Document:

MEMORANDUM OF UNDERSTANDING

This  Memorandum of  Understanding  ("MOU") is entered into among Wellsford Real
Properties,  Inc. ("WRP"), Wellsford Commercial Properties Trust ("WCPT"), WHWEL
Real Estate Limited Partnership  ("WHWEL"),  WXI/WWG Realty, L.L.C.  ("WHITEHALL
XI") and W/W Group  Holdings,  L.L.C.  ("HOLDING  CO.") this 25th day of October
2000 for the purpose of setting forth the  understanding  of the parties  hereto
with respect to (i) certain  modifications  to be made to the Limited  Liability
Company Operating Agreement (the "OPERATING  AGREEMENT") of  Wellsford/Whitehall
Group,  L.L.C.  (the  "COMPANY")  and (ii) certain  additional  agreements to be
entered  into among the  parties  relating  to the  Company,  its assets and its
business  and to WCPT and its  personnel.  All  capitalized  terms  used but not
defined herein have the meanings set forth in the Operating Agreement.

1.   Modification of Governance Provisions.

     (a)  WCPT  Management LLC ("NEW MANAGER") will replace WCPT as the managing
          member  of  the  Company,  and  New  Manager  will  assume  all of the
          day-to-day management rights and duties of WCPT. At the closing of the
          transactions  contemplated  in this MOU,  New Manager will be owned by
          Whitehall XI, Holding Co., WHWEL, Whitehall Street Real Estate Limited
          Partnership XIII,  Whitehall Parallel Real Estate Limited  Partnership
          XIII (and/or another  Whitehall Fund) or their  affiliates and Richard
          Previdi (and possibly other  employees) in amounts to be determined by
          them.

     (b)  From  and  after  the  effective  date  of the  definitive  agreements
          executed to implement this MOU (the "EFFECTIVE  DATE"),  the decisions
          that will require Management Committee's approval are:

          (i)  The Major  Decisions and  Operational  Decisions  originally  set
               forth in the Operating Agreement,  but as such terms are modified
               as provided on Annex A hereto.  (The  parties may  eliminate  the
               term  "Operational  Decisions"  and  include the items on Annex A
               defined as such within the term "Major Decisions");

          (ii) Material changes to the development plans and construction budget
               (which plans and budget will be subject to WCPT's  approval)  for
               the  property  known as  "Pointview",  located in the Township of
               Wayne,  New  Jersey  ("POINTVIEW"),  if such  changes  cause  the
               construction budget to increase by more than 10%;

                             Exhibit 10.104 Page 1
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          (iii)The incurrence of debt for borrowed money not in compliance  with
               the Financing Parameters (as defined in Section 2 below);

          (iv) The  sale  of  any  Property  not in  compliance  with  the  Sale
               Parameters  (as  defined  in  Section  3  below)  other  than the
               following  assets:  Channel  Lumber,  Channel Lumber Land (to the
               extent  it is  owned  by the  Company),  250  Elm  Street  and BF
               Goodrich  (the  "RECENTLY  ACQUIRED   ASSETS"),   which  will  be
               transferred pursuant to Section 4; and

          (v)  The  purchase  of any new real  estate  assets  except for assets
               acquired in one or more ss.1031 exchange  transactions for any of
               the Non-Nomura  Saracen Assets or the Nomura Saracen Assets (each
               as described below).

          For  purposes of clause (v),  New Manager may cause the Company (A) to
          acquire  any one or more assets in a ss.1031  transaction  in exchange
          for the Non-Nomura  Saracen Assets as determined by New Manager in its
          sole discretion,  provided that no individual asset acquired in such a
          ss.1031 transaction may, unless WCPT consents thereto,  have disclosed
          environmental  issues that would cost more than  $250,000 to remediate
          per asset (as  determined by the Company's  environmental  consultant)
          and (B) to acquire  Credit Lease Assets as part of a ss.1031  exchange
          transaction  for any of the Nomura Saracen Assets (as defined below in
          Section 5(iii)).  The term "CREDIT LEASE ASSETS" means any property or
          properties  to be owned or, if a part of an  acquisition  of a pool of
          assets that also includes fee owned  properties,  ground leased by the
          Company (or a  Subsidiary)  that are (I) leased to a tenant or tenants
          having a credit  rating of at least  "Baa" by Moody's or "BBB+" by S&P
          and (II) leveraged by the Company (or such  Subsidiary) with financing
          in an amount  equal to at least $140  million in the  aggregate  (i.e.
          among all of such properties  taken  together) or, if greater,  85% of
          the total purchase price of such properties. The ownership interest of
          the Company in the Credit  Lease  Assets  may, at the  election of New
          Manager,  and provided that a Tax Opinion (as hereinafter  defined) is
          obtained,  be distributed to the Company's Members so that each Member
          owns an  undivided  tenancy-in-common  interest  in the  Credit  Lease
          Assets   and   held   pursuant   by  such   Members   pursuant   to  a
          tenancy-in-common  agreement  in  substantially  the same  form as the
          Operating Agreement with such changes as may be reasonably  acceptable
          to WCPT and the Whitehall Group.

          Except for the  foregoing  decisions and except for such other matters
          that  expressly  require  the  consent  of  WCPT as set  forth  in the
          definitive agreements implementing this MOU, New Manager will have the
          authority  to act on  behalf of the  Company  without  the  Management
          Committee's or WCPT's consent or approval.

                             Exhibit 10.104 Page 2
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2.   Financing  Parameters.  From and after the Effective  Date, New Manager may
     from time to time  cause the  Company  and its  Subsidiaries  to enter into
     financings  and  refinancings  with the  approval  of the  Whitehall  Group
     provided  that the  Financing  Parameters  are  satisfied.  The  "FINANCING
     PARAMETERS" will be as follows:

     (a)  such  financings  are  non-recourse  to the  Company's  Members or the
          parent  companies of the Company's  Members (except for  environmental
          obligations and such Member's actions on account of matters covered by
          non-recourse carveouts similar to those in the Fleet Bank financing or
          similar matters consistent with market practice,  provided that unless
          one or more  Whitehall  funds actually  provides such a guaranty,  WRP
          shall  not be  required  to do so,  provided  further  that  any  such
          environmental  indemnity  shall only be recourse to the Company,  WCPT
          and  the  Whitehall  Group  but  not to the  parent  companies  of the
          Company's Members);

     (b)  the weighted  average  interest rate of all  financings of the Company
          and its  subsidiaries  taken  together  does not exceed LIBOR plus 400
          basis points per annum (calculated  quarterly based on the outstanding
          debt  balances of the Company  and its  Subsidiaries  as of the end of
          each calendar quarter); and

     (c)  the total aggregate  Indebtedness of the Company and its  Subsidiaries
          will not  exceed 70% of the  "BORROWING  BASE"  (calculated  quarterly
          based  on the  outstanding  debt  balances  of  the  Company  and  its
          Subsidiaries  as of the  end  of  each  calendar  quarter).  The  term
          "INDEBTEDNESS"  includes  any  secured or  unsecured  financings,  any
          senior or mezzanine  financings and any preferred equity issued by the
          Company after the date hereof.

          The Borrowing  Base will  initially be equal to $700 million,  as such
          amount is  allocated  among all of the  Company's  assets as agreed by
          WCPT and the  Whitehall  Group in the  definitive  documentation  (the
          allocated  value  for  each  asset  is  referred  to as an  "ALLOCATED
          VALUE").   The  Borrowing  Base  will  (x)  increase  or  decrease  in
          connection  with a re-financing of any asset by an amount equal to the
          difference between (1) a lender's appraised value or implied valuation
          (i.e.  based on the gross loan  amount  divided  by the  loan-to-value
          ratio,  regardless of whether a third party  appraisal is procured) of
          such  asset  and (2) the  Allocated  Value  of such  asset  in  effect
          immediately prior to such refinancing (and the Allocated Value of such
          refinanced asset will be increased or decreased,  as applicable,  by a
          like  amount) and (y) be reduced by the  Allocated  Value of any asset
          that is sold (as such  Allocated  Value may be adjusted as provided in
          the  foregoing  clause (x)) and by a pro rata portion of the Allocated
          Value of any asset that is subject to a casualty or  condemnation  and
          (z) exclude Credit Lease Assets that are financed as described below.

                             Exhibit 10.104 Page 3
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          For the avoidance of doubt, (i) any particular  financing may, without
          WCPT's  approval,  deviate from the Financing  Parameters set forth in
          (b) and (c) above as long as all of the  financings,  taken  together,
          continue to comply with the  Financing  Parameters,  (ii) WCPT and WRP
          may be  required  (and  hereby  agrees)  to  provide  guarantees  to a
          prospective  lender  with  respect to their  fraud,  misappropriation,
          willful  misconduct,  tortious actions and other matters comparable to
          those  matters  for which  Fleet Bank has  recourse  to WRP and/or its
          Members or similar matters  consistent with market practice  (provided
          that unless one or more of the Whitehall funds actually  provides such
          a guarantee, WRP shall not be required to do so), (iii) such financing
          may be  cross-collateralized  and cross-defaulted with other assets of
          the Company or its Subsidiaries  within the same or related financings
          that  are  contemporaneously  closed  with  each  other  (including  a
          cross-collateralized  facility that allows for additional  advances in
          connection  with the financing or  re-financing of other assets of the
          Company or its Subsidiaries) and (iv) New Manager may incur financing,
          including fixed rate financings, secured by any Credit Lease Asset (as
          described  above) and such financing and assets will not be taken into
          account in determining compliance with the tests in paragraphs (b) and
          (c) above (it being  agreed that New Manager may only incur fixed rate
          financings in connection with an exchange transaction for Credit Lease
          Assets).  In the event of a  refinancing  or repayment of debt that is
          currently  allocable  to the Saracen  Members  that could  result in a
          Saracen Debt Reduction  Event, New Manager will obtain a "Tax Opinion"
          (as defined in Section 3(a)(ii) below).

3.   Sale of  Assets.  (a) From and after  the  Effective  Date,  in lieu of the
     existing  provisions of Section 8.2 of the Operating  Agreement (which will
     be  deleted),  New  Manager may from time to time cause the Company and its
     Subsidiaries  to enter into sales of the  Company's  assets (or the Company
     itself  or  any  or  all of its  Subsidiaries)  with  the  approval  of the
     Whitehall Group and without the approval of WCPT; provided that:

          (i)  the  Whitehall  Group will give WCPT a 30-day prior notice of any
               such sale for informational  purposes only (with no obligation to
               sell  such  asset to  WCPT),  which  notice  shall  set forth the
               projected or  anticipated  terms and  conditions  thereof and, if
               available, any sales memorandum and analyses with respect to such
               sale;

          (ii) if the  Whitehall  Group decides to sell any of the assets listed
               on Schedule B hereto (the "NON-NOMURA SARACEN ASSETS"), it may do
               so  without  the  consent  of  WCPT  only  in a ss.1031  exchange
               transaction (it being agreed that WCPT has pre-approved a ss.1031
               exchange  transaction  with  respect to such  Non-Nomura  Saracen
               Assets)  and any  liability  pursuant  to  Section  8.2A for such
               transaction or any  future ss.1031 exchange  transaction that New

                             Exhibit 10.104 Page 4
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               Manager is permitted  to complete  shall be borne by the Company,
               provided  that New Manager  obtains  either (A) an opinion of Pre
               Approved  Counsel  (defined  to  mean  such  law  firm as the New
               Manager may engage  without the consent of WCPT) or another  firm
               approved by WCPT addressed to the Company to the effect that such
               transaction  "should"  not  result in a  liability  under the tax
               indemnification  in favor of Saracen  under  Section  8.2A of the
               Operating  Agreement  (such tax  opinion is referred to as a "TAX
               OPINION") or (B) a waiver by Saracen of such tax indemnification;

          (iii)if the  Whitehall  Group decides to sell any of the assets listed
               on Schedule C hereto (the "NOMURA SARACEN ASSETS"),  it may do so
               without the consent of WCPT (A) in a ss.1031 exchange transaction
               as described  above for Credit Lease  Assets,  provided  that New
               Manager  obtains  either  (I) a Tax  Opinion  or (II) a waiver by
               Saracen of such tax indemnification or (B) for OP units issued by
               a pre-approved  list of public  companies  (the "APPROVED  PUBLIC
               COMPANIES"),  provided  that  such OP units  may  have  "lock-up"
               restrictions  prohibiting their transfer for 6 months or less and
               will,  after such  "lock-up",  be convertible for or exchangeable
               into  registered   common  stock  or  common  stock  entitled  to
               registration  rights  reasonably deemed acceptable by New Manager
               (units  issued  by such  companies  and  having  such  terms  are
               referred to as "Qualified OP Units");

          (iv) if the  Whitehall  Group  decides to sell any of the assets other
               than the Non-Nomura  Saracen Assets and the Nomura Saracen Assets
               (the  "OTHER  ASSETS"),  it may do so without the consent of WCPT
               for (A) cash  consideration  or (B) Qualified OP Units so long as
               the total value of the OP units received in all such transactions
               consummated under this clause (iv) is less than $50 million; and

          (v)  if the  Whitehall  Group decides to cause the Company to be party
               to a merger,  consolidation or similar business  combination,  it
               may do so without the consent of WCPT for (x) cash  consideration
               or (y) a  combination  of cash and Qualified OP Units with any of
               the Approved  Public  Companies so long as the total value of the
               OP units received in such a transaction  consummated  pursuant to
               this clause (v) plus the total value of the OP units  received in
               a transaction  consummated  pursuant to the preceding clause (iv)
               is less than $50  million (a  transaction  in this clause (v), an
               "EXTRAORDINARY TRANSACTION").

          The foregoing restrictions in clauses (ii) through (v) are referred to
          herein as the "SALES PARAMETERS". In no event may the Company sell the
          Company's assets to

                             Exhibit 10.104 Page 5
<PAGE>

          any affiliate of the Whitehall Group without the consent of WCPT other
          than any of the Recently  Acquired  Assets (as  described in Section 4
          below).  If a Tax Opinion is to be obtained by New Manager pursuant to
          clauses (ii) or (iii) above,  New Manager shall deliver to WCPT a copy
          of a draft of such Tax  Opinion at least 5 Business  Days prior to the
          closing of such sale (but such opinion  shall not be subject to WCPT's
          review or approval).

          (b) In  connection  with an  Extraordinary  Transaction  described  in
          Section  3(v)  (including  a sale of all or  substantially  all of the
          Company Assets in a single  transaction),  the Whitehall  Group agrees
          that it will not execute a  confidentiality  agreement  without WCPT's
          consent   (such  consent  will  not  to  be   unreasonably   withheld,
          conditioned or delayed and, in any event, such consent shall be deemed
          given  if it is not  granted  or  denied  within  3  business  days of
          delivery by the Whitehall  Group of written notice thereof and copy of
          such  agreement).  The  parties  agree that it will not be  considered
          unreasonable  for WRP to  request  a  "standstill"  provision  in such
          confidentiality agreement in appropriate circumstances.

4.   Recently  Acquired  Assets.  The Whitehall  Group will cause the Company to
     sell to an entity affiliated with the Whitehall Group the Recently Acquired
     Assets for a purchase price equal to the Company's all-in  acquisition cost
     of such Recently  Acquired Asset plus a return on the invested equity equal
     to LIBOR plus 400 basis points from the date of acquisition.  The foregoing
     obligation of the Whitehall  Group is subject to the final  approval of the
     investment committee of each applicable Whitehall fund.

5.   Employees.  (a) As of the  Effective  Date,  all  employees of WCPT will be
     terminated and hired by New Manager on  substantially  the same terms (i.e.
     salary and benefits) as provided by WCPT. New Manager will obtain severance
     waivers from each such  employee.  New Manager will not assume  liabilities
     for claims that relate to or arise from the period  prior to the  Effective
     Date,  including  contractual  or other  claims  arising  from  illegal  or
     tortious  actions  taken (or  failed to be  taken) or  allegedly  taken (or
     failed to be taken) by WCPT,  WRP or the agents or  employees  of either of
     them or as a result of breach of contract by WCPT.  Each of the  employee's
     time of service with WCPT shall be counted  towards any qualifying  periods
     under any benefit programs  adopted by New Manager,  and each employee will
     be either  compensated by the Company for any unused accrued  vacation days
     or permitted to use such accrued vacation days prior to the Effective Date,
     in each case in accordance with the Company's current policies.

     (b) New Manager will allow Richard  Previdi to retain a part-time  position
     at WRP (for which WRP shall separately  compensate Mr.  Previdi),  provided
     that  such   responsibilities   do  not   interfere   with  Mr.   Previdi's
     responsibilities  to New Manager (it being  understood  that any obligation
     undertaken by Mr. Previdi to

                             Exhibit 10.104 Page 6
<PAGE>

     attend  periodic  meetings  of the  board of  directors  of WRP will not be
     deemed to interfere with his responsibilities to New Manager). In the event
     Mr.  Previdi is unable to attend a meeting of the board of directors of WRP
     for the purpose of discussing the Company's business, New Manager will send
     another  senior  employee of New Manager to attend such  meeting in lieu of
     Mr. Previdi, provided that New Manager will not be responsible in the event
     such person cannot attend such meetings because of any  circumstances  that
     are beyond New Manager's control.

     (c) Except as  permitted  in this  Section  2, WCPT  and/or WRP will not be
     permitted to employ or solicit the employment or consulting services of any
     individual employed by New Manager, and New Manager and the Whitehall Group
     will not be permitted  to employ or solicit the  employment  or  consulting
     services of any individual  employed by WRP, except after the expiration of
     6 months  following  the  termination  for any reason of such  individual's
     employment by WCPT or New Manager or WRP (as the case may be, provided that
     such  individual was not solicited by WRP, WCPT or New Manager (as the case
     may be)  during  such  individual's  employment).  The  provisions  of this
     Section 5(c) will terminate on January 1, 2007.

     (d) Mario  Mazzella will remain an employee of WRP but will work 50% of his
     time for New  Manager  and 50% of his time for WRP,  and each of them  will
     share the cost of his compensation and benefits, on a 50/50 basis; provided
     that New Manager will have the right to  terminate  his services to it upon
     60 days' prior notice to WRP. New Manager and WRP will determine a schedule
     that will permit Mr. Mazzella to be available 2 days per week in any of New
     Manager's offices.

     (e) The Company will pay the remaining  balance of the  Administration  Fee
     for the calendar year 2000. The Company will be responsible for the payment
     of all bonuses for the calendar year 2000 in the amounts agreed by WCPT and
     the  Whitehall  Group,  to be  allocated  among the  existing  employees as
     determined by New Manager in its sole  discretion,  subject to  contractual
     commitments.

6.   Existing  Advances  by  WRP.  As  of  the  date  hereof,  the  Company  has
     outstanding  unsecured  advances made by WRP (the "WRP ADVANCES").  The WRP
     Advances will be repaid on December 31, 2000.

     7.  Distributions.  Except  for  the  proceeds  of  assets  sold in ss.1031
     transactions as described in Sections 1 and 3 above, New Manager will cause
     the Company to distribute all Available Cash derived from Capital  Proceeds
     (as  defined  in the  Operating  Agreement)  within 45 days of such  event;
     provided that the amounts  distributed will be net of reserves withheld for
     (1) working capital in accordance  with Section  3.4.A.(g) of the Operating
     Agreement;   (2)   potential   claims  from  a  purchaser   for  breach  of
     representations and warranties and any other liabilities

                             Exhibit 10.104 Page 7
<PAGE>

     under a  purchase  and  sale  agreement  (as  such  reserves  or  potential
     liabilities are determined in the Whitehall Group's reasonable  discretion)
     after the sale of such asset (provided that no such reserve shall exceed 5%
     of the purchase price or be withheld for more than 18 months  following the
     closing of such sale,  even though the dollar  limit on and duration of the
     Company's (or Subsidiary's)  liability under any sales agreement may exceed
     such amounts if New Manager and the Whitehall Group so determine);  and (3)
     any debt of the Company or any of its Subsidiaries  that matures within 120
     days after the sale of such asset.

     WCPT will be solely  responsible for monitoring and maintaining  compliance
     with its REIT  qualification  requirements and will notify New Manager,  no
     later than 30 days prior to the relevant  distribution  date, of the amount
     of net  taxable  income  distributions  WCPT will be required to receive in
     order to remain  qualified as a REIT (with a computation  showing the basis
     for such  amount)  and New Manager  will,  subject to the terms of the loan
     documentation to which the Company or its  Subsidiaries are a party,  cause
     the Company to distribute cash to satisfy such distribution requirement. In
     the event the Company is required to distribute net taxable income realized
     in the  last  15 days of a  calendar  year  pursuant  to the  terms  of the
     preceding  sentence,  the New Manager will cause the Company to  distribute
     cash  to  satisfy  such  distribution  requirement  by  January  31 of  the
     following calendar year.  Notwithstanding  the foregoing,  no distributions
     will be made to the extent  doing so would  violate any loan  documents  to
     which the  Company or its  Subsidiaries  are bound.  Any  liability  of New
     Manager for wrongful or illegal  distributions  (e.g.,  because the Company
     was or became  insolvent upon the  distribution  or because the Company did
     not  adequately  reserve for  liabilities)  will be borne by the  Whitehall
     Group  and WCPT pro  rata in  accordance  with  their  relative  Percentage
     Interests.  Notwithstanding the foregoing, Saracen shall not be relieved of
     any liability it would have to return such distributions that Saracen would
     otherwise be required to return in  accordance  with the Limited  Liability
     Company Act of the State of Delaware.

     The definitive agreement will include the mechanism for WCPT's notification
     to New Manager of the amount of net taxable income distributions to be made
     pursuant to the foregoing.

8.   Revisions to the Promote.  Under Section 7.1(q) of the Operating Agreement,
     WCPT is required to distribute 50% of the  distributions  received by it to
     certain  designated  employees  of WCPT (the "FIRST  EMPLOYEE  PROMOTE") in
     respect of  distributions  received  pursuant to  Sections  7.1(c)(iii)(y),
     7.1(c)(iv)(y),  7.1(f)(iii)(y) and 7.1(f)(iv)(y) of the Operating Agreement
     (the "OLD MONEY  PROMOTE") and 55% of the  distributions  received by it to
     certain  designated  employees of WCPT (the "SECOND  EMPLOYEE  PROMOTE") in
     respect of  distributions  received  pursuant to  Sections  7.1(d)(iii)(y),
     7.1(d)(iv)(y),      7.1(e)(iii)(y),      7.1(e)(iv)(y),     7.1(g)(iii)(y),
     7.1(g)(iv)(y),  7.1(h)(iii)(y) and

                             Exhibit 10.104 Page 8
<PAGE>

     7.1(h)(iv)(y) of the Operating  Agreement (the "NEW MONEY PROMOTE").  After
     the Effective Date, the foregoing amounts will be distributed as follows:

     (a)  WRP will retain 50% of the Old Money  Promote and 45% of the New Money
          Promote;

     (b)  With respect to the First Employee  Promote,  15% of such amount (i.e.
          7.5% of the total Old Money  Promote) will be retained by designees of
          WRP;

     (c)  With respect to the Second Employee Promote,  15% of such amount (i.e.
          8.25% of the total New Money Promote) will be retained by designees of
          WRP;

     (d)  The remaining  First  Employee  Promote  (i.e.  42.5% of the Old Money
          Promote)  will be  allocated  to  employees  of New  Manager or to New
          Manager itself, in each case as determined in whole or in part, by the
          Whitehall Group in its sole and absolute discretion; and

     (e)  The remaining  Second Employee  Promote (i.e.  46.75% of the New Money
          Promote)  will be  allocated  to  employees  of New  Manager or to New
          Manager itself, in each case as determined in whole or in part, by the
          Whitehall Group in its sole and absolute discretion.

     In the event that the Company's  loan  documents  are  replaced,  waived or
     modified so as to permit a transfer of the remaining First Employee Promote
     and the remaining Second Employee  Promote to New Manager,  then WCPT shall
     effectuate  such  transfer and will  execute,  acknowledge  and deliver any
     instruments or documents necessary to evidence the transfer of such portion
     of the First Employee  Promote and the Second Employee Promote as specified
     above.

9.   Capital Calls. (a) The Whitehall Group and WCPT will remain responsible for
     funding  their  remaining  Capital  Commitment  (it being  agreed  that the
     current  deadline of December  31, 2000 for capital  calls will be extended
     until  December 31, 2001 (the  "DEADLINE")  and New Manager  shall have the
     right without any further approval to make capital calls for such amounts).
     The Deemed Value Per Membership Unit as of the date hereof will be $18 less
     the amount  equal to the  quotient  of the amount of any  Capital  Proceeds
     distributed  prior to the  Deadline  divided by the  number of  outstanding
     common  membership units at the time of such  distribution (it being agreed
     that any  distributions  to WCPT or the Whitehall  Group resulting from the
     Whitehall  Group's purchase of any Recently  Acquired Asset will not reduce
     the then Deemed Value Per  Membership  Unit,  and will increase the Capital
     Commitments of each party so that such distributed  amount is available for
     capital  calls  made  prior to the  Deadline).  Amounts to be funded by the
     Whitehall  Group will be allocated among the members of the Whitehall Group

                             Exhibit 10.104 Page 9
<PAGE>

     as they  determine.  The outstanding  Capital  Commitments of the Whitehall
     Group and WCPT will be  increased by the amount of any  distributions  they
     receive in connection  with any sale of the Recently  Acquired Assets to an
     entity affiliated with the Whitehall Group (as set forth in Section 4).

     (b) After the Capital Commitments are fully funded or expire, the Whitehall
     Group  and WCPT  will at the  request  of New  Manager  fund or cause to be
     funded on a "revolving" basis up to $10 million for Necessary  Expenditures
     (i.e. amounts funded under this provision may be returned and redrawn again
     later).  Such amounts  will be funded 60% by Whitehall  and 40% by WCPT and
     will be callable  prior to December 31,  2003.  Fundings of the $10 million
     for Necessary  Expenditures will be contributed as either debt or preferred
     equity and will accrue  interest or dividends at the rate of LIBOR plus 500
     basis points per annum. Such debt or preferred equity will be (A) senior in
     priority  to  the   Membership   Units  and  will  be  paid  prior  to  any
     distributions made on the account of the Membership Units and (B) junior in
     priority to the Series A Preferred  Membership  Units and any payments made
     in respect of the such debt or preferred  equity will be subordinate to any
     payments due in respect of the Series A Preferred Membership Units.

10.  Buy-Sell.  (a) In the event WCPT's  approval is sought  pursuant to Section
     1(b)(i)  above and is denied,  the  Whitehall  Group will have the right to
     exercise a buy-sell with respect to Pointview  such that either WCPT or the
     Whitehall Group will purchase Pointview pursuant to the following terms:

          (i)  The  Whitehall   Group  may  trigger  a  Pointview   Buy-Sell  by
               delivering  to WCPT a notice (the  "POINTVIEW  BUY-SELL  NOTICE")
               that  specifies the price the  Whitehall  Group is willing (1) to
               buy  Pointview  from the  Company or (2) to cause the  Company to
               sell  Pointview to WCPT.  Such  Pointview  Buy-Sell  Notice shall
               contain both an irrevocable  offer by the Whitehall  Group to buy
               Pointview for a price (the "POINTVIEW  OFFER Price") equal to the
               price specified in the Pointview  Buy-Sell Notice (the "POINTVIEW
               OFFER  TO  BUY")  and an  offer  to  cause  the  Company  to sell
               Pointview  to WCPT at the Offer  Price (the  "POINTVIEW  OFFER TO
               SELL").  Within 45 days  after  receipt of a  Pointview  Buy-Sell
               Notice,  WCPT shall deliver to the Whitehall Group an irrevocable
               binding  notice  (the  "POINTVIEW  ELECTION  NOTICE")  specifying
               whether it elects to accept the Whitehall Group's Pointview Offer
               to Buy or Pointview  Offer to Sell. If within such 45-day period,
               WCPT shall not have delivered an Election Notice, then WCPT shall
               be conclusively deemed to have irrevocably accepted the Whitehall
               Group's Pointview Offer to Buy.

          (ii) If WCPT  accepts (or is deemed to have  accepted)  the  Whitehall
               Group's Offer to Buy, the Whitehall  Group (or its designee) will
               make a deposit to the  Company in the amount  equal to 10% of the
               Pointview

                             Exhibit 10.104 Page 10
<PAGE>

               Offer Price, which deposit shall be non-refundable  except in the
               event of a default by the  Company or WCPT.  If WCPT  accepts the
               Whitehall  Group's  Pointview  Offer to Sell,  WCPT  will  make a
               deposit  to  the  Company  in  the  amount  equal  to  10% of the
               Pointview  Offer Price,  which  deposit  shall be  non-refundable
               except in the event of a default by the Company or the  Whitehall
               Group.  If WCPT elects to buy Pointview it may designate  another
               entity to buy Pointview.

          (iii)Closing of the  Pointview  Buy-Sell  will occur  within 90 (or if
               the  Offer  Price  exceeds  $25  million,  180)  days  after  the
               Pointview  Election  Notice is delivered or an election is deemed
               made,  with time being of the  essence.  In the event the Company
               (or WCPT, in the event the Pointview Offer to Buy is accepted, or
               the Whitehall  Group, in the event the Pointview Offer to Sell is
               accepted)  defaults  in its  obligation  to sell (or to cause the
               Company  to sell)  Pointview,  the  non-defaulting  party will be
               entitled  to  the  return  of the  deposit  or to  seek  specific
               performance.  If the party  obligated to buy (the "BUYING PARTY")
               Pointview defaults in its obligation,  the  non-defaulting  party
               (WCPT,  in the event the Pointview  Offer to Buy is accepted,  or
               the Whitehall  Group, in the event the Pointview Offer to Sell is
               accepted)  will be  entitled,  at its  election,  to  retain  the
               deposit for the Company's account as liquidated  damages (but the
               defaulting  party  shall  not  share in the  same)  or apply  the
               deposit  towards  the  Pointview  Offer  Price and  complete  the
               purchase of Pointview for the non-defaulting  party's account. In
               the event the Whitehall  Group defaults in its obligation  either
               to cause the Company to sell Pointview (if the Pointview Offer to
               Sell is accepted) or buy Pointview (if the Pointview Offer to Buy
               is  accepted),  it will  lose  all  further  right to  trigger  a
               buy-sell  with respect to Pointview  and WCPT will have the right
               to exercise all such rights granted to the Whitehall  Group under
               this Section 10(a)(i) (and in such event the Whitehall Group will
               have the same rights as WCPT hereunder).

          (iv) In  connection   with  the   foregoing   purchase  and  sale,  no
               representations  will be made by the Company. The following costs
               and expenses  will be allocated as follows:  (i) the Company will
               be responsible  for its own attorneys'  fees and expenses and the
               Buying Party will be responsible  for its own attorneys' fees and
               expenses;  and  (ii)  the  Company  will be  responsible  for the
               payment  of any  transfer  taxes in  connection  with the sale of
               Pointview  and (iii) the Company will bear any consent or similar
               fees or expenses.

          (v)  In the event WCPT or its controlled  affiliate acquires Pointview
               pursuant to the  buy-sell,  New Manager  will,  at the request of
               WCPT or such controlled affiliate,  agree to act as asset manager
               of Pointview  for a fee of 1% per annum of the Offer Price and to
               act as leasing agent,

                             Exhibit 10.104 Page 11
<PAGE>

               development  manager or  construction  manager (the  "DEVELOPMENT
               SERVICES")  at such fees set forth on  Schedule 1 for a period of
               not  more  than 3  years  after  the  Effective  Date  (it  being
               understood  that New  Manager  will not be  required to act as an
               asset  manager  unless it is also engaged to provide  Development
               Services and vice versa).

     (b) Except as provided in clause (c) below, each of the Whitehall Group and
     WCPT  (each a  "TRIGGERING  PARTY")  will each have the right to  trigger a
     "GLOBAL BUY-SELL" after December 31, 2003 upon the following terms:

          (i)  A Triggering Party may trigger a Global Buy-Sell by delivering to
               the  other  party  (the  "NON-TRIGGERING  PARTY")  a notice  (the
               "GLOBAL BUY-SELL NOTICE") that specifies the price per membership
               unit of the Company (the "UNIT PRICE") such  Triggering  Party is
               willing (1) to pay for the entire interest of the  Non-Triggering
               Party in the Company (the "NON-TRIGGERING PARTY INTEREST") or (2)
               to sell to the  Non-Triggering  Party the entire  interest of the
               Triggering   Party  in  the  Company   (the   "TRIGGERING   PARTY
               Interest").  Such Global  Buy-Sell  Notice shall  contain both an
               irrevocable   offer   by  the   Triggering   Party   to  buy  the
               Non-Triggering Party Interest for a price equal to the product of
               the Unit Price and the number of  Membership  Units  owned by the
               Non-Triggering  Party (the "GLOBAL OFFER TO BUY") and an offer to
               sell  the  Triggering  Party  Interest  for a price  equal to the
               product  of the Unit  Price and the  number of  Membership  Units
               owned by the  Triggering  Party  (the  "GLOBAL  OFFER TO SELL") .
               Within 45 days after  receipt of a Global  Buy-Sell  Notice,  the
               Non-Triggering  Party shall  deliver to the  Triggering  Party an
               irrevocable   binding  notice  (the  "GLOBAL  ELECTION   NOTICE")
               specifying whether it elects to accept the Trigger Party's Global
               Offer to Buy or  Global  Offer to Sell.  If  within  such  45-day
               period,  the  Non-Triggering  Party  shall not have  delivered  a
               Global Election Notice,  then the  Non-Triggering  Party shall be
               conclusively  deemed  to have  accepted  the  Triggering  Party's
               Global Offer to Buy.

          (ii) If the  Non-Triggering  Party  accepts  (or  is  deemed  to  have
               accepted)  the  Triggering  Party's  Global  Offer  to  Buy,  the
               Triggering  Party will make a deposit in the amount  equal to 10%
               of the product of (x) the number of Membership Units owned by the
               Non-Triggering  Party multiplied by (y) the Unit Price;  provided
               that in the event the  Company  Value  (i.e.,  the sum of (I) the
               product of (A) the total number of outstanding  Membership  Units
               multiplied  by (B)  the  Unit  Price,  plus  (II)  all  debt  and
               preferred  equity of the Company) is greater  than $250  million,
               the deposit  shall be in the amount  equal to 7.5% of the product
               of (x) the number of Membership Units owned by the Non-Triggering
               Party multiplied by (y) the Unit Price.

                             Exhibit 10.104 Page 12
<PAGE>

               If the Non-Triggering Party accepts the Triggering Party's Global
               Offer to Sell,  the  Non-Triggering  Party will make a deposit in
               the  amount  equal to 10% of the  product  of (x) the  number  of
               Membership  Units owned by the Triggering Party multiplied by (y)
               the Unit  Price;  provided  that in the event the  Company  Value
               (i.e.,  the sum of (I) the  product  of (A) the  total  number of
               outstanding  Membership  Units  multiplied by (B) the Unit Price,
               plus  (II) all debt  and  preferred  equity  of the  Company)  is
               greater  than $250  million,  the deposit  shall be in the amount
               equal to 7.5% of the  product  of (x) the  number  of  Membership
               Units owned by the  Triggering  Party  multiplied by (y) the Unit
               Price.

          (iii)Closing of the Global  Buy-Sell  will occur within 180 days after
               the Global  Election Notice is delivered or an election is deemed
               made,  with time being of the essence  after the Global  Election
               Notice is  delivered  or an  election is deemed  made,  with time
               being of the essence. In the event a party obligated to sell (the
               "SELLING  PARTY") its  interest  in the  Company  defaults in its
               obligation,  the  non-defaulting  party will be  entitled  to the
               return of the  deposit or to seek  specific  performance.  If the
               party  obligated  to buy (the "BUYING  PARTY") the other  party's
               interest  in  the  Company   defaults  in  its  obligation,   the
               non-defaulting  party will be  entitled to retain the deposit for
               its  own  account  as  liquidated  damages.   In  addition,   the
               defaulting  party will  forfeit all  further  rights to trigger a
               Global Buy-Sell and the non-defaulting party will have the right,
               from  time  to  time  and at any  time,  to  trigger  the  Global
               Buy-Sell.

          (iv) In connection  with the foregoing  purchase and sale, the Selling
               Party will represent, in addition to customary representations as
               to due  authorization,  execution and delivery and enforceability
               of the transfer  documents that it owns the entire Interest being
               sold and that it is  transferring  such  Interest  in the Company
               free and clear of all liens and  encumbrances.  The Selling Party
               will not be liable for any claims  arising from or in  connection
               with such  transferred  interests  after the closing date of such
               purchase and sale (the "POST-CLOSING  CLAIMS"),  arising prior to
               closing,  except for claims that result from or are on account of
               tortious  actions of the Selling Party and the Buying Party shall
               either  obtain a release of the Selling  Party from, or indemnify
               the Selling Party against, the Post-Closing Claims. The following
               costs and expenses  will be allocated as follows:  (i) each party
               will be  responsible  for its own  attorneys'  fees and expenses;
               (ii) the Selling Party will be responsible for the payment of any
               transfer  taxes  in  connection  with  the  sale of such  party's
               Interest;  and (iii) the Buying  Party  will bear any  consent or
               similar fees or expenses.

          (v)  In the  event  that at the  time  of the  Closing  of the  Global
               Buy-Sell  the  Company  owns  Development  Assets  (which will be
               defined as any  property  as to which more than $1 million of the
               budgeted tenant

                             Exhibit 10.104 Page 13
<PAGE>

               improvement,  base  building  or  renovation  work  remains to be
               completed),  then the New Manager will, at the request of WCPT or
               its controlled  affiliate if it is the Buying Party, agree to act
               as asset manager for such properties for a fee of 1% per annum of
               the  costs  of  such  Development  Assets  and  to  provide  such
               Development  Services  at 90% of the  market  rates  set forth on
               Schedule 1 for a period of up to 1 year.  The  provisions of this
               clause shall not apply in the event WCPT designates a third party
               to be the Buying  Partying and such entity is not affiliated with
               and controlled by WCPT.

     (c)  Notwithstanding  the  foregoing,  in the event that on the date of the
     delivery of a Global  Buy-Sell  notice the Company and its  Subsidiaries do
     not  own  any   properties   the  sale  of  which  would  trigger  the  tax
     indemnification obligation of the Company in favor of Saracen under Section
     8.2A  of the  Operating  Agreement,  then  the  foregoing  Global  Buy-Sell
     mechanism  will  apply  mutatis  mutandis  (on the  same  basis  as for the
     Pointview  property)  with  respect  to all of the  assets  of the  Company
     instead of the Triggering  Party's and  Non-Triggering  Party's interest in
     the  Company;  provided  that the Closing of the such  Buy-Sell  will occur
     within 90 (or if the total  purchase  price of all the  assets  (debt  plus
     equity) (the "TOTAL PURCHASE  PRICE") would exceed $250 million,  120) days
     after the Global  Election  Notice is  delivered  or an  election is deemed
     made, with time being of the essence. The Global Buy-Sell under this clause
     (c) will be for all (and not less than all) of the Company's Properties. In
     case of a buy-sell  pursuant to this Section 9(c), the Buying Party will be
     required to make a deposit to the Company in the amount  equal to 5% of the
     Total Purchase Price.

     (d) In  connection  with any of the  buy-sells  triggered  pursuant to this
     Section 9, neither party will make any representations to the other, except
     only for those representations set forth in Section 10(b)(iv).

     11. New Manager Fee. (a)  Initially,  New Manager will earn an annual asset
     management  fee equal to 0.93% per annum of $700 million (the "BASE VALUE")
     (such amount to be reduced 6 months after an asset is sold by the Allocated
     Value of such asset and increased by the  acquisition  price for any assets
     (other  than  Credit  Lease  Assets)  acquired  by the  Company  (it  being
     understood that such increase shall take effect upon the acquisition of any
     asset  other than an asset  acquired  in a ss.1031  transaction  and,  with
     respect to an asset  acquired in a ss.1031  transaction,  shall take effect
     six months after the acquisition of such asset) payable monthly in arrears.
     Each month,  the fee will be equal to 1/12 of 0.93% of the Base Value as of
     the date which is 180 days before such month.  This fee will be in exchange
     for the  services  rendered by New Manger  under the  Operating  Agreement,
     which  services  will  not  include  construction  management  and  leasing
     supervision  ("ADDITIONAL  SERVICES").  The  Company  will pay New  Manager
     additional  fees for  Additional  Services  at 90% of  market  rates  (with
     leasing overrides to be scheduled for each market in which the Company owns
     assets).

                             Exhibit 10.104 Page 14
<PAGE>

     As of  January  1,  2001,  the  Administration  Fee  payable to WRP will be
     terminated.  The Base Value will be increased,  with respect to each Credit
     Lease Asset acquired by the Company, by an amount equal to the equity value
     of such Credit Lease Asset (to be defined as the excess of the  acquisition
     price of such Credit  Lease Asset over the amount of  financing  secured by
     such Credit  Lease  Asset).  In the event the Company  acquires one or more
     Credit Lease Assets,  New Manager will,  in its sole  discretion,  have the
     right to  commence a bidding  process in which each of New Manager and WCPT
     will seek a bid from one  manager  on a list of pre  approved  third  party
     managers who will be responsible  for all asset  management  services,  tax
     services  and  accounting  services  (the  scope  of  such  services  to be
     reasonably  approved by WCPT and New Manager before the commencement of the
     bidding  process)  with  respect to such  Credit  Lease  Assets.  After the
     receipt by the Company of complying bids in response to such invitations to
     bid, New Manager will, in its sole discretion,  have the option of managing
     such  Credit  Lease  Assets  for a fee  equal to the more  competitive  bid
     submitted in the bidding  process or awarding the management of such Credit
     Lease  Assets to the more  competitive  bidder.  In the  event New  Manager
     elects to award the  management  of such  Credit  Lease  Assets to the more
     competitive  bidder,  New  Manager  shall have no further  reporting,  tax,
     accounting, information or other obligations to WRP or WCPT with respect to
     such Credit Lease Assets (other than,  for so long as the Company owns such
     Credit Lease Assets,  the  consolidation  of the financial  results of such
     Credit Lease Assets in the financial statements of the Company).

     (b) New  Manager  will be required to deliver  such  reports and  financial
     statements  in the same form as currently  provided  (the  "REPORTS")  on a
     monthly  basis within 20 days after such calendar  month.  In the event New
     Manager  fails to  deliver  the  Reports  on or before the 25th day after a
     month-end  or a  quarter-end  or the 60th day after a  year-end  (each such
     date, a "REPORTING  DEADLINE"),  New Manager will be assessed the following
     penalties:  (1) $10,000 if New Manager  fails to deliver the Reports  after
     the Reporting  Deadline for any month-end  (other than a quarter-end  month
     and year-end), (2) $100,000 if the New Manager fails to deliver any Reports
     necessary  for WRP to file its Form 10-Q or Form 10-K  after the  Reporting
     Deadline  for any  quarter-end  month or year-end  and such penalty will be
     increased to $250,000 (instead of $100,000) if New Manager fails to deliver
     any  Reports  on or before  the 5th day  after  such  applicable  Reporting
     Deadline;  provided  that no penalty  shall be  assessed in the event that,
     with  respect to an annual  report,  the New Manager  delivers  such annual
     report within 60 days after the end of the fiscal year to which such annual
     report relates and delivers the monthly Reports for the first two months of
     the  succeeding  fiscal year within 80 days of the beginning of such fiscal
     year (and in such event all  penalties  for January and  February  shall be
     refunded).  If  the  New  Manager  fails  to  meet  two or  more  Reporting
     Deadlines,  then  WCPT may take over  responsibility  for  supervising  the
     Company's  financial  reporting (which will continue to be performed by New
     Manager's accounting staff), in which event WCPT will be

                             Exhibit 10.104 Page 15
<PAGE>

     paid an annual fee of $600,000 (payable in monthly installments of $50,000)
     in consideration of supervising such reporting to the Company's Members. If
     WCPT takes  over such  responsibility,  there will be no further  penalties
     assessed  on New  Manager  for late  reports.  If New  Manager  provides  a
     quarterly report and financial  statements to WCPT within 25 days after the
     end of the calendar  quarter,  then any penalties for late monthly  reports
     and financial  statements for such quarter shall be refunded and no penalty
     shall be  assessed  in  respect  of such  quarterly  report.  WCPT  will be
     responsible  for the year-end audit and financial  statement  reporting for
     the year ended December 31, 2000.

     (c) At least 4 calendar days before any penalty would  otherwise be imposed
     on New Manager  pursuant to the  foregoing  provision,  WCPT shall  provide
     notice to the President and General Counsel of New Manager  identifying the
     Report  that  is  overdue  and  that a  penalty  will be  assessed,  and no
     penalties  will be payable  until not earlier  than the 4 th day after such
     notice is provided.

     (d) Upon  reasonable  request by WCPT,  New Manager will make  available to
     WCPT  (and  Ernst  &  Young  for  its  quarterly  review  of the  financial
     statements  of WRP)  financial  and other data and personnel of New Manager
     during reasonable business hours,  provided that such requests by WCPT will
     not  impose  any  significant  cost  on the  Company  and New  Manager.  In
     connection with the exercise of any buy/sell,  WCPT will be given access to
     the   Properties   to  conduct  a  customary   real  estate  due  diligence
     investigation  and will  indemnify  and hold  harmless  the Company and the
     Whitehall  Group  for any  loss or harm  caused  by or  arising  from  such
     investigation  or inspection.  In addition,  consistent with past practice,
     WRP will be provided with  financial  information  and analyses  reasonably
     requested by WRP for its board meetings.

     (e) WCPT will be  provided  with a  quarterly  report  showing  amounts  of
     leasing,  development and  construction  fees payable to New Manager or its
     affiliates by the Company and the calculations thereof.

12.  WRP Fees. In consideration of the modifications  described herein, WRP will
     be paid a  one-time  fee  equal to 0.25% of the gross  sales  price for any
     asset of the Company that is either sold or  exchanged.  WRP will be paid a
     one  time  acquisition  fee  (the  "NEW  ASSET  FEE")  equal to 0.6% of the
     purchase price of each new asset with respect to which substantially all of
     the  acquisition,  due  diligence  and  underwriting  work is  performed by
     employees of New Manager or New Manager acts as leasing agent,  development
     manager or asset  manager  for such  asset  after the  acquisition  of such
     asset,  provided  that no New Asset Fee shall be  payable in respect of any
     asset which the Whitehall  Group or its  affiliates  owned on or before the
     Effective Date (the "NEW VENTURE ASSETS"); provided that (1) 50% of the New
     Asset  Fee for any New  Venture  Asset  will be paid  upon  closing  of the
     acquisition  and the other 50% will be  subordinated to a 15% internal rate
     of return on the capital  invested in such New Venture  Asset,  (2) the New
     Asset Fee

                             Exhibit 10.104 Page 16
<PAGE>

     will be payable  to WRP only in  respect  of the first $400  million of New
     Venture  Assets and only upon the closing of the  purchase of such  assets,
     and (3) in no event  will the New  Asset Fee  exceed  $2.4  million  in the
     aggregate.  For  clarification,  no fees will be paid on the acquisition or
     sale of the Recently  Acquired Assets or the assets acquired by the Company
     in any ss.1031 exchange  transaction or the sale of any replacement  assets
     as a result of an ss.1031 exchange transaction.  None of the foregoing fees
     will be paid by the  Company.  New Manger  will  provide  WCPT with  prompt
     notice of any  transaction  that would give rise to the  payment of any New
     Asset Fee.

13.  The Warrants.  The Whitehall Group will deliver its warrant certificates to
     WRP, and the Warrant Agreements,  the Registration Rights Agreement and any
     other side letter  agreement with respect to any rights to purchase  common
     stock of WRP will be terminated by the applicable parties thereto.

14.  Exclusivity  Provisions.  The  Whitehall  Group will agree not to  enforce,
     either individually or on behalf of the Company, any exclusivity provisions
     in the Operating  Agreement  which the Whitehall Group has the authority to
     enforce.  Subject to the preceding sentence, upon reasonable request by WRP
     and/or WCPT and their affiliates,  the Whitehall Group will acknowledge the
     foregoing  covenant to any third party entering into a transaction with WRP
     and/or WCPT.

15.  Leases to be Assumed.  New Manager  will assume all of the  obligations  of
     WCPT under all space,  personal property and equipment leases to which WCPT
     is a party to the extent such leases were  entered  into for the benefit of
     the Company.

16.  Miscellaneous.

     (a)  No party will make any public  statements or disclosures  with respect
          to the  transactions  contemplated  by this MOU without the consulting
          the other;  provided that no such  consultation  shall be required for
          statements or disclosures  made in order to comply with any applicable
          law, rule or regulation.

     (b)  WRP shall  have all  exclusive  rights  to the use of the  "Wellsford"
          name, and the name of the Company or any  Subsidiary  thereof will not
          include "WRP" or any other derivative of the "Wellsford" name (but may
          include "WCPT"). The name "Wellsford" will be removed from all signage
          and other materials within 120 days after the Closing Date.

     (c)  Supplementing the existing provisions of the Operating Agreement,  the
          Company may, in the sole  discretion  of the Whitehall  Group,  retain
          Goldman,  Sachs & Co. in respect of debt  financing  transactions  for
          fees not greater than 1% of gross  proceeds for  financings up to $150
          million and 0.75% of the gross  proceeds for  financings  in excess of
          $150 million.

                             Exhibit 10.104 Page 17
<PAGE>

     (d)  It is  currently  the  intent of the  parties  to have a  simultaneous
          signing and closing of the transactions contemplated hereunder.

                             Exhibit 10.104 Page 18
<PAGE>

     This MOU is not binding on the parties and is subject to the  execution and
delivery  of final  legal  documentation  acceptable  to the  parties  and their
counsel incorporating,  without limitation,  the terms set forth in this MOU and
other terms  satisfactory to the parties.  The parties understand and agree that
this MOU does not include all of the terms and conditions  that will be included
in the final legal documentation.

     This MOU is governed by and shall be construed in  accordance  with the law
of the State of New York  applicable  to  contracts  made and  performed in that
State.

     The parties hereto  acknowledge their agreement to the foregoing by signing
the spaces provided below.

              WELLSFORD REAL PROPERTIES, INC.

                            By:     /s/ Edward Lowenthal
                                    ----------------------------
                                    Name: Edward Lowenthal
                                    Title: President

              WELLSFORD COMMERCIAL PROPERTIES TRUST

                            By:     /s/ Edward Lowenthal
                                    ----------------------------
                                    Name: Edward Lowenthal
                                    Title: President

              WHWEL REAL ESTATE LIMITED PARTNERSHIP

                            By:     WHATR Gen-Par, Inc., General Partner

                            By:     /s/ Ronald L. Bernstein
                                    ----------------------------
                                    Name: Ronald L. Bernstein
                                    Title: Vice President

                             Exhibit 10.104 Page 19
<PAGE>

              WXI/WWG REALTY, L.L.C.

                            By:     /s/ Ronald L. Bernstein
                                    ----------------------------
                                    Name: Ronald L. Bernstein
                                    Title: Vice President

              W/W GROUP HOLDINGS, L.L.C.

                            By:     /s/ Ronald L. Bernstein
                                    ----------------------------
                                    Name: Ronald L. Bernstein
                                    Title: Vice President

                             Exhibit 10.104 Page 20
<PAGE>

                                     ANNEX A

     The  definitions  of Major  Decisions  and  Operational  Decisions  will be
modified  as follows  (it being  understood  and  agreed  that,  in the  amended
agreement, the vote required to approve a Major Decision will be the same as the
vote required to approve an Operational Decision):

                  The "Major Decisions" are:

          (a)  altering  the  nature  of  the  business  of the  Company  or its
     Subsidiaries  from the businesses  permitted by Section 2.4 [NO CHANGE FROM
     EXISTING AGREEMENT];

          (b) taking any action in  contravention  of,  amending,  modifying  or
     waiving,  the provisions of this Agreement or the Certificate of Formation,
     or taking any action in contravention  of,  amending,  modifying or waiving
     the  provisions  of any  Organizational  Documents for any  Subsidiary  [NO
     CHANGE FROM EXISTING AGREEMENT];

          (c)  making  a  capital  call  in  excess  of  the  remaining  Capital
     Commitment  except as provided in the  provisions of  agreements  that will
     reflect the Memorandum of Understanding [CHANGED FROM EXISTING AGREEMENT];

          (d)   instituting   proceedings  to  adjudicate  the  Company  or  any
     Subsidiary a bankrupt,  or consent to the filing of a bankruptcy proceeding
     against  the  Company or any  Subsidiary,  or file a petition  or answer or
     consent seeking  reorganization  of the Company or any Subsidiary under the
     Federal  Bankruptcy  Act or any other similar  applicable  federal or state
     law, or consent to the filing of any such  petition  against the Company or
     any  Subsidiary,  or consent to the appointment of a receiver or liquidator
     or trustee or assignee in  bankruptcy  or  insolvency of the Company or any
     Subsidiary  or of its property,  or make an  assignment  for the benefit of
     creditors of the Company or any  Subsidiary,  or admit the Company's or any
     Subsidiary's  inability to pay its debts  generally as they become  due;[NO
     CHANGE FROM EXISTING AGREEMENT]

          (e)  extending  the  term of the  Company  or any of its  Subsidiaries
     beyond December 31, 2045;[NO CHANGE FROM EXISTING AGREEMENT]

          (f) approving any Annual Capital Budget,  Annual  Operating  Budget or
     Business Plan or modifying (or deviating from) any of the foregoing  except
     to the extent the Manager is so  permitted  by this Section 3.4) [NO CHANGE
     FROM EXISTING AGREEMENT];

          (g)  establishing  any reserve for the Company in excess of $1 million
     (less  any  reserves  held  by  the  Company's   Subsidiaries   other  than
     Property-level  reserves) or establishing  any  Property-level  reserves in
     excess  of  0.5% of the  book  value  of the  applicable  Property  (before
     depreciation)[;PROVIDED  THAT,  IN  CONNECTION  WITH A SALE,  THE WHITEHALL
     GROUP  MAY  ESTABLISH   RESERVES  IN  ACCORDANCE  WITH  THE  MEMORANDUM  OF
     UNDERSTANDING];

                             Exhibit 10.104 Page 21
<PAGE>

          (h) selecting or varying  depreciation  and  accounting  methods which
     would have a material effect on the income,  loss, gain or deduction of the
     Company or any of its  Subsidiaries  [OTHER THAN ANY SUCH  CHANGES THAT ARE
     REQUIRED BY GAAP AS DETERMINED BY E&Y IN ITS REASONABLE OPINION] and making
     any other decisions or elections with respect to federal,  state,  local or
     foreign tax matters or other financial purposes;

          (i) except as the Managing  Members are each  permitted by Section 8.2
     hereof  [OR BY THE  PROVISIONS  OF THE  AGREEMENT  THAT  WILL  REFLECT  THE
     MEMORANDUM OF UNDERSTANDING], directly or indirectly selling, transferring,
     assigning,  hypothecating,  pledging or  otherwise  disposing of all or any
     portion of any  Property or any  Subsidiary  or any  interest in any of the
     foregoing ;

          (j) extending credit,  making loans or becoming or acting as a surety,
     guarantor,  endorser or accommodation endorser (or materially modifying any
     obligations   relating  to  the  foregoing),   except  in  connection  with
     negotiating  checks or other  instruments  received  by the Company (or any
     Subsidiary),  except  for  immaterial  amounts  in the  ordinary  course of
     business  [AND EXCEPT AS  CONTEMPLATED  BY THE  PROVISIONS OF THE AGREEMENT
     THAT WILL REFLECT THE MEMORANDUM OF UNDERSTANDING];

          (k)  selecting  the  Company's  or any  Subsidiary's  accountants  and
     independent  auditors  (unless  such  accountants  or auditors  are Ernst &
     Young); and approving financial statements prepared by the Company's or any
     Subsidiary's auditors;[NO CHANGE FROM EXISTING AGREEMENT]

          (l) making or  agreeing to any  material  changes to the zoning of any
     Property;  and approving the material  terms and provisions of any material
     restrictive  covenants or easement agreements (other than utility easements
     or other non-material  easements necessary for the operation or development
     of a  Property)  or any  material  documents  establishing  a  cooperative,
     condominium or similar association or related entity affecting any Property
     or any portion thereof; [PROVIDED THAT WCPT'S CONSENT SHALL NOT BE REQUIRED
     IF SUCH  CHANGE IN ZONING  RESULTS  IN A HIGHER  FLOOR  AREA RATIO FOR SUCH
     PROPERTY OR IF THE CHANGE IN ZONING IS PART OF AN APPROVED BUSINESS PLAN OR
     IF ANY EASEMENT IS REQUIRED TO IMPLEMENT THE APPROVED BUSINESS PLAN];

          (m) [THIS PROVISIONS,  WHICH GOVERNS FINANCING,  ETC., WILL BE REVISED
     TO REFLECT THE MEMORANDUM OF UNDERSTANDING];

          (n)  approving  the  admission  to the Company of a successor or a New
     Member or removing any Member,  designating or approving the classification
     of  any  new  class  of  Membership  Units  issued  to a  New  Member  (and
     establishing  the  designations,  preferences and relative,  participating,
     optional  or other  special  rights,  powers  and  duties of each  class of
     Membership  Units)  or  approving  the  admission  to any  Subsidiary  of a
     successor  or an  additional  partner  or  member  or  other  equity  owner
     [PROVIDED, THAT, WITHOUT THE CONSENT OF WCPT, (I) THE COMPANY MAY ADMIT ONE
     OR MORE "MEZZANINE  LENDERS" AS NEW MEMBERS OF THE COMPANY AND ISSUE ONE OR
     MORE NEW CLASSES OF  MEMBERSHIP  UNITS TO SUCH NEW  MEMBER,  AS LONG AS THE
     TERMS

                             Exhibit 10.104 Page 22
<PAGE>

     OF SUCH MEMBERSHIP UNITS PROVIDE THE HOLDER THEREOF PRIOR TO A DEFAULT WITH
     ONLY  THOSE  VOTING/APPROVAL  RIGHTS AS ARE  CUSTOMARILY  PROVIDED  TO DEBT
     LENDERS OF INDEBTEDNESS,  (II) THE COMPANY MAY ADMIT ONE OR MORE AFFILIATES
     OF THE  WHITEHALL  GROUP AS NEW MEMBERS AND (III) THE COMPANY MAY ADMIT ONE
     OR MORE  EMPLOYEES  OF NEW  MANAGER AS NEW MEMBERS OF THE COMPANY AND ISSUE
     ONE OR MORE NEW CLASSES OF MEMBERSHIP UNITS TO SUCH NEW MEMBER,  SO LONG AS
     (X) THE TERMS OF SUCH  MEMBERSHIP  UNITS DO NOT PROVIDE THE HOLDER  THEREOF
     VOTING  RIGHTS AND (Y) THE ISSUE PRICE OF SUCH  MEMBERSHIP  UNITS EQUALS OR
     EXCEEDS THE DEEMED VALUE PER  MEMBERSHIP  UNIT (EXCEPT THAT  WHITEHALL  MAY
     TRANSFER A PORTION OF ITS  MEMBERSHIP  UNITS TO SUCH EMPLOYEES AT ANY PRICE
     IT DEEMS APPROPRIATE);

          (o)  terminating  and dissolving the Company (or causing or consenting
     to any such action  relating to a  Subsidiary)  except in  accordance  with
     Article X below [NO CHANGE FROM EXISTING AGREEMENT];

          (p) [THIS  PROVISION  WILL BE  REVISED TO REFLECT  THE  MEMORANDUM  OF
     UNDERSTANDING];

          (q) [PROVISIONS REGARDING MARKETING PLAN WILL BE DELETED]

          (r) [THIS  PROVISION  WILL BE  REVISED TO REFLECT  THE  MEMORANDUM  OF
     UNDERSTANDING]

          (s) [EXCEPT AS PROVIDED IN THE PROVISIONS OF THE AGREEMENT  REFLECTING
     THE MEMORANDUM OF  UNDERSTANDING  AND] except approving or entering into an
     Extraordinary  Transaction with respect to the Company or any Subsidiary or
     causing the Company (or any  Subsidiary)  to sell  ownership  interests  or
     other  securities  in a public or private  offering or otherwise (or taking
     any action which has  substantially  the same effect or commits the Company
     or any Subsidiary to do any of the foregoing);

          (t) taking any action or giving or withholding any consent,  waiver or
     approval  or  exercising  any  right  that  requires  the  approval  of the
     Management Committee pursuant to the terms of this Agreement; or

          (u) forming any  subsidiary of the Company (other than those listed in
     Schedule 2.4B [AND WHOLLY OWNED SUBSIDIARIES]).

     The "Operational Decisions" are:

          (a) (i)  terminating any lease covering  premises  greater than 25,000
     square  feet,  (ii)  executing  or modifying  any lease  covering  premises
     greater  than 25,000  square feet if the Absolute Net Rent is less than 90%
     of the amount set forth in the Leasing Plan;  PROVIDED,  however,  that the
     New  Manager  may  terminate  any  lease  (and  bring  eviction  and  legal
     proceedings  against the tenant  thereunder) where the tenant has defaulted
     in its rent  payments  or is  otherwise  in  material  default.  [The  term
     "Absolute  Net Rent" shall mean,  for any lease,  the initial  full service
     gross rent per square foot on

                             Exhibit 10.104 Page 23
<PAGE>

     the effective date of such lease,  minus (i) an amount equal to the initial
     operating  expenses per square  foot,  minus (ii) an amount per square foot
     equal  to (A) the  present  value  of all free  rent,  commissions,  tenant
     improvements and other  deal-related costs as of the effective date of such
     lease per square foot at a discount  rate of 11% per annum  amortized  over
     (B) number of years in the term of the lease at an interest rate of 11% per
     annum,  plus (iv) an amount  per  square  foot  equal to (I) the sum of the
     present value of each rent increase per square foot during the term of such
     lease at a discount rate of 11% per annum amortized over (II) the number of
     years in the term of the lease at an interest rate of 11% per annum];

          (b) [INSURANCE  PROGRAM WILL NOT REQUIRE  APPROVAL,  BUT THE WHITEHALL
     GROUP WILL USE REASONABLE EFFORTS TO OBTAIN A COMPETITIVE INSURANCE PROGRAM
     FOR THE PROPERTIES  AND WILL AGREE THAT THE INSURANCE  COSTS TO THE COMPANY
     WILL BE FAIRLY  ALLOCATED  AMONG  THESE  PROPERTIES  AND  OTHER  PROPERTIES
     COVERED BY THE POLICY];

          (c)  retaining  legal  counsel for the  Company (or its  Subsidiaries)
     [OTHER THAN COUNSEL SPECIFIED ON A PRE-AGREED LIST*] in connection with any
     major financing or other capital event (including a merger,  combination or
     public  offering  of the  Company);  provided  that  local  counsel  may be
     retained without WCPT's consent;

          (d)  taking  any  action  in  respect  of  any  Property  relating  to
     environmental  matters  other  than to  obtain  environmental  studies  and
     reports and conduct (or arrange for)  evaluations and analyses  thereof and
     other than to remediate any  environmental  contamination  or other similar
     matters as required by law if the cost of such remediation would not exceed
     $500,000  [CROSS  REFERENCE  WCPT'S  RIGHT  TO  CONSENT  FOR  ENVIRONMENTAL
     LIABILITIES IN EXCESS OF $250,000 FOR ANY SARACEN EXCHANGE ASSET];

          (e) settling an insurance  claim or  condemnation  action  involving a
     claim in excess of Five Hundred Thousand Dollars  ($500,000) or which, when
     added  to all  other  insurance  or  condemnation  claims  during  a single
     calendar  year,  exceeds One Million  Dollars  ($1,000,000);  provided that
     WCPT's consent shall not be required for settling the Pointview  litigation
     claim if the amount of such  settlement  exceeds  $1.5 million in excess of
     litigation and arbitrations costs;

          (f)  unless  required  pursuant  to the terms of any  ground  lease or
     mortgage  encumbering  any  Property,  deciding to use the  proceeds of any
     casualty  or  condemnation  to repair or  rebuild  in the case of  material
     damage that affects more than 10% of the square footage of any improvements
     on such  Property,  or any  part  thereof,  arising  out of a  casualty  or
     condemnation  (it being  understood  that New Manager may,  without  WCPT's
     consent, choose not to restore);

     ----------

*    This list will include Sullivan & Cromwell;  Robinson,  Silverman,  Pearce,
     Aronsohn & Berman LLP; Arent Fox Kintner Plotkin & Kahn; and Fried,  Frank,
     Harris,  Shriver & Jacobson as well as local counsel previously used by the
     Company or reasonably acceptable to WCPT.

                             Exhibit 10.104 Page 24
<PAGE>

          (g) making any expenditure or incurring any cost or obligation  which,
     when added to any other expenditure,  cost or obligation of the Company (or
     its  Subsidiaries,  as the case  may be),  either  exceeds  the  applicable
     Approved  Budget  applicable to the Budget Year when such  expenditure  was
     made or cost or obligation was incurred or exceeds any line items specified
     in such Approved Budget;  PROVIDED,  however, that the Manager may, without
     the  approval  of the  Management  Committee,  make  expenditures  or incur
     obligations  in excess  of an  Approved  Budget  if (i) the  making of such
     expenditure or incurrence of such obligation either (1) was necessitated by
     the  occurrence  of an event which was not in the control of the Manager or
     (2) relates to a non-discretionary  expenditure (e.g., taxes, utilities and
     insurance),  (ii) such  expenditure  or  obligation is within a 5% variance
     from the line item in question set forth in such  Approved  Budget  (taking
     into account all other  expenditures in excess of such line item during the
     same Budget Year not previously  approved by the Management  Committee) and
     the amount of all  variances  for such Budget Year  (including  the pending
     variance)  would not exceed 5% of the total  expenditures  in the  Approved
     Budget  and  (iii)  such  expenditure  or  obligation  would  not cause the
     applicable Property Loan, if any, to be in default [NO CHANGE FROM EXISTING
     AGREEMENT OTHER THAN TO IMPLEMENT THE DELEGATION OF AUTHORITY MEMO];

          (h)  giving  or  withholding  any  consent,   waiver  or  approval  or
     exercising any right that the Company (or any  Subsidiary) has the right to
     give,  withhold or  exercise  under or with  respect to the  Organizational
     Document  of any  Subsidiary  to the extent that the  Management  Committee
     would have the right to  approve,  consent  or  exercise  rights  hereunder
     regarding such matter [NO CHANGE FROM EXISTING AGREEMENT];

          (i) [EXCEPT FOR A MASTER ENVIRONMENTAL  SERVICES AGREEMENT WITH ARCHON
     GROUP,  L.P.,  NEW MANAGER WILL NOT BE PERMITTED TO ENTER INTO ANY PROPERTY
     MANAGEMENT,  LEASING,  DEVELOPMENT OR SIMILAR AGREEMENTS WITH ANY AFFILIATE
     OF THE WHITEHALL GROUP WITHOUT WCPT'S CONSENT].

          (j)  Replacing  any third  party  leasing,  development  and  property
     management  agreement  in  effect  as of  the  date  hereof  or  subsequent
     replacement with another third party if the terms of any such new agreement
     are less  favorable  to the  Company  than the  existing  terms of any such
     agreement.

          [THE LAST SENTENCE OF SECTION 3.4 OF THE OPERATING  AGREEMENT SHALL BE
     DELETED.]

                             Exhibit 10.104 Page 25
<PAGE>THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS  THIRD  AMENDMENT TO CREDIT AGREEMENT (the "Third Amendment") dated as
of  August  31, 2000, is to that Credit Agreement dated as of April 13, 1999 (as
amended  and  modified from time to time, the "Credit Agreement"; terms used but
not  otherwise  defined  herein  shall  have the meanings provided in the Credit
Agreement),  by  and  among  RACING  CHAMPIONS,  INC.,  an  Illinois corporation
("RCI"), and RACING CHAMPIONS SOUTH, INC., a North Carolina corporation ("RCS"),
(each  of  RCI  and  RCS individually a "U.S. Borrower", collectively, the "U.S.
Borrowers"),  RACING  CHAMPIONS WORLDWIDE LIMITED, a corporation organized under
the  laws  of  the  United  Kingdom (the "U.K. Borrower"; together with the U.S.
Borrowers,  the  "Borrowers"),  the  Guarantors  identified therein, the several
banks  and  other  financial institutions identified therein (the "Lenders") and
FIRST  UNION  NATIONAL  BANK,  a national banking association, as administrative
agent for the Lenders thereunder (in such capacity, the "Administrative Agent").

                                   WITNESSETH:

     WHEREAS,  the  Lenders  and Borrowers wish to amend the Credit Agreement to
modify  certain  provisions  contained  therein;

     NOW,  THEREFORE,  IN  CONSIDERATION  of  the  premises  and  other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  the  parties  hereto  agree  as  follows:

     A.     Amendments.  The  Credit  Agreement  is  amended  in  the  following
            ----------
respects:

          1.     Section  1.1  is  amended  to  (a)  delete  the  definitions of
                 ------------
"Applicable Percentage", "Business Day", "Consolidated EBITDA", "LIBOR", "Loan",
"Note",  "Notes",  "Participation  Interest",  "Required  Lenders",  "Revolving
Commitment  Termination  Date",  "Revolving  Loans",  "Security  Documents", and
substitute  the  following  therefor:

          "Applicable  Percentage"  shall  mean, for any day, the rate per annum
           ----------------------
set  forth  below  opposite  the  applicable  Level  then  in  effect,  it being
understood that the Applicable Percentage for (i)  U.S. Revolving Loans and Term
Loans  which  are  Alternate  Base  Rate Loans shall be the percentage set forth
under  the  column "Alternate Base Rate Margin for U.S. Revolving Loans and Term
Loans",  (ii) the U.S. Revolving Loans and Term Loans which are LIBOR Rate Loans
shall  be  the percentage set forth under the column "LIBOR Rate Margin for U.S.
Revolving  Loans,  Term  Loans  and  Letter  of Credit Fee", (iii) the Letter of
Credit  Fee  shall  be  the  percentage  set  forth  under  the

<PAGE>
column  "LIBOR  Rate  Margin  for U.S. Revolving Loans, Term Loans and Letter of
Credit  Fee" and (iv) the Commitment Fee shall be the percentage set forth under
the  column  "Commitment  Fee":
<TABLE>
<CAPTION>

                                                     LIBOR Rate
                               Alternate             Margin for
                               Base Rate        U.S. Revolving Loans
                              Margin for             Term Loans
           Leverage      U.S. Revolving Loans       And Letter of      Commitment
Level       Ratio           And Term Loans           Credit Fee            Fee
-----  ----------------  ---------------------  ---------------------  -----------
<S>    <C>               <C>                    <C>                    <C>

I . .      >3.50 to 1.0                  1.75%                  3.50%        0.50%
       ----------------  ---------------------  ---------------------  -----------
       <3.50 to 1.0 but
II. .     >3.00 to 1.00                  1.50%                  3.25%        0.40%
       ----------------  ---------------------  ---------------------  -----------
       <3.00 to 1.0 but
III .      >2.50 to 1.0                  1.00%                  2.75%       0.375%
       ----------------  ---------------------  ---------------------  -----------
       <2.50 to 1.0 but
IV. .      >2.00 to 1.0                   .75%                  2.50%        0.30%
       ----------------  ---------------------  ---------------------  -----------
       <2.00 to 1.0 but
V . .      >1.50 to 1.0                   .50%                  1.75%        0.25%
       ----------------  ---------------------  ---------------------  -----------
VI. .      <1.50 to 1.0                   .15%                  0.90%       0.225%
-----  ----------------  ---------------------  ---------------------  -----------
</TABLE>

          The  Applicable  Percentage  shall,  in  each  case, be determined and
adjusted  quarterly  on  the date ten (10) Business Days after the date on which
the Administrative Agent has received from the Borrowers the quarterly financial
information  and  certifications  required to be delivered to the Administrative
Agent  and  the Lenders in accordance with the provisions of Sections 5.1(b) and
5.2(b)  (each  an  "Interest  Determination  Date").  Such Applicable Percentage
shall  be  effective  from  such Interest Determination Date until the next such
Interest  Determination  Date.  If  the  Borrowers  shall  fail  to  provide the
quarterly  financial  information  and  certifications  in  accordance  with the
provisions  of  Sections  5.1(b) and 5.2(b), the Applicable Percentage from such
Interest  Determination Date shall, on the date ten (10) Business Days after the
date  by  which  the  Borrowers  were  so  required  to  provide  such financial
information  and  certifications to the Administrative Agent and the Lenders, be
based  on  Level  I  until  such time as such information and certifications are
provided,  whereupon  the Level shall be determined by the then current Leverage
Ratio.

          "Business Day" shall mean a day other than a Saturday, Sunday or other
           ------------
day on which commercial banks in Charlotte, North Carolina or New York, New York
are authorized or required by law to close; provided, however, that when used in

                                        2

<PAGE>
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate  Loan, the term "Business Day" shall also exclude any day on which banks in
London,  England  are  not  open  for  dealings in Dollar deposits in the London
interbank  market.

          "Consolidated  EBITDA"  shall  mean,  for  any  period, the sum of (i)
           --------------------
Consolidated  Net  Income  for  such  period,  plus (ii) an amount which, in the
determination  of Consolidated Net Income for such period, has been deducted for
(A)  Consolidated  Interest Expense, (B) total federal, state, local and foreign
income,  value  added  and  similar taxes, and (C) depreciation and amortization
expense,  and  (D)  non-cash  losses,  and  minus  (iii)  non-cash  gains.

          "LIBOR"  shall  mean,  for any LIBOR Rate Loan for any Interest Period
           -----
therefor,  the  rate  per  annum  (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3740 or 3750 (or any successor pages) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M.  (London  time)  two  Business Days prior to the first day of such Interest
Period  for  a  term comparable to such Interest Period.  If for any reason such
rate  is not available, the term "LIBOR" shall mean, for any LIBOR Rate Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to  the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank  offered  rate  for  deposits  in  Dollars at approximately 11:00 A.M.
(London  time)  two Business Days prior to the first day of such Interest Period
for  a  term comparable to such Interest Period; provided, however, if more than
one  rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the  arithmetic  mean  of  all such rates (rounded upwards, if necessary, to the
nearest  1/100  of 1%).  If, for any reason, neither of such rates is available,
then  "LIBOR"  shall  mean  the  rate  per  annum at which, as determined by the
Administrative  Agent,  Dollars  in  an  amount  comparable  to  the  Loans then
requested  are being offered to leading banks at approximately 11:00 A.M. London
time, two (2) Business Days prior to the commencement of the applicable Interest
Period  for  settlement  in  immediately available funds by leading banks in the
London  interbank  market  for  a  period equal to the Interest Period selected.

          "Loan"  shall  mean  a U.S. Revolving Loan, a Swingline Loan, and/or a
           ----
Term  Loan,  as  appropriate.

          "Note"  or  "Notes" shall mean the U.S. Revolving Notes, the Swingline
           ----        -----
Note  and/or  the  Term  Notes,  collectively,  separately  or  individually, as
appropriate.

          "Participation  Interest"  shall  mean  the  purchase by a Lender of a
           -----------------------
participation  interest  in (i) Swingline Loans as provided in Section 2.2(b) or
(ii)  Letters  of  Credit  as  provided  in  Section  2.3.

                                        3
<PAGE>
          "Required Lenders" shall mean (i) Lenders holding in the aggregate not
           ----------------
less  than  51%  of  all Revolving Loans and LOC Obligations then outstanding at
such  time plus the aggregate unused Revolving Commitment at such time (treating
for  purposes  hereof in the case of Swingline Loans and LOC Obligations, in the
case  of  the  Swingline  Lender and the Issuing Lender, only the portion of the
Swingline  Loans and the LOC Obligations of the Swingline Lender and the Issuing
Lender, respectively, which is not subject to the Participation Interests of the
other  Lenders  and,  in the case of the Lenders other than the Swingline Lender
and the Issuing Lender, the Participation Interests of such Lenders in Swingline
Loans  and  LOC  Obligations  hereunder  as direct Obligations) and (ii) Lenders
holding in the aggregate not less than 51% of all Term Loans then outstanding at
such time; provided, however, that if any Lender shall be a Defaulting Lender at
such  time,  then  there  shall  be  excluded from the determination of Required
Lenders,  Obligations  (including  Participation  Interests)  owing  to  such
Defaulting Lender and such Defaulting Lender's Commitments, or after termination
of  the  Commitments,  the  principal  balance  of the Obligations owing to such
Defaulting  Lender.

          "Revolving  Commitment  Termination  Date"  shall  mean April 1, 2003.
           ----------------------------------------

          "Revolving  Loans" shall mean the U.S. Revolving Loans as set forth in
           ----------------
Section  2.1.

          "Security  Documents"  shall  mean  the Pledge Agreement, the Security
           -------------------
Agreement,  the  Mortgage  and  such  other  documents executed and delivered in
connection  with the attachment and perfection of the Agent's security interests
and  liens  arising  thereunder,  including,  without  limitation, UCC financing
statements.

(b)  delete  the  definitions of "British Pounds Sterling", "Dollar Equivalent",
"Interest  Coverage  Ratio",  "MLA  Cost",  "U.K.  Lender",  "U.K.  Revolving
Commitment",  "U.K.  Revolving  Committed  Amount",  and  "U.K. Revolving Loans"
therefrom  in  their  entirety,  and  (c) add the following definitions thereto:

          "Borrowing  Base"  shall  mean,  as  of  any date of determination, an
           ---------------
amount  equal  to  the  sum  of (i) up to seventy-five percent (75%) of the face
amount  of Eligible Receivables (net of maximum discounts, allowances, retainage
and  any  other  amounts  deferred  with  respect thereto) plus (ii) up to fifty
percent  (50%)  of the value (determined at factory cost) of Eligible Inventory.
For purposes of this definition, Eligible Receivables and Eligible Inventory, as
of  any  date  of  determination,  shall  be  determined  after deduction of all
Eligibility  Reserves  then  effective  with  respect  to  such  items.

          "Borrowing  Base  Certificate"  shall  mean  a  certificate,  in
           ----------------------------
substantially  the  form  of  Exhibit  X attached hereto and made a part hereof,
setting  forth  Eligible  Receivables and Eligible Inventory, advance rates with
respect  thereto,  and  the resultant Borrowing Base, in each instance as of the
date  of  such  certificate.

                                        4
<PAGE>
          "Eligibility  Reserves"  means, as of five (5) Business Days after the
           ---------------------
date  of  written  notice  of  any determination thereof to the Borrowers by the
Administrative  Agent,  or  to the Borrowers and the Administrative Agent by the
Requisite  Lenders,  such  amounts as the Administrative Agent, or the Requisite
Lenders,  as  the case may be, in the exercise of its or their reasonable credit
judgment  and consistent with its or their customary practices, may from time to
time  establish  against the gross amounts of Eligible Receivables and the value
of  Eligible  Inventory to reflect risks or contingencies which could reasonably
be  expected  to adversely affect the collectibility or timing of collectibility
of such items and have not otherwise been taken into account in determination of
which  Receivables  are  Eligible  Receivables  or  the  value  of such Eligible
Inventory.

          "Eligible  Accounts"  shall  mean  each  account  receivable  of  the
           ------------------
Borrowers  which,  when  scheduled  to the Administrative Agent and at all times
thereafter,  is  not  of  any  of  the  following  types:

               (i)     it  arises  out of a sale not made in the ordinary course
of  the  Borrowers'  business or a sale to a Person which is an Affiliate of the
Borrowers  or  controlled  by  an  Affiliate  of  the  Borrowers;  or

               (ii)     it  fails  to  meet  or  violates  any  warranty,
representation  or  covenant  contained  in  this  Agreement or any of the other
Credit  Documents  relating directly or indirectly to the accounts receivable of
the  Borrowers;  or

               (iii)     the  account  debtor  is  also a Borrower's supplier or
creditor  and  the  account  receivable is or may become subject to any right of
setoff  by  the  account debtor, and such account debtor has not entered into an
agreement  with the Administrative Agent with respect to the waiver of rights of
setoff  which is in form and substance satisfactory to the Administrative Agent;
or  the  account  debtor  has  disputed  liability  with respect to such account
receivable,  or  made any claim with respect to any other account receivable due
from  such  account  debtor  to  a Borrower, in each of which cases such account
receivable  shall  be ineligible to the extent of such dispute, claim or setoff;
or

               (iv)     the  account  debtor has filed a petition for bankruptcy
or  any  other  petition  for  relief  under  the Bankruptcy Code or any similar
statute  (unless  the  account  debtor is a debtor-in-possession in a Chapter 11
case  and  has  available  debtor-in-possession financing from sources and under
terms  reasonably  acceptable  to  the  Administrative  Agent  and  the  account
receivable  is  entitled to priority under Section 507 of the Bankruptcy Code as
an  administrative expense allowed under Section 503(b) of the Bankruptcy Code),
made  an  assignment  for  the benefit of creditors, or if any petition or other
application for relief under the Bankruptcy Code or any similar statute has been
filed against the account debtor, or if the account debtor has failed, suspended
its  business  operations, become insolvent, suffered a receiver or a trustee to
be  appointed  for  any of its assets or affairs, or is generally failing to pay
its  debts  as  they  become  due;  or

                                        5
<PAGE>
               (v)     the  sale  is  on  any  repurchase  or  return  basis; or

               (vi)     the  Administrative  Agent  believes, in the exercise of
its  reasonable  credit  judgment,  or  the  Requisite  Lenders  believe, in the
exercise  of  their  reasonable credit judgment, that collection of such account
receivable is insecure or that such account receivable may not be paid by reason
of  the  account  debtor's  financial  inability  to  pay;  or

               (vii)     the  account  debtor is the United States of America or
any department, agency or instrumentally thereof, unless the applicable Borrower
assigns  its  right  to payment of such account receivable to the Administrative
Agent  pursuant  to the Assignment of Claims Act of 1940, as amended, (31 U.S.C.
3727);  or

               (viii)     the  Administrative  Agent  does  not  have  a senior,
perfected  security  interest  in  such  account  receivable;  or

               (ix)     the account debtor is located in the state of New Jersey
or  Minnesota and the applicable Borrower has not filed and maintained effective
(unless  exempt  from  the  requirements for filing) a current Business Activity
Report  with  the  appropriate Governmental Authority in the states of Minnesota
and/or  New  Jersey,  as  applicable.

          "Eligible  Inventory"  shall  mean,  as  of  the date of determination
           -------------------
therefor,  all  Inventory  of  the  Borrowers  which,  when  scheduled  to  the
Administrative  Agent  on  a  Borrowing  Base  Certificate  and  at  all  times
thereafter, (i) is in the required quantity and in the required condition as set
forth  on such Borrowing Base Certificate, (ii) is located at a Borrower's owned
or  leased  Properties  in  the United States, (iii) subject to a first priority
perfected  Lien  in  favor  of  the  Administrative Agent for the benefit of the
Lenders, and (iv) does NOT consist of: (a) goods in transit (other than goods in
transit  to  the  United States from China); or (b) goods held on consignment or
any similar arrangement, including, without limitation, goods held by a Borrower
but  owned by a customer of a Borrower; or (c) goods which are subject to a Lien
in  favor of a bailee or landlord, except goods located on premises with respect
to  which  the Administrative Agent has received a landlord's or bailee's waiver
in  form  and  substance  satisfactory  to  the  Administrative  Agent.

          "Excess  Cash  Flow"  shall  mean,  for any fiscal year of the Company
           ------------------
ending  in  2000  and  thereafter, an amount equal to the greater of (i) zero of
(ii)  the amount for such fiscal year equal to (a) Consolidated EBITDA minus (b)
cash  interest  paid,  minus  (c)  taxes  paid  in cash (minus the amount of tax
refunds  due),  minus (d) the sum of all repayments and voluntary prepayments of
principal  of the Term Loan, minus (e) Consolidated Capital Expenditures paid in
cash.

                                        6
<PAGE>
          "Mortgage"  shall  mean  the  Mortgage  dated  as  of  August 31, 2000
           --------
executed  and  delivered  by  The Ertl Company, Inc., a Delaware corporation, in
favor  of the Administrative Agent with respect to the Properties located in the
City  of  Dyersville, Dubuque County, Iowa, as amended, modified or supplemented
from  time  to  time  in  accordance  with  its  terms.

          2.     Section  2.1(a)  is amended to delete the provisions thereof in
                 ---------------
their  entirety  and  substitute  the  following  therefor:

               (a)     U.S. Revolving Commitment.  During the Commitment Period,
                       -------------------------
subject to the terms and conditions hereof, each Lender severally agrees to make
revolving  credit loans ("U.S. Revolving Loans") to the U.S. Borrowers from time
to time for the purposes hereinafter set forth; provided, however, that (i) with
regard  to  each  Lender  individually,  the  sum  of  such  Lender's  share  of
outstanding  U.S.  Revolving  Loans  plus  such  Lender's  Revolving  Commitment
                                     ----
Percentage  of  Swingline  Loans plus such Lender's LOC Commitment Percentage of
                                 ----
LOC  Obligations  shall not exceed such Lender's Revolving Commitment Percentage
of the aggregate Revolving Committed Amount, and (ii) with regard to the Lenders
collectively,  the  sum  of  the  aggregate amount of outstanding U.S. Revolving
Loans  plus  Swingline Loans plus LOC Obligations shall not exceed the lesser of
(A)  the  Revolving Committed Amount and (B) the amount of the Borrowing Base as
of  the  date  on  which  the  applicable Notice or Borrowing is delivered.  For
purposes  hereof,  the  aggregate  amount  available  hereunder  shall be TWENTY
MILLION  DOLLARS  ($20,000,000)  as such aggregate maximum amount may be reduced
from time to time as provided in Section 2.7, the "Revolving Committed Amount").
U.S.  Revolving  Loans  may  consist  of Alternate Base Rate Loans or LIBOR Rate
Loans,  or  a combination thereof, as the U.S. Borrowers may request, and may be
repaid  and  reborrowed  in  accordance  with the provisions hereof.  LIBOR Rate
Loans  shall  be  made  by each Lender at its LIBOR Lending Office and Alternate
Base Rate Loans at its Domestic Lending Office.  Notwithstanding anything to the
contrary  in  this Agreement, in each calendar year, for a period of thirty (30)
consecutive  days  commencing on the date in such calendar year of which written
notice  shall have been given by the U.S. Borrowers at least ten (10) days prior
thereto,  the  sum  of  the aggregate amount of outstanding U.S. Revolving Loans
plus  Swingline  Loans  plus  LOC  Obligations shall not exceed thirty-seven and
one-half  percent  (37.5%)  of  the  Revolving  Committed Amount then in effect.

          3.     Section  2.2(a)  is amended to delete the provisions thereof in
                 ---------------
their  entirety  and  substitute  the  following  therefor:

               (a)     Swingline  Commitment.  During  the  Commitment  Period,
                       ---------------------
subject  to  the  terms  and  conditions  hereof,  the  Swingline Lender, in its
individual  capacity,  agrees to make certain revolving credit loans to the U.S.
Borrowers (each a "Swingline Loan" and, collectively, the "Swingline Loans") for
the  purposes  hereinafter

                                        7
<PAGE>
set  forth;  provided,  however,  (i)  the  aggregate  amount of Swingline Loans
outstanding at any time shall not exceed THREE MILLION DOLLARS ($3,000,000) (the
"Swingline  Committed  Amount"),  and  (ii)  the  sum of the aggregate amount of
outstanding U.S. Revolving Loans plus Swingline Loans plus LOC Obligations shall
exceed  the Revolving Committed Amount.  Swingline Loans hereunder may be repaid
and  reborrowed  in  accordance  with  the  provisions  hereof.

          4.     Section  2.3(a)  is amended to delete the provisions thereof in
                 ---------------
their  entirety  and  substitute  the  following  therefor:

               (a)     Issuance.  Subject to the terms and conditions hereof and
                       --------
of  the  LOC  Documents,  if  any,  and any other terms and conditions which the
Issuing  Lender may reasonably require, during the Commitment Period the Issuing
Lender  shall issue, and the Lenders shall participate in, Letters of Credit for
the  account  of  the  U.S.  Borrowers  from time to time upon request in a form
acceptable  to  the  Issuing  Lender;  provided, however, that (i) the aggregate
amount  of  LOC  Obligations  shall  not at any time exceed FIVE MILLION DOLLARS
($5,000,000)  (the "LOC Committed Amount"), (ii) the sum of the aggregate amount
of  U.S.  Revolving Loans plus Swingline Loans plus LOC Obligations shall not at
any  time  exceed  the  Revolving  Committed Amount, (iii) all Letters of Credit
shall  be  denominated in Dollars and (iv) Letters of Credit shall be issued for
the purpose of supporting tax-advantaged variable rate demand note financing and
for  other  lawful  corporate  purposes  and may be issued as standby letters of
credit,  including  in connection with workers' compensation and other insurance
programs,  and  trade  letters  of credit.  Except as otherwise expressly agreed
upon  by all the Lenders, no Letter of Credit shall have an original expiry date
more  than  twelve (12) months from the date of issuance or later than March 21,
2003;  provided, however, so long as no Default or Event of Default has occurred
and  is continuing and subject to the other terms and conditions to the issuance
of  Letters  of  Credit  hereunder, the expiry dates of Letters of Credit may be
extended  annually  or periodically from time to time on the request of the U.S.
Borrowers  or  by operation of the terms of the applicable Letter of Credit to a
date  not  more  than  twelve (12) months from the date of expiration; provided,
further,  that  no  Letter of Credit, as originally issued or as extended, shall
have  an expiry date extending beyond the Revolving Commitment Termination Date.
Each Letter of Credit shall comply with the related LOC Documents.  The issuance
and  expiry  date of each Letter of Credit shall be a Business Day.  Any Letters
of  Credit  issued  hereunder  shall  be  in  a  minimum original face amount of
$150,000.  There  will  be  no more than 10 Letters of Credit outstanding at any
time.  First  Union  shall be the Issuing Lender on all Letters of Credit issued
after  the  Closing  Date.

          5.     Section  2.4  is  amended  to  delete the provisions thereof in
                 ------------
their  entirety.

                                        8
<PAGE>
          6.     Section  2.5(b) is amended to delete the terms thereof in their
                 ---------------
entirety  and  substitute  the  following  therfor:

               (b)     Repayment of Term Loan.  The principal amount of the Term
                       ----------------------
Loan  shall  be repaid in fifteen (15) consecutive fiscal quarterly installments
as  follows,  unless  accelerated  sooner  pursuant  to  Section  7.2:
<TABLE>
<CAPTION>

Principal           Term Loan Principal
Amortization            Amortization
Payment Dates             Payment
------------------  --------------------
<S>                 <C>

June 30, 1999. . .  $                  0
                    --------------------
September 30, 1999  $                  0
                    --------------------
December 31, 1999.  $                  0
                    --------------------
March 31, 2000 . .  $                  0
                    --------------------
June 30, 2000. . .  $          5,750,000
                    --------------------
September 30, 2000  $          3,125,000
                    --------------------
December 31, 2000.  $          3,125,000
                    --------------------
March 31, 2001 . .  $          3,500,000
                    --------------------
June 30, 2001. . .  $          3,500,000
                    --------------------
September 30, 2001  $          3,500,000
                    --------------------
December 31, 2001.  $          3,500,000
                    --------------------
March 31, 2002 . .  $          4,000,000
                    --------------------
June 30, 2002. . .  $          4,000,000
                    --------------------
September 30, 2002  $          4,000,000
                    --------------------
December 31, 2002.  $          4,000,000
                    --------------------
April 1, 2003. . .  $          73,000,00
------------------  --------------------
</TABLE>

          7.     Section  2.6(a)  is  amended  to delete the provisions in their
--------------------------------
entirety  and  substitute  the  following  therefor:

               (a)     Commitment  Fee.  In  consideration  of  the  Revolving
                       ---------------
Commitment,  the  Borrowers  jointly  and  severally  agree  to  pay  to  the
Administrative  Agent  for  the  ratable benefit of the Lenders a commitment fee
(the "Commitment Fee") in an amount equal to the Applicable Percentage per annum
on  the average daily unused amount of the aggregate Revolving Committed Amount.
For  purposes  of  computing  the  Commitment Fee hereunder, Swingline Loans and
Letters  of  Credit  shall  be  considered  usage  under the aggregate Revolving
Committed  Amount.  The  Commitment Fee shall be payable quarterly in arrears on
the  15th  day  following  the  last  day of each calendar quarter for the prior
calendar  quarter  and  on  the  Revolving  Commitment  Termination  Date.

                                        9
<PAGE>
          8.     Section  2.7(a)  is amended to delete the provisions thereof in
                 ---------------
their  entirety  and  substitute  the  following  therefor:

               (a)     Voluntary Reductions.  The Borrowers shall have the right
                       --------------------
to terminate or permanently reduce the unused portion of the Revolving Committed
Amount  at  any time or from time to time upon not less than five Business Days'
prior notice to the Administrative Agent (which shall notify the Lenders thereof
as  soon  as  practicable)  of  each such termination or reduction, which notice
shall  specify  the  effective date thereof and the amount of any such reduction
which  shall  be  in  a  minimum  amount  of  $3,000,000  or a whole multiple of
$1,000,000 in excess thereof and shall be irrevocable and effective upon receipt
by  the  Administrative  Agent,  provided  that no such reduction or termination
shall be permitted if after giving effect thereto, and to any prepayments of the
Revolving  Loans  made  on  the  effective  date  thereof,  the  sum of the then
outstanding  aggregate  principal  amount  of  the  U.S.  Revolving  Loans  plus
Swingline  Loans  plus  LOC  Obligations  would  exceed  the Revolving Committed
Amount.

          9.     Section  2.8  is amended to (a) delete the provisions of clause
                 ------------
(a)  thereof  in  their  entirety  and  substitute  the  following  therefor:

               (a)     Optional Prepayments.  The Borrowers shall have the right
                       --------------------
to  repay  Loans  in whole or in part from time to time; provided, however, that
each  partial  prepayment  of  U.S. Revolving Loans and Term Loans shall be in a
minimum  principal  amount of $3,000,000 and integral multiples of $1,000,000 in
excess  thereof  and  each  prepayment  of Swingline Loans shall be in a minimum
principal  amount  of  $100,000  and  integral  multiples  of $100,000 in excess
thereof.  The  Borrowers  shall  give three Business Days' irrevocable notice (a
"Notice  of  Payment")  in  the  case of LIBOR Rate Loans and one Business Day's
irrevocable  notice  in  the  case  of  Alternate  Base  Rate  Loans  to  the
Administrative  Agent  (which  shall  notify  the  Lenders  thereof  as  soon as
practicable).  A  form of such Notice of Prepayment is attached as Schedule 2.8.
Subject  to  the foregoing terms, that amounts prepaid under this Section 2.8(a)
shall be applied as the Borrowers may elect; provided that if the Borrowers fail
to  specify the application of an optional prepayment then such prepayment shall
be applied first to Revolving Loans and then pro rata to the remaining principal
installments  of the Term Loans, in each case first to Alternate Base Rate Loans
and then to LIBOR Rate Loans in direct order of Interest Period maturities.  All
prepayments  under  this  Section  2.8(a)  shall be subject to Section 2.18, but
otherwise  without premium or penalty.  Interest on the principal amount prepaid
shall  be  payable  on  the next occurring Interest Payment Date that would have
occurred had such loan not been prepaid or, at the request of the Administrative
Agent,  interest  on  the  principal amount prepaid shall be payable on any date
that  a prepayment is made hereunder to the date of prepayment.  Amounts prepaid
on  the  Swingline  Loan and the Revolving Loans may be reborrowed in accordance
with the terms hereof.  Amounts prepaid on the Term Loans may not be reborrowed.

                                        10
<PAGE>
               (b)  delete  the  provisions  of  clauses (b)(ii)-(vi) thereof in
their  entirety  and  substitute  the  following  therefor:

                    (ii)     Asset  Dispositions.  Within  sixty (60) days after
                             -------------------
the  consummation of any Asset Disposition, the Borrowers shall prepay the Loans
in  an  aggregate  amount  equal  to  one hundred percent (100%) of the Net Cash
Proceeds  derived  from such Asset Disposition (such prepayment to be applied as
set  forth  in  clause  (vii) below); provided that the Borrowers may apply that
portion  of  such  Net  Cash  Proceeds  which  does  not  exceed $500,000 in the
aggregate for all such Asset Dispositions occurring during a given calendar year
to  repair  or  replace damaged property or to purchase or otherwise acquire new
assets  or  property.

                    (iii)     Debt  Issuances.  Immediately  upon receipt by any
                              ---------------
Credit  Party  of  proceeds  from  any Debt Issuance (other than the issuance of
Subordinated  Debt), the Borrowers shall prepay the Loans in an aggregate amount
equal  to  one  hundred  percent  (100%)  of  the Net Cash Proceeds of such Debt
Issuance  to  the  Lenders (such prepayment to be applied as set forth in clause
(vii)  below).

                    (iv)     Equity  Issuances.  Immediately upon receipt by any
                             -----------------
Credit  Party  of  proceeds  from  any  Equity Issuance (excluding capital stock
issued  for  acquisitions  permitted  under  Section  6.5(b)  or  employee stock
programs),  the Borrowers shall prepay the Loans in an aggregate amount equal to
one hundred percent (100%) of such cash proceeds to the Lenders (such prepayment
to  be  applied  as  set  forth  in  clause  (vii)  below).

                    (v)     Recovery  Event.  To  the  extent  cash  proceeds
                            ---------------
received  in  connection  with  a  Recovery  Event  are not applied to repair or
replace  damaged  property  or  to  purchase  or otherwise acquire new assets or
property  within  180  days  after  the  receipt  by a Credit Party of such cash
proceeds,  the  Borrowers shall prepay the Loans in an aggregate amount equal to
one hundred percent (100%) of such cash proceeds to the Lenders (such prepayment
to  be  applied  as  set forth in clause (vii) below) on the 180th day after the
applicable  Credit  Party's  receipt  of  such  cash  proceeds.

                    (vi)     Excess  Cash  Flow.  On the date of delivery of the
                             ------------------
financial  statements  required  to  be  delivered  under Section 5.1(a) for the
fiscal  years of the Borrowers ending in 2000 and 2001 (which date, for purposes
of  this  Section 2.8(b)(vi), shall not extend beyond the 95th day after the end
of  each  such  fiscal year), the Borrowers shall make a mandatory prepayment of
the  Term  Loans  in  an  amount equal to seventy-five percent (75%) of the then
applicable  Excess Cash Flow for the fiscal year then most recently ended, which
prepayment shall be applied to the installments of the Term Loans in the inverse
order  of  maturity  until  paid  in  full.

                                       11
<PAGE>
                    (vii)     Application of Mandatory Prepayments.  All amounts
                              ------------------------------------
required  to  be paid pursuant to this Section 2.8(b)(i)-(v) shall be applied as
follows:  (A) with respect to all amounts prepaid pursuant to Section 2.8(b)(i),
to  Revolving  Loans  and (after all Revolving Loans have been repaid) to a cash
collateral  account  in  respect  of LOC Obligations and (B) with respect to all
amounts  prepaid pursuant to Sections 2.8(b)(ii) through (v), (1) first pro rata
                                                                        --- ----
to  the Term Loans (ratably to the remaining principal installments thereof) and
(2)  second  to  the  Revolving  Loans  and (after all Revolving Loans have been
repaid)  to a cash collateral account in respect of LOC Obligations.  Within the
parameters  of  the  applications  set forth above, prepayments shall be applied
first  to Alternate Base Rate Loans and then to LIBOR Rate Loans in direct order
of  Interest Period maturities.  All prepayments under this Section 2.8(b) shall
be  subject  to  Section  2.18  and  be accompanied by interest on the principal
amount  prepaid  to  the  date  of  prepayment.

               and  (c)     delete  clause  (c)  thereof  in  its  entirety.

          10.     Section  2.9  is  amended  to delete the provisions thereof in
                  ------------
their  entirety  and  substitute  the  following  therefor:

          All  borrowings, payments and prepayments in respect of U.S. Revolving
Loans  and  Term  Loans  shall  be  in such amounts and be made pursuant to such
election  so  that after giving effect thereto the aggregate principal amount of
the U.S. Revolving Loans and Term Loans comprising any Tranche shall not be less
than  $3,000,000  or  a  whole  multiple  of  $1,000,000  in  excess  thereof.

          11.     Section  2.10  is  amended to delete the provisions thereof in
                  -------------
their  entirety  and  substitute  the  following  therefor:

          Upon  the  occurrence,  and  during  the  continuance,  of an Event of
Default,  the  principal of and, to the extent permitted by law, interest on the
Loans  and any other amounts owing hereunder or under the other Credit Documents
shall  bear interest, payable on demand, at a per annum rate 2% greater than the
Alternate  Base  Rate  plus  the  Applicable  Percentage  then  in  effect.

          12.     Section 2.11(a) is amended to delete the provisions thereof in
                  ---------------
their  entirety  and  substitute  the  following  therefor:

               (a)     The Borrowers may, in the case of Revolving Loans and the
Term  Loans,  elect  from  time  to time to convert Alternate Base Rate Loans to
LIBOR  Rate  Loans,  by  giving the Administrative Agent at least three Business
Days'  prior  irrevocable  written notice of such election.  A form of Notice of
Conversion/Extension  is  attached  as Schedule 2.11.  If the date upon which an
Alternate  Base  Rate  Loan  is  to  be  converted to a LIBOR Rate Loan is not a
Business  Day,  then  such  conversion  shall  be

                                       12
<PAGE>
made  on  the  next succeeding Business Day and during the period from such last
day  of  an Interest Period to such succeeding Business Day such Loan shall bear
interest  as  if  it  were  an  Alternate  Base  Rate  Loan.  All or any part of
outstanding  Alternate  Base  Rate  Loans  may  be converted as provided herein,
provided  that  (i)  no  Loan  may  be converted into a LIBOR Rate Loan when any
Default  or  Event  of  Default  has occurred and is continuing and (ii) partial
conversions  shall  be  in  aggregate  principal amount of $3,000,000 or a whole
multiple  of  $1,000,000  in excess thereof with respect to U.S. Revolving Loans
and  Term  Loans.

          13.     Section 2.14(a) is amended to delete the provisions thereof in
                  ---------------
their  entirety  and  substitute  the  following  therefor:

               (a)     Unless  the Administrative Agent shall have been notified
in  writing  by  a  Lender prior to the date a Loan is to be made by such Lender
(which  notice shall be effective upon receipt) that such Lender does not intend
to  make  the  proceeds  of such Loan available to the Administrative Agent, the
Administrative  Agent  may  assume  that  such  Lender  has  made  such proceeds
available to the Administrative Agent on such date, and the Administrative Agent
may  in  reliance  upon  such  assumption  (but  shall  not be required to) make
available  to  the  applicable Borrowers a corresponding amount on the date when
due.  If  such  corresponding  amount  is  not  in  fact  made  available to the
Administrative  Agent,  the  Administrative  Agent shall be able to recover such
corresponding  amount  from  such  Lender.  If  such  Lender  does  not pay such
corresponding  amount  forthwith  upon  the  Agent's  demand  therefor,  the
Administrative Agent will promptly notify the Borrowers, and the Borrowers, on a
joint  and several basis, shall immediately pay such corresponding amount to the
Administrative  Agent.  The  Administrative  Agent  shall  also  be  entitled to
recover  from  the Lender or the Borrowers, as the case may be, interest on such
corresponding  amount  in  respect  of each day from the date such corresponding
amount was made available by the Administrative Agent to the applicable Borrower
to  the  date such corresponding amount is recovered by the Administrative Agent
at  a  per annum rate equal to (i) from the Borrowers at the applicable rate for
the  applicable  borrowing  pursuant  to the Notice of Borrowing and (ii) from a
Lender  at  the  Federal  Effective  Funds  Rate.

          14.     Section  2.21  is  amended to delete the provisions thereof in
                  -------------
their  entirety.

          15.     Section  4.2 is amended to (a) delete the provisions of clause
                  ------------
(c)  thereof  in  their  entirety  and  substitute  the  following  therefor:

               (c)     Delivery  of  Borrowing Base Certificate; Compliance with
                       ---------------------------------------------------------
Commitments.  The  Borrowers  shall  have delivered a Borrowing Base Certificate
 ----------
dated  as of the date of the Notice of Borrowing or request for Letter of Credit
 -
applicable  to  such Extension of Credit attached to such Notice of Borrowing or
request  for  Letter  of

                                       13
<PAGE>
Credit  and, immediately after giving effect to the making of any such Extension
of  Credit  (and  the  application  of  proceeds  thereof),  (i)  the sum of the
aggregate  principal  amount  of outstanding U.S. Revolving Loans plus Swingline
Loans  plus  LOC  Obligations  shall  not  exceed the then applicable limitation
thereon  set  forth in Section 2.1(a), (ii) the LOC Obligations shall not exceed
the  LOC  Committed  Amount,  and (iii) the Swingline Loans shall not exceed the
Swingline  Commitment.

               and  (b)     delete  the  provisions of clause (g) thereof in its
entirety.

          16.     Section  5.1  is  amended to delete the provisions immediately
                  ------------
following  clause  (c)  thereof  in  their entirety and substitute the following
therefor:

               (d)     Monthly Reporting.  As soon as available and in any event
                       -----------------
within  25  days  after  the  end of each calendar month, (i) a company-prepared
consolidated  balance  sheet of the Company and its consolidated Subsidiaries as
at  the  end  of  such  period  and  related company-prepared statements for the
Company  and  its consolidated Subsidiaries of (A) income for such month and the
fiscal  year  to date, (B) retained earnings for such period and the fiscal year
to  date in the event such period ends at fiscal quarter end, and (C) cash flows
for  the  fiscal  year  to  date, in each case setting forth in comparative form
consolidated  figures  for the corresponding period or periods of the proceeding
fiscal  year  (subject to normal recurring year-end audit adjustments), together
with  a  management  discussion  of  such  results;  provided, however, that the
requirements  of this clause (i) shall terminate as of such time as the Leverage
Ratio is less than 2.50 to 1.00, as determined based upon the then most recently
prepared  audited  financial statements delivered pursuant to Section 5.1(a) and
the  requirements of clause (i)(C) shall commence with the period ending January
31,  2001;  (ii)  a  TRSTS  report;  (iii)  a report of the status of the Credit
Parties'  open  orders  as  of month-end for such month and the calendar year to
date,  in  each  case  setting  forth  in  comparative  form the figures for the
corresponding  period  or  periods  of  the  preceding calendar year and for the
current  periods  included in such report; and (iv) a forecast of the Borrowers'
cash  flow  for the then immediately succeeding six (6) calendar months, in each
instance,  substantially  in the form of such reports attached hereto as Exhibit
5.1-D  and  made  a  part  hereof.

               (e)     Borrowing  Base  Reporting.  Within 15 days after the end
                       --------------------------
of each calendar month, written confirmation of the Borrowing Base as of the end
of  such  month and, concurrently with the submission of any Notice of Borrowing
as  provided  in  Section  2.1(b)(i)  and  any  request  for Letter of Credit as
provided in Section 2.3(b), a Borrowing Base Certificate dated as of the date of
such  notice  or  request,  as  applicable.

          All  such  financial  statements  to  be  complete  and correct in all
material  respects  (subject,  in  the  case  of  interim  statements, to normal
recurring  year-end  audit  adjustments) and to be prepared in reasonable detail
and,  in  the  case  of  the  annual,

                                       14
<PAGE>
quarterly  and  monthly  financial  statements  provided  in  accordance  with
subsections  (a),  (b),  and  (d)  above,  in  accordance  with  GAAP  applied
consistently throughout the periods reflected therein and further accompanied by
a description of, and an estimation of the effect on the financial statements on
account  of,  a  change,  if any, in the application of accounting principles as
provided  in  Section  1.3.

          17.     Section  5.9  is  amended  to delete the provisions thereof in
                  ------------
their  entirety  and  substitute  the  following  therefor:

          The Company shall, and shall cause each of its Subsidiaries to, comply
with  the  following  financial  covenants:

               (a)     Leverage  Ratio.  The  Leverage Ratio, as of the last day
                       ---------------
of  each  fiscal quarter of the Company and its Subsidiaries set forth below for
the  four  fiscal  quarters  then ended, shall be less than or equal to that set
forth  opposite  such  date:
<TABLE>
<CAPTION>

Period Ending     Ratio
-------------  ------------
<S>            <C>
9/30/2000 . .  4.00 to 1.00
12/31/2000. .  3.75 to 1.00
3/31/2001 . .  3.75 to 1.00
6/30/2001 . .  3.50 to 1.00
9/30/2001 . .  3.25 to 1.00
12/31/2001. .  3.25 to 1.00
3/31/2002 . .  3.00 to 1.00
6/30/2002 . .  3.00 to 1.00
9/30/2002 . .  2.75 to 1.00
12/31/2002. .  2.75 to 1.00
3/31/2003 . .  2.75 to 1.00
</TABLE>

               (b)     Minimum  Consolidated EBITDA.  Consolidated EBITDA, as of
---------------------------------------------------
the  last  day  of  each  fiscal quarter of the Company and its Subsidiaries set
forth  below for the four fiscal quarters then ended, shall not be less than the
amount  set  forth  opposite  such  date:
<TABLE>
<CAPTION>

                  Minimum
               Consolidated
Period Ending     EBITDA
-------------  -------------
<S>            <C>
9/30/2000 . .  $  27,900,000
12/31/2000. .  $  32,490,000
3/31/2001 . .  $  33,100,000
6/30/2001 . .  $  34,500,000
9/30/2001 . .  $  34,500,000
12/31/2001. .  $  36,200,000

                  Minimum
               Consolidated
Period Ending     EBITDA
-------------  -------------

3/31/2002 . .  $  36,500,000
6/30/2002 . .  $  37,400,000
9/30/2002 . .  $  39,773,000
12/31/2002. .  $  42,000,000
3/31/2003 . .  $  42,000,000
</TABLE>

                                       15
<PAGE>
               (c)     Consolidated  Capital Expenditures.  Consolidated Capital
                       ----------------------------------
Expenditures  as  of  the last day of each fiscal quarter of the Company and its
Subsidiaries  set  forth  below  for  the  four fiscal quarters then ended shall
exceed  the  amount  set  forth  opposite  such  date:
<TABLE>
<CAPTION>

                           Maximum Capital
Period Ending                Expenditures
-------------------------  ----------------
<S>                        <C>
6/30/2000 . . . . . . . .  $     11,300,000
9/30/2000 . . . . . . . .  $     11,100,000
12/31/2000. . . . . . . .  $     10,900,000
3/31/2001 . . . . . . . .  $     11,250,000
6/30/2001 . . . . . . . .  $     11,500,000
9/30/2001 . . . . . . . .  $     11,750,000
12/31/2001 thru 3/31/2003  $     12,000,000
</TABLE>

          For  purposes  of  this Section 5.9, Consolidated EBITDA shall exclude
any  non-recurring  or  special charges related to legal settlements and license
guarantees  for  calendar  year  2000  in  an aggregate amount not to exceed the
lesser  of  (i)  $2,500,000  or  (ii)  the actual amount of such special charges
incurred  in  calendar year 2000 which are required to meet the projected EBITDA
for  the  fiscal  year  ending  December  31,  2000  reflected  in the financial
projections  attached  hereto  as  Exhibit  5.9  and  made  a  part  hereof.

          18.     Section  6.5  is  amended  to delete the provisions (i) of the
proviso in clause (a)(ii) thereof in their entirety and substitute the following
therefor:

               provided that such purchase or acquisition is committed to within
60  days  of  receipt  of  the  net proceeds and such purchase or acquisition is
included  within  the  amount  set  forth  in  Section  2.8(b)(ii).

               and  (ii)     of  clause  (b)  thereof  in  their  entirety  and
substitute  the  following  therefor:

               (b)     purchase,  lease  or  otherwise  acquire  (in  a  single
transaction  or  a series of related transactions) the property or assets of any
Person  (other  than  purchases  or  other  acquisitions  of  inventory, leases,
materials,  property  and  equipment  in  the  ordinary  course  of  business).

          19.     Section  6.6  is amended to add the following provision at the
                  ------------
end  thereof:

                                       16
<PAGE>
          Notwithstanding the foregoing, in no event shall the Company or any of
its  Subsidiaries make any Permitted Investment described in clause (vii) of the
definition  of  such  term.

          20.     Section  6.11  is  amended to delete the provisions thereof in
                  -------------
their  entirety  and  substitute  the  following  therefor:

          The  Company  will not, nor will it permit any Subsidiary to, directly
or  indirectly,  declare,  order,  make  or  set  apart  any  sum for or pay any
Restricted  Payment.

          21.     Schedule 1.1(b) is deleted in its entirety and Schedule 2.1(a)
                  ---------------                                ---------------
is  deleted  in  its  entirety  and  Schedule 2.1(a) attached hereto substituted
                                     ---------------
therefor.

     B.     No  Other  Amendments.  Except  as modified hereby, all of the terms
            ---------------------
and  provisions  of  the  Credit  Documents  remain  in  full  force and effect.

     C.     Waiver.  The  Lenders hereby waive their rights and remedies arising
            ------
with  respect  to the occurrence of those Defaults and Events identified in that
certain  Second  Amendment to Credit Agreement dated as of May 15, 2000 and that
certain  letter dated July 14, 2000 addressed to the Credit Parties, executed by
the  Lenders,  and  agreed  and  acknowledged  by  the  Credit  Parties.

     D.     Representations  and  Warrants.  The Credit Parties hereby represent
            ------------------------------
and warrant that (a) the representations and warranties contained in Article III
of  the Credit Agreement, as amended hereby are correct in all material respects
on  and  as  of  the date hereof as though made on and as of such date and after
giving  effect to the amendments contained herein and (b) except as specifically
referenced  in  C  above, no Default or Event of Default exists under the Credit
Agreement  on and as of the date hereof and after giving effect to the amendment
contained  herein.

     E.     Conditions  Precedent.  This  Third Amendment shall become effective
            ---------------------
upon  the  satisfaction  of  the  following  conditions  precedent:

          1.     Execution  of  Third  Amendment  and  Security  Documents.  The
                 ---------------------------------------------------------
Administrative  Agent  shall  have  received  counterparts  of  (a)  this  Third
Amendment,  executed by a duly authorized offer of each party hereto and (b) the
Security  Documents and third-party agreements identified on Schedule I attached
hereto  and  made  a  part  hereof,  in  form  and substance satisfactory to the
Administrative  Agent  and  its  counsel.

          2.     Legal  Opinion of Counsel.  The Administrative Agent shall have
                 -------------------------
received an opinion of Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.,
counsel for the Credit Parties, dated as of the date hereof and addressed to the
Administrative  Agent and the Lenders, in form and substance satisfactory to the
Administrative  Agent.

                                       17
<PAGE>
          3.     Restructuring  Fee.  The  Administrative  Agent  shall  have
                 ------------------
received,  for  the  account  of the Lenders in accordance with their respective
Commitment  Percentage,  payment of a fee in the amount of $328,125, in addition
to, and not in lieu of, other amounts paid or payable by the Borrowers under the
Credit  Documents or amendments thereto or agreements entered into in connection
therewith.

          4.     Management  Letter.  The  Borrowers shall have delivered to the
                 ------------------
Administrative  Agent  and  the  Lenders  a copy of the management letter of its
independent  accountants  prepared  with  respect  to  the  audited  financial
statements  for  the  fiscal  year  ended  December  31,  1999.

          5.     Expenses.  The Administrative Agent shall have received payment
                 --------
on August 31, 2000 of all expenses incurred by it and payable or reimbursable by
the  Borrowers  pursuant  to  Section 9.5 of the Credit Agreement which are then
unpaid  or  unreimbursed.

     F.     Reaffirmation.  Each  of  the Credit Parties hereby reaffirms all of
            -------------
its  obligations  and duties under the Credit Documents as amended including but
not  limited  to  the  Borrower's obligations under the Credit Agreement and the
Guarantors  obligations  under  the  Credit  Agreement.

     G.     Execution  in Counterparts.  This Third Amendment may be executed in
            --------------------------
any  number  of counterparts, each of which when so executed and delivered shall
be  deemed  an  original  and  it shall not be necessary in making proof of this
Third  Amendment  to  produce  or  account  for  more than one such counterpart.

     H.     Governing  Law.  This  Third  Amendment and the Credit Agreement, as
            --------------
amended hereby, shall be deemed to be contracts made under, and for all purposes
shall  be  construed in accordance with the laws of the State of North Carolina.

                                       18
<PAGE>
     IN  WITNESS  WHEREOF,  each of the parties has caused a counterpart of this
First  Amendment to be duly executed and delivered as of the date and year first
above  written.

U.S.  BORROWERS     :              RACING  CHAMPIONS,  INC.
                                        an  Illinois  corporation

                                   By     /s/  Curtis  W.  Stoelting
                                          --------------------------
                                   Title:

                                   RACING  CHAMPIONS  SOUTH,  INC.
                                        a  North  Carolina  corporation

                                   By     /s/  Curtis  W.  Stoelting
                                          --------------------------
                                   Title:

U.K.  BORROWER:                    RACING  CHAMPIONS  WORLDWIDE LIMITED,
                                        a  United  Kingdom  corporation

                                   By     /s/  Curtis  W.  Stoelting
                                          --------------------------
                                   Title:

GUARANTORS:                        RACING  CHAMPIONS  CORPORATION,
                                        a  Delaware  corporation
                                   GREEN'S  RACING  SOUVENIRS,  INC.
                                        a  Virginia  corporation
                                   RCNA  HOLDINGS,  INC.,
                                        a  Delaware  corporation
                                   RACING  CHAMPIONS  ERTL,  INC.,
                                   f/k/a  THE  ERTL  COMPANY,  INC.,
                                        a  Delaware  corporation
                                   DIECAST  EXPRESS.COM,  INC.
                                        a  Delaware  corporation

                                   By     /s/  Curtis  W.  Stoelting
                                          --------------------------
                                   Title:

                                       19
<PAGE>

ADMINISTRATIVE  AGENT
AND  LENDERS:                         FIRST  UNION  NATIONAL  BANK,
                                        as  Administrative  Agent  and  as
                                        a  Lender

                                   By     /s/  Jill  W.  Akre
                                          -------------------
                                   Title:     Senior  Vice  President & Director

                                   HARRIS  TRUST  AND  SAVINGS  BANK

                                   By     /s/  Mark  W.  Piekos
                                          ---------------------
                                   Title:     Vice  President

                                   BANK  ONE,  N.A.,  f/k/a  THE  FIRST
                                   NATIONAL  BANK  OF  CHICAGO

                                   By     /s/  Randall  Taylor
                                          --------------------
                                   Title:     Senior  Vice  President

                                   NORTHERN  TRUST  COMPANY

                                   By     /s/  J.E.  Clark  Delanois
                                          --------------------------
                                   Title:     Vice  President

                                   BANK  OF  AMERICA,  N.A.

                                   By     /s/  Michael  Staunton
                                          ----------------------
                                   Title:     Vice  President

                                   COMERICA  BANK

                                   By     /s/  James  L.  Woods
                                          ---------------------
                                   Title:     Assistant  Vice  President

                                       20
<PAGE>

                                   NATIONAL  CITY  BANK

                                   By     /s/  Frank  F.  Pagura
                                          ----------------------
                                   Title:     Senior  Vice  President

                                   MICHIGAN  NATIONAL  BANK

                                   By     /s/  Kevin  Potter
                                          ------------------
                                   Title:     Controller,  Asset  Structuring

                                       21

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