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                                                                   EXHIBIT 10.5
                                          
                                          
                                          
                          AGREEMENT OF LIMITED PARTNERSHIP
                                          
                                          
                                         OF
                                          
                                          
                                      W3 L.P.
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                DATED APRIL 17, 1998 

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                                 TABLE OF CONTENTS
<TABLE>
<S>                                                                       <C>
ARTICLE I           Definitions; General Provisions                       1
     Section 1.1    Definitions                                           1
     Section 1.2    Partnership Organization and Name                     3
     Section 1.3    Fiscal Year                                           4
     Section 1.4    Registered Office and Agent                           4
     Section 1.5    Purpose of the Partnership                            4

ARTICLE II          Management of Partnership                             4
     Section 2.1    Management                                            4
     Section 2.2    Authority of General Partner                          4
     Section 2.3    Reliance by Third Parties                             5
     Section 2.4    Activities of the General Partner                     5
     Section 2.5    Indemnification of Indemnified Persons                5
     Section 2.6    Payment of Costs and Expenses                         6
     Section 2.7    Compensation to General Partner                       6
     Section 2.8    Covenants                                             6

ARTICLE III         Contributions; Distributions; Tax Allocations         8
     Section 3.1    Contributions                                         8
     Section 3.2    Distributions                                         9
     Section 3.3    Tax Allocations                                       9

ARTICLE IV          Partnership Composition                               9
     Section 4.1    Assignments                                           9
     Section 4.2    No Withdrawal of General Partner                     10
     Section 4.3    Removal of General Partner                           10
     Section 4.4    Admission of New Partners                            10

ARTICLE V           Duration and Termination of Partnership              10
     Section 5.1    Duration and Event of Withdrawal                     10
     Section 5.2    Termination                                          11

ARTICLE VI          Representations and Warranties of the General 
                    Partner and LOT$OFF                                  11
     Section 6.1    Due Organization                                     12
     Section 6.2    Due Execution; NonContravention; Enforceability      12
     Section 6.3    No Liens                                             12
     Section 6.4    [Intentionally Omitted]                              12
     Section 6.5    Judgment                                             12
     Section 6.6    Complete and Accurate Information                    12

ARTICLE VII         Representations and Warranties of the 
                    Preferred Limited Partner                            13
     Section 7.1    Investment Purpose                                   13
     Section 7.2    Transfer Restriction                                 13
     Section 7.3    Knowledgeable Investor                               13
     Section 7.4    Accredited Investor                                  13
     Section 7.5    No Public Solicitation                               13
     Section 7.6    Due Diligence                                        13

ARTICLE VIII        Tax Returns; Reports to Partners                     14
     Section 8.1    Independent Accountants                              14
     Section 8.2    Filing of Tax Returns                                14
     Section 8.3    Tax Matters Partner                                  14
     Section 8.4    Financial Statements: Statements of Account          14
     Section 8.5    Annual Reports to Partners                           14

ARTICLE IX          Miscellaneous                                        15
     Section 9.1    General                                              15
     Section 9.2    Amendments                                           15
     Section 9.3    Notices                                              15
     Section 9.4    Headings                                             15
     Section 9.5    Construction; Severability                           15
     Section 9.6    Governing Law                                        16

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     Section 9.7    Confidentiality                                      16


SCHEDULE I          PARTNERS
SCHEDULE II         CONTRIBUTIONS
SCHEDULE III        PREFERENTIAL DISTRIBUTION
</TABLE>
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                          AGREEMENT OF LIMITED PARTNERSHIP
                                          
                                          
     This Agreement of Limited Partnership (as the same may hereafter be 
modified in accordance with the provisions hereof, this "Agreement") is made 
as of the 17th day of April, 1998 by and among Giant Sequoia Corporation (the 
"General Partner"), a Delaware corporation having an office at 1201 Austin 
Highway, Suite 116, San Antonio, Texas 78209, as general partner, and those 
Persons (as defined below) set forth on Schedule I hereto as the limited 
partners (collectively, the "Limited Partners"), and provides for the 
organization, governance and operation of W3 L.P., a limited partnership (the 
"Partnership") pursuant to the provisions of the Delaware Revised Uniform 
Limited Partnership Law, as heretofore or hereafter amended (the "Partnership 
Law"), and pursuant to the terms and provisions of this Agreement.  All 
capitalized terms used herein and not otherwise defined shall have the 
meanings assigned to them in Section 1.1 below.
     
                               W I T N E S S E T H :
     
     WHEREAS, the Partners wish to form a limited partnership for the purpose 
of owning, holding and supporting the Judgment and the Cause of Action;
     
     NOW, THEREFORE, in consideration of the agreements and obligations set 
forth herein and for other good and valuable consideration, the receipt and 
sufficiency of which are hereby acknowledged, the Partners hereby agree as 
follows:
     
                                     ARTICLE I

                          Definitions; General Provisions
     
     Section 1.1    Definitions.  For the purposes of this Agreement, 
capitalized terms used herein and not otherwise defined shall have the 
following meanings:
     
          (a)  "50-OFF" or "50-OFF Stores, Inc." shall mean LOT$OFF.
     
          (b)  "Affiliate" shall mean, with reference to any Person, a Person 
which directly or indirectly, controls, is controlled by or is under common 
control with such Person.  The term "control," as used herein with respect to 
any Person, shall mean the possession, directly or indirectly, of the power to 
direct or cause the direction of the management and policies of such Person, 
whether through the ownership of voting securities, by contract or otherwise. 
In no event shall any Limited Partner be deemed an Affiliate of the 
Partnership as a result of it being a Limited Partner.
     
          (c)  "Assignment Agreement" shall mean the Pledge of Partnership 
Interest, dated as of April 17, 1998, by the General Partner and the Common 
Limited Partner in favor of GECC.
     
          (d)  "Cause of Action" shall mean the cause of action which LOT$OFF 
has or may have against The Chase Manhattan Bank ("Chase") arising from the 
transactions and events which were the basis for the Lawsuit.
     
          (e)  "Common Limited Partner" shall mean the Person set forth on 
Schedule I hereto who holds a common limited partnership interest in the 
Partnership as indicated on such Schedule.
     
          (f)  "Contractual Obligation" shall mean, with respect to any 
Person, any provision of any debt security or of any preferred stock or other 
equity interest issued by such Person or of any contract, agreement, 
instrument, arrangement, understanding or other undertaking (in each case, 
whether oral, written or otherwise) to which such Person is a party or by 
which it or any of its property or assets is bound.
     
          (g)  "Contribution" shall mean, with respect to each Partner, the 
contribution listed as such opposite its name on Schedule II attached hereto 
and made a part hereof.


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          (h)  "Fourth Amendment" shall mean the Fourth Amendment to Revolving 
Credit Agreement, dated as of April 17, 1998.
     
          (i)  "Indebtedness" shall mean, with respect to any Person, all 
obligations of such Person for borrowed money, (ii) all obligations of such 
Person evidenced by bonds, debentures, notes or other similar instruments, 
(iii) all obligations of such Person to pay the deferred purchase price of 
property, assets or services, (iv) all capital lease obligations of such 
Person, (v) all obligations of such Person in respect of letters of credit, 
bankers' acceptances or similar instruments, (vi) all Indebtedness of others 
secured by a Lien on any property or asset of such Person, whether or not such 
Indebtedness is assumed by such Person, (vii) all contingent obligations of 
such Person, (viii) all liabilities of such Person under any interest rate 
cap, swap or collar agreements, foreign currency exchange agreements and other 
hedging agreements or arrangements and (ix) all obligations of such Person to 
purchase investments which arise out of or in connection with the sale of the 
same or substantially similar investments or other similar transactions having 
the same economic effect or all obligations of such Person incurred in 
connection with any security lending transactions.
     
          (j)  "Judgment" shall mean the judgment in favor of LOT$OFF and 
against Chase entered on December 4, 1997 by the United States District Court 
for the Western District of Texas, San Antonio Division (the "District Court") 
in the Lawsuit.  On February 19, 1998, an order was entered by the District 
Court denying all post-trial motions by Chase.  Chase has filed a notice of 
appeal with respect to the Judgment.
     
          (k)  "Lawsuit" shall mean that action from which the Judgment was 
obtained in the United States District Court for the Western District of 
Texas, San Antonio Division, order styled "50-OFF Stores, Inc. v. Banque 
Paribas (Suisse) S.A., et al" (Docket No. SA-95-CA-0159).
     
          (l)  "Lien" shall mean any mortgage, deed of trust, pledge, 
hypothecation, assignment, encumbrance, lien (statutory or other) or 
preference, priority or other security interest or preferential arrangement of 
any kind or nature whatsoever.
     
          (m)  "Limited Partners" shall mean the Common Limited Partner and 
the Preferred Limited Partner.
     
          (n)  "LOT$OFF" shall mean LOT$OFF Corporation, a Delaware 
corporation and the sole shareholder of the General Partner.
     
          (o)  "Net Proceeds" shall mean any and all Proceeds from the 
Judgment and/or the Cause of Action, net of all contingency fees paid or owing 
to counsel for LOT$OFF upon receipt of such Proceeds, including the 
reimbursement to such counsel of related litigation expenses now owing to or 
hereafter incurred by such counsel, such related litigation expenses not to 
exceed $1,000,000 without the prior written consent of the Preferred Limited 
Partner.
     
          (p)  "Partner" shall mean any or each or all, as the case may be, of 
the General Partner and the Limited Partners.
     
          (q)  "Permitted Liens" shall mean the following encumbrances and 
claims: (i) liens in favor of General Electric Capital Corporation ("GECC") 
under LOT$OFF's $15,000,000 Revolving Credit Agreement with GECC, dated as of 
June 16, 1997 (as amended, the "Credit Agreement"), and pursuant to the 
Security Agreement and the Assignment Agreement; (ii) the Series B Preferred 
Stock Lien and the Class 7 Lien (as those terms are defined in 50-OFF Stores, 
Inc.'s Joint Plan of Reorganization, as Amended and Modified, dated as of 
March 27, 1997) and (iii) all contingent fee interests and claims of counsel 
(including, without limitation, Akin, Gump, Strauss, Hauer & Feld, L.L.P.), 
including claims for reimbursement of expenses now owing to or hereafter 
incurred by such counsel not to exceed $1,000,000 without the prior written 
consent of the Preferred Limited Partner.

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          (r)  "Person" shall mean an individual, partnership, corporation, 
limited liability company, trust, unincorporated association or any other 
legal entity.
     
          (s)  "Preferential Distribution" shall mean the full amount of the 
preferential distribution to which the Preferred Limited Partner is entitled 
under this Agreement, as set forth on Schedule III hereto.
     
          (t)  "Preferred Limited Partner" shall mean the Person set forth on 
Schedule I hereto who holds a preferred limited partnership interest in the 
Partnership as indicated on such Schedule.
     
          (u)  "Proceeds" shall mean any and all proceeds from the Judgment 
and/or the Cause of Action, including, but not limited to, proceeds pursuant 
to a final, non-appealable judgment or settlement of the Lawsuit based on or 
arising out of the Cause of Action, or any foreclosure on the Judgment or the 
Cause of Action by any Person who holds a Lien on such Judgment or Cause of 
Action, and including, without limitations all interest thereon.
     
          (v)  "Security Agreement" shall mean the Security Agreement, dated 
as of April 17, 1998, by the General Partner and the Partnership in favor of 
GECC.  
 

     Section 1.2    Partnership Organization and Name.  The Partners hereby 
organize the Partnership as a limited partnership pursuant to the Partnership 
Law.  The General Partner shall have the right, upon notice to and consent of 
the Limited Partners, to change the name of the Partnership and, in connection 
therewith, may execute and file such amendments to this Agreement, and such 
other documentation, as shall be necessary or desirable to effect such name 
change.  Upon the dissolution and termination of the Partnership, the General 
Partner shall retain all rights with respect to the name of the Partnership 
and the use of such name.
     
     Section 1.3    Fiscal Year.  The fiscal year of the Partnership ("Fiscal 
Year") shall end on the Friday closest to January 31st of each year. 
Notwithstanding the foregoing, if the General Partner shall determine that a 
change in the Fiscal Year of the Partnership would be in the best interest of 
the Partnership, the General Partner shall be entitled, upon notice to the 
Limited Partners, to make such a change without the consent of the Limited 
Partners.
     
     Section 1.4    Registered Office and Agent.  The principal office of the 
Partnership shall be 1201 Austin Highway, Suite 116, San Antonio, Texas 78209, 
or such other place as may from time to time be designated by the General 
Partner.  The registered office of the Partnership shall be c/o The 
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, 
Wilmington, Delaware 19801, or such other place as may from time to time be 
designated by the General Partner. The agent for service of process upon the 
Partnership within the State of Delaware shall be c/o The Corporation Trust 
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 
19801, or such other agent as may from time to time be designated by the 
General Partner.
     
     Section 1.5    Purpose of the Partnership.  The Partnership is organized 
for the purpose of holding, owning and supporting the Judgment and the Cause 
of Action and making distributions to the Partners of the Net Proceeds from 
such Judgment and Cause of Action, in accordance with this Agreement.
     
                                     ARTICLE II
                                          
                             Management of Partnership
     
     Section 2.1    Management.  Subject to the further express provisions of 
this Agreement, the management of the Partnership shall be vested exclusively 
in the General Partner.  The Limited Partners shall have no part in the 
management of the Partnership, and shall have no authority or right in their 
capacity as Limited Partners to act on behalf of the Partnership in connection 
with any matter, including, without limitation, any settlement of the Lawsuit.
     
     Section 2.2    Authority of General Partner.  Without limiting the
provisions of Section 2.1, but subject to the further provisions of this Article
2, the General Partner shall have the power by itself on behalf and in the name

<PAGE>


of the Partnership, without the consent of the Limited Partners (except as 
otherwise explicitly provided in this Agreement), to carry out any and all of 
the objectives and purposes of the Partnership set forth in Section 1.5, to 
support, pursue, administer and dispose of the Judgment and the Cause of 
Action, and to perform all acts and enter into and perform all contracts and 
other undertakings which it may deem necessary or advisable in connection 
therewith, including the power to:
     
          (a)  open, maintain and close bank accounts and draw checks or other 
orders for the payment of monies;
     
          (b)  make such elections under the Internal Revenue Code of 1986, as 
amended (the "Code"), and other relevant tax laws (whether federal, state, 
local or foreign) as to the treatment of items of Partnership income, gain, 
loss, deduction and credit, and as to all other relevant matters, as the 
General Partner deems necessary or appropriate, determinations of which items 
of cash outlay are to be capitalized or treated as current expenses and 
selection of the method of accounting and bookkeeping procedures to be used;
     
          (c)  deposit, withdraw, pay, retain and distribute the Partnership's 
funds in a manner consistent with the provisions of this Agreement; and
     
          (d)  authorize any officer, director, employee or other agent of the 
General Partner, or any employee or agent of the Partnership, to act for and 
on behalf of the Partnership in any or all of the foregoing matters and all 
matters incidental thereto as fully as if such Person were the General Partner.
     
     Section 2.3    Reliance by Third Parties.  Any Person dealing with the 
Partnership shall be conclusively protected in relying upon the certificate of 
the General Partner to the effect that it is then acting as General Partner, 
or in accepting any instrument signed by the General Partner in the name and 
on behalf of the Partnership.
     
     Section 2.4    Activities of the General Partner.
     
          (a)  The officers, directors, employees and agents of the General 
Partner may perform services for Persons other than the Partnership; provided, 
however, that the General Partner shall cause its employees, officers, 
directors and agents, if any, to devote so much of their time and attention to 
the affairs of the Partnership as is reasonably necessary to enable the 
General Partner to perform its responsibilities in respect of the 
Partnership's business.
     
          (b)  Nothing herein contained shall be deemed to preclude the 
officers, directors, agents and employees of the General Partner from engaging 
directly or indirectly in any other business and from possessing interests in 
any other business or businesses.
     
     Section 2.5    Indemnification of Indemnified Persons.
     
          (a)  The Partnership, out of its own assets and not out of the 
assets of any Limited Partner, shall indemnify and hold harmless each of the 
Limited Partners and the shareholders, constituent partners (direct or 
indirect), officers, directors, employees, agents and Affiliates of such 
Limited Partners (and of such Affiliates) and the legal representatives of 
each of the foregoing (collectively, the "Indemnified Persons"), from and 
against any loss, expense, judgment, settlement cost, fee and related expenses 
(including attorneys' fees and expenses), costs or damages arising out of or 
in connection with any act taken or omitted to be taken in respect of the 
affairs of the Partnership (including any such act or failure which is 
negligent), unless such act or omission resulted from or was attributable to 
such Indemnified Person's willful misconduct, bad faith, gross negligence, 
violation of law or violation of any provision of this Agreement.  The 
termination of any action, suit or proceeding by settlement shall not, of 
itself, create a presumption that an Indemnified Person did not act in good 
faith or was guilty of willful misconduct, bad faith, gross negligence, a 
violation of law or a violation of any provision of this Agreement. The 
Partnership shall advance to any Indemnified Person reasonable attorneys' fees 
and other costs and expenses incurred in connection with the defense of any 
action or proceeding which arises out of conduct which is the subject of the 
indemnification 

<PAGE>

provided hereunder; provided that each Indemnified Person shall agree as a 
condition to receiving such advances, that in the event such Indemnified 
Person receives any such advance, such Indemnified Person shall reimburse the 
Partnership for such advance if it shall be judicially determined, in a final, 
non-appealable judgment, that such Indemnified Person was not entitled to 
indemnification under this Section 2.5.
     
          (b)  Notwithstanding any of the foregoing to the contrary, the 
provisions of this Section 2.5 shall not be construed so as to provide for the 
indemnification of any Indemnified Person for any liability to the extent (but 
only to the extent) that such indemnification would be in violation of 
applicable law, but shall be construed so as to effectuate the provisions of 
this Section 2.5 to the fullest extent permitted by law.
     
     Section 2.6    Payment of Costs and Expenses.  The General Partner shall 
pay or cause to be paid all expenses incurred in connection with the business 
of the Partnership (including, without limitation, legal, auditors, and tax 
accountants' fees and expenses, the cost of complying with applicable laws and 
regulations, costs associated with the settlement of disputes, the cost of 
preparing and making documentary filings, insurance premiums, taxes payable by 
the Partnership and the cost of preparing and distributing reports and 
financial statements).
     
     Section 2.7    Compensation to General Partner.  Neither the General 
Partner nor any Affiliate of the General Partner shall be entitled to any 
compensation or reimbursement for services rendered by it to the Partnership 
or for costs incurred or time expended by it on behalf of the Partnership 
(including, without limitation, any expenses paid by the General Partner 
pursuant to Section 2.6 hereof) until after the Preferred Limited Partner has 
received the full amount of the Preferential Distribution due to it under this 
Agreement.
     
     Section 2.8    Covenants.  The General Partner hereby covenants and 
agrees that unless the Limited Partners otherwise consent in writing, it 
shall, and it shall cause the Partnership to:
     
          (a)  Maintain its own deposit account or accounts, separate from 
those of any Affiliate, with commercial banking institutions and ensure that 
the funds of the Partnership will not be diverted to any other Person or for 
uses other than the stated purposes of the Partnership, and not commingle such 
funds with the funds of the General Partner;
     
          (b)  To the extent that it shares the same officers or other 
employees as any of its Partners or Affiliates, fairly allocate the salaries 
of and the expenses related to providing benefits to such officers and other 
employees among such entities, with each such entity bearing its fair share of 
the salary and benefit costs associated with all such common officers and 
employees;
     
          (c)  Refrain from entering into any Contractual Obligation, whether 
currently existing or hereafter entered into, except as otherwise expressly 
permitted in this Agreement and in connection with the support of the Lawsuit 
against Chase; provided, however, the aggregate amount payable under all such 
Contractual Obligations not expressly permitted hereunder shall not exceed 
$1,000,000;
     
          (d)  Issue separate financial statements from those of any 
Affiliate, prepared not less frequently than annually and prepared in 
accordance with GAAP;

          (e)  Conduct its affairs in its own name and strictly in accordance 
with this Agreement and observe all necessary, appropriate and customary 
partnership formalities, including, but not limited to, approving all consents 
necessary to authorize actions taken or to be taken, and maintaining accurate 
and separate books, records and accounts, including, but not limited to, 
payroll and affiliated transaction accounts;
     
          (f)  Refrain from assuming or guaranteeing any liabilities of any 
Affiliate thereof other than pursuant to the Security Agreement and the 
Assignment Agreement.


<PAGE>

          (g)  Take, or refrain from taking, as the case may be, all actions 
that are necessary to be taken or not to be taken in order to ensure that the 
Partnership does not become subject to any bankruptcy or bankruptcy related 
proceedings;
     
          (h)  Except for (i) the Contributions hereunder, (ii) in connection 
with the Security Agreement and the Assignment Agreement, and (iii) as 
otherwise expressly provided in this Agreement, not sell, pledge, assign or 
otherwise transfer to any Person, or create, incur, assume or suffer to exist 
any Lien upon any of its property, assets or revenues, whether now owned or 
hereafter acquired, and including, without limitation, the Judgment or the 
Cause of Action, except for the Permitted Liens;
     
          (i)  Except as otherwise expressly provided in this Agreement, not 
become or remain liable, directly or contingently, in connection with any 
Indebtedness or other liability of any other Person, whether by guarantee, 
endorsement (other than endorsements of negotiable instruments for deposit or 
collection in the ordinary course of business), agreement to purchase or 
repurchase, agreement to supply or advance funds, or otherwise;

          (j)  Not enter into any merger, consolidation or amalgamation, or 
liquidate, wind up or dissolve itself (or suffer any liquidation or 
dissolution), or make any material change in its present method of conducting 
business, or convey, sell, lease, assign, transfer or otherwise dispose of, 
all or any portion of the Judgment or the Cause of Action, except to the 
extent that such conveyance, sale, lease, assignment, transfer or other 
disposition is (i) pursuant to the Security  Agreement and Assignment 
Agreement, or (ii) subject to and does not adversely affect the rights of the 
Preferred Limited Partner under this Agreement;
     
          (k)  Not make any distribution in respect of any of the 
Partnership's assets, either directly or indirectly, whether in cash or 
property or in obligations of the Partnership, other than pursuant to this 
Agreement;
     
          (l)  Not engage at any time in any business or business activity 
other than the transactions contemplated by this Agreement; 
     
          (m)  Not make any advance, loan, extension of credit or capital 
contribution to, or purchase any stock, bonds, notes, debentures or other 
securities of or any assets constituting a business unit of, or make any other 
investment in, any Person;
     
          (n)  Except as otherwise expressly provided in this Agreement, not 
create, incur, assume or suffer to exist any Indebtedness, except: (i) 
Indebtedness representing fees, expenses and indemnities payable pursuant to 
and in accordance with this Agreement, and (ii) Indebtedness for services 
supplied or furnished to the Partnership in an amount not to exceed $10,000 at 
any one time outstanding;
     
          (o)  Unless and until the Preferred Limited Partner has received the 
full amount of the Preferential Distribution due to it under this Agreement, 
not distribute more than $1,500,000 in cash from the Net Proceeds to satisfy 
the Class 7 and Series B Preferred Stock Liens; and
     
          (p)  Conduct its business in a separate space within, but segregated 
from, the office of any Affiliate, and maintain telephone numbers, mailing 
address, stationery and other business forms that are separate and distinct 
from those of any Affiliate.
                                          
                                    ARTICLE III
                                          
                   Contributions; Distributions; Tax Allocations
     
     Section 3.1    Contributions.  Concurrent with the execution of this 
Agreement, LOT$OFF shall contribute to the Partnership all of its right, title 
and interest in and to the Judgment and the Cause of Action, pursuant to 
documentation satisfactory to the Preferred Limited Partner and subject only 
to the Permitted Liens, in exchange for a 99% common limited partnership 
interest and 1% general partnership interest in the Partnership.  Immediately 

<PAGE>

thereafter, LOT$OFF shall contribute its 99% common limited partnership 
interest to the Common Limited Partner and its 1% general partnership interest 
to the General Partner.  Concurrent with the contribution of the Judgment and 
the Cause of Action by LOT$OFF to the Partnership, the Preferred Limited 
Partner shall make its Contribution to the Partnership, in cash, in the amount 
set forth opposite its name on Schedule II hereto, in exchange for a 100% 
preferred limited partnership interest in the Partnership.  To the extent 
reasonably necessary, LOT$OFF agrees to execute, acknowledge and deliver, and 
cause to be executed, acknowledged and delivered, such other and further 
documents and take, or cause to be taken, such other action as may be 
necessary to effectuate the terms of this Agreement, and to ensure the valid 
transfer of the Judgment and the Cause of Action into the Partnership.
     
     Section 3.2    Distributions.  Promptly after receipt by the Partnership 
of the Contribution of the Preferred Limited Partner, the total amount of such 
Contribution shall be distributed in cash to the Common Limited Partner.  
Within two business days after the payment of the Proceeds, the Preferential 
Distribution shall be made to the Preferred Limited Partner, out of the Net 
Proceeds, in cash, by wire transfer of immediately available funds, pursuant 
to the formula set forth on Schedule III.  Except as provided in the first 
sentence of this Section 3.2, no distributions shall be made to the General 
Partner or the Common Limited Partner until the Preferred Limited Partner has 
received the full amount of the Preferential Distribution to which it is 
entitled pursuant to Schedule III.  Thereafter, all remaining amounts shall be 
distributed to the General Partner and the Common Limited Partner according to 
their respective common partnership interests as set forth on Schedule I.
     
     Section 3.3    Tax Allocations.    For federal income tax purposes, no 
amount of income shall be allocated to the Preferred Limited Partner except to 
the extent that distributions shall have been made to the Preferred Limited 
Partner in excess of the amount contributed by the Preferred Limited Partner 
to the Partnership, and the General Partner agrees to prepare all Partnership 
tax returns in a manner consistent with the foregoing.  Any loss of the 
Partnership shall be allocated in the manner that as closely as possible 
results in the Partners' capital accounts being equal to the distributions 
they would receive on termination of the Partnership.  Any income not 
allocable to the Preferred Limited Partner shall be allocated among the 
remaining Partners in accordance with their respective common partnership 
interests.
          
                                     ARTICLE IV

                              Partnership Composition
     
     Section 4.1    Assignments.  Unless otherwise provided in this Agreement, 
except pursuant to the Security Agreement or the Assignment Agreement or with 
the express written consent of the Limited Partners, which may be withheld in 
their sole and absolute discretion, and, in each case (if applicable), subject 
to compliance with applicable securities laws, the General Partner may not 
assign, sell, transfer, pledge, hypothecate or otherwise dispose of all or any 
of the portion of its interest in the Partnership or any interest (including a 
beneficial interest) in such interest.  Unless otherwise provided in this 
Agreement, except pursuant to the Assignment Agreement or with the express 
written consent of the General Partner, which may not be unreasonably withheld 
or delayed, and subject to compliance with applicable securities laws, none of 
the Limited Partners may assign, sell, transfer, pledge, hypothecate or 
otherwise dispose of all or any portion of its interest in the Partnership or 
any interest (including a beneficial interest) in such interest.  Any 
assignment, sale, transfer, pledge, hypothecation or other disposition made in 
violation of this Section 4.1 shall be void and of no effect.
     
     Section 4.2    No Withdrawal of General Partner.  Without the prior 
written consent of the Limited Partners, the General Partner shall not 
withdraw or resign from the Partnership.
     
     Section 4.3    Removal of General Partner.  In the event that the General 
Partner has committed gross negligence or willful misconduct in the 
performance of its duties hereunder or has violated the provisions of this 
Agreement and such gross negligence, willful misconduct or violation has had a 
material adverse effect on the Partnership, then at the sole and absolute 
discretion of the Preferred Limited Partner, the General Partner shall be 
removed as general partner of the Partnership and the Limited Partners may 
appoint a new general partner; provided, 

<PAGE>

however, the Preferred Limited Partner shall provide the General Partner with 
a notice and an opportunity to cure, if curable, such material adverse effect, 
within thirty (30) days of the receipt by the General Partner of such notice.  
The removed General Partner's interest in the Partnership shall be treated as 
follows: (a) such interest shall be converted into a common limited 
partnership interest in the Partnership and shall remain subject to the liens 
under the Assignment Agreement and (b) the removed General Partner shall 
retain, with respect to such common limited partnership interest, its right to 
distributions under this Agreement.
     
     Section 4.4    Admission of New Partners. Unless otherwise permitted by 
this Agreement, except with the express written consent of the Limited 
Partners, which may be withheld in their sole and absolute discretion, no 
Person may be admitted to the Partnership as a new partner.  Notwithstanding 
anything to the contrary in this Agreement, one or more new common limited 
partners may be admitted to the Partnership in the General Partner's 
discretion, provided (i) the General Partner provides the Preferred Limited 
Partner with ten (10) days prior written notice (including all documentation 
to be entered into); (ii) each such new partner's interest does not adversely 
affect the rights of the Preferred Limited Partner and (iii) each such new 
partner agrees in writing to be bound by the terms and conditions of this 
Agreement to the same extent as the existing Common Limited Partner.  Each of 
the Limited Partners and the General Partner hereby consent to GECC or its 
agent or designee, or any other Person purchasing an interest in the 
Partnership in connection with GECC's remedies under the Assignment Agreement, 
being admitted as a new partner of the Partnership, subject to compliance with 
clause (iii) of the preceding sentence.
          
                                     ARTICLE V
                                          
                      Duration and Termination of Partnership
                                          
     Section 5.1    Duration and Event of Withdrawal.   
                                          
          (a)  The Partnership shall dissolve and terminate on the earliest to 
occur of: (i) at any time at the election of the General Partner, upon the 
receipt by the Preferred Limited Partner of the full amount of its 
Preferential Distribution, in accordance with Schedule III or (ii) the date 
that the General Partner becomes bankrupt or insolvent; provided, however, 
that upon the occurrence of such bankruptcy or insolvency of the General 
Partner, the Partnership may continue its operations if, within ninety (90) 
days, the Preferred Limited Partner (or, if the Preferred Limited Partner has 
received the full amount of the Preferential Distribution to which it is 
entitled under this Agreement, then the Common Limited Partners) shall elect 
to continue the business of the Partnership and shall elect a new general 
partner for the Partnership.
     
          (b)  If a new general partner is elected as provided in Section 
5.1(a), then the withdrawn General Partner's interest in the Partnership shall 
automatically be converted into a common limited partnership interest therein 
and the General Partner shall be entitled to retain its beneficial interest in 
the Partnership with respect to such interest.
     
     Section 5.2    Termination.  Upon termination of the Partnership, the 
Partnership shall wind up its affairs and the property and assets of the 
Partnership shall be liquidated as promptly as possible, but in an orderly 
manner so as not to involve undue sacrifice.  The General Partner shall be the 
liquidator to wind up the affairs of the Partnership and to continue to manage 
the Partnership's assets during such winding-up; provided that if the General 
Partner is removed or withdrawn, the Limited Partners may appoint another 
Person to act as liquidator.  Any proceeds of the sale or other disposition of 
the Partnership's assets shall be applied and distributed in the following 
manner and order:
     
          (a)  to the payment of the debts and liabilities of the Partnership 
and the expenses of liquidation including, to the extent payable, obligations 
secured by the Permitted Liens;
     
          (b)  to the setting up of any reserves which the liquidator 
determines are reasonably necessary for any contingent unforeseen liabilities 
or obligations of the Partnership.  Such reserves may, in the discretion of 
the liquidator, be paid over to an escrow agent selected by it to be held by 
such escrow agent for the purpose of disbursing 

<PAGE>

such reserves in payment of any of the aforementioned contingencies, and, at 
the expiration of such period as the liquidator may deem advisable, to 
distribute the balance thereafter remaining, if any, to the General Partner;
     
          (c)  to the payment of the Preferential Distribution to the 
Preferred Limited Partner; and
     
          (d)  with respect to all remaining amounts, to the payment to the 
Common Limited Partner and the General Partner in accordance with their 
respective percentage interests in the Partnership.
          
                                     ARTICLE VI
                                          
                         Representations and Warranties of
                          the General Partner and LOT$OFF
     
     The General Partner and LOT$OFF hereby jointly and severally represent 
and warrant to the Preferred Limited Partner as follows:
     
     Section 6.1    Due Organization.  Each of the General Partner, the Common 
Limited Partner and LOT$OFF is (a) a corporation duly organized, validly 
existing and in good standing under the laws of the jurisdiction of its 
organization and (b) is duly qualified as a foreign corporation and is in good 
standing under the laws of each jurisdiction where its ownership or lease of 
property or the conduct of its business requires such qualification.  Each of 
the General Partner, the Common Limited Partner and LOT$OFF has the requisite 
corporate power and authority and the legal right to own, pledge, mortgage or 
otherwise encumber and operate its properties and to conduct its business as 
now, heretofore and proposed to be conducted.
     
     Section 6.2    Due Execution; Non-Contravention; Enforceability.  The 
execution, delivery and performance by the General Partner, the Common Limited 
Partner and LOT$OFF of this Agreement and all instruments and documents to be 
delivered by such party in connection herewith and the contribution to the 
Partnership of the Judgment and the Cause of Action provided for herein and in 
the documentation assigning such Judgment and Cause of Action: (a) are within 
the applicable party's corporate power; (b) have been duly authorized by all 
necessary or proper corporate action; (c) are not in contravention of any 
provision of the applicable party's constituent documents; (d) will not 
violate any law or regulation, or any judgment, order or decree of any court 
or governmental instrumentality; and (e) do not require the consent or 
approval of, notice to or filing with any governmental authority or any other 
Person other than such consents, approvals, notices or filings which have 
already been obtained or made.  This Agreement has been duly executed and 
delivered by the General Partner, the Common Limited Partner and LOT$OFF, and 
constitutes a legal, valid and binding obligation of such party, enforceable 
against such party in accordance with its terms, subject to applicable 
bankruptcy, insolvency, moratorium, reorganization and other similar laws 
affecting creditors' rights and to equitable principles of general 
applicability.
     
     Section 6.3    No Liens.  The Judgment and the Cause of Action are 
contributed to the Partnership free and clear of all Liens other than the 
Permitted Liens.
     
     Section 6.4    [Intentionally Omitted]
     
     Section 6.5    Judgment.  The Judgment has been finally entered by the 
District Court.  The total amount of damages awarded to LOT$OFF under such 
Judgment is $148,575,000.00 (plus cost of court and all interest accrued 
thereon).
     
     Section 6.6    Complete and Accurate Information.  All documents 
delivered by or on behalf of the General Partner, the Common Limited Partner, 
LOT$OFF or any Affiliate thereof in connection with this Agreement or the 
transactions contemplated hereby are true, complete and authentic in all 
material respects. No representation or warranty of the General Partner, the 
Common Limited Partner or LOT$OFF contained in this Agreement and no document 
furnished by or on behalf of the General Partner, the Common Limited Partner, 
LOT$OFF or any Affiliate 

<PAGE>

thereof pursuant to this Agreement or any transaction contemplated hereby 
contains an untrue statement of a material fact or omits to state a material 
fact required to be stated therein or necessary to make the statements made, 
in the context in which made, not materially false or misleading.
          
                                    ARTICLE VII
                                          
          Representations and Warranties of the Preferred Limited Partner
     
     The Preferred Limited Partner hereby represents and warrants to the 
General Partner and the Common Limited Partner as follows:
     
     Section 7.1    Investment Purpose. The Preferred Limited Partner is 
acquiring its interest in the Partnership solely for investment, solely for 
its own account and not with a view to or for the resale or distribution 
thereof in violation of applicable securities laws.
     
     Section 7.2    Transfer Restriction.  The Preferred Limited Partner may 
sell or otherwise transfer its interest in the Partnership, or any portion 
thereof, only if such transaction is duly registered under the Securities Act 
of 1933, as amended, or if it shall have received the favorable opinion of 
counsel to it, which opinion shall be reasonably satisfactory to counsel to 
the Partnership, to the effect that such sale or other transfer may be made in 
the absence of registration under the Securities Act of 1933, as amended, and 
registration or qualification in every applicable state.
     
     Section 7.3    Knowledgeable Investor.  The Preferred Limited Partner has 
not relied upon the advice of a "Purchaser Representative" (as defined in 
Regulation D of the Securities Act) in evaluating the risks and merits of this 
investment.  The Preferred Limited Partner has the knowledge and experience to 
evaluate the Partnership and the risks and merits relating thereto.
     
     Section 7.4    Accredited Investor.  The Preferred Limited Partner is an 
"accredited investor" as such term is defined in Rule 501 of Regulation D 
Promulgated pursuant to the Securities Act of 1933, as amended; the Preferred 
Limited Partner is able to bear the economic risk of losing its entire 
investment in the Partnership and understands that an investment in the 
Partnership involves substantial risks including the potential liquidation of 
the Partnership.  The Preferred Limited Partner has the power and authority to 
enter into this Agreement.  This Agreement is a valid and binding obligation 
of the Preferred Limited Partner and the execution and delivery of, and 
performance under this Agreement does not and shall not contravene or result 
in a default under any bylaw, charter, rule, regulation, judgment or agreement 
applicable to the Preferred Limited Partner.
     
     Section 7.5    No Public Solicitation.  The Preferred Limited Partner has 
not received any public solicitation or advertisement regarding an investment 
in the Partnership and is not aware of any such public solicitation or 
advertisement.
     
     Section 7.6    Due Diligence.  The Preferred Limited Partner represents 
that it has been furnished by LOT$OFF during the course of this transaction 
with all information regarding LOT$OFF, its Affiliates, the Judgment, the 
Cause of Action, the Lawsuit and this transaction which the Preferred Limited 
Partner has requested or desired to know, and that copies of all documents 
requested have been made available for inspection and review.  The Preferred 
Limited Partner further represents that it has been afforded the opportunity 
to ask questions of and receive answers from officers of LOT$OFF and its 
Affiliates concerning LOT$OFF, its Affiliates, the Judgment, the Cause of 
Action, the Lawsuit and this transaction.

<PAGE>
                                          
                                    ARTICLE VIII
                                          
                          Tax Returns; Reports to Partners
     
     Section 8.1    Independent Accountants.  The books and records of the 
Partnership shall be reviewed as of the end of each Fiscal Year by 
independent certified accountants selected by the General Partner.
     
     Section 8.2    Filing of Tax Returns.  The General Partner shall prepare 
and file, or cause the accountants of the Partnership to prepare and file, a 
U.S. federal information tax return in compliance with Section 6031 of the 
Code and any required state and local income tax and information returns for 
each tax year of the Partnership.
     
     Section 8.3    Tax Matters Partner.  The General Partner shall be 
designated on the Partnership's annual U.S. federal information tax return as 
the tax matters partner of the Partnership (the "Tax Matters Partner") as 
provided in Section 6231(a)(7) of the Code.  In the event the Partnership 
shall be the subject of an income tax audit by any federal, state or local 
authority, to the extent the Partnership is treated as an entity for purposes 
of such audit, including administrative settlement and judicial review, the 
Tax Matters Partner shall be authorized to act for, and its decision shall be 
final and binding upon, the Partnership and each Partner thereof.  All 
expenses incurred in connection with any such audit, investigation, 
settlement or review shall be borne by the General Partner.  The General 
Partner shall promptly respond to all reasonable inquiries of any Limited 
Partner with respect to any tax matters and shall, to the extent commercially 
reasonable, use its best efforts to obtain all tax refunds to which the 
Partnership may be entitled.
     
     Section 8.4    Financial Statements: Statements of Account.  Within 
ninety (90) days after the end of each Fiscal Year, the General Partner shall 
send to each Person who was a Partner in the Partnership at any time during 
the Fiscal Year then ended a statement of assets, liabilities and Partners' 
capital as of the end of such Fiscal Year and related audited statements of 
income or loss and changes in assets, liabilities and Partners' capital.  The 
General Partner shall make available, from time to time, such information as 
may be reasonably requested by any Limited Partner.
     
     Section 8.5    Annual Reports to Partners.  Within ninety days after the 
end of each Fiscal Year, the General Partner shall prepare and mail, or cause 
the Partnership's accountants to prepare and mail, to each Partner (or such 
Partner's legal representatives), a report setting forth in sufficient detail 
such information relating to the Partnership and its activities as shall 
enable such Partner (or such Partner's legal representatives) to prepare 
their respective federal, state and local income tax returns in accordance 
with the laws, rules and regulations then prevailing.
          
                                     ARTICLE IX
                                          
                                   Miscellaneous
     
     Section 9.1    General.  This Agreement: (i) shall be binding on, and 
inure to the benefit of, the successors, permitted assigns and legal 
representatives of the Partners; and (ii) may be executed, through the use of 
separate signature pages or in any number of counterparts, with the same 
effect as if the parties executing such counterparts had all executed one 
counterpart.
     
     Section 9.2    Amendments. The terms and provisions of this Agreement 
may be modified or amended at any time and from time to time only with the 
written consent of the Limited Partners and the written consent of the 
General Partner; provided, however, the General Partner may, in its own 
discretion, amend this Agreement to reflect changes validly made in the 
composition of the Partnership in accordance with the terms of this 
Agreement. Notwithstanding any provision in this Agreement to the contrary, 
no amendment to this Agreement shall increase the liability of a Limited 
Partner.

<PAGE>

     Section 9.3    Notices.  All notices, consents, approvals and other 
communications required or permitted by this Agreement shall be in writing 
and (a) delivered by hand against receipt, (b) transmitted by telecopy with 
transmission confirmed, (c) sent by registered or certified mail, postage 
prepaid, with return receipt requested, or (d) sent by nationally-recognized 
overnight courier, postage prepaid; provided that routine communications such 
as reports and financial statements may be sent by first-class mail.  All 
notices to the Partnership and to the General Partner shall be addressed c/o 
the General Partner to the General Partner's principal office.  All notices 
addressed to a Limited Partner shall be addressed to such Partner at the 
address set forth in Schedule II. Any Partner may designate a new address by 
notice to that effect given to the Partnership.  Unless otherwise 
specifically provided in this Agreement, a notice shall be deemed to have 
been effectively given when received if received on a business day during 
normal business hours and otherwise shall be effective on the next business 
day.  Refusal to accept delivery shall be deemed to constitute delivery at 
the time so refused.
     
     Section 9.4    Headings. The titles of the Articles and the headings of 
the Sections of this Agreement are for convenience, of reference only and are 
not to be considered in constructing the terms and provisions of this 
Agreement.
     
     Section 9.5    Construction; Severability. The language in all parts of 
this Agreement shall in all cases be construed simply according to its fair 
meaning and not strictly for or against any Limited Partner or the General 
Partner.  Whenever possible, the provisions of this Agreement shall be 
interpreted in such manner as to be effective and valid under applicable law, 
but if any provision of this Agreement shall be unenforceable or invalid 
under said applicable law, such provision shall be ineffective only to the 
extent of such unenforceability or invalidity, and the remaining provisions 
of this Agreement shall continue to be binding and in full force and effect.
     
     Section 9.6    Governing Law.  This Agreement shall be governed by and 
construed in accordance with the laws of the State of Delaware applicable to 
agreements made wholly within such state, without regard to the conflict of 
law provisions thereof.
     
     Section 9.7    Confidentiality.  Except as may be required by applicable 
law or the rules of any national securities exchange or national market, none 
of the General Partner, the Common Limited Partner, LOT$OFF or any Affiliate 
thereof may issue a publicity release or announcement or otherwise make any 
public disclosure concerning this Agreement or any of the transactions 
contemplated hereby without prior approval by the Preferred Limited Partner.  
If any announcement is required by law to be made by the General Partner, the 
Common Limited Partner, LOT$OFF or any Affiliate thereof, prior to making 
such announcement, the General Partner, the Common Limited Partner, LOT$OFF 
or any Affiliate thereof, as the case may be, will deliver a draft of such 
announcement to the Preferred Limited Partner as soon as practicable after 
such draft has been prepared and shall give the Preferred Limited Partner 
sufficient opportunity (in no event to be less than one (1) business day) to 
comment thereon.
          
                    [Remainder of page intentionally left blank.] 
<PAGE>

     IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of 
the date first set forth above.

                             GENERAL PARTNER:

                             GIANT SEQUOIA CORPORATION

                             By: /s/ Charles J. Fuhrmann II
                                --------------------------------------------
                             Printed Name: Charles J. Fuhrmann II
                             Title: President and Chief Executive Officer


                             COMMON LIMITED PARTNER:

                             MOUNTAIN LAUREL CORPORATION

                             By: /s/ Joan Dobrzynski     
                                --------------------------------------------
                             Printed Name: Joan Dobrzynski
                             Title: President

                             PREFERRED LIMITED PARTNER:

                             GENERAL ELECTRIC CAPITAL CORPORATION

                             By: /s/ Timothy C. Huban            
                                --------------------------------------------
                             Printed Name: Timothy C. Huban
                             Title: Senior Vice President of Commercial Finance

<PAGE>

     LOT$OFF hereby covenants and agrees (i) to cause the General Partner to 
fulfill all of its obligations under Sections 2.8 and 3.1 of this Agreement, 
and if the General Partner fails to fulfill such obligations, to fulfill such 
obligations on behalf of the General Partner; (ii) that the representations 
and warranties of the General Partner and LOT$OFF as set forth in Article VI 
of this Agreement are joint and several; (iii) that it shall not, and shall 
cause each Affiliate to not, hold itself out, or permit itself to be held 
out, as having agreed to pay or be liable for the debts of the Partnership; 
and (iv) to prepare its financial statements in a manner that reflects (x) 
that the Judgment and the Cause of Action are owned and held by the 
Partnership and (y) the interests of the Preferred Limited Partner and of 
LOT$OFF's Affiliates in the Partnership.


                            LOT$OFF CORPORATION


                            By: /s/ Charles J. Fuhrmann II            
                                --------------------------------------------
                            Printed Name: Charles J. Fuhrmann II    
                            Title: President and Chief Executive Officer 

<PAGE>

                                                                     SCHEDULE I

                                      PARTNERS

Preferred:
                                                     Percentage of
                                       Type of   Preferred Partnership
     Name                              Interest        Interest

General Electric Capital Corporation   Limited           100%


Common:
                                                     Percentage of
                                       Type of     Common Partnership
     Name                              Interest        Interest

Mountain Laurel Corporation            Limited            99%

Giant Sequoia Corporation              General             1%

<PAGE>

                                    SCHEDULE II
                                          
                                   CONTRIBUTIONS


Name and Address                        Contribution

Common Limited Partner:

Mountain Laurel Corporation             Contribution of the
900 Market Street                       Judgment and the Cause of
Suite 200                               Action by LOT$OFF
Wilmington, Delaware 19801    
Fax: (302) 421-7378


General Partner:


Giant Sequoia Corporation               Contribution of the 
1201 Austin Highway                     Judgment and the Cause of 
Suite 116                               Action by LOT$OFF
San Antonio, Texas 78209
Fax: (210) 804-4980


Preferred Limited Partner:

General Electric Capital Corporation    $5,800,000
3379 Peachtree Road, N.E.
Suite 600
Atlanta, Georgia 30326

                                 Fax: (404) 262-9034 

<PAGE>

                                   SCHEDULE III
                                          
                             PREFERENTIAL DISTRIBUTION


If the aggregate amount of the       Then the total amount of the 
Net Proceeds is:                     Preferential Distribution is:

Less than or equal to $1.5 million                                 $0

Greater than $1.5 million but less   100% multiplied by the amount
than or equal to $11.5 million       of Net Proceeds in excess of
                                                                   $1.5 million

Greater than $11.5 million *                                       $10 million

*    In no event shall the aggregate amount of the Preferential Distribution
     made to the Preferred Limited Partner exceed $10 million.


     In the event that the entire Preferential Distribution occurs on or before
July 15, 1998, and if, and only if, the Proceeds received prior to that time
represent the entire settlement from the Judgment and/or Cause of Action, the
Net Proceeds will be disbursed as follows:

If the aggregate amount of the       Then the total amount of the 
Net Proceeds is:                     Preferential Distribution is:

Less than or equal to $1.5 million                                  $0

Greater than $1.5 million but less   100% multiplied by the amount
than or equal to $10.5 million       of Net Proceeds in excess of
                                                                    $1.5 million

Greater than $11.5 million **                                       $9   million

**   In no event shall the aggregate amount of the Preferential Distribution
made to the Preferred Limited Partner exceed $9 million.