreement or any other Loan Document shall be disaffirmed or shall terminate, be
terminable  or be  terminated  or become  void or  unenforceable  for any reason
whatsoever (other than in accordance with its terms in the absence of default or
by reason of any action by the Lenders or the Agent);

                                       55

<PAGE>

then,  and in every such event (other than an event with respect to the Borrower
described  in clause (h) or (i) of this  Section  ), and at any time  thereafter
during the  continuance of such event,  the Agent may, and at the request of the
Required Lenders or any single Lender having a Revolving Commitment in excess of
$10,000,000  shall,  by  notice  to the  Borrower,  take  either  or both of the
following  actions,  at the same or different times: (i) terminate the Revolving
Commitments,   and   thereupon  the  Revolving   Commitments   shall   terminate
immediately,  and (ii) declare the Loans then  outstanding to be due and payable
in whole (or in part,  in which case any principal not so declared to be due and
payable may  thereafter  be declared to be due and  payable),  and thereupon the
principal of the Loans so declared to be due and payable,  together with accrued
interest  thereon and all fees and other  Obligations  of the  Borrower  accrued
hereunder, shall become due and payable immediately, without presentment demand,
protest  or other  notice of any kind,  all of which  are  hereby  waived by the
Borrower;  and in case of any event with  respect to the  Borrower  described in
clause (h) or (i) of this Section, the Revolving Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest  thereon and all fees and other  Obligations  of the  Borrower  accrued
hereunder,  shall  automatically  become due and payable,  without  presentment,
demand,  protest or other notice of any kind,  all of which are hereby waived by
the Borrower.

                                  ARTICLE VIII

                                    The Agent
                                    ---------

          SECTION 8.01.  Relationship with Lenders.  (a) Each of the Lenders and
the  Issuing  Bank  hereby  irrevocably  appoints  the  Agent as its  agent  and
authorizes  the Agent to take such  actions on its behalf and to  exercise  such
powers  as are  delegated  to the  Agent by the  terms  of the  Loan  Documents,
together with such actions and powers as are reasonably incidental thereto.

          (b) The bank serving as the Agent hereunder shall have the same rights
and powers in its  capacity as a Lender as any other Lender and may exercise the
same as  though it were not the  Agent,  and such  bank and its  Affiliates  may
accept deposits from, lend money to and generally engage in any kind of business
with the Borrower or any Subsidiary or other Affiliate thereof as if it were not
the Agent hereunder.

          (c) The Agent shall not have any duties or  obligations  except  those
expressly set forth in the Loan  Documents.  Without  limiting the generality of
the  foregoing,  (a) the Agent  shall not be subject to any  fiduciary  or other
implied duties,  regardless of whether a Default has occurred and is continuing,
(b) the  Agent  shall  not have any duty to take  any  discretionary  action  or
exercise  any  discretionary  powers,  except  discretionary  rights  and powers
expressly  contemplated  by the Loan  Documents  that the Agent is  required  to
exercise in writing by the Required  Lenders (or such other number or percentage
of the  Lenders as shall be  necessary  under the  circumstances  as provided in
Section 9.02), and (c) except as expressly set forth in the Loan Documents,  the
Agent  shall not have any duty to  disclose,  and  shall  not be liable  for the
failure to  disclose,  any  information  relating to the  Borrower or any of its

                                       56

<PAGE>

Subsidiaries that is communicated to or obtained by the bank serving as Agent or
any of its  Affiliates  in any  capacity.  The Agent shall not be liable for any
action  taken or not  taken  by it with the  consent  or at the  request  of the
Required  Lenders (or such other number or percentage of the Lenders as shall be
necessary  under the  circumstances  as provided in Section 9.02) except for its
own gross negligence or willful  misconduct in the execution of any such action,
or otherwise in the absence of its own gross  negligence  or wilful  misconduct.
The Agent shall not be deemed to have  knowledge of any Default unless and until
written  notice  thereof is given to the Agent by the Borrower or a Lender,  and
the Agent shall not be responsible  for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
any Loan  Document,  (ii)  the  contents  of any  certificate,  report  or other
document delivered thereunder or in connection therewith,  (iii) the performance
or observance of any of the  covenants,  agreements or other terms or conditions
set forth in any Loan Document, (iv) the validity, enforceability, effectiveness
or  genuineness  of any Loan  Document  or any other  agreement,  instrument  or
document,  or (v) the  satisfaction  of any condition set forth in Article IV or
elsewhere in any Loan Document, other than to confirm receipt of items expressly
required to be delivered to the Agent.

          (d) The Agent shall be entitled to rely upon,  and shall not incur any
liability  for  relying  upon,  any  notice,  request,   certificate,   consent,
statement,  instrument,  document or other writing  believed by it to be genuine
and to have been  signed or sent by the proper  Person.  The Agent also may rely
upon any  statement  made to it orally or by telephone  and believed by it to be
made by the  proper  Person,  and  shall not incur  any  liability  for  relying
thereon.  The Agent may consult  with legal  counsel (who may be counsel for the
Borrower),  independent  accountants and other experts selected by it, and shall
not be liable for any  action  taken or not taken by it in  accordance  with the
advice of any such  counsel,  accountants  or experts.  The Agent shall be fully
justified in failing or refusing to take any action under this  Agreement or any
other Loan Document  unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all the Lenders) as
it deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action (it being understood that
this  provision  shall not  release  the Agent from  performing  any action with
respect to the Borrower expressly required to be performed by it pursuant to the
terms  hereof)  under  this  Agreement.  The  Agent  shall in all cases be fully
protected in acting, or in refraining from acting,  under this Agreement and the
other Loan Documents in accordance  with a request of the Required  Lenders (or,
if so specified by this  Agreement,  all the Lenders),  and such request and any
action  taken or failure to act pursuant  thereto  shall be binding upon all the
Lenders.

          (e) The Agent may perform any and all of its duties and  exercise  its
rights and  powers by or through  any one or more  sub-agents  appointed  by the
Agent.  The Agent and any such  sub-agent may perform any and all its duties and
exercise its rights and powers through their  respective  Related  Parties.  The
exculpatory  provisions  of the  preceding  paragraphs  shall  apply to any such
sub-agent and to the Related Parties of each Agent and any such  sub-agent,  and
shall apply to their respective activities in connection with the syndication of
the credit facility provided for herein as well as activities as Agent.

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<PAGE>

          (f) Subject to the  appointment and acceptance of a successor Agent as
provided in this  paragraph,  the Agent may resign at any time by notifying  the
Lenders,  the Issuing  Bank and the  Borrower.  Upon any such  resignation,  the
Required  Lenders shall have the right,  in consultation  with the Borrower,  to
appoint  a  successor.  If no  successor  shall  have been so  appointed  by the
Required Lenders and shall have accepted such  appointment  within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders and the Issuing Bank,  appoint a successor Agent, which
shall be a bank with an office in New York,  New York,  or an  Affiliate  of any
such bank.  Upon the  acceptance  of its  appointment  as Agent  hereunder  by a
successor,  such  successor  shall  succeed  to and become  vested  with all the
rights,  powers,  privileges  and duties of the retiring  Agent and the retiring
Agent shall be discharged  from its duties and obligations  hereunder.  The fees
payable by the Borrower to a successor  Agent shall be the same as those payable
to its  predecessor  unless  otherwise  agreed  between  the  Borrower  and such
successor.  After the Agent's  resignation  hereunder,  the  provisions  of this
Article  and  Section  9.03 shall  continue  in effect  for the  benefit of such
retiring Agent, its sub-agents and their  respective  Related Parties in respect
of any  actions  taken or omitted to be taken by any of them while it was acting
as Agent.

          (g) Each Lender  acknowledges  that it has,  independently and without
reliance  upon the Agent or any other  Lender  and based on such  documents  and
information  as it has  deemed  appropriate,  made its own credit  analysis  and
decision to enter into this  Agreement.  Each Lender also  acknowledges  that it
will,  independently and without reliance upon the Agent or any other Lender and
based on such  documents  and  information  as it shall  from  time to time deem
appropriate,  continue to make its own  decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related agreement
or any document furnished hereunder or thereunder.

     SECTION  8.02.  Indemnification.  Each Lender  agrees to indemnify and hold
harmless the Agent (to the extent not reimbursed under Section 9.03, but without
limiting  the  obligations  of the  Borrower  under  Section  9.03),  ratably in
accordance  with the  aggregate  principal  amount of the  respective  Revolving
Commitments  of and/or Loans and L/C Exposure held by the Lenders (or, if all of
the Revolving  Commitments  shall have been  terminated  or expired,  ratably in
accordance with the aggregate  outstanding  amount of the Loans and L/C Exposure
held  by  the  Lenders),  for  any  and  all  liabilities  (including,   without
limitation,  pursuant to any Environmental Law),  obligations,  losses, damages,
penalties, actions, judgments,  deficiencies,  suits, costs, expenses (including
reasonable  attorneys' fees) or disbursements of any kind and nature  whatsoever
that may be imposed on, incurred by or asserted  against the Agent,  the Issuing
Bank or any Lender arising out of or by reason of any investigation in or in any
way  relating  to or arising  out of any Loan  Document  or any other  documents
contemplated  by or referred to therein,  for any action  taken or omitted to be
taken by the Agent, the Issuing Bank or any Lender under or in respect of any of
the Loan  Documents  or other such  documents or the  transactions  contemplated
thereby (including, without limitation, the costs and expenses that the Borrower
is  obligated  to pay under  Section  9.03,  but  excluding,  unless an Event of
Default or Default has occurred and is continuing,  normal  administrative costs
and expenses  incident to the performance of its agency duties hereunder) or the
enforcement  of any  of the  terms  hereof  or  thereof  or of  any  such  other
documents;  provided,  however,  that no Lender  shall be liable  for any of the
foregoing to the extent they are determined by a court of competent jurisdiction

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in a final and nonappealable judgment to have resulted from the gross negligence
or willful  misconduct of the Agent.  The  agreements  set forth in this Section
8.02 shall survive the payment of all Loans,  expiration or  termination  of the
Revolving Commitments and all Letters of Credit, and the payment,  satisfaction,
and performance of all other Obligations, and shall be in addition to and not in
lieu of any other indemnification  agreements contained in this Agreement of any
other Loan Document.

                                   ARTICLE IX

                                  Miscellaneous
                                  -------------

          SECTION  9.01.  Notices.  Except  in the  case of  notices  and  other
communications  expressly  permitted to be given by  telephone,  all notices and
other  communications  provided  for  herein  shall be in  writing  and shall be
delivered  by  hand  or  overnight  courier  service,  mailed  by  certified  or
registered mail, or sent by telecopy, as follows:

               (a) if to the Borrower,  to it at One Whitehall  Street New York,
New York,  10004-2109,  Attention  of Ms.  Catherine  K.  Jessup  (Telecopy  No.
212-376-0621),  with a copy to Willkie Farr & Gallagher, 787 Seventh Avenue, New
York,  New York  10019-6099  (Telecopy No.  212-728-8111),  Attention of William
Hiller, Esq.;

               (b) if to the Agent,  to The Chase  Manhattan  Bank,  4 MetroTech
Center,  22nd Floor,  Brooklyn,  New York 11245,  Attention  of Mr.  Christopher
Murtha and Regional Manager  (Telecopy No.  718-242-3846),  with a copy to Esanu
Katsky  Korins & Siger,  LLP,  605  Third  Avenue,  New  York,  New York  10158,
Attention of Stephen D. Brodie, Esq. (Telecopy No. 212-953-6899);

               (c) if to the  Issuing  Bank,  to it at the  address  provided in
paragraph (b).

               (d) if to LaSalle Bank  National  Association,  135 South LaSalle
Street,  Chicago, IL 60603, Attention of Mr. Steven M. Cohen (Telecopy No. (312)
904-9293),  with a copy to Vedder Price  Kaufman & Kammholz,  222 North  LaSalle
Street,  Chicago, IL 60601, Attention of Michael A. Nemeroff, Esq. (Telecopy No.
(312) 609-5005).

               (e) if to any other  Lender,  to it at its address  (or  telecopy
number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications  hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt. The
Agent agrees to forward to each Lender copies of all material  notices  received
by the Agent, including notices pursuant to Section 5.08.

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          SECTION  9.02.  Waivers,  Amendments.  (a) No  failure or delay by the
Agent the Issuing Bank or any Lender in exercising any right or power  hereunder
or under any other Loan Document  shall operate as a waiver  thereof,  nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,  preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent, the Issuing Bank and the Lenders  hereunder and under
the other Loan  Documents are  cumulative and are not exclusive of any rights or
remedies that they would  otherwise have. No waiver of any provision of any Loan
Document or consent to any  departure  by the Borrower  therefrom,  shall in any
event be effective  unless the same shall be permitted by paragraph  (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing,  the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default,  regardless  of whether the Agent,  any
Lender or the Issuing  Bank may have had notice or  knowledge of such Default at
the time.

               (b) Neither this Agreement nor any other Loan  Document,  nor any
provision  hereof or thereof,  may be waived,  amended or modified except in the
case of this  Agreement,  pursuant  to an  agreement  or  agreements  in writing
entered into by the  Borrower  and the  Required  Lenders or, in the case of any
other Loan Document,  pursuant to an agreement or agreements in writing  entered
into by the  Agent  and the  Borrower,  in each  case  with the  consent  of the
Required  Lenders;  provided  that  no  such  agreement,  waiver,  amendment  or
modification  shall (i) increase the Revolving  Commitment of any Lender without
the written consent of each Lender, (ii) reduce the principal amount of any Loan
or LC  Disbursement or reduce the rate of interest  thereon,  or reduce any fees
payable  hereunder (to any Lender as a Lender),  without the written  consent of
each Lender  affected  thereby,  (iii) postpone the Maturity Date, or reduce the
amount of, waive or excuse any payment of the principal amount of any Loan or LC
Disbursement  or any  interest  thereon,  or any fees  payable  hereunder to any
Lender (as a Lender),  without  the  written  consent  of each  Lender  affected
thereby, (iv) change Section 2.18(b) or (c) in a manner that would alter the pro
rata sharing of payments required  thereby,  without the written consent of each
Lender,  (v) change any of the  provisions of this Section or the  definition of
"Required  Lenders" or any other  provision of any Loan Document  specifying the
number or  percentage of Lenders  required to waive,  amend or modify any rights
thereunder or make any  determination or grant any consent  thereunder,  without
the written  consent of each Lender,  (vi) release any Subsidiary (to the extent
such  Subsidiary is obligated under any Guarantee of any  Obligations)  from any
Guarantee,  or limit its  liability  in respect of such  Guarantee,  without the
written  consent of each Lender,  or (vii) change any  provision of Article V or
Article  VI,  without  the  written  consent of each  Lender  having a Revolving
Commitment of $15,000,000  or more; and provided  further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the Agent or the
Issuing  Bank,  without  the prior  written  consent of the Agent or the Issuing
Bank, as the case may be.

          SECTION 9.03.  Expenses,  Indemnity,  Damage Waiver.  (a) The Borrower
shall pay (i) all reasonable  out-of-pocket  expenses  incurred by the Agent and
its Affiliates,  including the reasonable  fees,  charges and  disbursements  of
counsel for the Agent in connection  with the syndication of the credit facility
provided for herein, the preparation and administration of the Loan Documents or
any amendments,  modifications or waivers of the provisions  thereof (whether or

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<PAGE>

not the transactions contemplated hereby or thereby shall be consummated),  (ii)
all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the  issuance,  amendment,  renewal or extension of any Letter of Credit or
any demand for payment thereunder, and (iii) all out-of-pocket expenses incurred
by the Agent,  the Issuing Bank or any Lender,  including the fees,  charges and
disbursements of any counsel for the Agent,  the Issuing Bank or any Lender,  in
connection  with the  enforcement or protection of its rights in connection with
the Loan  Documents,  including its rights under this Section,  or in connection
with the Loans made or Letters of Credit  issued  hereunder,  including all such
out-of-pocket   expenses   incurred   during  any  workout,   restructuring   or
negotiations in respect of such Loans or Letters of Credit.

               (b) The Borrower shall indemnify the Agent,  the Issuing Bank and
each Lender,  and each Related Party of any of the foregoing  Persons (each such
Person being called an "Indemnitee")  against and hold each Indemnitee  harmless
from, any and all losses,  claims,  damages,  liabilities and related  expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted  against any  Indemnitee  arising out of, in  connection
with,  or as a result of (i) the  execution or delivery of any Loan  Document or
any other agreement or instrument  contemplated  hereby,  the performance by the
parties to the Loan Documents of their respective  obligations thereunder or the
consummation   of  the  Financing   Transactions   or  any  other   transactions
contemplated  hereby,  (ii)  any  Loan or  Letter  of  Credit  or the use of the
proceeds therefrom  (including any refusal by the Issuing Bank to honor a demand
for payment  under a Letter of Credit if the  documents  presented in connection
with  such  demand  do not  strictly  comply  with the  terms of such  Letter of
Credit),  (iii) any actual or alleged presence or release of Hazardous Materials
on or  from  any  property  owned  or  operated  by the  Borrower  or any of its
Subsidiaries,  or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding  relating to any of the foregoing,  whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto;  provided that such indemnity shall not, as to any Indemnitee, be
available  to the extent  that such  losses,  claims,  damages,  liabilities  or
related  expenses are determined by a court of competent  jurisdiction  by final
and nonappealable  judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

               (c) To the  extent  that the  Borrower  fails  to pay any  amount
required to be paid by it to the Agent or the Issuing Bank under  paragraph  (a)
or (b) of this Section,  each Lender severally agrees to pay to the Agent or the
Issuing Bank, as the case may be, such Lender's pro rata share (determined as of
the time that the  applicable  unreimbursed  expense  or  indemnity  payment  is
sought)  of such  unpaid  amount;  provided  that the  unreimbursed  expense  or
indemnified loss, claim,  damage,  liability or related expense, as the case may
be, was  incurred  by or asserted  against the Agent or the Issuing  Bank in its
capacity as such.  For  purposes  hereof,  a Lender's  "pro rata share" shall be
determined based upon its share of the sum of the total Revolving  Exposures and
unused Revolving Commitments at the time.

               (d) To the extent  permitted by applicable  law, the Borrower and
Topps  Enterprises shall not assert,  and each hereby waives,  any claim against
any Indemnitee, on any theory of liability, for special, indirect, consequential
or punitive  damages (as opposed to direct or actual damages) arising out of, in
connection  with,  or as a  result  of,  this  Agreement  or  any  agreement  or
instrument contemplated hereby, the Financing  Transactions,  any Loan or Letter
of Credit, or the use of the proceeds thereof.

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<PAGE>

               (e) All amounts due under this Section shall be payable  promptly
after written demand therefor.

          SECTION 9.04.  Successors and Assigns.

               (a) The  provisions of this  Agreement  shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
assigns  permitted  hereby  (including  any  Affiliate  of the Issuing Bank that
issues  any  Letter of  Credit),  except  that the  Borrower  may not  assign or
otherwise transfer any of its rights or obligations  hereunder without the prior
written consent of each Lender (and any attempted  assignment or transfer by the
Borrower  without  such  consent  shall  be  null  and  void).  Nothing  in this
Agreement,  express or  implied,  shall be  construed  to confer upon any Person
(other  than  the  parties  hereto,  their  respective  successors  and  assigns
permitted  hereby  (including  any Affiliate of the Issuing Bank that issues any
Letter of Credit) and, to the extent expressly  contemplated hereby, the Related
Parties of each of the Agent,  the  Issuing  Bank and each  Lender) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

               (b) Any Lender may assign to one or more  Eligible  Assignees all
or a portion of its rights and obligations  under this Agreement  (including all
or a portion of its Revolving Commitment and the Loans at the time owing to it);
provided  that  (i)  except  in the  case of an  assignment  to a  Lender  or an
Affiliate of a Lender,  the Agent (and, in the case of an assignment of all or a
portion of a Revolving  Commitment or any Lender's obligations in respect of its
LC Exposure,  the Issuing  Bank) must give their prior  written  consent to such
assignment  (which consent shall not be unreasonably  withheld),  (ii) except in
the  case of an  assignment  to a  Lender  or an  Affiliate  of a  Lender  or an
assignment of the entire  remaining amount of the assigning  Lender's  Revolving
Commitment  or Loans,  the amount of the  Revolving  Commitment  or Loans of the
assigning Lender subject to each such assignment  (determined as of the date the
Assignment  and Acceptance  with respect to such  assignment is delivered to the
Agent) shall not be less than $5,000,000  and, after giving effect thereto,  the
assigning  Lender shall retain a Revolving  Commitment and Loans  aggregating at
least  $5,000,000,  in each case  unless  the Agent and the  Borrower  otherwise
consent,  (iii) each  partial  assignment  shall be made as an  assignment  of a
proportionate  part of all the assigning  Lender's rights and obligations  under
this Agreement, (iv) the parties to each assignment shall execute and deliver to
the  Agent  an  Assignment  and  Acceptance,  together  with  a  processing  and
recordation  fee of $3,500,  and (v) the assignee,  if it shall not be a Lender,
shall  deliver  to  the  Agent  an  Administrative  Questionnaire.   Subject  to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective  date  specified in each  Assignment  and Acceptance the
assignee  thereunder  shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement,  and the assigning Lender  thereunder shall, to the
extent of the interest  assigned by such Assignment and Acceptance,  be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance  covering all of the assigning  Lender's rights and obligations under
this Agreement,  such Lender shall cease to be a party hereto but shall continue
to be entitled  to the  benefits of Sections  2.15,  2.16,  2.17 and 9.03).  Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this  paragraph  shall be treated for purposes of this
Agreement  as a sale by such  Lender  of a  participation  in  such  rights  and
obligations accordance with paragraph (e) of this Section.

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               (c) The  Agent,  acting  for  this  purpose  as an  agent  of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each  Assignment  and  Acceptance  delivered  to  it  and  a  register  for  the
recordation  of the  names  and  addresses  of the  Lenders,  and the  Revolving
Commitment of, and principal amount of the Loans and LC Disbursements  owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive,  and the Borrower,  the Agent,  the
Issuing Bank and the Lenders may treat each Person whose name is recorded in the
Register  pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement,  notwithstanding  notice to the contrary.  The Register shall be
available for  inspection by the Borrower,  the Issuing Bank and any Lender,  at
any reasonable time and from time to time upon reasonable prior notice.

               (d)  Upon  its  receipt  of  a  duly  completed   Assignment  and
Acceptance  executed by an  assigning  Lender and an  assignee,  the  assignee's
completed  Administrative  Questionnaire (unless the assignee shall already be a
Lender  hereunder),  the processing and recordation fee referred to in paragraph
(b) of this  Section  and any  written  consent to such  assignment  required by
paragraph  (b) of this  Section,  the Agent  shall  accept such  Assignment  and
Acceptance  and record the  information  contained  therein in the Register.  No
assignment  shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

               (e) Any Lender  may,  without the  consent of the  Borrower,  the
Agent or the Issuing  Bank,  sell  participations  to one or more banks or other
entities  (a  "Participant")  in all or a portion  of such  Lender's  rights and
obligations  under this  Agreement  (including all or a portion of its Revolving
Commitment  and the  Loans  owing  to  it);  provided  that  (i)  such  Lender's
obligations under this Agreement shall remain unchanged,  (ii) such Lender shall
remain solely  responsible  to the other parties  hereto for the  performance of
such  obligations,  and (iii) the Borrower,  the Agent, the Issuing Bank and the
other  Lenders  shall  continue to deal solely and directly  with such Lender in
connection with such Lender's rights and obligations  under this Agreement.  Any
agreement or  instrument  pursuant to which a Lender sells such a  participation
shall  provide  that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment,  modification or waiver of any provision
of the Loan  Documents;  provided that such  agreement or instrument may provide
that such Lender will not, without the consent of the Participant,  agree to any
amendment,  modification  or waiver  described  in the first  proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
the Borrower agrees that each  Participant  shall be entitled to the benefits of
Sections  2.15,  2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by  assignment  pursuant to paragraph (b) of this Section,
but the  aggregate  amount  payable by the  Borrower  to the Lender  selling the
participation  and the  Participant  shall not  exceed the  amount  which  would
otherwise  be  payable  in the  absence  of  the  participation.  To the  extent
permitted  by law,  each  Participant  also shall be entitled to the benefits of
Section 9.08 as though it were a Lender,  provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.

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<PAGE>

               (f) A  Participant  shall not be  entitled to receive any greater
payment  under Section 2.15 or 2.17 than the  applicable  Lender would have been
entitled to receive with respect to the participation  sold to such Participant,
unless  the  sale of the  participation  to such  Participant  is made  with the
Borrower's prior written  consent.  A Participant that would be a Foreign Lender
if it were a Lender  shall not be  entitled  to the  benefits  of Section  2.17,
unless the Borrower is notified of the  participation  sold to such  Participant
and such  Participant  agrees,  for the benefit of the Borrower,  to comply with
Section 2.17(e) as though it were a Lender.

               (g) Any  Lender  may at any time  pledge  or  assign  a  security
interest  in all or any  portion of its rights  under this  Agreement  to secure
obligations  of such  Lender,  including  any  pledge  or  assignment  to secure
obligations  to a Federal  Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security  interest;  provided that no such pledge
or  assignment  of a security  interest  shall  release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

          SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower and Topps  Enterprises in the Loan Documents and
in the  certificates  or  other  instruments  delivered  in  connection  with or
pursuant to this  Agreement or any other Loan  Document  shall be  considered to
have been  relied  upon by the  other  parties  hereto  and  shall  survive  the
execution  and  delivery of the Loan  Documents  and the making of any Loans and
issuance of any Letters of Credit,  regardless of any investigation  made by any
such other  party or on its  behalf,  and  notwithstanding  that the Agent,  the
Issuing  Bank or any Lender may have had notice or  knowledge  of any Default or
incorrect  representation  or  warranty  at the  time  any  credit  is  extended
hereunder,  and shall continue in full force and effect as long as the principal
of or any accrued  interest on any Loan or any fee or any other  amount  payable
under this  Agreement  is  outstanding  and  unpaid,  or any Letter of Credit is
outstanding  and so  long as the  Revolving  Commitments  have  not  expired  or
terminated.  The  provisions of Sections 2.15,  2.16,  2.17 and 9.03 and Article
VIII  shall  survive  and  remain in full  force and  effect  regardless  of the
consummation  of the  transactions  contemplated  hereby,  the  repayment of the
Loans,  the expiration or termination of the Letters of Credit and the Revolving
Commitments, or the termination of this Agreement or any provision hereof.

          SECTION 9.06. Counterparts, Integration, Effectiveness. This Agreement
may be executed in  counterparts  (and by different  parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall  constitute a single  contract.  This Agreement,  the other
Loan Documents and any separate  letter  agreements with respect to fees payable
to the Agent  constitute the entire  contract among the parties  relating to the
subject  matter  hereof  and  supersede  any and  all  previous  agreements  and
understandings,  oral or written,  relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have  been  executed  by the  Agent  and  when the  Agent  shall  have  received
counterparts  hereof which, when taken together,  bear the signatures of each of
the other parties hereto,  and thereafter shall be binding upon and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns.
Delivery of an executed  counterpart  of a signature  page of this  Agreement by
telecopy  shall be effective as delivery of a manually  executed  counterpart of
this Agreement.

                                       64

<PAGE>

          SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid,  illegal  or  unenforceable  in  any  jurisdiction  shall,  as to  such
jurisdiction,  be  ineffective to the extent of such  invalidity,  illegality or
unenforceability without affecting the validity,  legality and enforceability of
the remaining provisions hereof, and the invalidity of a particular provision in
a  particular  jurisdiction  shall not  invalidate  such  provision in any other
jurisdiction.

          SECTION 9.08. Right of Setoff. Subject to Section 2.18(c), if an Event
of Default  shall have occurred and be  continuing,  each Lender and each of its
Affiliates  is  hereby  authorized  at any time and  from  time to time,  to the
fullest  extent  permitted  by law,  to set off and apply  any and all  deposits
(general or special, time or demand,  provisional or final) at any time held and
other  obligations  at any time owing by such Lender or  Affiliate to or for the
credit or the account of the Borrower  against any of and all the obligations of
the Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although  such  obligations  may be unmatured.  The rights of each
Lender  under  this  Section  are in  addition  to  other  rights  and  remedies
(including other rights of setoff) which such Lender may have.

          SECTION  9.09.  Governing  Law;  Jurisdiction:  Consent  to Service of
Process.

               (a) This  Agreement  shall be  construed in  accordance  with and
governed by the law of the State of New York.

               (b) The Borrower hereby irrevocably and unconditionally  submits,
for itself and its property,  to the  nonexclusive  jurisdiction  of the Supreme
Court of the State of New York  sitting  in New York  County  and of the  United
States  District  Court of the Southern  District of New York, and any appellate
court from any thereof,  in any action or proceeding  arising out of or relating
to any Loan Document,  or for  recognition  or enforcement of any judgment,  and
each of the parties hereto hereby  irrevocably and  unconditionally  agrees that
all  claims  in  respect  of any such  action  or  proceeding  may be heard  and
determined  in such New York State or, to the extent  permitted  by law, in such
Federal  court.  Each of the parties  hereto agrees that a final judgment in any
such  action or  proceeding  shall be  conclusive  and may be  enforced in other
jurisdictions  by suit on the judgment or in any other  manner  provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Agent, the Issuing Bank or any Lender may otherwise have to bring any action
or proceeding  relating to this Agreement or any other Loan Document against the
Borrower or its properties in the courts of any jurisdiction.

               (c) The Borrower hereby irrevocably and  unconditionally  waives,
to the fullest extent it may legally and  effectively do so, any objection which
it may now or  hereafter  have to the  laying  of venue of any  suit,  action or
proceeding  arising  out of or  relating  to this  Agreement  or any other  Loan
Document in any court referred to in paragraph (b) of this Section.  Each of the
parties hereto hereby  irrevocably  waives,  to the fullest extent  permitted by
law, the defense of an  inconvenient  forum to the maintenance of such action or
proceeding in any such court.

                                       65

<PAGE>
               (d) Each party to this Agreement  irrevocably consents to service
of process in the manner  provided for notices in Section 9.01.  Nothing in this
Agreement or any other Loan  Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

          SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST  EXTENT  PERMITTED BY APPLICABLE  LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING  DIRECTLY OR INDIRECTLY  ARISING OUT OF OR
RELATING  TO  THIS   AGREEMENT,   ANY  OTHER  LOAN  DOCUMENT  OR  THE  FINANCING
TRANSACTIONS  CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,  TORT OR ANY OTHER
THEORY).  EACH  PARTY  HERETO (A)  CERTIFIES  THAT NO  REPRESENTATIVE,  AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,  EXPRESSLY OR OTHERWISE,  THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER,  AND (B)  ACKNOWLEDGES  THAT IT AND THE OTHER  PARTIES  HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,  THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

          SECTION 9.11. Headings.  Article and Section headings and the Table of
Contents (if any) used herein are for  convenience  of reference  only,  are not
part of this  Agreement  and shall not affect the  construction  of, or be taken
into consideration in interpreting, this Agreement.

          SECTION 9.12. Confidentiality. Each of the Agent, the Issuing Bank and
the Lenders  agrees to  maintain  the  confidentiality  of the  Information  (as
defined  below),  except that  Information  may be disclosed  (a) to its and its
Affiliates,  directors,  officers,  employees and agents, including accountants,
legal counsel and other advisors (it being  understood  that the Persons to whom
such  disclosure  is made will be  informed of the  confidential  nature of such
Information and instructed to keep such  Information  confidential),  (b) to the
extent  requested by any  regulatory  authority,  (c) to the extent  required by
applicable laws or regulations or by any subpoena or similar legal process,  (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding  relating to this Agreement
or  any  other  Loan  Document,  or  the  enforcement  of  rights  hereunder  or
thereunder,  (f) subject to an agreement containing provisions substantially the
same as those of this  Section,  to any  assignee of or  Participant  in, or any
prospective  assignee  of or  Participant  in, any of its rights or  obligations
under this Agreement, (g) with the consent of the Borrower, or (h) to the extent
such  Information  (A) becomes  publicly  available  other than as a result of a
breach of this Section or (B) becomes  available to the Agent,  the Issuing Bank
or any Lender on a non-confidential  basis from a source other than the Borrower
provided  the  Agent,  the  Issuing  Bank or any  Lender  does not  have  actual
knowledge that such other source is in breach of any  confidentiality  agreement
with the  Borrower.  For the purposes of this Section,  "Information"  means all
information received from the Borrower or its agents relating to the Borrower or
its business,  other than any such  information  that is available to the Agent,
the Issuing Bank or any Lender on a  non-confidential  basis prior to disclosure
by the  Borrower;  provided  the Agent,  the Issuing Bank or any Lender does not
have  actual  knowledge  that such  source  is in breach of any  confidentiality
agreement  with the Borrower.  The Agent,  the Issuing Bank and each Lender each
agrees that neither it nor its Affiliates will use any Information in connection
with the performance by it of services for companies other than the Borrower and
its Subsidiaries.

                                       66

<PAGE>

          SECTION  9.13.  Interest  Rate  Limitation.  Notwithstanding  anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees,  charges and other amounts which are treated as interest
on such Loan under applicable law  (collectively,  the "Charges"),  shall exceed
the maximum  lawful  rate (the  "Maximum  Rate")  which may be  contracted  for,
charged,  taken,  received  or  reserved  by the  Lender  holding  such  Loan in
accordance with applicable law, the rate of interest  payable in respect of such
Loan hereunder,  together with all Charges payable in respect thereof,  shall be
limited to the Maximum Rate and, to the extent lawful,  the interest and Charges
that would have been  payable in respect of such Loan but were not  payable as a
result of the operation of this Section shall be cumulated, and the interest and
Charges  payable to such  Lender in respect of other  Loans or periods  shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest  thereon at the Federal Funds  Effective Rate to the date
of repayment, shall have been received by such Lender.

          SECTION 9.14. Topps Enterprises.  Topps Enterprises has joined in this
Agreement, as a Subsidiary and a Guarantor, in order to provide its confirmation
of all  representations  and warranties made herein by the Borrower with respect
to Topps Enterprises and to set forth its agreement to perform all of the things
required   herein  to  be  "caused"  by  the  Borrower  with  respect  to  Topps
Enterprises.

          SECTION 9.15.  Termination of Existing  Security.  The Chase Manhattan
Bank hereby agrees to terminate the "Security Documents" as that term is defined
in the Existing Agreement.

                                       67

<PAGE>

          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be duly executed by their respective  authorized officers as of the day and year
first above written.

TOPPS ENTERPRISES, INC.                 THE TOPPS COMPANY, INC.

By: /Cathy K. Jessup/                   By: /Cathy K Jessup/
    -----------------------                 -------------------------
    Name:   Cathy K. Jessup                  Name:   Cathy K. Jessup
    Title:  Vice President                   Title:  Vice President

LASALLE BANK NATIONAL                   THE CHASE MANHATTAN BANK,
  ASSOCIATION                               individually and as Agent

By: /Steve Cohen/                       By:  /Christopher L. Murtha/
    ------------------------                 ----------------------------
     Name:  Steve Cohen                      Name:  Christopher L. Murtha
     Title: Senior Vice President            Title: Vice President

                                       68

<PAGE>

                                  SCHEDULE 2.01

                              REVOLVING COMMITMENTS
                              ---------------------

The Chase Manhattan Bank                                    $20,000,000

LaSalle Bank National Association                           $15,000,000

                                       69

<PAGE>

                                    EXHIBIT A

                            ASSIGNMENT AND ACCEPTANCE
                            -------------------------
                            Dated: __________, ______

Reference  is made to the  Credit  Agreement,  dated  as of June  26,  2000  (as
amended, amended and restated, supplemented, modified and in effect from time to
time,  the  "Credit  Agreement"),  among THE TOPPS  COMPANY,  INC.,  a  Delaware
corporation (the "Borrower"), Topps Enterprises, Inc. ("Topps Enterprises"), the
Lenders  party  thereto  (together  with  their  successors  and  assigns,   the
"Lenders"),  and THE  CHASE  MANHATTAN  BANK,  as agent (in such  capacity,  the
"Agent")  for the  Lenders.  Capitalized  terms used  herein  and not  otherwise
defined shall have the meanings  assigned to such terms in the Credit Agreement.
This Assignment and Acceptance  between the Assignor (as set forth on Schedule I
hereto  and  made a part  hereof)  and the  Assignee  (as set  forth on the said
Schedule I ) is dated as of the  Assignment  Effective Date (as set forth on the
said Schedule I).

The  Assignor  hereby  irrevocably  sells and  assigns to the  Assignee  without
recourse to the  Assignor,  and the Assignee  hereby  irrevocably  purchases and
assumes from the Assignor without recourse to the Assignor, as of the Assignment
Effective  Date, an undivided  interest (the "Assigned  Interest") in and to all
the  Assignor's  rights and  obligations  under the Credit  Agreement as are set
forth on the said Schedule I (the "Assigned Facilities"),  in a principal amount
for each Assigned Facility as set forth on the said Schedule I.

The   Assignor  (i)  makes  no   representation   or  warranty  and  assumes  no
responsibility  with respect to any  statements,  warranties or  representations
made in or in  connection  with the  Credit  Agreement  or any other of the Loan
Documents or the execution,  legality,  validity,  enforceability,  genuineness,
sufficiency or value of the Credit Agreement, any other of the Loan Documents or
any other instrument or document furnished pursuant thereto,  other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim;  [and] (ii) makes
no representation or warranty and assumes no responsibility  with respect to the
financial  condition  of the  Borrower,  Topps  Enterprises,  any  of the  other
Subsidiaries  of the  Borrower or any other  obligor of any of their  respective
obligations  under the Credit  Agreement or the performance or observance by the
Borrower, Topps Enterprises, or any of the other Subsidiaries of the Borrower of
any of their respective obligations under the Credit Agreement, any of the other
Loan Documents or any other instrument or document  furnished  pursuant thereto;
[and (iii)  attaches  the Note held by it (the "Note")  evidencing  the Assigned
Facilities  and requests that the Agent exchange the Note for a new note payable
to the  Assignor  (if the  Assignor  has  retained  any interest in the Assigned
Facilities)  and [or] a new note  payable to the  Assignee  in the  [respective]
amount(s)  which  reflect the  assignment  being made  hereby (and after  giving
effect to any other  assignments  which have become  effective on the Assignment
Effective Date)]

                                       70

<PAGE>

The Assignee (i) represents and warrants that it is legally  authorized to enter
into this  Assignment and Acceptance and that it is an Eligible  Assignee;  (ii)
confirms  that it has  received a copy of the Credit  Agreement,  together  with
copies of the most recent  financial  statements  delivered  pursuant to Section
5.01  thereof,  and  such  other  documents  and  information  as it has  deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (iii) agrees that it will, independently and without
reliance upon the Agent, the Assignor,  any other Lender or any other Person and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  continue to make its own credit  decisions in taking or not taking action
under  the  Credit  Agreement,  any of the  other  Loan  Documents  or any other
instrument or document furnished pursuant thereto;  (iv) appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
and discretion under the Credit Agreement, the other Loan Documents or any other
instrument or document  furnished pursuant thereto as are delegated to the Agent
by the terms  thereof,  together with such powers as are  reasonably  incidental
thereto;  (v)  agrees  that it will be bound  by the  provisions  of the  Credit
Agreement and will perform in accordance  with its terms all of the  obligations
which by the terms of the Credit Agreement are required to be performed by it as
a Lender; and (vi) if the Assignee is organized under the laws of a jurisdiction
outside the United States, attaches the forms prescribed by the Internal Revenue
Service of the United States  certifying  as to the  Assignee's  exemption  from
United States  withholding  taxes with respect to all payments to be made to the
Assignee under the Credit  Agreement or such other documents as are necessary to
indicate  that all such payments are subject to such tax at a rate reduced by an
applicable tax treaty.

Following the execution of this Assignment and Acceptance,  it will be delivered
to the Agent,  together  with a  processing  and  recordation  fee of $3,500 for
acceptance by it and recording by the Agent  pursuant to Section  9.04(b) of the
Credit  Agreement,   effective  as  of  the  Assignment  Effective  Date  (which
Assignment  Effective Date shall be, unless otherwise agreed to by the Agent, at
least five Business Days after the execution of this Assignment and Acceptance).

Upon such  acceptance  and recording,  from and after the  Assignment  Effective
Date,  the Agent  shall make all  payments in respect of the  Assigned  Interest
(including  payments  of  principal,  interest,  fees and other  amounts) to the
Assignee,  whether such amounts have accrued prior to the  Assignment  Effective
Date or accrue subsequent to the Assignment Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments for periods prior to
the Assignment Effective Date by the Agent or with respect to the making of this
assignment directly between themselves.

From and after the Assignment  Effective Date, (i) the Assignee shall be a party
to the Credit  Agreement and, to the extent  provided in (x) this Assignment and
Acceptance  and (y) Section  9.04 of the Credit  Agreement,  have the rights and
obligations of a Lender  thereunder and under the other Loan Documents and shall
be bound by the provisions  thereof,  and (ii) the Assignor shall, to the extent
provided in (x) this  Assignment  and  Acceptance  and (y)  Section  9.04 of the
Credit  Agreement,  relinquish  its rights and be released from its  obligations
under the Credit  Agreement;  provided,  that the Assignor hereby represents and
warrants  that the  restrictions  set forth in  Section  9.04(b)  of the  Credit
Agreement pertaining to the minimum amount of assignments have been satisfied.

                                       71

<PAGE>

This  Assignment  and  Acceptance  shall be  construed  in  accordance  with and
governed by the laws of the State of New York,  without  regard to  conflicts of
laws principles and by federal law to the extent applicable.

IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Assignment  and
Acceptance to be executed by their  respective duly  authorized  officers on the
said Schedule I.

                                       72

<PAGE>

               Schedule I to Assignment and Acceptance Respecting
                 the Credit Agreement, dated as of June 26, 2000
             among The Topps Company, Inc., Topps Enterprises, Inc.,
            the Lenders party thereto, together with their successors
               and assigns and The Chase Manhattan Bank, as Agent

Legal Name of Assignor:

Legal Name of Assignee:

Assignment Effective Date:

Principal Revolving Commitment Amount Assigned:      $__________

Revolving Commitment Percentage Assigned:             __________%

Principal Revolving Commitment Amount Retained:      $___________

Revolving Commitment Percentage Retained:              __________%

Face Amount of Letters of Credit Assigned:           $___________

Face Amount of Letters of Credit Retained:           $___________

ACCEPTED:

THE CHASE MANHATTAN BANK,
       as Agent                              _______________________,
                                             as Assignor

By: __________________________               By: _________________________
Name:                                        Name:
Title:                                       Title:
                                             ____________________________,
                                             as Assignee

                                             By: _________________________
                                             Name:
                                             Title:

                                       73

<PAGE>

CONSENT OF THE  BORROWER  to the extent  that the  Assignee  is not an  Eligible
Assignee or as required in Section  9.04(b)(ii)  of the Credit  Agreement  where
such  assignment  is not to a Lender  or an  Affiliate  of a Lender or is not an
assignment of the entire remaining amount of the assigning  Lender's  Commitment
or Loans

THE TOPPS COMPANY, INC.

By: __________________________
Name:
Title:

                                       74

<PAGE>

                                    EXHIBIT B

                             COMPLIANCE CERTIFICATE

Reference is made to the Credit Agreement,  dated as of June 26, 2000, among the
Topps Company, Inc., as Borrower,  Topps Enterprises,  Inc., The Chase Manhattan
Bank, as Lender and Agent, and the other Lenders party thereto,  as the same may
have been amended, supplemented or otherwise modified (the "Credit Agreement").

 The undersigned hereby certifies as follows:

1.        [To be included where required under Section  5.01(c)] The Borrower is
          in  compliance  with the financial  covenants  contained in the Credit
          Agreement as follows:

          [Insert covenant compliance  calculations as set forth on the attached
          Schedule.

2.        [No Default has occurred or is continuing  under the Credit  Agreement
          or a Default has occurred and  [specifications  of details thereof and
          any action taken or proposed to be taken with respect thereto]]; and

3.        [No  Change in GAAP or the  application  thereof  has  occurred  since
          [____] or a change in GAAP or in the application  thereof has occurred
          since  [____]  and  [specifications   affecting  such  change  on  the
          financial statements accompanying such certificate]].

                                             THE TOPPS COMPANY, INC.

                                             By: _________________________
                                                     Title:

                                       75

<PAGE>

                                    EXHIBIT C
                                    ---------

                           TOPPS ENTERPRISES GUARANTY
                           --------------------------

               THIS  GUARANTY,  dated as of June  26,  2000  (together  with any
amendments, restatements,  modifications and supplements, this "Guaranty ") made
by TOPPS ENTERPRISES,  INC., a Delaware corporation (the "Guarantor"),  in favor
of THE CHASE  MANHATTAN  BANK,  as agent  (the  "Agent")  for the  lenders  (the
"Lenders") party to the Credit Agreement (as hereinafter  defined).  Capitalized
terms not  otherwise  defined  herein shall have the  meanings  assigned to such
terms in the Credit Agreement.

          WHEREAS,  the  Agent,  the  Lenders,  The  Topps  Company,  Inc.  (the
"Obligor"),  and the Guarantor  entered into a Credit  Agreement dated as of the
date hereof (as amended,  supplemented or otherwise  modified from time to time,
the "Credit Agreement").

          WHEREAS,  in consideration for the Agent's and the Lenders'  agreement
to enter into the Credit  Amendment and the transactions  contemplated  thereby,
the Guarantor has agreed to guaranty the payment of the obligations  owing under
the Credit Agreement.

          WHEREAS,  it is a  condition  precedent  to the  effectiveness  of the
Credit  Amendment  that the  Guarantor  shall have executed and delivered to the
Agent and the Lenders this Guaranty;

          NOW,  THEREFORE,  in  consideration of the premises and for other good
and  valuable  consideration,  the  receipt and  sufficiency  of which is hereby
acknowledged by the Guarantor,  the Guarantor  agrees with Agent and the Lenders
as follows:

          SECTION  1.  Guaranty.   (a)  The  Guarantor  hereby   unconditionally
guarantees  the punctual  payment when due, of all  obligations of every kind or
character now or hereafter existing, whether matured or unmatured, contingent or
liquidated, of the Obligor to each of the Agent and the Lenders under the Credit
Agreement,  whether for  principal,  interest,  fees,  expenses or otherwise and
whether in United States dollars or other currencies, and any and all reasonable
expenses (including  reasonable counsel fees and expenses) incurred by the Agent
and the Lenders in enforcing any of their respective  rights under this Guaranty
(all such obligations being collectively referred to as the "Obligations").

          SECTION 2. Guaranty of Payment.  The Guarantor further agrees that its
guarantee hereunder  constitutes a guarantee of payment and performance when due
and not of collection, and waives any right to require that any resort be had by
any of the  Lenders  to (i) the  Obligor,  (ii) any other  guarantor,  (iii) any
collateral  of any kind,  any  balance of any  deposit  account or credit on the
books of any of the Lenders in favor of the Obligor or any other Person, or (iv)
recourse against any other party.

                                       76

<PAGE>

          SECTION  3.  Guaranty  Absolute.  The  Guarantor  guarantees  that the
Obligations  will be performed and paid strictly in accordance with the terms of
the Loan Documents,  regardless of any law, regulation or order now or hereafter
in effect in any  jurisdiction  affecting any of such terms or the rights of any
of the Lenders with respect  thereto;  and such  guarantee is not subject to any
setoff,  counterclaim or defense. The Obligations of the Guarantor hereunder are
independent  of the  obligations  of  other  persons  under  any  other  related
document,  and a  separate  action or  actions  may be  brought  and  prosecuted
hereunder  whether the action is brought  against any such person or whether any
such  person is  joined in any such  action or  actions.  The  liability  of the
Guarantor under this Guaranty shall be absolute and unconditional, and shall not
be affected or released in any way, irrespective of:

          (i) any lack of validity or  enforceability  of any or all of the Loan
          Documents or of any or all of the Obligations;

          (ii) any change in the time,  manner or place of payment of, or in any
          other term of, all or any of the  Obligations,  or any other amendment
          or waiver of or any consent to departure from any document  evidencing
          or  relating  to any of the  Obligations  or of any or all of the Loan
          Documents,  including,  but not limited to, an increase or decrease in
          the Obligations;

          (iii) any  taking  and  holding of any  collateral  or any  additional
          guaranty  for  all  or  any of  the  Obligations,  or  any  amendment,
          alteration,  exchange,  substitution,  transfer, enforcement,  waiver,
          subordination,  termination, or release of any collateral securing any
          or all of the Obligations,  or such guaranty, or any non-perfection of
          any collateral or any consent to departure from any such guaranty;

          (iv) any manner of application of collateral,  or proceeds thereof, to
          all or any of the Obligations, or the manner of sale of any collateral
          securing any of the Obligations;

          (v)  any  consent  by  one  or  more  of the  Lenders  to the  change,
          restructuring  or termination of the corporate  structure or existence
          of the Obligor,  or any other guarantor of any of the Obligations,  or
          any Affiliate of any of them, and any  corresponding  restructuring of
          the  Obligations,  or any other  restructuring  or  refinancing of the
          Obligations or any portion thereof;

          (vi) any  modification,  compromise,  settlement  or release by one or
          more of the Lenders,  by operation of law or otherwise,  collection or
          other liquidation of any or all of the Obligations or any liability of
          the Obligor and/or any other guarantor, or of any collateral, in whole
          or in part,  or any refusal of payment by one or more of the  Lenders,
          in whole or in part,  from the Obligor or any  guarantor in connection
          with any of the Obligations, whether or not with notice to, or further
          assent by, or any reservation of rights against, the Guarantor;

                                       77

<PAGE>

          (vii) the waiver of the  performance  or  observance by the Obligor or
          any  other  guarantor  of  any of the  Obligations  of any  agreement,
          covenant, term or condition to be performed by any of them;

          (viii) the voluntary or involuntary liquidation,  dissolution, sale of
          all or  substantially  all of the  property,  marshaling of assets and
          liabilities,  receivership, insolvency, bankruptcy, assignment for the
          benefit of  creditors,  reorganization,  arrangement,  composition  or
          readjustment, or other similar application or proceeding affecting the
          Obligor or any other guarantor of any of their respective assets;

          (ix) the release of the Obligor or any other  guarantor  of any of the
          Obligations  from the  performance  or  observance  of any  agreement,
          covenant,  term or condition  contained  in any  agreement or document
          evidencing  or relating to the  Obligations  or the Loan  Documents by
          operation of law; or

          (x) any other circumstance (including, but not limited to, any statute
          of limitations)  which might otherwise  constitute a defense available
          to, or a discharge of, the Guarantor.

          Without limiting the generality of the foregoing, the Guarantor hereby
consents,  and hereby agrees, that the rights of the Lenders hereunder,  and the
liability  of the  Guarantor  hereunder,  shall not be  affected  by any and all
releases of any collateral or any other guaranty of any of the Obligations. This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Obligations is rescinded or must otherwise
be returned by any Lender upon the insolvency,  bankruptcy or  reorganization of
the Obligor or otherwise, all as though such payment had not been made.

          SECTION 4. Waivers.  The Guarantor  waives  presentment  to, demand of
payment  from and protest to the Obligor,  or any other  guarantor of any of the
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest  for  non-payment.  The  Guarantor  hereby  further  waives  promptness,
diligence,  notice of acceptance and any other notice with respect to any of the
Obligations  and this  Guaranty and any  requirement  that the Lenders  protect,
secure,  perfect or insure any security interest or lien or any property subject
thereto or exhaust  any right or take any action  against  the  Obligor,  or any
other guarantor of any of the Obligations or any other Person or any collateral.

          SECTION 5. Other  Waivers.  The  Guarantor  hereby waives any right to
require  the Agent or the  Lenders to proceed  against  the  Obligor,  any other
guarantor or any other Person,  or to proceed against any collateral,  or pursue
any other remedy in the power of the Agent or the Lenders.

                                       78

<PAGE>

          SECTION 6.  Subrogation.  Upon payment by the Guarantor of any sums to
the Lenders  hereunder,  all rights of the Guarantor against the Obligor arising
as a result thereof by way of right of  subrogation  or otherwise,  shall in all
respects  be  subordinate  and junior in right of payment to the prior final and
indefeasible payment in full of all the Obligations. If any amount shall be paid
to the  Guarantor  for the account of the Obligor,  such amount shall be held in
trust for the benefit of the Lenders and shall  forthwith be paid to the Lenders
to be credited and applied to the Obligations, whether matured or unmatured.

          SECTION 7. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the  Guarantor  herefrom  shall in
any event be  effective  unless the same  shall be in writing  and signed by the
Lenders and then such waiver or consent shall be effective  only in the specific
instance and for the specific purpose for which given.

          SECTION 8. Notices,  Etc. All notices and other  communications to any
party  provided  for  hereunder  shall  be in  writing  (including  telegraphic,
telecopy,  telex or cable  communication) and mailed,  telegraphed,  telecopied,
telexed,  cabled  or  delivered,  addressed  to such  party,  in the case of the
Guarantor,  at One Whitehall Street, New York, New York 10004-2109  Attention of
Mr.  Warren  Friss  (Telecopy  No.  212-376-0621)  with a copy to Willkie Farr &
Gallagher,  787 Seventh  Avenue,  New York,  New York  10019-6099  (Telecopy No.
212-728-8111),  Attention of William Hiller,  Esq., in the case of the Agent, at
the address of the Agent referred to in Section 9.01(b) of the Credit Agreement,
or as to any party at such other address as shall be designated by such party in
a written notice to each other party  complying as to delivery with the terms of
this Section.  All such notices and other  communications shall be effective (a)
when  received,  if mailed or delivered,  or (b) when delivered to the telegraph
company,  transmitted by telecopier,  confirmed by telex answerback or delivered
to the cable company, respectively, addressed as aforesaid.

          SECTION 9. No Waiver,  Remedies.  No failure on the part of any of the
Lenders to  exercise,  and no delay in  exercising,  any right  hereunder  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right hereunder  preclude any other or further  exercise thereof or the exercise
of any  other  right.  The  remedies  herein  provided  are  cumulative  and not
exclusive  of any remedies  provided by law,  the Credit  Agreement or any other
agreement relating to the Obligations.

          SECTION  10.  Right of  Set-off  Upon the  occurrence  and  during the
continuance  of any Event of Default,  the Lenders are hereby  authorized at any
time and from time to time, to the fullest  extent  permitted by law, to set off
and apply any and all deposits (general or special, time or demand,  provisional
or final) at any time held and other indebtedness at any time owing by the Agent
or the Lenders to or for the credit or the account of the Guarantor  against any
and all of the Obligations of the Guarantor now or hereafter existing under this
Guaranty,  irrespective  of whether the Lenders shall have made any demand under
this Guaranty and although such Obligations may be contingent and unmatured. The
rights of the Lenders  under this Section 10 are in addition to other rights and
remedies  (including,  without  limitation,  other rights of set-off)  which the
Lenders may have.

                                       79

<PAGE>

          SECTION  11.  Continuing  Guaranty.   Transfer  of  Note;  Release  of
Guaranty.  This  Guaranty is a continuing  guaranty and shall (i) remain in full
force and effect  until the  payment in full of all of the  Obligations  and all
other amounts  payable under this Guaranty,  (ii) be binding upon the Guarantor,
its successors and assigns, and (iii) inure to the benefit of and be enforceable
by the Lenders and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), each Lender may assign or
otherwise  transfer any instrument of indebtedness of the Obligor held by it, or
any interest  therein,  or grant any  participation in its rights or Obligations
under any agreement  relating to the Obligations and the Loan Documents  subject
to the provisions of such  agreement to any other person,  and such other person
shall thereupon  become vested with all the rights in respect thereof granted to
the Lender.

          SECTION 12.  Jurisdiction,  Waiver of Jury Trial. THE GUARANTOR HEREBY
IRREVOCABLY  SUBMITS  ITSELF TO THE EXCLUSIVE  JURISDICTION  OF BOTH THE SUPREME
COURT OF THE STATE OF NEW YORK,  NEW YORK COUNTY AND THE UNITED STATES  DISTRICT
COURT FOR THE SOUTHERN  DISTRICT OF NEW YORK AND ANY APPEAL  THEREFROM,  FOR THE
PURPOSE OF ANY SUIT,  ACTION OR OTHER  PROCEEDING  ARISING OUT OF OR RELATING TO
THIS GUARANTY, AND HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE OR OTHERWISE, IN ANY SUIT, ACTION OR PROCEEDING,  ANY CLAIM THAT IT IS
NOT PERSONALLY  SUBJECT TO THE  JURISDICTION OF THE  ABOVE-NAMED  COURTS FOR ANY
REASON  WHATSOEVER,  THAT SUCH  SUIT,  ACTION OR  PROCEEDING  IS  BROUGHT  IN AN
INCONVENIENT  FORUM OR THAT  THIS  GUARANTY  MAY NOT BE  ENFORCED  IN OR BY SUCH
COURTS.  NEITHER  THE  GUARANTOR  NOR THE LENDER WILL SEEK TO  CONSOLIDATE  SUCH
PROCEEDING  INTO ANY  ACTION  IN WHICH A JURY  TRIAL  CANNOT  BE OR HAS NOT BEEN
WAIVED. SECTION 9.10 OF THE CREDIT AGREEMENT SHALL APPLY TO THIS GUARANTY.

          SECTION 13.  Applicable  Law. THIS  GUARANTY  SHALL IN ALL RESPECTS BE
CONSTRUED IN  ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.

          SECTION  14.  Expenses  of the Agent and the  Lenders.  The  Guarantor
agrees to pay all reasonable and necessary  out-of-pocket  expenses  incurred by
the Agent and the Lenders in connection  with the  enforcement  or protection of
its rights or the rights of the Agent and the Lenders  generally  in  connection
with the  Guaranty  including,  but not  limited  to,  the  reasonable  fees and
disbursements of counsel for the Agent and the Lenders.

                          [Signature on Following Page]

                                       80

<PAGE>

          IN WITNESS WHEREOF,  the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer  thereunto duly  authorized as of the date
first above written.

                                        TOPPS ENTERPRISES, INC.

                                        By:_________________________________
                                        Name:
                                        Title:

                                       81

<PAGE>

                                    EXHIBIT D

                              REVOLVING CREDIT NOTE

$___________                                                  New York, New York
                                                                _____ ____, ____

          FOR VALUE RECEIVED,  THE TOPPS COMPANY,  INC., a corporation organized
under the laws of Delaware (the "Borrower"), hereby promises to pay to the order
of   ____________________________________ (the   "Lender")   at  its  office  at
_________________ _______________________________, or at such other place as the
Lender  directs  in  writing,  the  principal  sum  of   _______________________
($__________)  or, if less, the then outstanding  amount loaned by the Lender to
the Borrower  pursuant to the Credit Agreement  (defined below), in lawful money
of the United  States of America  and in  immediately  available  funds,  on the
Maturity  Date (or sooner if  required  under the Credit  Agreement)  and in the
manner  provided in the Credit  Agreement.  The  Borrower  also  promises to pay
interest on the unpaid principal balance hereof,  for the period such balance is
outstanding,  at the said  office of the  Lender,  or at such other place as the
Lender directs in writing, in like money, at the rate(s) of interest as provided
in the Credit  Agreement  on the dates and in the manner  provided in the Credit
Agreement.

          The date and amount of each Loan (as defined in the Credit  Agreement)
made by the Lender to the Borrower under the Credit Agreement,  and each payment
of principal thereof,  shall be recorded by the Lender on its books and prior to
any transfer of this Revolving Credit Note (or, at the discretion of the Lender,
at any other time),  endorsed by the Lender on Schedule A attached hereto or any
continuation  thereof;  provided however, that the failure of the Lender to make
such a notation  or any error  therein  shall not affect the  obligation  of the
Borrower  to repay the Loans  made by the Lender in  accordance  with the Credit
Agreement and this Revolving Credit Note.

          This is a  promissory  note made  pursuant to Section  2.09(e) of that
certain  Credit  Agreement  dated as of June 26, 2000 (as  amended,  modified or
supplemented  from time to time,  the "Credit  Agreement"),  among the Borrower,
Topps Enterprises,  Inc., the Agent (defined  therein),  and the "Lenders" party
thereto,  and evidences the Loans made by the Lender under the Credit Agreement.
All  capitalized  terms not defined herein shall have the meanings given to them
in the Credit Agreement.

          The Credit Agreement  provides for the acceleration of the maturity of
principal upon the  occurrence of certain Events of Default and for  prepayments
on the terms and conditions specified therein.

                                       82

<PAGE>

          The Borrower waives presentment,  notice of dishonor,  protest and any
other notice or formality with respect to this Revolving Credit Note.

          The  Revolving  Credit  Note is subject in all  respects to the Credit
Agreement,   including,   without  limitation,   the  interest  rate  limitation
provisions in Section 9.13 thereof.

          This Revolving  Credit Note shall be governed by, and  interpreted and
construed in accordance with, the laws of the State of New York,  without regard
to conflicts of law principles.

                                             THE TOPPS COMPANY, INC.

                                             By: ______________________________
                                             Name:
                                             Title:

                                       83

<PAGE>

                                   SCHEDULE A
                                   ----------

               Amount         Amount of           Balance             Notation
Date           of Loan        Payment             Outstanding         By
----           -------        ---------           -----------         --------

                                      84Exhibit 4.2

                            PSEG ENERGY HOLDINGS INC.

                          9 1/8% SENIOR NOTES DUE 2004

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

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                                               FEBRUARY 10, 2000

Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285

Ladies and Gentlemen:

      PSEG Energy  Holdings  Inc.,  a New Jersey  corporation  (the  "Company"),
proposes to issue and sell to the Purchaser  (as defined  herein) upon the terms
set forth in the Purchase  Agreement (as defined herein) its 9 1/8% Senior Notes
due 2004. As an inducement to the Purchaser to enter into the Purchase Agreement
and  in  satisfaction  of a  condition  to  the  obligations  of  the  Purchaser
thereunder, the Company agrees with the Purchaser for the benefit of holders (as
defined  herein)  from time to time of the  Registrable  Securities  (as defined
herein) as follows:

      1. Certain  Definitions.  For purposes of this  exchange and  registration
rights  agreement,  the  following  terms  shall have the  following  respective
meanings:

            "Base Interest" shall mean the interest that would otherwise  accrue
      on the  Securities  under the terms  thereof  and the  Indenture,  without
      giving effect to the provisions of this Agreement.

            the term "broker-dealer"  shall mean any broker or dealer registered
      with the Commission under the Exchange Act.

            "Closing  Date"  shall  mean the date on which  the  Securities  are
      initially issued.

            "Commission"  shall mean the United States  Securities  and Exchange
      Commission,  or any other  federal  agency at the time  administering  the
      Exchange Act or the Securities Act,  whichever is the relevant statute for
      the particular purpose.

            "EFFECTIVE TIME," in the case of (i) an Exchange Registration, shall
      mean the time and date as of which the  Commission  declares  the Exchange
      Registration Statement effective or as of which the Exchange Registration
      Statement otherwise becomes effective and (ii) a Shelf Registration, shall
      mean  the time and date as of which  the  Commission  declares  the  Shelf
      Registration  Statement  effective  or as of which the Shelf  Registration
      Statement otherwise becomes effective.

<PAGE>

            "Electing  Holder" shall mean any holder of  Registrable  Securities
      that has returned a completed and signed Notice and  Questionnaire  to the
      Company in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

            "Exchange  Act" shall mean the  Securities  Exchange Act of 1934, or
      any successor thereto, as the same shall be amended from time to time.

            "Exchange  Offer" shall have the meaning assigned thereto in Section
      2(a) hereof.

            "Exchange  Registration"  shall have the meaning assigned thereto in
      Section 3(c) hereof.

            "Exchange  Registration  Statement"  shall have the meaning assigned
      thereto in Section 2(a) hereof.

            "Exchange  Securities"  shall have the meaning  assigned  thereto in
      Section 2(a) hereof.

            The term  "holder"  shall mean the  Purchaser  and other persons who
      acquire Registrable Securities from time to time (including any successors
      or assigns),  in each case for so long as such person owns any Registrable
      Securities.

            "Indenture"  shall mean the Indenture,  dated as of October 8, 1999,
      between the Company and First Union National Bank, as Trustee, as the same
      shall be amended from time to time.

            "Notice and Questionnaire" means a Notice of Registration  Statement
      and  Selling  Securityholder  Questionnaire  substantially  in the form of
      Exhibit A hereto.

            The  term   "person"   shall   mean  a   corporation,   association,
      partnership,  organization,  business, individual, government or political
      subdivision thereof or governmental agency.

            "Purchase Agreement" shall mean the Purchase Agreement,  dated as of
      February 3, 2000,  between the Purchaser  and the Company  relating to the
      Securities.

            "Purchaser" shall mean Lehman Brothers Inc.

            "Registrable  Securities"  shall  mean  the  securities;   provided,
      however, that a Security shall cease to be a Registrable Security when (i)
      in the circumstances contemplated by Section 2(a) hereof, the Security has
      been  exchanged  for  an  Exchange   Security  in  an  Exchange  Offer  as
      contemplated in Section 2(a) hereof  (PROVIDED that any Exchange  Security
      that, pursuant to the last two sentences of Section 2(a), is included in a
      prospectus for use in connection with resales by  broker-dealers  shall be
      deemed to be a  Registrable  Security  with respect to Sections 5, 6 and 9
      until resale of such  Registrable  Security has been  effected  within the
      180-day  period  referred to in Section 2(a));  (ii) in the  circumstances
      contemplated  by

                                       2
<PAGE>

      Section 2(b)  hereof,  a Shelf  Registration  Statement  registering  such
      Security under the  Securities Act has been declared or becomes  effective
      and such  Security  has been sold or otherwise  transferred  by the holder
      thereof  pursuant to and in a manner  contemplated by such effective Shelf
      Registration  Statement;  (iii) such Security is sold pursuant to Rule 144
      under circumstances in which any legend borne by such Security relating to
      restrictions  on  transferability  thereof,  under the  Securities  Act or
      otherwise,  is removed by the Company or pursuant to the  Indenture;  (iv)
      such  Security is eligible to be sold  pursuant to  paragraph  (k) of Rule
      144; or (v) such Security shall cease to be outstanding.

            "Registration  Default" shall have the meaning  assigned  thereto in
      Section 2(c) hereof.

            "Registration  Expenses" shall have the meaning  assigned thereto in
      Section 4 hereof.

            "Resale Period" shall have the meaning  assigned  thereto in Section
      2(a) hereof.

            "Restricted  Holder" shall mean (i) a holder that is an affiliate of
      the  Company  within the meaning of Rule 405,  (ii) a holder who  acquires
      Exchange Securities outside the ordinary course of such holder's business,
      (iii) a holder who has arrangements or  understandings  with any person to
      participate in the Exchange Offer for the purpose of distributing Exchange
      Securities  and  (iv) a holder  that is a  broker-dealer,  but  only  with
      respect to Exchange Securities received by such broker-dealer  pursuant to
      an Exchange Offer in exchange for Registrable  Securities  acquired by the
      broker-dealer directly from the Company.

            "Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
      rule promulgated under the Securities Act (or any successor provision), as
      the same shall be amended from time to time.

            "Securities" shall mean,  collectively,  the 9 1/8% Senior Notes due
      2004 of the Company to be issued and sold to the Purchaser, and securities
      issued in exchange therefor or in lieu thereof pursuant to the Indenture.

            "Securities Act"  shall  mean the  Securities  Act of 1933,  or any
      successor thereto, as the same shall be amended from time to time.

            "Shelf  Registration"  shall have the  meaning  assigned  thereto in
      Section 2(b) hereof.

            "Shelf  Registration  Statement"  shall  have the  meaning  assigned
      thereto in Section 2(b) hereof.

            "Special  Interest"  shall  have the  meaning  assigned  thereto  in
      Section 2(c) hereof.

            "Subsidiary"  shall mean a "significant  subsidiary" as such term is
      defined in Rule 1-02 of Regulation S-X.

                                       3
<PAGE>

            "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
      any successor  thereto,  and the rules,  regulations and forms promulgated
      thereunder, all as the same shall be amended from time to time.

      Unless the context otherwise requires, any reference herein to a "Section"
or "clause" refers to a Section or clause,  as the case may be, of this Exchange
and  Registration  Rights  Agreement,  and  the  words  "herein,"  "hereof"  and
"hereunder"  and  other  words of  similar  import  refer to this  Exchange  and
Registration  Rights  Agreement as a whole and not to any particular  Section or
other subdivision.

      2. Registration Under the Securities Act.

      (a) Except as set forth in Section 2(b) below,  the Company agrees to file
under the  Securities  Act, as soon as  practicable,  but no later than 240 days
after  the  Closing  Date,  a  registration  statement  relating  to an offer to
exchange (such registration  statement,  the "Exchange Registration  Statement",
and such offer,  the "Exchange  Offer") any and all of the Securities for a like
aggregate principal amount of debt securities issued by the Company,  which debt
securities are  substantially  identical to the Securities  (and are entitled to
the  benefits  of a trust  indenture  which is  substantially  identical  to the
Indenture  or is the  Indenture  and  which has been  qualified  under the Trust
Indenture Act),  except that they have been registered  pursuant to an effective
registration  statement  under the Securities Act and do not contain  provisions
for the additional  interest  contemplated  in Section 2(c) below (such new debt
securities hereinafter called "Exchange Securities").  The Company agrees to use
its  reasonable  best  efforts to cause the Exchange  Registration  Statement to
become  effective under the Securities Act as soon as practicable,  but no later
than 270 days after the Closing  Date.  The  Exchange  Offer will be  registered
under  the  Securities  Act on the  appropriate  form and will  comply  with all
applicable  tender  offer rules and  regulations  under the  Exchange  Act.  The
Company  further  agrees to use its best  efforts to commence  and  complete the
Exchange  Offer  promptly,  but no later than 45 days  after  such  registration
statement  has become  effective,  hold the Exchange  Offer open for at least 30
days and exchange Exchange  Securities for all Registrable  Securities that have
been properly  tendered and not  withdrawn on or prior to the  expiration of the
Exchange Offer.  The Exchange Offer will be deemed to have been "completed" only
if the debt securities  received by holders other than Restricted Holders in the
Exchange Offer for  Registrable  Securities  are, upon receipt,  transferable by
each such holder without  restriction  under the Securities Act and the Exchange
Act and without material restrictions under the blue sky or securities laws of a
substantial majority of the States of the United States of America. The Exchange
Offer  shall be deemed to have been  completed  upon the earlier to occur of (i)
the  Company  having  exchanged  the  Exchange  Securities  for all  outstanding
Registrable  Securities  pursuant  to the  Exchange  Offer and (ii) the  Company
having exchanged,  pursuant to the Exchange Offer,  Exchange  Securities for all
Registrable Securities that have been properly tendered and not withdrawn before
the expiration of the Exchange Offer,  which shall be on a date that is at least
30 days following the commencement of the Exchange Offer. The Company agrees (x)
to include in the Exchange  Registration  Statement a prospectus  for use in any
resales by any holder of Exchange  Securities that is a broker-dealer and (y) to
keep such

                                       4
<PAGE>

Exchange  Registration  Statement  effective for a period (the "Resale  Period")
beginning  when Exchange  Securities  are first issued in the Exchange Offer and
ending upon the earlier of the  expiration  of the 180th day after the  Exchange
Offer has been completed or such time as such  broker-dealers  no longer own any
Registrable  Securities.  With respect to such Exchange Registration  Statement,
such  holders  shall  have the  benefit  of the  rights of  indemnification  and
contribution set forth in Sections 6(a), (c), (d) and (e) hereof.

      (b) If (i) on or  prior  to the  time  the  Exchange  Offer  is  completed
existing  Commission  interpretations  are changed such that the debt securities
received by holders  other than  Restricted  Holders in the  Exchange  Offer for
Registrable  Securities are not or would not be, upon receipt,  transferable  by
each such holder without restriction under the Securities Act, (ii) the Exchange
Offer has not been completed within 315 days following the Closing Date or (iii)
the Exchange Offer is not available to any holder of the Securities, the Company
shall,  in lieu of (or, in the case of clause (iii),  in addition to) conducting
the Exchange Offer  contemplated  by Section 2(a), file under the Securities Act
as soon as  practicable,  but no later  than the later of 30 days after the time
such obligation to file arises, a "shelf"  registration  statement providing for
the  registration  of,  and the sale on a  continuous  or  delayed  basis by the
holders  of,  all of the  Registrable  Securities,  pursuant  to Rule 415 or any
similar  rule that may be adopted by the  Commission  (such  filing,  the "Shelf
Registration"  and  such  registration   statement,   the  "Shelf   Registration
Statement").  The Company agrees to use its reasonable best efforts (x) to cause
the Shelf  Registration  Statement  to become or be declared  effective no later
than 30 days after such Shelf  Registration  Statement is filed and to keep such
Shelf Registration  Statement  continuously effective for a period ending on the
earlier of the second  anniversary  of the Effective  Time or such time as THERE
ARE NO LONGER ANY REGISTRABLE SECURITIES OUTSTANDING, PROVIDED, HOWEVER, that no
holder  shall be entitled to be named as a selling  securityholder  in the Shelf
Registration  Statement  or to use the  prospectus  forming a part  thereof  for
resales of Registrable  Securities unless such holder is an Electing Holder, and
(y) after the Effective Time of the Shelf Registration Statement,  promptly upon
the request of any holder of Registrable Securities that is not then an Electing
Holder, to take any action reasonably necessary to enable such holder to use the
prospectus  forming  a part  thereof  for  resales  of  Registrable  Securities,
including, without limitation, any action necessary to identify such holder as a
selling securityholder in the Shelf Registration Statement,  PROVIDED,  HOWEVER,
that nothing in this Clause (y) shall relieve any such holder of the  obligation
to return a  completed  and signed  Notice and  Questionnaire  to the Company in
accordance  with  Section  3(d)(iii)  hereof.  The  Company  further  agrees  to
supplement or make amendments to the Shelf Registration  Statement,  as and when
required  by  the  rules,   regulations  or   instructions   applicable  to  the
registration form used by the Company for such Shelf  Registration  Statement or
by  the   Securities  Act  or  rules  and   regulations   thereunder  for  shelf
registration,  and the Company agrees to furnish to each Electing  Holder copies
of any  such  supplement  or  amendment  prior  to its  being  used or  promptly
following its filing with the Commission.

      (c) In the  event  that  (i)  the  Company  has  not  filed  the  Exchange
Registration  Statement or Shelf Registration Statement on or before the date on
which such

                                       5
<PAGE>

registration statement is required to be filed pursuant to Section 2(a) or 2(b),
respectively, or (ii) such Exchange Registration Statement or Shelf Registration
Statement has not become effective or been declared  effective by the Commission
on or before the date on which such registration statement is required to become
or be declared  effective  pursuant to Section  2(a) or 2(b),  respectively,  or
(iii) the Exchange Offer has not been completed within 45 days after the initial
effective date of the Exchange  Registration  Statement relating to the Exchange
Offer (if the Exchange  Offer is then  required to be made) or (iv) any Exchange
Registration  Statement or Shelf Registration Statement required by Section 2(a)
or 2(b) hereof is filed and declared  effective but shall  thereafter  either be
withdrawn  by the Company or shall  become  subject to an  effective  stop order
issued   pursuant  to  Section  8(d)  of  the   Securities  Act  suspending  the
effectiveness of such registration  statement (except as specifically  permitted
herein)  without  being  succeeded  immediately  by an  additional  registration
statement  filed and declared  effective (each such event referred to in clauses
(i) through  (iv),  a  "Registration  Default"  and each period  during  which a
Registration  Default has occurred and is continuing,  a  "Registration  Default
Period"),  then, as liquidated damages for such Registration Default, subject to
the  provisions of Section  9(b),  special  interest  ("Special  Interest"),  in
addition to the Base Interest, shall accrue at a per annum rate of 0.25% for the
first 90 days of the Registration  Default Period,  at a per annum rate of 0.50%
for the second 90 days of the Registration  Default Period,  at a per annum rate
of 0.75% for the third 90 days of the  Registration  Default Period and at a per
annum rate of 1.0%  thereafter  for the  remaining  portion of the  Registration
Default Period.

      (d) The Company shall take all actions  necessary or advisable to be taken
by it to ensure that the  transactions  contemplated  herein are  effected as so
contemplated.

      (e) Any reference herein to a registration  statement as of any time shall
be deemed to include any document  incorporated,  or deemed to be  incorporated,
therein  by  reference  as  of  such  time  and  any  reference  herein  to  any
post-effective  amendment  to a  registration  statement as of any time shall be
deemed to  include  any  document  incorporated,  or deemed to be  incorporated,
therein by reference as of such time.

      3. Registration Procedures.

      If the Company files a registration  statement pursuant to Section 2(a) or
Section 2(b), the following provisions shall apply:

      (a) At or before the Effective  Time of the Exchange  Registration  or the
Shelf Registration,  as the case may be, the Company shall qualify the Indenture
under the Trust Indenture Act of 1939.

      (b) In the event that such qualification  would require the appointment of
a new  trustee  under the  Indenture,  the Company  shall  appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.

                                       6
<PAGE>

      (c) In  connection  with the  Company's  obligations  with  respect to the
registration  of  Exchange  Securities  as  contemplated  by  Section  2(a) (the
"Exchange  Registration"),   if  applicable,  the  Company  shall,  as  soon  as
practicable (or as otherwise specified):

            (i) prepare and file with the Commission, as soon as practicable but
      no later than 240 days after the Closing  Date,  an Exchange  Registration
      Statement on any form which may be utilized by the Company and which shall
      permit  the  Exchange   Offer  and  resales  of  Exchange   Securities  by
      broker-dealers  during the Resale Period to be effected as contemplated by
      Section 2(a), and use its  reasonable  best efforts to cause such Exchange
      Registration   Statement  to  become  effective  as  soon  as  practicable
      thereafter, but no later than 270 days after the Closing Date;

            (ii) as soon as  practicable  prepare  and file with the  Commission
      such  amendments and supplements to such Exchange  Registration  Statement
      and the  prospectus  included  therein as may be  necessary  to effect and
      maintain the effectiveness of such Exchange Registration Statement for the
      periods and  purposes  contemplated  in Section  2(a) hereof and as may be
      required by the applicable rules and regulations of the Commission and the
      instructions   applicable  to  the  form  of  such  Exchange  Registration
      Statement,  and  promptly  provide  each  broker-dealer  holding  Exchange
      Securities with such number of copies of the prospectus  included  therein
      (as then amended or supplemented),  in conformity in all material respects
      with the  requirements  of the Securities Act and the Trust  Indenture Act
      and the  rules  and  regulations  of the  Commission  thereunder,  as such
      broker-dealer reasonably may request prior to the expiration of the Resale
      Period, for use in connection with resales of Exchange Securities;

            (iii)  promptly  notify each  broker-dealer  that has  requested  or
      received copies of the prospectus included in such registration statement,
      and confirm such advice in writing,  (A) when such  Exchange  Registration
      Statement or the prospectus  included therein or any prospectus  amendment
      or  supplement  or  post-effective  amendment  has been filed,  and,  with
      respect to such  Exchange  Registration  Statement  or any  post-effective
      amendment,  when the same has become effective, (B) of any comments by the
      Commission and by the blue sky or securities  commissioner or regulator of
      any state with  respect  thereto  or any  request  by the  Commission  for
      amendments  or  supplements  to such  Exchange  Registration  Statement or
      prospectus  or for  additional  information,  (C) of the  issuance  by the
      Commission of any stop order suspending the effectiveness of such Exchange
      Registration Statement or the initiation or threatening of any proceedings
      for that purpose, (D) if at any time the representations and warranties of
      the Company  contemplated by Section 5 cease to be true and correct in all
      material  respects,  (E) of the receipt by the Company of any notification
      with  respect  to the  suspension  of the  qualification  of the  Exchange
      Securities for sale in any  jurisdiction  or the initiation or threatening
      of any proceeding  for such purpose,  or (F) at any time during the Resale
      Period when a prospectus is required to be delivered  under the Securities
      Act, that such Exchange  Registration  Statement,  prospectus,  prospectus
      amendment or

                                       7
<PAGE>

      supplement or  post-effective  amendment  does not conform in all material
      respects to the  applicable  requirements  of the  Securities  Act and the
      Trust  Indenture  Act and the  rules  and  regulations  of the  Commission
      thereunder or contains an untrue  statement of a material fact or omits to
      state any material fact required to be stated therein or necessary to make
      the statements  therein not misleading in light of the circumstances  then
      existing;

            (iv) in the event that the Company  would be  required,  pursuant to
      Section 3(c)(iii)(F) above, to notify any broker-dealers  holding Exchange
      Securities,  without  delay  prepare  and  furnish  to each such  holder a
      reasonable  number of copies of a  prospectus  supplemented  or amended so
      that,  as thereafter  delivered to purchasers of such Exchange  Securities
      during the Resale Period,  such  prospectus  shall conform in all material
      respects to the  applicable  requirements  of the  Securities  Act and the
      Trust  Indenture  Act and the  rules  and  regulations  of the  Commission
      thereunder and shall not contain an untrue statement of a material fact or
      omit to state a material fact  required to be stated  therein or necessary
      to  make  the   statements   therein  not   misleading  in  light  of  the
      circumstances then existing;

            (v) use its best  efforts  to  obtain  the  withdrawal  of any order
      suspending the  effectiveness of such Exchange  Registration  Statement or
      any post-effective amendment thereto at the earliest practicable date;

            (vi) use its reasonable  best efforts to (A) register or qualify the
      Exchange  Securities  under the  securities  laws or blue sky laws of such
      jurisdictions  as are  contemplated  by  Section  2(a) no  later  than the
      commencement  of the  Exchange  Offer,  (B)  keep  such  registrations  or
      qualifications  in effect  and  comply  with such laws so as to permit the
      continuance of offers,  sales and dealings  therein in such  jurisdictions
      until the  expiration  of the Resale Period and (C) take any and all other
      actions  as may be  reasonably  necessary  or  advisable  to  enable  each
      broker-dealer  holding  Exchange  Securities to consummate the disposition
      thereof in such jurisdictions;  provided,  however, that the Company shall
      not be  required  for  any  such  purpose  to  (1)  qualify  as a  foreign
      corporation in any jurisdiction wherein it would not otherwise be required
      to qualify but for the requirements of this Section 3(c)(vi),  (2) consent
      to general  service of  process in any such  jurisdiction  or (3) make any
      changes to its  certificate of  incorporation  or by-laws or any agreement
      between it and its stockholders;

            (vii) use its  reasonable  best  efforts  to obtain  the  consent or
      approval of each governmental agency or authority,  whether federal, state
      or local, which may be required to effect the Exchange  Registration,  the
      Exchange  Offer  and the  offering  and  sale of  Exchange  Securities  by
      broker-dealers during the Resale Period;

            (viii) provide a CUSIP number for all Exchange Securities, not later
      than the applicable Effective Time;

                                       8
<PAGE>

            (ix)  comply  with  all  applicable  rules  and  regulations  of the
      Commission, and make generally available to its securityholders as soon as
      practicable  but no later than eighteen months after the effective date of
      such Exchange Registration  Statement, an earning statement of the Company
      and its  subsidiaries  complying  with Section 11(a) of the Securities Act
      (including, at the option of the Company, Rule 158 thereunder).

      (d) In connection with the Company's obligations with respect to the Shelf
Registration,  if applicable,  the Company shall,  as soon as practicable (or as
otherwise specified):

            (i) prepare and file with the Commission, as soon as practicable but
      in any case within the time  periods  specified  in Section  2(b), a Shelf
      Registration  Statement  on any form which may be  utilized by the Company
      and which shall register all of the  Registrable  Securities for resale by
      the  holders  thereof  in  accordance  with  such  method  or  methods  of
      disposition  as may be  specified  by such of the holders as, from time to
      time, may be Electing Holders and use its best efforts to cause such Shelf
      Registration  Statement to become  effective as soon as practicable but in
      any case within the time periods specified in Section 2(b);

            (ii) not less than 30 calendar days prior to the  Effective  Time of
      the Shelf Registration Statement, mail the Notice and Questionnaire to the
      holders of Registrable Securities; no holder shall be entitled to be named
      as a selling  securityholder in the Shelf Registration Statement as of the
      Effective  Time,  and no holder  shall be entitled  to use the  prospectus
      forming a part thereof for resales of Registrable  Securities at any time,
      unless  such  holder  has  returned  a  completed  and  signed  Notice and
      Questionnaire  to the  company  by the  deadline  for  response  set forth
      therein;  provided,  however, holders of Registrable Securities shall have
      at  least  28  calendar  days  from  the  date on  which  the  Notice  and
      Questionnaire  is first mailed to such  holders to return a completed  and
      signed Notice and Questionnaire to the Company;

            (iii) after the Effective Time of the Shelf Registration  Statement,
      upon the request of any holder of Registrable  Securities that is not then
      an  Electing  Holder,  promptly  send a Notice and  Questionnaire  to SUCH
      HOLDER; PROVIDED that the Company shall not be required to take any action
      to name such holder as a selling  securityholder in the Shelf Registration
      Statement  or to enable such holder to use the  prospectus  forming a part
      thereof  for  resales of  Registrable  Securities  until  such  holder has
      returned a completed and signed Notice and Questionnaire to the Company;

            (iv) as soon as  practicable  prepare  and file with the  Commission
      such amendments and supplements to such Shelf  Registration  Statement and
      the prospectus included therein as may be necessary to effect and maintain
      the  effectiveness  of such Shelf  Registration  Statement  for the period
      specified in Section 2(b) hereof and as may be required by the  applicable
      rules and regulations of the Commission and the instructions applicable to
      the form of such

                                       9
<PAGE>

      Shelf Registration  Statement,  and furnish to the Electing Holders copies
      of any such  supplement or amendment  simultaneously  with or prior to its
      being used or filed with the Commission;

            (v) comply with the provisions of the Securities Act with respect to
      the disposition of all of the Registrable Securities covered by such Shelf
      Registration   Statement  in  accordance  with  the  intended  methods  of
      disposition   by  the  Electing   Holders   provided  for  in  such  Shelf
      Registration Statement;

            (vi) provide (A) the Electing Holders,  (B) the underwriters  (which
      term,  for purposes of this Exchange and  Registration  Rights  Agreement,
      shall include a person deemed to be an  underwriter  within the meaning of
      Section 2(a)(11) of the Securities Act), if any, thereof, (C) any sales or
      placement  agent therefor,  (D) counsel for any such  underwriter or agent
      and (E) not  more  than  one  counsel  for all the  Electing  Holders  the
      opportunity to participate in the  preparation of such Shelf  Registration
      Statement,  each prospectus  included therein or filed with the Commission
      and each amendment or supplement thereto;

            (vii) for a  reasonable  period  prior to the  filing of such  Shelf
      Registration  Statement,  and throughout  the period  specified in Section
      2(b), make available at reasonable times, at the Company's principal place
      of business or such other  reasonable  place for inspection by the persons
      referred to in Section 3(d)(vi) who shall certify to the Company that they
      have a current  intention to sell the Registrable  Securities  pursuant to
      the Shelf Registration, such financial and other information and books and
      records of the Company,  and cause the  officers,  employees,  counsel and
      independent certified public accountants of the Company to respond to such
      inquiries,  as shall  be  reasonably  necessary,  in the  judgment  of the
      respective  counsel  referred to in such Section,  to conduct a reasonable
      investigation  within the  meaning OF  SECTION 11 OF THE  SECURITIES  ACT;
      PROVIDED,  HOWEVER,  that each such party shall be required to maintain in
      confidence  and not to disclose  to any other  person any  information  or
      records reasonably designated by the Company as being confidential,  until
      such  time as (A) such  information  becomes  a matter  of  public  record
      (whether by virtue of its  inclusion  in such  registration  statement  or
      otherwise),  or (B) such person  shall be  required  so to  disclose  such
      information  pursuant  to a  subpoena  or  order  of any  court  or  other
      governmental  agency or body having  jurisdiction over the matter (subject
      to the  requirements of such order,  and only after such person shall have
      given the Company prompt prior written notice of such requirement), or (C)
      such  information  is required to be set forth in such Shelf  Registration
      Statement or the  prospectus  included  therein or in an amendment to such
      Shelf  Registration  Statement  or an  amendment  or  supplement  to  such
      prospectus in order that such Shelf  Registration  Statement,  prospectus,
      amendment or  supplement,  as the case may be,  complies  with  applicable
      requirements of the federal  securities laws and the rules and regulations
      of the Commission  and does not contain an untrue  statement of a material
      fact or omit to state  therein  a  material  fact  required  to be  stated
      therein or  necessary to make the  statements  therein not  misleading  in
      light of the circumstances then existing;

                                       10
<PAGE>

            (viii)  promptly notify each of the Electing  Holders,  any sales or
      placement agent therefor and any underwriter  thereof (which  notification
      may be made through any managing  underwriter that is a representative  of
      such underwriter for such purpose) and confirm such advice in writing, (A)
      when such Shelf Registration  Statement or the prospectus included therein
      or any prospectus amendment or supplement or post-effective  amendment has
      been filed, and, with respect to such Shelf Registration  Statement or any
      post-effective  amendment,  when the same has become effective, (B) of any
      comments by the Commission and by the blue sky or securities  commissioner
      or  regulator  of any state with  respect  thereto  or any  request by the
      Commission  for  amendments  or  supplements  to such  Shelf  Registration
      Statement or prospectus or for additional information, (C) of the issuance
      by the Commission of any stop order  suspending the  effectiveness of such
      Shelf  Registration  Statement or the  initiation  or  threatening  of any
      proceedings for that purpose,  (D) if at any time the  representations and
      warranties of the Company  contemplated by Section 3(d)(xvii) or Section 5
      cease to be true and correct in all material respects,  (E) of the receipt
      by the Company of any  notification  with respect to the suspension of the
      qualification  of the Registrable  Securities for sale in any jurisdiction
      or the initiation or  threatening  of any proceeding for such purpose,  or
      (F) if at any time when a prospectus is required to be delivered under the
      Securities  Act,  that  such  Shelf  Registration  Statement,  prospectus,
      prospectus  amendment or supplement or  post-effective  amendment does not
      conform in all material  respects to the  applicable  requirements  of the
      Securities Act and the Trust  Indenture Act and the rules and  regulations
      of the Commission thereunder or contains an untrue statement of a material
      fact or omits to state any material fact required to be stated  therein or
      necessary to make the  statements  therein not  misleading in light of the
      circumstances then existing;

            (ix) use its reasonable best efforts to obtain the withdrawal of any
      order suspending the effectiveness of such  registration  statement or any
      post-effective amendment thereto at the earliest practicable date;

            (x) if requested by any managing  underwriter or  underwriters,  any
      placement or sales agent or any Electing Holder, promptly incorporate in a
      prospectus  supplement or post-effective  amendment such information as is
      required by the applicable  rules and regulations of the Commission and as
      such managing  underwriter  or  underwriters,  such agent or such Electing
      Holder  specifies  should be included therein relating to the terms of the
      sale of such Registrable Securities, including information with respect to
      the principal amount of Registrable Securities being sold by such Electing
      Holder or agent or to any  underwriters,  the name and description of such
      Electing  Holder,  agent  or  underwriter,  the  offering  price  of  such
      Registrable Securities and any discount,  commission or other compensation
      payable in respect thereof, the purchase price being paid therefor by such
      underwriters  and with  respect to any other terms of the  offering of the
      Registrable  Securities to be sold by such Electing  Holder or agent or to
      such  underwriters;  and  make all  required  filings  of such  prospectus
      supplement or post-effective  amendment promptly after notification of

                                       11
<PAGE>

      the  matters  to  be  incorporated   in  such  prospectus   supplement  or
      post-effective amendment;

            (xi) furnish to each Electing Holder, each placement or sales agent,
      if any,  therefor,  each  underwriter,  if any, thereof and the respective
      counsel  referred to in Section 3(d)(vi) an executed copy (or, in the case
      of an  Electing  Holder,  a  conformed  copy) of such  Shelf  Registration
      Statement,  each  such  amendment  and  supplement  thereto  (in each case
      including  all  exhibits  thereto  (in the case of an  Electing  Holder of
      Registrable  Securities,  upon  request)  and  documents  incorporated  by
      reference  therein)  and such number of copies of such Shelf  Registration
      Statement  (excluding  exhibits  thereto  and  documents  incorporated  by
      reference  therein  unless  specifically  so  requested  by such  Electing
      Holder,  agent or  underwriter,  as the case may be) and of the prospectus
      included in such Shelf Registration  Statement (including each preliminary
      prospectus  and any summary  prospectus),  in  conformity  in all material
      respects with the  applicable  requirements  of the Securities Act and the
      Trust  Indenture  Act and the  rules  and  regulations  of the  Commission
      thereunder,  and such other documents,  as such Electing Holder, agent, if
      any,  and  underwriter,  if  any,  may  reasonably  request  in  order  to
      facilitate  the offering and  disposition  of the  Registrable  Securities
      owned  by  such  Electing  Holder,  offered  or  sold  by  such  agent  or
      underwritten by such underwriter and to permit such Electing Holder, agent
      and  underwriter to satisfy the prospectus  delivery  requirements  of the
      Securities  Act;  and  the  Company  hereby  consents  to the  use of such
      prospectus  (including such  preliminary  and summary  prospectus) and any
      amendment or supplement  thereto by each such  Electing  Holder and by any
      such  agent  and  underwriter,  in each  case in the  form  most  recently
      provided to such person by the Company,  in  connection  with the offering
      and  sale  of  the  Registrable   Securities  covered  by  the  prospectus
      (including such  preliminary and summary  prospectus) or any supplement or
      amendment thereto;

            (xii) use  reasonable  best  efforts to (A)  register or qualify the
      Registrable Securities to be included in such Shelf Registration Statement
      under such securities laws or blue sky laws of such  jurisdictions  as any
      Electing  Holder and each placement or sales agent,  if any,  therefor and
      underwriter,  if any,  thereof  shall  reasonably  request,  (B) keep such
      registrations or  qualifications in effect and comply with such laws so as
      to permit the  continuance of offers,  sales and dealings  therein in such
      jurisdictions  during the period the Shelf  Registration  is  required  to
      remain  effective  under  Section  2(b)  above  and  for so long as may be
      necessary to enable any such  Electing  Holder,  agent or  underwriter  to
      complete  its   distribution   of   Securities   pursuant  to  such  Shelf
      Registration  Statement  and (C) take any and all other  actions as may be
      reasonably  necessary or advisable  to enable each such  Electing  Holder,
      agent, if any, and  underwriter,  if any, to consummate the disposition in
      such jurisdictions of such Registrable Securities; provided, however, that
      the Company shall not be required for any such purpose to (1) qualify as a
      foreign corporation in any jurisdiction  wherein it would not otherwise be
      required to qualify but for the  requirements  of this Section  3(d)(xii),
      (2) consent to general service of process in any such  jurisdiction or (3)
      make any

                                       12
<PAGE>

      changes to its  certificate of  incorporation  or by-laws or any agreement
      between it and its stockholders;

            (xiii) use its  reasonable  best  efforts  to obtain the  consent or
      approval of each governmental agency or authority,  whether federal, state
      or local,  which may be required to effect the Shelf  Registration  or the
      offering or sale in connection  therewith or to enable the selling  holder
      or  holders  to  offer,   or  to  consummate  the  disposition  of,  their
      Registrable Securities;

            (xiv) unless any Registrable  Securities shall be in book-entry only
      form,  cooperate with the Electing Holders and the managing  underwriters,
      if any, to facilitate the timely  preparation and delivery of certificates
      representing Registrable Securities to be sold, which certificates,  if so
      required by any securities exchange upon which any Registrable  Securities
      are listed, shall be penned,  lithographed or engraved, or produced by any
      combination  of  such  methods,  on  steel  engraved  borders,  and  which
      certificates shall not bear any restrictive  legends;  and, in the case of
      an underwritten offering, enable such Registrable Securities to be in such
      denominations  and  registered in such names as the managing  underwriters
      may  request  at  least  two  business  days  prior  to  any  sale  of the
      Registrable Securities;

            (xv)  provide a CUSIP  number for all  Registrable  Securities,  not
      later than the applicable Effective Time;

            (xvi)  enter into one or more  underwriting  agreements,  engagement
      letters,  agency  agreements,  "best efforts"  underwriting  agreements or
      similar  agreements,   as  appropriate,   including  customary  provisions
      relating to indemnification and contribution,  and take such other actions
      in connection  therewith as any Electing Holders  aggregating at least 20%
      in aggregate  principal  amount of the Registrable  Securities at the time
      outstanding   shall  request  in  order  to  expedite  or  facilitate  the
      disposition of such Registrable Securities;

            (xvii)  whether  or not an  agreement  of the  type  referred  to in
      Section 3(d)(xvi) hereof is entered into and whether or not any portion of
      the offering  contemplated  by the Shelf  Registration  is an underwritten
      offering  or is made  through  a  placement  or sales  agent or any  other
      entity,  (A) make such  representations  and  warranties  to the  Electing
      Holders  and the  placement  or  sales  agent,  if any,  therefor  and the
      underwriters,  if  any,  thereof  in  form,  substance  and  scope  as are
      customarily  made in  connection  with  an  offering  of  debt  securities
      pursuant to any appropriate agreement or to a registration statement filed
      on the form applicable to the Shelf Registration; (B) obtain an opinion of
      counsel to the Company in customary form and covering such matters, of the
      type customarily covered by such an opinion, as the managing underwriters,
      if any, or as any Electing Holders of at least 20% in aggregate  principal
      amount  of  the  Registrable   Securities  at  the  time  outstanding  may
      reasonably request,  addressed to such Electing Holder or Electing Holders
      and the placement or sales agent, if any,  therefor and the  underwriters,
      if any,  thereof and dated the effective  date of such

                                       13
<PAGE>

      Shelf  Registration  Statement (and if such Shelf  Registration  Statement
      contemplates an underwritten  offering of a part or all of the Registrable
      Securities, dated the date of the closing under the underwriting agreement
      relating  thereto) (it being agreed that the matters to be covered by such
      opinion  shall  include  the due  incorporation  and good  standing of the
      Company and its  Subsidiaries;  the  qualification  of the Company and its
      Subsidiaries  to  transact  business  as  foreign  corporations;  the  due
      authorization,  execution  and delivery of the  relevant  agreement of the
      type  referred  to in Section  3(d)(xvi)  hereof;  the due  authorization,
      execution,   authentication   and   issuance,   and   the   validity   and
      enforceability,  of the  Securities;  the  absence  of  material  legal or
      governmental proceedings involving the Company; the absence of a breach by
      the Company or any of its  Subsidiaries  of, or a default under,  material
      agreements binding upon the Company or any Subsidiary of the Company;  the
      absence of  governmental  approvals  required to be obtained in connection
      with the Shelf  Registration,  the  offering  and sale of the  Registrable
      Securities,  this  Exchange  and  Registration  Rights  Agreement  or  any
      agreement of the type referred to in Section 3(d)(xvi) hereof, except such
      approvals as may be required under state  securities or blue sky laws; the
      material  compliance as to form of such Shelf  Registration  Statement and
      any documents  incorporated by reference therein and of the Indenture with
      the requirements of the Securities Act and the Trust Indenture Act and the
      rules and regulations of the Commission thereunder,  respectively; and, as
      of the date of the opinion and of the Shelf Registration Statement or most
      recent  post-effective  amendment thereto, as the case may be, the absence
      from  such  Shelf  Registration  Statement  and  the  prospectus  included
      therein,  as  then  amended  or  supplemented,   and  from  the  documents
      incorporated  by reference  therein (in each case other than the financial
      statements and other financial information contained therein) of an untrue
      statement of a material  fact or the omission to state  therein a material
      fact necessary to make the statements  therein not misleading (in the case
      of such documents,  in the light of the circumstances existing at the time
      that such  documents  were filed with the  Commission  under the  Exchange
      Act));  (C) obtain a "cold comfort" letter or letters from the independent
      certified  public  accountants  of the  Company  addressed  to the selling
      Electing  Holders,  the placement or sales agent, if any,  therefor or the
      underwriters,  if any, thereof, dated (i) the effective date of such Shelf
      Registration  Statement  and (ii)  the  effective  date of any  prospectus
      supplement to the prospectus included in such Shelf Registration Statement
      or  post-effective  amendment to such Shelf  Registration  Statement which
      includes  unaudited or audited financial  statements as of a date or for a
      period  subsequent to that of the latest such statements  included in such
      prospectus  (and, if such Shelf  Registration  Statement  contemplates  an
      underwritten  offering  pursuant  to  any  prospectus  supplement  to  the
      prospectus included in such Shelf Registration Statement or post-effective
      amendment to such Shelf Registration Statement which includes unaudited or
      audited  financial  statements as of a date or for a period  subsequent to
      that of the latest such statements included in such prospectus,  dated the
      date of the closing under the underwriting  agreement  relating  thereto),
      such letter or letters to be in customary  form and covering  such matters
      of the type customarily  covered by letters of such type; (D) deliver such

                                       14
<PAGE>

      documents and certificates,  including officers'  certificates,  as may be
      reasonably  requested by any Electing Holders of at least 20% in aggregate
      principal amount of the Registrable  Securities at the time outstanding or
      the  placement  or  sales  agent,  if  any,   therefor  and  the  managing
      underwriters,   if  any,   thereof  to  evidence   the   accuracy  of  the
      representations  and warranties made pursuant to clause (A) above or those
      contained in Section 5(a) hereof and the compliance  with or  satisfaction
      of any agreements or conditions contained in the underwriting agreement or
      other  agreement  entered  into by the  Company;  and (E)  undertake  such
      obligations  relating  to  expense   reimbursement,   indemnification  and
      contribution as are provided in Section 6 hereof;

            (xviii) notify in writing each holder of  Registrable  Securities of
      any  proposal  by the  Company  to amend or waive  any  provision  of this
      Exchange and Registration Rights Agreement pursuant to Section 9(h) hereof
      and of any amendment or waiver effected  pursuant  thereto,  each of which
      notices  shall  contain the text of the  amendment  or waiver  proposed or
      effected, as the case may be;

            (xix) in the  event  that any  broker-dealer  registered  under  the
      Exchange Act shall underwrite any Registrable Securities or participate as
      a member of an  underwriting  syndicate or selling group or "assist in the
      distribution"  (within  the  meaning of the  Conduct  Rules (the  "Conduct
      Rules) of the National Association of Securities Dealers, Inc. ("NASD") or
      any successor thereto, as amended from time to time) thereof, whether as a
      holder of such Registrable Securities or as an underwriter, a placement or
      sales agent or a broker or dealer in respect thereof, or otherwise, assist
      such  broker-dealer  in complying  with the  requirements  of such Conduct
      Rules, including by (A) if such Conduct Rules shall so require, engaging a
      "qualified independent  underwriter" (as defined in such Conduct Rules) to
      participate  in  the  preparation  of  the  Shelf  Registration  Statement
      relating to such  Registrable  Securities,  to exercise usual standards of
      due  diligence  in respect  thereto  and, if any  portion of the  offering
      contemplated  by such  Shelf  Registration  Statement  is an  underwritten
      offering or is made through a placement or sales agent,  to recommend  the
      yield of such Registrable Securities,  (B) indemnifying any such qualified
      independent   underwriter  to  the  extent  of  the   indemnification   of
      underwriters  provided  in Section 6 hereof  (or to such  other  customary
      extent  as may be  reasonably  requested  by  such  underwriter),  and (C)
      providing  such  information to such  broker-dealer  as may be required in
      order  for such  broker-dealer  to  comply  with the  requirements  of the
      Conduct Rules; and

            (xx)  comply  with  all  applicable  rules  and  regulations  of the
      Commission, and make generally available to its securityholders as soon as
      practicable  but in any event not later  than  eighteen  months  after the
      effective date of such Shelf Registration  Statement, an earning statement
      of the Company and its  subsidiaries  complying  with Section 11(a) of the
      Securities  Act  (including,  at the  option  of  the  Company,  Rule  158
      thereunder).

                                       15
<PAGE>

      (e) In the event that the Company  would be required,  pursuant to Section
3(d)(viii)(F)  above,  to notify the Electing  Holders,  the  placement or sales
agent, if any,  therefor and the managing  underwriters,  if any,  thereof,  the
Company shall without delay prepare and furnish to each of the Electing Holders,
to each placement or sales agent, if any, and to each such underwriter,  if any,
a reasonable  number of copies of a prospectus  supplemented or amended so that,
as thereafter delivered to purchasers of Registrable Securities, such prospectus
shall conform in all material  respects to the  applicable  requirements  of the
Securities Act and the Trust  Indenture Act and the rules and regulations of the
Commission  thereunder  and shall not contain an untrue  statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing.  Each Electing  Holder agrees that upon receipt of any notice from the
Company  pursuant to Section  3(d)(viii)(F)  hereof,  such Electing Holder shall
forthwith discontinue the disposition of Registrable  Securities pursuant to the
Shelf  Registration  Statement  applicable to such Registrable  Securities until
such Electing  Holder shall have received copies of such amended or supplemented
prospectus,  and if so directed  by the  Company,  such  Electing  Holder  shall
deliver  to the  Company  (at the  Company's  expense)  all  copies,  other than
permanent  file  copies,  then  in  such  Electing  Holder's  possession  of the
prospectus  covering such Registrable  Securities at the time of receipt of such
notice.

      (f) In the event of a Shelf  Registration,  in addition to the information
required to be provided by each Electing Holder in its Notice Questionnaire, the
Company  may  require  such  Electing  Holder to  furnish  to the  Company  such
additional information regarding such Electing Holder and such Electing Holder's
intended method of distribution of Registrable  Securities as may be required in
order to comply with the  Securities  Act. Each such  Electing  Holder agrees to
notify the Company as promptly as  practicable  of any  inaccuracy  or change in
information  previously  furnished by such Electing  Holder to the Company or of
the  occurrence of any event in either case as a result of which any  prospectus
relating  to such  Shelf  Registration  contains  or  would  contain  an  untrue
statement of a material fact  regarding  such  Electing  Holder or such Electing
Holder's intended method of disposition of such Registrable  Securities or omits
to state any material  fact  regarding  such  Electing  Holder or such  Electing
Holder's intended method of disposition of such Registrable  Securities required
to be stated therein or necessary to make the statements  therein not misleading
in light of the  circumstances  then  existing,  and  promptly to furnish to the
Company any additional information required to correct and update any previously
furnished  information  or required so that such  prospectus  shall not contain,
with respect to such  Electing  Holder or the  disposition  of such  Registrable
Securities,  an untrue  statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the  statements  therein
not misleading in light of the circumstances then existing.

      (g) Until the  expiration of two years after the Closing Date, the Company
will not, and will not permit any of its  "affiliates"  (as defined in Rule 144)
to, resell any of the Securities that have been reacquired by any of them except
pursuant to an effective registration statement under the Securities Act.

                                       16
<PAGE>

      4. Registration Expenses.

      The  Company  agrees to bear and to pay or cause to be paid  promptly  all
expenses  incident  to the  Company's  performance  of or  compliance  with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD  registration,  filing  and review  fees and  expenses  including  fees and
disbursements  of counsel for the  placement or sales agent or  underwriters  in
connection with such registration,  filing and review, (b) all fees and expenses
in connection  with the  qualification  of the  Securities for offering and sale
under the State  securities  and blue sky laws referred to in Section  3(d)(xii)
hereof and  determination of their  eligibility for investment under the laws of
such  jurisdictions  as any managing  underwriters  or the Electing  Holders may
designate,  including  any fees and  disbursements  of counsel for the  Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration  statement required to be filed hereunder,
each prospectus  included therein or prepared for distribution  pursuant hereto,
each  amendment or  supplement to the  foregoing,  the expenses of preparing the
Securities   for  delivery  and  the  expenses  of  printing  or  producing  any
underwriting agreements,  agreements among underwriters,  selling agreements and
blue sky or legal  investment  memoranda  and all other  documents in connection
with the  offering,  sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses  relating  to the  offering,  sale or delivery  of  Securities  and the
preparation of documents  referred in clause (c) above, (e) fees and expenses of
the Trustee  under the  Indenture,  any agent of the Trustee and any counsel for
the Trustee and of any  collateral  agent or  custodian,  (f) internal  expenses
(including  all salaries and expenses of the  Company's  officers and  employees
performing legal or accounting duties), (g) fees,  disbursements and expenses of
counsel and independent  certified public  accountants of the Company (including
the expenses of any opinions or "cold comfort"  letters  required by or incident
to such performance and compliance), (h) fees, disbursements and expenses of any
"qualified  independent  underwriter"  engaged  pursuant  to  Section  3(d)(xix)
hereof,  (i) fees,  disbursements  and  expenses of one counsel for the Electing
Holders  retained in connection  with a Shelf  Registration,  as selected by the
Electing  Holders of at least a majority in  aggregate  principal  amount of the
Registrable  Securities  held  by  Electing  Holders  (which  counsel  shall  be
reasonably  satisfactory  to the  Company),  (j) any fees charged by  securities
rating  services  for  rating  the  Securities,   and  (k)  fees,  expenses  and
disbursements of any other persons,  including special experts,  retained by the
Company in connection with such  registration  (collectively,  the "Registration
Expenses").  To the extent that any Registration Expenses are incurred,  assumed
or paid by any holder of Registrable  Securities or any placement or sales agent
therefor or underwriter thereof, the Company shall reimburse such person for the
full amount of the Registration  Expenses so incurred,  assumed or paid promptly
after receipt of a request therefor.  Notwithstanding the foregoing, the holders
of the Registrable  Securities  being  registered  shall pay all agency fees and
commissions and underwriting discounts and commissions  attributable to the sale
of such Registrable  Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.

                                       17
<PAGE>

      5. Representations and Warranties.

      The Company  represents  and warrants to, and agrees with,  each Purchaser
and each of the holders from time to time of Registrable Securities that:

      (a) Each registration  statement covering Registrable  Securities and each
prospectus  (including any preliminary or summary prospectus)  contained therein
or  furnished  pursuant to Section  3(d) or Section  3(c) hereof and any further
amendments or supplements to any such registration statement or prospectus, when
it becomes  effective or is filed with the Commission,  as the case may be, and,
in the case of an underwritten offering of Registrable  Securities,  at the time
of the closing under the underwriting  agreement relating thereto,  will conform
in all material respects to the requirements of the Securities Act and the Trust
Indenture Act and the rules and  regulations  of the  Commission  thereunder and
will not  contain  an untrue  statement  of a  material  fact or omit to state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading; and at all times subsequent to the Effective Time when a
prospectus  would be required to be delivered  under the  Securities  Act, other
than from (i) such time as a notice has been  given to  holders  of  Registrable
Securities  pursuant to Section  3(d)(viii)(F)  or Section  3(c)(iii)(F)  hereof
until  (ii)  such time as the  Company  furnishes  an  amended  or  supplemented
prospectus  pursuant  to Section  3(e) or  Section  3(c)(iv)  hereof,  each such
registration  statement,  and each prospectus (including any summary prospectus)
contained therein or furnished  pursuant to Section 3(d) or Section 3(c) hereof,
as then amended or  supplemented,  will conform in all material  respects to the
requirements of the Securities Act and the Trust Indenture Act and the rules and
regulations  of the  Commission  thereunder  and  will  not  contain  an  untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated therein or necessary to make the statements therein not misleading in the
light  of  the  CIRCUMSTANCES  THEN  EXISTING;   PROVIDED,  HOWEVER,  that  this
representation  and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information  furnished in writing to the
Company by a holder of Registrable Securities expressly for use therein.

      (b) Any documents  incorporated by reference in any prospectus referred to
in Section  5(a)  hereof,  when they become or became  effective  or are or were
filed with the Commission,  as the case may be, will conform or conformed in all
material respects to the requirements of the Securities Act or the Exchange Act,
as  applicable,  and none of such  documents will contain or contained an untrue
statement  of a material  fact or will omit or omitted to state a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading;  provided,  however, that this representation and warranty shall not
apply to any  statements  or omissions  made in reliance  upon and in conformity
with information  furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.

      (c) The  compliance  by the  Company  with all of the  provisions  of this
Exchange  and  Registration   Rights  Agreement  and  the  consummation  of  the
transactions herein contemplated will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage,  deed  of  trust,  loan  agreement

                                       18
<PAGE>

or other material agreement or instrument to which the Company or any Subsidiary
of the  Company  is a party or by which the  Company  or any  Subsidiary  of the
Company is bound or to which any of the property or assets of the Company or any
Subsidiary  of the  Company  is  subject,  nor will  such  action  result in any
violation of the provisions of the certificate of incorporation,  as amended, or
the by-laws of the Company or any statute or any order,  rule or  regulation  of
any court or governmental agency or body having jurisdiction over the Company or
any  subsidiary  of the  Company  or any of their  properties;  and no  consent,
approval,  authorization,  order,  registration or  qualification of or with any
such court or  governmental  agency or body is required for the  consummation by
the Company of the  transactions  contemplated by this Exchange and Registration
Rights  Agreement,  except  the  registration  under the  Securities  Act of the
Securities,  qualification  of the Indenture  under the Trust  Indenture Act and
such consents, approvals, authorizations, registrations or qualifications as may
be  required  under State  securities  or blue sky laws in  connection  with the
offering and distribution of the Securities.

      (d)  This  Exchange  and  Registration  Rights  Agreement  has  been  duly
authorized, executed and delivered by the Company.

      6. Indemnification.

      (a)  Indemnification  by the Company.  The Company will indemnify and hold
harmless each of the holders of Registrable  Securities  included in an Exchange
Registration  Statement,  each of the Electing Holders of Registrable Securities
included in a Shelf Registration Statement and each person who participates as a
placement  or sales agent or as an  underwriter  in any offering or sale of such
Registrable Securities against any losses, claims, damages or liabilities, joint
or several, to which such holder,  agent or underwriter may become subject under
the  Securities  Act or otherwise,  insofar as such losses,  claims,  damages or
liabilities  (or actions in respect  thereof)  arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Exchange Registration Statement or Shelf Registration Statement, as the case may
be, under which such Registrable Securities were registered under the Securities
Act,  or any  preliminary,  final or  summary  prospectus  contained  therein or
furnished  by  the  Company  to any  such  holder,  Electing  Holder,  agent  or
underwriter,  or any  amendment or  supplement  thereto,  or arise out of or are
based upon the  omission or alleged  omission to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading, and will reimburse such holder, such Electing Holder, such agent and
such underwriter for any legal or other expenses  reasonably incurred by them in
connection  with  investigating  or  defending  any such action or claim as such
expenses are incurred;  provided,  however, that the Company shall not be liable
to any such  person in any such case to the extent  that any such  loss,  claim,
damage  or  liability  arises  out of or is based  upon an untrue  statement  or
alleged  untrue   statement  or  omission  or  alleged  omission  made  in  such
registration  statement,  or  preliminary,   final  or  summary  prospectus,  or
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by such person expressly for use therein.

                                       19
<PAGE>

      (b)  Indemnification  by the Holders and any Agents and Underwriters.  The
Company may require,  as a condition to including any Registrable  Securities in
any registration statement filed pursuant to Section 2(b) hereof and to entering
into any  underwriting  agreement with respect  thereto,  that the Company shall
have received an  undertaking  reasonably  satisfactory  to it from the Electing
Holder of such  Registrable  Securities and from each  underwriter  named in any
such  underwriting  agreement,  severally and not jointly,  to (i) indemnify and
hold  harmless the Company,  and all other  holders of  Registrable  Securities,
against any losses,  claims, damages or liabilities to which the Company or such
other holders of Registrable Securities may become subject, under the Securities
Act or otherwise,  insofar as such losses,  claims,  damages or liabilities  (or
actions in respect  thereof) arise out of or are based upon an untrue  statement
or alleged untrue  statement of a material fact  contained in such  registration
statement, or any preliminary,  final or summary prospectus contained therein or
furnished by the Company to any such Electing Holder,  agent or underwriter,  or
any  amendment  or  supplement  thereto,  or arise out of or are based  upon the
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements  therein not  misleading,  in
each case to the extent,  but only to the extent,  that such untrue statement or
alleged  untrue  statement or omission or alleged  omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Electing Holder or underwriter expressly for use therein, and (ii) reimburse the
Company for any legal or other  expenses  reasonably  incurred by the Company in
connection  with  investigating  or  defending  any such action or claim as such
expenses are incurred;  provided, however, that no such Electing Holder shall be
required to  undertake  liability  to any person under this Section 6(b) for any
amounts in excess of the dollar  amount of the  proceeds  to be received by such
Electing Holder from the sale of such Electing Holder's  Registrable  Securities
pursuant to such registration.

      (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under  subsection (a) or (b) above of written notice of the  commencement of any
action,  such  indemnified  party shall,  if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying  party in writing of
the commencement of such action;  but the omission so to notify the indemnifying
party  shall  not  relieve  it  from  any  liability  which  it may  have to any
indemnified  party  otherwise  than under the  indemnification  provisions of or
contemplated  by Section 6(a) or 6(b)  hereof.  In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying  party
of the  commencement  thereof,  such  indemnifying  party  shall be  entitled to
participate  therein  and, to the extent that it shall  wish,  jointly  with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the  consent of the  indemnified  party,  be  counsel  to the  indemnifying
party),  and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof,  such indemnifying party shall
not be liable to such indemnified  party for any legal expenses of other counsel
or any other expenses,  in each case  subsequently  incurred by such indemnified
party, in connection  with the defense  thereof other than  reasonable  costs of
investigation.  In no event shall an  indemnifying  party be liable for

                                       20
<PAGE>

fees and  expenses  of more than one  counsel  (in  addition  to local  counsel)
separate from their own counsel for all  indemnified  parties in connection with
any  one  action  or  separate  but  similar  or  related  actions  in the  same
jurisdiction  arising out of the same general  allegations or circumstances.  No
indemnifying party shall,  without the written consent of the indemnified party,
effect the  settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or  threatened  action or claim in respect of which
indemnification  or  contribution  may be sought  hereunder  (whether or not the
indemnified  party is an  actual  or  potential  party to such  action or claim)
unless such  settlement,  compromise  or judgment (i) includes an  unconditional
release of the indemnified  party from all liability  arising out of such action
or claim and (ii) does not include a statement  as to or an  admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

      (d)  Contribution.  If  for  any  reason  the  indemnification  provisions
contemplated  by Section 6(a) or Section 6(b) are unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses,  claims, damages
or liabilities (or actions in respect  thereof)  referred to therein,  then each
indemnifying  party  shall  contribute  to the  amount  paid or  payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect  thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses,  claims, damages
or liabilities  (or actions in respect  thereof),  as well as any other relevant
equitable  considerations.  The relative  fault of such  indemnifying  party and
indemnified  party shall be  determined  by reference  to,  among other  things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged  omission to state a material  fact relates to  information  supplied by
such indemnifying  party or by such indemnified party, and the parties' relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  statement or omission.  The parties hereto agree that it would not be just
and equitable if contributions  pursuant to this Section 6(d) were determined by
pro rata allocation (even if the holders or any agents or underwriters or all of
them were  treated  as one entity for such  purpose)  or by any other  method of
allocation which does not take account of the equitable  considerations referred
to in this Section 6(d). The amount paid or payable by an indemnified party as a
result of the losses,  claims,  damages,  or liabilities  (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses  reasonably  incurred  by such  indemnified  party in  connection  with
investigating  or  defending  any such  action  or  claim.  Notwithstanding  the
provisions of this Section  6(d), no holder shall be required to contribute  any
amount in  excess of the  amount  by which  the  dollar  amount of the  proceeds
received  by such  holder  from the sale of any  Registrable  Securities  (after
deducting any fees,  discounts and commissions  applicable  thereto) exceeds the
amount of any damages  which such holder has  otherwise  been required to pay by
reason of such  untrue or  alleged  untrue  statement  or  omission  or  alleged
omission,  and no  underwriter  shall be  required to  contribute  any amount in
excess  of the  amount  by  which  the  total  price at  which  the  Registrable
Securities  underwritten by it and distributed to the public were offered to the
public  exceeds the amount of any damages which such  underwriter  has otherwise
been  required to pay by reason of such untrue or alleged  untrue  statement  or
omission or alleged omission.  No person guilty of fraudulent

                                       21
<PAGE>

misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be  entitled  to  contribution  from any person who was not guilty of such
fraudulent misrepresentation.  The holders' and any underwriters' obligations in
this Section 6(d) to contribute  shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may be,
by them and not joint.

      (e) The  obligations  of the  Company  under  this  Section  6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and  conditions,  to each  officer,  director and partner of
each holder,  agent and  underwriter  and each person,  if any, who controls any
holder,  agent or underwriter  within the meaning of the Securities Act; and the
obligations of the holders and any agents or  underwriters  contemplated by this
Section 6 shall be in addition to any  liability  which the  respective  holder,
agent or underwriter  may otherwise  have and shall extend,  upon the same terms
and  conditions,  to each  officer and  director of the Company  (including  any
person who, with his consent, is named in any registration statement as about to
become a director of the Company)  and to each person,  if any, who controls the
Company within the meaning of the Securities Act.

      7. Underwritten Offerings.

      (a)  Selection  of  Underwriters.  If any of  the  Registrable  Securities
covered by the Shelf  Registration  are to be sold  pursuant to an  underwritten
offering,  the managing  underwriter or underwriters thereof shall be designated
by Electing Holders holding at least a majority in aggregate principal amount of
the Registrable  Securities to be included in such offering,  provided that such
designated managing underwriter or underwriters is or are reasonably  acceptable
to the Company.

      (b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder  that no such holder may  participate  in any
underwritten  offering  hereunder  unless  such  holder  (i) agrees to sell such
holder's  Registrable  Securities  on the  basis  provided  in any  underwriting
arrangements  approved  by  the  persons  entitled  hereunder  to  approve  such
arrangements  and (ii)  completes  and  executes all  questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
required under the terms of such underwriting arrangements.

      8. Rule 144.

      The Company covenants to the holders of Registrable Securities that to the
extent it shall be required to do so under the Exchange  Act, the Company  shall
timely file the reports required to be filed by it under the Exchange Act or the
Securities Act (including the reports under Section 13 and 15(d) of the Exchange
Act  referred to in  subparagraph  (c)(1) of Rule 144 adopted by the  Commission
under  the  Securities  Act)  and  the  rules  and  regulations  adopted  by the
Commission  thereunder,  and shall  take such  further  action as any  holder of
Registrable  Securities may reasonably request,  all to the extent required from
time to time to  enable  such  holder  to sell  Registrable  Securities  without
registration  under the Securities  Act within the  limitations of the exemption
provided by Rule 144 under the Securities  Act, as such Rule may be

                                       22
<PAGE>

amended  from time to time,  or any  similar  or  successor  rule or  regulation
hereafter  adopted  by  the  Commission.  Upon  the  request  of any  holder  of
Registrable  Securities in  connection  with that holder's sale pursuant to Rule
144, the Company shall deliver to such holder a written  statement as to whether
it has complied with such requirements.

      9. Miscellaneous.

      (a)  No  Inconsistent  Agreements.   The  Company  represents,   warrants,
covenants and agrees that it has not granted, and shall not grant,  registration
rights with respect to  Registrable  Securities  or any other  securities  which
would be inconsistent with the terms contained in this Exchange and Registration
Rights Agreement.

      (b) Specific Performance.  The parties hereto acknowledge that there would
be no  adequate  remedy  at law if  the  Company  fails  to  perform  any of its
obligations  hereunder  and that the Purchaser and the holders from time to time
of the Registrable Securities may be irreparably harmed by any such failure, and
accordingly agree that the Purchaser and such holders,  in addition to any other
remedy to which they may be entitled  at law or in equity,  shall be entitled to
compel  specific  performance  of the  obligations  of the  Company  under  this
Exchange and  Registration  Rights  Agreement in  accordance  with the terms and
conditions of this Exchange and Registration  Rights Agreement,  in any court of
the United States or any State thereof having jurisdiction.

      (c) Notices. All notices,  requests,  claims,  demands,  waivers and other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given when  delivered by hand, if delivered  personally  or by courier,  or
three days after being  deposited in the mail  (registered  or  certified  mail,
postage prepaid,  return receipt requested) as follows: If to the Company, to it
at 80 Park Plaza,  Newark,  NJ 07102, and if to a holder, to the address of such
holder set forth in the security register or other records of the Company, or to
such other  address as the Company or any such holder may have  furnished to the
other in  writing  in  accordance  herewith,  except  that  notices of change of
address shall be effective only upon receipt.

      (d) Parties in Interest. All the terms and provisions of this Exchange and
Registration  Rights Agreement shall be binding upon, shall inure to the benefit
of and shall be  enforceable  by the parties hereto and the holders from time to
time of the Registrable  Securities and the respective successors and assigns of
the parties  hereto and such  holders.  In the event that any  transferee of any
holder of Registrable  Securities shall acquire Registrable  Securities,  in any
manner, whether by gift, bequest, purchase,  operation of law or otherwise, such
transferee shall, without any further writing or action of any kind, be deemed a
beneficiary  hereof for all purposes and such  Registrable  Securities  shall be
held  subject  to all of the  terms of this  Exchange  and  Registration  Rights
Agreement, and by taking and holding such Registrable Securities such transferee
shall be entitled to receive the benefits of, and be conclusively deemed to have
agreed  to be  bound  by all of the  applicable  terms  and  provisions  of this
Exchange and Registration Rights Agreement. If the Company shall so request, any
such successor,  assign or transferee shall agree in writing to acquire and hold
the Registrable Securities subject to all of the applicable terms hereof.

                                       23
<PAGE>

      (e) Survival.  The respective  indemnities,  agreements,  representations,
warranties and each other provision set forth in this Exchange and  Registration
Rights  Agreement or made pursuant  hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made by
or on behalf of any holder of Registrable Securities,  any director,  officer or
partner of such holder,  any agent or  underwriter  or any director,  officer or
partner thereof,  or any controlling  person of any of the foregoing,  and shall
survive delivery of and payment for the Registrable  Securities  pursuant to the
Purchase  Agreement and the transfer and registration of Registrable  Securities
by such holder and the consummation of an Exchange Offer.

      (f) Governing Law. This Exchange and  Registration  Rights Agreement shall
be governed by and  construed  in  accordance  with the laws of the State of New
York.

      (g)  Headings.  The  descriptive  headings  of the  several  Sections  and
paragraphs of this Exchange and  Registration  Rights Agreement are inserted for
convenience  only, do not  constitute a part of this  Exchange and  Registration
Rights  Agreement and shall not affect in any way the meaning or  interpretation
of this Exchange and Registration Rights Agreement.

      (h) Entire Agreement;  Amendments.  This Exchange and Registration  Rights
Agreement and the other writings referred to herein (including the Indenture and
the form of  Securities) or delivered  pursuant  hereto which form a part hereof
contain  the entire  understanding  of the parties  with  respect to its subject
matter.  This Exchange and Registration  Rights  Agreement  supersedes all prior
agreements  and  understandings  between the parties with respect to its subject
matter.  This Exchange and Registration  Rights Agreement may be amended and the
observance of any term of this Exchange and Registration Rights Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company and the
holders of at least a majority in aggregate  principal amount of the Registrable
Securities at the time outstanding. Each holder of any Registrable Securities at
the time or  thereafter  outstanding  shall be bound by any  amendment or waiver
effected  pursuant to this Section 9(h),  whether or not any notice,  writing or
marking  indicating  such  amendment  or  waiver  appears  on  such  Registrable
Securities or is delivered to such holder.

      (i)  Inspection.  For so long as this  Exchange  and  Registration  Rights
Agreement shall be in effect,  this Exchange and  Registration  Rights Agreement
and a complete list of the names and addresses of all the holders of Registrable
Securities  shall be made  available for  inspection and copying on any business
day by any holder of  Registrable  Securities  for proper  purposes  only (which
shall  include any purpose  related to the rights of the holders of  Registrable
Securities  under the  Securities,  the  Indenture  and this  Agreement)  at the
offices of the  Company at the address  thereof set forth in Section  9(c) above
and at the office of the Trustee under the Indenture.

      (j)  Counterparts.  This  agreement  may be  executed  by the  parties  in
counterparts,  each of which  shall be  deemed to be an  original,  but all such
respective counterparts shall together constitute one and the same instrument.

                                       24
<PAGE>

      If the foregoing is in accordance with your understanding, please sign and
return to us counterparts  hereof,  and upon the acceptance  hereof by you, this
letter and such acceptance  hereof shall constitute a binding  agreement between
the Purchaser and the Company.

                                           Very truly yours,

                                           PSEG Energy Holdings Inc.

                                           By: /s/ Bruce E. Walenczyk
                                               ---------------------------------
                                               Name: Bruce E. Walenczyk
                                               Title: Vice President - Finance

Accepted as of the date hereof:

Lehman Brothers Inc.

By: /s/ James W. Merli
    -------------------------------
    Name: James W. Merli
    Title: Managing Director

                                       25
<PAGE>

                                                                       Exhibit A

                            PSEG ENERGY HOLDINGS INC.

                         INSTRUCTION TO DTC PARTICIPANTS
                         -------------------------------

                               (Date of Mailing)

                     URGENT - IMMEDIATE ATTENTION REQUESTED

                        DEADLINE FOR RESPONSE: [DATE]*
                        -------------------------------

The Depository  Trust Company  ("DTC") has  identified you as a DTC  Participant
through  which  beneficial  interests  in the PSEG  Energy  Holdings  Inc.  (the
"Company") 9 1/8% Senior Notes due 2004 (the "Securities") are held.

The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof.  In order to have their
Securities  included  in the  registration  statement,  beneficial  owners  must
complete and return the enclosed  Notice of  Registration  Statement and Selling
Securityholder Questionnaire.

It is important that beneficial  owners of the securities  receive a copy of the
enclosed  materials as soon as possible as their  rights to have the  Securities
included in the  registration  statement  depend upon their Returning the notice
and  questionnaire  by [deadline  for  response].  Please  forward a copy of the
enclosed  documents  to  each  beneficial  owner  that  holds  interests  in the
Securities  through you. If you require more copies of the enclosed materials or
have any  questions  pertaining  to this  matter,  please  contact  PSEG  Energy
Holdings Inc. in writing at 80 Park Plaza,  Newark,  NJ 07102 or by telephone at
(973) 456-3581.

--------
*Not less than 28 calendar days from date of mailing.

                                      A-1
<PAGE>

                            PSEG ENERGY HOLDINGS INC.

                        Notice of Registration Statement
                                       and
                      Selling Securityholder Questionnaire

                                     (Date)

Reference is hereby made to the Exchange and Registration  Rights Agreement (the
"Exchange and Registration  Rights Agreement") between PSEG Energy Holdings Inc.
(the  "Company") and the Purchaser  named therein.  Pursuant to the Exchange and
Registration  Rights  Agreement,  the Company  has filed with the United  States
Securities and Exchange  Commission (the "Commission") a registration  statement
on Form S-3 (the "Shelf Registration Statement") for the registration and resale
under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"),
of the Company's 9 1/8% Senior Notes due 2004 (the "Securities").  A copy of the
Exchange and Registration  Rights Agreement is attached hereto.  All capitalized
terms not otherwise  defined herein shall have the meanings  ascribed thereto in
the Exchange and Registration Rights Agreement.

Each beneficial  owner of Registrable  Securities (as defined below) is entitled
to have the  Registrable  Securities  beneficially  owned by it  included in the
Shelf Registration  Statement.  In order to have Registrable Securities included
in the Shelf Registration  Statement,  this Notice of Registration Statement and
Selling  Securityholder  Questionnaire  ("Notice  and  Questionnaire")  must  be
completed, executed and delivered to the Company at the address set forth herein
for  receipt  ON  OR  BEFORE  [deadline  for  response].  Beneficial  owners  of
Registrable  Securities who do not complete,  execute and return this Notice and
Questionnaire by such date (i) will not be named as selling  securityholders  in
the Shelf  Registration  Statement and (ii) may not use the Prospectus forming a
part thereof for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration  Statement and related Prospectus.  Accordingly,  holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel  regarding the  consequences  of being named or not being
named as a  selling  securityholder  in the  Shelf  Registration  Statement  and
related Prospectus.

The term  "Registrable  Securities" is defined in the Exchange and  Registration
Rights Agreement.

                                     A-2
<PAGE>

                                    ELECTION

The undersigned holder (the "Selling  Securityholder") of Registrable Securities
hereby elects to include in the Shelf  Registration  Statement  the  Registrable
Securities  beneficially  owned  by  it  and  listed  below  in  Item  (3).  The
undersigned,  by signing and returning this Notice and Questionnaire,  agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this  Notice and  Questionnaire  and the  Exchange  and  Registration  Rights
Agreement,  including,  without  limitation,  Section  6  of  the  Exchange  and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.

Upon any sale of  Registrable  Securities  pursuant  to the  Shelf  Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Exchange and Registration Rights Agreement.

The Selling  Securityholder  hereby  provides the following  information  to the
Company and  represents  and  warrants  that such  information  is accurate  and
complete:

                                      A-3
<PAGE>

                                  QUESTIONNAIRE

(1) (a)     Full Legal Name of Selling Securityholder:

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

    (b)     Full  Legal  Name of  Registered  Holder  (if not the same as in (a)
            above) of Registrable Securities Listed in Item (3) below:

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

    (c)     Full Legal Name of DTC  Participant  (if  applicable  and if not the
            same as (b) above) Through Which  Registrable  Securities  Listed in
            Item (3) below are Held:

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

(2)         Address for Notices to Selling Securityholder:

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

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

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

            TELEPHONE:       ---------------------------------------------------

            FAX:             ---------------------------------------------------

            CONTACT PERSON:  ---------------------------------------------------

(3)         Beneficial Ownership of Securities:

            Except as set forth below in this Item (3), the undersigned does not
            beneficially own any Securities.

    (a)     Principal amount of registrable securities beneficially owned:______
            CUSIP No(s). Of such registrable securities:________________________

    (b)     Principal  amount of Securities  other than  Registrable  Securities
            beneficially owned:

            --------------------------------------------------------------------
            CUSIP No(s). Of such other securities:

    (c)     Principal  amount of Registrable  Securities  which the  undersigned
            wishes to be included  in the Shelf  Registration  Statement: ______
            CUSIP No(s).  Of such  Registrable  Securities to be included in the
            shelf registration statement________________________________________

(4)         Beneficial Ownership of Other Securities of the Company:

            Except as set forth below in this Item (4), the undersigned  Selling
            Securityholder  is not the  beneficial  or  registered  owner of any
            other  securities of the Company,  other than the Securities  listed
            above in Item (3).

            State any exceptions here:

                                      A-4
<PAGE>

(5)         Relationships with the Company:

            Except as set forth below,  neither the selling  securityholder  nor
            any of its  affiliates,  officers,  directors  or  principal  equity
            holders (5% or more) has held any  position or office or has had any
            other material relationship with the company (or its predecessors or
            affiliates) during the past three years.

            State any exceptions here:

(6)         Plan of Distribution:

            Except as set forth below,  the undersigned  selling  securityholder
            intends to distribute  the  registrable  securities  listed above in
            item (3) only as follows (if at all):  such  registrable  securities
            may be sold from time to time  directly by the  undersigned  selling
            securityholder    or,    alternatively,     through    underwriters,
            broker-dealers or agents. Such registrable securities may be sold in
            one or more  transactions  at fixed  prices,  at  prevailing  market
            prices at the time of sale, at varying prices determined at the time
            of sale,  or at  negotiated  prices.  Such sales may be  effected in
            transactions  (which may involve crosses or block  transactions) (i)
            on any national  securities  exchange or quotation  service on which
            the  registered  securities  may be  listed or quoted at the time of
            sale,  (ii) in the  over-the-counter  market,  (iii) in transactions
            otherwise   than  on  such   exchanges   or   services   or  in  the
            over-the-counter  market, or (iv) through the writing of options. In
            connection  with sales of the  registrable  securities or otherwise,
            the selling  securityholder may enter into hedging transactions with
            broker-dealers,  which  may in turn  engage  in  short  sales of the
            registrable  securities in the course of hedging the positions  they
            assume.  The  selling   securityholder  may  also  sell  registrable
            securities  short and deliver  registrable  securities  to close out
            such short positions,  or loan or pledge  registrable  securities to
            broker-dealers that in turn may sell such securities.

            State any exceptions here:

By signing below, the Selling  Securityholder  acknowledges  that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the  Exchange  Act  and  the  rules  and  regulations  thereunder,  particularly
Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the
Registrable  Securities  listed in Item (3) above  after the date on which  such
information  is provided to the Company,  the Selling  Securityholder  agrees to
notify  the  transferee(s)  at the  time

                                      A-5
<PAGE>

of  the  transfer  of  its  rights  and   obligations   under  this  Notice  and
Questionnaire and the Exchange and Registration Rights Agreement.

By signing below, the Selling  Securityholder  consents to the disclosure of the
information  contained  herein in its answers to Items (1) through (6) above and
the  inclusion  of such  information  in the Shelf  Registration  Statement  and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in  connection  with the  preparation  of the
Shelf Registration Statement and related Prospectus.

In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and  Registration  Rights  Agreement to provide such information as
may be required by law for inclusion in the Shelf  Registration  Statement,  the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information  provided herein which may occur subsequent to the
date  hereof at any time  while  the Shelf  Registration  Statement  remains  in
effect.  All notices  hereunder  and pursuant to the  Exchange and  Registration
Rights Agreement shall be made in writing,  by hand-delivery,  first-class mail,
or air courier guaranteeing overnight delivery as follows:

      To the Company:

                                                PSEG Energy Holdings Inc.
                                                80 Park Plaza, T-22
                                                P.O. Box 1171
                                                Newark, New Jersey 07101
                                                Attention: Treasurer

Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the  Company,  the terms of this Notice and  Questionnaire,  and the
representations  and  warranties  contained  herein,  shall be binding on, shall
inure to the benefit of and shall be enforceable  by the respective  successors,
heirs,  personal  representatives,  and  assigns of the  Company and the Selling
Securityholder (with respect to the Registrable Securities beneficially owned by
such Selling  Securityholder  and listed in Item (3) above. This Agreement shall
be governed in all respects by the laws of the State of New York.

                                      A-6
<PAGE>

IN WITNESS WHEREOF,  the  undersigned,  by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

DATED:________________________

               _________________________________________________________________
               Selling Securityholder
               (Print/type full legal name of beneficial owner of Registrable
               Securities)

               BY: _____________________________________________________________
               Name:
               Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY AT:

                                                PSEG Energy Holdings Inc.
                                                80 Park Plaza, T-22
                                                P.O. Box 1171
                                                Newark, New Jersey 07101
                                                Attention: Treasurer

                                      A-7
<PAGE>

                                                                       Exhibit B

              NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

First Union National Bank
Pseg Energy Holdings Inc.
c/o First Union National Bank
21 South Street, 3rd Floor
Morristown, New Jersey 07960

Attention:  Trust Officer

         Re:      PSEG Energy Holdings Inc. (the "Company")
                  9 1/8% Senior Notes due 2004

Dear Sirs:

Please be  advised  that  _____________________  has  transferred  $____________
aggregate  principal  amount  of  the  above-referenced  Notes  pursuant  to  an
effective  Registration  Statement on Form S-3 (File No. 333-____ ) filed by the
Company.

We hereby  certify that the  prospectus  delivery  requirements,  if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial  owner of the Notes is named as a "Selling  Holder" in the PROSPECTUS
DATED [DATE] or in supplements  thereto, and that the aggregate principal amount
of the Notes  transferred are the Notes listed in such Prospectus  opposite such
owner's name.

Dated:                                          Very truly yours,

                                                --------------------------------
                                                (Name)

                                            By:
                                                --------------------------------
                                                (Authorized Signature)

                                      B-1

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