Exhibit 10.14


                              AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

                          Dated as of January 27, 1998

                                      Among

                        BANKAMERICA BUSINESS CREDIT, INC.

                                  as the Lender

                                       and

                      THE GREAT TRAIN STORE PARTNERS, L.P.

                                 as the Borrower

                                       and

                          THE GREAT TRAIN STORE COMPANY

                                GTS PARTNER, INC.

                            GTS LIMITED PARTNER, INC.

                    as members of the GTS Consolidated Group


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                                TABLE OF CONTENTS

                                                                          Page


1.       DEFINITIONS..........................................................1
         Account  1
         Account Debtor.......................................................1
         Adjusted Net Earnings from Operations................................2
         Affiliate............................................................2
         Affiliate Guaranties.................................................2
         Anniversary Date.....................................................2
         Applicable Inventory Advance Rate....................................2
         Availability.........................................................3
         Available Development Capital........................................3
         Average Eligible Inventory...........................................4
         Bank.................................................................4
         Borrowing............................................................4
         Business Day.........................................................4
         Capital Adequacy Regulation..........................................5
         Capital Expenditures.................................................5
         Capital Lease........................................................5
         Closing Date.........................................................5
         Closing Fee..........................................................5
         Code.................................................................5
         Collateral...........................................................5
         Contaminant..........................................................5
         Debt.................................................................5
         Distribution.........................................................6
         DOL..................................................................6
         Dollar...............................................................6
         EBITDA...............................................................6
         ECO/Marshall Debt....................................................6
         Eligible Inventory...................................................6
         Environmental Compliance Reserve.....................................7
         Environmental Laws...................................................7
         Environmental Lien...................................................7
         ERISA................................................................7
         ERISA Affiliate......................................................7
         ERISA Event..........................................................7
         Event................................................................8
         Event of Default.....................................................8
         Existing Store Locations.............................................8
         Facility Fee.........................................................8
         Financed Capital Expenditures........................................8
         Financial Statements.................................................8
         Fiscal Year..........................................................8
         Fixed Charges........................................................8
         Funding Date.........................................................8
         GAAP.................................................................8
         GTS Consolidated Group...............................................8
         Guaranty.............................................................9
         Holiday Stores.......................................................9
         Intercompany Accounts................................................9
         Interest Period......................................................9
         Inventory............................................................9
         Investment Property.................................................10
         IRS.................................................................10
         Latest Projections..................................................10
         Letter of Credit....................................................10
         Letter of Credit Fee................................................10
         LIBOR Interest Payment Date.........................................10
         LIBOR Interest Rate Determination Date..............................10
         LIBOR Rate..........................................................10
         LIBOR Revolving Loan................................................11
         Lien................................................................11
         Loans...............................................................11
         Loan Documents......................................................11
         Multiemployer Plan..................................................11
         New Store Equipment Financing.......................................12
         New Store Opening...................................................12
         New Store Opening Costs.............................................12
         New Store Locations.................................................12
         Notice of Borrowing.................................................12
         Notice of Conversion/Continuation...................................12
         Obligations.........................................................12
         Other Taxes.........................................................12
         Parent..............................................................12
         Parent Guaranty.....................................................12
         Participating Lender................................................13
         Patent and Trademark Assignment.....................................13
         Payment Account.....................................................13
         PBGC................................................................13
         Pension Plan........................................................13
         Permitted Debt......................................................13
         Permitted Distributions.............................................13
         Permitted Liens.....................................................13
         Person..............................................................14
         Plan................................................................14
         Premises............................................................14
         Proceeds............................................................14
         Property............................................................14
         Proprietary Rights..................................................14
         Public Authority....................................................15
         Receivables.........................................................15
         Reference Rate......................................................15
         Reference Rate Revolving Loans......................................15
         Reportable Event....................................................15
         Requirement of Law..................................................15
         Restricted Investment...............................................16
         Reversions..........................................................16
         Revolving Loans.....................................................16
         Security Interest...................................................16
         Solvent.............................................................16
         Stated Termination Date.............................................17
         Subordinated Debt...................................................17
         Subsidiary..........................................................17
         Taxes...............................................................17
         Total Facility......................................................17
         Triggering Event....................................................17
         UCC.................................................................17
         Unused Line Fee.....................................................17
         Accounting Terms....................................................17
         Other Terms.........................................................17
         1.2      Interpretive Provisions....................................18

2.       LOANS AND LETTERS OF CREDIT.........................................18
         2.1      Total Facility.............................................18
         2.2      Revolving Loans............................................19
         2.3      Letters of Credit..........................................20

3.       INTEREST AND OTHER CHARGES..........................................24
         3.1      Interest...................................................24
         3.2      Conversion and Continuation Elections.... .................25
         3.3      Maximum Interest Rate......................................26
         3.4      Facility Fee...............................................26
         3.5      Closing Fee................................................26
         3.6      Letter of Credit Fee.......................................27

4.       PAYMENTS AND PREPAYMENTS............................................27
         4.1      Revolving Loans............................................27
         4.2      Place and Form of Payments:  Extension of Time.............27
         4.3      Application and Reversal of Payments.......................27
         4.4      INDEMNITY FOR RETURNED PAYMENTS............................27

5.       LENDER'S BOOKS AND RECORDS: MONTHLY STATEMENTS......................28

6.       TAXES, YIELD PROTECTION AND ILLEGALITY..............................28
         6.1      Taxes......................................................28
         6.2      Illegality.................................................29
         6.3      Increased Costs and Reduction of Return....................29
         6.4      Funding Losses.............................................30
         6.5      Inability to Determine Rates...............................30
         6.6      Survival...................................................31

7.       COLLATERAL..........................................................31
         7.1      Grant of Security Interest.................................31
         7.2      Perfection and Protection of Security Interest.............31
         7.3      Location of Collateral.....................................32
         7.4      Title to, Liens on, and Sale and Use of Collateral.........33
         7.5      Appraisals.................................................33
         7.6      Access and Examination.....................................33
         7.7      Insurance..................................................33
         7.8      Collateral Reporting.......................................34
         7.9      Accounts...................................................34
         7.10     Collection of Accounts: Payments...........................35
         7.11     Inventory..................................................36
         7.12     RESERVED...................................................36
         7.13     RESERVED...................................................36
         7.14     Documents, Instruments, and Chattel Paper..................36
         7.15     Right to Cure..............................................36
         7.16     Power of Attorney..........................................37
         7.17     Lender's Rights, Duties, and Liabilities...................37

8.       BOOKS AND RECORDS: FINANCIAL INFORMATION: NOTICE....................38
         8.1      Books and Records..........................................38
         8.2      Financial Information......................................38
         8.3      Notices to Lender..........................................40

9.       GENERAL WARRANTIES AND REPRESENTATIONS..............................41
         9.1      Authorization, Validity, and Enforceability of 
                    this Agreement and the Loan Documents....................41
         9.2      Validity and Priority of Security Interest.................42
         9.3      Organization and Qualification.............................42
         9.4      Corporate Name; Prior Transactions.........................42
         9.5      Subsidiaries and Affiliates................................42
         9.6      Financial Statements and Projections.......................42
         9.7      Capitalization.............................................43
         9.8      Solvency...................................................43
         9.9      Debt.......................................................43
         9.10     Distributions..............................................43
         9.11     Title to Property..........................................43
         9.12     Adequate Assets............................................43
         9.13     Real Property; Leases......................................44
         9.14     Proprietary Rights.........................................44
         9.15     Trade Names and Terms of Sale..............................44
         9.16     Litigation.................................................44
         9.17     Restrictive Agreements.....................................44
         9.18     Labor Disputes.............................................44
         9.19     Environmental Laws.........................................45
         9.20     No Violation of Law........................................45
         9.21     No Default.................................................45
         9.22     ERISA Compliance...........................................45
         9.23     Taxes......................................................46
         9.24     Use of Proceeds............................................46
         9.25     Private Offerings..........................................46
         9.26     Broker's Fees..............................................46
         9.27     No Material Adverse Change.................................46
         9.28     Disclosure.................................................47

10.      AFFIRMATIVE AND NEGATIVE COVENANTS..................................47
         10.1     Taxes and Other Obligations................................47
         10.2     Existence and Good Standing................................47
         10.3     Compliance with Law and Agreements.........................47
         10.4     Maintenance of Property and Insurance......................47
         10.5     Environmental Laws.........................................48
         10.6     ERISA......................................................48
         10.7     Mergers, Consolidations, Acquisitions, or Sales............48
         10.8     Distributions; Capital Changes.............................48
         10.9     Transactions Affecting Collateral or Obligations...........48
         10.10    Guaranties.................................................48
         10.11    Debt.......................................................48
         10.12    Prepayment.................................................48
         10.13    Transactions with Affiliates...............................49
         10.14    Business Conducted.........................................49
         10.15    Liens......................................................49
         10.16    New Store Equipment Financing..............................49
         10.17    New Subsidiaries...........................................49
         10.18    Restricted Investments.....................................49
         10.19    Capital Expenditures.......................................49
         10.20    Fixed Charge Coverage Ratio................................49
         10.21    New Store Openings.........................................50
         10.22    EBITDA.....................................................50
         10.23    Further Assurances.........................................50

11.      CLOSING; CONDITIONS TO CLOSING......................................50
         11.1     Conditions Precedent to Making of Loans on the 
                    Closing Date.............................................51
         11.2     Conditions Precedent to Each Loan..........................51

12.      DEFAULT; REMEDIES...................................................52
         12.1     Events of Default..........................................52

13.      REMEDIES............................................................54

14.      TERM AND TERMINATION................................................55

15.      MISCELLANEOUS.......................................................56
         15.1     Cumulative Remedies; No Prior Recourse to Collateral.......56
         15.2     No Implied Waivers.........................................56
         15.3     Severability...............................................56
         15.4     GOVERNING LAW..............................................56
         15.5     Consent to Jurisdiction and Venue; Service of Process......56
         15.6     Waiver of Jury Trial.......................................57
         15.7     Survival of Representations and Warranties.................57
         15.8     Other Security and Guaranties..............................57
         15.9     Fees and Expenses..........................................57
         15.10    Notices....................................................58
         15.11    Indemnification............................................59
         15.12    Waiver of Notices..........................................60
         15.13    Binding Effect; Assignment.................................60
         15.14    NO ORAL AGREEMENTS; ENTIRE AGREEMENT.......................60
         15.15    Counterparts...............................................61
         15.16    Captions...................................................61
         15.17    Right of Set-Off...........................................61
         15.18    Participating Lender's Security Interests..................61
         15.19    AMENDMENT AND RESTATEMENT..................................61

<PAGE>

         AMENDED AND RESTATED LOAN AND SECURITY  AGREEMENT,  dated as of January
27,  1998,  by  and  between  BANKAMERICA  BUSINESS  CREDIT,  INC.,  a  Delaware
corporation,  with  offices  at 231 S.  LaSalle  Street,  16th  Floor,  Chicago,
Illinois  60697 (the  "Lender")  and THE GREAT TRAIN  STORE  PARTNERS,  L.P.,  a
Missouri limited partnership,  with offices at 14180 Dallas Parkway,  Suite 618,
Dallas,  Texas 75240 (the  "Borrower"),  and THE GREAT TRAIN STORE COMPANY,  GTS
PARTNER,  INC., and GTS LIMITED PARTNER, INC. as members of the GTS Consolidated
Group.

                               W I T N E S S E T H

         WHEREAS, on June 7, 1996 BankOne,  Texas, N.A. ("BankOne") entered into
a Loan and Security  Agreement  (the  "BankOne Loan  Agreement")  with The Great
Train Store Partners,  L.P. as "Borrower" and The Great Train Store Company, GTS
Partner,  Inc., GTS Limited Partner, Inc., who, along with Borrower, are members
of the "Debtor Group"; and

         WHEREAS,  the BankOne Loan Agreement as amended by the First  Amendment
to Loan and  Security  Agreement  dated as of March 19,  1997 and by the  Second
Amendment to Loan and Security  Agreement  dated as of July 29, 1997 is referred
to herein as the "Original  Loan  Agreement"  and all  documents and  agreements
executed  in  connection  therewith  are  referred  to  as  the  "Original  Loan
Documents"; and

         WHEREAS,  BankOne has agreed to assign its right, title and interest in
and to the Original Loan  Agreement  and the Original Loan  Documents to Lender,
and Lender has  agreed to accept  such  assignment  and to  continue  to provide
Borrower with a working capital facility; and

         WHEREAS, the Borrower has requested the Lender to make available to the
Borrower a revolving line of credit for loans and letters of credit in an amount
not to exceed  $15,000,000.00.  which extensions of credit the Borrower will use
for its working capital needs and general business purposes;

         NOW,   THEREFORE,   in  consideration  of  the  mutual  conditions  and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged,  the Borrower and the Lender hereby
agree as follows:

1.   DEFINITIONS.  As used herein:

     "Account"  means the right to payment  for a sale or lease and  delivery of
goods or rendition of services by Borrower or any member of the GTS Consolidated
Group.

     "Account Debtor" means each Person obligated in any way on or in connection
with an Account.

<PAGE>

     "Adjusted Net Earnings from Operations"  means,  with respect to any fiscal
period of the Borrower,  the GTS Consolidated Group's net income after provision
for income taxes for such fiscal period,  as determined in accordance  with GAAP
and reported on the Financial  Statements  for such period,  less any and all of
the  following  included in such net income:  (a) gain or loss  arising from the
sale of any capital asset;  (b) gain arising from any write-up in the book value
of any asset; (c) earnings of any corporation,  substantially  all the assets of
which  have been  acquired  by any member of the GTS  Consolidated  Group in any
manner,  to the extent realized by such other  corporation  prior to the date of
acquisition;  (d) earnings of any business entity in which any member of the GTS
Consolidated  Group has an  ownership  interest  unless (and only to the extent)
such  earnings  shall  actually  have  been  received  by any  member of the GTS
Consolidated Group in the form of cash distributions; (e) earnings of any Person
to which  assets of any  member of the GTS  Consolidated  Group  shall have been
sold,  transferred  or  disposed  of,  or  into  which  any  member  of the  GTS
Consolidated  Group shall have been  merged,  or which has been a party with any
member  of the GTS  Consolidated  Group to any  consolidation  or other  form of
reorganization, prior to the date of such transaction; (f) gain arising from the
acquisition of debt or equity  securities of any member of the GTS  Consolidated
Group or from  cancellation  or  forgiveness  of Debt; and (g) gain arising from
extraordinary  items,  as determined in accordance  with GAAP, or from any other
nonrecurring transaction.

     "Affiliate" means: (a) a Person which, directly or indirectly, controls, is
controlled by or is under common control with, the Borrower;  (b) a Person which
beneficially owns or holds, directly or indirectly,  five percent or more of any
class of voting stock of the Borrower;  or (c) a Person in which five percent of
any  class of the  voting  stock is  beneficially  owned  or held,  directly  or
indirectly, by the Borrower. The term "control" (including the terms "controlled
by" and  "under  common  control  with"),  means  the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies of the Person in question.

     "Affiliate  Guaranties" means the Guaranties of the Obligations made by the
Affiliates  identified  on  Schedule  8.5  hereto  in  favor of the  Lender  and
delivered to the Lender pursuant to Section 10.2.

     "Anniversary Date" means each anniversary of the Closing Date.

     "Applicable Inventory Advance Rate" means:

     (i) fifty  percent  (50%) during the period  beginning the last day of each
Fiscal Year through and including January 31 of each year; and

     (ii) sixty percent (60%) during the period  beginning on February 1 through
and  including  the day  preceding  the last day of each Fiscal Year;  provided,
however, that as long as Borrower's Availability during the entire month of June
in each Fiscal Year is at least $1,250,000 after taking into  consideration  all
then  outstanding  Revolving  Loans and Letters of Credit,  then the  Applicable
Inventory Advance Rate shall be increased as follows:

                  (x)  seventy-five  percent  (75%) during the period  beginning
         August 1 through and  including  the day preceding the last day of each
         Fiscal  Year with  respect  to  Inventory  located  at  Existing  Store
         Locations and Holiday Stores;

<PAGE>

                  (y) one hundred  percent  (100%)  during the period  beginning
         August 1 through and  including  the day preceding the last day of each
         Fiscal Year with respect to Inventory located at New Store Locations.

In no event shall the Loans and Letters of Credit  outstanding  exceed an amount
that would be permitted to be outstanding if the  Availability  were  calculated
using an advance rate of eighty-five percent (85%).

     "Availability" means at any time the lesser of:

                  (a) The amount of Ten Million and No/100 Dollars ($10,000,000)
from the Closing Date through and including July 31, 1998,  and Fifteen  Million
and No/100  Dollars  ($15,000,000)  thereafter  (the "Maximum  Revolving  Credit
Line") or

                  (b) the  value  of  Eligible Inventory  multiplied  by   the 
Applicable Inventory Advance Rate;

                  provided,  however, that at all  times  Availability shall be 
reduced by the sum of:

                  (a) the unpaid balance of Revolving Loans  at that time;

                  (b) the    aggregate    undrawn   face   amount  of  all  
outstanding  Letters  of  Credit  which  the Lender  has caused to be issued or 
obtained for the Borrower's account;

                  (c)  reserves for accrued interest on the Revolving Loans;

                  (d)  the Environmental Compliance Reserve; and

                  (e) all  other  reserves  which the  Lender in its  reasonable
discretion  deems  necessary  or  desirable  to  maintain  with  respect  to the
Borrower's account, including,  without limitation, any amounts which the Lender
may be obligated to pay in the future for the account of the Borrower.

         "Available  Development Capital" means the following,  in each instance
calculated as of the end of each fiscal quarter of Borrower:

         A.       The sum of:

                           (i)  Borrower's  existing cash on hand  regardless of
                  the source of such cash,  including,  but not  limited to, net
                  proceeds from New Store  Equipment  Financing  and  additional
                  equity contributions, plus

<PAGE>

                           (ii)  sixty  percent  (60%) of the  Average  Eligible
                  Inventory multiplied by the number of Existing Store Locations
                  plus New Store Locations; LESS

         B.       The sum of:

                           (i)    $8,000  multiplied  by the number of Existing 
                  Store Locations plus the number of New  Store Locations; plus

                           (ii)   the unpaid  balance of  Revolving Loans,  and 
                  all issued and outstanding  Letters of Credit at that time, if
                  any; plus

                           (iii)  the  aggregate  amount of all  trade payables 
                  which exceed normal trade terms, if any; plus

                           (iv)  EBITDA  projected  from the end of such  fiscal
                  quarter  through  the fiscal  month of October of such  Fiscal
                  Year. It is  understood  that all such  projections  are to be
                  based on  conservative  assumptions  (e.g.  historical  actual
                  comparative  store  sales,  store  operating   expenses,   and
                  selling,  general and administrative  expenses,  adjusted only
                  for current trends and specific expected future events); plus

                           (v)  Fixed  Charges  projected  from  the end of such
                  fiscal  quarter  through the fiscal month ending in October of
                  such Fiscal Year.

     "Average  Eligible  Inventory" means (i) Eligible  Inventory at all stores,
other than  Holiday  Stores,  for the  period  beginning  January 1 through  and
including July 31 during the prior Fiscal Year divided by (ii) the number of all
such stores.

     "Bank" means Bank of America National Trust and Savings  Association in San
Francisco, California.

     "Borrowing"  means a borrowing  hereunder  consisting of Revolving Loans by
the Lender to the Borrower.

     "Business Day" means (a) any day that is not a Saturday,  Sunday,  or a day
on which banks in San  Francisco,  California,  are  required or permitted to be
closed,  and (b) with  respect  to all  notices,  determinations,  fundings  and
payments in connection  with the LIBOR Rate or LIBOR  Revolving  Loans,  any day
that is a Business  Day  pursuant  to clause (a) above and that is also a day on
which trading is carried on by and between banks in the London interbank market.

     "Capital Adequacy Regulation" means any guideline,  request or directive of
any  central  bank  or  other  Public  Authority,  or any  other  law,  rule  or
regulation,  whether  or not having  the force of law,  in each case,  regarding
capital adequacy of any bank or of any corporation controlling a bank.

<PAGE>

     "Capital  Expenditures"  means all  payments  due  (whether or not paid) as
determined in accordance with GAAP,  during a Fiscal Year in respect of the cost
of any fixed asset or  improvement,  or replacement,  substitution,  or addition
thereto,  which  has a useful  life of more than one  year,  including,  without
limitation,  those arising in connection with the direct or indirect acquisition
of such assets by way of increased product or service charges or offset items or
in connection with Capital Leases.

     "Capital  Lease"  means any lease of  Property  by the  Borrower  that,  in
accordance with GAAP, should be reflected as a liability on the balance sheet of
the Borrower.

     "Closing Date" means the date of this Agreement, being the date first above
written.

     "Closing Fee" has the meaning specified in Section 3.4.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Collateral" has the meaning given to such term in Section 7.1.

     "Contaminant"  means  any  waste,  pollutant,  hazardous  substance,  toxic
substance,  hazardous  waste,  special  waste,  petroleum  or  petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or other substance or material,  the handling,  release, or possession
of  which is  regulated  to  protect  health,  safety,  or  environment,  or any
constituent of any such substance or waste.

     "Debt" means all liabilities,  obligations and indebtedness of the Borrower
to any Person, of any kind or nature,  now or hereafter owing,  arising,  due or
payable,  howsoever  evidenced,  created,  incurred,  acquired or owing, whether
primary,  secondary,  direct,  contingent,  fixed or otherwise,  and  including,
without in any way limiting the generality of the foregoing:  (a) the Borrower's
liabilities and obligations to trade  creditors;  (b) all  Obligations;  (c) all
obligations  and liabilities of any Person secured by any Lien on the Borrower's
Property,  even though the Borrower  shall not have assumed or become liable for
the  payment  thereof;   provided,   however,  that  all  such  obligations  and
liabilities  which are limited in recourse to such Property shall be included in
Debt only to the extent of the book value of such  Property as would be shown on
a balance  sheet of the  Borrower  prepared  in  accordance  with GAAP;  (d) all
obligations  or  liabilities  created  or  arising  under any  Capital  Lease or
conditional  sale or other title  retention  agreement  with respect to Property
used or acquired by the Borrower, even if the rights and remedies of the lessor,
seller or lender  thereunder  are  limited  to  repossession  of such  Property;
provided,  however,  that all such obligations and liabilities which are limited
in recourse to such Property shall be included in Debt only to the extent of the
book value of such Property as would be shown on a balance sheet of the Borrower
prepared  in  accordance  with  GAAP;  (e) all  accrued  pension  fund and other
employee  benefit plan  obligations  and  liabilities;  (f) all  obligations and
liabilities under Guaranties; and (g) deferred taxes.

     "Distribution"  means,  in respect of any  corporation:  (a) the payment or
making of any dividend or other  distribution  of Property in respect of capital
stock of such corporation, other than distributions in capital stock of the same
class;  or (b) the redemption or other  acquisition of any capital stock of such
corporation.

     "DOL"  means  the  United  States  Department  of  Labor  or any  successor
department or agency.

<PAGE>

     "Dollar" and "$" means dollars in the lawful currency of the United States.


     "EBITDA" means with respect to the GTS Consolidated  Group, for any period,
Adjusted Net Earnings from  Operations,  plus the sum of (i) interest  expenses,
whether paid or accrued,  (ii)  depreciation,  (iii)  amortization,  (iv) income
taxes  paid or  accrued  with  respect to such  period,  and (v) other  non-cash
expenses  (including,  without  limitation,  amortization of goodwill,  deferred
financing fees, LIFO reserve  adjustments  and other  intangibles),  each to the
extent  deducted in determining  Adjusted Net Earnings from  Operations for that
period,  less  non-cash  income  included in the  calculation  of  Adjusted  Net
Earnings  from  Operations  for that  period;  and plus or minus the  adjustment
needed to state rental  expense on a cash paid or payable  basis with respect to
such period.

         "ECO/Marshall Debt" means all Debt owed by Borrower: (i) to ECO Leasing
Corp. under five (5) leases entered into by and between Borrower and ECO Leasing
Corp. dated April 1, 1995, May 24, 1995,  September 15, 1995, April 11, 1996 and
April  12,  1996;  and  (ii) to  Marshall's  Train  Depot,  Inc.  pursuant  to a
Promissory  Note dated  November  3, 1996 in the  original  principal  amount of
$115,137.80.

     "Eligible  Inventory"  means Borrower's  Inventory,  valued at the lower of
cost or market,  that  constitutes  first quality  merchandise  held for sale or
resale and that: (a) is not, in the Lender's reasonable  opinion,  "slow moving"
(i.e.  Inventory  for which  Borrower  has more than 52 weeks of sales on hand),
obsolete or  unmerchantable,  or produced in violation of the Federal Fair Labor
Standards Act of 1938, as amended; (b) is located at Premises owned or leased by
the  Borrower  or on Premises  otherwise  reasonably  acceptable  to the Lender,
provided,  however,  that Inventory  located on Premises  leased to the Borrower
shall not be Eligible  Inventory unless the Borrower shall have delivered to the
Lender a written waiver, duly executed on behalf of the appropriate landlord and
in form and substance  acceptable to the Lender, of all Liens which the landlord
for such Premises may be entitled to assert against such Eligible Inventory; (c)
is subject to the Lender's first priority perfected  security  interest;  (d) is
not  packaging  and  shipping  materials,  supplies,   bill-and-hold  Inventory,
returned or  defective  Inventory,  or  Inventory  delivered  to the Borrower on
consignment;  and (e) the Lender, in the exercise of its reasonable  discretion,
deems  eligible as the basis for Revolving  Loans based on such  collateral  and
credit criteria as the Lender may from time to time establish.  If any Inventory
at any time ceases to be Eligible  Inventory,  such Inventory  shall promptly be
excluded from the calculation of Eligible Inventory.

     "Environmental Compliance Reserve" means all reserves which the Lender from
time to time establishes for amounts that are reasonably required to be expended
in order for the Borrower and the  Borrower's  operations and Property to comply
with  Environmental Laws or in order to correct any violation by the Borrower or
the Borrower's operations or Property of Environmental Laws.

<PAGE>

     "Environmental  Laws"  means all  federal,  state and  local  laws,  rules,
regulations, ordinances, programs, permits, guidance, orders and consent decrees
relating to health,  safety,  hazardous  substances,  and environmental  matters
applicable to the Borrower's  business and  facilities  (whether or not owned by
it).  Such laws and  regulations  include  but are not  limited to the  Resource
Conservation  and  Recovery  Act, 42 U.S.C.  ss. 6901 et seq.,  as amended;  the
Comprehensive  Environmental  Response Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., as amended;  the Toxic  Substances  Control Act, 15 U.S.C. ss.
2601 et seq.,  as amended;  the Clean Water Act, 33 U.S.C.  ss. 466 et seq.,  as
amended;  the Clean Air Act, 42 U.S.C.  ss. 7401 et seq., as amended;  state and
federal  lien  and  environmental  cleanup  programs;  and  U.S.  Department  of
Transportation regulations.

     "Environmental  Lien" means a Lien in favor of any Public Authority for (a)
any liability  under any  Environmental  Laws,  or (b) damages  arising from, or
costs incurred by such Public  Authority in response to, a Release or threatened
Release of a Contaminant into the environment.

     "ERISA"  means the Employee  Retirement  Income  Security Act of 1974.,  as
amended.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
under common  control with the Borrower  within the meaning of Section 414(b) or
(c) of the  Code  (and  Sections  414(m)  and (o) of the Code  for  purposes  of
provisions relating to Section 412 of the Code).

     "ERISA Event" means,  with respect to the Borrower,  any ERISA Affiliate or
any Pension  Plan,  the  occurrence  of any of the  following:  (a) a Reportable
Event;  (b) a withdrawal by a  substantial  employer (as defined in Section 4001
(a)(12)  of  ERISA)  subject  to  Section  4063 of  ERISA;  (c) a  cessation  of
operations  which is treated as a withdrawal under Section 4062(e) of ERISA; (d)
a complete  or partial  withdrawal  under  Section  4203 or 4205 of ERISA from a
Multiemployer  Plan;  (e)  a  notification  that  a  Multiernployer  Plan  is in
reorganization under Section 4242 of ERISA; (f) the filing of a notice of intent
to  terminate  a Pension  Plan  under  4041 of ERISA;  (g) the  treatment  of an
amendment  of a Pension  Plan as a  termination  under  4041 of  ERISA;  (h) the
termination  of a  Multiemployer  Plan  under  Section  4041A of ERISA;  (i) the
commencement  of  proceedings by the PBGC to terminate a Pension Plan under 4042
of ERISA;  (j) an event or  condition  which  could  reasonably  be  expected to
constitute  grounds under Section 4042 of ERISA for the  termination  of, or the
appointment of a trustee to administer, a Pension Plan; or (k) the imposition of
any  liability  under Title IV of ERISA,  other than PBGC  premiums  due but not
delinquent under Section 4007 of ERISA.

     "Event"  means any event or condition  which,  with notice,  the passage of
time, the happening of any other condition or event, or any combination thereof,
would constitute an Event of Default.

     "Event of Default" has the meaning specified in Section 12.1.

     "Existing Store Locations" means, as of the date of  determination,  all of
Borrower's  stores which are currently opened and operated but excluding (i) the
Holiday Stores and (ii) New Store Locations.

     "Facility Fee" has the meaning specified in Section 3.4.

     "Financed  Capital  Expenditures"  means Capital  Expenditures  financed by
either Available  Development  Capital or New Store Equipment Financing or other
Permitted Debt.

     "Financial Statements" means, according to the context in which it is used,
the financial  statements  attached  hereto as Exhibit D-1, and the  projections
attached hereto as Exhibit D-2 or any financial  statements required to be given
to the Lender  pursuant to Section  8.2(a),  (b),  and (c),  or any  combination
thereof.

<PAGE>

     "Fiscal Year" means the  Borrower's  fiscal year for  financial  accounting
purposes. The current Fiscal Year of the Borrower will end on January 2, 1999.

     "Fixed  Charges"  means the sum of interest  expense and income  taxes plus
scheduled  principal  payments  on Debt  for  borrowed  money  (other  than  the
Revolving  Loans)  plus  Capital   Expenditures  (other  than  Financed  Capital
Expenditures)  plus all  Distributions  (other than certain  "designated  equity
offering proceeds"), in each instance with respect to the applicable period.

     "Funding Date" means the date on which a Borrowing occurs.

     "GAAP"  means  at  any  particular  time  generally   accepted   accounting
principles as in effect at such time.

     "GTS Consolidated Group" means Borrower, Parent, GTS Partner, Inc., and GTS
Limited Partner, Inc.

     "Guaranty" by any Person means all  obligations of such Person which in any
manner  directly or indirectly  guarantee or assure,  or in effect  guarantee or
assure,  the  payment or  performance  of any  indebtedness,  dividend  or other
obligation of any other Person (the "guaranteed  obligations"),  or to assure or
in effect  assure  the  holder of the  guaranteed  obligations  against  loss in
respect thereof,  including,  without limitation,  any such obligations incurred
through an agreement,  contingent or otherwise:  (a) to purchase the  guaranteed
obligations or any Property  constituting  security therefor;  (b) to advance or
supply funds for the  purchase or payment of the  guaranteed  obligations  or to
maintain  a working  capital  or other  balance  sheet  condition;  (c) to lease
Property  or to  purchase  any debt or equity  securities  or other  Property or
services.

     "Holiday  Stores"  means stores  operated by Borrower on a temporary  basis
that are  projected  to be open for a limited  period of time not to exceed  six
months and where opening costs do not exceed $30,000 for each such store.

     "Intercompany Accounts" means all assets and liabilities,  however arising,
which are due to the Borrower from, which are due from the Borrower to, or which
otherwise arise from any transaction by the Borrower with, any Affiliate.

     "Interest  Period"  means,  as to any  LIBOR  Revolving  Loan,  the  period
commencing  on the Funding  Date of such Loan or on the  Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Revolving Loan,
and ending on the date one,  two, or three months  thereafter as selected by the
Borrower  in its  Notice of  Borrowing  or  Notice  of  Conversion/Continuation;
provided, however, that:

                  (i) if any Interest  Period would  otherwise end on a day that
         is not a Business Day,  that  Interest  Period shall be extended to the
         following  Business Day unless the result of such extension would be to
         carry such Interest Period into another  calendar month, in which event
         such Interest Period shall end on the preceding Business Day;

<PAGE>

                  (ii) any Interest Period  pertaining to a LIBOR Revolving Loan
         that begins on the last  Business Day of a calendar  month (or on a day
         for which there is no  numerically  corresponding  day in the  calendar
         month  at the  end of  such  Interest  Period)  shall  end on the  last
         Business Day of the calendar month at the end of such Interest  Period;
         and

                  (iii) no  Interest  Period  shall  extend  beyond  the  Stated
         Termination Date or any renewal term.

     "Inventory"  means all of the now owned and hereafter  acquired  inventory,
goods, merchandise, and other personal property of Borrower or any member of the
GTS Consolidated Group,  wherever located, to be furnished under any contract of
service or held for sale or lease,  all  finished  goods,  returned  goods,  and
materials and supplies of any kind,  nature or description which are or might be
used or consumed in the business of such entity or used in  connection  with the
packing,  shipping,  advertising or selling of such goods,  merchandise and such
other  personal  property,  and all  documents,  of  title  or  other  documents
representing them.

     "Investment Property" means:

         (a)      a security, whether certificated or uncertificated;

         (b)      a security entitlement;

         (c)      a securities account;

         (d)      a commodity contract; or

         (e)      a commodity account.

     "IRS" means the Internal Revenue Service or any successor agency.

     "Latest  Projections"  means:  (a) on the Closing Date and thereafter until
the Lender receives new projections  pursuant to Section 8.2(f), the projections
of the Borrower's monthly financial condition,  results of operations,  and cash
flow for the year period ending January 3, 1998, attached hereto as Exhibit A-2;
and (b)  thereafter,  the  projections  most  recently  received  by the  Lender
pursuant to Section 8.2(f).

     "Letter of Credit" has the meaning specified in Section 2.3.

     "Letter of Credit Fee" has the meaning specified in Section 3.6.

     "LIBOR  Interest  Payment  Date" means,  with respect to a LIBOR  Revolving
Loan, the last day of each Interest Period applicable to such Loan.

<PAGE>

     "LIBOR Interest Rate Determination Date" means each date of calculating the
LIBOR Rate for  purposes of  determining  the  interest  rate with respect to an
Interest  Period.  The  LIBOR  Interest  Rate  Determination  Date for any LIBOR
Revolving  Loan shall be the second  Business  Day prior to the first day of the
related Interest Period for such LIBOR Revolving Loan.

     "LIBOR  Rate"  means,  for any  Interest  Period,  with  respect  to  LIBOR
Revolving Loans comprising part of the same Borrowing,  the rate of interest per
annum (rounded upward to the next 1/1000th of 1.0%) determined as follows:

         LIBOR Rate  =    LIBOR
                          1.00 - Eurodollar Reserve Percentage
         Where,

                           "Eurodollar Reserve Percentage" means for any day for
                  any Interest Period the maximum reserve percentage  (expressed
                  as a decimal,  rounded  upward to the next 1/100th of 1.0%) in
                  effect on such day (whether or not  applicable  to the Lender)
                  under  regulations  issued  from  time to time by the  Federal
                  Reserve Board for determining the maximum reserve  requirement
                  (including  any  emergency,  supplemental  or  other  marginal
                  reserve  requirement)  with  respect to  Eurocurrency  funding
                  (currently referred to as "Eurocurrency liabilities"); and

                           "LIBOR" means the rate of interest per annum (rounded
                  upward to the next 1/16 of 1%)  notified to the Lender by Bank
                  as the rate of interest at which United States Dollar deposits
                  in the approximate  amount of the Loan to be made or continued
                  as, or  converted  into, a LIBOR  Revolving  Loan and having a
                  maturity  comparable to such Interest  Period would be offered
                  by Bank's  applicable  lending  office  to major  banks in the
                  London  interbank  market at their  request  at  approximately
                  11:00  a.m.  (London  time)  two  Business  Days  prior to the
                  commencement of such Interest Period.

     "LIBOR Revolving Loan" means a Revolving Loan during any period in which it
bears interest based on the LIBOR Rate.

     "Lien" means: (a) any interest in Property  securing an obligation owed to,
or a claim by, a Person  other  than the  owner of the  Property,  whether  such
interest is based on the common law, statute, or contract, and including without
limitation, a security interest, charge, claim, or lien arising from a mortgage,
deed  of  trust,  encumbrance,   pledge,  hypothecation,   assignment,   deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease,  consignment or bailment for security  purposes;  and (b) to the extent
not  included  under  clause  (a),  any  reservation,  exception,  encroachment,
easement, right-of-way,  covenant, condition,  restriction, lease or other title
exception or encumbrance affecting Property.

     "Loans" means, collectively, all loans and advances provided for in Section
2.

<PAGE>

     "Loan   Documents"   means  this   Agreement,   the  Patent  and  Trademark
Assignments,  the  Parent  Guaranty,  the  Affiliate  Guaranties  and all  other
agreements,  instruments, and documents heretofore, now or hereafter evidencing,
securing, guaranteeing or otherwise relating to the Obligations, the Collateral,
the Security Interest,  or any other aspect of the transactions  contemplated by
this Agreement.

     "Multiemployer  Plan"  means a  Multiemployer  plan as  defined  in Section
4001(a)(3)  of ERISA to which the  Borrower  or any ERISA  Affiliate  makes,  is
making,  made,  or was at any time  during the current  year or the  immediately
preceding six (6) years obligated to make contributions.

     "New Store  Equipment  Financing"  means term debt  financing  provided  to
Borrower  by a third  party  lender  and  secured  by part or all of  Borrower's
equipment.

     "New Store Opening" means a new store,  other than a Holiday Store,  opened
by Borrower after the Closing Date.

     "New  Store  Opening  Costs"  means  the  sum of (i)  Capital  Expenditures
required to open the new store less those amounts paid up front by the landlord,
plus (ii) costs  incurred by the  Borrower  prior to opening the new store which
related directly to the new store,  plus (iii) an estimate of the value of forty
percent (40%) of Eligible  Inventory (other than seasonal  Inventory) that would
be at the newly acquired store immediately following the opening thereof.

     "New  Store  Locations"  means all of  Borrower's  stores,  other  than the
Holiday Stores, which were opened during the then current Fiscal Year.

     "Notice of Borrowing" has the meaning specified in Section 2.2(b).

     "Notice of  Conversion/Continuation"  has the meaning  specified in Section
3.2(b).

     "Obligations"  means all present and future loans,  advances,  liabilities,
obligations,  covenants,  duties,  and Debt owing by the Borrower to the Lender,
whether or not arising  under this  Agreement,  whether or not  evidenced by any
note,  or other  instrument  or document,  whether  arising from an extension of
credit,   opening  of  a  letter  of   credit,   acceptance,   loan,   guaranty,
indemnification  or otherwise,  whether direct or indirect  (including,  without
limitation,  those acquired by assignment from others,  and any participation by
the Lender in the Borrower's debts owing to others) absolute or contingent,  due
or to  become  due,  primary  or  secondary,  as  principal  or  guarantor,  and
including, without limitation, all interest, charges, expenses, fees, attorneys.
fees, filing fees and any other sums chargeable to the Borrower hereunder, under
another  Loan  Document,  or under any other  agreement or  instrument  with the
Lender.  "Obligations" includes, without limitation, all debts, liabilities, and
obligations  now  or  hereafter  owing  from  Borrower  to  Lender  under  or in
connection with the Letters of Credit.

     "Other Taxes" means any present or future stamp or documentary taxes or any
other excise or property  taxes,  charges or similar levies which arise from any
payment made hereunder or from the execution,  delivery or  registration  of, or
otherwise with respect to, this Agreement or any other Loan Documents.

     "Parent" means The Great Train Store Company, a Delaware corporation.

<PAGE>

     "Parent  Guaranty" means the Guaranty of the Obligations  made by Parent in
favor of the Lender.

     "Participating  Lender"  means any Person who shall have been  granted  the
right by the Lender to  participate in the Loans and who shall have entered into
a participation agreement in form and substance satisfactory to the Lender.

     "Patent  and  Trademark  Assignment"  means the  Collateral  Assignment  of
Patents  (Security  Agreement)  and  the  Collateral  Assignment  of  Trademarks
(Security Agreement),  each dated as of the date hereof,  executed and delivered
by the  Parent to the Lender to  evidence  and  perfect  the  Lender's  Security
Interest in the Parent's  present and future  patents,  trademarks,  and related
licenses and rights.

     "Payment   Account"  means  each  blocked  bank  account  or  bank  account
associated with a lock box,  established  pursuant to Section 7.10, to which the
funds of the Borrower (including,  without limitation,  Proceeds of Accounts and
other Collateral) are deposited or credited, and which is maintained in the name
of the Lender or the Borrower, as the Lender may determine,  on terms acceptable
to the Lender.

     "PBGC"  means  the  Pension  Benefit  Guaranty  Corporation  or any  Person
succeeding to the functions thereof.

     "Pension  Plan" means a pension  plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Borrower or an ERISA Affiliate  sponsors,
maintains,   or  to  which  it  makes,  is  making,  or  is  obligated  to  make
contributions or, in the case of a Multiemployer Plan, has made contributions at
any time  during the  current  year or the  immediately  preceding  six (6) plan
years.

     "Permitted  Debt" means the New Store Equipment  Financing  consented to by
Lender in  accordance  with Section  10.16,  and the Debt  described on Schedule
10.11.

     "Permitted  Distributions"  means  those  Distributions  listed on Schedule
10.8.

<PAGE>

     "Permitted  Liens" means:  (a) Liens for taxes not yet  delinquent or Liens
for taxes in an amount not to exceed  $100,000 being  contested in good faith by
appropriate  proceedings  diligently  pursued,  provided that a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
therefor on the applicable  Financial  Statements and that a stay of enforcement
of any such  Lien is in  effect;  (b)  Liens in favor of the  Lender;  (c) Liens
arising  by  operation  of law in favor of  warehousemen,  landlords,  carriers,
mechanics,  materialmen,  laborers,  employees  or  suppliers,  incurred  in the
ordinary  course of  business of the  Borrower  and not in  connection  with the
borrowing of money,  for sums not yet delinquent or which are being contested in
good faith and by proper proceedings diligently pursued, provided that a reserve
or other  appropriate  provision,  if any, required by GAAP shall have been made
therefor on the applicable Financial Statements and a stay of enforcement of any
such Lien is in effect;  (d) Liens in connection  with worker's  compensation or
other  unemployment  insurance incurred in the ordinary course of the Borrower's
business;  (e) Liens created by deposits of cash to secure  performance of bids,
tenders,  leases  (to the  extent  permitted  under  this  Agreement),  or trade
contracts,  incurred in the ordinary  course of business of the Borrower and not
in connection  with the borrowing of money;  (f) Liens arising by reason of cash
deposit  for surety or appeal  bonds in the  ordinary  course of business of the
Borrower; (g) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which has not yet expired,  or in respect of
which the Borrower is in good faith  prosecuting  an appeal or proceeding  for a
review,  and in  respect of which a stay of  execution  pending  such  appeal or
proceeding  for  review  has been  secured;  (h)  Liens  securing  the New Store
Equipment Financing, and (i) Permitted Liens set forth on Schedule 10.15.

     "Person" means any  individual,  sole  proprietorship,  partnership,  joint
venture,   trust,   unincorporated   organization,   limited  liability  company
association, corporation, Public Authority, or any other entity.

     "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Borrower or an ERISA  Affiliate  sponsors or maintains or to which the
Borrower  or an ERISA  Affiliate  makes,  is  making,  or is  obligated  to make
contributions and includes any Pension Plan.

     "Premises" means the land identified by addresses on Schedule 9.13 together
with all  buildings,  improvements,  and  fixtures  thereon  and all  tenements,
hereditament,  and appurtenances  belonging or in any way appertaining  thereto,
and which  constitutes  all of the real  property in which the  Borrower has any
interests on the Closing Date.

     "Proceeds"  means all  products  and  proceeds of any  Collateral,  and all
proceeds of such proceeds and products,  including, without limitation, all cash
and credit  balances,  all payments under any indemnity,  warranty,  or guaranty
payable with respect to any Collateral, all awards for taking by eminent domain,
all  proceeds  of fire or other  insurance,  and all money  and  other  Property
obtained as a result of any claims  against third parties or any legal action or
proceeding with respect to Collateral.

     "Property"  means any  interest in any kind of  property or asset,  whether
real, personal or mixed, or tangible or intangible.

     "Proprietary  Rights"  means all of the  following  now owned and hereafter
arising or acquired assets of the Borrower or any member of the GTS Consolidated
Group: all licenses,  franchises,  permits, patents, patent rights,  copyrights,
works which are the subject matter of copyrights, trademarks, trade names, trade
styles,  patent and trademark  applications and licenses and rights  thereunder,
including without limitation those patents,  trademarks and copyrights set forth
on  Schedule  9.14,  and  all  other  rights  under  any of the  foregoing,  all
extensions,     renewals,    reissues,     divisions,     continuations,     and
continuations-in-part  of any of the foregoing,  and all rights to sue for past,
present,  and future  infringement  of any of the foregoing;  inventions,  trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill; customer and other lists in
whatever form maintained;  and trade secret rights,  copyright rights, rights in
works of authorship, and contract rights relating to computer software programs,
in whatever form created or maintained.

<PAGE>

     "Public  Authority" means the government of any country or sovereign state,
or of any state, province, municipality, or other political subdivision thereof,
or any department, agency, public corporation or other instrumentality of any of
the foregoing.

     "Receivables" means all of the following now owned and hereafter arising or
acquired  assets of Borrower or any member of the GTS  Consolidated  Group:  all
Accounts (whether or not earned by performance),  including Accounts owed to the
Borrower  by any  member  of the  GTS  Consolidated  Group,  together  with  all
interest, late charges,  penalties,  collection fees, and other sums which shall
be due and payable in  connection  with any Account;  proceeds of any letters of
credit  naming  the  Borrower  or any  member of the GTS  Consolidated  Group as
beneficiary;  contract rights, chattel paper,  instruments,  documents,  general
intangibles  (including without limitation choices in action,  causes of action,
tax refunds,  tax refund claims, and Reversions and other amounts payable to the
Borrower or any member of the GTS Consolidated Group from or with respect to any
Plan) and all forms of  obligations  owing to the  Borrower or any member of the
GTS Consolidated  Group  (including,  without  limitation,  in respect of loans,
advances,  and extensions of credit by or to any member of the GTS  Consolidated
Group);  guarantees  and  other  security  for  any  of  the  foregoing;   goods
represented  by or the sale,  lease or delivery of which gave rise to any of the
foregoing;  merchandise returned to or repossessed by the Borrower or any member
of the GTS Consolidated Group and rights of stoppage in transit,  replevin,  and
reclamation;  and other  rights or  remedies  of an unpaid  vendor,  lienor,  or
secured  party;   provided,   however,   that  'Receivables"  does  not  include
cooperative  advertising and tenant  allowances in favor of Borrower relating to
real estate leases.

     "Reference Rate" means the rate of interest publicly announced from time to
time by the Bank as its reference  rate. It is a rate set by the Bank based upon
various factors including the Bank's costs and desired return,  general economic
conditions, and other factors, and is used as a reference point for pricing some
loans.  However,  the Bank may price loans at,  above,  or below such  announced
rate.  Any changes in the Reference  Rate shall take effect on the day specified
in the public announcement of such change.

     "Reference  Rate Revolving  Loans" means a Revolving Loan during any period
in which it bears interest based on the Reference Rate.

     "Reportable Event" means, any of the events set forth in Section 4043(b) of
ERISA or the  regulations  thereunder,  other  than any such event for which the
30-day notice  requirement under ERISA has been waived in regulations  issued by
the PBGC.

     "Requirement of Law" means any law (statutory or common),  treaty,  rule or
regulation or determination of an arbitrator or of a Public Authority.

<PAGE>

     "Restricted  Investment"  means any acquisition of Property by the Borrower
or any  member  of the GTS  Consolidated  Group  in  exchange  for cash or other
Property,  whether in the form of an  acquisition of stock,  debt  security,  or
other  indebtedness  or obligation,  or the purchase or acquisition of any other
Property,  or a loan, advance,  capital  contribution,  or subscription,  except
acquisitions  of the  following:  (a) fixed assets to be used in the business of
the  Borrower,  so long as the  acquisition  costs  thereof  constitute  Capital
Expenditures  permitted  hereunder;  (b) current assets arising from the sale or
lease of goods or rendition  of services in the  ordinary  course of business of
the Borrower;  (c) direct  obligations  of the United States of America,  or any
agency  thereof,  or  obligations  guaranteed  by the United  States of America,
provided  that  such  obligations  mature  within  one  year  from  the  date of
acquisition  thereof,  (d) certificates of deposit maturing within one year from
the date of  acquisition,  bankers  acceptances,  Eurodollar  bank deposits,  or
overnight bank  deposits,  in each case issued by, created by, or with a bank or
trust company organized under the laws of the United States or any state thereof
having capital and surplus aggregating at least $100,000,000; and (e) commercial
paper given the highest  rating by a national  credit rating agency and maturing
not more than 270 days from the date of creation  thereof;  and (f)  provided no
Revolving Loans are then  outstanding,  money market mutual funds of the quality
offered by Fidelity, T. Rowe Price, or similar organizations.

     "Reversions"  means  any funds  which may  become  due to the  Borrower  in
connection with the termination of any Plan or other employee benefit plan.

     "Revolving Loans" has the meaning specified in Section 2.2.

     "Security  Interest" means  collectively the Liens granted to the Lender in
the Collateral  pursuant to this  Agreement,  the other Loan  Documents,  or any
other agreement or instrument.

     "Solvent"  means when used with  respect to any Person  that at the time of
determination:

                  (i)  the assets of such  Person,  at  a fair  valuation,  are 
         in  excess  of  the  total amount  of its  debts  (including,  without 
         limitation, contingent liabilities); and

                  (ii) the present fair saleable  value of its assets is greater
         than its probable  liability on its existing debts as such debts become
         absolute and matured; and

                  (iii) it is then able and  expects to be able to pay its debts
         (including, without limitation, contingent debts and other commitments)
         as they mature; and

                  (iv)  it has capital  sufficient  to carry on its business as 
         conducted  and as proposed to be conducted.

For  purposes  of  determining  whether a Person is  Solvent,  the amount of any
contingent  liability  shall be computed as the amount that, in light of all the
facts and  circumstances  existing at such time,  represents the amount that can
reasonably expected to become an actual or matured liability.

     "Stated Termination Date" means the third Anniversary Date.

     "Subordinated Debt" means Debt for borrowed money which is unsecured and is
specifically subordinated to the Obligations on terms acceptable to the Lender.

     "Subsidiary" of a Person means any corporation,  association,  partnership,
joint  venture  or other  business  entity of which  more than 50% of the voting
stock  or  other  equity   interests   (in  the  case  of  Persons   other  than
corporations),  is owned or controlled  directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.  Unless
the context  otherwise  clearly  requires,  references  herein to a "Subsidiary"
refer to a Subsidiary of the Borrower.

<PAGE>

     "Taxes"  means any and all present or future  taxes,  assessments,  levies,
imposts, impositions,  deductions,  charges or withholdings, and all liabilities
with  respect  thereto,  excluding,  in the  case  of  the  Lender,  such  taxes
(including income taxes or franchise taxes) as are imposed on or measured by the
Lender's net income by the jurisdiction (or any political  subdivision  thereof)
under the laws of which the Lender is organized or maintains a lending office.


     "Total Facility" has the meaning specified in Section 2.1.

     "Triggering  Event" means the occurrence of either of the following events:
(a) an Event of  Default,  or (b)  existing  Availability  is less than  fifteen
percent of gross  Availability  (with  gross  Availability  calculated  for this
purpose as if there were no outstanding Revolving Loans and Letters of Credit).

     "UCC" means the Uniform  Commercial Code (or any successor  statute) of the
State of  Missouri  or of any  other  state the laws of which  are  required  by
Section 9-103  thereof to be applied in connection  with the issue of perfection
of security interests.

     "Unused Line Fee" has the meaning specified in Section 3.1(c).

     Accounting  Terms.  Any accounting  term used in this Agreement shall have,
unless otherwise  specifically provided herein, the meaning customarily given in
accordance  with  GAAP,  and  all  financial  computations  hereunder  shall  be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as  consistently  applied and using the same method for  inventory  valuation as
used in the preparation of the Financial Statements.

     Other Terms.  All other undefined terms contained in this Agreement  shall,
unless the context  indicates  otherwise,  have the meanings provided for by the
UCC to the extent the same are used or defined therein.  Wherever appropriate in
the context, terms used herein in the singular also include the plural, and vice
versa,  and each masculine,  feminine,  or neuter pronoun shall also include the
other genders.

     1.2 Interpretive Provisions.

                  (a) The meanings of defined  terms are equally  applicable  to
the singular and plural forms of the defined terms.

                  (b) The words  "hereof,"  "herein,"  "hereunder,"  and similar
words refer to this Agreement as a whole and not to any particular  provision of
this Agreement; and Subsection,  Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.

                  (c) (i) The term "documents" includes any and all instruments,
documents,  agreements,  certificates,  indentures,  notices and other writings,
however evidenced.

                      (ii)  The  term  "including"  is not  limiting  and  means
"including without limitation."

<PAGE>

                      (iii)  In  the  computation  of  periods  of  time  from a
specified  date to a later  specified  date,  the word  "from"  means  "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."

                  (d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications  thereto,
but  only  to the  extent  such  amendments  and  other  modifications  are  not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation  are to be construed as including  all  statutory  and  regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.

                  (e)  The  captions  and  headings  of this  Agreement  are for
convenience  of reference only and shall not affect the  interpretation  of this
Agreement.

                  (f) This  Agreement  and other Loan  Documents may use several
different  limitations,  tests or  measurements  to regulate the same or similar
matters.  All such limitations,  tests and measurements are cumulative and shall
each be performed in accordance with their terms.

                  (g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to Lender, the Borrower,
and the other parties,  and are the products of all parties.  Accordingly,  they
shall not be construed against Lender merely because of Lender's  involvement in
their preparation.

2.       LOANS AND LETTERS OF CREDIT.

     2.1 Total  Facility.  Subject  to all of the terms and  conditions  of this
Agreement,  the Lender  shall make  available a total  credit  facility of up to
$15,000,000  (the "Total  Facility") for Borrower's use from time to time during
the term of this Agreement. The Total Facility shall be comprised of a revolving
line of credit up to the limits of the  Availability,  consisting  of  revolving
loans and letters of credit as described in Sections 2.2 and 2.3.

<PAGE>

     2.2 Revolving Loans.

         (a) The Lender shall,  upon the  Borrower's  request from time to time,
make revolving loans (the "Revolving Loans") to the Borrower up to the limits of
the Availability.  The Lender, in its discretion, may elect to exceed the limits
of the  Availability  on one or more  occasions,  but if it does so,  the Lender
shall not be deemed thereby to have changed the limits of the Availability or to
be obligated to exceed the limits of the Availability on any other occasion.  If
the unpaid balance of the Revolving Loans exceeds the  Availability  (determined
for this purpose as if the amount of the  Revolving  Loans were zero),  then the
Lender may refuse to make or otherwise restrict Revolving Loans on such terms as
the Lender  determines until such excess has been  eliminated.  The Borrower may
request Revolving Loans either  telephonically or in writing.  Each oral request
for a  Revolving  Loan  shall be  conclusively  presumed  to be made by a person
authorized by the Borrower to do so and the crediting of a Revolving Loan to the
Borrower's deposit account,  or transmittal to such Person as the Borrower shall
direct,  shall  conclusively  establish the  obligation of the Borrower to repay
such  Revolving  Loan as provided  herein.  The Lender will charge all Revolving
Loans and other  Obligations to a loan account of the Borrower  maintained  with
the Lender. All fees,  commissions,  costs, expenses, and other charges under or
pursuant to the Loan Documents, and all payments made and out-of-pocket expenses
incurred  by the  Lender  pursuant  to the Loan  Documents,  will be  charged as
Revolving  Loans  to the  Borrower's  loan  account  as of the date due from the
Borrower or the date paid or incurred by the Lender, as the case may be.

         (b)      Procedure for Borrowing.

                  (i)  Each   Borrowing   shall  be  made  upon  the  Borrower's
irrevocable  written notice  delivered to the Lender in the form of a "Notice of
Borrowing",  a form of which is attached  hereto as Exhibit "B",  (which  notice
must be received by the Lender prior to 11:00 a.m. (Chicago,  Illinois time) (1)
three  Business Days prior to the  requested  Funding Date, in the case of LIBOR
Revolving Loans and (2) no later than 11:00 a.m. on the requested  Funding Date,
in the case of Reference Rate Revolving Loans, specifying:

                  (A) the amount of the Borrowing;

                  (B) the  requested  Funding Date, which  shall be a  Business
Day;

                  (C)  whether  the   Revolving  Loans   requested  are  to  be 
Reference  Rate  Revolving  Loans or LIBOR Revolving Loans; and

                  (D) the  duration  of the  Interest  Period  if the  requested
Revolving  Loans are to be LIBOR  Revolving  Loans.  If the Notice of  Borrowing
fails to specify the duration of the Interest Period for any Borrowing comprised
of LIBOR Revolving Loans, such Interest Period shall be three months;  provided,
however,  that with respect to the  Borrowings  to be made on the Closing  Date,
such Borrowings will consist of Reference Rate Revolving Loans only.

                  (ii)     After  giving  effect  to any  Borrowing,  there may 
not be  more  than  two  different Interest Periods in effect.

                  (iii) With respect to any request for Reference Rate Revolving
Loans,  in lieu of  delivering  the  above-described  Notice  of  Borrowing  the
Borrower may give the Lender  telephonic  notice of such request by the required
time, with such telephonic  notice to be confirmed in writing within 24 hours of
the giving of such notice but Lender shall be entitled to rely on the telephonic
notice in making such Revolving Loans.

<PAGE>

     2.3  Letters of Credit.  (a)  Subject to the terms and  conditions  of this
Agreement,  the Lender  shall,  upon the  Borrower's  request from time to time,
cause  merchandise or standby  letters of credit to be issued for the Borrower's
account (the "Letters of  Credit"').  The Lender will not cause to be opened any
Letter of Credit if: (i) the  maximum  face  amount of the  requested  Letter of
Credit,  plus the aggregate  undrawn face amount of all  outstanding  Letters of
Credit,  would exceed  $500,000;  (ii) the maximum face amount of the  requested
Letter of Credit,  and all  commissions,  fees, and charges due from Borrower to
Lender in connection with the opening  thereof,  would cause the Availability to
be exceeded at such time; or (iii) the  expiration  date of the Letter of Credit
would exceed the Stated  Termination Date or any renewal term or be greater than
twelve (12) months from the date of  issuance.  All  payments  made and expenses
incurred by the Lender  pursuant to or in connection  with the Letters of Credit
will be charged to the Borrower's loan account as Revolving Loans.

                  (b) Other  Conditions.  In  addition  to being  subject to the
satisfaction of the applicable conditions precedent contained in Section 11, the
obligation  of the  Lender to cause to be issued any Letter of Credit is subject
to  the  following  conditions  precedent  having  been  satisfied  in a  manner
satisfactory to the Lender:

                           (1)  The  Borrower  shall  have  delivered   to  the 
proposed  issuer of such Letter of Credit,  at such times and in such manner as 
such  proposed  issuer  may  prescribe, an  application  in form  and substance
satisfactory  to such proposed  issuer and the Lender for the  issuance of the 
Letter of Credit and such other  documents as may be  required  pursuant to the 
terms  thereof,  and the form and terms of the proposed  Letter of Credit shall 
be satisfactory to the Lender and such proposed issuer; and

                           (2)  As of the date of  issuance,  no  order  of any 
court,  arbitrator  or  Public Authority  shall  purport by its terms to enjoin 
or restrain  money center  banks generally  from  issuing  letters of credit of 
the type and in the amount of the proposed  Letter of Credit,  and no law, rule 
or regulation  applicable  to money  center banks  generally  and no request or 
directive  (whether or not having the force of law)  from any Public  Authority 
with  jurisdiction  over money  center banks  generally   shall  prohibit,  or 
request that the proposed  issuer of such Letter of  Credit  refrain from,  the 
issuance  of letters  of credit  generally  or the  issuance of such Letters of 
Credit.

                  (c)      Issuance of Letters of Credit.

                    (1) Request for Issuance. The Borrower shall give the Lender
three (3) Business Days' prior written notice of the Borrower's  request for the
issuance  of a Letter of Credit.  Such  notice  shall be  irrevocable  and shall
specify  the  original  face  amount  of the  Letter of  Credit  requested,  the
effective  date  (which  date  shall  be a  Business  Day) of  issuance  of such
requested  Letter of  Credit,  whether  such  Letter of Credit may be drawn in a
single or in partial draws, the date on which such requested Letter of Credit is
to expire  (which  date shall be a Business  Day),  the  purpose  for which such
Letter of Credit is to be issued, and the beneficiary of the requested Letter of
Credit. The Borrower shall attach to such notice the proposed form of the Letter
of Credit that the Lender is requested to cause to be issued.

                    (2) No  Extensions  or  Amendment.  The Lender  shall not be
obligated  to cause any Letter of Credit to be  extended  or amended  unless the
requirements  of this  Section 2.3 are met as though a new Letter of Credit were
being requested and issued.

                  (d)      Payments Pursuant to Letters of Credit.

<PAGE>

                    (1) Payment of Letter of Credit  Obligations.  The  Borrower
agrees  to  reimburse  the  issuer  for any draw  under  any  Letter  of  Credit
immediately  upon  demand,  and to pay the  issuer of the  Letter of Credit  the
amount of all other  obligations  and other amounts payable to such issuer under
or in connection with any Letter of Credit immediately when due, irrespective of
any claim,  set off,  defense or other right which the  Borrower may have at any
time against such issuer or any other Person.

                    (2) Revolving Loans to Satisfy Reimbursement Obligations. In
the event  that the  issuer of any  Letter of Credit  honors a draw  under  such
Letter of Credit  and the  Borrower  shall not have  repaid  such  amount to the
issuer of such Letter of Credit pursuant to Section 2.3(d)(1),  the Lender shall
pay the issuer and such amount when paid shall constitute a Revolving Loan which
shall be deemed to have been requested by the Borrower.

                  (e)      Compensation for Letters of Credit.

                    (1) Letter of Credit Fee. The Borrower  agrees to pay to the
Lender with respect to each Letter of Credit, the Letter of Credit Fee specified
in, and in accordance with the terms of, Section 3.6.

                    (2) Issuer Fees and Charges.  The Borrower  shall pay to the
issuer of any Letter of Credit, or to the Lender,  for the account of the issuer
of any such Letter of Credit,  solely for such issuer's  account,  such fees and
other  charges as are charged by such issuer for letters of credit issued by it,
including,  without  limitation,  its standard fees for issuing,  administering,
amending,  renewing,  paying and canceling  letters of credit and all other fees
associated with issuing or servicing letters of credit, as and when assessed.

                  (f)      Indemnification: Exoneration: Power of Attorney

                    (1)  Indemnification.  In  addition  to  amounts  payable as
elsewhere  provided in this Section 2.3, the Borrower  hereby agrees to protect,
indemnify, pay and save the Lender harmless from and against any and all claims,
demands,  liabilities,  damages,  losses, costs, charges and expenses (including
reasonable  attorneys'  fees)  which the  Lender may incur or be subject to as a
consequence,  direct or indirect, of the issuance of any Letter of Credit or the
provision of any credit  support or  enhancement  in connection  therewith.  The
agreement in this Section 2.3(f)(1) shall survive payments of all Obligations.

<PAGE>
                    (2)  Assumption  of Risk by the  Borrower.  As  between  the
Borrower  and the  Lender,  the  Borrower  assumes  all  risks  of the  acts and
omissions  of, or misuse of any of the  Letters  of Credit  by,  the  respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing,  the Lender shall not be responsible for: (A) the form, validity,
sufficiency,  accuracy, genuineness or legal effect of any document submitted by
any  Person  in  connection  with  the  application  for  and  issuance  of  and
presentation of drafts with respect to any of the Letters of Credit,  even if it
should prove to be in any or all  respects  invalid,  insufficient,  inaccurate,
fraudulent  or  forged;  (B)  the  validity  or  sufficiency  of any  instrument
transferring  or  assigning  or  purporting  to transfer or assign any Letter of
Credit or the rights or benefits  thereunder or proceeds thereof, in whole or in
part,  which may prove to be  invalid or  ineffective  for any  reason;  (C) the
failure  of the  beneficiary  of any  Letter  of  Credit  to  comply  duly  with
conditions  required  in order to draw upon such  Letter of Credit;  (D) errors,
omissions, interruptions, or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(E) errors in  interpretation  of technical  terms; (F) any loss or delay in the
transmission or otherwise of any document required in order make a drawing under
any Letter of Credit or of the proceeds thereof;  (G) the  misapplication by the
beneficiary  of any Letter of Credit of the  proceeds of any drawing  under such
Letter of Credit; or (H) any consequences arising from causes beyond the control
of the Lender,  including,  without  limitation,  any act or  omission,  whether
rightful  or  wrongful,  of any  present  or future  de jure or de facto  Public
Authority.  None of the foregoing shall affect, impair or prevent the vesting of
any rights or powers of the Lender under this Section 2.3.

                      (3) Exoneration.  In furtherance and extension, and not in
limitation,  of the specific  provisions  set forth  above,  any action taken or
omitted by the Lender under or in  connection  with any of the Letters of Credit
or any  related  certificates,  if  taken or  omitted  in the  absence  of gross
negligence or willful  misconduct,  shall not put the Lender under any resulting
liability  to the  Borrower  or relieve the  Borrower of any of its  obligations
hereunder to any such Person.

                      (4) Power of Attorney. In  connection  with all  Inventory
financed by Letters of Credit,  the Borrower hereby appoints the Lender,  or the
Lender's designee, as its attorney,  with full power and authority:  (a) to sign
and/or endorse the Borrower's name upon any warehouse or other receipts;  (b) to
sign  the  Borrower's  name  on  bills  of  lading  and  other   negotiable  and
non-negotiable documents; (c) to clear Inventory through customs in the Lender's
or the Borrower's  name, and to sign and deliver to customs  officials powers of
attorney  in the  Borrower's  name  for such  purpose;  (d) to  complete  in the
Borrower's or the Lender's name,  any order,  sale, or  transaction,  obtain the
necessary documents in connection  therewith,  and collect the proceeds thereof;
and (e) to do such other acts and things as are necessary in order to enable the
Lender to obtain  possession  of the  Inventory  and to  obtain  payment  of the
Obligations.  Neither the Lender nor its designee,  as the Borrower's  attorney,
will be liable  for any acts or  omissions,  nor for any error of  judgement  or
mistakes  of fact  or law.  This  power,  being  coupled  with an  interest,  is
irrevocable until all Obligations have been paid and satisfied.

                      (5) Account  Party.  The Borrower  hereby  authorizes  and
directs any issuer of a Letter of Credit to name the  Borrower  as the  "Account
Party" therein and to deliver to the Lender all instruments, documents and other
writings and property  received by the issuer  pursuant to the Letter of Credit,
and to accept  and rely  upon the  Lender's  instructions  and  agreements  with
respect to all matters  arising in  connection  with the Letter of Credit or the
application therefor.

                      (6) Control of Inventory. In connection with all Inventory
financed by Letters of Credit,  the  Borrower  will,  at the  Lender's  request,
instruct all suppliers, carriers, forwarders,  warehouses or others receiving or
holding cash,  checks,  Inventory,  documents or instruments in which the Lender
holds a security  interest to deliver them to the Lender  and/or  subject to the
Lender's  order,  and if they  shall  come into the  Borrower's  possession,  to
deliver them,  upon request,  to the Lender in their original form. The Borrower
shall also,  at the Lender's  request,  designate the Lender as the consignee on
all bills of lading and other negotiable and non-negotiable documents.

<PAGE>

                  (g)  Supporting  Letter  of  Credit:   Cash  Collateral.   If,
notwithstanding  the provisions of this Section 2.3 and Section 14 any Letter of
Credit is outstanding  upon the  termination of this  Agreement,  then upon such
termination the Borrower shall deposit with the Lender, at its discretion,  with
respect to each Letter of Credit then  outstanding,  either (A) a standby letter
of credit (a "Supporting  Letter of Credit") in form and substance  satisfactory
to the Lender, issued by an issuer satisfactory to the Lender in an amount equal
to the greatest amount for which such Letter of Credit may be drawn, under which
Supporting  Letter of Credit the Lender is entitled to draw amounts necessary to
reimburse the Lender for payments made by the Lender under such Letter of Credit
or under any credit  support or  enhancement  provided  through  the Lender with
respect  thereto,  or (B) cash in amounts  necessary to reimburse the Lender for
payments  made by the  Lender  under  such  Letter of Credit or under any credit
support or enhancement  provided through the Lender.  Such Supporting  Letter of
Credit or deposit of cash shall be held by the Lender,  as security  for, and to
provide for the  payment of, the  aggregate  undrawn  amount of such  Letters of
Credit remaining outstanding.


3.       INTEREST AND OTHER CHARGES.

         3.1      Interest.

                  (a)  All  Obligations   shall  bear  interest  on  the  unpaid
principal amount thereof from the date made until paid in full in cash at a rate
determined by reference to the Reference Rate or the LIBOR Rate and Sections 3.1
(a)(i) or (ii), as  applicable,  but not to exceed the Maximum Rate.  Subject to
the  provisions  of Section  3.2,  any of the Loans may be  converted  into,  or
continued as,  Reference Rate Revolving  Loans or LIBOR  Revolving  Loans in the
manner  provided  in  Section  3.2.  If at any time Loans are  outstanding  with
respect to which notice has not been delivered to Lender in accordance  with the
terms of this Agreement  specifying the basis for  determining the interest rate
applicable thereto, then those Loans shall be Reference Rate Revolving Loans and
shall bear  interest at a rate  determined  by reference to the  Reference  Rate
until  notice to the  contrary  has been given to the Lender and such notice has
become  effective.  Except as otherwise  provided herein,  the Obligations shall
bear interest as follows:

                      (i) For all Obligations, other than LIBOR Revolving Loans,
then at a fluctuating  per annum rate equal to one quarter of one percent (.25%)
(the "Reference Rate Margin") plus the Reference Rate;
                                
and

                      (ii) If the Loans are LIBOR Revolving Loans, then at a per
annum  rate equal to two and one  quarter of one  percent  (2.25%)  (the  "LIBOR
Margin") plus the LIBOR Rate determined for the applicable Interest Period.

         Each change in the  Reference  Rate shall be  reflected in the interest
rate  described  in (i)  above  as of the  effective  date of such  change.  All
interest charges shall be computed on the basis of a year of three hundred sixty
(360) days and actual days elapsed.  All interest  shall be payable to Lender on
the first day of each month hereafter.

                  (b) If any Event of Default  occurs,  then, from the date such
Event of Default occurs until it is cured, or if not cured until all Obligations
are paid and  performed in full,  the  Borrower  will pay interest on the unpaid
principal  balances of the  Revolving  Loans at a per annum rate 2% greater than
the rate of interest  otherwise  specified herein,  and the Letter of Credit Fee
shall be increased to three and one-half percent (3.50%) per annum.

<PAGE>

                  (c) Unused Line Fee.  For every month  during the term of this
Agreement, the Borrower shall pay the Lender a fee (the "Unused Line Fee") in an
amount equal to  three-eighths  of one percent (.375%) per annum,  multiplied by
the average daily amount by which the Maximum  Revolving Credit Line exceeds the
sum of (i) the average daily outstanding  amount of Revolving Loans and (ii) the
undrawn face amount of all outstanding Letters of Credit during such month, with
the unpaid balance calculated for this purpose by applying payments  immediately
upon receipt.  Such a fee, if any, shall be calculated on the basis of a year of
three hundred sixty (360) days and actual days elapsed,  and shall be payable to
the Lender on the first day of each month with respect to the prior month.

         3.2      Conversion and Continuation Elections.

                      (a) The Borrower may, upon  irrevocable  written notice to
the Lender in accordance with Subsection 3.2(b):

                           (i) elect,  as of any  Business  Day,  in the case of
         Reference Rate  Revolving  Loans to convert any such Loans (or any part
         thereof  in an  amount  not  less  than  $1,000,000,  or  that is in an
         integral multiple of $1,000,000 in excess thereof) into LIBOR Revolving
         Loans; or

                           (ii)  elect,  as of the  last  day of the  applicable
         Interest Period,  to continue any LIBOR Revolving Loans having Interest
         Periods  expiring  on such day (or any part  thereof)  in an amount not
         less than  $1,000,000 or that is in an integral  multiple of $1,000,000
         in excess thereof;

provided,  that if at any time the aggregate  amount of LIBOR Revolving Loans in
respect of any Borrowing is reduced,  by payment,  prepayment,  or conversion of
part  thereof to be less than  $1,000,000,  such  LIBOR  Revolving  Loans  shall
automatically convert into Reference Rate Revolving Loans, and on and after such
date the right of the Borrower to continue such Loans as, and convert such Loans
into, LIBOR Revolving Loans, as the case may be, shall terminate.

                  (b) The Borrower  shall  deliver a notice in the form attached
hereto as Exhibit "C"  ("Notice of  Conversion/Continuation")  to be received by
the Lender not later than 11:00 a.m. (Chicago, Illinois time) at least three (3)
Business Days in advance of the date of conversion or  continuing,  if the Loans
are to be converted into or continued as LIBOR Revolving Loans and specifying:

                           (A)  the proposed Conversion/Continuation Date;

                           (B)  the aggregate amount of Loans to be converted or
continued;

                           (C)  the type of  Loans resulting  from the proposed 
conversion or continuation; and

                           (D)  the duration of the  requested  Interest Period.

<PAGE>

                  (c) If upon the expiration of any Interest  Period  applicable
to LIBOR  Revolving  Loans,  the  Borrower  has  failed to  select  timely a new
Interest  Period to be applicable to LIBOR  Revolving Loans or if any Default or
Event of Default  then exists,  the Borrower  shall be deemed to have elected to
convert such LIBOR Revolving Loans into Reference Rate Revolving Loans effective
as of the expiration date of such Interest Period.

                  (d) During the existence of a Default or Event of Default, the
Borrower  may not elect to have a Loan  converted  into or  continued as a LIBOR
Revolving Loan.

                  (e) After giving effect to any conversion or  continuation  of
Loans, there may not be more than two (2) different Interest Periods in effect.

     3.3 Maximum Interest Rate. In no event shall any interest rate provided for
hereunder  exceed the maximum rate  permissible  for corporate  borrowers  under
applicable  law for  loans of the type  provided  for  hereunder  (the  "Maximum
Rate"). If, in any month, any interest rate, absent such limitation,  would have
exceeded the Maximum  Rate,  then the interest  rate for that month shall be the
Maximum Rate,  and, if in future months,  that interest rate would  otherwise be
less than the Maximum Rate,  then that interest rate shall remain at the Maximum
Rate until such time as the amount of interest paid hereunder  equals the amount
of interest  which would have been paid if the same had not been  limited by the
Maximum Rate. In the event that, upon payment in full of the  Obligations  under
this Agreement,  the total amount of interest paid or accrued under the terms of
this  Agreement is less than the total amount of interest  which would,  but for
this Section 3.3, have been paid or accrued if the interest rates  otherwise set
forth in this  Agreement  had at all times  been in  effect,  then the  Borrower
shall,  to the extent  permitted by  applicable  law, pay the Lender,  an amount
equal to the  difference  between  (a) the lesser of (i) the amount of  interest
which  would have been  charged if the Maximum  Rate had, at all times,  been in
effect or (ii) the amount of interest  which would have accrued had the interest
rates  otherwise set forth in this Agreement,  at all times,  been in effect and
(b) the amount of interest actually paid or accrued under this Agreement. In the
event that a court  determines  that the Lender has received  interest and other
charges  hereunder  in excess of the Maximum  Rate,  such excess shall be deemed
received  on account  of,  and shall  automatically  be  applied to reduce,  the
Obligations other than interest, in the inverse order of maturity,  and if there
are no  Obligations  outstanding,  the Lender shall refund to the Borrower  such
excess.

     3.4 Facility  Fee.  The Borrower  will pay the Lender a facility fee in the
amount of $7,500 (the "Facility Fee"), which Facility Fee will be payable on the
Closing  Date,  and on each  March 31  (except  for  March 31,  1998),  June 30,
September 30 and December 31 after the Closing Date. The Lender and the Borrower
agree that the Facility Fee shall be financed by the Lender as a Revolving Loan.

     3.5 Closing  Fee.  The  Borrower  will pay the Lender on the Closing Date a
closing fee in the amount of $75,000  (the  "Closing  Fee").  The Lender and the
Borrower  agree  that the  Closing  Fee  shall be  financed  by the  Lender as a
Revolving Loan.

<PAGE>

     3.6 Letter of Credit Fee.  The  Borrower  agrees to pay to the Lender a fee
(the "Letter of Credit Fee") equal to one and one-half percent (1.50%) per annum
of the undrawn  face amount of each Letter of Credit  issued for the  Borrower's
account at the Borrower's request,  plus out-of-pocket  costs, fees and expenses
incurred by the Lender in connection with the application  for,  issuance of, or
amendment to any Letter of Credit,  which costs, fees and expenses could include
a  "fronting  fee"  required  to be paid by the  Lender to such  issuer  for the
assumption of the settlement risk in connection with the issuance of such Letter
of Credit;  the Letter of Credit Fee shall be payable  monthly in arrears on the
first day of each  month  following  any  month in which a Letter of Credit  was
issued  and/or in which a Letter of Credit  remains  outstanding.  The Letter of
Credit  Fee shall be  computed  on the basis of a  360-day  year for the  actual
number of days elapsed.

4.       PAYMENTS AND PREPAYMENTS.

     4.1 Revolving  Loans.  The Borrower shall repay the  outstanding  principal
balance of the Revolving  Loans,  plus all accrued but unpaid interest  thereon,
upon the termination of this Agreement for any reason. In addition,  and without
limiting the generality of the foregoing,  the Borrower shall pay to the Lender,
on demand,  the amount by which the unpaid  principal  balance of the  Revolving
Loans at any time exceeds the  Availability  at such time  (determined  for this
purpose as if the amount of the Revolving Loans were zero).

     4.2  Place  and Form of  Payments:  Extension  of  Time.  All  payments  of
principal,  interest, premium, and other sums due to the Lender shall be made at
the Lender's  address set forth in Section 15.10.  Except for Proceeds  received
directly by the Lender, all such payments shall be made in immediately available
funds. If any payment of principal,  interest,  premium, or other sum to be made
hereunder  becomes due and payable on a day other than a Business  Day,  the due
date of such payment shall be extended to the next  succeeding  Business Day and
interest  thereon shall be payable at the  applicable  interest rate during such
extension.

     4.3 Application and Reversal of Payments. The Lender shall determine in its
sole  discretion  the order and manner in which Proceeds of Collateral and other
payments that the Lender receives are applied to the Revolving  Loans,  interest
thereon,  and the other Obligations,  and the Borrower hereby irrevocably waives
the right to direct the application of any payment or Proceeds. The Lender shall
have the continuing and exclusive right to apply and reverse and reapply any and
all such Proceeds and payments to any portion of the Obligations.

<PAGE>

     4.4 INDEMNITY FOR RETURNED PAYMENTS.  IF AFTER RECEIPT OF ANY PAYMENT WHICH
IS APPLIED TO THE PAYMENT OF ALL OR ANY PART OF THE  OBLIGATIONS,  THE LENDER IS
FOR ANY REASON  COMPELLED TO SURRENDER  SUCH PAYMENT TO ANY PERSON  BECAUSE SUCH
PAYMENT IS INVALIDATED, DECLARED FRAUDULENT, SET ASIDE, DETERMINED TO BE VOID OR
VOIDABLE AS A PREFERENCE,  IMPERMISSIBLE  SETOFF, OR A DIVERSION OF TRUST FUNDS,
OR FOR ANY OTHER REASON,  THEN: THE  OBLIGATIONS OR PART THEREOF  INTENDED TO BE
SATISFIED  SHALL BE REVIVED AND CONTINUE AND THIS  AGREEMENT  SHALL  CONTINUE IN
FULL  FORCE AS IF SUCH  PAYMENT  HAD NOT BEEN  RECEIVED  BY THE  LENDER  AND THE
BORROWER  SHALL BE LIABLE TO PAY TO THE  LENDER AND HEREBY  DOES  INDEMNIFY  THE
LENDER AND HOLD THE LENDER HARMLESS FOR THE AMOUNT OF SUCH PAYMENT  SURRENDERED.
The provisions of this Section 4.4 shall be and remain effective notwithstanding
any  contrary  action  which may have been taken by the Lender in reliance  upon
such payment,  and any such contrary action so taken shall be without  prejudice
to the  Lender's  rights under this  Agreement  and shall be deemed to have been
conditioned  upon  such  payment  having  become  final  and  irrevocable.   The
provisions of this Section 4.4 shall survive the termination of this Agreement.

     5. LENDER'S BOOKS AND RECORDS:  MONTHLY  STATEMENTS.  The Borrower and each
member of the GTS Consolidated  Group agrees that the Lender's books and records
showing the Obligations and the transactions  pursuant to this Agreement and the
other Loan  Documents  shall be admissible  in any action or proceeding  arising
therefrom,  and shall  constitute  prima facie proof  thereof,  irrespective  of
whether  any  Obligation  is  also  evidenced  by a  promissory  note  or  other
instrument.  The Lender  will  provide to the  Borrower a monthly  statement  of
Loans,  payments,  and  other  transactions  pursuant  to this  Agreement.  Such
statement shall be deemed correct,  accurate, and binding on the Borrower and as
an account stated (except for reversals and  reapplications  of payments made as
provided in Section 4.3 and  corrections  of errors  discovered  by the Lender),
unless the Borrower notifies the Lender in writing to the contrary within thirty
(30) days after such statement is rendered. In the event a timely written notice
of  objections is given by the  Borrower,  only the items to which  exception is
expressly made will be considered to be disputed by the Borrower.

6.       TAXES, YIELD PROTECTION AND ILLEGALITY.

        6.1      Taxes.

                  (a) Any and all  payments by the  Borrower to the Lender under
this  Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for any Taxes. In addition,  the Borrower shall
pay all Other Taxes.

                  (b) The  Borrower  agrees to indemnify  and hold  harmless the
Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section) paid by
the Lender and any liability (including  penalties,  interest,  additions to tax
and expenses)  arising  therefrom or with respect  thereto,  whether or not such
Taxes or Other Taxes were  correctly  or legally  asserted.  Payment  under this
indemnification  shall be made  within 30 days after the date the  Lender  makes
written demand therefor.

                  (c) If the  Borrower  shall be  required  by law to  deduct or
withhold  any  Taxes  or  Other  Taxes  from or in  respect  of any sum  payable
hereunder to Lender, then:

                      (i) the sum payable  shall be  increased  as  necessary so
that after making all required deductions and withholdings (including deductions
and  withholdings  applicable to additional sums payable under this Section) the
Lender  receives an amount  equal to the sum it would have  received had no such
deductions or withholdings been made;

                      (ii)  the  Borrower   shall  make  such   deductions   and
withholdings;

                      (iii) the Borrower  shall pay the full amount  deducted or
withheld to the relevant taxing  authority or other authority in accordance with
applicable law; and

<PAGE>

                      (iv) the Borrower shall also pay to the Lender at the time
interest is paid, all additional amounts which the Lender specifies as necessary
to preserve the after-tax  yield the Lender would have received if such Taxes or
Other Taxes had not been imposed.

                  (d)  Within  30 days  after  the  date of any  payment  by the
Borrower of Taxes or Other  Taxes,  the  Borrower  shall  furnish the Lender the
original or a certified copy of a receipt evidencing  payment thereof,  or other
evidence of payment satisfactory to the Lender.

     6.2 Illegality.  (a) If the Lender  determines that the introduction of any
Requirement  of  Law,  or  any  change  in any  Requirement  of  Law,  or in the
interpretation  or  administration  of any  Requirement  of  Law,  has  made  it
unlawful,  or that any central bank or other Public  Authority has asserted that
it is unlawful,  for the Lender or its  applicable  lending office to make LIBOR
Revolving  Loans,  then, on notice  thereof by the Lender to the  Borrower,  any
obligation of the Lender to make LIBOR  Revolving Loans shall be suspended until
the Lender  notifies the  Borrower  that the  circumstances  giving rise to such
determination no longer exist.

                  (b) If the Lender  determines  that it is unlawful to maintain
any LIBOR Revolving Loan, the Borrower shall, upon its receipt of notice of such
fact and demand from the Lender,  prepay in full such LIBOR Revolving Loans then
outstanding,  together with interest accrued thereon, and amounts required under
Section  6.4,  either on the last day of the  Interest  Period  thereof,  if the
Lender may lawfully continue to maintain such LIBOR Revolving Loans to such day,
or immediately,  if the Lender may not lawfully  continue to maintain such LIBOR
Revolving  Loan.  If the  Borrower is required to so prepay any LIBOR  Revolving
Loan, then concurrently with such prepayment, the Borrower shall borrow from the
Lender, in the amount of such repayment, a Reference Rate Revolving Loan.

     6.3 Increased Costs and Reduction of Return.  (a) If the Lender  determines
that, due to either (i) the introduction of or any change in the  interpretation
of any law or regulation or (ii) the compliance by the Lender with any guideline
or request  from any  central  bank or other  Public  Authority  (whether or not
having the force of law),  there shall be any increase in the cost to the Lender
of agreeing to make or making, funding or maintaining any LIBOR Revolving Loans,
then the Borrower shall be liable for, and shall from time to time, upon demand,
pay to the Lender, additional amounts as are sufficient to compensate the Lender
for such increased costs.

<PAGE>

                  (b)  If  the  Lender  shall  have   determined  that  (i)  the
introduction of any Capital Adequacy Regulation,  (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital  Adequacy  Regulation by any central bank or other Public  Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Lender or any corporation  controlling the Lender with any Capital  Adequacy
Regulation,  affects or would affect the amount of capital, reserves, or special
deposits  required or expected to be maintained by the Lender or any corporation
controlling  the Lender and (taking  into  consideration  such  Lender's or such
corporation's  policies  with  respect to  capital  adequacy  and such  Lender's
desired return on capital) determines that the amount of such capital, reserves,
or special  deposits is  increased  as a  consequence  of its loans,  credits or
obligations  under  this  Agreement,  then,  upon  demand  of the  Lender to the
Borrower,  the Borrower shall pay to the Lender,  from time to time as specified
by the Lender,  additional  amounts sufficient to compensate the Lender for such
increase.  Notwithstanding the foregoing,  (i) all such amounts shall be subject
to the  provisions  of Section 3.3,  and (ii) if, as a result of the  additional
amounts  required  under this Section  6.3(b),  the result is an increase in the
otherwise  applicable  interest rate by at least one-half of one percent (.50%),
then Borrower may,  within ninety (90) days of the imposition of such additional
amounts  and upon  giving  Lender  thirty  (30) days  notice in  advance  of its
election to do so,  terminate  this Agreement and prepay all  Obligations,  such
prepayment to be without  premium or penalty  except as provided in Section 6.4,
if applicable.

     6.4 Funding  Losses.  The Borrower shall  reimburse the Lender and hold the
Lender  harmless  from any loss or expense which the Lender may sustain or incur
as a consequence of:

            (a) the  failure  of the  Borrower  to make on a  timely  basis  any
payment of principal of any LIBOR Revolving Loan;

            (b) the  failure of the  Borrower  to borrow,  continue or convert a
Loan  after the  Borrower  has  given  (or is deemed to have  given) a Notice of
Borrowing or a Notice of Conversion/Continuation;

            (c) the prepayment or other payment  (including  after  acceleration
thereof)  of an  LIBOR  Revolving  Loan on a day that is not the last day of the
relevant  Interest  Period;  including any such loss or expense arising from the
liquidation  or  reemployment  of funds  obtained  by it to  maintain  its LIBOR
Revolving  Loans or from fees payable to terminate  the deposits from which such
funds were obtained.

     6.5 Inability to Determine Rates. If the Lender reasonably  determines that
for any reason  adequate and reasonable  means do not exist for  determining the
LIBOR Rate for any requested  interest  Period with respect to a proposed  LIBOR
Revolving  Loan, or that the LIBOR Rate for any requested  Interest  Period with
respect  to a  proposed  LIBOR  Revolving  Loan does not  adequately  and fairly
reflect the cost to the Lender of funding such Loan, the Lender will promptly so
notify  the  Borrower.  Thereafter,  the  obligation  of the  Lender  to make or
maintain LIBOR  Revolving  Loans  hereunder  shall be suspended until the Lender
revokes such notice in writing.  Upon  receipt of such notice,  the Borrower may
revoke  any  Notice  of  Borrowing  or Notice  of  Conversion/Continuation  then
submitted by it. If the Borrower  does not revoke such Notice,  the Lender shall
make, convert or continue the Loans, as proposed by the Borrower,  in the amount
specified in the  applicable  notice  submitted by the Borrower,  but such Loans
shall be made,  converted or continued as Reference Rate Revolving Loans instead
of LIBOR Revolving Loans.

     6.6  Survival.  The  agreements  and  obligations  of the  Borrower in this
Section 6 shall survive the payment of all other Obligations.

<PAGE>

7.       COLLATERAL.

         7.1      Grant of Security Interest.

                  (a) As security  for the  Obligations,  the  Borrower and each
member of the GTS  Consolidated  Group  hereby  grant to the Lender a continuing
security  interest  in,  lien  on,  and  assignment  of:  (i)  all  Receivables,
Inventory,  Proprietary  Rights,  Investment  Property  and  Proceeds,  wherever
located and whether now  existing or  hereafter  arising or  acquired;  (ii) all
moneys, securities and other property and the Proceeds thereof, now or hereafter
held or received  by, or in transit  to, the Lender from or for the  Borrower or
any member of the GTS  Consolidated  Group,  whether  for  safekeeping,  pledge,
custody, transmission,  collection or otherwise,  including, without limitation,
all of the  deposit  accounts,  credits,  and  balances  with the Lender and all
claims of the Borrower and each member of the GTS Consolidated Group against the
Lender at any time  existing;  (iii) all  deposit  accounts  with any  financial
institutions  with which  Borrower or any member of the GTS  Consolidated  Group
maintains deposits;  and (iv) all books,  records and other Property relating to
or referring to any of the foregoing,  including, without limitation, all books,
records,  ledger cards,  data processing  records,  computer  software and other
property  and  general  intangibles  at any time  evidencing  or relating to the
Receivables,  Inventory,  Proprietary Rights, Investment Property, Proceeds, and
other property referred to above (all of the foregoing,  together with all other
property  in which the Lender may at any time be  granted a Lien,  being  herein
collectively referred to as the "Collateral").  The Lender shall have all of the
rights of a secured party with respect to the Collateral under the UCC and other
applicable laws.

                  (b) All Obligations  shall constitute a single loan secured by
the Collateral.  The Lender may, in its sole discretion, (i) exchange, waive, or
release any of the  Collateral,  (ii) apply  Collateral  and direct the order or
manner  of  sale  thereof  as  the  Lender  may  determine,  and  (iii)  settle,
compromise,  collect,  or otherwise  liquidate any Collateral in any manner, all
without affecting the Obligations or the Lender's right to take any other action
with respect to any other Collateral.

     7.2 Perfection and Protection of Security  Interest.  The Borrower and each
member of the GTS  Consolidated  Group shall, at its expense,  perform all steps
reasonably  requested by the Lender at any time to perfect,  maintain,  protect,
and enforce the Security Interest  including,  without  limitation:  (a) causing
Parent to execute  and record the Patent and  Trademark  Assignments  (provided,
however,  that Lender agrees not to record any such  assignments  outside of the
United  States  unless and until an Event of Default has occurred) and executing
and filing financing or continuation statements, and amendments thereof, in form
and  substance  satisfactory  to the Lender;  (b)  delivering  to the Lender the
original  certificates  of title for motor  vehicles with the Security  Interest
properly  endorsed  thereon  if  required;  (c)  delivering  to the  Lender  the
originals  of all  instruments,  documents,  and  chattel  paper,  and all other
Collateral of which the Lender determines it should have physical  possession in
order to perfect and protect the Security  Interest  therein,  duly  endorsed or
assigned  to the  Lender  without  restriction;  (d)  delivering  to the  Lender
warehouse  receipts covering any portion of the Collateral located in warehouses
and for which  warehouse  receipts  are issued;  (e)  transferring  Inventory to
warehouses  designated by the Lender;  (f) placing  notations on the  Borrower's
books of account to disclose the Security Interest; (g) executing and delivering
to the  Lender a  security  agreement  relating  to the  Reversions  in form and
substance  satisfactory to the Lender;  (h) delivering to the Lender all letters


<PAGE>

of credit on which the Borrower is named beneficiary;  and (i) taking such other
steps as are deemed  necessary by the Lender to maintain the Security  Interest.
To the extent  permitted by  applicable  law,  the Lender may file,  without the
Borrower's signature or that of any member of the GTS Consolidated Group, one or
more financing  statements  disclosing the Security Interest.  All parties agree
that  a  carbon,  photographic,  photostatic,  or  other  reproduction  of  this
Agreement or of a financing statement is sufficient as a financing statement. If
any Collateral is at any time in the possession or control of any  warehouseman,
bailee or any of the Borrower's  agents or  processors,  then the Borrower shall
notify the Lender thereof and shall notify such Person of the Security  Interest
in such Collateral and, upon the Lender's request,  instruct such Person to hold
all  such   Collateral  for  the  Lender's   account  subject  to  the  Lender's
instructions.  If at any time any Collateral is located on any Premises that are
not owned by the Borrower,  then the Borrower shall obtain written  waivers,  in
form and substance  satisfactory to the Lender,  of all present and future Liens
to which the owner or lessor or any  mortgagee of such  Premises may be entitled
to assert against the Collateral.  From time to time, the Borrower  shall,  upon
Lender's request,  execute and deliver confirmatory written instruments pledging
to the  Lender the  Collateral,  but the  Borrower's  failure to do so shall not
affect or limit the Security Interest or the Lender's other rights in and to the
Collateral.  So long as this  Agreement  is in effect and until all  Obligations
have been fully  satisfied,  the Security  Interest shall continue in full force
and effect in all Collateral  (whether or not deemed eligible for the purpose of
calculating the Availability or as the basis for any advance, loan, extension of
credit, or other financial accommodation).

     7.3  Location  of  Collateral.  The  Borrower  and each  member  of the GTS
Consolidated  Group  represent and warrant to the Lender that:  (a) Schedule 7.3
hereto is a correct  and  complete  list of the  chief  executive  office of the
Borrower  and each member of the GTS  Consolidated  Group,  the  location of its
books and records, the locations of the Collateral,  and the locations of all of
its other places of business and (b) Schedule 7.3  correctly  identifies  any of
such  facilities and locations that are not owned by the Borrower and sets forth
the names of the owners and lessors or  sub-lessors  of, and, to the best of the
Borrower's  knowledge,  the holders of any  mortgages  on, such  facilities  and
locations.  The Borrower and each member of the GTS Consolidated  Group covenant
and agree that they will not maintain any  Collateral at any location other than
those listed on Schedule 7.3, and they will not  otherwise  change or add to any
of such  locations,  unless they give the Lender at least 30 days prior  written
notice thereof and execute any and all financing  statements and other documents
that the Lender requests in connection therewith.

     7.4 Title to,  Liens on, and Sale and Use of  Collateral.  The Borrower and
each member of the GTS  Consolidated  Group  represent and warrant to the Lender
that:  (a) all  Collateral  is and will continue to be owned by the Borrower and
the  members  of the  GTS  Consolidated  Group  free  and  clear  of  all  Liens
whatsoever,  except for the Security Interest and other Permitted Liens; (b) the
Security  Interest  will not be subject  to any prior Lien  except for the Liens
described in (b), (c), (e), (f), (h), (i) and (j) of the definition of Permitted
Liens; (c) the Borrower and each member of the GTS Consolidated  Group will use,
store,  and maintain the Collateral  with all  reasonable  care and will use the
Collateral for lawful purposes only; and (d) the Borrower and each member of the
GTS Consolidated  Group will not,  without the Lender's prior written  approval,
sell,  lease,  or dispose of or permit the sale or disposition of the Collateral
or any portion thereof,  except for sales of Inventory and sales of Equipment in
the ordinary  course of business.  The  inclusion of Proceeds in the  Collateral
shall not be deemed the Lender's consent to any sale or other disposition of the
Collateral except as expressly permitted herein.

<PAGE>

     7.5 Appraisals.  Whenever an Event or Event of Default exists,  and at such
other times not more  frequently  than once a year as the Lender  requests,  the
Borrower shall, at its expense and upon the Lender's request, provide the Lender
with  appraisals  or  updates  thereof of any or all of the  Collateral  from an
appraiser.  The expenses for all appraisals conducted prior to the occurrence of
an Event of Default for which Borrower shall be liable will not exceed,  in each
instance,  an amount equal to $200 times the number of stores open at that time.
After  an  Event  or Event of  Default,  Borrower  will be  liable  for all such
expenses, regardless of amount.

     7.6 Access and  Examination.  The Lender may at all  reasonable  times have
access to,  examine,  audit,  make  extracts  from and  inspect  the  Borrower's
records,  files,  and books of account  and the  Collateral  and may discuss the
Borrower's  affairs with the Borrower's  officers and  management.  The Borrower
will  deliver to the Lender any  instrument  necessary  for the Lender to obtain
records from any service bureau maintaining records for the Borrower. The Lender
may, at any time when an Event of Default exists and at the Borrower's  expense,
make copies of all of the Borrower's books and records,  or require the Borrower
to deliver  such copies to the Lender.  The Lender may,  without  expense to the
Lender, use such of the Borrower's personnel,  supplies,  and Premises as may be
reasonably necessary for maintaining or enforcing the Security Interest.  Lender
shall have the right,  at any time, in Lender's name or in the name of a nominee
of the Lender,  to verify the validity,  amount or any other matter  relating to
the Accounts, by mail, telephone, or otherwise.

     7.7 Insurance.  The Borrower  shall insure the  Collateral  against loss or
damage by fire with  extended  coverage,  theft,  burglary,  pilferage,  loss in
transit,  and such other hazards as the Lender shall specify, in amounts,  under
policies and by insurers acceptable to the Lender.  Borrower shall also maintain
flood insurance for all Premises where  Inventory is located,  in the event of a
designation  of the area in which real estate is located as a "flood prone" or a
"flood  risk  area"  (hereinafter  "SFHA")  as  defined  by the  Flood  Disaster
Protection Act of 1973, in an amount to be reasonably  determined by the Lender,
and  shall  comply  with  the  additional  requirements  of the  National  Flood
Insurance  Program as set forth therein.  The Borrower shall also maintain flood
insurance  for its  Inventory  which is  located  at any  time in an  SFHA.  The
Borrower shall cause the Lender to be named in each such policy as secured party
or mortgagee and loss payee or additional insured, in a manner acceptable to the
Lender. Each policy of insurance shall contain a clause or endorsement requiring
the insurer to give not less than thirty (30) days prior  written  notice to the
Lender in the event of cancellation of the policy for any reason  whatsoever and
a clause or  endorsement  stating  that the  interest of the Lender shall not be
impaired or  invalidated  by any act or neglect of the  Borrower or the owner of
any premises where  Collateral is located nor by the occupation of such premises
for purposes  more  hazardous  than are  permitted by such policy.  The Borrower
shall pay, upon Lender's  request,  all fees incurred by the Lender to determine
whether any of the real estate and other  Collateral  is located in a SFHA.  The
Borrower  shall also pay all  premiums  for such  insurance  when due, and shall
deliver to the Lender  certificates of insurance and, if requested,  photocopies
of the  policies.  If the  Borrower  fails to pay such fees or to  procure  such
insurance  or the premiums  therefor  when due, the Lender may (but shall not be
required to) do so and charge the costs thereof to the  Borrower's  loan account
as a Revolving  Loan. The Borrower shall promptly notify the Lender of any loss,
damage, or destruction to the Collateral or arising from its use, whether or not
covered by insurance.  The Lender is hereby  authorized to collect all insurance
proceeds  directly.  After  deducting  from such proceeds the expenses,  if any,
incurred by Lender in the collection or handling  thereof,  the Lender may apply
such  proceeds  to the  reduction  of the  Obligations  in such  order as Lender
determines,  or at the Lender's option may permit or require the Borrower to use
such money,  or any part  thereof,  to replace,  repair,  restore or rebuild the
Collateral in a diligent and  expeditious  manner with materials and workmanship
of  substantially  the same  quality  as  existed  before  the  loss,  damage or
destruction.

<PAGE>

     7.8  Collateral  Reporting.  The Borrower  will provide the Lender with the
following  documents at the following times in form  satisfactory to the Lender:
(a) on a monthly  basis  from  January  1 through  July 31 of each year and on a
bi-weekly  basis from August 1 through  December 31 of each year, or on a weekly
basis if  requested  by Lender,  perpetual  inventory  reports by  category  and
location;  (b) monthly agings of accounts  payable no later than the 10th day of
the following month; (c) upon request, copies of purchase orders,  invoices, and
delivery  documents  for  Inventory  acquired  by the  Borrower;  (d) such other
reports as to the  Collateral as the Lender shall request from time to time; and
(e)  certificates of an officer of the Borrower  certifying as to the foregoing.
If any of the Borrower's records or reports of the Collateral are prepared by an
accounting  service or other agent, the Borrower hereby  authorizes such service
or agent to deliver such records, reports, and related documents to the Lender.

     7.9 Accounts.  The Borrower and each member of the GTS  Consolidated  Group
hereby  represents  and  warrants to the Lender and agrees with the Lender that:
(i) each existing Account represents,  and each future Account will represent, a
bona fide sale or lease and delivery of goods by the  Borrower,  or rendition of
services by the Borrower,  in the ordinary  course of the  Borrower's  business;
(ii) each existing Account is, and each future Account will be, for a liquidated
amount  payable  by the  Account  Debtor  thereon  on the terms set forth in the
invoice  therefor or in the schedule  thereof  delivered to the Lender,  without
offset, deduction,  defense, or counterclaim;  (iii) no payment will be received
with respect to any Account, and no credit, discount, or extension, or agreement
therefor  will be granted on any  Account,  except as  reported to the Lender in
accordance  with this  Agreement;  and (iv) all goods  described in each invoice
will have been  delivered to the Account Debtor and all services of the Borrower
described in each invoice will have been performed.

     7.10 Collection of Accounts: Payments.

                  (a) Until the Lender  notifies the  Borrower to the  contrary,
the Borrower shall make collection of all Accounts and other  Collateral for the
Lender,   shall  receive  all  payments  as  the  Lender's  trustee,  and  shall
immediately  deliver  all  payments  to the Lender in their  original  form duly
endorsed  in blank into a Payment  Account  established  for the  account of the
Borrower at a bank acceptable to Lender and subject to documentation  acceptable
to lender. All fund deposited into a Payment Account shall remain subject to the
control of the Borrower until such time as a Triggering Event shall occur.  Upon
the happening of a Triggering  Event, all funds deposited into a Payment Account
shall  be wire  transferred  each  day to the  Lender  for  application  against
outstanding  Revolving  Loans.  In the event that a  Triggering  Event no longer
exists for a period of ninety (90)  consecutive  days, the Lender shall instruct
the bank maintaining a Payment Account to cease transferring funds to the Lender
and to  resume  following  the  instructions  of  the  Borrower.  Following  the
occurrence  of a  Triggering  Event,  all  collections  received  in any Payment
Account or directly by the Borrower or the Lender,  and all funds in any Payment
Account or other account to which such  collections are deposited,  shall be the
sole property of the Lender and subject to the Lender's sole control. The Lender
or the Lender's  designee  may, at any time,  notify  obligors that the Accounts
have been assigned to the Lender and of the Security Interest  therein,  and may
collect  them  directly  and charge the  collection  costs and  expenses  to the
Borrower's  loan  account as a Revolving  Loan.  At the  Lender's  request,  the
Borrower  shall  execute and deliver to the Lender such  documents as the Lender
shall  require  to grant  the  Lender  access  to any post  office  box in which
collections of Accounts are received.

<PAGE>

                  (b) If sales of  Inventory  are made for  cash,  the  Borrower
shall  immediately  deliver to the Lender the identical  checks,  cash, or other
forms of payment which the Borrower receives.

                  (c) All payments received by the Lender on account of Accounts
or as Proceeds of other  Collateral  will be the Lender's sole property and will
be credited to the Borrower's loan account  (conditional  upon final collection)
immediately upon receipt.

                  (d) In the event the  Borrower  repays all of the  Obligations
upon the termination of this Agreement,  other than through the Lender's receipt
of payments on account of Accounts or Proceeds of other Collateral, such payment
will be credited  (conditional  upon final  collection) to the  Borrower's  loan
account immediately after the Lender's receipt thereof.

     7.11 Inventory.  The Borrower and each member of the GTS Consolidated Group
represent  and  warrant to the Lender that all of the  Inventory  is and will be
held for sale or lease,  or to be furnished in connection  with the rendition of
services in the ordinary  course of the  Borrower's  business and is and will be
fit for  such  purposes.  The  Borrower  will  keep  the  Inventory  in good and
marketable  condition,  at its own expense. The Borrower will not, without prior
written notice to the Lender,  acquire or accept any Inventory on consignment or
approval.  The Borrower agrees that Borrower will make all reasonable efforts to
assure that all Inventory  will be produced in accordance  with the Federal Fair
Labor Standards Act of 1938, as amended, and all rules, regulations,  and orders
thereunder. The Borrower will maintain a perpetual inventory reporting system at
all times.  The Borrower will conduct a physical count of the Inventory at least
once per Fiscal Year, and at such other times as the Lender requests,  and shall
promptly supply the Lender with a copy of such count  accompanied by a report of
the value of such  Inventory  (valued at the lower of cost,  on an average  cost
basis,  or market  value).  The  Borrower  will not without the  Lender's  prior
written consent,  sell any Inventory on a  bill-and-hold,  guaranteed sale, sale
and return, sale on approval, consignment, or other repurchase or return basis.

     7.12 RESERVED.

     7.13 RESERVED.

     7.14  Documents,  Instruments,  and Chattel  Paper.  The  Borrower and each
member of the GTS  Consolidated  Group represent and warrant to the Lender that:
(a) all documents,  instruments,  and chattel paper describing,  evidencing,  or
constituting  Collateral,  and all signatures and endorsements  thereon, are and
will be  complete,  valid,  and  genuine;  and (b) all goods  evidenced  by such
documents,  instruments, and chattel paper are and will be owned by the Borrower
free and clear of all Liens other than Permitted Liens.

<PAGE>

     7.15 Right to Cure. The Lender may, in its sole discretion and at any time,
pay any amount or do any act  required of the  Borrower  hereunder  to preserve,
protect,  maintain or enforce the  Obligations,  the  Collateral or the Security
Interest,  and  which  the  Borrower  fails  to pay or  do,  including,  without
limitation, payment of any judgment against the Borrower, any insurance premium,
any warehouse charge,  any finishing or processing charge, any landlord's claim,
and any other Lien upon or with respect to the Collateral. All payments that the
Lender makes under this Section 7.15, and all  out-of-pocket  costs and expenses
that the  Lender  pays or  incurs  in  connection  with any  action  taken by it
hereunder  shall be charged to the Borrower's  loan account as a Revolving Loan.
Any payment  made or other  action  taken by the Lender  under this Section 7.15
shall be without  prejudice to any right to assert an Event of Default hereunder
and to proceed thereafter as herein provided.

     7.16  Power  of  Attorney.   The  Borrower  and  each  member  of  the  GTS
Consolidated  Group hereby appoint the Lender and the Lender's  designees as the
attorney  for the  Borrower,  with power:  (a)  following  the  occurrence  of a
Triggering  Event,  to  endorse  such  entity's  name  on  any  checks,   notes,
acceptances,  money orders, or other forms of payment or security that come into
the Lender's possession,  and to sign such entity's name on any invoice, bill of
lading, or other document of title relating to any Collateral, on drafts against
customers; (b) to sign such entity's name on assignments of Accounts, on notices
of assignment,  financing  statements and other public records, on verifications
of  Accounts  and on notices to Account  Debtors;  (c) to notify the post office
authorities, when an Event of Default exists, to change the address for delivery
of such  entity's  mail to an address  designated  by the Lender and to receive,
open and dispose of all mail addressed to the Borrower; (d) to send requests for
verification of Accounts to Account Debtors;  and (e) to do all things necessary
to  carry  out  this  Agreement.  The  Borrower  and  each  member  of  the  GTS
Consolidated  Group  ratify and approve all acts of such  attorney.  Neither the
Lender  nor the  attorney  will be liable for any acts or  omissions  or for any
error of judgment or mistake of fact or law.  This power,  being coupled with an
interest,  is  irrevocable  until this  Agreement  has been  terminated  and the
Obligations have been fully satisfied.

     7.17 Lender's Rights, Duties, and Liabilities. The Borrower and each member
of the GTS Consolidated  Group assumes all  responsibility and liability arising
from or relating  to the use,  sale,  or other  disposition  of the  Collateral.
Neither the Lender nor any of its  officers,  directors,  employees,  and agents
shall be  liable or  responsible  in any way for the  safekeeping  of any of the
Collateral,  or for any act or failure to act with respect to the Collateral, or
for any loss or damage thereto,  or for any diminution in the value thereof,  or
for any act or default of any warehouseman,  carrier, forwarding agency or other
person  whomsoever,  all of which  shall be at the  Borrower's  sole  risk.  The
Obligations shall not be affected by any failure of the Lender to take any steps
to perfect the Security  Interest or to collect or realize upon the  Collateral,
nor shall loss of or damage to the  Collateral  release the Borrower from any of
the  Obligations.  The Lender may (but shall not be required to), without notice
to or consent from the Borrower or any member of the GTS Consolidated Group, sue
upon or otherwise  collect,  extend the time for payment of, modify or amend the
terms of,  compromise or settle for cash,  credit,  or otherwise upon any terms,
grant other indulgences,  extensions,  renewals,  compositions, or releases, and
take or omit to take any  other  action  with  respect  to the  Collateral,  any
security  therefor,  any agreement  relating thereto,  any insurance  applicable
thereto,  or any Person liable  directly or indirectly in connection with any of
the foregoing,  without  discharging or otherwise affecting the liability of the
Borrower  or any member of the GTS  Consolidated  Group for the  Obligations  or
under this Agreement or any other  agreement now or hereafter  existing  between
the Lender and the Borrower or any member of the GTS Consolidated Group.

<PAGE>

8.       BOOKS AND RECORDS: FINANCIAL INFORMATION: NOTICE.

     8.1 Books and  Records.  Each  member of the GTS  Consolidated  Group shall
maintain,  at all times,  correct and  complete  books,  records and accounts in
which  complete,  correct  and timely  entries are made of its  transactions  in
accordance  with GAAP  consistent  with those applied in the  preparation of the
Financial Statements.  Each member of the GTS Consolidated Group shall, by means
of appropriate entries, reflect in such accounts and in all Financial Statements
proper  liabilities  and  reserves  for  all  taxes  and  proper  provision  for
depreciation  and amortization of Property and bad debts, all in accordance with
GAAP.  Each member of the GTS  Consolidated  Group  shall  maintain at all times
books and records  pertaining to the Collateral in such detail,  form, and scope
as the Lender shall reasonably require, including without limitation records of:
(a) all payments received and all credits and extensions granted with respect to
the  Accounts;  (b) the return,  rejections  repossession,  stoppage in transit,
loss,  damage,  or  destruction  of any  Inventory;  and (c) all other  dealings
affecting the Collateral.

     8.2 Financial Information.  Each member of the GTS Consolidated Group shall
promptly  furnish to the Lender or its agents all such financial  information as
the Lender shall  reasonably  request,  and notify its auditors and  accountants
that the Lender is  authorized  to obtain such  information  directly from them.
Without limiting the foregoing,  the Parent and its Subsidiaries will furnish to
the Lender, in such detail as the Lender shall request, the following:

                  (a) As soon as  available,  but in any event not later than 90
days after the close of each Fiscal Year, consolidated and consolidating audited
balance sheets,  and statements of income and expense,  retained  earnings,  and
statements  of cash  flows  and  stockholders'  equity  for the  Parent  and its
consolidated  Subsidiaries  for such Fiscal  Year,  and the  accompanying  notes
thereto, setting forth in each case in comparative form figures for the previous
Fiscal Year, all in reasonable detail,  fairly presenting the financial position
and the results of operations of the Parent and its consolidated Subsidiaries as
at the date  thereof  and for the  Fiscal  Year  then  ended,  and  prepared  in
accordance  with GAAP.  Such  statements  shall be examined in  accordance  with
generally  accepted  auditing  standards by and  accompanied by a report thereon
unqualified as to scope of independent  certified public accountants selected by
the Parent and reasonably satisfactory to the Lender.

                  (b) As soon as  available,  but in any event not later than 45
days after the close of each fiscal  quarter other than the fourth  quarter of a
Fiscal Year,  consolidated  and  consolidating  unaudited  balance sheets of the
Parent and its  consolidated  Subsidiaries  as at the end of such  quarter,  and
consolidated and  consolidating  unaudited  statements of income and expense and
statements of cash flows for the Parent and its  consolidated  Subsidiaries  for
such quarter and for the period from the beginning of the Fiscal Year to the end
of such quarter, together with the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and results of operation of the
Parent and its  consolidated  Subsidiaries  as at the date  thereof and for such
periods,  prepared in accordance with GAAP consistent with the audited Financial
Statements  required  pursuant  to  Section  8.2(a).  Such  statements  shall be
certified  to be correct by the chief  financial  or  accounting  officer of the
Parent, subject to normal year-end adjustments.

<PAGE>

                  (c) As soon as  available,  but in any event not later than 30
days  after the end of each  month,  consolidated  and  consolidating  unaudited
balance sheets of the Parent and its consolidated  Subsidiaries as at the end of
such month, and consolidated and  consolidating  unaudited  statements of income
and expenses for the Parent and its consolidated Subsidiaries for such month and
for the period from the  beginning  of the Fiscal Year to the end of such month,
all in reasonable  detail,  fairly presenting the financial position and results
of operation and cash flows of the Parent and its  consolidated  Subsidiaries as
at the date thereof and for such periods,  and prepared in accordance  with GAAP
consistent with the audited  Financial  Statements  required pursuant to Section
8.2(a).  Such statements shall be certified to be correct by the chief financial
or accounting officer of the Parent, subject to normal year-end adjustments.

                  (d) With each of the audited  Financial  Statements  delivered
pursuant to Section 8.2(a),  a certificate of the independent  certified  public
accountants  that examined such statements to the effect that they have reviewed
and are familiar with the Loan  Documents and that, in examining  such Financial
Statements,  they  did not  become  aware of any fact or  condition  which  then
constituted an Event or Event of Default, except for those, if any, described in
reasonable detail in such certificate.

                  (e) With each of the annual  audited and  quarterly  unaudited
Financial  Statements  delivered  pursuant  to  Sections  8.2(a) and  8.2(b),  a
certificate of the chief executive or chief financial  officer of the Parent (i)
setting forth in reasonable  detail the calculations  required to establish that
the GTS  Consolidated  Group was in  compliance  with its covenants set forth in
Sections  10.19  through  10.22  during  the period  covered  in such  Financial
Statements,  and (ii) stating that,  except as explained in reasonable detail in
such  certificate,  (A) all of the  representations  and  warranties  of the GTS
Consolidated  Group contained in this Agreement and the other Loan Documents are
correct and complete as at the date of such certificate as if made at such time,
(B) no Event or Event of  Default  then  exists or  existed  during  the  period
covered by such  Financial  Statements,  and (iii)  describing  and analyzing in
reasonable  detail  all  material  trends,  changes  and  developments  in  such
Financial  Statements.  If such certificate  discloses that a representation  or
warranty is not correct or complete,  or that a covenant  has not been  complied
with, or that an Event or Event of Default existed or exists,  such  certificate
shall set forth what  action the  Borrower  has taken or  proposes  to take with
respect thereto.

                  (f) No sooner  than 90 days and no later than 30 days prior to
the  beginning of each Fiscal Year,  consolidated  and  consolidating  projected
balance  sheets,  statements of income and expense,  and statements of cash flow
for the GTS  Consolidated  Group  as at the end of and for  each  month  of such
Fiscal Year.

                  (g) Within 45 days  after the end of each  fiscal  quarter,  a
report of Available Development Capital, a roll-forward of Available Development
Capital from the prior fiscal quarter,  a report of the Capital  Expenditures of
the  Borrower for such  quarter and a schedule of the total  investments  in New
Store  Openings and the amount and terms of landlord  concessions  received with
respect to each new store,  prepared in accordance with GAAP consistent with the
audited Financial Statements required pursuant to Section 8.2(a).

                  (h) Promptly  after their  preparation,  copies of any and all
proxy  statements,  financial  statements,  and reports  which the Parent  makes
available to its stockholders.

<PAGE>

                  (i) Promptly  after filing with the PBGC,  DOL, or IRS, a copy
of each annual  report or other filing or notice filed with respect to each Plan
of the Parent or any ERISA Affiliate.

                  (j) Such additional information as the Lender may from time to
time reasonably  request regarding the financial and business affairs of the GTS
Consolidated  Group,  including,  without  limitation,   projections  of  future
operations on both a consolidated and consolidating basis.

     8.3 Notices to Lender.  The Borrower  shall notify the Lender in writing of
the following matters at the following times:

                  (a)  Immediately  after becoming aware of the existence of any
Event or Event of Default.

                  (b)  Immediately  after  becoming aware that the holder of any
capital  stock of the  Borrower  or of any Debt has  given  notice  or taken any
action with respect to a claimed default.

                  (c) Immediately  after becoming aware of any material  adverse
change in the Borrower's Property, business, operations, or condition (financial
or otherwise).

                  (d) Immediately after becoming aware of the entry of any final
judgment by any court, or of any pending or threatened action, suit, proceeding,
or counterclaim by any Person,  or any pending or threatened  investigation by a
Public Authority,  which may materially and adversely affect the Collateral, the
repayment of the Obligations,  the Lender's rights under the Loan Documents,  or
the  Borrower's  Property,  business,  operations,  or condition  (financial  or
otherwise).

                  (e)  Immediately  after  becoming  aware  of  any  pending  or
threatened strike, work stoppage, material unfair labor practice claim, or other
material  labor  dispute  affecting  the  Borrower  or any  member  of  the  GTS
Consolidated Group.

                  (f)  Immediately  after becoming aware of any violation of any
law,  statute,  regulation,  or ordinance of a Public  Authority  applicable  to
Borrower,  any Subsidiary,  or their respective  Properties which may materially
and  adversely  affect the  Collateral,  the repayment of the  Obligations,  the
Lender's rights under the Loan Documents, or the Borrower's Property,  business,
operations, or condition (financial or otherwise).

                  (g)  Immediately  after becoming aware of any violation by the
Borrower of Environmental  Laws or immediately upon receipt of any notice that a
Public  Authority  has  asserted  that the  Borrower is not in  compliance  with
Environmental Laws or that its compliance is being investigated.

                  (h)  Thirty (30) days prior to the Borrower changing its name.

<PAGE>

                  (i)  Immediately  after  becoming  aware of any  ERISA  Event,
accompanied  by any  materials  required to be filed with the PBGC with  respect
thereto;  immediately after the Borrower's  receipt of any notice concerning the
imposition of any withdrawal  liability under Section 4042 of ERISA with respect
to a Plan;  immediately upon the  establishment of any Pension Plan not existing
at the Closing Date or the  commencement of contributions by the Borrower to any
Pension Plan to which the Borrower was not contributing at the Closing Date; and
immediately upon becoming aware of any other event or condition regarding a Plan
or the  Borrower's  or an ERISA  Affiliate's  compliance  with ERISA,  which may
materially and adversely affect the Borrower's Property, business, operation, or
condition (financial or otherwise).

Each notice  given  under this  Section 8.3 shall  describe  the subject  matter
thereof in  reasonable  detail and shall set forth the action that the  Borrower
has taken or proposes to take with respect thereto.

9.       GENERAL WARRANTIES AND REPRESENTATIONS.

     The Borrower  and each member of the GTS  Consolidated  Group  continuously
warrant  and  represent  to the  Lender,  at all times  during  the term of this
Agreement  and  until  all  Obligations  have been  satisfied,  that,  except as
hereafter disclosed to and accepted by the Lender in writing:

     9.1 Authorization,  Validity,  and Enforceability of this Agreement and the
Loan Documents.  The Borrower and each member of the GTS Consolidated Group have
the corporate power and authority to execute, deliver and perform this Agreement
and the  other  Loan  Documents,  to incur  the  Obligations,  and to grant  the
Security  Interest.  The Borrower and each member of the GTS Consolidated  Group
have  taken all  necessary  corporate  action  (including,  without  limitation,
obtaining  approval of its  stockholders) to authorize its execution,  delivery,
and  performance  of this  Agreement and the other Loan  Documents.  No consent,
approval,  or  authorization  of, or  declaration  or filing  with,  any  Public
Authority,  and no consent of any other Person,  is required in connection  with
the execution,  delivery,  and  performance of this Agreement and the other Loan
Documents by the Borrower or any member of the GTS  Consolidated  Group,  except
for those already duly  obtained.  This  Agreement and the other Loan  Documents
have been duly executed and delivered by the Borrower and  constitute the legal,
valid  and  binding  obligation  of the  Borrower  and  each  member  of the GTS
Consolidated Group,  enforceable against it in accordance with its terms without
defense,  setoff, or counterclaim.  The execution,  delivery, and performance of
this  Agreement and the other Loan  Documents by the Borrower and each member of
the GTS  Consolidated  Group do not and will not conflict  with, or constitute a
violation or breach of, or constitute a default under, or result in the creation
or imposition of any Lien upon the Property of the Borrower or any member of the
GTS  Consolidated  Group (except as contemplated by this Agreement and the other
Loan Documents) by reason of the terms of (a) any mortgage, lease, agreement, or
instrument to which the Borrower or any member of the GTS Consolidated  Group is
a party or which is binding upon it, (b) any  judgment,  law,  statute,  rule or
governmental  regulation  applicable  to the  Borrower  or any member of the GTS
Consolidated  Group,  or (c) the  Certificate  or Articles of  Incorporation  or
By-Laws of the Borrower or any member of the GTS Consolidated Group.

<PAGE>

     9.2 Validity  and Priority of Security  Interest.  The  provisions  of this
Agreement and the other Loan  Documents  create legal and valid Liens on all the
Collateral in the Lender's favor, and when all proper filings,  recordings,  and
other  actions  necessary  to perfect  such Liens have been made or taken,  such
Liens will  constitute  perfected and  continuing  Liens on all the  Collateral,
having priority over all other Liens on the Collateral  except for the Permitted
Liens  identified  in Section 7.4 and  enforceable  against the Borrower and all
third parties.

     9.3 Organization and Qualification. The Borrower: (a) is a Missouri limited
partnership  duly organized and validly existing in good standing under the laws
of the  State  of  Missouri;  (b) is  qualified  to do  business  and is in good
standing in the States set forth on Schedule  9.3,  which are the only states in
which  qualification  is  necessary in order for it to own or lease its Property
and conduct its  business;  and (c) has all  requisite  power and  authority  to
conduct its business and to own its Property.

     9.4 Corporate Name;  Prior  Transactions.  The Borrower has not, during the
past five years,  been known by or used any other corporate or fictitious  name,
or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any Person,  or  acquired  any of its  Property  out of the
ordinary course of business, except as set forth on Schedule 9.4.

     9.5  Subsidiaries  and  Affiliates.  Schedule 9.5 is a correct and complete
list of the  name  and  relationship  to the  Borrower  of  each  and all of the
Borrower's  Subsidiaries  and  other  Affiliates.  Each  Subsidiary  is (a) duly
incorporated  and organized and validly existing in good standing under the laws
of its state of incorporation set forth on Schedule 9.5, and (b) qualified to do
business as a foreign  corporation  and in good standing in the states set forth
opposite  its name on  Schedule  9.5,  which are the only  states in which  such
qualification  is  necessary  in order for it to own or lease its  Property  and
conduct its business.

     9.6 Financial Statements and Projections.

                  (a) The  Borrower  has  delivered  to the Lender  the  audited
balance sheet and related statements of income,  retained  earnings,  changes in
financial position,  and changes in stockholders'  equity for the Borrower as of
December 28, 1996 and for the Fiscal Year then ended,  accompanied by the report
thereon of the Borrower's independent certified public accountants, Peat Marwick
& Co. The Borrower has also delivered to the Lender the unaudited  balance sheet
and related  statements  of income and  changes in  financial  position  for the
Borrower,  as at November 22, 1997,  and for the eleven months then ended.  Such
financial  statements  are attached  hereto as Exhibit  A-1. All such  financial
statements have been prepared in accordance with GAAP and present accurately and
fairly the Borrower's financial position as at the dates thereof and its results
of operations for the periods then ended.

<PAGE>

                  (b) The Latest  Projections  attached  hereto as  Exhibit  A-2
represent  the  Borrower's  best  estimate of the  Borrower's  future  financial
performance for the periods set forth therein.  The Latest Projections have been
prepared on the basis of the assumptions  set forth therein,  which the Borrower
believes are fair and reasonable in light of current and reasonably  foreseeable
business conditions.

     9.7  Capitalization.  The Parent's  authorized capital stock consists of 18
million  shares of common stock,  par value $.01 per share,  of which  4,405,269
shares are validly issued and outstanding,  fully paid and  non-assessable as of
September 27, 1997.

     9.8  Solvency.  The Borrower is Solvent prior to and after giving effect to
the transactions contemplated by this Agreement and each Revolving Loan.

     9.9 Debt. The Borrower has no Debt,  except (a) the  Obligations,  (b) Debt
set forth in the most recent Financial  Statements  delivered to the Lender,  or
the notes thereto, (c) trade payables and other contractual  obligations arising
in the ordinary course of business since the date of such Financial  Statements,
and (d) Debt  incurred  since the date of such  Financial  Statements to finance
Capital Expenditures permitted hereby.

     9.10  Distributions.  Since  September 27, 1997, no  Distribution  has been
declared,  paid,  or made  upon or in  respect  of any  capital  stock  or other
securities of the Borrower.

     9.11 Title to Property.  Except for Property which the Borrower leases, the
Borrower has good and  marketable  title in fee simple to the Premises and good,
indefeasible,  and  merchantable  title to all of its other Property  including,
without limitation, the assets reflected on the most recent Financial Statements
delivered  to the Lender,  except as  disposed of since the date  thereof in the
ordinary course of business.

     9.12  Adequate  Assets.  The  Borrower  possesses  adequate  assets for the
conduct of its business.

     9.13 Real Property; Leases. Schedule 9.13 is a correct and complete list of
all real  property  owned by the  Borrower,  all leases and subleases of real or
personal  property by the  Borrower as lessee or  sublessee,  and all leases and
subleases of real or personal  property by the Borrower as lessor or  sublessor.
Each of such leases and subleases is valid and  enforceable  in accordance  with
its terms and is in full  force and  effect  and no  default by any party to any
such lease or sublease exists.

     9.14  Proprietary  Rights.  Schedule 9.14 is a correct and complete list of
all the  Borrower's  Proprietary  Rights.  None of the  Proprietary  Rights  are
subject to any licensing agreement or similar arrangement except as set forth on
Schedule 9.14. None of the  Proprietary  Rights infringe on or conflict with any
other Person's Property and no other Person's Property infringes on or conflicts
with the Proprietary  Rights.  The Proprietary Rights described on Schedule 9.14
constitute  all of the  Property  of such  type  necessary  to the  current  and
anticipated future conduct of the Borrower's business.

<PAGE>

     9.15 Trade Names and Terms of Sale.  All trade names or styles  under which
the Borrower will sell Inventory or create Accounts,  or to which instruments in
payment of Accounts may be made payable, are listed on Schedule 9.15.

     9.16 Litigation.  Except as set forth on Schedule 9.16, there is no pending
or,  to  the  best  of  the  Borrower's  knowledge,   threatened  action,  suit,
proceeding,  or  counterclaim  by any  Person,  or  investigation  by any Public
Authority,  or any basis for any of the  foregoing,  which  may  materially  and
adversely affect the Collateral, the repayment of the Obligations,  the Lender's
rights  under  the  Loan  Documents,  or  the  Borrower's  Property,   business,
operations, or condition (financial or otherwise).

     9.17 Restrictive Agreements. The Borrower is not a party to any contract or
agreement,  and is not  subject to any charter or other  corporate  restriction,
which affects its ability to execute,  deliver,  and perform the Loan  Documents
and  repay  the  Obligations  or which  materially  and  adversely  affects  the
Borrower's   Property,   business,   operations,   or  condition  (financial  or
otherwise).

     9.18 Labor Disputes.  Except as set forth on Schedule 9.18: (a) there is no
collective  bargaining  agreement or other labor contract covering  employees of
the Borrower or any member of the GTS Consolidated Group; (b) no such collective
bargaining  agreement or other labor  contract is scheduled to expire during the
term of this Agreement;  (c) no union or other labor  organization is seeking to
organize,  or to be recognized as, a collective  bargaining unit of employees of
the  Borrower  or any member of the GTS  Consolidated  Group or for any  similar
purpose;  and  (d)  there  is no  pending  or,  to the  best  of the  Borrower's
knowledge,  threatened  strike,  work stoppage,  material  unfair labor practice
claims,  or other material labor dispute  against or affecting the Borrower,  or
any member of the GTS Consolidated Group or their respective employees.

     9.19  Environmental  Laws. Except as otherwise  disclosed on Schedule 9.19,
the Borrower and its  Subsidiaries  have complied in all material  respects with
all Environmental Laws applicable to its Premises and business,  and neither the
Borrower nor any Subsidiary nor any of its present  Premises or operations,  nor
its past property or  operations,  is subject to any  enforcement  order from or
liability  agreement with any Public Authority or private Person  respecting (i)
compliance  with any  Environmental  Law, or (ii) any potential  liabilities and
costs or remedial  action  arising from the release or  threatened  release of a
contaminant.

     9.20 No  Violation  of Law.  The  Borrower is not in  violation of any law,
statute,  regulation,  ordinance,  judgment,  order, or decree  applicable to it
which  violation  would in any  respect  materially  and  adversely  affect  the
Collateral, the repayment of the Obligations, the Lender's rights under the Loan
Documents,  or the  Borrower's  Property,  business,  operations,  or  condition
(financial or otherwise).

<PAGE>

     9.21 No Default.  The  Borrower is not in default with respect to any note,
indenture,  loan agreement,  mortgage,  lease, deed, or other agreement to which
the Borrower is a party or bound,  which default could reasonably be expected to
materially  and  adversely   affect  the   Collateral,   the  repayment  of  the
Obligations,  the Lender's  rights under the Loan  Documents,  or the Borrower's
Property, business, operations, or condition (financial or otherwise).

     9.22 ERISA Compliance. Except as specifically disclosed in Schedule 9.22:

                  (a) Each Plan is in compliance  in all material  respects with
the  applicable  provisions  of ERISA,  the Code and other federal or state law.
Each Plan which is  intended  to qualify  under  Section  401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the  Borrower,  nothing  has  occurred  which  would  cause  the loss of such
qualification.  The  Borrower  and each ERISA  Affiliate  have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding  waiver or an extension  of any  amortization  period  pursuant to
Section 412 of the Code has been made with respect to any Plan.

                  (b)  There  are no  pending  or,  to  the  best  knowledge  of
Borrower,  threatened  claims,  actions  or  lawsuits,  or action by any  Public
Authority,  with respect to any Plan which has resulted or could  reasonably  be
expected to result in a material  adverse effect on the  Borrower's  business or
operations.  There  has  been no  prohibited  transaction  or  violation  of the
fiduciary  responsibility  rules with  respect to any Plan which has resulted or
could  reasonably  be  expected  to result in a material  adverse  effect on the
Borrower's business or operations.

                  (c) (i) No ERISA Event has occurred or is reasonably  expected
to occur; (ii) no Pension Plan has any unfunded pension liability; (iii) neither
the Borrower nor any ERISA  Affiliate  has incurred,  or  reasonably  expects to
incur,  any  liability  under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent  under Section 4007 of ERISA);  (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur,  any liability  (and no event has occurred  which,  with the giving of
notice  under  Section  4219 of ERISA,  would  result in such  liability)  under
Section  4201 or 4243 of ERISA with  respect to a  Multiemployer  Plan;  and (v)
neither the Borrower nor any ERISA  Affiliate has engaged in a transaction  that
could subject any Person to Section 4069 or 4212(c) of ERISA.

     9.23 Taxes.  The Borrower and its  Subsidiaries  have filed all tax returns
and other  reports  required  to be filed and have paid all Taxes,  assessments,
fees and  other  governmental  charges  levied  or  imposed  upon  them or their
properties, income or assets that are otherwise due and payable.

<PAGE>

     9.24  Use of  Proceeds.  None  of the  transactions  contemplated  in  this
Agreement  (including,  without limitation,  the use of proceeds from the Loans)
will violate or result in the violation of Section 7 of the Securities  Exchange
Act of 1934, as amended,  or any regulations issued pursuant thereto,  including
without  limitation,  Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System ("Federal  Reserve Board"),  12 CFR, Chapter II. Borrower
does not own or  intend to carry or  purchase  any  "margin  stock"  within  the
meaning  of said  Regulations  U or G. None of the  proceed of the loans will be
used, directly or indirectly,  to purchase or carry (or refinance any borrowing,
the proceeds of which were used to purchase or carry) any "security"  within the
meaning of the Securities Exchange Act of 1934, as amended.

     9.25 Private Offerings.  Borrower has not, directly or indirectly,  offered
the  Loans  for sale to,  or  solicited  offers  to buy part  thereof  from,  or
otherwise  approached or negotiated  with respect  thereto with any  prospective
purchaser  other than Lender.  Borrower hereby agrees that neither it nor anyone
acting on its behalf has offered or will offer the Loans or any part  thereof or
any similar  securities for issue or sale to or solicit any offer to acquire any
of the  same  from  anyone  so as to  bring  the  issuance  thereof  within  the
provisions of Section 5 of the Securities Act of 1933, as amended.

     9.26 Broker's  Fees. No Person is entitled to any brokerage or finder's fee
with respect to the transactions described in this Agreement.

     9.27 No Material Adverse Change. No material adverse change has occurred in
the  Borrower's  Property,  business,  operations,  or conditions  (financial or
otherwise) since the date of the Financial  Statements  delivered to the Lender.
On the basis of a comprehensive review and assessment  undertaken by Borrower of
Borrower's  computer  applications  and  inquiry  made  of  Borrower's  material
suppliers,  vendors,  and customers Borrower  reasonably believes that the "Year
2000 problem" (that is, the risk that computer  applications  used by any Person
may be unable  to  recognize  and  perform  properly  date  sensitive  functions
involving  certain dates prior to and any date after December 31, 1999) will not
result in a material adverse change in the operations,  business, properties, or
condition (financial or otherwise) of the Borrower.

     9.28  Disclosure.  Neither  this  Agreement  nor any  document or statement
furnished to the Lender by or on behalf of the Borrower  hereunder  contains any
untrue  statement  of a  material  fact or  omits  to state  any  material  fact
necessary  in order to make the  statements  contained  herein  or  therein  not
misleading.

     10. AFFIRMATIVE AND NEGATIVE COVENANTS. The Borrower and each member of the
GTS Consolidated  Group covenants that, so long as any of the Obligations remain
outstanding or this Agreement is in effect:

     10.1 Taxes and Other  Obligations.  The Borrower and each member of the GTS
Consolidated Group of its Subsidiaries  shall: (a) file when due all tax returns
and other reports which it is required to file, pay, or provide for the payment,
when due, of all Taxes, fees, assessments and other governmental charges against
it or upon its Property,  income, and franchises,  make all required withholding
and other tax deposits,  and establish  adequate reserves for the payment of all
such items, and shall provide to the Lender, upon request, satisfactory evidence
of its timely compliance with the foregoing;  and (b) pay when due all Debt owed
by it and  perform  and  discharge  in a timely  manner  all  other  obligations
undertaken by it; provided,  however that the Borrower and its Subsidiaries need
not pay any tax, fee,  assessment,  governmental  charge, or Debt, or perform or
discharge  any  other  obligation,  that  it is  contesting  in  good  faith  by
appropriate proceedings diligently pursued.

<PAGE>

     10.2 Existence and Good  Standing.  The Borrower and each member of the GTS
Consolidated  Group shall maintain its existence and its  qualification and good
standing in all states  necessary to conduct its business and own its  Property,
and shall obtain and maintain all licenses, permits, franchises and governmental
authorizations necessary to conduct its business and own its Property.

     10.3 Compliance  with Law and  Agreements.  The Borrower and each member of
the GTS  Consolidated  Group shall comply with the terms and  provisions of each
judgment,  law, statute, rule, and governmental  regulation applicable to it and
each contract,  mortgage, lien, lease, indenture, order, instrument,  agreement,
or document to which it is a party or by which it is bound.

     10.4 Maintenance of Property and Insurance. The Borrower and each member of
the GTS Consolidated Group shall: (a) maintain all of its Property necessary and
useful in its business in good operating condition and repair, ordinary wear and
tear  excepted;  and (b) in addition to the  insurance  required by Section 7.7,
maintain with financially sound and reputable insurers such other insurance with
respect to its Property and business  against  casualties and  contingencies  of
such types (including, without limitation, business interruption,  environmental
liability,  public liability,  product liability,  and larceny,  embezzlement or
other criminal misappropriation) and in such amounts as is customary for Persons
of  established  reputation  engaged  in the  same  or a  similar  business  and
similarly  situated,  naming the Lender, at its request,  as additional  insured
under each such policy.

     10.5  Environmental  Laws.  The Borrower shall conduct its business in full
compliance  with all  Environmental  Laws applicable to it,  including,  without
limitation, those relating to the Borrower's generation, handling, use, storage,
and disposal of hazardous and toxic wastes and substances.

     10.6 ERISA.  The Borrower shall cause each Plan,  which has been designated
to be so, to be qualified  within the meaning of Section  401(a) of the Code and
to be  administered  in all respects in  compliance  with Section  401(a) of the
Code. The Borrower shall cause each Plan to be  administered  in all respects in
compliance with ERISA.

     10.7 Mergers, Consolidations,  Acquisitions, or Sales. Neither the Borrower
nor any member of the GTS Consolidated Group shall enter into any transaction of
merger, reorganization,  or consolidation,  or transfer, sell, assign, lease, or
otherwise  dispose of all or any part of its Property,  or wind up, liquidate or
dissolve,  or agree to do any of the  foregoing,  except  sales of  Inventory or
equipment in the ordinary course of its business. Notwithstanding the foregoing,
Borrower may grant  Permitted  Liens and incur Permitted Debt in connection with
its Property which is not part of the Collateral.

     10.8 Distributions;  Capital Changes.  Except for Permitted  Distributions,
neither the Borrower  nor any member of the GTS  Consolidated  Group shall:  (a)
directly or  indirectly  declare or make,  or incur any  liability to make,  any
Distribution,  except  Distributions  to the  Borrower  by a  member  of the GTS
Consolidated  Group; or (b) make any change in its capital structure which could
adversely affect the repayment of the Obligations.

     10.9 Transactions Affecting Collateral or Obligations. Neither the Borrower
nor any member of the GTS  Consolidated  Group shall enter into any  transaction
which materially and adversely affects the Collateral or the Borrower's  ability
to repay the Obligations.

<PAGE>

     10.10  Guaranties.   Neither  the  Borrower  nor  any  member  of  the  GTS
Consolidated  Group shall make, issue, or become liable on any Guaranty,  except
(i) Guaranties in favor of the Lender,  (ii)  endorsements  of  instruments  for
deposit,  and (iii)  guaranties by Parent of Borrower's  lease  obligations  and
Permitted Debt.

     10.11 Debt.  Neither the  Borrower  nor any member of the GTS  Consolidated
Group shall incur or maintain any Debt,  other than:  (a) the  Obligations;  (b)
trade payables and contractual  obligations to suppliers and customers  incurred
in the ordinary course of business;  (c) other Debt existing on the Closing Date
and  reflected  in the  Financial  Statements  attached as Exhibit  A-1; and (d)
Permitted Debt.

     10.12  Prepayment.   Neither  the  Borrower  nor  any  member  of  the  GTS
Consolidated Group shall voluntarily prepay any Debt, except (i) the Obligations
in accordance with their terms,  (ii) the ECO/Marshall  Debt in an amount not to
exceed  $300,000,  and (iii) the  prepayment  of trade  payables in the ordinary
course to take advantage of cash discounts.

     10.13  Transactions  with Affiliates.  Except as set forth below and except
for  Permitted  Distributions,  neither the  Borrower  nor any member of the GTS
Consolidated  Group  shall:  sell,  transfer,  distribute,  or pay any  money or
Property  to any  Affiliate,  or  lend  or  advance  money  or  Property  to any
Affiliate,  or invest in (by capital  contribution  or otherwise) or purchase or
repurchase any stock or indebtedness or any Property of any Affiliate, or become
liable on any Guaranty of the indebtedness,  dividends,  or other obligations of
any  Affiliate.  Notwithstanding  the  foregoing,  if no  Event of  Default  has
occurred and is  continuing,  the Borrower  and its  Subsidiaries  may engage in
transactions  with  Affiliates in the ordinary course of business in amounts and
upon terms fully  disclosed to the Lender and no less  favorable to the Borrower
or such  Subsidiary than would obtain in a comparable  arm's length  transaction
with a third party who is not an Affiliate.

     10.14  Business  Conducted.  The  Borrower  and  each  member  of  the  GTS
Consolidated  Group shall not engage,  directly  or  indirectly,  in any line of
business  other than the  businesses in which the Borrower and any member of the
GTS Consolidated Group are engaged on the Closing Date.

     10.15 Liens.  Neither the  Borrower nor any member of the GTS  Consolidated
Group shall create,  incur,  assume, or permit to exist any Lien on any Property
now owned or hereafter acquired by any of them, except Permitted Liens.

     10.16 New Store  Equipment  Financing.  Borrower has advised  Lender of its
intent to obtain New Store Equipment  Financing after the Closing Date. Borrower
and Lender have agreed that Borrower will not enter into any  agreements for New
Store Equipment Financing without Lender's prior written consent thereto,  which
consent  will not be  unreasonably  withheld.  If Lender  elects to withhold its
consent and Borrower  enters into a New Store  Equipment  Financing  arrangement
without such consent,  then Borrower may prepay all  Obligations  owed to Lender
without  premium or penalty,  notwithstanding  the provisions of Section 14, and
terminate this Agreement.

     10.17 New  Subsidiaries.  The Borrower  shall not,  directly or indirectly,
organize or acquire any Subsidiary other than those listed on Schedule 10.17.

<PAGE>

     10.18  Restricted  Investments.  Neither the Borrower nor any member of the
GTS Consolidated Group shall make any Restricted Investment.

     10.19 Capital Expenditures.  Neither the Borrower nor any member of the GTS
Consolidated  Group  shall  make or incur any  Capital  Expenditure  other  than
Capital  Expenditures  related to New Store  Openings,  if, after giving  effect
thereto,  the aggregate  amount of all Capital  Expenditures by the Borrower and
its Subsidiaries in any Fiscal Year would exceed $1,500,000.

     10.20 Fixed Charge  Coverage  Ratio.  The GTS  Consolidated  Group will not
permit  the  ratio  of (a)  EBITDA  to (b)  Fixed  Charges  to be less  than the
following  ratios as of the last day of each of the  following  fiscal  quarters
with each calculation based on a trailing 12-month basis:

                  Period                                           Ratio
                  ------                                           -----
         First fiscal quarter of 1998                           1.0 to 1.0
         Second fiscal quarter of 1998                          1.0 to 1.0
         Third fiscal quarter of 1998                           1.0 to 1.0
         Fourth fiscal quarter of 1998                          1.5 to 1.0
         First fiscal quarter of 1999                           1.0 to 1.0
         Second fiscal quarter of 1999                          1.0 to 1.0
         Third fiscal quarter of 1999                            .0 to 1.0
         Fourth fiscal quarter of 1999, and
         each fiscal quarter ending thereafter                  1.2 to 1.0

     10.21 New Store Openings. The Borrower shall not make any New Store Opening
after the Closing Date unless:

                  (1) at the  time of any such New  Store  Opening,  no Event or
         Event of  Default  has  occurred  or would  result  from such New Store
         Opening; and

                  (2)  sufficient  Available  Development  Capital exists at the
         time the Borrower  makes a  commitment  with regard to the proposed New
         Store Opening to pay all New Store Opening  Costs  associated  with the
         proposed New Store Opening.

     10.22 EBITDA.  The GTS Consolidated  Group will not allow EBITDA to be less
than (i) $1,600,000 as of the end of the 1997 Fiscal Year,  and (ii)  $3,250,000
as of the end of the 1998 Fiscal Year and thereafter.

     10.23  Further  Assurances.  The  Borrower  and  each  member  of  the  GTS
Consolidated  Group shall  execute  and  deliver,  or cause to be  executed  and
delivered, to the Lender such documents and agreements,  and shall take or cause
to be taken such actions, as the Lender may, from time to time, request to carry
out the terms and conditions of this Agreement and the other Loan Documents.

     11.  CLOSING;  CONDITIONS  TO CLOSING.  The Lender will not be obligated to
make the initial  Loans or to obtain any Letters of Credit on the Closing  Date,
unless  the  following  conditions  precedent  have been  satisfied  in a manner
satisfactory to Lender:

<PAGE>

     11.1 Conditions Precedent to Making of Loans on the Closing Date.

                  (a)   Representations   and   Warranties;    Covenants.    The
representations  and  warranties  contained in this Agreement and the other Loan
Documents by the Borrower and each member of the GTS Consolidated Group shall be
correct and complete;  the Borrower  shall have  performed and complied with all
covenants,  agreements,  and conditions  contained  herein and in the other Loan
Documents which are required to have been performed or complied with.

                  (b) Delivery of Documents.  The Borrower shall have delivered,
or caused to be delivered, to the Lender the Loan Documents, and such documents,
instruments  and agreements as the Lender shall request in connection  herewith,
duly  executed by all  parties  thereto  other than the Lender,  and in form and
substance satisfactory to the Lender and its counsel.

                  (c) Termination of Liens.  The Lender shall have received duly
executed  UCC-3  Termination  Statements  and  other  instruments,  in form  and
substance  satisfactory  to the Lender,  as shall be necessary to terminate  and
satisfy  all Liens on the  Property of the  Borrower  and each member of the GTS
Consolidated Group except Permitted Liens.

                  (d)  Closing and Facility  Fees. The Borrower  shall have paid
in full the Closing Fee and the Facility Fee.

                  (e)  Required  Approvals.   The  Lender  shall  have  received
certified  copies of all consents or approvals of any Public  Authority or other
Person  which  the  Lender   determines  is  required  in  connection  with  the
transactions contemplated by this Agreement.

                  (f) No Material  Adverse Change.  There shall have occurred no
material adverse change in the Borrower's  business or financial condition or in
the  Collateral  since  September 27, 1997, and the Lender shall have received a
certificate of Borrower's chief executive officer to such effect.

                  (g)  Proceedings.  All  proceedings  to be taken in connection
with  the  transactions  contemplated  by this  Agreement,  and  all  documents,
contemplated in connection herewith, shall be satisfactory in form and substance
to the Lender and its counsel.

     11.2  Conditions  Precedent to Each Loan.  The  obligation of the Lender to
make each Loan or to provide for the  issuance of any Letter of Credit  shall be
subject to the  condition  precedent  that on the date of any such  extension of
credit  the  following  statements  shall be  true,  and the  acceptance  by the
Borrower of any  extension  of credit  shall be deemed to be a statement  to the
effect set forth in clauses (a) and (b), with the same effect as the delivery to
the Lender of a  certificate  signed by the chief  executive  officer  and chief
financial  officer of the Borrower,  dated the date of such extension of credit,
stating that:

<PAGE>

                  (a)  The  representations  and  warranties  contained  in this
Agreement and the other Loan  Documents are correct in all material  respects on
and as of the date of such  extension of credit as though made on and as of such
date, except to the extent the Lender has been notified by the Borrower that any
representation  or warranty is not correct and the Lender has explicitly  waived
in writing compliance with such representation or warranty; and

                  (b)   No  Event or  Event  of  Default  has  occurred  and  is
continuing,  or would result from such extension of credit.

12.      DEFAULT; REMEDIES.

     12.1 Events of Default.  It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:

                  (a)  failure to make  payment  of  principal,  interest,  fees
or  premium  on  any of the Obligations when due;

                  (b) any  representation or warranty made or deemed made by the
Borrower or by any member of the GTS Consolidated  Group in this Agreement or in
any of the other Loan  Documents,  any Financial  Statement,  or any certificate
furnished  by the  Borrower or any member of the GTS  Consolidated  Group at any
time to the Lender  shall prove to be untrue in any  material  respect as of the
date when made, deemed made, or furnished;

                  (c) default shall occur in the  observance or  performance  of
any of the covenants and agreements contained in this Agreement,  the other Loan
Documents, or any other agreement entered into at any time to which the Borrower
or any member of the GTS Consolidated  Group and the Lender are party, or if any
such agreement or document shall  terminate  (other than in accordance  with its
terms or with the written consent of the Lender) or become void or unenforceable
without the written consent of the Lender;

                  (d) default  shall occur in the  payment of any  principal  or
interest on any  indebtedness  for borrowed  money (other than the  Obligations)
beyond any period of grace provided with respect thereto;

                  (e) the Borrower or any member of the GTS  Consolidated  Group
shall: (i) file a voluntary  petition in bankruptcy or file a voluntary petition
or  an  answer  or  otherwise   commence  any  action  or   proceeding   seeking
reorganization, arrangement or readjustment of its debts or for any other relief
under the Federal Bankruptcy Code, as amended,  or under any other bankruptcy or
insolvency act or law, state or federal,  now or hereafter existing,  or consent
to, approve of, or acquiesce in, any such petition,  action or proceeding;  (ii)
apply for or acquiesce in the appointment of a receiver,  assignee,  liquidator,
sequestrator,  custodian,  trustee or similar  officer  for it or for all or any
part of its Property;  (iii) make an assignment for the benefit of creditors; or
(iv) be unable generally to pay its debts as they become due;

                  (f) an  involuntary  petition  shall be filed or an  action or
proceeding   otherwise   commenced   seeking   reorganization,   arrangement  or
readjustment  of the debts of  Borrower  or any  member of the GTS  Consolidated
Group or for any other relief under the Federal Bankruptcy Code, as amended,  or
under any other  bankruptcy or insolvency act or law,  state or federal,  now or
hereafter existing;

<PAGE>

                   (g)   a   receiver,   assignee,   liquidator,   sequestrator,
custodian,  trustee or similar officer for the Borrower or any member of the GTS
Consolidated  Group or for all or any part of their  Property shall be appointed
involuntarily; or a warrant of attachment, execution or similar process shall be
issued against any part of the Property of the Borrower or any member of the GTS
Consolidated Group;

                  (h) the Borrower or any member of the GTS  Consolidated  Group
shall file a certificate of dissolution  under  applicable state law or shall be
liquidated, dissolved or wound-up or shall commence or have commenced against it
any action or proceeding for  dissolution,  winding-up or liquidation,  or shall
take any corporate action in furtherance thereof,

                  (i) all or any part of the Property of the  Borrower  shall be
nationalized,  expropriated or condemned,  seized or otherwise appropriated,  or
custody or control of such  Property or of the Borrower  shall be assumed by any
Public  Authority or any court of competent  jurisdiction at the instance of any
Public  Authority,  except where  contested in good faith by proper  proceedings
diligently pursued where a stay of enforcement is in effect;

                  (j)  any  guaranty  of the  Obligations  shall be  terminated,
revoked or  declared  void or invalid;

                  (k) one or more  final  judgments  for the  payment  of  money
aggregating in excess of $100,000  (unless fully covered by insurance)  shall be
rendered  against the Borrower or any member of the GTS  Consolidated  Group and
the  Borrower  or  such  member  of the GTS  Consolidated  Group  shall  fail to
discharge  the same  within  thirty  (30)  days from the date of notice of entry
thereof or to appeal therefrom;

                  (l)  any  loss,  theft,  damage  or  destruction  of any item 
or items of  Collateral  occurs which:  (i)  materially  and  adversely  affects
the  operation of the  Borrower's  business or (ii) is material in amount and is
not adequately covered by insurance;

                  (m)  Parent ceases to control the Borrower (the term "control"
having the meaning given to it in the definition of Affiliate herein);

                  (n) any event or  condition  shall occur or exist with respect
to a Plan that could, in the Lender's reasonable judgment,  subject the Borrower
or any member of the GTS  Consolidated  Group to any tax,  penalty or  liability
under  ERISA,  the Code or  otherwise  which in the  aggregate  is  material  in
relation to the business,  operations,  Property or financial or other condition
of the Borrower; or

                  (o)   there  occurs   any  material  adverse  change  in  the 
Borrower's   Property,  business,   operations,  or   condition  (financial  or 
otherwise).

<PAGE>

13.      REMEDIES.

         (a) If an Event of Default exists, the Lender may, without notice to or
demand on the Borrower or any member of the GTS  Consolidated  Group,  do one or
more of the  following  at any time or times and in any  order:  (i)  reduce the
Availability or one or more of the elements thereof; (ii) restrict the amount of
or refuse to make Revolving  Loans and restrict or refuse to arrange for Letters
of Credit;  (iii) terminate this Agreement;  (iv) declare any or all Obligations
to be immediately due and payable  (provided however that upon the occurrence of
any Event of  Default  described  in  Sections  12.1(e),  12.1(f),  12.1(g),  or
12.1(h),   all  Obligations  shall  automatically  become  immediately  due  and
payable);  and (v) pursue its other rights and remedies under the Loan Documents
and applicable law.

         (b) If an Event of  Default  exists:  (i) the  Lender  shall  have,  in
addition to all other  rights,  the rights and remedies of a secured party under
the UCC; (ii) the Lender may, at any time, take possession of the Collateral and
keep it on the Borrower's premises, at no cost to the Lender, or remove any part
of it to such other  place or places as the Lender may desire,  or the  Borrower
shall, upon the Lender's demand, at the Borrower's cost, assemble the Collateral
and make it  available  to the Lender at a place  reasonably  convenient  to the
Lender;  and (iii) the Lender may sell and deliver any  Collateral  at public or
private sales, for cash, upon credit or otherwise,  at such prices and upon such
terms as the Lender deems  advisable,  in its sole  discretion,  and may, if the
Lender deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement  at the time and place of sale or of such  postponed  or  adjourned
sale without giving a new notice of sale. Without in any way requiring notice to
be given in the  following  manner,  the Borrower  agrees that any notice by the
Lender of sale,  disposition or other intended action hereunder or in connection
herewith,  whether required by the UCC or otherwise, shall constitute reasonable
notice to the Borrower if such notice is mailed by registered or certified mail,
return receipt requested,  postage prepaid,  or is delivered  personally against
receipt,  at least five (5) days prior to such action to the Borrower's  address
specified in or pursuant to Section  15.10.  If any  Collateral is sold on terms
other than payment in full at the time of sale, no credit shall be given against
the Obligations until the Lender receives payment,  and if the buyer defaults in
payment,  the Lender may resell the  Collateral.  without  further notice to the
Borrower. In the event the Lender seeks to take possession of all or any portion
of the Collateral by judicial process,  the Borrower irrevocably waives: (a) the
posting  of any bond,  surety or  security  with  respect  thereto  which  might
otherwise be required;  (b) any demand for possession  prior to the commencement
of any suit or action to recover the Collateral;  and (c) any  requirement  that
the Lender retain possession and not dispose of any Collateral until after trial
or final  judgment.  The Borrower  agrees that the Lender has no  obligation  to
preserve  rights to the  Collateral or marshal any Collateral for the benefit of
any  Person.  The  Lender is hereby  granted  a license  or other  right to use,
without charge, the Borrower's labels, patents, copyrights, name, trade secrets,
trade names,  trademarks,  and advertising  matter, or any similar property,  in
completing  production  of,  advertising  or  selling  any  Collateral,  and the
Borrower's rights under all licenses and all franchise agreements shall inure to
the  Lender's  benefit.  The  proceeds  of sale  shall be  applied  first to all
expenses of sale,  including  attorneys' fees, and second, in whatever order the
Lender  elects,  to all  Obligations.  The Lender  will return any excess to the
Borrower  or such other  Person as shall be  legally  entitled  thereto  and the
Borrower shall remain liable for any deficiency.

         (c) If an Event of Default occurs,  the Borrower and each member of the
GTS Consolidated  Group hereby waives (i) all rights to notice and hearing prior
to the exercise by the Lender of the Lender's rights to repossess the Collateral
without  judicial  process  or to  replevy,  attach or levy upon the  Collateral
without  notice or  hearing,  and (ii) all  rights of set-off  and  counterclaim
against Lender.

<PAGE>

         (d) If the Lender  terminates  this Agreement upon an Event of Default,
the  Borrower  shall pay the  Lender,  immediately  upon  termination,  an early
termination  penalty  equal to the early  termination  fee that  would have been
payable  under  Section 14 if this  Agreement  had been  terminated on that date
pursuant to the Borrower's election.

     14.  TERM AND  TERMINATION.  This  Agreement  shall  expire  on the  Stated
Termination Date unless terminated or automatically extended as provided in this
Section  14.  This  Agreement  shall  automatically  be renewed  thereafter  for
successive  one-year  terms,  unless this  Agreement is  terminated  as provided
below.  The  Lender and the  Borrower  shall  have the right to  terminate  this
Agreement,  without premium or penalty, at the end of the initial term or at the
end of any renewal term by giving the other  written  notice not less than sixty
(60) days prior to the end of such term by  registered  or certified  mail.  The
Borrower may also  terminate  this Agreement at any time during its initial term
or any successive renewal term if: (a) it gives the Lender sixty (60) days prior
written notice of  termination by registered or certified  mail; (b) it pays and
performs all Obligations on or prior to the effective date of  termination;  and
(c) it pays the Lender, on or prior to the effective date of termination, and in
addition  to the fees  required by Section  6.4,  (i) one and  one-half  percent
(1.50%)  of the  average  amount of the  Revolving  Loans and  Letters of Credit
outstanding during the prior 180 day period (or lesser period if within 180 days
of the  Closing  Date) if such  termination  is made on or  prior  to the  first
Anniversary  Date; and (ii)  three-quarters of one percent (.75%) of the average
amount of the Revolving Loans and Letters of Credit outstanding during the prior
180 day  period  if such  termination  is  after  the  first  Anniversary  Date,
including  during any renewal term. The Lender may also terminate this Agreement
without notice upon an Event of Default.  Upon the effective date of termination
of this  Agreement  for any reason  whatsoever,  all  Obligations  shall  become
immediately  due and  payable and  Borrower  shall  immediately  arrange for the
cancellation  of  Letters  of  Credit  then  outstanding.   Notwithstanding  the
termination of this  Agreement,  until all Obligations are paid and performed in
full, the Lender shall retain all its rights and remedies hereunder  (including,
without limitation) in all then existing and after-arising Collateral).

     15. MISCELLANEOUS.

     15.1 Cumulative Remedies; No Prior Recourse to Collateral1. The enumeration
herein of the Lender's rights and remedies is not intended to be exclusive,  and
such rights and remedies are in addition to and not by way of  limitation of any
other  rights  or  remedies  that the  Lender  may have  under  the UCC or other
applicable  law. The Lender  shall have the right,  in its sole  discretion,  to
determine which rights and remedies are to be exercised and in which order.  The
exercise of one right or remedy  shall not  preclude the exercise of any others,
all of which shall be cumulative.  The Lender may, without  limitation,  proceed
directly  against  the  Borrower to collect  the  Obligations  without any prior
recourse to the Collateral.

     15.2 No Implied  Waivers.  No act,  failure  or delay by the  Lender  shall
constitute  a waiver of any of its  rights  and  remedies.  No single or partial
waiver by the  Lender  of any  provision  of this  Agreement  or any other  Loan
Document,  or of breach or default  hereunder or thereunder,  or of any right or
remedy  which  the  Lender  may  have,  shall  operate  as a waiver of any other
provision,  breach,  default, right or remedy or of the same provision,  breach,
default,  right or remedy on a future  occasion.  No waiver by the Lender  shall
affect its rights to require strict performance of this Agreement.

<PAGE>

     15.3  Severability.  If any provision of this Agreement shall be prohibited
or invalid,  under  applicable law, it shall be ineffective only to such extent,
without invalidating the remainder of this Agreement.

     15.4 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE
STATE OF MISSOURI AND SHALL BE GOVERNED BY AND  INTERPRETED  IN ACCORDANCE  WITH
THE LAWS OF SUCH  STATE,  EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED
TO APPLY THE LAWS OF ANY OTHER STATE OR JURISDICTION.

     15.5 Consent to Jurisdiction  and Venue;  Service of Process.  The Borrower
and each member of the GTS  Consolidated  Group  agree that,  in addition to any
other courts that may have  jurisdiction  under  applicable  laws, any action or
proceeding to enforce or arising out of this  Agreement or any of the other Loan
Documents may be commenced in the appropriate  state court of the State of Texas
for  Dallas  County,  Texas,  or in the  United  States  District  Court for the
Northern  District  of  Texas,  and the  Borrower  and  each  member  of the GTS
Consolidated Group consent and submit in advance to such jurisdiction and agrees
that venue will be proper in such courts on any such  matter.  The  Borrower and
each member of the GTS  Consolidated  Group  hereby  waive  personal  service of
process  and  agree  that a  summons  and  complaint  commencing  an  action  or
proceeding in any such court shall be properly  served and shall confer personal
jurisdiction  if served by registered or certified mail to the Borrower.  Should
the  Borrower  or any member  fail to appear or answer any  summons,  complaint,
process or papers so served  within  thirty (30) days after the mailing or other
service  thereof,  it shall be deemed in default and an order or judgment may be
entered against it as demanded or prayed for in such summons, complaint, process
or  papers.  The  choice of forum set forth in this  Section  15.5  shall not be
deemed to preclude the  enforcement of any judgment  obtained in such forum,  or
the  taking of any action  under this  Agreement  to  enforce  the same,  in any
appropriate jurisdiction.

     15.6  Waiver  of Jury  Trial.  THE  BORROWER  AND  EACH  MEMBER  OF THE GTS
CONSOLIDATED  GROUP HEREBY WAIVE TRIAL BY JURY, RIGHTS OF SET OFF, AND THE RIGHT
TO IMPOSE  COUNTERCLAIMS  IN ANY  LITIGATION  IN ANY COURT WITH  RESPECT  TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL,  OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT
HERETO OR THERETO, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING,  BETWEEN THE
BORROWER, ANY MEMBER OF THE GTS CONSOLIDATED GROUP, AND THE LENDER. THE BORROWER
AND EACH MEMBER OF THE GTS CONSOLIDATED GROUP CONFIRM THAT THE FOREGOING WAIVERS
ARE INFORMED AND FREELY MADE.

     15.7 Survival of Representations and Warranties. All of the representations
and  warranties  by the Borrower and each member of the GTS  Consolidated  Group
contained  in  this  Agreement  shall  survive  the  execution,   delivery,  and
acceptance  thereof by the parties,  notwithstanding  any  investigation  by the
Lender or its agents.

<PAGE>

     15.8 Other  Security  and  Guaranties.  The Lender may,  without  notice or
demand and without affecting the Borrower's obligations hereunder,  from time to
time: (a) take from any Person and hold  collateral  (other than the Collateral)
for the payment of all or any part of the Obligations  and exchange,  enforce or
release  such  collateral  or any  part  thereof;  and (b)  accept  and hold any
endorsement  or  guaranty of payment of all or any part of the  Obligations  and
release or  substitute  any such  endorser or  guarantor,  or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations,  or any other Person in any way obligated to pay all or
any part of the Obligations.

     15.9 Fees and Expenses.  The Borrower shall pay to the Lender on demand all
costs  and  expenses  that the  Lender  pays or incurs  in  connection  with the
negotiation,  preparation,   consummation,   administration,   enforcement,  and
termination of this Agreement and the other Loan Documents,  including,  without
limitation:  (a) reasonable attorneys' and paralegals' fees and disbursements of
counsel to the Lender (including,  without limitation,  a reasonable estimate of
the  allocable  cost of  in-house  counsel and  staff);  (b) costs and  expenses
including attorneys' and paralegals' fees and disbursements (including,  without
limitation,  a reasonable estimate of the allocable cost of in-house counsel and
staff) for any amendment,  supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the  transactions  contemplated  thereby;
(c) costs and  expenses  of lien and title  searches  and title  insurance;  (d)
taxes,  fees and other  charges for recording the  mortgages,  filing  financing
statements  and  continuations,  and other  actions  to  perfect,  protect,  and
continue the Security  Interest;  (e) sums paid or incurred to pay any amount or
take any action  required  of the  Borrower  under the Loan  Documents  that the
Borrower  fails  to pay or  take;  (f)  costs of  appraisals,  inspections,  and
verifications of the Collateral, including, without limitation, travel, lodging,
and meals  together  with an  allocated  charge of $600 per day for each auditor
employed by the Lender for  inspections  of the  Collateral  and the  Borrower's
operations;  (g) costs and  expenses of  forwarding  loan  proceeds,  collecting
checks and other items of payment,  and  establishing  and  maintaining  Payment
Accounts and lock boxes; (h) costs and expenses of preserving and protecting the
Collateral; and (i) costs and expenses including attorneys' and paralegals' fees
and disbursements  (including,  without limitation, a reasonable estimate of the
allocable cost of in-house counsel and staff) paid or incurred to obtain payment
of the Obligations,  enforce the Security  Interest,  sell or otherwise  realize
upon the Collateral, and otherwise enforce the provisions of the Loan Documents,
or to defend any claims made or threatened against the Lender arising out of the
transactions contemplated hereby (including without limitation, preparations for
and  consultations  concerning  any such  matters).  The foregoing  shall not be
construed to limit any other  provisions of the Loan Documents  regarding  costs
and expenses to be paid by the Borrower. All of the foregoing costs and expenses
shall be charged to the Borrower's loan account as Revolving Loans.

     15.10 Notices.  Except as otherwise provided herein, all notices,  demands,
and requests  that either party is required or elects to give to the other shall
be in  writing,  shall  be  delivered  personally  against  receipt,  or sent by
recognized  overnight  courier  services,  or mailed by  registered or certified
mail, return receipt requested,  postage prepaid,  and shall be addressed to the
party to be notified as follows:

<PAGE>

                  If to the Lender: BankAmerica Business Credit, Inc.

                          231 S. LaSalle Street, 16th Floor
                          Chicago, Illinois 60697
                          Attention: L. Frank Melazzo

                  with a copy to:  Bank of America NT&SA, Legal Department
                          10124 Old Grove Road
                          San Diego, California 92131

                  If to the Borrower:  The Great Train Store
                          14180 Dallas Parkway, Suite 618
                          Dallas, Texas 75240
                          Attn: Cheryl A. Taylor,
                          Chief Financial Officer

                  with a copy to: Gallop Johnson & Newman, L.L.C.
                          101 South Hanley Road, 16th Floor
                          St. Louis, Missouri 63105
                          Attn:  Douglas Bates

or to such other  address as each party may designate for itself by like notice.
Any such  notice,  demand,  or request  shall be deemed  given when  received if
personally  delivered or sent by  overnight  courier,  or when  deposited in the
United States mails, postage paid, if sent by registered or certified mail.

<PAGE>

     15.11 Indemnification. (a) BORROWER AND EACH MEMBER OF THE GTS CONSOLIDATED
GROUP HEREBY INDEMNIFIES, DEFENDS AND HOLDS LENDER, AND ITS DIRECTORS, OFFICERS,
AGENTS,  EMPLOYEES  AND COUNSEL,  HARMLESS  FROM AND AGAINST ANY AND ALL LOSSES,
CLAIMS. DAMAGES,  LIABILITIES,  DEFICIENCIES,  JUDGMENTS,  PENALTIES OR EXPENSES
IMPOSED  ON,  INCURRED  BY OR  ASSERTED  AGAINST  ANY OF THEM,  WHETHER  DIRECT,
INDIRECT  OR  CONSEQUENTIAL  ARISING  OUT OF OR BY  REASON  OF  ANY  LITIGATION,
INVESTIGATIONS,  CLAIMS, OR PROCEEDINGS (WHETHER BASED ON ANY FEDERAL,  STATE OR
LOCAL LAWS OR OTHER  STATUTES OR  REGULATIONS,  INCLUDING,  WITHOUT  LIMITATION,
SECURITIES,  ENVIRONMENTAL, OR COMMERCIAL LAWS AND REGULATIONS, UNDER COMMON LAW
OR AT EQUITY, OR ON CONTRACT OR OTHERWISE) COMMENCED OR THREATENED,  WHICH ARISE
OUT OF OR ARE IN ANY WAY BASED  UPON THE  NEGOTIATION,  PREPARATION,  EXECUTION,
DELIVERY,  ENFORCEMENT,  PERFORMANCE OR  ADMINISTRATION  OF THIS AGREEMENT,  ANY
OTHER LOAN  DOCUMENT,  OR ANY  UNDERTAKING  OR PROCEEDING  RELATED TO ANY OF THE
TRANSACTIONS  CONTEMPLATED  HEREBY  OR  ANY  ACT,  OMISSION  TO  ACT,  EVENT  OR
TRANSACTION RELATED OR ATTENDANT THERETO, INCLUDING, WITHOUT LIMITATION, AMOUNTS
PAID IN SETTLEMENT, COURT COSTS, AND THE FEES AND EXPENSES OF COUNSEL REASONABLY
INCURRED  IN  CONNECTION  WITH  ANY  SUCH  LITIGATION,  INVESTIGATION,  CLAIM OR
PROCEEDING  AND FURTHER  INCLUDING,  WITHOUT  LIMITATIONS,  ALL LOSSES,  DAMAGES
(INCLUDING  CONSEQUENTIAL  DAMAGES),  EXPENSES OR  LIABILITIES  SUSTAINED BY THE
LENDER IN CONNECTION WITH ANY ENVIRONMENTAL INSPECTION, MONITORING, SAMPLING, OR
CLEANUP OF THE ENCUMBERED REAL ESTATE REQUIRED OR MANDATED BY ANY  ENVIRONMENTAL
LAW;  PROVIDED,  HOWEVER,  THAT  NEITHER  BORROWER  NOR  ANY  MEMBER  OF THE GTS
CONSOLIDATED  GROUP SHALL INDEMNIFY  LENDER,  ITS DIRECTORS,  OFFICERS,  AGENTS,
EMPLOYEES AND COUNSEL FROM SUCH DAMAGES RESULTING FROM THEIR GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.

         (b) The Borrower and each member of the GTS  Consolidated  Group hereby
indemnify,  defend  and hold  harmless  the  Lender  from any loss or  liability
directly  or  indirectly  arising  out  of  the  use,  generation,  manufacture,
production,   storage,  release,  threatened  release,  discharge,  disposal  or
presence  of a  hazardous  substance.  This  indemnity  will apply  whether  the
hazardous  substance is on, under or about the Borrower's property or operations
or property leased to the Borrower. The indemnity includes but is not limited to
attorneys'  fees  (including  the  reasonable  estimate of the allocated cost of
in-house counsel and staff).  The indemnity  extends to the Lender,  its parent,
subsidiaries  and  all  of  their  directors,   officers,   employees,   agents,
successors,  attorneys and assigns.  "Hazardous substances" means any substance,
material  or waste  that is or  becomes  designated  or  regulated  as  "toxic,"
"hazardous,"   "pollutant,"  or  "contaminant"  or  a  similar   designation  or
regulation  under any  federal,  state or local law  (whether  under common law,
statute,  regulation or otherwise) or judicial or administrative  interpretation
of such,  including without limitation  petroleum or natural gas. This indemnity
will survive termination of the Agreement.

         (c)  Without  limiting  the  foregoing,  if,  by  reason of any suit or
proceeding of any kind, nature, or description against Borrower,  or by Borrower
or any other party against Lender,  which in Lender's sole  discretion  makes it
advisable  for Lender to seek counsel for  protection  and  preservation  of its
liens and security  assets,  or to defend its own  interest,  such  expenses and
counsel fees shall be allowed to Lender.  To the extent that the  undertaking to
indemnify,  pay and  hold  harmless  set  forth  in this  Section  15.11  may be
unenforceable  because it is  violative  of any law or public  policy,  Borrower
shall  contribute  the maximum  portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all indemnified matters
incurred by Lender.  The  foregoing  indemnity  shall survive the payment of the
Obligations and the  termination of this  Agreement.  All of the foregoing costs
and expenses shall be part of the Obligations and secured by the Collateral.

     15.12 Waiver of Notices.  Unless otherwise  expressly  provided herein, the
Borrower and each member of the GTS Consolidated Group waive presentment, notice
of intent to accelerate and notice of acceleration, protest and notice of demand
or  dishonor  and  protest  as to any  instrument,  as well as any and all other
notices to which it might  otherwise be entitled.  No notice to or demand on the
Borrower which the Lender may elect to give shall entitle the Borrower to any or
further notice or demand in the same, similar or other circumstances.

<PAGE>

     15.13 Binding Effect; Assignment. The provisions of this Agreement shall be
binding  upon  and  inure  to the  benefit  of the  respective  representatives,
successors  and  assigns  of the  parties  hereto;  provided,  however,  that no
interest  herein may be  assigned  by the  Borrower  without  the prior  written
consent of the Lender. The rights and benefits of the Lender hereunder shall, if
the  Lender  so  agrees,  inure  to any  party  acquiring  any  interest  in the
Obligations or any part thereof.

     15.14 NO ORAL AGREEMENTS;  ENTIRE AGREEMENT. ORAL AGREEMENTS OR COMMITMENTS
TO LOAN MONEY,  EXTEND CREDIT OR TO FORBEAR FROM ENFORCING  REPAYMENT OF A DEBT,
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT
BORROWER AND LENDER FROM  MISUNDERSTANDING  OR  DISAPPOINTMENT,  ANY  AGREEMENTS
REACHED BY BORROWER  AND LENDER  COVERING  SUCH  MATTERS ARE  CONTAINED  IN THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, WHICH AGREEMENT AND OTHER LOAN DOCUMENTS
ARE A COMPLETE AND EXCLUSIVE  STATEMENT OF THE AGREEMENTS  BETWEEN  BORROWER AND
LENDER, EXCEPT AS BORROWER AND LENDER MAY LATER AGREE IN WRITING TO MODIFY THEM.
This  Agreement  embodies the entire  agreement  and  understanding  between the
parties hereto and supersedes all prior agreements and  understandings  (oral or
written) relating to the subject matter hereof.

     15.15  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts, and by the Lender and the Borrower in separate counterparts,  each
of which shall be an original,  but all of which shall  together  constitute one
and the same agreement.

     15.16  Captions.   The  captions   contained  in  this  Agreement  are  for
convenience only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.

     15.17 Right of Set-Off.  Whenever an Event of Default exists, the Lender is
hereby  authorized  at any time and from  time to time,  to the  fullest  extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Lender or any affiliate of the Lender to or for the credit
or the account of the Borrower against any and all of the  Obligations,  whether
or not then due and payable. Lender agrees promptly to notify Borrower after any
such set-off and application  made by Lender,  provided that the failure to give
such notice shall not affect the validity of such set-off and application.

<PAGE>

     15.18 Participating  Lender's Security  Interests.  The Lender may, without
notice to or  consent  by the  Borrower  or any  member of the GTS  Consolidated
Group, grant one or more  participations in the Loans to Participating  Lenders.
If a  Participating  Lender  shall at any time  with  the  Borrower's  knowledge
participate  with the Lender in the Loans,  the Borrower  hereby  grants to such
Participating  Lender, and the Lender and such  Participating  Lender shall have
and are hereby given, a continuing  lien on and security  interest in any money,
securities  and other  property of the Borrower in the custody or  possession of
the Participating  Lender,  including the right of set off, to the extent of the
Participating Lender's participation in the Obligations,  and such Participating
Lender  shall  be  deemed  to have the same  right of set off to the  extent  of
Participating Lender's participation in the Obligations under this Agreement, as
it would have it were a direct lender.

     15.19  AMENDMENT  AND  RESTATEMENT.  THIS  AGREEMENT  AMENDS,  EXTENDS  AND
RESTATES IN ITS ENTIRETY  THE ORIGINAL  LOAN  AGREEMENT.  THE  EXECUTION OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION  HEREWITH DOES NOT
EXTINGUISH  THE  INDEBTEDNESS  OUTSTANDING  IN CONNECTION  THEREWITH NOR DOES IT
CONSTITUTE A NOVATION WITH RESPECT TO THE INDEBTEDNESS OUTSTANDING IN CONNECTION
WITH THE ORIGINAL LOAN  AGREEMENT.  BORROWER  REPRESENTS AND WARRANTS THAT AS OF
THE  CLOSING  DATE  THERE  ARE NO CLAIMS  OR  OFFSETS  AGAINST  OR  DEFENSES  OR
COUNTERCLAIMS TO ITS OBLIGATIONS  UNDER THE ORIGINAL LOAN AGREEMENT OR ANY OTHER
LOAN DOCUMENTS.  BORROWER WAIVES ANY AND ALL SUCH CLAIMS,  OFFSETS,  DEFENSES OR
COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING PRIOR TO THE CLOSING DATE.

     IN WITNESS  WHEREOF,  the parties have  entered into this  Agreement on the
date first above written.

                                THE GREAT TRAIN STORE PARTNERS, L.P.
                                By:   GTS PARTNER, INC., its General Partner



                                By:
                                      Cheryl A. Taylor
                                      Vice President


                                BANKAMERICA BUSINESS CREDIT, INC.


                                By:
                                      Raymond Gore
                                      Vice President

<PAGE>

         ACKNOWLEDGED AND AGREED TO:

         Each of the  following  members of the GTS  Consolidated  Group  hereby
executes this Agreement to acknowledge  (i) its grant of a security  interest in
its  Collateral  to Lender and (ii) its agreement to comply with and be bound by
all those particular warranties, representations,  covenants, and agreements set
forth herein that are expressly  applicable to the GTS Consolidated Group by the
terms of this Agreement.


                                 THE GREAT TRAIN STORE COMPANY



                                 By:
                                       Cheryl A. Taylor
                                       Vice President

                                 GTS PARTNER, INC.



                                 By:
                                       Cheryl A. Taylor
                                       Vice President

                                 GTS LIMITED PARTNER, INC.



                                  By:
                                       Cheryl A. Taylor
                                       Vice President

<PAGE>

                           List of Exhibits/Schedules

Exhibit A       Financial Statements and Projections

                - Exhibit A-1    Financial Statement

                - Exhibit A-2    Projections

Exhibit B       Notice of Borrowing

Exhibit C       Notice of Conversion/Continuation

Schedule 7.3    Locations of Borrower

Schedule 9.3    States Where Borrower is In Good Standing

Schedule 9.4    Names of Borrower and Trade Styles

Schedule 9.5    Subsidiaries and Affiliates and states of incorporation 
                and qualification

Schedule 9.13   Real Estate - Owned and Leased

Schedule 9.14   Proprietary Rights Collateral (patents, trademarks, and 
                copyrights)

Schedule 9.15   Trade Names

Schedule 9.16   Litigation

Schedule 9.18   Labor Disputes

Schedule 9.19   Environmental Laws

Schedule 9.22   ERISA Compliance

Schedule 10.8   Permitted Distributions

Schedule 10.11  Permitted Debt

Schedule 10.15  Permitted Liens

Schedule 10.17  New Subsidiaries