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                         AMENDMENT NO. 2 TO CREDIT AGREEMENT

         AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of March 18, 1997 (this
"AMENDMENT"), among GANTOS, INC., a Michigan corporation (the "Borrower"), FLEET
BANK, N.A. (formerly known as Natwest Bank N.A.) and LASALLE NATIONAL BANK, as
lenders (each individually, a "Lender" and collectively, the "Lenders"), and
FLEET BANK, N.A.  (formerly known as Natwest Bank N.A.) as agent for the Lenders
(in such capacity, the "Agent").

         WHEREAS, the Borrower, the Lenders, and the Agent are party to the
Revolving Credit Agreement, dated as of March 10, 1995 (as amended by amendment
no. 1, dated April 25, 1996 and as further amended, supplemented or modified
from time to time in accordance with its terms, the "CREDIT AGREEMENT"); and

         WHEREAS, subject to the terms and conditions hereof, the parties
hereto desire to amend certain provisions of the Credit Agreement.

         NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:

         (1)  DEFINED TERMS.  Unless otherwise specifically defined herein, all
capitalized terms used herein shall have the respective meanings ascribed to
such terms in the Credit Agreement.

         (2)  AMENDMENTS TO CREDIT AGREEMENT.  Subject to the conditions as to
effectiveness set forth in Paragraph 4 of this Amendment, the Credit Agreement
is hereby amended as follows:


         The following definitions are added in their proper alphabetically
determined place in Article I of the Credit Agreement:

         (i)       "ADJUSTED CAPITAL EXPENDITURES" shall mean (i) as of the
                   last day of the first fiscal quarter which ends on or after
                   a Trigger Date, the product obtained by multiplying (x)
                   actual Capital Expenditures during such fiscal quarter times
                   (y) 4; (ii) as of

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                   the last day of the second fiscal quarter which ends on or
                   after a Trigger Date, the product obtained by multiplying
                   (x) actual Capital Expenditures during the period of two
                   consecutive fiscal quarters ending on such last day times
                   (y) 2; (iii) as of the last day of the third fiscal quarter
                   which ends on or after a Trigger Date, the product obtained
                   by multiplying (x) actual Capital Expenditures during the
                   period of three consecutive fiscal quarters ending on such
                   last day times (y) 1.333, and (iv) on the last day of each
                   fiscal quarter thereafter, actual Capital Expenditures for
                   the period of four consecutive fiscal quarters ending on
                   such last day.

         (ii)      "ADJUSTED INTEREST EXPENSE" shall mean, for any period, the
                   greater of (a) zero and (b) Interest Expense for such
                   period, less, the amount by which (i) Interest Expense for
                   such period attributable to the Senior Notes exceeds (ii) an
                   amount equal to Interest Expense, for such period,
                   attributable to a portion of the Revolving Loan equal to the
                   outstanding principal amount of Senior Notes outstanding
                   during such period (or if no such portion of the Revolving
                   Loan was outstanding during such period, what Interest
                   Expense, for such period, attributable to such portion of
                   the Revolving Loan, would have been, assuming such portion
                   of the Revolving Loan had been outstanding).

         (iii)     "ADJUSTMENT DATE" means, initially, the last day by which
                   annual financial statements and accompanying documents are
                   required to be delivered to the Agent by Section 6.05(a) and
                   Section 6.05(d) hereof in respect of the Fiscal Year ending
                   on the Saturday closest to January 31, 1998, and thereafter,
                   the last day by which annual or quarterly financial
                   statements and accompanying documents are required to be
                   delivered to the Agent by Sections 6.05(a) and Section
                   6.05(d) or Section 6.05(b)(ii) hereof, respectively.

         (iv)      "CALCULATION PERIOD" means each period which begins on an
                   Adjustment Date and ends on the day immediately preceding
                   the immediately succeeding Adjustment Date.

         (v)       "TRIGGER DATE" shall have the meaning assigned to such term
                   in Section 7.09.

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         (b)  (i) The definition of "Applicable Margin" appearing in Article I
of the Credit Agreement is amended and restated in its entirety as follows:

         "APPLICABLE MARGIN" means:

         (a) until the day immediately preceding the first Adjustment Date (i)
         with respect to Prime Rate Loans, one and one-quarter percent (1-1/4%) 
         and (ii) with respect to Eurodollar Loans, two and one-half
         percent (2-1/2%), in each case, subject to adjustment pursuant to
         Section 2.05(d) hereof; and

         (b) for each Calculation Period, the margin set forth below for Prime
         Rate Loans or Eurodollar Loans, respectively, opposite the level of
         EBITDA set forth below (000's omitted) for the period of four
         consecutive fiscal quarters ending with the fiscal quarter (or fiscal
         quarter ending a Fiscal Year) reflected in the financial statements
         required to be delivered as of the first day of such Calculation
         Period (EBITDA being deemed to be not over $12,000,000 for any
         Calculation Period as of the first date of which any financial
         statements and accompanying documents have not been delivered within
         the time period required by Section 6.05(a) and Section 6.05(d) or
         Section 6.05(b)(ii) hereof, respectively):

         EBITDA for four
         consecutive fiscal       Margin for         Margin for
         quarters (000'S omitted) Eurodollar Loans   Prime Rate Loans
         ------------------------ ---------------    ----------------
         Over $14,000             1.75%                    0.50%
         Over $13,000 and
         not over $14,000         2.00%                    0.75%
         Over $12,000 and
         not over $13,000         2.25%                    1.00%
         Not over $12,000         2.50%                    1.25%

         (ii) The definition of "Final Maturity Date" appearing in Article I is
amended and restated in its entirety as follows: "'FINAL MATURITY DATE' shall
mean March 31, 2000."

         (iii) The definition of "Fixed Charge Coverage Ratio" appearing in
Article I is amended and restated in its entirety as follows:

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         "'FIXED CHARGE COVERAGE RATIO' shall mean, as of the last day of any
         fiscal quarter, the ratio of (a) EBITDA for the period of four
         consecutive fiscal quarters ending on such day, less Adjusted Capital
         Expenditures as of such day, to (b) the sum of, without duplication
         (i) Interest Expense, for such period of four consecutive fiscal
         quarters, (ii) any provision for income taxes actually paid in cash or
         otherwise due and payable (or less any benefits from income taxes
         actually received in cash) for such period of four consecutive fiscal
         quarters, and (iii) the aggregate of regularly scheduled principal
         payments with respect to all Indebtedness (including, without
         limitation, scheduled payments of Capital Lease Obligations and
         excluding all principal payments of the Senior Notes) for such period
         of four consecutive fiscal quarters, (which shall be on a Consolidated
         basis in the event the Borrower has any subsidiaries), determined in
         accordance with generally accepted accounting principles consistently
         applied."

         (iv) The definition of "Interest Coverage Ratio" appearing in Article
I is amended as follows: the phrase "Interest Expense" appearing in clause (ii)
thereof is replaced with the phrase "Adjusted Interest Expense".

         (c)  Section 2.05(d) of the Credit Agreement is amended by adding to
the following to the end of such Section: "Notwithstanding the foregoing, the
provisions of Section 2.05(d) shall not be applicable from and after the first
Adjustment Date."

         (d)  Section 2.06(b) of the Credit Agreement is amended and restated
in its entirety as follows:

                   "(b) If, on or prior to September 18, 1998, the Total
         Commitment shall be permanently terminated (whether by the Borrower,
         as a result of an Event of Default or otherwise) or the Total
         Commitment shall be permanently reduced, the Borrower shall pay each
         Lender, through the Agent, on the date of, and as a condition to, such
         termination or reduction a fee (the "REDUCTION FEE") in an amount
         equal to one percent (1%) of the principal amount of such permanent
         termination or reduction if such termination or reduction occurs on or
         prior to March 18, 1998 or one-half of one percent (1/2%) of the
         principal amount of such permanent termination or reduction if such
         termination or reduction occurs after March 18, 1998 and on or

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         prior to September 18, 1998."

         (e)  The text of Section 7.08 of the Credit Agreement (following the
caption thereof) is deleted, and is replaced with "Intentionally omitted." and a
corresponding change is made to the table of contents.

         (f)  Section 7.09 of the Credit Agreement is amended and restated in
its entirety as follows:

              "SECTION 7.09. FIXED CHARGE COVERAGE RATIO.  From and after the
         first date on which Availability shall be less than $7,500,000 (the
         "TRIGGER DATE"), permit or suffer the Fixed Charge Coverage Ratio of
         the Borrower and its subsidiaries to be less than 1.0:1.0 as of the
         last day of any fiscal quarter which ends on or after the Trigger
         Date."

         (g)  Section 7.10 of the Credit Agreement is amended and restated in
its entirety as follows:

                   "SECTION 7.10.  EBITDA.  Permit EBITDA of the Borrower and
         its subsidiaries at the end of each fiscal quarter for the
         four-quarter period then ending to be less than the respective amounts
         set forth below for the periods indicated:

         Four Fiscal Quarters          Minimum
         Ending on or about            EBITDA
         --------------------          ----------
         January 31, 1997              $9,500,000
         April 30, 1997                $7,900,000
         July 31, 1997                 $6,800,000
         October 31, 1997              $5,800,000
         January 31, 1998              $7,000,000
         April 30, 1998                $6,800,000
         July 31, 1998                 $6,200,000
         October 31, 1998              $6,400,000
         January 31, 1999              $7,600,000
         April 30, 1999                $8,600,000
         July 31, 1999                 $8,700,000
         October 31, 1999 and
         the last day of each
         fiscal quarter thereafter     $8,600,000

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         (h)  Section 7.11 of the Credit Agreement is amended and restated in
its entirety as follows:

         SECTION 7.11.  INTEREST COVERAGE RATIO.  Permit or suffer the Interest
         Coverage Ratio of the Borrower and its subsidiaries at the end of each
         fiscal quarter for the four quarter period then ending to be less than
         the respective amounts set forth below for the periods indicated:

         Four Fiscal Quarters Ending
         On or about                        Minimum Ratio
         ---------------------------        -------------
         January 31, 1997                      2.0:1
         April 30, 1997                        3.4:1
         July 31, 1997                         3.2:1
         October 31, 1997                      2.9:1
         January 31, 1998                      3.8:1
         April 30, 1998                        3.9:1
         July 31, 1998                         3.5:1
         October 31, 1998                      3.4:1
         January 31, 1999                      4.1:1
         April 30, 1999                        4.4:1
         July 31, 1999                         4.4:1
         October 31, 1999 and
         the last day of each
         fiscal quarter thereafter             4.1:1

         (i)  The text of Section 7.12 of the Credit Agreement is deleted, and
is replaced (following the caption thereof) with "Intentionally omitted." and a
corresponding change is made to the table of contents.

         (j)  Section 7.19(a) of the Credit Agreement is amended by adding the
following immediately before the period ending such subsection:

    "PROVIDED, FURTHER, that notwithstanding the foregoing and notwithstanding
    Section 7.06 hereof, the Borrower may purchase or redeem and concurrently
    retire any or all of the Senior Notes, at par or less, so long as at the
    time of any such purchase or redemption and concurrent retirement, no
    Default or Event of Default is continuing or would arise as a result
    thereof."

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         (k)  Section 12.01 of the Credit Agreement is amended by replacing the
figure "$4,000,000" appearing therein, with the figure "$15,000,000".

         (l)  Section 12.06 of the Credit Agreement is amended by replacing
clause (a) thereof with the following: "(a) to the Agent for the ratable benefit
of the Lenders a letter of credit fee equal to (i) in the case of Letters of
Credit (other than standby Letters of Credit), one and one-half of one percent
(1-1/2%) per annum, and (ii) in the case of standby Letters of Credit, one and
three-quarters of one percent (1-3/4%) per annum, in each case, on the face
amount of each Letter of Credit outstanding and".

         3.   REPRESENTATIONS AND WARRANTIES.  The Borrower hereby represents
and warrants as follows (which representations and warranties shall survive the
execution and delivery of this Amendment) as of the date hereof that:

         (a)  All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof with the same force and effect as if
made on such date (except to the extent that any such representation or warranty
relates expressly to an earlier date).

         (b)  The Borrower has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Amendment and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Amendment.

         (c)  This Amendment has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Borrower, and is
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and by
general equity principles.

         (d)  No registration or filing with, consent or approval of, or other
action by, any Federal, State or other governmental agency, authority or
regulatory body is or will be required on behalf of the Borrower in connection
with the execution, delivery, performance, validity or enforcement of this
Amendment other than any such registration or filing which has been made or any
such consent, approval or other action which has been obtained and remains in
full

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force and effect and other than the filing of a Form
10-Q or a Form 10-K with the Securities and Exchange Commission.

         (e)  The execution, delivery and performance of this Amendment by the
Borrower will not violate any provision of the certificate or articles of
incorporation or bylaws of the Borrower or any of its subsidiaries or any law,
statute, rule or regulation, or any order or decree of any court or governmental
instrumentality applicable to the Borrower or any of its subsidiaries, or
violate, result in the breach of or constitute a default under any indenture,
agreement or other instrument to which the Borrower or any of its subsidiaries
or any of their respective properties or assets are or may be bound.

         (f)  The Borrower is in compliance with all of the various covenants
and agreements applicable to it set forth in the Credit Agreement and each of
the other Loan Documents.

         (g)  No event has occurred and is continuing which constitutes or
would constitute, with the giving of notice or the lapse of time or both, an
Event of Default under the Credit Agreement or any of the other Loan Documents,
or an Event of Default (as defined in the Indenture) under the Indenture.

         (h)  The Borrower has no defense to or setoff, counterclaim or claim
against payment of the Obligations or enforcement of the Loan Documents based
upon a fact or circumstance existing or occurring on or prior to the date
hereof.

         4.   CONDITIONS PRECEDENT.  Notwithstanding any term or provision of
this Amendment to the contrary, no amendment set forth in Paragraph 2 hereof
shall become effective until the Agent shall have determined that each of the
following conditions precedent shall have been satisfied:

         (a)  All required corporate actions in connection with the execution
and delivery of this Amendment shall have been taken, and each shall be
satisfactory in form and substance to the Agent, and the Agent shall have
received all information and copies of all documents, including, without
limitation, records of requisite corporate action that the Agent may reasonably
request, to be certified by the appropriate corporate person or government
authorities.

         (b)  All representations and warranties made by the Borrower contained
in Paragraph 3 hereof shall be true and correct with the same effect as though
such representations and warranties had been made on the date of

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effectiveness of the amendments contained in this Amendment after giving effect
to such amendments (unless any such representation or warranty speaks expressly
to an earlier date).

         (c)  Counterparts of this Amendment shall have been duly executed and
delivered on behalf of the Borrower, the Lenders and the Agent.

         5.   CONTINUED EFFECTIVENESS.  The term "Agreement", "hereof",
"herein" and similar terms as used in the Credit Agreement, and references in
the other Loan Documents to the Credit Agreement, shall mean and refer to, from
and after the effective date of the amendments contained herein as determined in
accordance with Paragraph 4 hereof, the Credit Agreement as amended by this
Amendment.  Each of the parties hereto agrees that, as amended by this
Amendment, all of the covenants and agreements and other provisions contained in
the Credit Agreement and the other Loan Documents are hereby ratified and
confirmed in all respects and shall remain in full force and effect from and
after the date of this Amendment.

         6.   COUNTERPARTS.  This Amendment may be executed in two or more
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument.  Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment.

         7.   GOVERNING LAW.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF).

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


                   GANTOS, INC., as Borrower


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

                   FLEET BANK, N.A. (formerly known as Natwest Bank N.A.), as
Agent and as a Lender


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

              LASALLE NATIONAL BANK, as a Lender


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