“(c) Subject to subsection (b) above and subsection (d) below, the principal of the Term Loanshall be repaid in installments as follows:               (A) commencing on March 1, 2008, and continuing on the first day of April and May, 2008**,**equal installments of $208,333.33;               (B) commencing on September 1, 2008, and continuing on the first day of each of the 28consecutive months thereafter, equal installments of $229,166.66; and               (C) on the Maturity Date, a final installment in an amount equal to the then unpaid principalbalance of the Term Loan.”     (b) Section 6.16(b) of the Credit Agreement is amended and restated as follows:          **“(b) Minimum EBITDA**. Fail to achieve EBITDA, measured on a fiscal year to date basis, of notless than the required amount set forth in the following table for the applicable period set forthopposite thereto:     Applicable Period Applicable AmountFebruary 3, 2008 to May 3, 2008  ($2,293,572)February 3, 2008 to August 2, 2008  ($1,058,178)February 3, 2008 to November 1, 2008  ($3,710,683)February 3, 2008 to January 31, 2009 $4,305,231 February 1, 2009 to May 2, 2009  ($1,338,523)February 1, 2009 to August 1, 2009  ($1,266,327)February 1, 2009 to October 31, 2009  ($4,134,907)February 1, 2009 to January 30, 2010 $4,576,432 January 31, 2010 to May 1, 2010  ($1,462,274)January 31, 2010 to July 31, 2010  ($1,326,164)January 31, 2010 to October 30, 2010  ($4,252,196)     (c) The Updating Information (or any decline in the market price of Borrower’s Stockreasonably determined to arise as a result of such information) shall not be deemed to constitute aMaterial Adverse Change.     (d) Section 2.4(a) of the Credit Agreement is deleted and replaced by the following:          ”(i) Except as otherwise expressly provided herein and subject to the Senior LoanSubordination Agreement, all payments by Borrower shall be made in Dollars to Lender’s Account forthe account of the Lender Group and shall be made in immediately available funds, no later than11:00 a.m. (California time) on the date specified herein . Any payment received by
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Lender later than 11:00 a.m. (California time) shall be deemed to have been received on thefollowing Business Day, and any applicable interest or fee shall continue to accrue until suchfollowing Business Day.”     (e) Section 2.8 of the Credit Agreement is deleted and replaced by the following:          “**Crediting Payments**. The receipt of any payment item by Lender shall not be considered apayment on account unless such payment item is a wire transfer of immediately available federalfunds made to the Lender’s Account or unless and until such payment item is honored when presentedfor payment. Should any payment item not be honored when presented for payment, then Borrower shall be deemed not to have made such payment and interest shall be calculatedaccordingly. Anything to the contrary contained herein notwithstanding, any payment item shall bedeemed received by Lender only if it is received into the Lender’s Account on a Business Day on orbefore 11:00 a.m. (California time). If any payment item is received into the Lender’s Account ona non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed tohave been received by Lender as of the opening of business on the immediately following BusinessDay.”     (f) Schedule A-2 Lender’s Account shall be inserted after Schedule A-1 and read as set forthon Exhibit 2(f) attached hereto.     (g) In Schedule 1.1, the following shall be added:          “Lender’s Account” means the Deposit Account of Lender identified on Schedule A-2.”2.A. **AMENDMENT TO REGISTRATION RIGHTS AGREEMENT**     The Registration Rights Agreement is amended as follows:     (a) “Shares” shall be deemed to include the additional 50,000 shares of common stock ofBorrower issued pursuant hereto, so that “Shares” includes both the 350,000 previously issued toAgent and the additional 50,000 shares issued pursuant to this First Amendment.     (b) “Filing Date” shall mean “ a date no later than May 12, 2008.”3. **CONDITIONS PRECEDENT TO THIS FIRST AMENDMENT**. The satisfaction of each of the followingshall constitute conditions precedent to the effectiveness of this First Amendment and each andevery provision hereof:     (a) The representations and warranties in the Credit Agreement and the other Loan Documentsshall be true and correct in all material respects on and as of the date hereof, as though made onsuch date (except to the extent that such representations and warranties relate solely to anearlier date);     (b) No Default or Event of Default shall have occurred and be continuing as of the datehereof;
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     (c) No injunction, writ, restraining order, or other order of any nature prohibiting, directlyor indirectly, the consummation of the transactions contemplated herein shall have been issued andremain in force by any Governmental Authority against Borrower, Agent or any Lender;     (d) Borrowershall have issued to Agent 50,000 shares of common stock of Borrower, which willbe fully earned and non-refundable as of the date hereof; and     (c) Borrower shall have executed and delivered this First Amendment to Lender by no later thanMay 9, 2008.4. **CONSTRUCTION**. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADEAND TO BE PERFORMED IN THE STATE OF CALIFORNIA.5. **ENTIRE AMENDMENT; EFFECT OF SECOND AMENDMENT**. This First Amendment, and terms andprovisions hereof, constitute the entire agreement among the parties pertaining to the subjectmatter hereof and supersedes any and all prior or contemporaneous amendments relating to thesubject matter hereof. Except as expressly set forth in this First Amendment, the Credit Agreement,the Registration Rights Agreement and the other Loan Documents shall remain unchanged and in fullforce and effect. To the extent any terms or provisions of this First Amendment conflict with thoseof the Credit Agreement, the Registration Rights Agreement or the other Loan Documents, the termsand provisions of this First Amendment shall control. This First Amendment is a Loan Document.6. **COUNTERPARTS; TELEFACSIMLE EXECUTION**. This First Amendment may be executed in any number ofcounterparts, all of which taken together shall constitute one and the same instrument and any ofthe parties hereto may execute this First Amendment by signing any such counterpart. Delivery of anexecuted counterpart of this First Amendment by telefacsimile shall be equally as effective asdelivery of an original executed counterpart of this First Amendment. Any party delivering anexecuted counterpart of this First Amendment by telefacsimile also shall deliver an originalexecuted counterpart of this First Amendment, but the failure to deliver an original executedcounterpart shall not affect the validity, enforceability, and binding effect of this FirstAmendment.7. **MISCELLANEOUS**.     (a) Upon the effectiveness of this First Amendment, each reference in the Credit Agreement to“this Agreement,” “hereunder,”“herein,” “hereof” or words of like import referring to the CreditAgreement shall mean and refer to the Credit Agreement as amended by this First Amendment.     (b) Upon the effectiveness of this First Amendment, each reference in the Loan Documents tothe “Credit Agreement,” “thereunder,” “therein,” “thereof” or words of like import referring to theCredit Agreement shall mean and refer to the Credit Agreement as amended by this First Amendment.
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     (c) Upon the effectiveness of this First Amendment, each reference in the Registration RightsAgreement to “this Agreement,” “hereunder,” “herein,” “hereof” or words of like import referringto the Registration Rights Agreement shall mean and refer to the Registration Rights Agreement asamended by this First Amendment.     (d) Upon the effectiveness of this First Amendment, each reference in the Loan Documents tothe “Registration Rights Agreement.” “thereunder,” “therein,” “thereof” or words of like importreferring to the Registration Rights Agreement shall mean and refer to the Registration RightsAgreement as amended by this First Amendment.
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     IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed anddelivered as of the date first written above.      **BAKERS FOOTWEAR GROUP, INC.**