<PAGE>   1

                 SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

                  This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Agreement") dated as of December 1, 1998 is by and between THE CREDIT STORE,
INC., a Delaware corporation (the "Borrower") and COAST BUSINESS CREDIT, a
division of Southern Pacific Bank, a California corporation ("Coast").

                             BACKGROUND INFORMATION

                  The Borrower and Coast are parties to a Loan and Security
Agreement dated as of April 30, 1998, as amended by the First Amendment to Loan
and Security Agreement dated as of September 30, 1998 (as so amended, the "Loan
Agreement"). To secure the payment of the Borrower's obligations under such
agreement, the Borrower has granted Coast a security interest in and lien upon
substantially all of its assets, including, without limitation, the Borrower's
right, title, and interest in Receivables (including the Funding II Receivables,
as defined below) and collections related thereto.

                  The Borrower and TCS Funding II, Inc., a Delaware corporation
(the "Buyer"), have entered into a Receivables Purchase Agreement (the
"Receivables Purchase Agreement") of even date herewith pursuant to which, from
time to time, the Borrower agrees to, sell, assign, transfer, set-over, and
otherwise convey to the Buyer, and the Buyer agrees to purchase from the
Borrower, all of the Borrower's right, title, and interest in, to, and under the
Conveyed Property, as defined in the Receivables Purchase Agreement (such
Conveyed Property referred to herein as the "Funding II Receivables").

                  To finance the purchase of the Funding II Receivables, the
Buyer, the Borrower, and Miller & Schroeder Investments Corporation, a Minnesota
corporation (the "Lender"), have entered into a Credit and Security Agreement
(the "Credit Agreement") of even date herewith pursuant to which the Lender
agrees to extend a term loan to the Buyer, which loan is to be secured by, among
other things, a first priority security interest in and lien upon the Funding II
Receivables.

                  As a condition precedent to disbursing the term loan under the
Credit Agreement, the Lender requires the due execution and delivery of this
Agreement by the parties hereto. Therefore, the parties hereto wish to amend the
Loan Agreement to release Coast's right, title, and/or interest in, to, or under
the Funding II Receivables and to provide for certain other changes in
circumstances and new arrangements among themselves.

                  ACCORDINGLY, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:



<PAGE>   2


                                    ARTICLE I

                                   DEFINITIONS

         1.1 Loan Agreement Definitions. Terms defined in the Loan Agreement
shall have the same meaning when used herein unless otherwise indicated.

                                   ARTICLE II

                                   AMENDMENTS

         2.1 Amendment to Section 1 of the Loan Agreement.

         (a) Section 1 of the Loan Agreement is hereby amended by adding the
following definitions to such section:

                  "Funding II Receivables" means the "Conveyed Property" as
         defined in the Receivables Purchase Agreement.

                  "Future Funding II Receivables" means all of the Funding II
         Receivables to be transferred by the Borrower to TCS Funding II after
         November 1, 1998 and arising from time to time in connection with the
         credit card accounts listed on one or more schedules delivered to Coast
         pursuant to Section 4.3 below.

                  "Initial Funding II Receivables" means any of the Funding II
         Receivables, whether now existing or hereafter arising, to be
         transferred by the Borrower to TCS Funding II and associated with the
         credit card accounts listed on Annex F hereto.

                  "TCS Funding II" means TCS Funding II, Inc., a Delaware
         corporation.

                  "Funding II Receivables Purchase Agreement" means the
         Receivables Purchase Agreement dated as of December 1, 1998 by and
         between the Borrower, as seller, and TCS Funding II, as purchaser.

         (b) The definitions of "General Intangibles" and "Receivables" stated
in Section 1 of the Loan Agreement are hereby amended by amending and restating
such definitions in their entirety to read as follows:

                  "General Intangibles" means all general intangibles of
         Borrower, whether now owned or hereafter created or acquired by
         Borrower, including, without limitation, all choses in action, causes
         of action, corporate or other business records, Deposit Accounts,
         investment property, inventions, designs, drawings, blueprints,
         patents, patent applications, trademarks and the goodwill of the
         business symbolized thereby, names, trade names, trade secrets,
         goodwill, copyrights, registrations, licenses, franchises, customer
         lists, security and other deposits, rights in all litigation presently

                                       2

<PAGE>   3

         or hereafter pending for any cause or claim (whether in contract, tort,
         or otherwise), and all judgments now or hereafter arising therefrom,
         all claims of Borrower against Coast, rights to purchase or sell real
         or personal property, rights as a licensor or licensee of any kind,
         royalties, telephone numbers, proprietary information, purchase orders,
         and all insurance policies and claims (including without limitation
         life insurance, key man insurance, credit insurance, liability
         insurance, property insurance and other insurance), tax refunds and
         claims, computer programs, discs, tapes and tape files, claims under
         guaranties, security interests or other security held by or granted to
         Borrower, all rights to indemnification and all other intangible
         property or every kind and nature (other than Receivables) excluding,
         however, the Initial Funding I Receivables and (subject to the terms of
         Section 4.3 below) any Future Funding I Receivables, the Initial
         Funding II Receivables and (subject to the terms of Section 4.5 below)
         any Future Funding II Receivables."

                  "Receivables" means all of Borrower's now owned and hereafter
         acquired accounts (whether or not earned by performance), letters or
         credit, contract rights, chattel paper, instruments, securities,
         documents, securities accounts, security entitlements, commodity
         contracts, commodity accounts, investment property and all other forms
         of obligations at any time owing to Borrower, all guaranties and other
         security therefor, all merchandise returned to or repossessed by
         Borrower, and all rights of stoppage in transit and all other rights or
         remedies of an unpaid vendor, lienor or secured party; excluding,
         however, the Initial Funding I Receivables and (subject to the terms of
         Section 4.3 below) any Future Funding I Receivables, the Initial
         Funding II Receivables and (subject to the terms of Section 4.5 below)
         any Future Funding II Receivables."

         2.2      Amendment to Section 4 of the Loan Agreement.

         (a) Section 4.1 of the Loan Agreement is hereby amended by amending the
final parenthetical clause of such section to read as follows: "(all of the
foregoing, together with all other property in which Coast may now or in the
future be granted a lien or security interest, excluding, however, the Initial
Funding I Receivables, the Initial Funding II Receivables and (subject to the
terms of Sections 4.3 and 4.5, respectively, below) any Future Funding I
Receivables and any Future Funding II Receivables, is referred to herein,
collectively, as the `Collateral')."

         (b) The Loan Agreement is hereby further amended by adding the
following new sections after Section 4.3 thereof:

                           4.4 RELEASE OF INITIAL FUNDING II RECEIVABLES. Coast
                  hereby (i) releases any and all right, title, and interest
                  Coast may have or hereafter acquire in the Initial Funding II
                  Receivables and (ii) consents to any sale, assignment,
                  transfer, or conveyance of, or granting of a security interest
                  in, the Initial Funding II Receivables by the Borrower to TCS
                  Funding II pursuant to the terms of the Receivables Purchase
                  Agreement. On or before the date of

                                       3

<PAGE>   4

                  transfer of the Initial Funding II Receivables, Coast agrees
                  to promptly take all further action, and to promptly execute
                  and deliver any UCC releases, confirmatory letters, and/or any
                  other document, reasonably required by the Borrower (at the
                  Borrower's expense) to effect, evidence, complete, and/or
                  confirm Coast's release of the Initial Funding II Receivables.

                           4.5 RELEASE OF FUTURE FUNDING II RECEIVABLES. Coast
                  hereby further (i) agrees to release from time to time, any
                  and all right, title, and interest Coast may have or hereafter
                  acquire in the Future Funding II Receivables and (ii) consents
                  to any sale, assignment, transfer, or conveyance of, or
                  granting of a security interest in, the Future Funding II
                  Receivables, from time to time, by the Borrower to TCS Funding
                  II pursuant to the terms of the Receivables Purchase
                  Agreement, subject to each of the following conditions: (a) no
                  Default or Event of Default shall have occurred and be
                  continuing at the time of, and after giving effect to, such
                  release and (b) the Borrower shall have delivered to Coast a
                  schedule identifying the credit card accounts with which such
                  Future Funding II Receivables are associated and a certificate
                  to the effect that after giving effect to the release of such
                  Future Funding II Receivables, the outstanding Loans will not
                  exceed the Credit Limit. On or before the date of transfer of
                  any Future Funding II Receivables, Coast agrees to promptly
                  take all further action, and to promptly execute any UCC
                  releases (including, without limitation, UCC releases in the
                  form of Annex A hereto), confirmatory letters, and/or any
                  other document, reasonably required by the Borrower (at the
                  Borrower's expense) to effect, evidence, complete, and/or
                  confirm Coast's release of such Future Funding II Receivables.

         2.3 Amendment to Section 8.5(c) of the Loan Agreement. Section 8.5(c)
of the Loan Agreement is hereby amended by restating such subsection in its
entirety to read as follows:

                  "(c) make any investment, equity contribution, loan or other
         transfer to any subsidiary or any other affiliate except for dividends
         or distributions permitted under Section 8.5(k) hereof and except for
         (i) loans or capital contributions of up to $25,000 per month by
         Borrower to Borrower's subsidiary Sleepy Hollow Associates, Inc., (ii)
         loans or capital contributions to TCS Funding I in connection with the
         Funding I Receivables Purchase Agreement, and (iii) loans or capital
         contributions to TCS Funding II in connection with the Funding II
         Receivables Purchase Agreement; provided, however, Borrower may enter
         into joint ventures, reasonably acceptable to Coast, and may contribute
         services to joint ventures (or enter into service agreements with joint
         ventures), so long as Borrower does not make an investment equity
         contribution or commingle the collections of Receivables;"

         2.4 Addition of Annex A to the Loan Agreement. The Loan Agreement is
hereby Amended by adding Annex A hereto as Annex B to the Loan Agreement.

                                       4

<PAGE>   5

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties. Each of the parties hereto
represents and warrants to the other party that (a) it is duly organized and
existing in good standing under the laws of its jurisdiction of organization and
has full power and authority to make and deliver this Agreement, (b) the
execution, delivery, and performance of this Agreement have been duly authorized
by all necessary action and do not and will not violate the provisions of, or
constitute a default under, any presently applicable law or its organizational
documents or any agreement presently binding on it, (c) this Agreement has been
duly executed and delivered by its duly authorized attorney-in-fact, officer, or
member, as the case may be, and constitutes the lawful, binding, and legally
enforceable agreement and obligation of such party, and (d) the authorization,
execution, delivery, and performance of this Agreement do not require
notification to, registration with, or consent or approval by, any federal,
state, province, or local regulatory body or administrative agency.

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.1 Ratification. As amended hereby, the Loan Agreement is hereby
ratified, approved, and confirmed in every respect, and shall remain in full
force and effect.

         4.2 Further Assurances. The parties hereto agree to do and perform,
from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the other party to this
Agreement to more fully effect the purposes of this Agreement and the amendments
and modifications contained herein, including, without limitation, the execution
of any financing statements or continuation statements or releases or amendments
to financing statements or equivalent documents relating to the Funding II
Receivables for filing under the provisions of the Uniform Commercial Code as
enacted in any applicable jurisdiction or other laws of any applicable
jurisdiction.

         4.3 Execution in Counterparts and by Facsimile. This Agreement may be
executed in any number of counterparts (including facsimile counterparts) and by
the different parties on separate counterparts, each of which when so executed
and delivered shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same instrument.

         4.4 Costs and Expenses. The Borrower agrees to pay all costs and
expenses in connection with the negotiation, preparation, execution, delivery,
and administration of this Agreement and any and all other documents furnished
in connection with the execution and delivery of this Agreement, including
reasonable attorneys' fees and expenses.

                                       5

<PAGE>   6

         4.5 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws (without regard to the conflict of laws
provisions) of the State of California.




                            (Signature Page Follows)


                                       6

<PAGE>   7


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

THE CREDIT STORE, INC.


By  /s/  Michael J. Philippe
   --------------------------------
   Its   CFO
        ---------------------------



COAST BUSINESS CREDIT,
a division of Southern Pacific Bank


By  [Illegible]
   --------------------------------
   Its   VP
        ---------------------------






        (Signature Page 1 of 1 to the Second Amendment to Loan Agreement)