Sample Business Contracts


Manufacturing Agreement - Hershey Foods Corp. and Topps Co. Inc.

Manufacturing Forms


                                                                 EXECUTION COPY

                              AMENDED AND RESTATED
                             MANUFACTURING AGREEMENT

          This Amended and Restated Manufacturing  Agreement is dated as of this
13th day of March,  1998 by and between  Hershey Foods  Corporation,  a Delaware
corporation with an address of 14 E. Chocolate Avenue, Hershey, PA 17033 Hershey
(hereinafter  "Hershey" ) and The Topps Company,  Inc., a Delaware  corporation,
having  offices at One Whitehall  Street,  New York, NY 10004-2109  (hereinafter
"Topps").

                                    RECITALS

          WHEREAS,  Topps and Leaf, Inc. entered into a Manufacturing  Agreement
as of November 6, 1996 (the "Original Agreement");

         WHEREAS, Hershey purchased Leaf, Inc. on December 30, 1996;

          WHEREAS,  Topps and  Hershey  wish to amend and restate the terms upon
which  Hershey  will  manufacture  for Topps  the gum  product(s)  described  on
Schedule A (the  "Product")  and package the  Product in certain  packaging  and
labeling  including,  inter alia,  Topps' name,  trademarks and trade dress (the
"Packaging")(the  Product as packaged in the  packaging is referred to herein as
the "Packaged Product") for sale in the United States (the "Territory"); and

          WHEREAS, Hershey and Topps desire to enter into this Agreement for the
mutual  considerations  stated in this  Agreement,  in order to establish  their
respective rights,  conditions,  obligations and responsibilities with regard to
the manufacture, supply and sale of the Packaged Products.

          NOW,  THEREFORE,  Hershey and Topps,  in  consideration  of the mutual
promises and undertakings contained below, agree as follows:

1.       MANUFACTURING RELATIONSHIP

          (a)  Subject  to the  terms and  conditions  of the  Agreement,  Topps
appoints  Hershey as its  exclusive  manufacturer  of the Product  and  Packaged
Product to be sold in the Territory and Hershey  accepts such  appointment.  All
Products and Packaged  Products shall be  manufactured by Hershey at its current
Memphis,  Tennessee plant (which it hereby  represents that it owns),  except as
otherwise  agreed by Topps in writing.  Nothing in this Agreement shall restrict
Topps from selling the Packaged Product outside the Territory.

          (b) So long as Hershey is able to provide  Topps with the quantity and
quality of the Packaged  Product  ordered  hereunder  and on the terms  provided
hereunder,  during the term of this  Agreement,  Topps  shall not,  directly  or
indirectly,  utilize  another  manufacturer  to  manufacture  and/or package the
Product and Packaged Product to be sold in the Territory.  Nothing  contained in

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this  Agreement  shall  restrict  Topps from using  other  manufacturers  to (i)
manufacture  the  Product  or the  Packaged  Product  for  sale  outside  of the
Territory  or (ii) to  manufacture  items  other than the  Product  or  Packaged
Product for sale anywhere in the world.  In the event Topps desires to appoint a
manufacturer  for the Product or the Packaged  Product to be sold or distributed
by Topps (and not a  licensee)  outside of the  Territory,  Topps  shall  notify
Hershey and Hershey  shall have the right to submit a bid for the job within ten
(10) days of such  notice.  Topps shall have the sole and  absolute  discretion,
however, over the selection of any such manufacturer.

(c) Topps  shall  provide  to  Hershey  by the 1st of each  month in which  this
Agreement is in effect a written firm purchase order for the next calendar month
(the  "Purchase  Order").  Topps and Hershey may upon mutual  written  agreement
agree to replace written  purchase orders with some form of electronic  purchase
order  system.  In the event the parties so agree,  all terms and  conditions of
this Agreement governing written purchase orders other than the requirement that
the purchase  order be written  shall apply equally to any  electronic  purchase
orders.  Upon receipt of the Purchase  Order,  Hershey shall notify Topps of its
acceptance or rejection (only as permitted  below) of the Purchase Order. In the
event  Hershey  does not accept the Purchase  Order,  the parties will use their
best efforts to mutually agree on a revised  Purchase  Order.  Hershey shall, at
all times, have sufficient Product  production  capacity to fully utilize all of
Topps'  wrapping  machines for the Product  (which shall be kept in good working
order as further  outlined in paragraph  3(a) below),  based upon three  shifts,
five (5) days per week  (excluding  scheduled  plant  shutdowns  which  shall be
agreed to by Hershey and Topps and Hershey's normal plant  holidays).Hershey may
only  reject a Purchase  Order to the extent  Topps  requirements  for any month
exceed such required capacity. In the event of Hershey's rejection of a Purchase
Order  due  to  a  request  in  excess  of  the  foregoing  production  capacity
requirement, Topps shall be free to acquire up to that month's excess production
requirements  from another  source.  Upon  acceptance  of the Purchase  Order or
revised  Purchase  Order,  Hershey  shall be  obligated  to supply the  quantity
ordered  in the  time  required.  Additionally,  if Topps  requests  incremental
production  which exceeds  Hershey's 5 day, 3 shifts per day  capacity,  Hershey
will provide Topps with a cost estimate for the incremental overtime production.
Incremental  labor cost for  direct and  indirect  labor will be  calculated  by
multiplying  the number of hours  worked  times the wage  premium  plus  partial
benefit rate (401K,  FICA,  pension).  Upon receipt of the cost estimate,  Topps
will notify  Hershey,  in a timely  manner if the overtime is desired and, if it
is,  Hershey  shall  perform the  overtime.  Hershey will invoice  Topps for the
actual overtime at the end of each month;  provided,  however,  that Topps shall
not be  required  to pay any costs for  overtime  to the extent that they exceed
Hershey's  estimate by more than 10%. The terms and conditions of this Agreement
shall  supersede any and all terms and conditions  that may be contained in such
Purchase  Order other than the  specified  quantity to be  purchased  within the
specified time frame.

(d) Topps will provide  rolling twelve (12) month estimates on a quarterly basis
of its  anticipated  requirements  for the Product and/or  Packaged  Product for
purposes of Hershey  maintaining  adequate supplies of ingredients and packaging
components.  Hershey  shall  have the right to  purchase  up to a three  months'
supply of ingredients  and packaging  materials for the Product and/or  Packaged
Products  based on these  estimates.  During  March and  September  of each year

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hereunder Topps and Hershey will review inventories of ingredients and packaging
materials and will agree on the  disposition of and  reimbursement  for obsolete
items.  Topps shall only be required to reimburse  Hershey for any  purchases of
ingredients or packaging materials made by Hershey in excess of this three month
supply if Topps has approved  these  purchases in writing in advance and Hershey
cannot use these ingredients.

(e) Hershey will provide daily  production  reports and monthly reports on waste
levels (gum and  packaging),  line  output,  etc.,  to be used by the parties to
monitor  performance  related  improvements and production  levels.  The reports
shall be substantially in the form attached hereto as Schedule B.

(f) Hershey agrees to conduct  appropriate  tests,  audits and  evaluations,  as
currently  performed  by Hershey and  described  on Schedule C, to confirm  that
ingredients,  components,  formulas,  sequences,  weights, count, package defect
levels and other  quality  parameters  are being  maintained,  and shall provide
Topps  monthly  reports  regarding  the  foregoing.  Hershey  shall perform such
additional quality assurance tests, audits or evaluation that Topps may request,
and Topps shall pay the incremental cost, if any, of the additional functions.

(g) Hershey agrees to maintain  adequate  records of  production,  including lot
numbers,  dates,  codes,  etc., to identify and isolate production and to reduce
losses in the event of a product recall or defect.

2.       PRICES AND CONDITIONS OF SALE

A. The  following  will apply during the  Original  Term of this  Agreement  (as
defined below):

(a) For 1997,  Hershey  shall  sell the  Packaged  Product to Topps at the price
listed on Schedule D-1997,  F.O.B.  Hershey's production facility,  exclusive of
all sales,  use,  excise or other taxes,  charges or assessments  imposed on the
purchase  and resale of the  Packaged  Product,  subject  to only those  changes
described  in  paragraph  (d)  below and  subject  to the next  sentence.  Topps
acknowledges  that as of November 1, 1997, the gum and gum base processing labor
costs  will be $.076 (or 7.6 cents)  per pound for sugar gum  (versus  $.02) and
$.101  (or 10.1  cents)  per  pound  for  sugarless  gum  (versus  $.0245)  and,
therefore, the total net difference for November and December 1997 shall be paid
by Topps to Hershey within thirty (30) days after invoice.

(b) For the period from January 1, 1998 through December 31, 1998, Hershey shall
sell the  Packaged  Product  to Topps at the price  listed on  Schedule  D-1998,
F.O.B.  Hershey's  production  facility,  exclusive of all sales, use, excise or
other taxes,  charges or  assessments  imposed on the purchase and resale of the
Packaged Product, subject only those changes described in paragraph (d) below.

(c) For the period from January 1, 1999 through December 31, 1999, Hershey shall
sell the  Packaged  Product to Topps at the prices  listed on  Schedule  D-1999,
F.O.B.  Hershey's  production  facility,  exclusive of all sales, use, excise or
other taxes,  charges or  assessments  imposed on the purchase and resale of the
Packaged  Product,  subject only to those  changes  described  in paragraph  (d)

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below. Schedule D-1999 shall be established not later than November 15, 1998 and
the differences  between  Schedule D-1998 and Schedule D-1999 shall reflect only
(i) an  aggregate  maximum  increase of 2.5% in the labor cost per case,  not to
exceed $110,000 in aggregate cost to Topps for the twelve-month  period and (ii)
updated pricing on ingredients and packaging materials permitted under paragraph
(d) below provided,  however, that this updated pricing shall reflect changes in
all ingredients and packaging materials (i.e. not limited to largest 80%).

(d) The  prices  for the  Packaged  Product  outlined  in (a) - (c) above may be
changed  during the calendar  year in which each Schedule D is in effect only to
reflect the following:

          (i)  increases  or  decreases  in the  cost  of  any  of  the  largest
ingredients and packaging  materials (by dollars) which make up 80% of the total
cost (by dollars) of  ingredients  and packaging  materials in the aggregate for
all  Packaged  Products  expected  to be  manufactured  by Hershey  during  that
calendar year (which items shall be agreed to by the parties at the beginning of
each year); and

          (ii)  one-half  of any  cost  decreases  associated  with  performance
improvements in factory throughput of the Packaged Product.

          Price  changes in (i) above shall take place as and when  Hershey uses
the newly priced items in the Packaged Product. The new prices will be effective
after use of the current inventory, using a FIFO depletion method. Hershey shall
give Topps notice of all pricing  changes  promptly after Hershey learns of such
changes  along with copies of the notices or invoices  received from its vendor.
On March 31,  June 30,  September  30 and  December  31 of each year  during the
Original Term Hershey will provide Topps with copies of the most recent invoices
Hershey has received for  packaging  and  ingredients  used to  manufacture  the
Packaged  Product.  Factory  throughput shall be reviewed  semi-annually  during
March and  September of each year and any price changes in (ii) above shall take
place as soon as possible thereafter.

B. The following shall apply during the Extended Term (as defined below):

(a) Topps shall pay Hershey as follows:

          (i) the actual cost of  ingredients  and  packaging  to be provided by
Hershey;

          (ii)  Hershey's  cost of labor and  benefits  as  calculated  from the
crewing, output and pay rates plus the benefits cost per labor dollar;

          (iii) the overhead  rate per pound of Packaged  Product  manufactured,
which shall be determined in accordance with subparagraph B(c)(vii) below; and

          (iv) five (5)% of the total of subparagraphs B(a)(i)-(iii) above.

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(b) The costs  referenced in B (a)(i)-(iv) will be established by November 15 of
the year  preceding  the year in which the costs  will be  effective  during the
Extended Term (as  hereinafter  defined) and will be reflected in a new Schedule
D-[year]for each year.  Hershey and Topps shall together review the new Schedule
D, and Hershey  shall  explain to Topps the basis for all changes from the prior
Schedule D.

(c) Topps and  Hershey  agree as follows  with  regard to pricing  for  Packaged
Products during the Extended Term:

          (i) labor costs  described  in B (a) (ii) above will be  reviewed  and
revised  in the new  Schedule  D to take into  account  actual,  reasonable  and
verifiable  crewing  changes,  output  changes,  pay changes  and  benefit  cost
changes.  Output changes, if any, will be based on the last six months' prior to
October  actual  average  output of each  Packaged  Product  unless  extenuating
circumstances affected the six-month average.

          (ii) minimum  acceptable yields for ingredients and packaging for each
year  during  the  Extended  Term  will be  mutually  agreed to and set forth in
Schedule D hereto.  Minimum  acceptable  yields will be based on the six months'
prior  to  October  actual  average  yields,  unless  extenuating  circumstances
affected  the  six-month  average.  Hershey  will  bear all costs  incurred  for
packaging and ingredients if yields fall below the yields stated on Schedule D.

          (iii) on March 31, June 30,  September 30 and December 31 of each year
during the Extended  Term  Hershey  will  provide  Topps with copies of the most
recent invoices  Hershey has received for the packaging and ingredients  used to
manufacture the Packaged Products.

          (iv) in the  event  Hershey  at any  time  receives  notice  of a cost
increase or decrease in any of the largest  ingredients and packaging  materials
(by dollars) which make up 80% of the total cost (by dollars) of ingredients and
packaging  materials in the aggregate for all Packaged  Products  expected to be
manufactured  by Hershey  during that calendar year (which items shall be agreed
to by the parties at the beginning of each year),  Hershey will promptly  notify
Topps of such  increase(s)  or  decrease(s)  along with any  notices or invoices
received from vendors evidencing such increase(s) or decrease(s).  The costs set
forth on Schedule D will change to evidence the changed  costs when Hershey uses
the newly priced items in the Packaged Product. The new prices will be effective
after use of the current inventory, using a FIFO depletion method. Hershey shall
not  discriminate  against Topps in the manner in which it uses  ingredients and
packaging materials in the Packaged Product versus its own products.
 
          (v) Hershey will invoice Topps for the Packaged  Products  produced by
Hershey at the time of shipment of such Packaged  Products to Topps.  Topps will
pay Hershey the invoiced  amount  within 30 days of the invoice  date.  Interest
will accrue on any amount  remaining  unpaid at the end of such 30 day period at
the rate of 1% per month  unless  Topps has  notified  Hershey of its good faith
dispute of any invoiced item.  Hershey and Topps agree to use their best efforts
to resolve such disputes.

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          (vi) During the Extended  Term only,  in the event during any calendar
year Topps  purchases less than 4 million  pounds of Product from Hershey,  then
Hershey shall have the option of  terminating  this Agreement upon eighteen (18)
months' written notice to Topps delivered  within thirty (30) days after the end
of such calendar  year.  If Hershey  delivers the notice of  termination,  Topps
shall then have the right  (but not the  obligation)  to commit to  Hershey  (by
written  notice  delivered  by March 15 of that year) that it will  purchase  at
least 4 million  pounds of Product during that next calendar year. If Topps does
so commit and meets the 4 million pound level,  the notice of termination  shall
be void and this Agreement shall remain in full force and effect. If Topps makes
this commitment and fails to meet the 4 million pound threshold,  then (x) Topps
shall pay Hershey an amount equal to the  shortfall in pounds  multiplied by the
overhead rate per pound of Packaged Product then in effect and (y) Hershey shall
have the right to terminate  this Agreement by delivery of written notice within
thirty (30) days of the end of the calendar  year,  which  termination  shall be
effective eighteen (18) months after that notice of termination.

          (vii) For calendar  years 2000,  2001 and 2002,  the overhead rate per
pound of  Packaged  Product  shall be fixed at $0.34 per pound.  Promptly  after
execution  of this  Amended and Restated  Manufacturing  Agreement,  the parties
shall work, in good faith, to establish a methodology,  by October 15, 1998, for
determining the overhead rate per pound of Packaged  Product for all years after
2002 that the Agreement is in effect.  That  methodology,  when mutually  agreed
upon, will become part of this Agreement as Schedule E. The actual overhead rate
for each year after 2002 will be calculated in accordance with this  methodology
and will be included on the new Schedule D. In the event the total overhead rate
per pound of Packaged  Product as listed in Schedule D for any such year exceeds
the  overhead  rate per pound of Packaged  Product for that listed in Schedule D
for the prior year by more than 6%, Topps shall have the right to terminate this
Agreement on not less than six (6) nor more than eighteen  (18) months'  written
notice delivered at any time within ninety (90) days after the later of the date
the new Schedule D is established or February 15 of the new year.

C. The parties agree that the following  will be applicable  during the Original
Term and the Extended Term as defined below:

(a) The  parties  agree that  Schedule A is not a static  list of  Products  and
Packaged  Products  and that Product and  Packaged  Product skus (stock  keeping
units) may be added or deleted at Topps' discretion.  Pricing for any additional
Product or Packaged  Product skus will be established  using the same basic cost
and profit  structure as was used to determine  the agreed upon pricing of other
skus  provided  for  herein.  Topps  and  Hershey  agree to review  the  pricing
established by the parties for items added to the Schedule of Packaged  Products
90 days  after  production  of those new  products  has begun to  determine  the
accuracy of the  established  prices.  In the event  actual costs to Hershey are
different than originally anticipated the parties agree to negotiate adjustments
in good faith to take into account the higher or lower costs  actually  incurred
by Hershey.

(b) The parties  acknowledge  that new product  development  is important to the
vitality of the Bazooka brand and that product changes are sometimes required or
advisable.  Without  limiting  the  foregoing,  examples  of some of  these  new
products or product changes are: 

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          A. Flavor extensions.
          B. Size changes.  
          C. New configurations of existing or new formulations.
          D. Wrap or box changes in graphics, counts, size, etc. 
          E. Ingredient changes.

          If Topps  requests,  Hershey  shall assist Topps with the research and
development  and the  implementation  of  changes or new  products.  If Topps so
requests Hershey's assistance,  Topps shall be required to pay the capital costs
for the  equipment  required to produce a new or changed  product and Topps will
retain ownership thereof.  With respect to the cost of production trials for new
products,  Topps shall pay for all ingredients,  packaging components and direct
labor, and the parties shall negotiate in advance regarding additional costs and
expenses.

(c) In the event Hershey makes its  continuous  gum base and gum making  process
available to Topps for use in producing  the  Products,  and if Topps elects (in
its discretion) to use the same,  Topps agrees that it will use the same formula
as Hershey chooses to utilize, except that Topps may choose the color and flavor
of the Products  produced by Hershey  through this  process.  In the event that,
before the end of 1998, Hershey makes this process available and Topps elects to
utilize  Hershey's  continuous gum base and gum making process,  the gum and gum
base  processing  labor costs outlined in Schedule D will be replaced with $.033
(or 3.3 cents) per pound.  For any use of this  continuous base or process after
the end of 1998 Hershey will provide Topps with the costs of production. Nothing
herein shall be deemed to require Hershey to make its continuous system formulas
or process available to Topps, or, once having made it available, to continue to
make it  available.  Hershey may at any time  decline to make the  formulas  and
process  available to Topps.  In the event Hershey  determines it will no longer
make the formulas and process available to Topps, Topps must revert to the batch
production  process  at  costs  based on those  previously  applicable  to batch
production.  In the event Topps elects to utilize  Hershey's  continuous gum and
gum base  formulas  and Hershey  subsequently  changes its formula and elects to
make such revised formulas available to Topps, then Topps must either (x) accept
the revised formulas or (y) revert to Topps' prior batch  production  process at
rates  based  on  those  previously   applicable  to  batch  production.   Topps
specifically  acknowledges  that the  technology,  processing  and  operation of
Hershey's  continuous  gum and base making  process and the  formulas are deemed
proprietary intellectual property and/or trade secret information by Hershey and
will be governed by the terms of this Agreement.

(d) Any new  technology or other  intellectual  property or any portion  thereof
developed  solely by Topps concerning these new products or changes is to remain
confidential  and not to be disclosed or used in the  manufacture of any product
except the Product and the Packaged  Product,  and shall be owned by Topps.  Any
new technology or intellectual  property or portion thereof  developed solely by
Hershey  is to  remain  confidential  and  shall be owned  by  Hershey.  Any new
technology or intellectual  property developed jointly by Topps and Hershey will
be owned jointly by the two parties,  and each party shall have the unrestricted
right to utilize,  modify,  enhance,  replicate,  and create derivatives of such
technology or intellectual  property.  Prior to full scale production of any new
product,  any party that believes it has a proprietary interest in any component
thereof (other than items that have been  previously  included in the Product or

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Packaged  Product or other new products  developed  hereunder)  shall notify the
other  party in  writing.  The parties  shall  attempt to  amicably  resolve any
dispute regarding the foregoing.

(e) After development of any item for which Topps requested Hershey's assistance
as set forth above,  Hershey shall have the first option to be the  manufacturer
for such  changed or new product in the  Territory  so long as the cost to Topps
(including  capital  costs and unit  prices)  shall be no greater than Topps can
obtain  elsewhere.  Except  as set  forth  in the  preceding  sentence,  nothing
contained  in  this  Agreement   shall  require  Topps  to  utilize  Hershey  to
manufacture new products or variations.  If Topps elects to produce the product,
for sale in the Territory,  elsewhere,  Topps will  reimburse  Hershey for costs
Hershey incurred on the development project.

(f) All orders will be loaded by Hershey for shipping,  in truckload  quantities
unless  otherwise  indicated by Topps,  to any location within the 48 contiguous
states of the United States  designated by Topps,  by a means of  transportation
selected by Topps.  Hershey will  cooperate in all  shipping  procedures.  Topps
shall either supply, or at its option pay for, all pallets and slip sheets to be
used. All labeling  shall include item numbers,  count per pallet and date code.
Any other labeling or handling shall be negotiated by the parties in advance.

(g) Hershey  shall not be liable for failure to perform or delay in  performance
hereunder  if such  failure  or  delay  is due to fire,  storms,  floods,  labor
disputes,  strikes,  lockouts,  war,  riots,  or  civil  commotion,   embargoes,
government or industry regulation, act of God, or any other cause or contingency
beyond its reasonable control. In the event of any such occurrence,  Topps shall
have the right (but not the  obligation)  to source the Product and the Packaged
Product from another  entity for the affected  period and if the period of force
majeure  exceeds six (6) months,  then Topps may, as its sole remedy,  terminate
the Agreement immediately.

(h) Hershey agrees to carry insurance covering Products and general liability in
amounts  of not less  than $1  million  per  occurrence  and $2  million  in the
aggregate, and an umbrella policy of not less than $15 million in the aggregate.
All policies shall provide for at least thirty (30) days prior written notice of
cancellation,  non-renewal  or material  change in the terms and  conditions  of
coverage and name Topps as an  additional  insured.  Hershey will provide  Topps
with a certificate or  certificates  of insurance  evidencing  such coverage and
such other evidence as Topps may  reasonably  request to insure that the insurer
is required to cover Topps, as an additional insured, for the deductible portion
as well.  Hershey will promptly inform Topps of Hershey's receipt of a notice of
cancellation,  non-renewal,  or material  change in the terms and  conditions of
such  coverage.  In the event Hershey  ceases to carry  adequate  insurance that
names Topps as an  additional  insured,  and  Hershey  fails to cure such breach
within  forty-five (45) days after written notice by Topps,  Topps may terminate
this Agreement by giving Hershey  written notice of Topps' election to terminate
this Agreement.

(i) Hershey shall provide evidence of all price changes  referred to herein.  In
the event Topps desires to confirm any pricing under this Agreement  whatsoever,
an independent and mutually  agreeable  auditor will be retained by the parties,
at the sole  expense  of Topps and not more  frequently  than once per  calendar
year, to do so;  provided,  however,  that the cost  components for the overhead

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rate  through the year 2002 shall not be subject to audit.  Notwithstanding  the
foregoing,  in the event that an audit reveals that Hershey overcharged Topps by
five percent (5%) or more for any calendar year,  Hershey shall  reimburse Topps
for the cost of the audit. Topps and Hershey will work together in good faith to
reduce the cost of  production  of the Product and Packaged  Product,  including
without  limitation,  the cost of  ingredients.  In the  event  Topps  locates a
supplier of ingredients or packaging components that has lower prices than those
being used,  Hershey and Topps shall  evaluate such  materials and supplier.  If
Hershey  determines that the materials or supplier are not acceptable or Hershey
has another reasonable basis for not buying such materials and,  notwithstanding
such  advice  from  Hershey  in  writing,  Topps  requires  Hershey  to use such
materials or supplier,  Hershey shall not be responsible for any adverse effects
which may occur and which are  related to  Hershey's  basis for  rejecting  such
supplier or materials.  Title to and responsibility for the Product and Packaged
Product  passes to Topps  when  placed on the truck for  shipping  at  Hershey's
production facility.

(j) The parties  acknowledge  that Hershey will be  purchasing  ingredients  and
components  for its own products and the products of others,  as well as for the
Packaged Product, and Hershey may not discriminate or act with prejudice against
Topps  in  any  purchasing,   use,  pricing  or  allocation  of  ingredients  or
components. Hershey agrees to use its reasonable best efforts in accordance with
Hershey's customary practice and consistent with the quality standards necessary
to ensure  the  quality of the  Packaged  Products,  to obtain  the best  prices
available for the  ingredients  and  packaging  and to avoid price  increases if
possible.

(k) The parties further acknowledge that the prices on Schedule D are based upon
Topps  purchasing  not less  than 4  million  pounds  of  Product  per year from
Hershey.  In the event that Topps  purchases  less than such amount,  the prices
shall be adjusted to reflect any increased cost to Hershey. Nothing contained in
this Agreement,  however,  shall require Topps to make any minimum  purchases of
the Product or the Packaged Product whatsoever.

3.       TOPPS' RESPONSIBILITIES

(a) Topps has  shipped to Hershey at Topps' sole  expense all of Topps  wrapping
machines for gum and other ancillary  equipment listed on Schedule F (the "Topps
Equipment").  Such  machinery  shall  remain the sole  property of Topps and, at
Topps  request,  will be returned to Topps at Topps'  cost upon  termination  or
expiration  of this  Agreement.  In the  event  Topps  does not so  request  the
machinery within six (6) months after  termination or expiration,  Hershey shall
be entitled to the machinery or to dispose of it at its sole option.  Topps will
provide at its  expense  any  replacements  for the Topps  Equipment  reasonably
requested  by  Hershey  and  agreed  to by Topps for use in the  production  and
packaging  of the  Products.  Hershey  shall be  responsible  for the normal and
customary day to day maintenance and repair of Topps Equipment at its expense as
necessary to keep Topps  Equipment  in good working  order but not to exceed the
condition in which Hershey received the machinery provided,  however, that Topps
shall pay for all rebuilds of Topps Equipment necessary in Hershey's  reasonable
opinion to maintain the operation or  performance  of the equipment or any other
capital  improvements  to the Topps  Equipment  made with Topps'  prior  written
consent.

                                        9
<PAGE>

(b) Topps  warrants that any machinery,  when  delivered to Hershey,  will be in
good working  condition and not requiring any  substantial  repairs.  Topps will
reimburse  Hershey for all of its  out-of-pocket  expenses for Hershey's  actual
capital  expense and capital  costs for  installing  the  machinery  provided by
Topps. Hershey shall provide in advance of the installation its best estimate of
such capital costs and Topps may review the methods of  installation  and costs,
and  make  reasonable  requests  of  Hershey  for a  change  in  the  method  of
installation  for the sole purpose of cost  control.  Further,  Hershey shall be
entitled  to test the  machinery  for  operability  and  Topps  will pay for all
materials and Hershey's direct labor costs for such tests.

(c) Topps acknowledges that Hershey incurred  substantial start up costs when it
began  production  for Topps under the Original  Agreement  and that those costs
continued  through  October 31, 1997.  Hershey  agrees to provide Topps with all
available  documentation  and  verification  of such  start up costs.  Topps and
Hershey  agree to review  the  costs in good  faith.  Topps  agrees to pay fifty
percent  (50%) of those  verified  start up costs to  Hershey,  up to a  maximum
aggregate  payment of $1 million  (less the sum of  $105,983  which was  already
advanced to Hershey) in three equal installments, one due upon execution of this
Agreement,  one due in December of 1998 and one due in December of 1999. Hershey
agrees  that Topps will have no other  liability  for  start-up  costs.  Hershey
hereby  waives  any claim  that it may have  relating  to the  condition,  as it
existed at the date of  delivery by Topps of the Topps  Equipment  that has been
delivered  by Topps  prior  to the  date  hereof;  provided,  however,  that the
foregoing shall not be interpreted as a waiver by Hershey of any claim regarding
equipment  which  is  delivered  by  Topps  after  the date  hereof.  Except  as
specifically set forth in the preceding sentence this section is not intended to
limit Topps'  obligations  with regard to  equipment as set forth in  paragraphs
3(a) and (b) above.

(d) Topps has provided  Hershey with  specifications,  formula  sequences,  time
requirements and quality  standards,  which Topps may revise from  time-to-time,
for the Products  and/or the Packaged  Products and any  ingredient or component
thereof which Hershey is to purchase hereunder.  Topps may modify the Product to
be  manufactured  hereunder  and/or  change  the  Packaging  and  Hershey  shall
manufacture such changed Product or Packaging;  provided,  however,  that if any
such  modification  or change would  increase the cost of performance to Hershey
hereunder,  then  Hershey  shall  have the right to adjust  the  pricing  of the
Product,  as necessary,  to offset such incremental cost and the prices shall be
reduced to Topps to the extent the costs are thereby reduced.

(e) Topps shall, at its sole cost,  secure and maintain all necessary  licenses,
permits,  authorizations  or  other  approvals  for  the  use of the  ingredient
statements,  labeling, trademarks, trade names, trade dress or other elements of
the Packaging hereunder.

(f) Topps agrees to carry insurance  covering  Products and general liability in
amounts  of not less  than $1  million  per  occurrence  and $2  million  in the
aggregate,  with an umbrella policy of not less than $15 million,  and insurance
covering trademark infringement, trade name infringement, copyright infringement
and advertising liability in amounts not less than $1 million per occurrence and
$1 million in the aggregate. All such policies shall provide for at least thirty
(30) days prior written notice of cancellation or reduction in coverage and name

                                        10
<PAGE>

Hershey as an  additional  insured.  At  Hershey's  request,  Topps will provide
Hershey  with  a  certificate  or  certificates  of  insurance  evidencing  such
coverage.  Topps will promptly  inform  Hershey of Topps' receipt of a notice of
cancellation  or reduction in such coverage.  In the event Topps ceases to carry
adequate insurance that names Hershey as an additional insured,  and Topps fails
to cure such breach within forty-five (45) days after written notice by Hershey,
Hershey may terminate this Agreement by giving Topps written notice of Hershey's
election to terminate  this Agreement on twelve (12) months'  notice;  provided,
however,  that during such twelve (12) month period Hershey shall have the right
to buy such insurance and bill Topps therefor.

(g) Topps  shall  indemnify,  defend and hold  harmless  Hershey and its parent,
affiliates,  subsidiaries,  officers, directors, employees and stockholders from
and against any and all claims, demands,  suits, judgments,  costs and expenses,
including, without limitation, reasonable attorneys' fees, (1) resulting from or
arising out of either:  (i) Topps marketing  practices and selling practices for
the  Packaged  Products;  (ii) errors by Topps in the  labeling of the  Packaged
Product; (iii) any ingredient, packaging, formula, process or other component of
the  Product  or  Packaged  Product  supplied  by Topps;  or (iv) any  breach or
violation,  or a claim by a third  party  that,  if true,  would be a breach  or
violation, by Topps of any provision of this Agreement or of any representation,
warranty,  covenant or guarantee of Topps under this Agreement, or (2) caused by
any of the written  specifications  for the Packaged Product given to Hershey by
Topps,  except  to the  extent  any  of the  foregoing  arise  out of  Hershey's
negligent act or omission.

4.       HERSHEY'S RESPONSIBILITIES

(a) As an essential  condition of this  Agreement,  Hershey shall, at all times,
manufacture  and  produce  the  Product  and the  Packaged  Product  strictly in
accordance with Topps specifications,  formula sequences,  time requirements and
quality standards,  which Topps may revise from  time-to-time.  In the event any
revision by Topps would increase the cost of  performance to Hershey  hereunder,
then  Hershey  shall  have the right to adjust  the  pricing  of the  Product as
necessary.  In the event any revisions by Topps reduces the cost of  performance
to Hershey hereunder, the prices shall be reduced in an amount equal to the cost
of reduction.  Hershey shall also provide  reasonable  security measures against
theft or sabotage,  including the use of metal  detectors  supplied by Topps for
all  Products  and  Packaged  Products  with such  detectors  being  operated at
acceptable sensitivity levels, and shall code each case of Packaged Product with
a special date code which indicates the date and shift of manufacture.

(b) Hershey shall, at its sole cost, secure and maintain all necessary licenses,
permits,  authorizations  or  other  approvals  necessary  for  its  performance
hereunder  including,  without limitation,  all licenses,  permits and approvals
required  by the  Federal  Food and Drug  Administration  (the  "FDA").  Hershey
represents  and  warrants  that at the time the  Product  is placed on trucks or
other carrier for shipping from Hershey's  production plant to Topps' designated
location,  the Product (i) shall be neither  "adulterated"  nor  "misbranded' as
those terms are specifically defined in the Federal Food, Drug and Cosmetic Act,
(ii)  shall  comply  with all  applicable  United  States  laws and  regulations
relating to the  production  and  manufacture  of the  Product and the  Packaged
Product and (iii) that the  Products  and  Packaged  Products  shall  conform to
Topps' standards, specifications and instructions; provided, however, that Topps

                                        11
<PAGE>

shall be responsible for taste testing the Bazooka flavor solely to test whether
it complies  with Topps  standards  for taste.  Notwithstanding  the  foregoing,
Hershey  makes no  representation  or  warranty  of any kind to the  extent  any
Product or Packaged Product fails to comply with (i) - (iii) above to the extent
the  non-compliance  is the result of (x)  ingredients  or Packaging  components
supplied by Topps, (y) the specifications,  formula,  sequences and instructions
for the  manufacturing  process  provided  by Topps,  or  (z)any of the  written
specifications  for the  Packaged  Product  given to Hershey  by Topps.  Hershey
covenants  that the  Products  and the Packaged  Products  will be  manufactured
following FDA's Current Good Manufacturing Practice in Manufacturing,  Packaging
or Holding Human Food, as these  guidelines  and rules may be modified from time
to time. However,  Hershey makes no representation or warranty as to whether the
Product or the  Packaged  Product  complies  with any law or  regulation  of any
foreign  governmental  entity,  unless  otherwise  agreed to by the  parties  by
written amendment to this Agreement.

(c)  Hershey  shall  allow  authorized  representatives  of Topps (i) to inspect
Hershey's facilities and review its manufacturing  processing and conditions for
the Product and the Packaged  Product at any time during normal  business hours,
and (ii) to make  product and process  audits and  prepare  analytical  data for
quality control  purposes with the assistance of Hershey's  personnel.  Any such
inspection may be made without notice, on regular working days between 7:00 A.M.
and 5:00 P.M. or, on two hours' notice,  between the hours of 5:00 P.M. and 7:00
A.M. on any day other than weekends, holidays or agreed upon shutdowns, in which
case Topps shall  provide not less than 24 hours  notice.  Hershey  shall,  on a
weekly basis,  send Topps samples  (display box  quantities) of the Products and
the  Packaged  Products,  and in the case of new  Products  and if  requested by
Topps, on a daily basis. Topps shall bear the cost of such samples and shipping.
In the event Topps wishes to exercise the right granted pursuant to this Section
4(c),  Topps and any of Topps' personnel who are to inspect Hershey s facilities
shall execute any and all confidentiality  agreements  reasonably required to be
executed by Hershey which agreements shall supersede the secrecy  provisions set
forth in this  Agreement.  If as a result of the  exercise of the right  granted
pursuant to this Section 4(c), Topps shall acquire confidential,  proprietary or
trade  secret  information,  Topps shall take all steps  necessary  to keep such
information  confidential  and shall  not use such  information  other  than for
analyzing  Product  quality as  specifically  set forth in Sections  4(c)(i) and
4(c)(ii). In addition,  Topps shall indemnify,  defend and hold harmless Hershey
from and  against  any and all  claims,  demands,  suits,  judgments,  costs and
expenses  arising  out of  any  injury  to  Topps'  personnel  which  occurs  in
connection with any inspection  performed,  unless such injury was the result of
negligence or willful misconduct by Hershey.

(d) Hershey will procure and  maintain,  at its expense and in  accordance  with
specifications  provided by Topps,  all  ingredients  and  Packaging  components
necessary to manufacture and package the Packaged Product in amounts  sufficient
to meet Topps' expressed production  requirements and from suppliers approved in
advance by Topps.

(e) Hershey shall indemnify,  defend and hold harmless Topps and its affiliates,
subsidiaries,  officers, directors,  employees and stockholders from and against
any and all claims, demands, suits,  judgments,  costs and expenses,  including,
without limitation, reasonable attorneys' fees, resulting from or arising out of

                                        12
<PAGE>

any breach or violation,  or a claim by a third party that, if true,  would be a
breach or  violation,  by Hershey of any  provision of this  Agreement or of any
representation, warranty, covenant, or guarantee of Hershey under this Agreement
unless  caused by (x)  specifications,  formula  sequences,  quality  standards,
ingredients,  Packaging components or artwork/graphics supplied by Topps; (y) an
event which occurred  after  Hershey's  delivery of the Product and/or  Packaged
Product  to  Topps  as  described  herein;  or (z) any  breach  by  Topps of any
representation contained herein or any negligent act or omission of Topps.

5.       INTELLECTUAL PROPERTY

(a) Topps will market,  distribute  and sell the Packaged  Product under its own
trademark  and trade  name.  Topps  shall have no right to use any of  Hershey's
marks,  names,  other trade identities,  copyrighted works or other intellectual
property except to the extent that Hershey has incorporated its own intellectual
property  in or used in the  manufacture  of the  Product  or  Packaged  Product
supplied by Hershey to Topps. Topps represents,  warrants and guarantees that no
intellectual property which it may provide, and no name or mark or aspect of the
trade  dress  used on the  Packaging,  or in any  other  way  made a part of the
Packaging,  shall infringe upon or violate any copyright,  patent, trade secret,
trade name,  trademark or any other proprietary  rights, or other utility patent
rights, of any person not a party to this Agreement,  or violate any laws, rules
or regulations prohibiting deceptive or other forms of advertising. In the event
that Topps receives a claim or notice of suit alleging such infringement,  Topps
shall promptly notify Hershey. Topps shall then, at its sole expense, (i) settle
or defend  (with  counsel  of its own  choice)  any such claim  brought  against
Hershey  and/or Topps,  (ii) procure for Topps the right or rights  necessary to
manufacture,  package  and sell the  Packaged  Product  or replace or modify the
Product,  Packaging or Packaged  Product,  and (iii) to the extent required by a
court adjudicating the claim or as agreed in a settlement  agreement  respecting
the claim,  remove the affected  Product,  Packaging  and Packaged  Product from
Hershey s inventory and pay Hershey the purchase price for all affected units of
the Product,  Packaging and Packaged Product. Topps shall indemnify,  defend and
hold  harmless  Hershey  from and against any and all  claims,  demands,  suits,
judgments,  costs  and  expenses,  including,  without  limitation,   reasonable
attorneys' fees, resulting from or arising out of any breach or violation of any
representation, warranty or guarantee of Topps in this paragraph 5(a).

(b) Hershey  shall have no right to use any of Topps marks,  names,  other trade
identities,  copyrighted works or other intellectual property (including without
limitation the Bazooka flavors or Burst  technology),  except in the Product and
the Packaged  Product in  accordance  with the  Agreement.  Hershey  represents,
warrants,  covenants and  guarantees  that  intellectual  property  which it may
provide, if any, shall not infringe upon or violate any copyright, patent, trade
secret,  trade name, trademark or any other proprietary rights, or other utility
patent rights, of any person not a party to this Agreement, or violate any laws,
rules or  regulations.  In the event Hershey  receives a claim or notice of suit
alleging such infringement,  Hershey shall promptly notify Topps.  Hershey shall
then, at its sole expense, settle or defend (with counsel of its own choice) any
such claim brought against Hershey and/or Topps. Hershey shall indemnify, defend
and hold  harmless  Topps from and against any and all claims,  demands,  suits,
judgments,  costs  and  expenses,  including,  without  limitation,   reasonable
attorneys' fees, resulting from or arising out of any breach or violation of any

                                        13
<PAGE>

representation, warranty or guarantee of Hershey in this paragraph 5(b).

6.       TERM AND TERMINATION

(a) The  Original  Term of this  Agreement  shall be from the date of  execution
hereof  through  December 31, 1999.  (the "Original  Term").  The parties hereby
extend the term of this  Agreement  beyond the Original  Term for an  additional
term  beginning on January 1, 2000 and ending  December 31, 2002 (the  "Extended
Term"). For purposes of this Agreement the first year of the Extended Term shall
be defined as January 1, 2000 through  December 31, 2000.  Beginning on December
31,  1998  and  on  each  December  31  thereafter,   the  Extended  Term  shall
automatically  be extended for an additional  term of one (1) year so that there
are always five (5) years  remaining in the term,  unless either party  delivers
notice,  at least thirty (30) days prior to any such  December 31, of its desire
to terminate this Agreement at the end of the then current five (5) year term.

(b) Upon written  notice,  either  party shall have the right to terminate  this
Agreement,  on ninety (90) days written notice delivered within thirty (30) days
after the end of the cure period if the other party materially breaches or fails
to perform any of its material obligations or responsibilities  hereunder, which
material  breach  is not  cured by the  other  party  within  thirty  (30)  days
following  its  receipt of the  written  notice of breach  from the other  party
specifying the breach.  A material breach  includes,  but is not limited to: (1)
failure to pay material sums as provided for herein,  unless such failure is the
result of a good faith dispute  between the parties;  (2)  Hershey's  failure to
comply with  paragraphs  4(a) or 4(b) (unless such breach is caused by an act or
omission  of  Topps);  and  (3)  Hershey's  failure,  for a  period  of two  (2)
consecutive  months or three (3) months during any twelve (12) month period,  to
meet Topps' actual production requirements.

(c)  Notwithstanding  anything to the contrary in this  Agreement,  either party
shall have the right to terminate this Agreement  immediately,  without  further
notice,  if the other party  becomes  insolvent or makes an  assignment  for the
benefit of creditors,  a proceeding or petition for  bankruptcy or insolvency is
filed by or against  the other party under any federal or state law in any court
of competent  jurisdiction,  or receiver of assets is appointed or any levy of a
material portion of the other party's assets under the attachment,  execution or
similar  process is made, and the other party does not cure any of the foregoing
within sixty (60) days of its occurrence.

(d) Hershey may terminate this Agreement,  on six (6) month's written notice, if
the Product or the Packaged Product is or becomes  injurious to health,  and the
Product cannot be altered,  within the six (6) month period,  so that it will no
longer be injurious;  provided,  however,  that Hershey shall not be required to
sell any injurious Product at any time. Notice of such termination must be given
within sixty (60) days after it is  determined  that the Product or the Packaged
Product is injurious.

(e) Either party may terminate this Agreement,  on one (1) years written notice,
if the other party is convicted of criminal  conduct in a criminal court of law,
and such conduct  materially  and adversely  affects the reputation of the other

                                        14
<PAGE>

party. Such notice shall be given promptly after such party is so affected.

(f) Notwithstanding anything to the contrary in this Agreement, upon termination
or  expiration  of this  Agreement,  Topps shall  cease use of any of  Hershey's
intellectual  property,  trade secrets and formula(e),  provided Hershey advised
Topps in writing of its ownership of such intellectual  property,  trade secrets
or formula prior to inclusion in the Product or Packaged Product, and shall have
no  further  right to use the  same  except  that  Topps  may sell the  existing
inventory of Packaged Product.

(g)  Notwithstanding  anything to the contrary in this Agreement,  Hershey shall
not use any of Topps  intellectual  property,  trade  secrets or formula  (which
includes,  without  limitation,  the Bazooka flavors,  Burst technology,  master
batching and processes  relating to the production and  manufacture) as provided
to Hershey at the commencement of this Agreement,  learned by Hershey from Topps
or  developed  by  Topps  during  this  Agreement  (i)  during  the term of this
Agreement,  except in connection  with Hershey's  obligation to manufacture  for
Topps under this Agreement or (ii) after the termination of this Agreement.

(h) Upon any termination or expiration of this  Agreement,  Topps shall have the
obligation to purchase,  and shall  receive,  all  Packaging  material and other
material containing Topps trademarks ordered or in Hershey's possession, as well
as  all  Product  or  Packaged  Product  ingredients  ordered  or  in  Hershey's
possession, all at Hershey's actual cost therefor (provided the materials are of
good quality).

7.       ADDITIONAL TERMS

(a)  This  document,  together  with  the  schedules,   constitutes  the  entire
understanding of the parties  relating to the manufacture,  storage and shipping
of the  Product  and/or  Packaged  Products,  and any  prior or  contemporaneous
agreements or understandings  relating thereto are merged herein and superseded.
This  Agreement  may not be amended or altered  except by  agreement in writing,
signed and  acknowledged  by each party.  The headings in this Agreement are for
reference  only,  and shall not affect  the  interpretation  of this  Agreement.
Non-enforcement  by  either  party of the terms of this  Agreement  shall not be
deemed a waiver,  nor in any manner  affect such  party's  rights to enforce the
terms of this  Agreement.  Nor  shall a waiver  by one  party of a breach of the
other  party be  considered  a waiver of any other  pre-existing  or  succeeding
breach.  Notwithstanding  anything  contained in this Agreement to the contrary,
the parties expressly agree that this Agreement shall not extinguish or diminish
any  liability of Topps or Leaf to the other under the Original  Agreement  with
respect to Product and Packaged Product that was manufactured  prior to the date
hereof and other  events  which  occurred  prior to the date  hereof,  except as
expressly  set forth in the last  sentence of  paragraph  3(c)  hereof.  
(b) Any notice  required or necessary under this Agreement shall be in writing
and shall be  delivered  either in person,  or by  telegraph,  telex,  facsimile
transmission, or by certified or express mail, postage prepaid. Whenever notices
are necessary under this Agreement,  they shall be considered given to the other
party  when  personally  delivered,  telegraphed,  telexed,  sent  by  facsimile
transmission  or, if by certified  mail, four days after the date of the mailing

                                        15
<PAGE>

or, if by express mail, on the next business day. Notices  provided  pursuant to
this Agreement shall be addressed as follows:

              If to Hershey              Hershey Chocolate U.S.A.,
                                         400 Running Pump Road
                                         Lancaster, PA 17603

                                         Attn.: Director, Manufacturing

              With a copy to:            Hershey Foods Corporation
                                         100 Crystal A Drive
                                         Hershey, PA 17033
                                         Attn.: Vice President-General Counsel

              If to Topps:               The Topps Company, Inc.
                                         401 York Avenue
                                         Duryea, PA 18642
                                         Attn: Vice President-Manufacturing

              With copies to:            The Topps Company, Inc.
                                         One Whitehall Street
                                         New York, NY 10004-2109
                                         Attn.: Vice President-Operations
                                                       and
                                         Vice President-General Counsel

          Either party may change its designated  addressee on thirty (30) days'
written notice.

(c) A termination  or expiration of this  Agreement  shall not affect the rights
and responsibilities of the parties accruing prior to the date of termination or
expiration and,  notwithstanding  that this Agreement may otherwise terminate or
expire,  any  and  all  provisions   regarding   confidential   information  and
indemnification shall remain in full force and effect.

(d) In the event that any provision of this Agreement is held illegal or invalid
for any reason,  such  illegality or  invalidity  shall not affect the remaining
parts of this  Agreement,  but this Agreement shall be construed and enforced as
if such illegal or invalid provision had never been inserted herein.

(e) The rights and  obligations  of either party  hereunder may not be assigned,
transferred or encumbered without the prior written consent of the other party.

(f)  The  laws  of  the  State  of  Delaware   shall  govern  this   Agreement's
interpretation and construction.

                                        16
<PAGE>

(g) (i) The  determination of the necessity of a product recall,  whether or not
such recall is due to defects or  potential  defects in the Products or Packaged
Products subject to possible recall,  the procedure for handling the recall, the
disposition of recalled  Products or Packaged  Products and  packaging,  and all
other  considerations  involved  in such a recall,  shall be made by Topps after
consultation with Hershey. Such decision shall not be arbitrary,  capricious, or
unreasonable.  Topps shall have the  obligation  to consider,  in good faith,  a
product recall due to defects or potential defects, upon Hershey's request.

(ii) All costs and expenses of the recall shall be paid by Hershey if the reason
for the recall is due to any event  which  occurred,  or which  failed to occur,
while the Product or the Packaged  Product was in the  possession  or control of
Hershey (including, without limitation, the inclusion of foreign material or the
inclusion of the product or the Packaged  Product of  ingredients  or components
that are or may be injurious to health), unless (A) the recall was the result of
flavor  or color  ingredients  or  packaging  components  from a Topps  approved
supplier and Hershey has entered  into a written  agreement  with such  supplier
under which Topps actually has an  enforceable  claim against such supplier as a
third  party  beneficiary  thereof (in which case Topps shall bear the costs and
expenses of the recall) or (B) the ingredients or components were those supplied
by Topps or (C) the recall was the result of any of the items for which  Hershey
is not  responsible  for under  paragraph  4(b) (x),  (y) or (z) or the  proviso
regarding Bazooka flavor contained in the second sentence of paragraph 4(b). All
costs and expenses of the recall shall also be paid by Hershey if the reason for
the recall is due to  Hershey's  conduct  which is in breach of this  Agreement,
Hershey's failure to manufacture (including,  without limitation,  labeling) the
Product or Packaged Product according to the specifications or Hershey's failure
to store the Product or Packaged  Product  according to FDA or other  applicable
laws or regulations. All costs and expenses of the recall shall be paid by Topps
if the reason  for the  recall is due to conduct by Topps  which is in breach of
this  Agreement,  an event which occurred after the Product or Packaged  Product
was no longer in the  possession  or  control of  Hershey  (provided  it was not
caused  by an act or  omission  on the part of  Hershey  while  the  Product  or
Packaged  Product was in  Hershey's  possession  or  control),  or  ingredients,
packaging  components or artwork which were supplied by Topps. The parties shall
share the costs and expenses of any other recall.

(h) Hershey  covenants  that it shall be a condition to the sale by Hershey of a
material portion of the assets of its gum plant located at Memphis Tennessee, to
a single person,  entity or group that at Topps request,  this Agreement and the
obligations  of  Hershey  hereunder  shall be  assigned  to and  assumed by such
purchaser.  Topps  shall have  forty-five  (45) days after  written  notice from
Hershey to determine  whether it will require such assignment.  If, and only if,
such sale takes place  during the  Extended  Term and Topps does not require the
purchaser to assume this  Agreement for the remainder of the then existing term,
then this  Agreement  shall,  at Topps option and as a condition to such sale by
Hershey,  be assigned to and assumed by such  purchaser with a shortened term of
not less than six (6) months nor more than eighteen (18) months, such term to be
designated by Topps within sixty (60) days after the closing of the sale.

(i) Hershey and Topps will not use or  commercially  exploit for its own benefit
or the benefit of others any  Confidential  Information,  nor will the receiving
party disclose any Confidential  Information to any person,  firm or corporation
except  (i)  employees  of the  receiving  party  who  have a need to know  such

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<PAGE>

Confidential  Information  and who have been informed of the  receiving  party's
obligations hereunder, and (ii) contractors or consultants under contract to the
receiving party who have a need to know such Confidential Information,  who have
been  approved  by  the  disclosing  party  in  advance  of  any  disclosure  of
Confidential  Information,  and who have been informed of the receiving  party's
obligations hereunder, unless the information:

          1. was  known  to the  receiving  party  prior  to  disclosure  by the
disclosing party; or

          2.  was  publicly  available  at the  time  of the  disclosure  to the
receiving party; or

          3.  subsequently  becomes publicly  available  through no fault of the
receiving party; or

          4.  is  rightfully  acquired  by the  receiving  party  subsequent  to
disclosure by the disclosing  party from a third party who is not in breach of a
confidential   relationship  to  the  disclosing   party  with  regard  to  such
information; or

          5. is independently developed by the receiving party and the receiving
party shall have the obligation of proving independent development.

          The term Confidential  Information shall include,  without limitation,
either  Topps' or Hershey's  formula,  recipe,  formula  sequences and processes
relating to the  production  and  maintenance  of the  Product and the  Packaged
Product, as well as Topps' purchase order,  purchasing  information,  production
requirements, production forecasts, etc.

          In the event that Topps  visits a Hershey  facility in order to render
assistance to Hershey,  Topps may be asked to sign a Visitor Agreement (attached
hereto as Exhibit A) containing a  confidentiality  provision which is of a term
longer than this  agreement;  in such case the term and the  conditions  of such
Visitor  Agreement  where  they  are  inconsistent  with  this  Agreement  shall
supersede this Agreement except that the reference in the Visitor's Agreement to
ideas, as Proprietary Information, shall be deemed deleted.

(j) Except as may be  required by law or  regulation  or if  requested  by Topps
employees' Union,  Hershey and Topps agree that they will maintain in confidence
the provisions, terms and conditions of this Agreement.

(k) Nothing in this Agreement shall preclude Hershey from  manufacturing any gum
or  confection  product for itself or others so long as Hershey does not violate
its obligations as set forth in this Agreement  including,  without  limitation,
paragraph 7(i) hereof.

(l) Nothing  contained  herein  shall place the parties in the  relationship  of
partners,  joint venturers,  principal-agent,  or employer-employee  and neither
party  shall  have  any  right to  obligate  or bind  the  other  in any  manner
whatsoever.

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<PAGE>

(m) The  parties  agree  that in the case of a  breach  of this  Agreement,  the
non-breaching  party shall take reasonable  steps to mitigate the damages caused
by the  breach.  Further,  in the event  that the  breach at issue is  Hershey's
failure  to  manufacture  Packaged  Product  for Topps as  required  under  this
Agreement,  Hershey  shall not be liable for damages to Topps to the extent that
such damages result from Topps failure,  after a period of three (3) years after
such breach by Hershey, to find another manufacturer acceptable to Topps. Except
as expressly set forth in the two previous sentences, this Agreement shall in no
way limit the damages that may be awarded by any court or tribunal.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date shown.

     THE TOPPS COMPANY, INC.                     HERSHEY FOODS CORPORATION



By: ____________________________            By: ____________________________

Title: ___________________________          Title: ___________________________



                                        19
<PAGE>



                           SCHEDULES



Schedule A           List of Products and Packaged Products

Schedule B           Form of Monthly Report to be Furnished by Hershey

Schedule C           QA Test  Procedures  and Form of Monthly  Reports to be
                     Furnished by Hershey

Schedule D - 1997    Prices for 1997

Schedule D - 1998    Prices for 1998

Schedule E           [to be completed]

Schedule F           Schedule of Equipment









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