CONTINUING GUARANTY

                             (BUSINESS ORGANIZATION)



            GUARANTOR: PEOPLES EDUCATIONAL HOLDINGS, INC.



            299 Market Street, Saddle Brook, New Jersey  07663

            Address of Chief Executive Office



            a  corporation organized under the laws of the State of Delaware



            BORROWER:  THE PEOPLES PUBLISHING GROUP, INC.



            Having its chief executive office at 299 Market Street, Saddle

            Brook, New Jersey 07663



            BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, One M&T Plaza,

                  Buffalo, New York 14240 Attention: Office of General Counsel.



      1. GUARANTY.



            (a) Guarantor, intending to be legally bound, hereby unconditionally

guarantees the full and prompt payment and performance of any and all of

Borrower's Obligations (as defined below) to the Bank when due, whether at

stated maturity, by acceleration or otherwise. As used in this Guaranty, the

term "Obligations" shall mean any and all obligations, indebtedness and other

liabilities of Borrower to the Bank now or hereafter existing, of every kind and

nature and all accrued and unpaid interest thereon and all Expenses (as defined

below) including without limitation, whether such obligations, indebtedness and

other liabilities (i) are direct, contingent, liquidated, unliquidated, secured,

unsecured, matured or unmatured; (ii) are pursuant to a guaranty or surety in

favor of the Bank; (iii) were originally contracted with the Bank or with

another party (including obligations under a guaranty or surety originally in

favor of such other party); (iv) are contracted by Borrower alone or jointly

with one or more other parties; (v) are or are not evidenced by a writing; (vi)

are renewed, replaced, modified or extended; and (vii) are periodically

extinguished and subsequently re-incurred or reduced and thereafter increased.

Guarantor will pay or perform its obligations under this Guaranty upon demand.

This Guaranty is and is intended to be a continuing guaranty of payment (not

collection) of the Obligations (irrespective of the aggregate amount thereof and

whether or not the Obligations from time to time exceeds the amount of this

Guaranty, if limited), independent of, in addition and without modification to,

and does not impair or in any way affect, any other guaranty, indorsement, or

other agreement in connection with the Obligations, or in connection with any

other indebtedness or liability to the Bank or collateral held by the Bank

therefor or with respect thereto, whether or not furnished by Guarantor.

Guarantor understands that the Bank can bring an action under this Guaranty

without being required to exhaust other remedies or demand payment first from

other parties.



            (b) Guarantor acknowledges the receipt of valuable consideration for

this Guaranty and acknowledges that the Bank is relying on this Guaranty in

making a financial accommodation to Borrower, whether a commitment to lend,

extension, modification or replacement of, or forbearance with respect to, any

Obligation, cancellation of another guaranty, purchase of Borrower's assets, or

other valuable consideration.



      2. CONTINUING, ABSOLUTE, UNCONDITIONAL. This Guaranty is irrevocable,

absolute, continuing, unconditional and general without any limitation. This

Guaranty is unlimited in amount.



      3. GUARANTOR'S WAIVERS & AUTHORIZATIONS.



            (a) Guarantor's obligations shall not be released, impaired or

affected in any way including by any of the following, all of which Guarantor

hereby waives (i) any bankruptcy, reorganization or insolvency under any law of

Borrower or that of any other party, or by any action of a trustee in any such

proceeding; (ii) any new agreements or obligations of Borrower or any other

party with the Bank; (iii) any adjustment, compromise or release of any

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