LIQUIDATION AGREEMENT
    
     This Agreement is entered into as of this 5th day of May, 1997 between 
Norwest Bank Minnesota, National Association (the "Lender") and Zearl T. Young,
Incorporated (the "Company").
    
Recitals
--------
    
    A.  The Company is indebted to the Lender pursuant to a Loan and Security
Agreement dated October 28, 1994, as amended, (the "Credit Agreement"). All 
advances under the Credit Agreement, together with daily interest, fees, costs 
and expenses and any other indebtedness of the Company to Lender, are 
hereinafter collectively referred to as the "Indebtedness." The Credit Agreement
and all related documents in favor of the Lender are referred to herein as the 
"Security Documents."
    
     B.  As of the close of business on May 4, 1997, the outstanding principal
amount of the Indebtedness was $6,055,473.65. In addition, interest, fees, costs
and expenses have accrued and are accruing.
    
     C.  The Indebtedness is secured by, among other things, a perfected 
security interest in, without limitation, all inventory, receivables, accounts, 
equipment and general intangibles of the Company (the "Collateral").
    
     D.  Robert W. Schleizer and John R. Boudreau (the "Guarantors") have each,
in their personal capacities, executed a Guaranty dated as of October 28, 1994,
as amended, and a Management Agreement dated as of October 28, 1994.
    
     E.  The Company is in default of its obligations under the Security
Documents. The Lender is entitled to exercise its rights and remedies.
    
     F.  The Company has acknowledged its financial difficulties and has
represented to the Lender its desire to liquidate its assets. The Company 
desires to seek a buyer for its assets on a going concern basis for a limited 
period of time, and, if the Company cannot sell its assets as a going concern, 
to wind up its affairs through an orderly liquidation. The Company has 
represented that the level of the Collateral will not materially deteriorate in
relationship to the level of Indebtedness while the Company seeks buyers for its
assets. The Lender has consented to a winding down of the Company's business and
orderly liquidation on the terms and conditions set forth below.
    
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                             AGREEMENT
    
    NOW, THEREFORE, in consideration of the foregoing and for good and valuable 
consideration, the receipt and sufficiency of which is hereby acknowledged by 
each party, the parties agree as follows:
    
    1.  The Recitals are true and correct. The Indebtedness is due and owing,
without defense, offset or counterclaim.
    
    2.  The Company may continue its business operations to the extent 
reasonably necessary to sell inventory and other assets, service existing 
customers, collect receivables and wind down its affairs in a timely manner 
until July 31, 1997, provided that it complies with the Budget attached hereto 
as Exhibit A in all material respects. No item of Collateral with a value 
greater than $5,000.00 may be sold, other than in the ordinary course of 
business, by the Company without the prior approval of the Lender. The Company 
shall pay the Indebtedness in full on or before July 31, 1997. Promptly after 
July 15, 1997, unless the Company has located a buyer who will buy the Company's
assets on a going-concern basis, the Company will conduct a going out of 
business sale or will otherwise sell its remaining inventory, equipment and 
other assets, and shall either sell or collect its remaining receivables.
    
    3.  All proceeds from the sale of assets and from the collection of accounts
or otherwise collected or received by the Company shall be turned over to the 
Lender in the form received for application to the Indebtedness in a manner to 
be determined by the Lender in its sole discretion.
    
    4.  Except as set forth in paragraph 5 below, the Company shall not incur or
pay expenses or other obligations except expenses which are both (i) set forth 
in the Budget and (ii) reasonably necessary to wind down its business. The 
Lender, in its sole discretion, may fund advances required by the Company as set
forth in the Budget, and any amounts so advanced shall become part of the 
Indebtedness. The Company shall achieve the collections and payments to the 
Indebtedness as set forth in the Budget, and shall comply with the Budget in 
every respect at the times and in the amounts set forth in the Budget. The 
Company shall not accept consigned inventory unless the consignor has executed 
an intercreditor agreement with the Lender, in form and substance acceptable to 
the Lender, including, without limitation, provisions regarding the segregation 
of consigned inventory and that no consigned inventory shall be sold on a 
deferred payment basis unless such deferred payments are sold to a third party.

    5.  The Company has represented to the Lender that certain parties
("Consignors") may provide inventory to the Company on consignment (the 
"Consignment Goods") for sale by the Company. The Lender has no objection to the
Company accepting Consigned Goods for sale, provided:

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       (i)   All Consigned Goods must be readily identifiable by marking or 
             labeling as constituting Consigned Goods.

       (ii)  All Consigned Goods that are not clearly marked or labeled as such 
             shall be deemed to be part of the Collateral.

       (iii) The Company shall not sell any Consigned Goods for less than the 
             amount owing to the Consignor for such Consigned Goods.

       (iv)  The Company shall not sell any Consigned Goods other than for cash 
             unless the company has an agreement from an unrelated third party 
             to purchase any accounts receivable or chattel paper created by 
             such sales at face value.

       (v)  The Company will deliver to the Lender all payments made to the 
            Company on account of the sale of the Consigned Goods, including the
            proceeds from the disposition of chattel paper or accounts 
            receivable resulting from the sale of Consigned Goods.

Provided that the Company meets its obligations herein and complies with the 
foregoing, the Lender has no objection to the Company's payment to Consignors of
an amount equal to the cost of Consigned Goods sold by the Company, 
notwithstanding that the Budget does not list any payments to Consignors for the
Sale of Consigned Goods.

   6.  The Company agrees to permit the Lender, and its respective officers,
employees and agents, to have full access to the Company's books, records and 
properties for the purpose of verifying the Company's compliance with the terms 
of the Security Documents and this Agreement.

   7.  Except as expressly modified by this Agreement, all provisions of the
Security Documents remain in full force and effect. The Lender reserves its 
rights at any time to exercise all of its rights and remedies under the Security
Documents, whether or not the Company has complied with its covenants and 
obligations under this Agreement, or the Security Documents. The Company shall, 
upon request of the Lender, deliver all of the Collateral to the Lender and 
shall permit the Lender to use the Company's premises for the purpose of 
enforcement and foreclosure of the Lender's security interest in the Collateral.
Without limiting the generality of the foregoing, the Lender specifically 
reserves its rights with respect to the Guarantors. 

   8.  The Company shall also deliver the following to the Lender: (a) a 
daily report setting forth the sales of inventory, equipment and other assets 
and collection of receivables by 12:00 noon on the next business day and (b) a 
revised weekly cash flow 

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forecast comparing actual results to forecasted performance for the prior week, 
along with a collateral\loan schedule, and a sales projection schedule, all to 
be received by 12:00 noon on the Tuesday of the following week and reflecting 
information through the close of business for the prior week. The Company shall 
also deliver to the Lender by 12:00 noon on each Tuesday, a report with respect 
to the Company's efforts with respect to the sale of its receivables portfolio, 
including information regarding offers received, contacts made, and other 
information relevant to the disposition of the Company's assets. The reports 
shall also provide detailed information regarding the Company's efforts to sell 
its store operations, and information regarding store performance including 
sales, cash collections and expenses. The Company agrees to execute and deliver 
such other and further documents or reports as the Lender may request from the 
Company to execute, perfect, evidence or otherwise implement the agreements set 
forth in this Agreement. In consideration of the Lender's willingness to provide
further advances to the Company and to provide the Company an opportunity to 
liquidate its assets in an orderly fashion, the Company shall execute such 
further financing statements, assignments, mortgages or other documents which 
the Lender may require to create perfected security interests or liens on assets
of the Company. 

   9.  If the Company permanently reduces the outstanding Indebtedness from 
the proceeds of liquidation to $4,000,000 or less by no later than July 31, 
1997, the Lender will not object if Company elects to pay the Guarantors a bonus
of $25,000 each. If the Company further permanently reduces the outstanding 
Indebtedness from the proceeds of the liquidation below $4,000,000 by no later 
than July 31, 1997, the Lender will not object to the Company's payment of an 
additional bonus to each Guarantor, not to exceed $50,000 each (in addition to 
the foregoing $25,000 bonus), equal to five percent (5%) of the amount such 
permanent reduction is less than $4,000,000. If the Company further permanently 
reduces the outstanding Indebtedness from the proceeds of liquidation below 
$3,000,000 by no later than July 31, 1997, the Lender will not object to the 
Company's payment of a bonus to each of Guarantors of ten percent (10%) of the 
amount of such permanent reduction below $3,000,000, such bonus being in 
addition to the foregoing described bonuses. For the purposes of the 
calculations set forth in this paragraph 9 only, (i) the proceeds of liquidation
shall not include any proceeds received from life insurance policies, and (ii) 
collateral monitoring fees, unused line fees and interest accruing after April 
5, 1997 shall not be added to the Indebtedness.

   10.  In consideration of the execution of this Agreement, the Company, on 
behalf of itself, its officers, agents, insurers, successors and assigns, 
releases, acquits and forever discharges the Lender, and its respective 
officers, directors, agents, attorneys, insurers, parents, affiliates, 
successors and assigns, of and from any and all manner of action or actions, 
suits, claims, damages, judgments, levies and executions, whether known or 
unknown, liquidated or unliquidated, fixed, contingent, direct or indirect, 
which the Company ever had, has, or may have or claim to have against the Lender
or its respective officers, agents, insurers, successors and assigns, for, upon 
or by reason of any matter, act or thing prior to the date of execution of this
Agreement. 

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   11.  No modifications or amendments to this Agreement may be made except in a
writing signed by all parties hereto.

   12.  This Agreement may be executed in any number of counterparts, each of 
which shall be an original, but all of which together shall constitute one 
instrument. Facsimiles or photocopies of executed signature pages to this 
Agreement shall be considered originals. 

   13.  This Agreement is made and entered into in the State of Minnesota, and 
the laws of Minnesota shall govern its enforcement and performance.

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


NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION

By______________________________
Its___________________________

ZEARL T. YOUNG, INCORPORATED

By /s/
   ______________________________
Its President
   ____________________________


   
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