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                     REVOLVING CREDIT AND GUARANTY AGREEMENT
                                    (5-Year)


                                      Among



                            CARSON PIRIE SCOTT & CO.,

                                   as Borrower


                          CPS DEPARTMENT STORES, INC.,
                AND EACH OF THE OTHER SUBSIDIARIES NAMED HEREIN,

                                  as Guarantors



                             THE BANKS PARTY HERETO


                               ABN AMRO BANK N.V.,

                                    as Agent


                                       and

                              THE BANK OF NEW YORK,


                                       and


                                DRESDNER BANK AG,

                                  as Co-Agents


                          Dated as of October 16, 1997

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<PAGE>
                                Table of Contents


Introductory Statement.........................................................1

ARTICLE I                  DEFINITIONS.........................................1
       Section 1.01.           Defined Terms...................................1
       Section 1.02.           Terms Generally................................19

ARTICLE II                 AMOUNT AND TERMS OF CREDIT.........................19

       Section 2.01.           Commitment of the Banks........................19
       Section 2.02.           Borrowing Base.................................19
       Section 2.03.           Letters of Credit..............................20
       Section 2.04.           Issuance.......................................21
       Section 2.05.           Nature of Letter of Credit Obligations
                                Absolute......................................22
       Section 2.06.           Making of Loans................................22
       Section 2.07.           Notes; Repayment of Loans......................23
       Section 2.08.           Interest on Loans..............................23
       Section 2.09.           Default Interest...............................24
       Section 2.10.           Optional Termination or Reduction
                                of Commitment.................................24
       Section 2.11.           Alternate Rate of Interest.....................24
       Section 2.12.           Refinancing of Loans...........................24
       Section 2.13.           Mandatory Prepayment; Commitment
                                Termination; Cash Collateral..................25
       Section 2.14.           Optional Prepayment of Loans...................26
       Section 2.15.           Reserve Requirements; Change in
                                Circumstances.................................27
       Section 2.16.           Change in Legality.............................29
       Section 2.17.           Pro Rata Treatment, Etc........................29
       Section 2.18.           Taxes..........................................30
       Section 2.19.           Certain Fees...................................32
       Section 2.20.           Commitment Fee.................................32
       Section 2.21.           Letter of Credit Fees..........................32
       Section 2.22.           Nature of Fees.................................33
       Section 2.23.           Right of Set-Off...............................33
       Section 2.24.           Making of Loans................................33

ARTICLE III                REPRESENTATIONS AND WARRANTIES OF BORROWER.........34

       Section 3.01.           Organization and Authority.....................34
       Section 3.02.           Due Execution..................................34
       Section 3.03.           Statements Made................................35
       Section 3.04.           Financial Statements...........................35
       Section 3.05.           Ownership......................................35
       Section 3.06.           Liens..........................................35
       Section 3.07.           Litigation:  Compliance with Law, Etc..........36
       Section 3.08.           Insurance......................................36
       Section 3.09.           Use of Proceeds................................36
       Section 3.10.           Litigation.....................................36
       Section 3.11.           Governmental Approvals.........................36
       Section 3.12.           Federal Reserve Regulations....................36
       Section 3.13.           Taxes..........................................37
       Section 3.14.           Employee Benefit Plans.........................37
       Section 3.15.           Investment Company Act; Public Utility
                                Holding Company Act...........................37
<PAGE>

       Section 3.16.           Subsidiaries...................................38
       Section 3.17.           Title to Properties; Possession Under
                                Leases; Trademarks; Licenses and
                                Supplier Agreements...........................38
       Section 3.18.           Solvency.......................................38
       Section 3.19.           Permits, Etc...................................39
       Section 3.20.           Landlord's Liens...............................39
       Section 3.21.           Environmental Matters..........................39

ARTICLE IV                 CONDITIONS OF LENDING..............................39

       Section 4.01.           Conditions Precedent to Effectiveness..........39
       Section 4.02.           Conditions Precedent to Each Loan and
                                Each Letter of Credit.........................41

ARTICLE V                  AFFIRMATIVE COVENANTS..............................42

       Section 5.01.           Financial Statements, Reports, Etc.............42
       Section 5.01A.          Litigation and Other Notices...................44
       Section 5.02.           Corporate Existence............................45
       Section 5.03.           Insurance......................................45
       Section 5.04.           Obligations and Taxes..........................45
       Section 5.05.           Notice of Event of Default, Etc................46
       Section 5.06.           Borrowing Base Certificate.....................46
       Section 5.07.           Access to Books and Records....................46
       Section 5.08.           Business Plan..................................47
       Section 5.09.           Compliance with Laws, Etc......................47
       Section 5.10.           Use of Proceeds................................47
       Section 5.11.           Additional Guarantors..........................47
       Section 5.12.           Environmental Laws.............................47

ARTICLE VI                 NEGATIVE COVENANTS.................................47

       Section 6.01.           Liens..........................................47
       Section 6.02.           Merger, Acquisitions, Etc......................48
       Section 6.03.           Indebtedness...................................48
       Section 6.04.           Sales, Etc, of Assets..........................48
       Section 6.05.           Funded Debt to EBITDA Ratio....................49
       Section 6.06.           Cash Flow Coverage.............................49
       Section 6.07.           Minimum Tangible Net Worth.....................49
       Section 6.08.           Limitation on Voluntary Payments and
                                Modifications of Subordinated
                                Indebtedness..................................49
       Section 6.09.           Guarantees and Other Liabilities...............49
       Section 6.10.           Receivables Agreement Documents................50
       Section 6.11.           Investments, Loans and Advances................50
       Section 6.12.           Lease-Backs....................................51
       Section 6.13.           Transactions with Affiliates...................51
       Section 6.14.           Business.......................................52
       Section 6.15.           ERISA..........................................52
       Section 6.16.           Accounting Changes.............................52
       Section 6.17.           Modification of Charter Documents..............52
       Section 6.18.           Landlord's Liens...............................52
       Section 6.19.           NBGL...........................................52

<PAGE>
ARTICLE VII                EVENTS OF DEFAULT..................................53

       Section 7.01.           Events of Default..............................53
       Section 7.02.           Receivables Purchases..........................56
       Section 7.03.           Additional Undertakings........................57
       Section 7.04.           Collateral for Undrawn Letters of Credit.......57

ARTICLE VIII               GUARANTY...........................................57

       Section 8.01.           Guaranty.......................................57
       Section 8.02.           No Impairment of Guaranty......................58
       Section 8.03.           Waiver of Subrogation..........................59
       Section 8.04.           Maximum Guaranteed Amount......................59

ARTICLE IX                 THE AGENT..........................................59

       Section 9.01.           Administration by Agent........................59
       Section 9.02.           Advances and Payments..........................59
       Section 9.03.           Sharing of Setoffs.............................60
       Section 9.04.           Agreement of Required Banks....................60
       Section 9.05.           Liability of Agent.............................60
       Section 9.06.           Reimbursement and Indemnification..............61
       Section 9.07.           Rights of Agent................................61
       Section 9.08.           Independent Investigation by Banks.............61
       Section 9.09.           Notice of Transfer.............................62
       Section 9.10.           Successor Agent................................62

ARTICLE X                  MISCELLANEOUS......................................62

       Section 10.01.          Notices........................................62
       Section 10.02.          Survival of Agreement, Representations
                                and Warranties, Etc...........................62
       Section 10.03.          Successors and Assigns.........................63
       Section 10.04.          Confidentiality................................65
       Section 10.05.          Expenses.......................................66
       Section 10.06.          Indemnity......................................66
       Section 10.07.          Choice of Law..................................66
       Section 10.08.          No Waiver......................................67
       Section 10.09.          Extension of Maturity..........................67
       Section 10.10.          Amendments, Etc................................67
       Section 10.11.          Severability...................................68
       Section 10.12.          Headings.......................................68
       Section 10.13.          Execution in Counterparts......................68
       Section 10.14.          Prior Agreements...............................68
       Section 10.15.          Further Assurance..............................69
       Section 10.16.          Submission to Jurisdiction; Waiver of
                                Jury Trial....................................69

EXHIBIT A                      --      Form of Notes
EXHIBIT B                      --      Form of Opinions of Counsel
EXHIBIT C                      --      Form of Borrowing Base Certificate
EXHIBIT D                      --      Form of Assignment and Acceptance
SCHEDULE I                     --      Permitted Investments
SCHEDULE 3.07                  --      Litigation; Compliance With Law
SCHEDULE 3.13                  --      Taxes
SCHEDULE 3.16                  --      Subsidiaries
SCHEDULE 3.19                  --      Permits, Licenses, Approvals and Consents
SCHEDULE 3.21                  --      Environmental Matters
SCHEDULE 6.01                  --      Liens
SCHEDULE 6.03                  --      Indebtedness
<PAGE>


                     REVOLVING CREDIT AND GUARANTY AGREEMENT
                                    (5-Year)
                          Dated as of October 16, 1997

         REVOLVING CREDIT AND GUARANTY AGREEMENT,  dated as of October 16, 1997,
among CARSON PIRIE SCOTT & CO., an Illinois  corporation (the  "Borrower"),  CPS
DEPARTMENT STORES, INC., a Delaware corporation ("CPS"); and, together with each
of  the  other   Subsidiaries   listed  on  the  signature  pages  hereof,   the
"Guarantors"), each of the financial institutions from time to time party hereto
(the "Banks"),  ABN AMRO BANK N.V., as  Administrative  Agent (in such capacity,
the  "Agent") for the Banks,  and The Bank of New York and  Dresdner  Bank AG as
Co-Agents (collectively, the "Co-Agents").

                             INTRODUCTORY STATEMENT

         The Borrower has applied to the Banks for a revolving credit and letter
of credit facility in an aggregate principal amount not to exceed $75,000,000.

         The  Borrower  owns  directly  or  indirectly  all  of the  issued  and
outstanding equity securities of each Guarantor.

         To provide guarantees for the repayment of the Loans, the reimbursement
of any  draft  drawn  under a Letter  of  Credit  and the  payment  of the other
obligations of the Borrower and the Guarantors  hereunder,  the Borrower and the
Guarantors  will provide to the Agent and the Banks a guaranty  from each of the
Guarantors (as more fully described  herein) of the due and punctual payment and
performance of the obligations of the Borrower hereunder.

         Accordingly, the parties hereto hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

            Section 1.01.    Defined  Terms.  As used  in this  Agreement,  the
following  terms  shall  have  the meanings specified below:

         "ABN AMRO" shall mean ABN AMRO Bank N.V.

         "ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.

         "ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference  to the  Alternate  Base Rate in  accordance  with the  provisions  of
Article II.

         "Account"  shall mean each individual  private label  revolving  credit
account that exists on the Closing Date or is established after the Closing Date
pursuant to a Credit Card  Agreement  between CPS,  NBGL or the Borrower and the
Obligor.

         "Additional Seller" shall have the meaning set forth in the Liquidity
Agreement.

         "Adjusted  LIBOR  Rate"  shall  mean,  with  respect to any  Eurodollar
Borrowing for any Interest Period,  an interest rate per annum (rounded upwards,
if  necessary,  to the next 1/16 of 1%) equal to the  quotient  of (a) the LIBOR
Rate in effect for such Interest  Period divided by (b) a percentage  (expressed
as a decimal) equal to 100% minus Statutory  Reserves.  For purposes hereof, the
term "LIBOR Rate" shall mean the rate (rounded  upwards,  if  necessary,  to the
next  1/16 of 1%) at which  dollar  deposits  approximately  equal in  principal
amount  to such  Eurodollar  Borrowing  and for a  maturity  comparable  to such
Interest  Period are offered to the principal  London office of the Agent or its
London  affiliate in immediately  available funds in the London interbank market
at  approximately  11:00  a.m.,  London  time,  two  Business  Days prior to the
commencement of such Interest Period.

         "Affiliate"  shall mean,  as to any  Person,  any other  Person  which,
directly or  indirectly,  is in control of, is controlled by, or is under common
control  with  such  Person.  For  purposes  of this  definition,  a  Person  (a
"Controlled  Person")  shall be deemed to be  "controlled  by" another Person (a
"Controlling   Person")  if  the  Controlling  Person  possesses,   directly  or
indirectly,  power  either  to (i)  vote  10% or more of the  securities  having
ordinary voting power for the election of directors of the Controlled  Person or
(ii)  direct  or cause the  direction  of the  management  and  policies  of the
Controlled Person whether by contract or otherwise.

         "Agent" shall have the meaning set forth in the preamble to this
Agreement.

         "Agreement" shall mean this Revolving Credit and Guaranty  Agreement as
the same may from time to time be amended, modified or supplemented.

         "Alternate  Base  Rate"  shall  mean,  for any day,  a rate  per  annum
(rounded upwards, if necessary,  to the next 1/16 of 1%) equal to the greater of
(a) the Prime  Rate in effect on such day and (b) the  Federal  Funds  Effective
Rate in  effect on such day plus 1/2 of 1%. If for any  reason  the Agent  shall
have determined (which  determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds  Effective Rate for any reason,
including the inability or failure of the Agent to obtain sufficient  quotations
in  accordance  with  the  terms  thereof,  the  Alternate  Base  Rate  shall be
determined without regard to clause (b) of the first sentence of this definition
until the  circumstances  giving rise to such  inability  no longer  exist.  Any
change in the  Alternate  Base  Rate due to a change  in the  Prime  Rate or the
Federal Funds  Effective  Rate shall be effective on the effective  date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.

         "AMC" shall mean The Associated  Merchandising Corporation, a New York
corporation.

         "Applicable  Margin"  means,  on any date,  for any Alternate Base Rate
Loan or  Eurodollar  Loan,  the rate per annum set forth below,  as in effect on
such date as determined  pursuant to the provisions of the definition of Pricing
Date:

  LEVEL                    EURODOLLAR LOANS        ALTERNATE BASE RATE LOANS

Level I Status                 0.500%                         0%
Level II Status                0.625%                         0%
Level III Status               0.750%                         0%
Level IV Status                1.000%                         0%
Level V Status                 1.250%                      0.25%


         "Assignment  and  Acceptance"  shall mean an assignment  and acceptance
entered  into by a Bank and an  Eligible  Assignee,  and  accepted by the Agent,
substantially in the form of Exhibit D.

         "Bank Termination Date" shall have the meaning set forth in the
Liquidity Agreement.

         "Bankruptcy  Code"  shall mean The  Bankruptcy  Reform Act of 1978,  as
heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.

         "Banks" shall have the meaning set forth in the preamble to this
Agreement.

         "Bergner Credit Corporation" shall mean Bergner Credit  Corporation,  a
Delaware corporation, an indirect wholly-owned Subsidiary of Borrower.

         "Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.

         "Borrower" shall have the meaning set forth in the preamble to this
Agreement.

         "Borrowing"  shall mean the  incurrence  of Loans of a single Type made
from all the Banks on a single date and having, in the case of Eurodollar Loans,
a single  Interest Period (with any ABR Loan made pursuant to Section 2.16 being
considered a part of the related Borrowing of Eurodollar Loans).

         "Borrowing  Base"  shall  mean on any day an  amount  which  is  equal
to 60% of  Eligible  Book  Value of Inventory.

         "Borrowing Base Certificate" shall mean a certificate  substantially in
the form of Exhibit C, executed and  certified by a  Responsible  Officer of the
Borrower, which shall include appropriate exhibits thereto.

         "Business  Day"  shall mean any day other  than a  Saturday,  Sunday or
other  day on which  banks  in the  State of New  York  and/or  in the  State of
Illinois are required or permitted to close (and, for a Letter of Credit,  other
than a day on which the Fronting  Bank issuing such Letter of Credit is closed);
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business  Day"  shall  also  exclude  any day on which  banks  are not open for
dealings in dollar deposits on the London interbank market.

         "Capital  Expenditures"  shall mean, for any period,  on a consolidated
basis for the Borrower and its Subsidiaries,  the sum, without  duplication,  of
the  aggregate  of  all  expenditures,   except  interest   capitalized   during
construction, during such period which, in accordance with GAAP, are required to
be included in property,  plant or equipment  or a similar  fixed asset  account
(excluding  assets subject to capital leases).  For purposes of this definition,
the purchase  price of  equipment  which is  purchased  simultaneously  with the
trade-in  or sale of  existing  equipment  owned by the  Borrower  or any of its
Subsidiaries or with insurance proceeds or cash landlord/vendor allowances shall
be included in Capital  Expenditures  only to the extent of the gross  amount of
such purchase  price less the credit granted by the seller of such equipment for
the equipment  being traded in at such time, the purchase price of such existing
equipment or the amount of such proceeds or allowances, as the case may be.

         "Closing  Date"  shall mean the date on which this  Agreement  has been
executed and the conditions  precedent to its effectiveness set forth in Section
4.01 have been satisfied or waived.

         "Co-Agents" shall  have  the  meaning set forth in the preamble to this
Agreement.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Commitment"  shall mean,  with respect to each Bank, the commitment of
each Bank  hereunder  in the amount set forth  opposite  such Bank's name on the
appropriate  signature  page hereof or as may  subsequently  be set forth in the
Register  from  time to  time,  as the  same may be  reduced  from  time to time
pursuant to Sections 2.10 and 2.13.

         "Commitment Fee" shall have the meaning set forth in Section 2.20.

         "Commitment  Percentage"  shall mean at any time,  with respect to each
Bank,  the  percentage  obtained by dividing its  Commitment at such time by the
Total Commitment at such time.

         "Compliance  Certificate" means the certificate  delivered to the Agent
pursuant to Section 5.01(b) hereof.

         "Consignment  Liens"  shall have the  meaning  ascribed  thereto in the
definition of Eligible Book Value of Inventory.

         "Consolidated Net Income" shall mean, for any period,  the aggregate of
the  Net  Income  of  the  Borrower  and  its  Subsidiaries,   determined  on  a
consolidated basis.

         "Controlled   Group"  means  all  members  of  a  controlled  group  of
corporations and all trades and businesses  (whether or not incorporated)  under
common control that, together with the Borrower or any of its Subsidiaries,  are
treated as a single employer under Section 414 of the Code.

         "CPS" shall have the meaning set forth in the preamble to this
Agreement.

         "CPS  Holding  Co." shall  mean CPS  Holding  Co.  (formerly  known as
Carson  Pirie  Scott &  Company),  a Delaware corporation.

         "Credit Card  Agreement" shall mean,  with respect to an Account,  the
agreement governing such Account.

         "Credit Card Guidelines"  shall mean the policies and procedures of the
Borrower,  CPS, and NBGL,  as the case may be, as in effect on the Closing Date,
relating to the operation of their respective credit card businesses,  including
the creditworthiness of credit card customers, the extension of credit to credit
card customers,  the terms on which  repayments are required to be made, and the
terms  relating to finance  charges and the amounts  thereof and relating to the
maintenance of credit card accounts and collection of credit card receivables.

         "Credit Card Receivable"  shall mean a right to receive payment arising
from a sale of  merchandise  or service by the  Borrower  or CPS  pursuant to an
arrangement  with any Obligor pursuant to which such Obligor is obligated to pay
for merchandise or service under a credit plan that permits the purchase of such
merchandise  and  services on credit,  and  includes the right to payment of any
interest or finance  charges and other  obligations of such Obligor with respect
thereto.

         "Dollars"  and  "$"  shall  mean  lawful money of the United States of
America.

         "EBITDA" shall mean, for any period,  the  consolidated  Net Income (or
net loss) of the Borrower and its  Subsidiaries  for such period,  plus,  to the
extent deducted in computing Net Income, (a) the sum of, without duplication (i)
depreciation  expense,  (ii)  amortization  expense,  (iii)  provision  for LIFO
charges, (iv) gross interest expense for such period minus gross interest income
for such  period,  (v) total income tax expense and (vi)  extraordinary  losses,
which  include the  cumulative  effect on earnings from the adoption of new GAAP
pronouncements and non-cash pension expense and less (b) extraordinary gains.

         "Eligible  Assignee"  shall mean (i) any  Subsidiary  or Affiliate of a
Bank;  (ii) a commercial  bank having total assets in excess of  $1,000,000,000;
(iii) a finance company,  insurance company,  or other financial  institution or
fund acceptable to the Agent,  which in the ordinary course of business  extends
credit of the type  evidenced  by the  Notes  and has total  assets in excess of
$200,000,000  and whose  becoming an assignee  would not constitute a prohibited
transaction   under  Section  4975  of  ERISA;  and  (iv)  any  other  financial
institution satisfactory to the Borrower and the Agent.

         "Eligible  Book  Value of  Inventory"  shall mean the cost value of all
Inventory  of the  Borrower  (including  inventory  owned  by the  Borrower  and
consigned  to CPS)  which  (i) is free and  clear of all  Liens and any claim of
others (including the Liens and claims of consignors  ("Consignment Liens")) and
(ii) is substantially  similar in quality and mix to Inventory maintained by the
Borrower  and CPS in recent  historical  operations  prior to the date hereof as
determined by the Agent in the exercise of its reasonable discretion.  Inventory
as to which  Eligible  Book  Value of  Inventory  is  determined  shall  include
Inventory as to which a  documentary  Letter of Credit has been issued and which
if in  the  possession  of  the  Borrower  or  CPS  would  be  included  in  the
determination  of the  Eligible  Book  Value  of  Inventory,  but  only  if such
Inventory  has been shipped to the Borrower or CPS and title  thereto has passed
to the  Borrower.  Inventory  as to which  Eligible  Book Value of  Inventory is
determined shall exclude, without limitation, damaged goods, defective goods and
goods to be returned to vendor.

       "Environmental Laws" shall mean the Comprehensive Environmental Response,
Compensation,  and  Liability  Act (42 U.S.C.  ss.9601 et seq.),  the  Hazardous
Material   Transportation  Act  (49  U.S.C.   ss.1801  et  seq.),  the  Resource
Conservation  and Recovery Act (42 U.S.C.  ss.6901 et seq.),  the Federal  Water
Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Oil Pollution Act of 1990
(P.L.  101-380),  the Safe Drinking Water Act (42 U.S.C.  ss.300f et seq.),  the
Clean Air Act (42 U.S.C.  ss.7401 et seq.), the Toxic Substances Control Act, as
amended (15 U.S.C.  ss.2601 et seq.), the Federal  Insecticide,  Fungicide,  and
Rodenticide  Act (7 U.S.C.  ss.136 et seq.),  and the  Occupational  Safety  and
Health Act (29 U.S.C.  ss.651 et seq.), as such laws have been and hereafter may
be amended or  supplemented,  and any  related  or  analogous  present or future
Federal, state or local, statutes,  rules,  regulations,  ordinances and binding
interpretations and orders of any Governmental Authority.

         "Environmental  Lien"  shall  mean a Lien in favor of any  Governmental
Authority for (i) any  liability  under any  Environmental  Law, or (ii) damages
arising from or costs incurred by such  Governmental  Authority in response to a
Release or threatened Release of any Hazardous Material.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as  amended  from  time to  time,  and the  applicable  regulations  promulgated
thereunder.

         "ERISA  Affiliate"  shall mean any trade or  business  (whether  or not
incorporated)  which  is a  member  of a group  of  which  the  Borrower  or any
Subsidiary is a member and which is under common  control  within the meaning of
Section  414(b) or (c) of the Code and the  applicable  regulations  promulgated
thereunder.

         "Eurocurrency Liabilities" shall have the meaning assigned thereto in
Regulation D.

         "Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.

         "Eurodollar  Loan"  shall  mean any  Loan  bearing  interest  at a rate
determined  by  reference  to the  Adjusted  LIBOR Rate in  accordance  with the
provisions of Article II.

         "Event of Default" shall have the meaning given such term in Article
VII.

         "Federal  Funds  Effective  Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal  Reserve System  arranged by Federal funds brokers,  as published on the
next  succeeding  Business Day by the Federal  Reserve Bank of New York,  or, if
such rate is not so published  for any day which is a Business  Day, the average
of the  quotations for the day of such  transactions  received by the Agent from
three Federal funds brokers of recognized standing selected by it.

         "Fees" shall  collectively  mean the Commitment Fees,  Letter of Credit
Fees and other fees referred to in Section 2.19.

         "Final  Maturity  Date"  shall mean the earlier to occur of (i) October
___, 2002 and (ii) the  termination of the Total  Commitment in accordance  with
Section 7.01 hereof.

         "Fronting  Bank"  shall mean ABN AMRO or any  Affiliate  of ABN AMRO or
such other Bank designated by the Borrower (which other Bank shall be reasonably
acceptable to the Agent).


         "Funded  Debt"  means,  without  duplication,  for any  Person  (i) all
indebtedness  in respect of borrowed  money,  including  without  limitation all
capital  leases,   the  deferred  purchase  price  of  any  property  or  asset,
obligations  evidenced by a promissory note, bond or similar written  obligation
for the payment of money  (including,  but not limited to,  conditional sales or
similar title retention agreements), the aggregate dollar amount of outstandings
under financing  arrangements  in connection  with  receivable  securitizations,
whether or not any such  receivable  securitization  is reflected on the balance
sheet of such Person,  all payment  obligations under acceptance  facilities and
all unpaid  reimbursement  obligations  for any letter of credit  which has been
drawn  plus (ii) all  obligations  referred  to in clause  (i) above  guaranteed
directly  or  indirectly  by  such  Person  or  which  such  Person  has  agreed
(contingently  or otherwise)  to purchase or otherwise  acquire or in respect of
which such Person has otherwise assured a creditor against loss.


         "Funded Debt to EBITDA Ratio" shall have the meaning given such term in
Section 6.05 hereof.


         "GAAP" shall mean generally accepted accounting principles applied on a
basis consistent with those used in preparing the financial  statements referred
to in Section 3.04 hereof.


         "Governmental  Authority" shall mean any Federal,  state,  municipal or
other   governmental   department,   commission,   board,   bureau,   agency  or
instrumentality  or any court,  in each case  whether  of the  United  States or
foreign.


         "Great  Lakes"  shall  mean  Great  Lakes  Credit  Corp.,   a  Delaware
corporation, which is a wholly-owned subsidiary of NBGL.


         "Guarantors" shall have the meaning set forth in the preamble to this
Agreement.


         "Hazardous Material" shall mean any pollutant,  contaminant,  chemical,
or  industrial or hazardous,  toxic or dangerous  waste,  substance or material,
defined or regulated as such in (or for purposes of) any  Environmental  Law and
any  other  toxic,   reactive,   or  flammable  chemicals,   including  (without
limitation) any asbestos,  any petroleum  (including crude oil or any fraction),
any radioactive  substance and any polychlorinated  biphenyls or any constituent
of any such substance or waste.


         "Indebtedness" shall mean, at any time and with respect to any Person:

                   (i)     all indebtedness of such Person for borrowed money;

                  (ii) all indebtedness of such Person for the deferred purchase
         price of  property  or  services  (other  than  property  and  services
         purchased,   and  expense  accruals  and  deferred  compensation  items
         arising, in the ordinary course of business);

                 (iii) all obligations of such Person evidenced by notes, bonds,
         debentures or other similar instruments (other than performance, surety
         and appeal bonds arising in the ordinary course of business);

                  (iv) all  indebtedness of such Person created or arising under
         any conditional sale or other title retention agreement with respect to
         property  acquired by such Person  (even though the rights and remedies
         of the seller or lender  under such  agreement  in the event of default
         are limited to repossession or sale of such property);

                   (v) all  obligations  of such Person  under leases which have
         been or should be, in accordance with GAAP, recorded as capital leases,
         to the extent required to be so recorded;

                  (vi) all reimbursement, payment or similar obligations of such
         Person, contingent or otherwise, under acceptance,  letter of credit or
         similar  facilities  (other than letters of credit in  connection  with
         trade   obligations   incurred  in  the  ordinary  course  of  business
         (including Letters of Credit in favor of AMC as beneficiary),  workers'
         compensation,   general  liability,   unemployment  insurance,  old-age
         pensions and other social  security  benefits in the ordinary course of
         business  other than in respect of employee  benefit  plans  subject to
         ERISA);

                 (vii) all Indebtedness  referred to in clauses (i) through (vi)
         above  guaranteed  directly or indirectly by such Person,  or in effect
         guaranteed  directly or indirectly by such Person  through an agreement
         (A) to pay or purchase such  Indebtedness or to advance or supply funds
         for the payment or purchase of such Indebtedness, (B) to purchase, sell
         or lease  (as  lessee  or  lessor)  property,  or to  purchase  or sell
         services,  primarily  for the  purpose of  enabling  the debtor to make
         payment  of  such   Indebtedness  or  to  assure  the  holder  of  such
         Indebtedness  against  loss in  respect  of such  Indebtedness,  (C) to
         supply funds to or in any other manner invest in the debtor  (including
         any agreement to pay for property or services  irrespective  of whether
         such  property  is  received  or such  services  are  rendered)  or (D)
         otherwise  to  assure  a  creditor  against  loss  in  respect  of such
         Indebtedness,  including,  without  limitation,  with  respect  to  the
         Borrower, CPS, Great Lakes and any Additional Sellers, their respective
         obligations,  indebtedness and liabilities  (whether direct or indirect
         and whether  contingent or otherwise)  arising under,  or in connection
         with, any of the Receivables Agreement Documents;

                (viii) all Indebtedness referred to in clauses (i) through (vii)
         above secured by (or for which the holder of such  Indebtedness  has an
         existing  right,  contingent or  otherwise,  to be secured by) any Lien
         upon  or in  property  (including,  without  limitation,  accounts  and
         contract rights) owned by such Person,  even though such Person has not
         assumed or become liable for the payment of such Indebtedness; and

                  (ix) all  Indebtedness  referred  to in  clauses  (i)  through
         (viii) above of a partnership of which such Person is a general partner
         unless such Indebtedness is non-recourse to the general partner.

         "Interest  Expense"  shall mean, for any period and with respect to any
Person,  the sum of (a) cash  interest  paid by such  Person  during such period
minus (b) cash interest income of such Person during such period.

         "Interest Payment Date" shall mean (i) as to any Eurodollar Loan having
an Interest Period of one month, the last day of such Interest  Period,  (ii) as
to any Eurodollar  Loan having an Interest  Period of three or six months,  each
quarterly  anniversary of the  commencement of such Interest Period and the last
day of such Interest Period and (iii) as to all ABR Loans, the last Business Day
of each calendar month and the date on which any ABR Loans are  refinanced  with
Eurodollar  Loans  pursuant to Section 2.12,  and (iv) as to any Loan,  the date
such Loan is repaid.

         "Interest  Period" shall mean, as to any Borrowing of Eurodollar Loans,
the period commencing on the date of such Borrowing  (including as a result of a
refinancing  of ABR Loans) or on the last day of the preceding  Interest  Period
applicable to such Borrowing and ending on the numerically corresponding day (or
if there is no  corresponding  day, the last day) in the calendar  month that is
one,  three or six months  thereafter,  as the Borrower may elect in the related
notice delivered pursuant to Section 2.06(b) or 2.12;  provided,  however,  that
(i) if any Interest Period would end on a day which shall not be a Business Day,
such  Interest  Period  shall be extended to the next  succeeding  Business  Day
unless such next succeeding  Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day,
and (ii) no Interest Period shall end later than the Final Maturity Date.

         "Inventory"  shall mean goods held for sale by the  Borrower  or CPS in
the normal  course of  business  (and shall in no event  include  goods title to
which  is held  by a  concessionaire  or  lessee  of a  leased  department);  in
calculating the amount of Inventory for all purposes  hereunder,  there shall be
deducted a reserve for goods which have been  segregated  by the Borrower or CPS
to be returned to the applicable vendor for credit.

         "Knowledge" shall mean actual knowledge of a Responsible Officer.

         "Letter of Credit" shall mean any  irrevocable  letter of credit issued
pursuant  to  Section  2.03,  which  letter of credit  shall be (i) a standby or
documentary  letter of credit,  (ii) issued in  connection  with the purchase of
Inventory by the Borrower and for such other  purposes for which the Borrower or
CPS has historically  obtained letters of credit,  or for such other purposes as
are reasonably  acceptable to the Agent, (iii) denominated in Dollars,  and (iv)
otherwise in such form as may be  reasonably  approved  from time to time by the
Agent and the applicable Fronting Bank; provided, however, that the term "Letter
of Credit" as used in this  Agreement  shall  include  all  letters of credit in
existence on the Closing Date issued under the Existing Credit Agreement,  which
letters  of  credit  shall  be  deemed  to have  been  issued  pursuant  to this
Agreement.

         "Letter  of Credit  Fees"  shall  mean the fees  payable  in respect of
Letters of Credit pursuant to Section 2.21.

         "Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate  amount available for drawing under any contingency on all Letters
of Credit then outstanding plus (ii) all amounts theretofore drawn under Letters
of Credit and not then reimbursed.

         "Level I Status"  exists at any date if, at such date,  the Funded Debt
to EBITDA  Ratio is less than 1.75 to 1.0.

         "Level II Status"  exists at any date if, at such date,  Level I Status
does not exist and the Funded Debt to EBITDA Ratio is less than 2.25 to 1.0.

         "Level III Status" exists at any date if, at such date, neither Level I
nor Level II Status exists and the Funded Debt to EBITDA Ratio is less than 2.75
to 1.0.

         "Level IV Status" exists at any date if, at such date,  neither Level I
nor Level II nor Level III Status  exists and the Funded Debt to EBITDA Ratio is
less than 3.25 to 1.0.

         "Level V Status"  exists at any date if, at such date,  neither Level I
Status, Level II Status, Level III Status nor Level IV Status exists.

         "Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind whatsoever  (including any conditional  sale or other
title retention agreement or any lease in the nature thereof).

         "Liquidity  Agreement"  shall mean the Liquidity  Agreement dated as of
July 22,  1994  between  Great  Lakes and ABN AMRO Bank  N.V.,  as agent for the
lenders named therein (the "Receivables  Agreement Agent"), as the same may from
time to time be amended, supplemented or modified in accordance with its terms.

         "Liquidity Termination Event" shall have the same meaning herein as the
term "Termination Event" set forth in the Liquidity Agreement.

         "Loan" shall have the meaning given such term in Section 2.01.

         "Loan  Documents"  shall mean this  Agreement,  the Notes and any other
instrument or agreement executed and delivered in connection herewith.

         "Margin Stock" shall have the meaning assigned to such term in
Regulation U.

         "Material  Adverse Effect" shall mean a material  adverse effect on (i)
the business,  assets, prospects,  operations or financial or other condition of
the Borrower or CPS, or of the Borrower and its Subsidiaries taken as a whole or
(ii) the ability of the Borrower or Guarantors to perform or pay the Obligations
in accordance with the terms hereof or of any other Loan Document.

         "Multiemployer  Plan"  shall mean a pension  plan that  qualifies  as a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.

         "Multiple  Employer Plan" shall mean a Single Employer Plan,  which (i)
is maintained  for employees of the Borrower or an ERISA  Affiliate and at least
one  Person  other than the  Borrower  and its ERISA  Affiliates  or (ii) was so
maintained and in respect of which the Borrower or an ERISA Affiliate could have
liability under Section 4064 or 4069 of ERISA in the event such Plan has been or
were to be terminated.

         "NBGL" shall mean National Bank of the Great Lakes, a national bank.

         "NBGL  Documents"  shall  mean  (i)  each of the  Credit  Card  Program
Agreements dated February 4, 1996 (as amended,  collectively,  the "NBGL Program
Agreement") between NBGL and the Borrower and between NBGL and CPS.

         "Net  Income"  shall mean,  for any Person and for any period,  the net
income (loss) of such Person for such period,  provided  that: (i) all gains and
all losses realized by such Person and its  Subsidiaries  upon the sale or other
disposition  (including,  without  limitation,  pursuant  to sale and  leaseback
transactions) of property or assets which are not sold or otherwise  disposed of
in the ordinary course of business, or pursuant to the sale of any capital stock
of such Person or any subsidiary, shall be excluded, (ii) net income or net loss
of any Person  combined  with such  Person on a  "pooling  of  interests"  basis
attributable  to any  period  prior  to the  date of such  combination  shall be
excluded,  and (iii) net income of any Person which is not a Subsidiary  of such
Person and which is  consolidated  with such Person or is accounted  for by such
Person by the equity method of  accounting  shall be included only to the extent
of the amount of dividends or distributions paid to such Person or a Subsidiary.

         "Net Worth" shall mean, at any date,  the amount by which (a) the total
consolidated  assets of the Borrower and its  Subsidiaries  exceed (b) the total
consolidated liabilities of the Borrower and its Subsidiaries.

         "Non-Purchased  Receivables" shall have the meaning assigned thereto in
the Liquidity Agreement as in effect on the Closing Date.

         "Notes" shall mean the promissory notes of the Borrower,  substantially
in the form of Exhibit A hereto, each payable to the order of a Bank, evidencing
Loans.

         "Obligations"  shall mean (a) the due and punctual payment of principal
of and interest on the Loans and the Notes and the  reimbursement of all amounts
drawn under Letters of Credit,  and (b) the due and punctual payment of the Fees
and all other present and future,  fixed or contingent,  monetary obligations of
the Borrower  and/or the Guarantors to the Banks and/or the Agent under the Loan
Documents.

         "Obligor"  shall mean the Person or Persons  obligated to make payments
with respect to an Account, including any guarantor thereof.

         "Other Taxes" shall have the meaning given such term in Section 2.18.

         "Payment  Office"  shall  have the  meaning  given such term in Section
2.06(b) of this Agreement.

         "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation,  or any
successor agency or entity performing substantially the same functions.

         "Permitted Investments" shall mean:

                   (a) direct  obligations  of, or obligations  the principal of
         and  interest on which are  unconditionally  guaranteed  by, the United
         States of America  (or by any agency  thereof),  in each case  maturing
         within six months from the date of acquisition thereof;

                   (b) without  limiting the  provisions of paragraph (d) below,
         investments in (i) commercial paper maturing within six months from the
         date of acquisition thereof and having, at such date of acquisition,  a
         rating of at least  "A-1" or the  equivalent  thereof  from  Standard &
         Poor's  Ratings Group, a division of The  McGraw-Hill  Companies,  Inc.
         ("S&P") or of at least "Prime-1" or the equivalent thereof from Moody's
         Investors Service, Inc. ("Moody's"), (ii) bid notes maturing within six
         months from the date of acquisition thereof,  issued by an issuer whose
         short term rating is at least "A-1" or the equivalent  thereof from S&P
         or at least "Prime-1" or the equivalent  thereof from Moody's and (iii)
         up to  $10,000,000  in aggregate  principal  amount of corporate  bonds
         maturing within six months from the date of acquisition thereof, issued
         by  an  issuer  whose  short-term  rating  is at  least  "A-1"  or  the
         equivalent  thereof from S&P or at least  "Prime-1"  or the  equivalent
         from Moody's (in each case,  excluding any commercial  paper, bid notes
         or bonds of Great Lakes or any other Affiliate of the Borrower);

                   (c)  investments  in   certificates   of  deposit,   banker's
         acceptances and time deposits  maturing within six months from the date
         of  acquisition  thereof issued or guaranteed by or placed with (i) any
         domestic  office of the Agent or (ii) any domestic  office of any other
         commercial bank of recognized  standing organized under the laws of the
         United  States of  America  or any State  thereof  that has a  combined
         capital and surplus and undivided profits of not less than $250,000,000
         and is the  principal  banking  Subsidiary  of a bank  holding  company
         having a  long-term  unsecured  debt  rating  of at least  "A-1" or the
         equivalent  thereof from S&P or at least  "Prime-1"  or the  equivalent
         thereof from Moody's;

                   (d) investments in repurchase  obligations with a term of not
         more than one hundred  eighty  days for  underlying  securities  of the
         types  described in clause (a) above  entered into with any office of a
         bank or trust company  meeting the  qualifications  specified in clause
         (c) above;

                   (e)  investments  in money  market  funds which money  market
         funds comply with the  provisions  of Rule 2a-7 of the  Securities  and
         Exchange  Commission as in effect on the date hereof or  investments in
         mutual  funds  substantially  all the assets of which are  comprised of
         securities of the type described in clause (a) above;

                   (f) to the extent owned on the Closing  Date (i)  investments
         in the capital stock or partnership interests of any direct or indirect
         Subsidiary of the Borrower,  and (ii) other  investments  in the notes,
         bonds,  capital stock or partnership  interests of any Person listed on
         Schedule I to this  Agreement,  including in each case any dividends or
         distributions   in  respect  of  such  capital  stock  or   partnership
         interests;

                   (g) other investment  instruments  approved in writing by the
         Required Banks, which approval shall not be unreasonably  withheld, and
         offered by  financial  institutions  that have a combined  capital  and
         surplus and undivided profits of not less than $250,000,000;

                   (h)  investments  described in clauses  (a),  (b), (c) or (e)
         hereof maturing  between six and  twenty-four  months of the Borrower's
         acquisition,  if the  Borrower's  holdings of such  investments  do not
         exceed $40,000,000 at any time in the aggregate; and

                   (i)  other  investments  not  exceeding   $10,000,000  in  an
         aggregate  principal amount matching the Borrower's  obligations  under
         all of its deferred compensation plans.

         "Permitted Liens" shall mean:

                   (i) Liens imposed by law (other than Environmental  Liens and
         any Lien imposed under ERISA) for taxes,  assessments or charges of any
         Governmental  Authority  for  claims  not yet due or  which  are  being
         contested in good faith by appropriate  proceedings and with respect to
         which  adequate  reserves  or other  appropriate  provisions  are being
         maintained in accordance with GAAP;

                  (ii)  statutory  Liens of  landlords  and  Liens of  carriers,
         warehousemen,  mechanics,  materialmen  and other Liens (other than any
         Lien imposed under ERISA) imposed by law created in the ordinary course
         of business  for amounts  not yet due or which are being  contested  in
         good  faith  by  appropriate  proceedings  and  with  respect  to which
         adequate reserves or other appropriate  provisions are being maintained
         in accordance with GAAP;

                 (iii) Liens (other than any Lien imposed under ERISA)  incurred
         or deposits made in the ordinary course of business (including, without
         limitation,  surety bonds and appeal bonds) in connection with workers'
         compensation, unemployment insurance and other types of social security
         benefits  or to  secure  the  performance  of  tenders,  bids,  leases,
         contracts  (other than for the  repayment of  Indebtedness),  statutory
         obligations  and other  similar  obligations  or arising as a result of
         progress payments under government contracts;

                  (iv)  easements  (including,  without  limitation,  reciprocal
         easement agreements and utility agreements),  rights-of-way, covenants,
         consents, reservations,  encroachments, variations and zoning and other
         restrictions,  charges or encumbrances (whether or not recorded), which
         do not interfere  materially with the ordinary  conduct of the business
         of the Borrower or any  Guarantor,  as the case may be and which do not
         materially  detract from the value of the property to which they attach
         or materially impair the use thereof to the Borrower or such Guarantor,
         as the case may be;

                   (v) purchase money Liens upon or in any property  (other than
         Inventory)  acquired  or held in the  ordinary  course of  business  to
         secure  the  purchase  price  of  such  property  to  the  extent  such
         Indebtedness is permitted by Section 6.03(iv) solely for the purpose of
         financing the acquisition of such property;

                  (vi) extensions, renewals or replacements of any Lien referred
         to in  paragraphs  (i) through (v) above,  provided  that the principal
         amount of the obligation  secured thereby is not increased and that any
         such  extension,  renewal or  replacement  is  limited to the  property
         originally encumbered thereby;

                 (vii) Liens on Permitted  Investments  of up to  $20,000,000 at
         any  time  in  the  aggregate  in  favor  of the  Borrower's  liability
         insurance carriers to secure the Borrower's  reimbursement  obligations
         to the carriers; and

                (viii) Liens and encumbrances  with respect to the real property
         of the Borrower and/or any Guarantor which are reasonably acceptable to
         the Agent.

         "Person"  shall mean any  natural  person,  corporation,  division of a
corporation,  partnership,  trust, joint venture, association,  company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.

         "Plan"  means an employee  pension  benefit plan covered by Title IV of
ERISA or subject to the minimum funding  standards under Section 412 of the Code
and is either (i) maintained by a member of the  Controlled  Group for employees
of a member of the Controlled  Group of which the Borrower or any Guarantor is a
member or (ii) maintained pursuant to a collective  bargaining  agreement or any
other arrangement under which more than one employer makes  contributions and to
which a member of the Controlled Group of which the Borrower or any Guarantor is
a member is then making or accruing an obligation to make  contributions  or has
within  the  preceding  five  plan  years  made  or had an  obligation  to  make
contributions.

         "Pricing Date" means, for any fiscal quarter,  the latest date by which
the  Borrower is required to deliver a  Compliance  Certificate  for such fiscal
quarter  pursuant  to Section  5.01(b).  If the  Borrower  has not  delivered  a
Compliance Certificate by the date such Compliance Certificate is required to be
delivered  under Section  5.01(b),  Level V Status shall be deemed to exist from
such required  delivery date until a Compliance  Certificate is delivered before
the next Pricing Date. If the Borrower  subsequently  delivers such a Compliance
Certificate  before the next Pricing Date, the Applicable  Margin and Commitment
Fee established by such late delivered Compliance  Certificate shall take effect
from  the  date  of  delivery   until  the  next  Pricing  Date.  In  all  other
circumstances,  the  Applicable  Margin  and  Commitment  Fee  established  by a
Compliance  Certificate  shall be in effect  from the  Pricing  Date that occurs
immediately  after  the end of the  Company's  fiscal  quarter  covered  by such
Compliance Certificate until the next Pricing Date.

         "Prime Rate" shall mean the rate of interest per annum  announced  from
time to time by the Agent as its prime  lending rate in effect at its  principal
office in Chicago, Illinois; each change in the Prime Rate shall be effective on
the date such change is announced.  The Prime Rate is a reference  rate and does
not necessarily represent the lowest or best rate charged to any customers.  ABN
AMRO and the other  Banks may make  commercial  loans or other loans at rates of
interest at, above or below the Prime Rate.

         "Purchase  Termination  Date" shall have the meaning set  forth in  the
Liquidity Agreement.

         "Purchased  Receivables" shall have the meaning assigned thereto in the
Liquidity Agreement as in effect on the Closing Date.

         "Receivables Agreement" shall mean the Amended and Restated Receivables
Purchase  Agreement  dated as of July 22, 1994 among Great Lakes,  the Borrower,
CPS and  NBGL  providing  for  the  purchase  by  Great  Lakes  of  Credit  Card
Receivables  from the  Borrower  and CPS,  as the same may from  time to time be
amended, supplemented or modified in accordance with its terms.

         "Receivables Agreement Agent" shall have the meaning given such term in
the definition of "Liquidity Agreement" in this Agreement.

         "Receivables  Agreement  Documents" shall mean the Liquidity Agreement,
the Receivables  Agreement and all other  agreements,  documents and instruments
executed  in  connection  therewith,  and all other  agreements,  documents  and
instruments providing for the sale at no less than fair market value of accounts
receivable owed to the Borrower or any Guarantor,  as each may from time to time
be amended, supplemented or modified in accordance with their respective terms.

         "Register" shall have the meaning set forth in Section 10.3(d).

         "Release"  shall  mean  any  releasing,   spilling,  leaking,  seepage,
pumping,  pouring,  emitting,  emptying,   discharging,   injecting,   escaping,
leaching,  disposing or dumping of any Hazardous  Material into the environment,
and shall include any threatened Release.

         "Remedial  Work"  shall  mean  any   investigation,   site  monitoring,
containment,  cleanup, removal, treatment, restoration or other remedial work of
any  kind  or  nature  with  respect  to any  property  of the  Borrower  or its
Subsidiaries  (whether  such  property  is owned,  leased,  subleased  or used),
including,  without  limitation,  with  respect to  Hazardous  Material  and the
Release thereof.

         "Rental  Expense" shall mean, for any period,  the aggregate  amount of
payments  required to be made by the Borrower and its  Subsidiaries  during such
period in respect of operating leases or similar arrangements.

         "Reportable Event" shall mean a  Reportable Event as defined in Section
4043(b) of ERISA.

         "Required   Banks"  shall  mean,  at  any  time,  Banks  holding  Loans
representing  at  least  51% of the  aggregate  principal  amount  of the  Loans
outstanding  or,  if  no  Loans  are  outstanding,   Banks  having   Commitments
representing at least 51% of the Total Commitment.

         "Requirements  of Law" shall mean for any Person or any of its property
the certificate of incorporation or articles of association and by-laws or other
organizational or governing  documents of such Person, and any law, treaty, rule
or regulation,  or determination of an arbitrator or Governmental  Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject,  whether Federal,  state or
local (including,  without limitation,  usury laws, the Federal Truth in Lending
Act and retail installment sales acts).

         "Responsible  Officer"  shall mean,  with  respect to any  person,  the
President,   Chief  Financial  Officer,  Chief  Operating  Officer,   Treasurer,
Controller or Secretary of such person.

         "Seasonal  Termination  Date"  shall  have  the  meaning  set  forth in
the Liquidity Agreement.

         "Seller Notes"  shall  have the  meaning set  forth  in  the  Liquidity
Agreement. 

         "Short-Term  Credit  Agreement" means the $50,000,000  Revolving Credit
and Guaranty Agreement (364-Day) dated as of October 16, 1997 among Carson Pirie
Scott & Co.,  certain  Subsidiaries  of Carson Pirie Scott & Co., as Guarantors,
the Banks party thereto and ABN AMRO Bank N.V., as Agent.

         "Single Employer Plan" shall mean a pension plan (i) that constitutes a
single employer plan, as defined in Section  4001(a)(15) of ERISA, and (ii) that
is  maintained  for  employees of the  Borrower or an ERISA  Affiliate or was so
maintained  and in respect of which the  Borrower  could  have  liability  under
Section 4069 of ERISA in the event such Plan has been or were to be terminated.

         "Statutory Reserves" shall mean, on any date, the percentage (expressed
as a decimal)  established by the Board and any other banking authority which is
for purposes of the  definition of Adjusted  LIBOR Rate, the then stated maximum
rate for all reserves (including but not limited to any emergency,  supplemental
or other  marginal  reserve  requirements)  applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency  Liabilities (or any successor
category of  liabilities  under  Regulation D). Such reserve  percentages  shall
include,  without  limitation,  those imposed pursuant to said  Regulation.  The
Statutory  Reserves shall be adjusted  automatically  on and as of the effective
date of any change in such percentage.

         "Subordinated  Indebtedness"  shall  mean  any  Indebtedness  which  is
subordinated  in right of  payment  to the prior  payment of the Loans and other
Obligations,  pursuant to  documentation,  containing  interest  rates,  payment
terms, maturities,  amortization schedules,  covenants,  defaults,  remedies and
other material terms in form and substance  satisfactory  to the  Super-majority
Banks; provided that the subordinated indebtedness payable by Great Lakes to the
Sellers  (as  defined  in the  Receivables  Agreement  Documents)  shall  not be
considered Subordinated Indebtedness hereunder.

         "Subsidiary" shall mean, with respect to any Person (herein referred to
as the "parent"), any corporation, association or other business entity (whether
now  existing  or  hereafter  organized)  of which at  least a  majority  of the
securities or other  ownership  interests  having  ordinary voting power for the
election of  directors  is, at the time as of which any  determination  is being
made,  owned or  controlled  by the  parent or one or more  subsidiaries  of the
parent or by the parent and one or more subsidiaries of the parent.

         "Super-majority  Banks" shall mean,  at any time,  Banks  holding Loans
representing  at least  66-2/3% of the aggregate  principal  amount of the Loans
outstanding,   or  if  no  Loans  are  outstanding,   Banks  having  Commitments
representing at least 66-2/3% of the Total Commitment.

         "Tangible  Net Worth"  shall  mean,  at any date,  Net Worth  minus all
assets  of the  Borrower  and its  Subsidiaries  which  would be  classified  as
intangible assets.

         "Tax  Sharing  Agreement"  shall  have the  meaning  given such term in
Section 3.13 hereof.

         "Taxes" shall have the meaning given such term in Section 2.18 hereof.

         "Termination  Event" shall mean (i) a "reportable  event," as such term
is  described  in Section 4043 of ERISA and the  regulations  issued  thereunder
(other than a "reportable  event" not subject to the provision for 30-day notice
to the PBGC under such  regulations)  or an event  described  in Section 4068 of
ERISA excluding  events  described in 29 CFR ss.2615.21 or 2615.23,  or (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Multiple  Employer Plan
during a plan  year in which it was a  "substantial  employer,"  as such term is
defined in Section  4001(c) of ERISA,  or the  incurrence  of  liability  by the
Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the termination
of a Multiple  Employer Plan, or (iii) providing notice of intent to terminate a
Plan pursuant to Section  4041(c) of ERISA or the treatment of a Plan  amendment
as a  termination  under  Section  4041 of  ERISA,  or (iv) the  institution  of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA,  or (v)
any other event or condition  which might  reasonably  constitute  grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the imposition of any liability under Title IV of ERISA
(other than for the payment of premiums to the PBGC).

         "Total Commitment" shall mean, at any time, the sum of the Commitments
at such time.

         "Total  Liabilities"  shall  mean the  total of all items  which  would
properly be included  as  liabilities  on a  consolidated  balance  sheet of the
Borrower and its Subsidiaries.

         "Transactions" shall have the meaning set forth in Section 3.02 of this
Agreement.

         "Transferee"  shall  have the  meaning  set forth in  Section  2.18 of 
this Agreement.

         "Type" when used in respect of any Loan or Borrowing shall refer to the
rate of interest  by  reference  to which  interest on such Loan or on the Loans
comprising such Borrowing is determined.  For purposes hereof, "Rate" shall mean
the Adjusted LIBOR Rate and the Alternate Base Rate.

         "Uniform  Commercial Code" shall mean the Illinois  Uniform  Commercial
Code, as in effect from time to time.

         "Unused  Total  Commitment"  shall  mean,  at any  time,  (i) the Total
Commitment less (ii) the sum of (x) the aggregate  outstanding  principal amount
of all Loans and (y) the aggregate Letter of Credit Outstandings.

         "Welfare Plan" shall mean a "welfare plan," as  defined in Section 3(1)
of ERISA.

         "WINDMILL  Termination  Date"  shall  have  the  meaning  set  forth in
the Liquidity Agreement.

         "Withdrawal  Liability"  shall have the  meaning  given such term under
Part I of Subtitle E of Title IV of ERISA.

            Section 1.02. Terms Generally. The definitions in Section 1.01 shall
apply  equally  to both the  singular  and  plural  forms of the terms  defined.
Whenever the context may require,  any pronoun shall  include the  corresponding
masculine,  feminine  and  neuter  forms.  All  references  herein to  Articles,
Sections,  Exhibits and  Schedules  shall be deemed  references  to Articles and
Sections of, and Exhibits and  Schedules to, this  Agreement  unless the context
shall otherwise  require.  Except as otherwise  expressly  provided herein,  all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time;  provided,  however,  that for purposes of
determining  compliance  with any  covenant  set forth in Article VI, such terms
shall be  construed  in  accordance  with  GAAP as in effect on the date of this
Agreement  applied  on a  basis  consistent  with  the  application  used in the
Borrower's audited financial statements referred to in Section 3.04.


                                   ARTICLE II

                           AMOUNT AND TERMS OF CREDIT

            Section 2.01.  Commitment of the Banks.  (a) Each Bank severally and
not  jointly  with the other  Banks  agrees,  upon the terms and  subject to the
conditions  herein set forth,  to make  revolving  credit loans (each, a "Loan,"
and,  collectively,  the  "Loans") to the  Borrower at any time and from time to
time during the period  commencing  on the Closing  Date and ending on the Final
Maturity Date (or the earlier date of termination of the Total Commitment) in an
aggregate  principal amount not to exceed,  when added to such Bank's Commitment
Percentage  multiplied by the then aggregate Letter of Credit Outstandings,  the
Commitment of such Bank,  which Loans may be repaid and reborrowed in accordance
with the  provisions  of this  Agreement.  At no time  shall the sum of the then
outstanding  aggregate  principal  amount of the Loans  plus the then  aggregate
Letter of Credit  Outstandings  exceed the lesser of (i) the Total Commitment of
$75,000,000,  as the same may be reduced  from time to time  pursuant to Section
2.10 or 2.13, as the case may be and (ii) the sum of the Borrowing Base plus the
cash then held by the Agent  pursuant to Sections  2.03(b) and 2.13(a) minus the
aggregate  principal  amount of all  "Loans"  outstanding  under the  Short-Term
Credit Agreement.

           (b) Each Borrowing  shall be made by the Banks pro rata in accordance
with their respective  Commitments;  provided,  however, that the failure of any
Bank to make any Loan  shall not in  itself  relieve  the  other  Banks of their
obligations to lend.

            Section 2.02. Borrowing Base. Notwithstanding any other provision of
this  Agreement  to  the  contrary,   the  aggregate  principal  amount  of  all
outstanding  Loans plus the then aggregate Letter of Credit  Outstandings  minus
cash then held by the Agent pursuant to Sections 2.03(b) and 2.13(a) hereof plus
the aggregate  principal amount of all "Loans"  outstanding under the Short-Term
Credit  Agreement  shall not at any time exceed the  Borrowing  Base and no Loan
shall be made or Letter of Credit issued in violation of the foregoing.

            Section 2.03.  Letters of Credit.  (a) Upon the terms and subject to
the  conditions  herein set forth,  the Borrower may request a Fronting Bank, at
any time and from  time to time  after  the date  hereof  and prior to the Final
Maturity  Date,  to issue,  and  subject to the terms and  conditions  contained
herein,  such Fronting Bank shall issue,  for the account of the Borrower one or
more  Letters of Credit,  provided,  however,  that no Letter of Credit shall be
issued if after  giving  effect to such  issuance  (i) the  aggregate  Letter of
Credit  Outstandings  shall exceed  $50,000,000,  (ii) the  aggregate  Letter of
Credit Outstandings, when added to the aggregate outstanding principal amount of
the Loans,  would exceed the Total Commitment or (iii) the provisions of Section
2.02 would be violated thereby.

           (b) No  commercial  Letter  of Credit  shall  expire  later  than the
earlier of (u) 180 days after its date of issue and (v) the Final Maturity Date,
and no standby  Letter of Credit  shall expire later than the earlier of (w) one
year  after the date of its issue and (x) the  Final  Maturity  Date,  provided,
however,  that the  foregoing  clause (w) shall not  prohibit  the  issuance  of
"evergreen"  standby  Letters of Credit with an initial term of one year or less
from the  date of issue if the  Agent  or the  Fronting  Bank may  (without  the
agreement of the Borrower)  prevent the renewal of such standby Letter of Credit
pursuant to terms  consistent with the past practice of the Borrower;  provided,
however, that if any Letter of Credit shall be outstanding on the Final Maturity
Date, the Borrower  shall,  at or prior to the Final Maturity Date (i) cause all
Letters of Credit which expire after the Final  Maturity  Date to be returned to
the  Fronting  Bank  undrawn and marked  "cancelled"  or (ii) if the Borrower is
unable to do so in whole or in part, either (y) provide a "back-to-back"  letter
of credit to one or more Fronting Banks in a form  satisfactory to such Fronting
Banks,  the Agent and the Banks  (in their  sole  discretion),  issued by a bank
reasonably satisfactory to such Fronting Bank and the Agent (in their reasonable
discretion)  in an  amount  equal  to the  then  undrawn  stated  amount  of all
outstanding  Letters of Credit issued by such Fronting  Banks and/or (z) deposit
cash with the Agent in an amount equal to the then undrawn  stated amount of all
outstanding  Letters  of  Credit  as  collateral  security  for  the  Borrower's
reimbursement  obligations in connection  therewith.  "Back-to-back"  letters of
credit and cash  deposited  with the Agent in respect of a particular  Letter of
Credit  pursuant to this Section  2.03(b) shall be returned to the Borrower upon
the  expiration of such Letter of Credit  undrawn or upon the payment in full of
all reimbursement and other obligations in connection therewith.

           (c) The Borrower shall pay to each Fronting Bank, in addition to such
other fees and charges as are specifically  provided for in Section 2.21 hereof,
such fees and charges in  connection  with the  issuance and  processing  of the
Letters of Credit  issued by such Fronting  Bank as are  customarily  imposed by
such  Fronting  Bank  from  time to time in  connection  with  letter  of credit
transactions.

           (d) Drafts drawn under each Letter of Credit shall be  reimbursed  by
the Borrower not later than the first  Business Day  following  the date of draw
and shall bear interest from the date of draw until reimbursed in full at a rate
per annum equal to the Alternate  Base Rate (computed on the basis of the actual
number of days elapsed over a year of 360 days).

           (e)  Immediately  upon the  issuance  of any  Letter of Credit by any
Fronting  Bank,  such  Fronting  Bank  shall be deemed to have sold to each Bank
other  than  such  Fronting  Bank and  each  such  other  Bank  shall be  deemed
unconditionally  and  irrevocably  to have  purchased  from such Fronting  Bank,
without recourse or warranty,  an undivided interest and  participation,  to the
extent of such Bank's  Commitment  Percentage,  in such  Letter of Credit,  each
drawing  thereunder and the obligations of the Borrower and the Guarantors under
this Agreement with respect thereto. Upon any change in the Commitments pursuant
to Section 10.03,  it is hereby agreed that with respect to all Letter of Credit
Outstandings,  there  shall be an  automatic  adjustment  to the  participations
hereby  created to reflect the new  Commitment  Percentages of the assigning and
assignee  Banks.  Any action  taken or  omitted  by a Fronting  Bank under or in
connection with a Letter of Credit,  if taken or omitted in the absence of gross
negligence  or willful  misconduct,  shall not create for such Fronting Bank any
resulting liability to any other Bank.

           (f) In the event that a Fronting  Bank  makes any  payment  under any
Letter of Credit and the Borrower shall not have  reimbursed such amount in full
to such Fronting Bank pursuant to this Section, the Fronting Bank shall promptly
notify the Agent,  which shall  promptly  notify each Bank of such failure,  and
each Bank shall promptly and unconditionally pay to the Agent for the account of
the  Fronting  Bank the  amount of such  Bank's  Commitment  Percentage  of such
unreimbursed  payment in Dollars and in same day funds.  If the Fronting Bank so
notifies the Agent, and the Agent so notifies the Banks prior to 11:00 a.m. (New
York City time) on any  Business  Day,  such Banks shall make,  available to the
Fronting  Bank  such  Bank's  Commitment   Percentage  of  the  amount  of  such
unreimbursed  payment  on such  Business  Day in same day  funds.  If and to the
extent such Bank shall not have so made its Commitment  Percentage of the amount
of such payment  available to the Fronting Bank, such Bank agrees to pay to such
Fronting Bank, forthwith on demand such amount,  together with interest thereon,
for each day from such date until the date such  amount is paid to the agent for
the account of such  Fronting  Bank at the Federal  Funds  Effective  Rate.  The
failure  of any Bank to make  available  to the  Fronting  Bank  its  Commitment
Percentage of any payment under any Letter of Credit shall not relieve any other
Bank of its  obligation  hereunder to make  available  to the Fronting  Bank its
Commitment  Percentage  of any  payment  under any  Letter of Credit on the date
required,  as specified  above, but no Bank shall be responsible for the failure
of any other Bank to make  available  to such  Fronting  Bank such other  Bank's
Commitment  Percentage of any such payment.  Whenever a Fronting Bank receives a
payment of a  reimbursement  obligation as to which it has received any payments
from the Banks pursuant to this paragraph,  such Fronting Bank shall pay to each
Bank which has paid its Commitment  Percentage  thereof,  in Dollars and in same
day funds, an amount equal to such Bank's Commitment Percentage thereof.

            Section  2.04.  Issuance.  Whenever the Borrower  desires a Fronting
Bank to issue a Letter of Credit,  it shall give to such  Fronting  Bank and the
Agent at least two Business Days' prior written  (including telex,  facsimile or
cable communication) notice (or such shorter period as may be agreed upon by the
Agent,  the  Borrower and the Fronting  Bank)  specifying  the date on which the
proposed  Letter of Credit is to be issued (which shall be a Business  Day), the
stated amount of the Letter of Credit so requested,  the expiration date of such
Letter of Credit and the name and address of the beneficiary thereof.

            Section 2.05. Nature of Letter of Credit Obligations  Absolute.  The
obligations  of the Borrower to reimburse  the Banks for drawings made under any
Letter  of  Credit  shall be  unconditional  and  irrevocable  and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including,  without limitation (it being understood that any such payment by the
Borrower  shall be without  prejudice to, and shall not  constitute a waiver of,
any rights the Borrower  might have or might  acquire as a result of the payment
by the Fronting Bank of any draft or the reimbursement by the Borrower thereof):
(i) any lack of validity  or  enforceability  of any Letter of Credit;  (ii) the
existence of any claim, setoff, defense or other right which the Borrower or any
Guarantor may have at any time against a beneficiary  of any Letter of Credit or
against  any of the  Banks,  whether  in  connection  with this  Agreement,  the
transactions contemplated herein or any unrelated transaction;  (iii) any draft,
demand,  certificate  or other  document  presented  under any  Letter of Credit
proving to be forged, fraudulent,  invalid or insufficient in any respect or any
statement  therein being untrue or inaccurate in any respect;  (iv) payment by a
Fronting Bank of any Letter of Credit against presentation of a demand, draft or
certificate  or other  document  which  does not  comply  with the terms of such
Letter  of Credit  in the  absence  of  willful  misconduct  on the part of such
Fronting Bank; (v) any other  circumstances  or happening  whatsoever,  which is
similar  to any of the  foregoing;  or (vi) the fact that any  Event of  Default
shall have occurred and be continuing.

           Section 2.06.  Making of Loans. (a) Except as contemplated by Section
2.11,  Loans shall be either ABR Loans or  Eurodollar  Loans as the Borrower may
request subject to and in accordance with this Section,  provided that all Loans
made  pursuant  to the  same  Borrowing  shall,  unless  otherwise  specifically
provided  herein,  be Loans of the same Type.  Subject  to Section  2.24 of this
Agreement,  each Bank may fulfill its Commitment  with respect to any Eurodollar
Loan or ABR Loan by causing any  lending  office of such Bank to make such Loan;
provided that any such use of a lending  office shall not affect the  obligation
of the  Borrower  to  repay  such  Loan in  accordance  with  the  terms  of the
applicable Note. Each Bank shall, subject to its overall policy  considerations,
use  reasonable  efforts to select a lending office which will not result in the
payment of increased costs by the Borrower pursuant to Section 2.15.  Subject to
the other  provisions  of this  Section  and the  provisions  of  Section  2.12,
Borrowings  of Loans of more  than one Type may be  incurred  at the same  time,
provided that no more than ten Borrowings of Eurodollar Loans may be outstanding
at any time.

           (b) The Borrower  shall give the Agent prior notice of each Borrowing
hereunder by no later than 11:00 a.m.  Chicago time (i) at least three  Business
Days before the date the  Borrower  requests the Banks to advance a Borrowing of
Eurodollar Loans and (ii) on the date the Borrower requests the Banks to advance
a Borrowing of ABR Loans; such notice shall be irrevocable and shall specify the
amount of the proposed  Borrowing  (which shall not be less than  $10,000,000 in
the case of  Eurodollar  Loans and  $1,000,000 in the case of ABR Loans) and the
date thereof  (which  shall be a Business  Day) and shall  contain  disbursement
instructions.  Such  notice  shall  specify  whether  the  Borrowing  then being
requested  is to be a  Borrowing  of ABR  Loans  or  Eurodollar  Loans  and,  if
Eurodollar  Loans, the Interest Period with respect  thereto.  If no election of
Interest  Period is specified in any such notice  requesting a Eurodollar  Loan,
such notice shall be deemed a request for an Interest Period of one month. If no
election is made to the Type of Loan,  such notice shall be deemed a request for
Borrowing  of ABR Loans.  Subject to Section 2.24 of this  Agreement,  the Agent
shall promptly  notify each Bank of its  proportionate  share of such Borrowing,
the  date of such  Borrowing,  the Type of  Borrowing  being  requested  and the
Interest Period or Interest Periods applicable thereto, as appropriate.  Subject
to Section  2.24 of this  Agreement,  on the  borrowing  date  specified in such
notice,  each Bank shall make its share of the Borrowing available at the office
of the  Agent  at 1325  Avenue  of the  Americas,  New  York,  New  York  10019,
Attention:  Loan  Operations (the "Payment  Office"),  no later than 11:00 a.m.,
Chicago time, in immediately  available  funds.  Subject to Section 2.24 of this
Agreement,  upon  receipt of the funds made  available  by the Banks to fund any
Borrowing hereunder, the Agent shall disburse such funds in the manner specified
in the notice of borrowing  delivered  by the Borrower and shall use  reasonable
efforts to make the funds so received  from the Banks  available to the Borrower
no later than 2:00 p.m. Chicago time.

             Section  2.07.  Notes;  Repayment  of  Loans.  The  Loans  made  by
each  Bank  shall   be  evidenced   by  a  Note,  duly  executed  on  behalf  of
the Borrower, dated the  Closing Date  or the effective  date of the  applicable
Assignment  and  Acceptance,  as  the  case  may  be, in  substantially the form
attached  hereto  as  Exhibit  A,  payable  to  the  order  of  such  Bank in an
aggregate  principal  amount equal to such Bank's  Commitment.  The  outstanding
principal  balance of all of the Loans,  as  evidenced  by such Notes,  shall be
payable  on the Final  Maturity  Date (or such  earlier  date as is set forth in
Section 7.01 hereof). Each Note shall bear interest from the date thereof on the
outstanding  principal  balance  thereof as set forth in Section 2.08. Each Bank
shall,  and is hereby  authorized  by the Borrower  to,  endorse on the schedule
attached  to each  Note  delivered  to such Bank (or on a  continuation  of such
schedule attached to such Note and made a part thereof),  or otherwise to record
in such Bank's internal records, an appropriate notation evidencing the date and
amount of each Loan from such Bank,  each payment and prepayment of principal of
any  such  Loan,  each  payment  of  interest  on any such  Loan  and the  other
information provided for on such schedule;  provided,  however, that the failure
of any Bank to make such a notation  or any error  therein  shall not affect the
obligation  of the  Borrower to repay the Loans made by such Bank in  accordance
with the terms of this Agreement.

           Section  2.08.  Interest on Loans.  (a) Subject to the  provisions of
Section 2.08(c) and Section 2.09, each ABR Loan shall bear interest (computed on
the basis of the actual  number of days  elapsed over a year of 365 or 366 days,
as  applicable),  at a rate per annum equal to the Alternate  Base Rate plus the
Applicable Margin.

           (b) Subject to the  provisions  of Section  2.08(c) and Section 2.09,
each  Eurodollar  Loan shall bear interest  (computed on the basis of the actual
number  of days  elapsed  over a year of 360  days) at a rate per  annum  equal,
during each Interest Period applicable  thereto,  to the Adjusted LIBOR Rate for
such Interest Period in effect for such Borrowing plus the Applicable Margin.

           (c) Accrued interest on all Loans shall be payable in arrears on each
Interest Payment Date applicable  thereto,  at maturity (whether by acceleration
or otherwise), upon prepayment of any Eurodollar Loan and after such maturity on
demand.

            Section 2.09. Default Interest. If the Borrower shall default in the
payment of the  principal  of or  interest  on any Loan or in the payment of any
other  amount  becoming  due  hereunder  (including,   without  limitation,  the
reimbursement  pursuant to Section  2.03(d) of any draft drawn under a Letter of
Credit),  whether at stated maturity, by acceleration or otherwise, the Borrower
shall on demand from time to time pay interest,  to the extent permitted by law,
on such  defaulted  amount up to (but not  including) the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis of
the actual  number of days elapsed over a year of 360 days) equal to (a) for any
Eurodollar  Loan the sum of two percent (2%) plus the rate otherwise  applicable
thereto and (b) for all other amounts owing hereunder,  the sum of the Alternate
Base Rate plus 2%.

            Section 2.10. Optional Termination or Reduction of Commitment.  Upon
at least two Business Days' prior written notice to the Agent,  the Borrower may
at any  time  in  whole  permanently  terminate,  or  from  time to time in part
permanently  reduce,  the Unused Total  Commitment.  Each such  reduction of the
Commitments  shall be in the  principal  amount of  $5,000,000  or any  integral
multiple  thereof.  Simultaneously  with each  reduction or  termination  of the
Commitment, the Borrower shall pay to the Agent for the account of each Bank the
Commitment  Fee  accrued  on the  amount  of the  Commitment  of  such  Bank  so
terminated  or reduced  through the date  thereof.  Any  reduction  of the Total
Commitment  pursuant  to this  Section  shall be applied  pro rata to reduce the
Commitment of each Bank.

            Section 2.11. Alternate Rate of Interest.  In the event, and on each
occasion,  that on the day two Business  Days prior to the  commencement  of any
Interest Period for a Eurodollar  Loan, the Agent shall have  determined  (which
determination  shall be conclusive and binding upon the Borrower absent manifest
error)  that  reasonable  means do not exist  for  ascertaining  the  applicable
Adjusted LIBOR Rate, the Agent shall,  as soon as practicable  thereafter,  give
written  notice of such  determination  to the Borrower  and the Banks,  and any
request by the Borrower for a Borrowing of Eurodollar Loans (including  pursuant
to a refinancing  with Eurodollar  Loans) pursuant to Section 2.06 or 2.12 shall
be deemed a request for a Borrowing  of ABR Loans.  After such notice shall have
been  given and until the  circumstances  giving  rise to such  notice no longer
exist,  each request for a Borrowing of Eurodollar Loans shall be deemed to be a
request for a Borrowing of ABR Loans.

            Section  2.12.  Refinancing  of Loans.  The Borrower  shall have the
right,  at any time, on three  Business  Days' prior  irrevocable  notice to the
Agent (which  notice,  to be effective,  must be received by the Agent not later
than 11:00 a.m.,  Chicago time, on the third  Business Day preceding the date of
any  refinancing),  (x) to refinance any outstanding  Borrowing or Borrowings of
Loans of one Type (or a portion  thereof) with a Borrowing of Loans of the other
Type or (y) to continue an  outstanding  Borrowing  of  Eurodollar  Loans for an
additional Interest Period, subject to the following:

                   (a) in the case of a refinancing of ABR Loans with Eurodollar
         Loans or the  continuing  of a  Borrowing  of  Eurodollar  Loans for an
         additional Interest Period, no Event of Default shall have occurred and
         be continuing at the time of such refinancing;

                   (b)  if  less  than  a  full  Borrowing  of  Loans  shall  be
         refinanced,  such refinancing shall be made pro rata among the Banks in
         accordance  with  the  respective   principal   amounts  of  the  Loans
         comprising such Borrowing held by the Banks  immediately  prior to such
         refinancing;

                   (c) the aggregate  principal amount of Loans being refinanced
         shall be at least $10,000,000,  provided that no partial refinancing of
         a Borrowing of Eurodollar  Loans shall result in the  Eurodollar  Loans
         remaining  outstanding  pursuant  to such  Borrowing  being  less  than
         $10,000,000 in aggregate principal amount;

                   (d) each Bank shall effect each  refinancing  by applying the
         proceeds of its new Eurodollar Loan or ABR Loan, as the case may be, to
         its Loan being refinanced;

                   (e) the  Interest  Period  with  respect  to a  Borrowing  of
         Eurodollar  Loans  effected  by a  refinancing  or in  respect  to  the
         Borrowing of Eurodollar Loans being continued as Eurodollar Loans shall
         commence  on the date of such  refinancing,  which  shall be a Business
         Day, or the  expiration of the current  Interest  Period  applicable to
         such continuing Borrowing, as the case may be; and

                   (f)  each  request  for a  refinancing  with a  Borrowing  of
         Eurodollar  Loans or for a  continuation  of a Borrowing of  Eurodollar
         Loans  which  fails to state an  applicable  Interest  Period  shall be
         deemed to be a request for an Interest Period of one month.

In the event that the Borrower  shall not give notice to refinance any Borrowing
of Eurodollar  Loans, or to continue such Borrowing as Eurodollar Loans, in each
case as provided above, such Borrowing shall  automatically be refinanced with a
Borrowing of ABR Loans at the expiration of the  then-current  Interest  Period.
The Agent shall, after it receives notice from the Borrower,  promptly give each
Bank notice of any  refinancing,  in whole or in part,  of any Loan made by such
Bank.

            SECTION 2.13. Mandatory Prepayment; Commitment Termination; Cash 
Collateral. The outstanding Obligations shall be subject to mandatory prepayment
as follows:

                   (a) if at any  time the  aggregate  principal  amount  of the
         outstanding Loans plus the aggregate Letter of Credit Outstandings plus
         the aggregate  principal  amount of all "Loans"  outstanding  under the
         Short-Term  Credit  Agreement  exceeds the Borrowing Base, the Borrower
         will within  three  Business  Days (i) prepay the Loans (or the "Loans"
         under the Short-Term  Credit Agreement) in an amount necessary to cause
         the  aggregate  principal  amount  of the  outstanding  Loans  plus the
         aggregate Letter of Credit  Outstandings  plus the aggregate  principal
         amount of all "Loans" outstanding under the Short-Term Credit Agreement
         to be  equal  to or less  than the  Borrowing  Base and (ii) if,  after
         giving  effect to the  prepayment  in full of the Loans,  the aggregate
         Letter of Credit  Outstandings  exceeds the Borrowing Base deposit with
         the Agent an amount equal to the amount by which the  aggregate  Letter
         of Credit Outstandings so exceeds the Borrowing Base; and

                   (b) upon the Final Maturity Date, the Total  Commitment shall
         be terminated in full.

            Section 2.14. Optional Prepayment of Loans;  Reimbursement of Banks.
(a) The  Borrower  shall  have the  right  at any time and from  time to time to
prepay any Loans,  in whole or in part,  (x) with respect to  Eurodollar  Loans,
upon at least three  Business  Days' prior  written  notice to the Agent and (y)
with  respect  to ABR  Loans,  on the same  Business  Day if  written  notice is
received by the Agent prior to 11:00 a.m.  Chicago time and  thereafter  upon at
least one Business Day's prior written notice to the Agent;  provided,  however,
that (i) with respect to Eurodollar Loans, each such partial prepayment shall be
in multiples of $1,000,000  and  accompanied by any amounts owed the Banks under
Section  2.14(b)  hereof,  (ii) with  respect  to ABR Loans,  each such  partial
prepayment shall be in multiples of $1,000,000,  and (iii) no partial prepayment
of a Borrowing  of  Eurodollar  Loans shall  result in the  aggregate  principal
amount of the Eurodollar Loans remaining  outstanding pursuant to such Borrowing
being  less than  $10,000,000.  Each  notice of  prepayment  shall  specify  the
prepayment date, the principal amount of the Loans to be prepaid and in the case
of Eurodollar  Loans, the Borrowing or Borrowings  pursuant to which made, shall
be  irrevocable  and shall commit the Borrower to prepay such Loan by the amount
and on the date stated therein. The Agent shall, promptly after receiving notice
from the Borrower  hereunder,  notify each Bank of the  principal  amount of the
Loans held by such Bank which are to be  prepaid,  the  prepayment  date and the
manner of application of the prepayment.

           (b) The  Borrower  shall  reimburse  each Bank on demand for any loss
incurred or to be incurred by it in the  reemployment of the funds (i) resulting
from any prepayment (for any reason whatsoever,  including,  without limitation,
refinancing  with ABR Loans) of any Eurodollar  Loan required or permitted under
this  Agreement,  if such  Loan is  prepaid  other  than on the  last day of the
Interest  Period  for such Loan or (ii) in the  event  that  after the  Borrower
delivers a notice of  borrowing  under  Section  2.06 in  respect of  Eurodollar
Loans, such Loans are not made on the first day of the Interest Period specified
in such notice of  borrowing  for any reason other than a breach by such Bank of
its  obligations  hereunder.  Such  loss  shall  be  the  amount  as  reasonably
determined  by such Bank as the  excess,  if any,  (A) of the amount of interest
which would have accrued to such Bank on the amount so paid or not borrowed at a
rate of interest  equal to the Adjusted LIBOR Rate for such Loan, for the period
from the date of such  payment  or  failure to borrow to the last day (x) in the
case of a payment or  refinancing  with ABR Loans  other than on the last day of
the Interest Period for such Loan, of the then current  Interest Period for such
Loan, or (y) in the case of such failure to borrow,  of the Interest  Period for
such Loan which would have commenced on the date of such failure to borrow, over
(B) the amount of interest  which would have accrued to such Bank on such amount
by placing such amount on deposit for a comparable  period with leading banks in
the London interbank  market.  Each Bank shall deliver to the Borrower from time
to time one or more  certificates  setting  forth  the  amount  of such  loss as
determined by such Bank and such statement  shall be conclusive  absent manifest
error.  The  Borrower  shall pay such Bank the  amount  shown as due on any such
statement within ten (10) days after the receipt of the same.

           (c) In the event the  Borrower  fails to prepay  any Loan on the date
specified in any prepayment  notice delivered  pursuant to Section 2.14(a),  the
Borrower  on demand by any Bank  shall pay to the Agent for the  account of such
Bank any amounts  required to compensate such Bank for any loss incurred by such
Bank as a result of such failure to prepay, including,  without limitation,  any
loss,  cost or  expenses  incurred by reason of the  acquisition  of deposits or
other funds by such Bank to fulfill deposit obligations incurred in anticipation
of such  prepayment.  Each Bank shall  deliver to the Borrower from time to time
one or more certificates  setting forth the amount of such loss as determined by
such Bank and such statement  shall be conclusive  absent  manifest  error.  The
Borrower  shall pay such Bank the  amount  shown as due on any such  certificate
within ten (10) days after the receipt of the same.

           (d) Any partial  prepayment of the Loans by the Borrower  pursuant to
Section  2.13 or this 2.14 shall be applied as  specified by the Borrower or, in
the absence of such  specification,  as determined by Section  9.02(b) (with any
excess being applied as determined by the Agent),  provided that in each case no
Eurodollar  Loans shall be prepaid  pursuant to Section  2.13 to the extent that
such Loan has an Interest  Period  ending after the required  date of prepayment
unless and until all  outstanding  ABR Loans and Eurodollar  Loans with Interest
Periods ending on such date have been repaid in full.

            Section 2.15.   Reserve   Requirements;  Change  in   Circumstances.
(a)  Notwithstanding  any  other  provision  herein,  if  after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration   thereof  by  any  governmental   authority   charged  with  the
interpretation  or  administration  thereof  (whether or not having the force of
law) shall (i)  subject  the Agent or any Bank  (which  shall for the purpose of
this Section  2.15  include any assignee or lending  office of the Agent or such
Bank) to any tax with  respect to any amount  paid or to be paid by the Agent or
any Bank with  respect to any  Eurodollar  Loans made by a Bank to the  Borrower
(other than (x) taxes  imposed on the  overall  net income or gross  receipts of
such Agent or Bank and (y) franchise taxes imposed on the Agent or such Bank; in
either case by the  jurisdiction in which such Bank has its principal  office or
its  lending  office  with  respect  to such  Eurodollar  Loan or any  political
subdivision or taxing authority therein,  or by any other jurisdiction or by any
political  subdivision or taxing authority  therein other than a jurisdiction in
which the Agent or such Bank would not be  subject to tax but for the  execution
and  performance  of this  Agreement);  (ii)  change  the basis of  taxation  of
payments  to the  Agent  or any  Bank of the  principal  of or  interest  on any
Eurodollar Loan made by such Bank or any fees or other amounts payable hereunder
(other than franchise  taxes or taxes imposed on the overall net income or gross
receipts  of the  Agent or such Bank by the  jurisdiction  in which the Agent or
such Bank has its  principal  office or by any political  subdivision  or taxing
authority therein, or by any other jurisdiction or by any political  subdivision
or taxing authority therein other than a jurisdiction in which the Agent or such
Bank would not be subject to tax but for the execution and  performance  of this
Agreement); (iii) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account of or
loans or loan  commitments  extended  by such  Bank  (except  any  such  reserve
requirement  which is reflected  in the  Adjusted  LIBOR Rate) or (iv) impose on
such Bank or the London  interbank  market any other  condition  affecting  this
Agreement  or the  Eurodollar  Loans or other  Loans made by such Bank,  and the
result of any of the  foregoing  shall be to  increase  the cost to such Bank of
making or maintaining any Eurodollar Loan or to reduce the amount of any payment
(whether of  principal,  interest or  otherwise)  received or  receivable by the
Agent or such Bank hereunder or under the Notes (whether of principal,  interest
or  otherwise)  or to  require  the  Agent or such Bank to make any  payment  in
respect of any Eurodollar Loan, then the Borrower shall pay to the Agent or such
Bank, as the case may be, such  additional  amount or amounts as will compensate
the Agent or such Bank for such  additional  costs or reduction.  The Borrower's
obligation to pay the amounts  required to be paid pursuant to this Section 2.15
shall be limited,  as to any Bank,  to the amounts  under this Section 2.15 that
such Bank received  actual  knowledge of no more than 120 days prior to the date
on which the Borrower received an initial certificate from such Bank pursuant to
paragraph  (c) below  unless  the event  giving  rise to such  demand is applied
retroactively.  Notwithstanding  anything  contained  herein  to  the  contrary,
nothing in clause  (i) or (ii) of this  Section  2.15(a)  shall be deemed to (x)
permit the Agent or any Bank to recover any amount thereunder which would not be
recoverable  under  Section  2.18 hereof or (y) require the Borrower to make any
payment  of any amount to the  extent  that such  payment  would  duplicate  any
payment made by the Borrower pursuant to Section 2.18 hereof.

           (b) If any Bank shall have determined that the  applicability  of any
law,  rule,  regulation or guideline  adopted  pursuant to or arising out of the
July 1988 report of the Basle  Committee on Banking  Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards," or the adoption or  effectiveness  after the date hereof of any law,
rule,  regulation or guideline regarding capital adequacy,  or any change in any
of  the  foregoing  or in the  interpretation  or  administration  of any of the
foregoing  by any  governmental  authority,  central bank or  comparable  agency
charged with the interpretation or administration  thereof, or compliance by any
Bank (or any lending office of such Bank) or any Bank's holding company with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority,  central bank or comparable  agency, has or would
have the effect of reducing the rate of return on such Bank's  capital or on the
capital  of such  Bank's  holding  company,  if any,  as a  consequence  of this
Agreement,  the Loans made by such Bank pursuant hereto,  such Bank's Commitment
hereunder or the issuance of, or participation  in, any Letter of Credit by such
Bank to a level below that which such Bank or such Bank's holding  company could
have achieved but for such adoption,  change or compliance  (taking into account
such  Bank's  policies  and the  policies of such Bank's  holding  company  with
respect to capital  adequacy)  by an amount  deemed by such Bank to be material,
then from  time to time the  Borrower  shall  pay to such  Bank such  additional
amount or amounts as will  compensate  such Bank or such Bank's holding  company
for any such reduction suffered.

           (c) A  certificate  of each Bank setting forth such amount or amounts
as  shall be  necessary  to  compensate  such  Bank or its  holding  company  as
specified in paragraph (a) or (b) above,  as the case may be, shall be delivered
to the Borrower and shall be  conclusive  absent  manifest  error.  The Borrower
shall pay each Bank the amount shown as due on any such certificate delivered to
it within ten (10) days after its receipt of the same.  Any Bank  receiving  any
such payment shall  promptly  make a refund  thereof to the Borrower if the law,
regulation,  guideline or change in circumstances giving rise to such payment is
subsequently  deemed or held to be invalid or  inapplicable,  but such refund to
the  Borrower  shall be limited to the amount  received  as a refund by the Bank
(including interest, if any).

           (d)  Failure on the part of any Bank to demand  compensation  for any
increased  costs or reduction in amounts  received or receivable or reduction in
return on capital with  respect to any period  shall not  constitute a waiver of
such  Bank's  right to demand  compensation  with  respect to such period or any
other  period.  The  protection  of this Section shall be available to each Bank
regardless of any possible  contention of the invalidity or  inapplicability  of
the law, rule,  regulation,  guideline or other change or condition  which shall
have occurred or been imposed.

            Section 2.16. Change in Legality.  (a)  Notwithstanding  anything to
the contrary contained elsewhere in this Agreement, if (x) any change in any law
or regulation or in the  interpretation  thereof by any  governmental  authority
charged  with the  administration  thereof  shall make it unlawful for a Bank to
make or  maintain a  Eurodollar  Loan or to give  effect to its  obligations  as
contemplated  hereby with  respect to a  Eurodollar  Loan or (y) at any time any
Bank  determines  that the making or continuance of any of its Eurodollar  Loans
has become  impracticable as a result of a contingency  occurring after the date
hereof which adversely  affects the London  interbank  market or the position of
such Bank in such market, then, by written notice to the Borrower, such Bank may
(i)  declare  that  Eurodollar  Loans will not  thereafter  be made by such Bank
hereunder,  whereupon  any request by the Borrower  for a  Eurodollar  Borrowing
shall,  as to such Bank only,  be deemed a request  for an ABR Loan  unless such
declaration  shall  be  subsequently  withdrawn;   and  (ii)  require  that  all
outstanding  Eurodollar  Loans made by it be  converted  to ABR Loans,  in which
event all such Eurodollar Loans shall be automatically converted to ABR Loans as
of the effective date of such notice as provided in paragraph (b) below.  In the
event any Bank  shall  exercise  its  rights  under  clause  (i) or (ii) of this
paragraph (a), all payments and  prepayments of principal  which would otherwise
have been  applied  to repay the  Eurodollar  Loans that would have been made by
such Bank or the  converted  Eurodollar  Loans of such  Bank  shall  instead  be
applied to repay the ABR Loans made by such Bank in lieu of, or  resulting  from
the conversion of, such Eurodollar Loans.

           (b) For  purposes of this  Section  2.16, a notice to the Borrower by
any Bank pursuant to paragraph (a) above shall be effective,  if lawful,  and if
any  Eurodollar  Loans  shall  then  be  outstanding,  on  the  last  day of the
then-current Interest Period,  otherwise,  such notice shall be effective on the
date of receipt by the Borrower.

            Section 2.17. Pro Rata  Treatment,  Etc. All payments and repayments
of  principal  and  interest  in respect of the Loans  (except  as  provided  in
Sections  2.15,  2.16 and  10.10(b))  shall be made pro rata  among the Banks in
accordance  with the then  outstanding  principal  amount  of the  Loans  and/or
participations  in Letter of Credit  Outstandings  hereunder and all payments of
Commitment  Fees and  Letter of Credit  Fees  (other  than  those  payable  to a
Fronting  Bank) shall be made pro rata among the Banks in accordance  with their
Commitments. All payments by the Borrower hereunder and under the Notes shall be
(i) net of any tax  applicable  to the  Borrower or  Guarantor  and (ii) made in
Dollars in immediately available funds at the office of the Agent by 10:00 a.m.,
Chicago  time,  on the date on which  such  payment  shall be due.  Interest  in
respect of any Loan  hereunder  shall accrue from and including the date of such
Loan to but  excluding  the date on which such Loan is paid in full or converted
to a Loan of a different Type. The Agent may charge the Borrower's  account with
the Agent for all interest, principal, fees and other amounts owing to the Agent
and/or the Banks on or with respect to this Agreement and/or the Loans and other
Loan Documents if any such amount is not paid when due and payable.

            Section  2.18.  Taxes.  (a)  Any and all  payments  by the  Borrower
hereunder  and  under the  Notes  shall be made  free and  clear of and  without
deduction for any and all current or future taxes, levies, imposts,  deductions,
charges or withholdings, and all liabilities with respect thereto, excluding (i)
taxes imposed on or measured by the net income or overall gross  receipts of the
Agent  or  any  Bank  (or  any  transferee  or  assignee  thereof,  including  a
participation  holder  (any  such  entity  being  called  a  "Transferee"))  and
franchise  taxes imposed on the Agent or any Bank (or  Transferee) by the United
States  or any  jurisdiction  under the laws of which the Agent or any such Bank
(or  Transferee)  is organized or any  political  subdivision  thereof or by any
other  jurisdiction or by any political  subdivision or taxing authority therein
other than a  jurisdiction  in which the Agent or such Bank would not be subject
to tax but for the execution and  performance of this Agreement and (ii) levies,
imposts,  deductions,  charges  or  withholdings  ("Amounts")  with  respect  to
payments  hereunder or under the Notes to a Bank (or  Transferee)  in accordance
with laws in effect on the later of the date of this Agreement and the date such
Bank (or Transferee) becomes a Bank (or Transferee, as the case may be), but not
excluding,  with  respect to such Bank (or  Transferee),  any  increase  in such
Amounts solely as a result of any change in such laws occurring after such later
date or any Amounts that would not have been imposed but for actions (other than
actions contemplated by this Agreement or the Notes) taken by the Borrower after
such  later  date (all such  nonexcluded  taxes,  levies,  imposts,  deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower  shall be required by law to deduct any Taxes from or in respect
of any sum payable  hereunder to the Banks (or any Transferee) or the Agent, (i)
the sum payable shall be increased by the amount  necessary so that after making
all required  deductions  (including  deductions  applicable to additional  sums
payable under this Section 2.18) such Bank (or  Transferee) or the Agent (as the
case may be) shall receive an amount equal to the sum it would have received had
no such  deductions  been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower  shall pay the full amount  deducted to the  relevant  taxing
authority or other Governmental Authority in accordance with applicable law.

           (b) In  addition,  the  Borrower  agrees to pay any current or future
stamp or  documentary  taxes or any other  excise or  property  taxes,  charges,
assessments or similar levies that 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 Document (hereinafter referred to as "Other Taxes").

           (c) The Borrower will  indemnify  each Bank (or  Transferee)  and the
Agent  for the full  amount  of Taxes  and  Other  Taxes  paid by such  Bank (or
Transferee)  or the  Agent,  as the case may be,  and any  liability  (including
penalties,  interest and expenses)  arising  therefrom or with respect  thereto,
whether or not such Taxes or Other Taxes were  correctly or legally  asserted by
the  relevant   taxing   authority  or  other   Governmental   Authority.   Such
indemnification  shall  be made  within  30 days  after  the  date  any Bank (or
Transferee) or the Agent, as the case may be, makes written demand therefor.  If
a Bank (or  Transferee)  or the Agent shall  become aware that it is entitled to
receive  a refund  in  respect  of Taxes or Other  Taxes as to which it has been
indemnified by the Borrower  pursuant to this Section,  it shall promptly notify
the Borrower of the availability of such refund and shall,  within 30 days after
receipt of a request by the  Borrower,  apply for such refund at the  Borrower's
expense.  If any Bank (or  Transferee) or the Agent receives a refund in respect
of any Taxes or Other Taxes as to which it has been  indemnified by the Borrower
pursuant to this Section  2.18,  it shall  promptly  notify the Borrower of such
refund and shall,  within 30 days after receipt of a request by the Borrower (or
promptly upon receipt, if the Borrower has requested application for such refund
pursuant  hereto),  repay such refund to the  Borrower (to the extent of amounts
that have been paid by the Borrower under this Section 2.18 with respect to such
refund plus interest that is received by the Bank (or Transferee) as part of the
refund),  net of all out-of-pocket  expenses of such Bank and without additional
interest thereon;  provided that the Borrower, upon the request of such Bank (or
Transferee) or the Agent, agrees to return such refund (plus penalties, interest
or other  charges) to such Bank (or  Transferee)  or the Agent in the event such
Bank (or  Transferee)  or the Agent is  required to repay such  refund.  Nothing
contained in this  subsection (c) shall require any Bank (or  Transferee) or the
Agent  to make  available  any of its tax  returns  (or  any  other  information
relating to its taxes that it deems to be confidential).

           (d)  Within 30 days  after the date of any  payment of Taxes or Other
Taxes  withheld  by the  Borrower  in  respect  of any  payment  to any Bank (or
Transferee) or the Agent, the Borrower will furnish to the Agent, at its address
referred to on the signature pages hereof, the original or a certified copy of a
receipt evidencing payment thereof.

           (e)  Without  prejudice  to  the  survival  of  any  other  agreement
contained herein, the agreements and obligations  contained in this Section 2.18
shall  survive the payment in full of the principal of and interest on all Loans
made hereunder.

           (f) Each Bank (or  Transferee)  that is organized under the laws of a
jurisdiction outside the United States shall, if legally able to do so, prior to
the  immediately  following  due date of any payment by the Borrower  hereunder,
deliver  to the  Borrower  and  Agent  such  certificates,  documents  or  other
evidence,  as  required  by the Code or  Treasury  Regulations  issued  pursuant
thereto, including (A) Internal Revenue Service Form W-8 or W-9 and (B) Internal
Revenue Service Form 1001 or Form 4224 and any other certificate or statement of
exemption  required  by  Treasury  Regulation  Section  1.1441-1,   1.1441-4  or
1.1441-6(c) or any subsequent  version thereof or successors  thereto,  properly
completed and duly executed by such Bank (or Transferee)  establishing that such
payment is (i) not subject to United States  Federal  withholding  tax under the
Code because such payment is effectively connected with the conduct by such Bank
(or  Transferee)  of a trade or  business in the United  States or (ii)  totally
exempt from United States Federal  withholding  tax or subject to a reduced rate
of such tax under a provision of an applicable  tax treaty.  Unless the Borrower
and the  Agent  have  received  forms or other  documents  satisfactory  to them
indicating  that such  payments  hereunder or under the Notes are not subject to
United  States  Federal  withholding  tax or are  subject  to such tax at a rate
reduced by an applicable  tax treaty,  the Borrower or the Agent shall  withhold
taxes from such payments at the applicable statutory rate.

           (g) The Borrower shall not be required to pay any additional  amounts
to any Bank (or Transferee) in respect of United States Federal  withholding tax
pursuant  to  subsection  (a)  above if the  obligation  to pay such  additional
amounts would not have arisen but for a failure by such Bank (or  Transferee) to
comply with the provisions of subsection (f) above.

           (h) Any Bank (or Transferee)  claiming any additional amounts payable
pursuant to this  Section 2.18 shall use  reasonable  efforts  (consistent  with
legal and regulatory restrictions) to file any certificate or document requested
by the Borrower or to change the  jurisdiction of its applicable  lending office
if the making of such a filing or change  would avoid the need for or reduce the
amount of any such additional  amounts that may thereafter accrue and would not,
in the sole  reasonable  determination  of such Bank,  be  otherwise  materially
disadvantageous to such Bank (or Transferee).

            Section 2.19.  Certain Fees. The Borrower shall pay to the Agent for
the Agent's own account, the fees set forth in that certain letter dated October
16,  1997  between  the Agent and the  Borrower,  and such  other fees as may be
agreed upon by such parties.

            Section 2.20.  Commitment Fee. The Borrower shall pay to the Banks a
commitment fee (the "Commitment  Fee") for the period  commencing on the Closing
Date to the  Final  Maturity  Date or the  earlier  date of  termination  of the
Commitment,  computed (on the basis of the actual  number of days elapsed over a
year of 360 days) on the average daily Unused Total Commitment at a rate of:

             (i) 0.15% per annum for each day Level I Status exists,

            (ii) 0.20% per annum for each day Level II Status exists,

           (iii) 0.25% per annum for each day Level III Status exists,

            (iv) 0.30% per annum for each day Level IV Status exists, and

             (v) 0.375% for each day Level V Status exists;

The Commitment Fee, to the extent then accrued,  shall be payable (x) quarterly,
in arrears, on the tenth Business Day of each fiscal quarter of the Borrower for
the immediately  preceding fiscal quarter,  commencing on November 14, 1997, (y)
on the Final Maturity Date and (z) as provided in Section 2.10 hereof,  upon any
reduction or termination in whole or in part of the Total Commitment.

            Section 2.21.  Letter of Credit Fees. (a) Standby Letters of Credit.
The Borrower  shall pay with respect to each standby Letter of Credit (i) to the
Agent on behalf of the Banks a fee calculated (on the basis of the actual number
of days  elapsed  over a year of 360  days) at the rate per  annum  equal to the
Applicable  Margin in effect for  Eurodollar  Loans on the stated amount of each
standby  Letter of Credit then  outstanding  and (ii) to the Fronting  Bank such
Fronting  Bank's  customary  fees for  issuance  and  processing  referred to in
Section 2.03.

           (b) Trade Letters of Credit.  The Borrower  shall pay with respect to
each  trade  Letter  of  Credit  (i) to the  Agent on  behalf of the Banks a fee
calculated (on the basis of the actual number of days elapsed over a year of 360
days)  at the rate per  annum  equal to the  Applicable  Margin  in  effect  for
Eurodollar  Loans times 0.75 on the stated amount of each trade Letter of Credit
then  outstanding and (ii) to the Fronting Bank such Fronting  Bank's  customary
fees for issuance and processing referred to in Section 2.03.

           (c) Fronting Bank. The Borrower  agrees to pay each Fronting Bank for
its account a fronting  fee in respect of each  Letter of Credit  issued by such
Fronting  Bank,  for the period from and  including the date of issuance of such
Letter of Credit to and  including  the date of  termination  of such  Letter of
Credit calculated (on the basis of the actual number of days elapsed over a year
of 360 days) at the rate as may be agreed  between  such  Fronting  Bank and the
Borrower from time to time.

           (d) Payment.  Accrued fees  described in this Section 2.21 in respect
of each Letter of Credit  shall be due and payable  quarterly  in arrears on the
tenth Business Day of each fiscal quarter for the immediately  preceding  fiscal
quarter  and on the  Final  Maturity  Date,  or such  earlier  date as the Total
Commitment is terminated.

            Section  2.22.  Nature of Fees.  All fees shall be paid on the dates
due,  in  immediately   available  funds,  to  the  Agent  for  itself  and  for
distribution, as provided herein and in the letter described in Section 2.19.

            Section 2.23.  Right of Set-Off.  Upon the occurrence and during the
continuance  of any  Event  of  Default,  the  Agent  and  each  Bank 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 such Bank to or for the credit or the  account of the  Borrower or
any  Guarantor  against  any and all of the  obligations  of  such  Borrower  or
Guarantor now or hereafter  existing under the Loan  Documents,  irrespective of
whether or not such Bank shall have made any demand under any Loan  Document and
although such obligations may be unmatured.  Each Bank agrees promptly to notify
the Borrower and Guarantors  after any such set-off and application made by such
Bank,  provided  that the  failure  to give such  notice  shall not  affect  the
validity  of such  set-off and  application.  The rights of each Bank under this
Section 2.23 are in addition to other  rights and  remedies  which such Bank may
have upon the occurrence and during the continuance of any Event of Default.

            Section 2.24.  Making of Loans.  The Agent may assume that each Bank
will make its  ratable  portion of any amount to be  borrowed  available  to the
Agent in accordance with Section 2.06, and the Agent may in its  discretion,  in
reliance  upon such  assumption,  make  available to the Borrower on such date a
corresponding amount. If and to the extent such Bank shall not make such ratable
portion  available to the Agent,  such Bank and the Borrower  severally agree to
repay to the Agent forthwith on demand such corresponding amount,  together with
interest thereon for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent,  as to the Borrower,
at the rate of interest  applicable to Loans hereunder,  and as to such Bank, at
the Federal Funds Effective Rate and until so repaid such amount shall be deemed
to  constitute  a Loan by the Agent to the  Borrower  hereunder  entitled to the
benefits of the provisions  hereof  applicable to the Loans.  If such Bank shall
repay to the Agent  such  corresponding  amount,  the  amount  so  repaid  shall
constitute  such Bank's ratable portion of the Loans made on such borrowing date
for purposes of this Agreement.  No Bank shall be responsible for the failure of
any other  Bank to make its  ratable  portion  of such  Loans  available  on the
borrowing date.


                                   ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF BORROWER

         In order to induce the Banks to make Loans and issue and/or participate
in  Letters  of  Credit  hereunder,  the  Borrower  and  each of the  Guarantors
represents and warrants as follows:

            Section 3.01.  Organization and Authority.  Each of the Borrower and
the Guarantors (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of its  incorporation and is duly qualified
as a foreign  corporation and is in good standing in each  jurisdiction in which
the failure to so qualify  would have a Material  Adverse  Effect;  (ii) has the
requisite corporate power and authority to effect the transactions  contemplated
hereby, and by the other Loan Documents;  and (iii) has all requisite  corporate
authority and the legal right to own and operate its properties,  and to conduct
its business as now or currently proposed to be conducted.

            Section 3.02. Due Execution. The execution, delivery and performance
by each of the  Borrower  and the  Guarantors  of each of the Loan  Documents to
which it is a party, the borrowings hereunder by the Borrower, the execution and
delivery of the Notes,  and the  transactions  contemplated to occur under or in
connection  with this Agreement  and/or the other Loan Documents  (collectively,
the  "Transactions")  (i) are within the respective  corporate powers of each of
the Borrower and the  Guarantors,  have been duly  authorized  by all  necessary
corporate action,  including the consent of shareholders where required,  and do
not  (A)  contravene  the  charter  or  by-laws  of any of the  Borrower  or the
Guarantors,  (B) violate any law (including,  without limitation, the Securities
Exchange Act of 1934) or regulation (including,  without limitation,  Regulation
G, T, U or X of the Board),  or any order or decree of any court or governmental
instrumentality,  (C)  conflict  with or result in a breach of, or  constitute a
default under, any material  indenture,  mortgage or deed of trust, any material
lease,  agreement or other instrument  binding on the Borrower or the Guarantors
or any of  their  properties,  or (D)  result  in or  require  the  creation  or
imposition  of any Lien upon any of the  property of any of the  Borrower or the
Guarantors;  and do not require the consent,  authorization by or approval of or
notice  to or filing  or  registration  with any  Governmental  Authority.  This
Agreement  has been duly  executed and delivered by each of the Borrower and the
Guarantors. This Agreement is, and each of the other Loan Documents to which the
Borrower  and  each of the  Guarantors,  is or will be a party,  when  delivered
hereunder or thereunder,  will be, a legal,  valid and binding obligation of the
Borrower,  and  each  Guarantor,  as the case may be,  enforceable  against  the
Borrower, and the Guarantors, as the case may be, in accordance with its terms.

            Section 3.03.  Statements  Made.  The (a) written  statements of all
officers  and  employees  of the  Borrower  and the  Guarantors,  and  (b)  oral
statements  of the Chief  Executive  Officer,  Chief  Operating  Officer,  Chief
Financial Officer, Senior Vice President- Chief Information Officer,  Treasurer,
Director  of  Finance  and  Planning,  Controller  and  Treasury  Manager of the
Borrower  and the  Guarantors,  in each case  which have been  furnished  by the
Borrower  or any of the  Guarantors  to the Agent or to the Banks in  connection
with any Loan Document, and any financial statement delivered pursuant hereto or
thereto  (other  than  to  the  extent  that  any  such  statements   constitute
projections),  taken as a whole and in light of the circumstances in which made,
contain  no  untrue  statement  of a  material  fact  and do not omit to state a
material fact  necessary to make such  statements  not  misleading;  and, to the
extent that any such written statements constitute projections, such projections
were prepared in good faith on the basis of assumptions,  methods,  data,  tests
and  information  believed  by the  Borrower or such  Guarantor  to be valid and
accurate at the time such  projections were furnished to the Agent or the Banks,
as the case may be.

            Section 3.04. Financial  Statements.  The Borrower has furnished the
Banks with copies of the audited Consolidated  Financial Statement and Schedules
of the  Borrower  for its fiscal  year ended  February 1, 1997.  Such  financial
statements  present fairly in all material  respects the financial  position and
results of operations of the Borrower and its  consolidated  Subsidiaries  as of
such  date and for such  period;  such  balance  sheets  and the  notes  thereto
disclose  all  liabilities,  direct  or  contingent,  of the  Borrower  and  its
consolidated  Subsidiaries  as of the date  thereof  required to be disclosed by
GAAP and such financial statements were prepared in accordance with GAAP applied
on a  consistent  basis.  Since  February  1, 1997,  there has been no  material
adverse  change  in  the  condition   (financial  or   otherwise),   operations,
properties, assets or prospects of the Borrower and its Subsidiaries, taken as a
whole.

            Section  3.05.  Ownership.  No owner  or  group  of  owners  acting 
together control  50% or more of the  outstanding common shares of the Borrower.
Each Guarantor is a direct or indirect wholly-owned Subsidiary of the Borrower.

            Section 3.06. Liens. There are no Liens (including Liens or retained
security  titles  of  conditional  vendors)  of  any  nature  whatsoever  on any
properties of the Borrower or any of the Guarantors,  other than Permitted Liens
or Liens as set forth in Schedule  6.01. The Borrower and the Guarantors are not
parties to any contract,  agreement,  lease or  instrument  the  performance  of
which, either  unconditionally or upon the happening of an event, will result in
or require the  creation of a Lien on the  property or assets of the Borrower or
any Guarantor or otherwise result in a violation of this Agreement.

             Section 3.07. Litigation; Compliance with Law, Etc. (a)  Except  as
set  forth  on  Schedule  3.07,  (i)  the  operations  of  the  Borrower  and
the  Guarantors  comply  in all respects  with  all  applicable   Environmental
Laws, except where such noncompliance  would not have a Material Adverse Effect;
(ii) to the best  knowledge  of the  Borrower  and the  Guarantors,  none of the
operations  of the Borrower or the  Guarantors  is the subject of any Federal or
state  investigation  evaluating  whether any Remedial Work is needed to address
Hazardous  Material;  and (iii) to the best  knowledge  of the  Borrower and the
Guarantors,  the Borrower and the Guarantors do not have any material contingent
liability in connection with any Release that is reasonably  likely to result in
a Material Adverse Effect.

           (b) Except as set forth on Schedule  3.07,  neither the  Borrower nor
any Guarantor is, to the best of its knowledge, in violation of any law, rule or
regulation,  or in default with respect to any  judgment,  writ,  injunction  or
decree of any Governmental Authority, except where such violation would not have
a Material Adverse Effect.

            Section  3.08.  Insurance.  All policies of insurance of any kind or
nature owned by or issued to the Borrower and the Guarantors, including, without
limitation,  policies of life, fire, theft, product liability, public liability,
property  damage,  other casualty,  employee  fidelity,  workers'  compensation,
employee health and welfare,  title,  property and liability  insurance,  are in
full  force and  effect  and are of a nature and  provide  such  coverage  as is
sufficient and as is customarily  carried by companies of the size and character
of the Borrower and the  Guarantors.  Neither the Borrower nor any Guarantor has
been  refused  insurance  for which it applied  or had any  policy of  insurance
terminated (other than at its request).

            Section  3.09.  Use of Proceeds.  The proceeds of the Loans shall be
used only for general  corporate  purposes  of the  Borrower  and for  Inventory
purchases for retail stores operated by the Borrower and CPS.

            Section 3.10.  Litigation.  There are no unstayed actions,  suits or
proceedings  pending  or,  to the  knowledge  of  Borrower  or  the  Guarantors,
threatened  against or affecting  the Borrower or the  Guarantors  or any of its
properties,  including (without  limitation) the Inventory,  before any court or
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign,  which is reasonably  likely to be determined  adversely to
the Borrower or the Guarantors  and, if so determined  adversely to the Borrower
or the Guarantors would have a Material Adverse Effect.

            Section 3.11.  Governmental  Approvals.  No  registration  or filing
with,  consent or approval of, or other  action by, any Federal,  state or other
governmental  agency,  authority  or  regulatory  body is or will be required in
connection  with the  Transactions,  other  than any  which  have  been  made or
obtained.

            Section 3.12. Federal Reserve Regulations. (a) Neither the  Borrower
nor any of the Guarantors is engaged principally, or as  one  of  its  important
activities, in the purpose of  purchasing or  business of  extending credit  for
carrying Margin Stock.

           (b) No part of the  proceeds  of the  Loans  will  be  used,  whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend  credit to others for the purpose
of  purchasing  or carrying  Margin Stock or to refund  indebtedness  originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is  inconsistent  with, the provisions of the Regulations of the Board,
including, without limitation,  Regulation G, T, U or X thereof. If requested by
any Bank,  the Borrower or any of the  Guarantors  shall  furnish to such Bank a
statement on Federal Reserve Form U-1 referred to in said Regulation U.

            Section  3.13.  Taxes.  Except as set forth on Schedule 3.13 hereto,
the  Borrower  and each of the  Guarantors  have filed or caused to be filed all
Federal,  state, local and foreign tax returns which are required to be filed by
them, on or prior to the date hereof, other than tax returns in respect of taxes
that (x) are not franchise, capital, sales or income taxes, (y) in the aggregate
are not material and (z) would not, if unpaid,  result in the  imposition of any
material  Lien  on  any  property  or  assets  of  the  Borrower  or  any of the
Guarantors.  The  Borrower  and the  Guarantors  have paid or  provided  for the
payment of all taxes shown to be due and payable on such filed returns or on any
assessments  received  by them,  other  than (i) any  taxes or  assessments  the
validity of which the Borrower or such  Guarantor is contesting in good faith by
appropriate  proceedings,  and  with  respect  to  which  the  Borrower  or such
Guarantor  shall,  to the  extent  required  by GAAP have set aside on its books
adequate reserves and (ii) taxes other than income,  capital, sales or franchise
taxes that in the  aggregate  are not  material  and which would not, if unpaid,
result in the  imposition  of any material Lien on any property or assets of the
Borrower or any of the Guarantors.  Except as set forth on Schedule 3.13 hereto,
no such Federal income tax returns of the Borrower and the Guarantors  have been
audited by the United States  Internal  Revenue Service and neither the Borrower
nor any of the  Guarantors  has as of the date hereof  requested or been granted
any extension of time to file any Federal,  state,  local or foreign tax return.
Except as set forth on Schedule 3.13 hereto, neither the Borrower nor any of the
Guarantors  is party to or has any  obligation  under any tax sharing  agreement
other than the Federal Income Tax Allocation  Agreement  dated as of February 5,
1990 (as  heretofore  amended,  the "Tax Sharing  Agreement"),  by and among the
Borrower and the parties listed on the signature pages thereto.

            Section 3.14.  Employee  Benefit Plans.  The Borrower and each other
member of its Controlled  Group has fulfilled its obligations  under the minimum
funding  standards of and is in compliance in all material  respects with ERISA,
and with the Code to the  extent  applicable  to it,  and has not  incurred  any
liability  to the PBGC or a Plan under  Title IV of ERISA other than a liability
to the PBGC for premiums  under Section 4007 of ERISA.  Neither the Borrower nor
any Guarantor has any contingent  liability with respect to any  post-retirement
benefits under a Welfare Plan,  other than liability for  continuation  coverage
described in Part 6 of Title I of ERISA.

            Section 3.15. Investment Company Act; Public Utility Holding Company
Act. Neither the Borrower nor any of the Guarantors is an  "investment  company"
as  defined  in,  or  is otherwise subject  to regulation  under, the Investment
Company Act of 1940.  Neither  the  Borrower  nor any  of the  Guarantors  is a 
"holding  company"  as  that  term  is defined in  or is  otherwise  subject to 
regulation under, the Public Utility Holding Company Act of 1935.

            Section 3.16.  Subsidiaries.  As of the Closing Date, Schedule 3.16
annexed hereto sets forth each Subsidiary of the Borrower and its jurisdiction 
of incorporation.

            Section 3.17.  Title  to  Properties;  Possession  Under  Leases; 
Trademarks; Licenses and Supplier Agreements. (a) The Borrower  and each  of the
Guarantors have good and marketable title to,  or valid  leasehold  interest in,
all  of  their  respective  properties  and  assets shown  on  the  most  recent
balance  sheet  referred  to  in  Section  3.04  hereof  and  all  assets  and  
properties  acquired  since  the  date  of such  balance  sheet, except for such
properties  as  are  no  longer  used  or  useful  in   the   conduct  of  its
business or as have been  disposed of in the ordinary  course of  business,  and
except for minor defects in title that do not interfere  with the ability of the
Borrower or any of the Guarantors to conduct its business as now conducted.  All
such  assets  and  properties  are free and clear of all Liens  other than those
permitted by Section 6.01 hereof.  All  improvements  are in  compliance  in all
material  respects  with  all  applicable  laws,  ordinances,  zoning  laws  and
restrictive  covenants and do not encroach on the property of others. No charges
or violations  have been filed or made with respect to any violations or alleged
violations by such  property or structure of any  applicable  ordinances,  laws,
requirements,  regulations  or restrictive  covenants  except for any charges or
violations which would not have a Material Adverse Effect.

           (b) The  Borrower and each of the  Guarantors  own or control or have
the right to use all material  trademarks,  trademark rights, trade names, trade
name rights, copyrights, patents, patent rights and licenses which are necessary
for the conduct of the  business  of the  Borrower  and each of the  Guarantors;
provided, however, that the Banks acknowledge that the trademarks "P.A. Bergner"
and "Boston  Stores" have not been  registered  by the Borrower  with the United
States Patent and Trademark Office.

            Section 3.18. Solvency. (a) As of the Closing Date, the fair salable
value of the assets of the Borrower and the  Guarantors  taken as a whole is not
less than the amount  that will be  required  to be paid on or in respect of the
probable  liability  on the  existing  debts  and other  liabilities  (including
contingent  liabilities)  of the  Borrower  and the  Guarantors,  as they become
absolute and mature.

           (b) As of the  Closing  Date,  the  assets  of the  Borrower  and the
Guarantors taken as a whole do not constitute unreasonably small capital for the
Borrower and the  Guarantors to carry out their business as now conducted and as
proposed to be  conducted  including  the capital  needs of the Borrower and the
Guarantors,  taking into  account the  particular  capital  requirements  of the
business  conducted by the Borrower and the  Guarantors  and  projected  capital
requirements and capital availability thereof.

           (c) The  Borrower  and the  Guarantors  do not intend to incur  debts
beyond their  ability to pay such debts as they mature  (taking into account the
timing and amounts of cash to be received by the  Borrower  and the  Guarantors,
and of amounts to be  payable on or in respect of debt of the  Borrower  and the
Guarantors). The cash flow of the Borrower and the Guarantors, after taking into
account all  anticipated  uses of the cash of the Borrower  and the  Guarantors,
will at all times be sufficient to pay all such amounts on or in respect of debt
of the Borrower and the Guarantors when such amounts are required to be paid.

            Section  3.19.  Permits,  Etc.  Except as specified on Schedule 3.19
hereof, the Borrower and each of the Guarantors possess all material,  licenses,
permits, approvals and consents (collectively,  "Permits"),  including,  without
limitation, all those required under Environmental Law to conduct properly their
business, each such Permit is and will be in full force and effect, the Borrower
and each of the Guarantors  are in compliance in all material  respects with all
such Permits, and no event (including,  without limitation, any violation of any
law, rule or regulation) has occurred which allows the revocation or termination
of any such Permit or any restriction thereon.

            Section 3.20. Landlord's Liens. No landlord or other lessor has been
granted by the Borrower (by  contract) or any  Guarantor (by contract) a Lien or
other interest in any Inventory of the Borrower or the Guarantors.

            Section 3.21. Environmental Matters. Without limiting the generality
of Section 3.07 hereof, except as specified on Schedule 3.21 hereto, neither the
Borrower nor the Guarantors has received any claim,  written notice,  complaint,
suit or order from any  Governmental  Authority or other Person  concerning  the
Release of Hazardous  Materials  for which the Borrower or any  Guarantor may be
responsible under Environmental Law.


                                   ARTICLE IV

                             CONDITIONS OF LENDING

     Section 4.01.  Conditions Precedent to Effectiveness.  This Agreement shall
become effective on the date on which:

                   (a) Supporting  Documents.  The Agent shall have received for
         each of the  Borrower,  CPS and (with respect to item (iii) below only)
         the other Guarantors:

                            (i)  a  copy  of  such   entity's   certificate   of
                  incorporation,  as amended,  certified  as of a recent date by
                  the Secretary of State of the state of its incorporation;

                           (ii) a certificate of such Secretary of State,  dated
                  as of a recent date, as to the good standing of and payment of
                  taxes by, that entity and as to the charter  documents on file
                  in the office of such Secretary of State; and

                          (iii) a  certificate  of the Secretary or an Assistant
                  Secretary of that entity dated the date of the initial Loan or
                  the  initial  Letter  of  Credit  hereunder,  whichever  first
                  occurs, and certifying (A) that attached thereto is a true and
                  complete  copy of the  certificate  of  incorporation  and the
                  by-laws  of  that  entity  as in  effect  on the  date of such
                  certification,  (B)  that  attached  thereto  is  a  true  and
                  complete copy of resolutions adopted by the Board of Directors
                  of that entity authorizing the Borrowings and Letter of Credit
                  extensions   hereunder,   and  the  execution,   delivery  and
                  performance in accordance with their  respective terms of this
                  Agreement,  the Notes to be executed by it, the Loan Documents
                  and any other documents required or contemplated  hereunder or
                  thereunder,  (C) that the certificate of incorporation of that
                  entity  has not  been  amended  since  the  date  of the  last
                  amendment   thereto   indicated  on  the  certificate  of  the
                  Secretary of State furnished  pursuant to clause (i) above (or
                  as currently in effect with respect to the Guarantors) and (D)
                  as to the incumbency and specimen signature of each officer of
                  that entity executing this Agreement, the Notes to be executed
                  by it and the Loan Documents or any other  document  delivered
                  by it in connection herewith or therewith (such certificate to
                  contain a  certification  by another officer of that entity as
                  to the  incumbency  and  signature of the officer  signing the
                  certificate referred to in this clause (iii)).

                   (b) Notes.  On or before the date of the initial Loans or the
         issuance of the initial  Letter of Credit  hereunder,  whichever  first
         occurs,  the Agent shall have received  Notes executed on behalf of the
         Borrower,  dated the Closing Date,  payable to the order of each of the
         Banks, in an amount equal to such Bank's Commitment.

                   (c) Opinion of Counsel to the  Borrower  and the  Guarantors.
         The Agent and the Banks  shall  have  received  the  favorable  written
         opinion of Charles J. Hansen,  Esq., Vice President and General Counsel
         of the  Borrower and certain of the  Guarantors,  dated the date of the
         initial  Loans  or  the  issuance  of the  initial  Letter  of  Credit,
         whichever first occurs, substantially in the form of Exhibit B.

                   (d)  Payment  of Fees.  The  Borrower  shall have paid to the
         Agent the then  unpaid  balance of all  accrued  and  unpaid  Fees then
         payable under and pursuant to this Agreement and the letter referred to
         in Section 2.19.

                   (e) Interim Financials. The Agent shall have received (i) the
         interim  consolidated  and  consolidating  financial  statements of the
         Borrower and the  Guarantors  for each month  following the fiscal year
         ended  February  1, 1997 (to the  extent  that the  subject  month ends
         greater than 20 days prior to the Closing Date), prepared and certified
         by the Borrower, and such interim financial statements shall not differ
         in any material and adverse respect from estimates  thereof  previously
         delivered  in  writing  to  the  Agent  and  (ii)  a  certificate  of a
         Responsible  Officer setting forth  computations  in reasonable  detail
         demonstrating  as of  October  4, 1997  compliance  with the  covenants
         contained in Sections 6.05, 6.06 and 6.07.

                   (f)  Accuracy  of   Information.   None  of  the  information
         submitted by the  Borrower  and/or the  Guarantors  to the Agent or any
         Bank  prior to the  Closing  Date  shall  have  been or  become  false,
         incomplete, or inaccurate in any material and adverse respect, and none
         of the conditions represented or indicated to exist shall change in any
         material and adverse respect.

                   (g) Ongoing Due Diligence.  The Agent's ongoing due diligence
         investigation  shall not disclose  information,  or the Agent shall not
         otherwise discover information not previously disclosed to it, that the
         Agent believes has had or could have a Materially Adverse Effect.

                   (h) Notice Regarding Section 7.02. The Borrower and CPS shall
         have joined the Agent in notifying the Purchaser  under the Receivables
         Purchase  Agreement  and  the  Collateral  Agent  and  the  Receivables
         Agreement Agent (or the Agent under any other agreement entered into by
         such Purchaser to fund its purchase of Credit Card Receivables from the
         Borrower and CPS) of the provisions of Section 7.02 of this Agreement.

                   (i) Loan  Documents.  The Borrower and the  Guarantors  shall
         have duly  executed and  delivered,  or caused to be duly  executed and
         delivered,  such Loan Documents as the Agent shall reasonably  request.
         Each of the foregoing  shall be in form and substance  satisfactory  to
         the Agent and its counsel.

                   (j) Consents  and  Approvals.  The Agent shall have  received
         evidence  in form and  substance  satisfactory  to the  Agent  that the
         Borrower and the Guarantors  have obtained all requisite  governmental,
         regulatory or judicial consents and appraisals for the borrowings under
         this Agreement.

                   (k)  Termination of Existing  Credit  Facility.  The Borrower
         shall have terminated the Revolving Credit and Guaranty Agreement dated
         as of  May  24,  1996  (the  "Existing  Credit  Agreement")  among  the
         Borrower,  the Subsidiaries listed on the signature pages thereof,  the
         financial  institutions party thereto and ABN AMRO Bank N.V., as Agent,
         all amounts  payable  thereunder  shall have been paid or shall be paid
         with the proceeds of the first  Borrowing  hereunder  and ABN AMRO Bank
         N.V. shall have released any Liens granted to it by the Borrower or any
         Guarantor.

                   (l) NBGL  Documents.  The Borrower  shall have delivered true
         and correct copies of the NBGL Documents to the Agent.

            Section 4.02.  Conditions  Precedent to Each Loan and Each Letter of
Credit.  The  obligation of the Banks to make each Loan and of the Fronting Bank
to issue each  Letter of Credit,  including  the  initial  Loan and the  initial
Letter of Credit, is subject to the following conditions precedent:

                   (a)  Notice.  The Agent  shall have  received  a notice  with
         respect to such borrowing or issuance,  as the case may be, as required
         by Article II.

                   (b) Representations  and Warranties.  All representations and
         warranties  contained in this Agreement and the other Loan Documents or
         otherwise made in writing in connection  herewith or therewith shall be
         true and correct in all material respects on and as of the date of each
         Borrowing or the issuance of each Letter of Credit  hereunder  with the
         same   effect  as  if  made  on  and  as  of  such  date,   except  for
         representations  or  warranties  which  are  violated  as a  result  of
         transactions permitted in accordance with the terms of this Agreement.

                   (c) No Default.  On the date of each  Borrowing  hereunder or
         the  issuance of each Letter of Credit,  the  Borrower  and  Guarantors
         shall be in compliance  with all of the terms and  provisions set forth
         herein to be  observed  or  performed  and no Event of Default or event
         which upon notice or lapse of time or both would constitute an Event of
         Default shall have occurred and be continuing.

                   (d)  Corporate  and Judicial  Proceedings.  All corporate and
         judicial  proceedings  and all instruments and agreements in connection
         with the Transactions among the Borrower, the Guarantors, the Agent and
         the  Banks   contemplated   by  this  Agreement   shall  be  reasonably
         satisfactory  in form and  substance to the Agent,  and the Agent shall
         have received all  information  and copies of all documents and papers,
         including  good  standing and foreign  qualification  certificates  and
         records of corporate and judicial proceedings, which the Agent may have
         reasonably  requested  in  connection  therewith,   such  certificates,
         documents  and  papers  where  appropriate  to be  certified  by proper
         corporate, governmental or judicial authorities.

                   (e) Borrowing Base Certificate. The Agent shall have received
         the timely  delivery  of the most  recent  Borrowing  Base  Certificate
         required to be delivered hereunder.

                   (f)  Payment  of Fees.  The  Borrower  shall have paid to the
         Agent the then  unpaid  balance of all  accrued  and  unpaid  Fees then
         payable under and pursuant to this Agreement and the letter referred to
         in Section 2.19.

The request by the  Borrower  for, and the  acceptance  by the Borrower of, each
extension of credit  hereunder  (including each  refinancing of a Loan hereunder
(other than a conversion  of a Eurodollar  Loan to an ABR Loan)) shall be deemed
to be a  representation  and  warranty  by  the  Borrower  that  the  conditions
specified in this Section have been satisfied at that time and that after giving
effect  to such  extension  of  credit  the  Borrower  shall  continue  to be in
compliance with the Borrowing Base.


                                    ARTICLE V

                             AFFIRMATIVE COVENANTS

         From the  Closing  Date and for so long as any  Commitment  shall be in
effect or any Letter of Credit  shall  remain  outstanding  or any amount  shall
remain  outstanding under any Note or unpaid under this Agreement,  the Borrower
and  each of the  Guarantors  agrees  that,  unless  the  Required  Banks  shall
otherwise consent in writing, it will:

            Section 5.01.  Financial  Statements, Reports, Etc.  In  the case of
the Borrower, deliver to the Agent:

                   (a) within 90 days  after the end of each  fiscal  year,  its
         consolidated  balance  sheet and related  statement  of income and cash
         flows,   showing  the  financial  position  of  the  Borrower  and  its
         Subsidiaries as of the close of such fiscal year and the results of the
         Borrower's  operations  and the operations of its  Subsidiaries  during
         such year,  audited by KPMG Peat  Marwick or other  independent  public
         accountants  of  recognized  national  standing and  accompanied  by an
         opinion  of such  accountants  (which  shall  not be  qualified  in any
         material  respect)  to the  effect  that  such  consolidated  financial
         statements  present  fairly  in all  material  respects  the  financial
         position and results of operations of the Borrower and its Subsidiaries
         on  a  consolidated   basis  in  accordance  with  generally   accepted
         accounting principles consistently applied;

                   (b)  concurrently  with any delivery of financial  statements
         under (a) above or (c) below, a certificate of the accounting firm or a
         Responsible  Officer, as the case may be, opining on or certifying such
         statements (i) certifying  that no Event of Default or event which upon
         notice or lapse of time or both  would  constitute  an Event of Default
         has  occurred,  or, if such an Event of Default or event has  occurred,
         specifying  the nature and extent  thereof  and any  corrective  action
         taken or proposed  to be taken with  respect  thereto and (ii)  setting
         forth  computations  in  reasonable  detail  satisfactory  to the Agent
         demonstrating compliance with the covenants contained in Sections 6.04,
         6.05, 6.06, 6.07, and 6.12;

                   (c) (x)  within  forty-five  days  of the end of each  fiscal
         quarter, unaudited consolidating balance sheets of the Borrower and its
         Subsidiaries  and related  statements  of income and cash flows and (y)
         within  forty-five  days of the end of each of the first  three  fiscal
         quarters of the fiscal  year of the  Borrower,  unaudited  consolidated
         balance  sheets  of the  Borrower  and  its  Subsidiaries  and  related
         statements of income and cash flows, in each case showing the financial
         position of the Borrower and its  Subsidiaries  as of the close of such
         fiscal  quarter and the results of its operations and the operations of
         its  Subsidiaries  during  such  fiscal  quarter  and the then  elapsed
         portion  of the  fiscal  year,  together  with  a  comparison  of  such
         information with the written  projections  furnished by the Borrower to
         the Agent and with the results for such period in the  previous  fiscal
         year,  all certified by a Responsible  Officer as presenting  fairly in
         all material respects the financial  position and results of operations
         of the Borrower and its Subsidiaries on a consolidating or consolidated
         basis,  as the case  may be,  in  accordance  with  generally  accepted
         accounting principles consistently applied,  subject to normal year-end
         adjustments;

                   (d) promptly after the same become publicly available, copies
         of all periodic and other reports, proxy statements and other materials
         filed  by it  with  the  Securities  and  Exchange  Commission,  or any
         governmental  authority  succeeding  to any of or all the  functions of
         said commission,  or with any national securities exchange, as the case
         may be;

                   (e)  promptly,  from  time to time,  such  other  information
         regarding the operations,  business affairs and financial  condition of
         the Borrower or any  Subsidiary,  or  compliance  with the terms of any
         material  loan or  financing  agreements  as the  Agent or any Bank may
         reasonably request;

                   (f)  furnish  to  the  Agent   promptly  after  the  same  is
         available,  copies of all material  pleadings,  motions,  applications,
         judicial  information,  financial information and other documents filed
         by or on behalf of the Borrower or any of the  Guarantors in connection
         with any  litigation  or other  proceeding  described in Section  5.01A
         hereof;

                   (g)  immediately  upon obtaining  actual  knowledge  thereof,
         notice of any Liquidity  Termination Event and/or Purchase  Termination
         Event (as such term is defined in the Receivables  Agreement Documents)
         or termination of any of the NBGL Documents;

                   (h) (i) upon the  request of the Agent,  furnish to the Agent
         the Daily Reports  delivered under the  Receivables  Agreement and (ii)
         furnish  to the  Agent  after  the same is  available,  the  Settlement
         Reports  delivered under the Receivables  Agreement and any information
         furnished  by  NBGL  to the  Borrower  or  CPS  under  any of the  NBGL
         Documents;

                   (i)  promptly  upon  receipt  thereof,  copies  of all  final
         financial  reports,  if any,  submitted  to the  Borrower or any of its
         Subsidiaries by its auditors, in connection with each annual or interim
         audit or review of its books by such auditors;

                   (j)  written  notice in the event  that the Bank  Termination
         Date and/or WINDMILL Termination Date under the Liquidity Agreement has
         occurred or shall be scheduled to occur within 365 days; and

            Section 5.01A.  Litigation  and Other Notices. Give the Agent prompt
written notice of the following:

                   (a) the  issuance  by any  court or  governmental  agency  or
         authority  of  any  injunction,  order,  decision  or  other  restraint
         prohibiting,  or having  the effect of  prohibiting,  the making of the
         Loans or the issuance of Letters of Credit, or invalidating,  or having
         the effect of invalidating,  any provision of this Agreement, the Notes
         or the other Loan  Documents,  or the  initiation of any  litigation or
         similar  proceeding  seeking any such  injunction,  order,  decision or
         other restraint;

                   (b)  the  filing  or  commencement  of any  action,  suit  or
         proceeding  against the Borrower or any of the  Guarantors,  whether at
         law or in  equity  or by or before  any  court or any  Federal,  state,
         municipal  or other  governmental  agency  or  authority,  (i) which is
         material and is brought by or on behalf of any  governmental  agency or
         authority,  or in which  injunctive or other equitable relief is sought
         or (ii) as to which it is probable  (within the meaning of Statement of
         Financial  Accounting  Standards  No. 5) that  there will be an adverse
         determination and which, if adversely determined,  would (A) reasonably
         be expected to result in liability of the Borrower or any  Guarantor in
         an  aggregate  amount  of  $2,500,000  or  more,  not  reimbursable  by
         insurance, or (B) materially adversely affect the ability or impair the
         right of the Borrower or any Guarantor to perform its obligations under
         this  Agreement,  any Note or any other Loan  Document to which it is a
         party; and

                   (c)  any  development  in  the  business  or  affairs  of the
         Borrower or the Borrower and Guarantors  taken as a whole which has had
         or which is  likely,  in the  reasonable  judgment  of any  Responsible
         Officer of the Borrower, to have, a Material Adverse Effect.

            Section 5.02. Corporate Existence.  Do or cause to be done and cause
each of the  Guarantors  to do or  cause  to be done  all  things  necessary  to
preserve,  renew and keep in full  force and  effect  its  corporate  existence,
material  rights,  licenses,  permits and  franchises and comply in all material
respects with all laws and regulations applicable to it; provided, however, that
any Guarantor or Subsidiary (other than Great Lakes, Bergner Credit Corporation,
NBGL or Bergner Finance  Corporation)  may be merged into the Borrower or CPS so
long as the Borrower or CPS, as the case may be, is the  surviving  entity,  CPS
may be merged into CPS Holding Co., so long as CPS Holding Co. is the  surviving
entity and any  Guarantor  (other than CPS or CPS Holding Co.) which is directly
or indirectly wholly owned by the Borrower may merge into any other Guarantor or
adopt a plan of dissolution and make a liquidating distribution of its assets to
its shareholders  (so long as such  shareholder is a Guarantor).  Subject to the
proviso in the  immediately  preceding  sentence,  each  Subsidiary is and shall
remain a direct or indirect wholly-owned Subsidiary of the Borrower.

            Section 5.03. Insurance.  (a) Keep its insurable real properties and
all personal property insured at all times,  against such risks,  including fire
and other risks  insured  against by extended  coverage,  as is  customary  with
companies of the same or similar size in the same or similar businesses.

           (b) maintain in full  force and  effect  public  liability  insurance
against claims for personal injury or death or property  damage  occurring upon,
in, about or in connection  with the use of any  properties  owned,  occupied or
controlled  by the  Borrower  or any  Subsidiary,  as the case  may be,  in such
amounts and with such deductibles as are customary with companies of the same or
similar size in the same or similar  businesses and in the same geographic area;
and maintain such other insurance as may be required by law.

           (c) From time to time upon request of the Agent,  promptly furnish or
cause to be furnished to the Agent  evidence,  in form and substance  reasonably
satisfactory to the Agent,  of the  maintenance of all insurance  required to be
maintained  by this  Section 5.03  hereof,  including,  but not limited to, such
originals  or  copies  as  the  Agent  may   reasonably   request  of  policies,
certificates of insurance,  riders and  endorsements  relating to such insurance
and proof of premium payments.

            Section 5.04.  Obligations  and Taxes.  With respect to the Borrower
and each Guarantor,  pay all its material obligations promptly and in accordance
with their terms and pay and discharge promptly all material taxes,  assessments
and governmental charges or levies imposed upon it or upon its income or profits
or in respect of its property,  before the same shall become in default, as well
as all material  lawful  claims for labor,  materials  and supplies or otherwise
which, if unpaid, might become a Lien or charge upon such properties or any part
thereof;  provided,  however, that the Borrower and each Subsidiary shall not be
required to pay and  discharge  or to cause to be paid and  discharged  any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings (if the Borrower and
the Guarantors shall have set aside on their books adequate reserves therefor).

            Section 5.05. Notice of Event of Default,  Etc. Promptly give to the
Agent notice in writing of any Event of Default or the  occurrence  of any event
or circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default, specifying the nature and extent thereof and the
action (if any) which is proposed to be taken with respect thereto.

            Section 5.06.  Borrowing Base  Certificate.  Furnish to the Agent as
soon as available  and in any event on or before the fifth  Business Day of each
month a Borrowing Base  Certificate as at the end of the  immediately  preceding
week  substantially in the form of Exhibit D, provided that if there shall occur
a "system  failure" or other similar  technical  failure in the operations which
produce data included in the Borrowing Base  Certificate  or such reports,  such
Borrowing Base  Certificate or reports which are required to be delivered on the
fifth  Business  Day of each month shall be  delivered to the Agent on or before
the tenth Business Day of such month.

            Section 5.07.  Access to Books and Records.  Maintain or cause to be
maintained  at all times true and  complete  books and records of the  financial
operations  of the  Borrower,  the  Guarantors  and NBGL and  customer  lists in
connection  with the business of the  Borrower,  the  Guarantors  and NBGL;  and
provide  the Agent and its  representatives  (including  representatives  of the
Banks,  who  shall  accompany  the  Agent  and who  shall pay their own costs in
connection  therewith)  access to all such  books,  records and  customer  lists
during  regular  business  hours,  in order that the Agent may  examine and make
abstracts from such books,  accounts,  records,  customer lists and other papers
(including,  but not limited to,  Inventory  included in the Borrowing Base) for
the purpose of verifying  the accuracy of the various  reports  delivered by the
Borrower,  the  Guarantors  or NBGL to the Agent or the Banks  pursuant  to this
Agreement,  for otherwise  ascertaining  compliance  with this Agreement and for
such other  purposes as the Agent may  reasonably  request;  and at any time and
from time to time during regular business hours, permit the Agent and any agents
or representatives (including, without limitation,  appraisers) thereof to visit
the properties of the Borrower with a view to, among other things,  ascertaining
compliance  with the Borrowing  Base.  The  Borrower,  the  Guarantors  and NBGL
jointly and  severally  agree to pay to the Agent the  customary  per diem rates
plus reasonable out-of-pocket expenses for each of the Agent's examiners and the
reasonable costs to the Agent with respect to third party examiners, for a total
of three  examinations  per  calendar  year prior to an Event of Default and for
unlimited examinations after an Event of Default.

            Section 5.08. Business Plan. As soon as practicable,  furnish to the
Agent any material  amendments  and  supplements  with respect to the Borrower's
business  plan and make its senior  officers  available to discuss the same with
the Agent.  In addition to the  foregoing,  the  Borrower  agrees to furnish the
Agent with an update of its business plan at least once every twelve months.

            Section 5.09.  Compliance with Laws, Etc. Comply,  and cause each of
its  Subsidiaries to comply,  with all applicable laws,  rules,  regulations and
orders,  and duly observe,  and cause each of its  Subsidiaries to duly observe,
all  valid  requirements  of  governmental   authorities   (including,   without
limitation,  ERISA and the rules and regulations thereunder), and all applicable
statutes, rules, regulations and orders relating to environmental protection and
to public and employee health, safety and labor other than any such laws, rules,
regulations,  orders, requirements and statutes the failure to comply with would
not have a Material Adverse Effect.

            Section  5.10.  Use of Proceeds.  Use the proceeds of Loans only for
the purposes set forth in Section 3.09 hereof and use Letters of Credit only for
the purposes permitted in this Agreement.

            Section 5.11.  Additional  Guarantors.  Promptly inform the Agent of
the creation or acquisition of any direct or indirect subsidiary (subject to the
provisions of Section 6.19 hereof) and cause each direct or indirect  subsidiary
not in  existence  on the date  hereof  to enter  into a  Guarantee  in form and
substance satisfactory to the Agent.

            Section  5.12.  Environmental  Laws.  Comply,  and cause each of its
Subsidiaries  to comply,  in all material  respects  with the  provisions of all
applicable  Environmental Laws, and shall keep its properties and the properties
of its Subsidiaries free of any Environmental Lien. The Borrower shall not cause
or suffer, or permit,  and shall not suffer or permit any of its Subsidiaries to
cause or suffer or permit,  the property of the Borrower or its  Subsidiaries to
be used for the treatment,  transporting  or disposal of any Hazardous  Material
such as  would  require  a  Permit,  or,  except  as  necessary  for the  normal
operations of the Borrower and its Subsidiaries, and in material compliance with
Environmental Law, the storage of any waste or Hazardous Materials.


                                   ARTICLE VI

                               NEGATIVE COVENANTS


         From the  Closing  Date and for so long as any  Commitment  shall be in
effect or any Letter of Credit  shall  remain  outstanding  or any amount  shall
remain  outstanding  under any Note or unpaid under this  Agreement,  unless the
Required Banks shall otherwise consent in writing,  the Borrower and each of the
Guarantors will not:

            Section 6.01. Liens.  Incur,  create,  assume or suffer to exist any
Lien on any asset (including, without limitation, any Inventory or unsold Credit
Card  Receivables)  of the  Borrower  or any of the  Guarantors,  now  owned  or
hereafter  acquired,  other than (i) Liens  existing on the Closing  Date as set
forth on Schedule 6.01; (ii) Permitted Liens;  (iii) restrictions on transfer by
the Borrower of its AMC shares;  (iv)  arrangements for the prepayment of future
Inventory  purchases;  and (v) Liens securing the  Indebtedness  permitted under
Section 6.03(iv) hereof.

            Section 6.02. Merger,  Acquisitions,  Etc. Consolidate or merge with
or into, or transfer its properties and assets  substantially as an entirety to,
another Person, or acquire  substantially all of the assets or properties of any
Person except as permitted under Section 5.02 or Section 6.11 hereof.

            Section  6.03.  Indebtedness.  Contract,  create,  incur,  assume or
suffer  to exist  any  Indebtedness,  except  for (i)  Indebtedness  under  this
Agreement and under the Short-Term Credit Agreement;  (ii) Indebtedness incurred
on or prior to the Closing  Date as described  on Schedule  6.03  hereto;  (iii)
unsecured Indebtedness  (excluding trade credit) incurred after the Closing Date
in an outstanding aggregate principal amount not in excess of $50,000,000;  (iv)
Indebtedness  secured by  purchase  money  liens in an  aggregate  amount not to
exceed $25,000,000;  (v) Indebtedness  permitted under Section 6.11; (vi) to the
extent the same  constitutes  Indebtedness,  guarantees  permitted under Section
6.09;  (vii) (a) capital  lease  obligations  incurred by the  Borrower  and its
Subsidiaries  not in excess of $25,000,000  in the aggregate  during the term of
this  Agreement and (b) capital lease  obligations  incurred by the Borrower and
its  Subsidiaries in connection with sale lease-back  transactions  permitted by
Section 6.12 hereof; (viii) a refinancing, refunding or exchange of Indebtedness
permitted in clauses (iv) and (v) of this Section 6.03,  but not the increase in
principal  amount or extension of maturity  thereof;  (ix)  Indebtedness  of the
Borrower,  CPS,  Great Lakes and/or any Additional  Seller arising under,  or in
connection  with,  any of the  Receivables  Agreement  Documents as amended in a
manner  that  does  not  violate  Section  6.10  of  this  Agreement;   and  (x)
Subordinated  Indebtedness not to exceed  $150,000,000 in an aggregate principal
amount outstanding at any one time.

            Section 6.04. Sales, Etc, of Assets. Sell, assign, lease, consign or
otherwise dispose of any of its assets including without limitation, the capital
stock of any Guarantor or any other Subsidiary, Inventory (through bulk sales or
otherwise),  store  leases or  Receivables  or permit any  Subsidiary  so to do,
except for (i) sales of Inventory, fixtures and equipment in the ordinary course
of business and in a manner  consistent  with the Borrower's  past practices and
consignments  of  Inventory  by the  Borrower to CPS in the  ordinary  course of
business  and  in  a  manner  consistent  with  the  Borrower's  past  practices
(provided,  that the Borrower  shall be prohibited  from disposing of any of its
assets to CPS,  other than inventory by  consignment);  (ii) sales of "Purchased
Receivables"  under the  Receivables  Agreement  by the  Borrower,  CPS and NBGL
pursuant to the Receivables Agreement or any successor agreement satisfactory to
the Required Banks;  (iii) sales of obsolete fixtures and equipment and sales of
fixtures and  equipment  substantially  contemporaneously  with the  replacement
thereof;  and (iv)  other  sales,  assignments,  leases,  consignments  or other
dispositions of assets not otherwise  permitted  pursuant to clauses (i) through
(iii) above,  and not including  assets sold in connection with sale lease-backs
transactions  permitted under Section 6.12 hereof, in a principal amount (valued
at the greater of fair  market  value or book value of such asset) not to exceed
$100,000,000 in the aggregate for all such dispositions from the Closing Date.

            Section  6.05.  Funded  Debt to EBITDA  Ratio.  Permit  the ratio of
Funded  Debt of the  Borrower  and its  Subsidiaries  as of the last day of each
fiscal quarter to EBITDA for the twelve-consecutive-month  period ending on such
day (the "Funded Debt to EBITDA Ratio") to be greater than 3.75 to 1.00.

            Section 6.06. Cash Flow Coverage. Permit, as of the last day of each
fiscal quarter,  the ratio of (i) (A) EBITDA for the twelve fiscal months of the
Borrower  then ended plus (B) Rental  Expense for the same twelve  fiscal months
minus (C) the aggregate principal amount of Capital Expenditures of the Borrower
and its  Subsidiaries  for the same twelve  fiscal months to (ii) the sum of (A)
Interest  Expense of the Borrower and its  Subsidiaries on a consolidated  basis
for the same twelve  fiscal  months plus (B) Rental  Expense for the same twelve
fiscal  months  (the "Cash Flow  Ratio") to be less than 1.25 to 1.00;  provided
that at any time the sum of (i) the aggregate  outstanding  principal  amount of
all Loans and (ii) the  aggregate  outstanding  principal  amount of all "Loans"
under the  Short-Term  Credit  Agreement  is less than 25% of the sum of (i) the
Total Commitment plus (ii) the "Total  Commitment"  under the Short-Term  Credit
Agreement,  the  Borrower  shall not  permit the Cash Flow Ratio to be less than
1.00 to 1.00.

            Section 6.07.  Minimum  Tangible Net Worth.  Permit the Tangible Net
Worth at any time to be less than  $275,000,000  plus 75% of positive Net Income
of the Borrower and its Subsidiaries for each fiscal year commencing on or after
January 31, 1997 (but  without  subtraction  for any negative Net Income for any
such period).

            Section 6.08.  Limitation on Voluntary Payments and Modifications of
Subordinated Indebtedness. The Borrower will not, and will not permit any of its
Subsidiaries  to, (i) make (or give any  notice  for) any  principal  payment or
prepayment  on or  redemption  or  acquisition  for  value  of any  Subordinated
Indebtedness  or, after any Event of Default,  make any interest  payment on any
Subordinated  Indebtedness,  (ii) amend or modify,  or permit the  amendment  or
modification  of,  any  provision  of any  Subordinated  Indebtedness,  or (iii)
set-off any amounts against the Subordinated Indebtedness.

            Section  6.09.   Guarantees  and  Other  Liabilities.   Purchase  or
repurchase (or agree,  contingently or otherwise, so to do) the Indebtedness of,
or assume,  guarantee  (directly or indirectly  or by an  instrument  having the
effect of  assuring  another's  payment  or  performance  of any  obligation  or
capability  of so doing,  or  otherwise),  endorse or otherwise  become  liable,
directly or indirectly,  in connection with the obligations,  stock or dividends
of any Person,  or permit any  Subsidiary so to do, except (i) by endorsement of
negotiable  instruments  for deposit or  collection  in the  ordinary  course of
business,  (ii)  guarantees  pursuant to Article VIII,  (iii)  guarantees by the
Borrower of the  obligations of any Guarantor and guarantees by any Guarantor of
obligations of the Borrower,  (iv)  guarantees by a Guarantor of the obligations
of any other Guarantor (to the extent that such  obligations are permitted under
this Agreement),  (v) in addition to the guarantees permitted under clause (iii)
of this Section 6.09,  guarantees by the Borrower or CPS of  obligations  of any
Guarantor or Subsidiary of the Borrower under leases of real property where such
Guarantor  or such  Subsidiary  of the  Borrower is lessee,  and as to such real
property,  such  Guarantor  is sublessor or assignor and the Borrower or CPS, as
the case may be, is sublessee or  assignee,  (vi) in addition to the  guarantees
permitted under clause (iii) of this Section 6.09, guarantees by the Borrower or
CPS of obligations of any Person with respect to a lease of the property located
at  5700  Durand  Avenue,   Racine,   Wisconsin  53406  (vii)  all  obligations,
indebtedness  and  liabilities  of the  Borrower,  CPS,  Great Lakes  and/or any
Additional  Seller  (whether  direct  or  indirect  and  whether  contingent  or
otherwise)  arising  under,  or in  connection  with,  any  of  the  Receivables
Agreement  Documents as amended in a manner which does not violate  Section 6.10
of this  Agreement,  and  (viii)  merchandise  purchase  guarantees  made by the
Borrower in accordance with its arrangements with AMC.

            Section 6.10.  Receivables  Agreement  Documents.  Agree to or enter
into any Receivables  Agreement Document or any amendment or modification of the
Receivables  Agreement Documents which would add any Additional Seller or if the
Required Banks otherwise  determine in writing (in their sole  discretion)  that
such  amendment  or  modification  would have a material  adverse  effect on the
Borrower or upon the rights and remedies of the Required  Banks or any Bank.  In
addition  to  the  foregoing,  and  notwithstanding  anything  to  the  contrary
contained in this Section, neither the Borrower nor CPS shall (nor shall NBGL be
permitted  to),  unless  the  Required  Banks  otherwise   consent  in  writing,
repurchase any Credit Card Receivables from Great Lakes pursuant to Section 2.05
of the Receivables Agreement.

            Section 6.11.  Investments,  Loans and Advances.  Purchase,  hold or
acquire any capital stock,  evidences of  indebtedness  or other  securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment  or any other  interest  in, any other  Person (all of the  foregoing
"Investments"), except

                   (i)     Permitted Investments,

                  (ii) (A)  subordinated  promissory notes issued by Great Lakes
         pursuant to the terms of the Receivables  Agreement (x) in respect of a
         portion of the purchase price of Credit Card Receivables thereunder and
         (y) to  evidence  loans  which may be made by the  Borrower  and CPS to
         Great Lakes thereunder to enable Great Lakes to pay operating expenses,
         provided that the aggregate outstanding amount of such loans in respect
         of such operating expenses shall not exceed $1,000,000 at any time, (B)
         Seller Notes (as defined in the Receivables  Agreement) issued by Great
         Lakes pursuant to the terms of the Receivables  Agreement in respect of
         a portion of the purchase price of Credit Card Receivables  thereunder,
         and (C) all obligations,  indebtedness and liabilities of the Borrower,
         CPS,  Great  Lakes  and/or any  Additional  Seller  (whether  direct or
         indirect and whether  contingent or  otherwise)  arising  under,  or in
         connection with, any of the Receivables  Agreement Documents as amended
         in a manner which does not violate Section 6.10 of this Agreement,

                  (iii) advances  by  the  Borrower  to CPS  and by  CPS to  the
         Borrower,

                  (iv)  advances  by  any  Guarantor  (other  than  CPS)  to the
         Borrower and advances by the Borrower to any Guarantor (other than CPS)
         in an aggregate  annual amount for all  Guarantors  (other than CPS) of
         $1,125,000,

                   (v) other  advances by the  Borrower  and CPS in the ordinary
         course of business in an aggregate amount not to exceed $100,000,

                  (vi)  investments  not in excess of an  aggregate  of $500,000
         during the term of this Agreement in non-operating  Subsidiaries of the
         Borrower  (which  Subsidiaries  shall be required to become a Guarantor
         under this Agreement),

                 (vii) loans and advances  made by the Borrower or any Guarantor
         to the Borrower and/or any other Guarantor  pursuant to the Tax-Sharing
         Agreement,

                (viii)  open  market,  negotiated,  or  other  purchases  of the
         indebtedness of, claims against, or equity interests in any corporation
         whose  primary  business is in the  department  store  industry or in a
         closely related industry up to (I) $75,000,000 in the aggregate for all
         such  transactions  if at the time of such  investment  either  Level I
         Status,  Level II Status or Level III Status exists or (II) $20,000,000
         in the  aggregate  for all  such  transactions  if at the  time of such
         investment either Level IV Status or Level V Status exists, and

                  (ix)  advances  by  the  Borrower  to  NBGL  in  an  aggregate
         principal amount at any one time outstanding not exceeding $25,000,000.

            Section 6.12. Lease-Backs. Enter into any arrangements,  directly or
indirectly,  with any person,  whereby the  Borrower or any of its  Subsidiaries
shall sell or transfer any  property,  whether now owned or hereafter  acquired,
used or useful in its business,  in  connection  with the rental or lease of the
property so sold or  transferred or of other property which the Borrower or such
Subsidiary  intends to use for substantially the same purpose or purposes as the
property so sold or transferred, if the aggregate gross proceeds of such sale of
such  property  when added to the  aggregate  gross sale proceeds from all other
such  transactions  entered  into  from  and  after  the  Closing  Date  exceeds
$100,000,000.

            Section 6.13.  Transactions with Affiliates.  Directly or indirectly
purchase,  acquire or lease any property  from,  or sell,  transfer or lease any
property  to,  or enter  into  any  other  transaction  with,  any  stockholder,
Affiliate or agent of the Borrower, or any relative thereof, or permit or suffer
any Subsidiary to do so, except at prices and on terms not less favorable to the
Borrower  or such  Subsidiary  than that which  would have been  obtained  in an
arm's-length  transaction with a non-affiliated third party; provided,  however,
that there shall be excluded from this Section transactions between the Borrower
and any Guarantor,  transactions  between  Guarantors,  and  transactions  among
Bergner Credit  Corporation,  NBGL,  Great Lakes, CPS and the Borrower under the
Receivables  Agreement  and  among the  Borrower  and the  Guarantors  under the
Tax-Sharing Agreement.

            Section 6.14.    Business.  Alter  materially  the  nature  of  its
business  as  operated on the date of this Agreement in any material respect.

            Section 6.15.  ERISA.  The Borrower will, and will cause each of its
Subsidiaries  to,  promptly pay and discharge all  obligations  and  liabilities
arising under ERISA of a character  which if unpaid or unperformed  might result
in the  imposition  of a Lien against any of its  properties  or assets and will
promptly notify each Bank of (i) the occurrence of any Reportable Event relating
to a Plan,  other  than any such  event of which the PBGC has  waived  notice by
regulation,  (ii)  receipt  of any  notice  from PBGC of its  intention  to seek
termination of any Plan or appointment of a trustee  therefor,  (iii) its or any
of its Subsidiaries'  intention to terminate or withdraw from any Plan, and (iv)
the occurrence of any event that could result in the incurrence by any member of
the Controlled Group of any material liability, fine or penalty, or any material
increase  in the  contingent  liability  of the  Borrower or any  Subsidiary  in
connection with any post-retirement Welfare Plan Benefit.

            Section 6.16. Accounting Changes.  Make, or permit any Subsidiary to
make any change in their accounting  treatment or financial  reporting practices
except as required or permitted by generally accepted  accounting  principles in
effect from time to time.

            Section 6.17.  Modification of Charter Documents.  Modify,  amend or
alter  their  respective  certificates  or articles  of  incorporation  or their
by-laws in any respect  which is material and adverse to the Agent or any of the
Banks.

            Section  6.18.  Landlord's  Liens.  Enter  into any lease or similar
arrangement  pursuant to which a Lien or other  interest in any Inventory of the
Borrower or the  Guarantors  is granted by the Borrower or any  Guarantor to any
landlord or other lessor.

            Section  6.19.  NBGL.  (a)  Permit  NBGL to engage  in any  business
activity (including,  without limitation,  derivative  transactions  (including,
without limitation,  over the counter derivative  transactions))  other than (i)
the issuance of credit cards;  and (ii) the sale of Credit Card  Receivables  to
Great  Lakes  pursuant  to the  Receivables  Purchase  Agreement,  as amended in
accordance with Section 6.10.

           (b) Permit NBGL to incur any Indebtedness,  other than under the NBGL
Documents and under the Receivables  Agreement  Documents as amended in a manner
which does not violate Section 6.10 of this Agreement.

           (c) Permit NBGL to incur, create,  assume or suffer to exist any Lien
on any of its  assets,  now owned or  hereafter  acquired,  other than (i) Liens
under the Receivables  Agreement  Documents as in effect on the Closing Date and
as thereafter amended, modified and supplemented in accordance with Section 6.10
and (ii) Liens in favor of the Borrower and/or CPS under the NBGL Documents.

           (d) Permit NBGL to sell, assign,  lease, consign or otherwise dispose
of any of its assets, other than (i) the sale of Purchased  Receivables to Great
Lakes under the Receivables Agreement as amended in accordance with Section 6.10
and (ii) as permitted under clause (c) above.

           (e)  Permit  NBGL to  fail  to be in  compliance  with  any  material
statute,  material  regulation of any  governmental  agency or  instrumentality,
material agreement, or any order or decree.

           (f) Permit NBGL to amend or modify any of the NBGL  Documents  or its
charter,  bylaws or any of its other  organizational  documents  in any  respect
which is material and adverse to the Agent or any of the Banks.


                                   ARTICLE VII

                                EVENTS OF DEFAULT


            Section 7.01.    Events  of Default.  In  the case of the  happening
of any of the following events and the continuance thereof beyond the applicable
period of grace if any (each, an "Event of Default"):

                   (a) any  representation  or warranty  made by the Borrower or
         any  Guarantor  in  this  Agreement  or  in  any  Loan  Document  or in
         connection  with this  Agreement or with the  execution and delivery of
         the Notes or the credit extensions  hereunder or any material statement
         or representation made in any report, financial statement,  certificate
         or other document furnished by the Borrower or any of the Guarantors to
         the Banks under or in  connection  with this  Agreement  shall prove to
         have been false or  misleading  in any  material  respect  when made or
         delivered or deemed made or delivered  pursuant to Section 4.02 hereof;
         or

                   (b)  default  shall be made in the payment of any (i) Fees or
         interest on the Loans when due, or (ii) principal of the Loans or other
         amounts  payable  by  the  Borrower   hereunder   (including,   without
         limitation, reimbursement obligations in respect of Letters of Credit),
         when and as the same shall become due and  payable,  whether at the due
         date  thereof  or  at  a  date  fixed  for  prepayment  thereof  or  by
         acceleration thereof or otherwise; or

                   (c) default shall be made by the Borrower or any Guarantor in
         the  due  observance  or  performance  of any  covenant,  condition  or
         agreement contained in Article VI hereof; or

                   (d) default shall be made by the Borrower or any Guarantor in
         the due observance or performance of any other  covenant,  condition or
         agreement  to be  observed or  performed  pursuant to the terms of this
         Agreement or any of the other Loan  Documents  and such  default  shall
         continue  unremedied  for more than 10 days  (provided,  that the Agent
         shall have given the  Borrower  two days prior  notice of default  with
         respect to any default  arising  out of a  noncompliance  with  Section
         5.01(a),  Section  5.01(b),  Section  5.01(c)  or (with  respect to the
         furnishing  of quarterly and annual  reports only) Section  5.01(d) and
         provided,  further,  that the Agent shall have given the  Borrower  one
         day's prior notice of default  with respect to any default  arising out
         of a noncompliance with Section 5.06 of this Agreement); or

                   (e) the  Borrower,  any  Guarantor or any  Subsidiary  of any
         thereof  shall (i)  voluntarily  commence  any  proceeding  or file any
         petition seeking relief under Title 11 of the United States Code or any
         other Federal, state or foreign bankruptcy,  insolvency, liquidation or
         similar law, (ii) consent to the  institution of, or fail to contest in
         a timely and appropriate  manner,  any such proceeding or the filing of
         any such petition,  (iii) apply for or consent to the  appointment of a
         receiver, trustee, custodian,  sequestrator or similar official for the
         Borrower,  such Guarantor or such Subsidiary or for a substantial  part
         of its property or assets,  (iv) file an answer  admitting the material
         allegations of a petition filed against it in any such proceeding,  (v)
         make a general  assignment  for the benefit of  creditors,  (vi) become
         unable,  admit in writing its  inability  or fail  generally to pay its
         debts as they become due or (vii) take corporate action for the purpose
         of effecting any of the foregoing; or

                   (f)  an  involuntary  proceeding  shall  be  commenced  or an
         involuntary   petition   shall  be  filed  in  a  court  of   competent
         jurisdiction  seeking  (i)  relief  in  respect  of the  Borrower,  any
         Guarantor or any Subsidiary of any thereof, or of a substantial part of
         the property or assets of the Borrower, any Guarantor or any Subsidiary
         of any thereof,  under Title 11 of the United  States Code or any other
         Federal  state  or  foreign  bankruptcy,  insolvency,  receivership  or
         similar law, (ii) the  appointment of a receiver,  trustee,  custodian,
         sequestrator or similar official for the Borrower, any Guarantor or any
         Subsidiary of any thereof or for a substantial  part of the property of
         the Borrower,  any Guarantor or any  Subsidiary of any thereof or (iii)
         the  winding-up or  liquidation  of the Borrower,  any Guarantor or any
         Subsidiary  of any  thereof;  and such  proceeding  or  petition  shall
         continue  undismissed  for 60 days or an order or decree  approving  or
         ordering any of the foregoing shall continue unstayed and in effect for
         45 days; or

                   (g) default shall be made under  Indebtedness  or obligations
         under  a  capitalized  lease  of the  Borrower,  any  Guarantor  or any
         Subsidiary of any thereof (excluding Indebtedness outstanding hereunder
         or under the Short-Term Credit  Agreement) and the aggregate  principal
         amount of such  Indebtedness or obligations  under  capitalized  leases
         exceeds  $2,500,000,  if the  effect  of any such  default  shall be to
         accelerate, or to permit the holder or obligee of any such Indebtedness
         or obligations  under a capitalized  lease (or any trustee on behalf of
         such holder or obligee) at its option to  accelerate,  the  maturity of
         such Indebtedness or obligations under a capitalized lease; or

                   (h) any member of the Controlled  Group fails to pay when due
         an amount or amounts  aggregating in excess of $500,000 it is liable to
         pay to the PBGC or to a Plan  under  Title IV of  ERISA;  or  notice of
         intent to terminate a Plan or Plans having  aggregate  Unfunded  Vested
         Liabilities in excess of $500,000 (collectively,  a "Material Plan") is
         filed under Title IV of ERISA by a member of the Controlled  Group, any
         plan  administrator  or any  combination of the foregoing;  or the PBGC
         institutes proceedings under Title IV of ERISA to terminate or to cause
         a  trustee  to be  appointed  to  administer  any  Material  Plan  or a
         proceeding  is  instituted  by a fiduciary of any Material Plan against
         any member of the Controlled Group to enforce Section 515 or 4219(c)(5)
         of ERISA and such  proceeding is not dismissed  within thirty (30) days
         thereafter;  or a condition exists by reason of which the PBGC would be
         entitled to obtain a decree adjudicating that any Material Plan must be
         terminated;

                   (i) this Agreement, any Note or any other Loan Document shall
         for any reason cease to be, or shall be asserted by the Borrower or any
         Guarantor  not to be, a legal,  valid  and  binding  obligation  of the
         Borrower or such  Guarantor,  as applicable,  enforceable in accordance
         with its terms; or

                   (j) (w) the Receivables  Agreement shall be terminated by any
         party  thereto  or shall fail to be in full  force and  effect;  or (x)
         there  shall  exist any event of  default  or event of  termination  or
         similarly  designated  event under the  Receivables  Agreement;  or (y)
         there shall have occurred and be continuing any other event or state of
         facts which relieves Great Lakes from the obligation to purchase Credit
         Card  Receivables  thereunder;  or (z)(i) a default  shall  occur under
         Section  7.18 of the  Liquidity  Agreement  as in effect on the Closing
         Date  (without  giving  effect to any waivers  thereunder)  or (ii) the
         Liquidity Agreement shall fail to be in full force and effect; or

                   (k) if (i) during any  twelve-month  period, 6 or more of the
         18 individuals  currently serving on the Borrower's Executive Committee
         shall, for any reason or circumstance,  cease to serve on the Executive
         Committee  or (ii) any  individual  owner or  group  of  owners  acting
         together  shall own or control  50% or more of the  outstanding  common
         shares  of the  Borrower  or (iii)  the  Borrower  shall  cease to own,
         directly or indirectly,  100% of the outstanding  capital stock of CPS;
         or

                   (l) any  judgment or order as to a liability  or debt for the
         payment of money in excess of $7,500,000  (to the extent not covered by
         insurance)  shall  be  rendered  against  the  Borrower  or  any of the
         Guarantors  and  either  (i)  enforcement  proceedings  shall have been
         commenced and shall be continuing by any creditor upon such judgment or
         order or (ii) there shall be any period of 30 consecutive  days (or, in
         connection with an appeal of a tax court judgment, 90 consecutive days)
         during which a stay of enforcement of such judgment or order, by reason
         of a pending appeal or otherwise, shall not be in effect; or

                   (m) any  non-monetary  judgment  or order  shall be  rendered
         against  the  Borrower  or any of the  Guarantors  which  does or would
         reasonably  be expected to (i) cause a material  adverse  change in the
         condition (financial or otherwise),  business, operations or properties
         of the Borrower and the  Guarantors  taken as a whole on a consolidated
         basis,  (ii)  have a  material  adverse  effect on the  ability  of the
         Borrower  or  any  of  the  Guarantors  to  perform  their   respective
         obligations  under any Loan Document,  or (iii) have a material adverse
         effect on the  rights and  remedies  of the Agent or any Bank under any
         Loan  Document,  and there shall be any period of 10  consecutive  days
         during which a stay of enforcement of such judgment or order, by reason
         of a pending appeal or otherwise, shall not be in effect; or

                   (n)  an  "Event  of  Default"  shall  have  occurred  and  be
         continuing under the Short-Term Credit Agreement;

then, and in every such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent may, and at the request of the  Required  Banks,  shall,  by notice to the
Borrower,  take one or more of the following  actions,  at the same or different
times: (i) terminate forthwith the Total Commitment and/or the obligation of the
Fronting Bank to issue Letters of Credit hereunder;  (ii) declare the Loans then
outstanding  to be forthwith  due and payable,  whereupon  the  principal of the
Loans together with accrued interest thereon and any unpaid accrued Fees and all
other  liabilities  of the Borrower  accrued  hereunder and under any other Loan
Document, shall become forthwith due and payable,  without presentment,  demand,
protest  or any  other  notice of any kind,  all of which are  hereby  expressly
waived by the Borrower,  anything contained herein or in any other Loan Document
to the contrary  notwithstanding;  (iii) require the Borrower and the Guarantors
upon demand to  forthwith  deposit with the Agent cash in an amount equal to the
then  outstanding  Letters of Credit plus an amount  which shall be equal to the
Fees and expenses which are reasonably calculated by the Agent and each Fronting
Bank to be or become due with respect to such outstanding  Letters of Credit and
to the extent the Borrower and the  Guarantors  shall fail to furnish such funds
as demanded by the Agent, the Agent shall be authorized to debit the accounts of
the Borrower and the Guarantors  maintained with the Agent in such amount;  (iv)
set-off amounts in any account  maintained with the Agent and apply such amounts
to the obligations of the Borrower and the Guarantors hereunder and in the other
Loan  Documents;  and (v) exercise any and all remedies under the Loan Documents
and  under  applicable  law  available  to the Agent  and the  Banks;  provided,
however, that with respect to a default described in paragraph (e) or (f) above,
the Total Commitment and the obligation of the Fronting Bank to issue Letters of
Credit  hereunder shall  automatically  terminate and the principal of the Loans
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued  hereunder and under any other Loan Document
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrower,  anything  contained  herein  or in any  other  Loan  Document  to the
contrary notwithstanding.

            Section 7.02. Receivables Purchases. The Borrower and CPS agree that
upon the  occurrence  and during the  continuance of any Event of Default beyond
the  applicable  grace  period,  if any,  and  without  in any way  limiting  or
otherwise  affecting  the rights of the Agent set forth in this Article VII, the
Borrower  and CPS  will  cause  each  cash  payment  to each  Seller  under  the
Receivables  Agreement and/or any Receivables  Agreement Documents in respect of
the Purchase Price for Credit Card Receivables or in respect of the Subordinated
Notes or Seller  Notes (the terms  "Seller" and  "Purchase  Price" being used as
such terms are  defined in the  Receivables  Agreement)  to be paid  directly by
Great Lakes to the Agent for  application  to the  obligations  of the  Borrower
hereunder  and under the Notes (and if  received  by the  Borrower,  CPS or NBGL
shall be held in trust for the Agent and forthwith paid over to the Agent).

            Section 7.03. Additional  Undertakings.  Notwithstanding anything to
the contrary  contained in this Agreement,  the Borrower and CPS hereby covenant
and  agree  that  the  terms of the  Receivables  Agreement  shall at all  times
expressly  acknowledge  (in a manner  satisfactory  in form and substance to the
Agent) the rights and  remedies  of the Agent and the Banks set forth in Section
7.02.

            Section 7.04.  Collateral for Undrawn Letters of Credit.  (a) If the
prepayment  of the amount  available  for drawing  under any or all  outstanding
Letters of Credit is  required  under  Section  2.03(b),  2.13(a)  or 7.01,  the
Borrower shall forthwith pay the amount required to be so prepaid, to be held by
the Agent as provided in subsection (b) below.

           (b) All amounts  prepaid  pursuant to  subsection  (a) above shall be
held by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions  for such account,  any certificate of deposit or other instrument
evidencing  any of the  foregoing  and all proceeds of and earning on any of the
foregoing  being  collectively  called the  "Account")  as security for, and for
application by the Agent (to the extent  available) to, the reimbursement of any
payment under any Letter of Credit then or thereafter  made by a Fronting  Bank,
and to the payment of the unpaid balance of any Loans and all other Obligations.
The Account shall be held in the name of and subject to the  exclusive  dominion
and control of the Agent for the benefit of the Agent and the Banks. If and when
requested by the Borrower, the Agent shall invest funds held in the Account from
time to time in direct  obligations  of, or  obligations  the  principal  of and
interest  on which are  unconditionally  guaranteed  by,  the  United  States of
America with a remaining  maturity of one year or less,  provided that the Agent
is irrevocably  authorized to sell  investments  held in the Account when and as
required to make payments out of the Account for  application to amounts due and
owing from the Borrower to the Agent or Banks.


                                  ARTICLE VIII

                                    GUARANTY


            Section 8.01. Guaranty.  (a) Each of the Guarantors  unconditionally
and irrevocably  guarantees the due and punctual  payment and performance by the
Borrower of the  Obligations.  Each of the  Guarantors  further  agrees that the
Obligations may be extended or renewed,  in whole or in part,  without notice to
or  further  assent  from  it,  and it will  remain  bound  upon  this  guaranty
notwithstanding  any  extension  or  renewal  of  any of  the  Obligations.  The
Obligations of the Guarantors shall be joint and several.

           (b) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor,  and also waives notice
of protest for nonpayment. The obligations of the Guarantors hereunder shall not
be  affected  by (i) the  failure  of the Agent or a Bank to assert any claim or
demand or to  enforce  any right or remedy  against  the  Borrower  or any other
Guarantor  under the  provisions of this Agreement or any other Loan Document or
otherwise;  (ii) any  extension or renewal of any  provision  hereof or thereof;
(iii)  any   rescission,   waiver,   compromise,   acceleration,   amendment  or
modification  of any of the terms or  provisions  of any of the Loan  Documents;
(iv) the release,  exchange,  waiver or  foreclosure of any security held by the
Agent for the Obligations or any of them; (v) the failure of the Agent or a Bank
to exercise any right or remedy against any other Guarantor; or (vi) the release
or substitution of any Guarantor or any other Guarantor.

           (c)  Each  of  the  Guarantors  further  agrees  that  this  guaranty
constitutes  a guaranty of  performance  and of payment when due and not just of
collection,  and waives any right to require that any resort be had by the Agent
or a Bank to any security held for payment of the  Obligations or to any balance
of any deposit, account or credit on the books of the Agent or a in favor of the
Borrower or any other Guarantor, or to any other Person.

           (d) Each of the  Guarantors  hereby  waives any defense that it might
have based on a failure to remain  informed of the  financial  condition  of the
Borrower  and of  any  other  Guarantor  and  any  circumstances  affecting  any
collateral  for the  Obligations or the ability of the Borrower to perform under
this Agreement.

           (e) Each  Guarantor's  guaranty shall not be affected by any question
as  to  the  genuineness,   validity,   regularity  or   enforceability  of  the
Obligations, the Notes or any other instrument evidencing any Obligations, or as
to  the  existence,  validity,  enforceability,  perfection,  or  extent  of any
collateral  therefor or by any other  circumstance  relating to the  Obligations
which might  otherwise  constitute  a defense to this  Guaranty.  Neither of the
Agent, nor any of the Banks makes any  representation  or warranty in respect to
any such  circumstances or shall have any duty or  responsibility  whatsoever to
any Guarantor in respect of the management and maintenance of the Obligations.

           (f) Upon the Obligations becoming due and payable (by acceleration or
otherwise), the Banks shall be entitled to immediate payment of such obligations
by the Guarantors upon written demand by the Agent.

            Section  8.02. No Impairment  of Guaranty.  The  obligations  of the
Guarantors  hereunder  shall  not  be  subject  to  any  reduction,  limitation,
impairment or termination for any reason,  including,  without  limitation,  any
claim of waiver, release, surrender,  alteration or compromise, and shall not be
subject to any  defense or  set-off,  counterclaim,  recoupment  or  termination
whatsoever by reason of the invalidity,  illegality or  unenforceability  of the
Obligations.  Without limiting the generality of the foregoing,  the obligations
of the  Guarantors  hereunder  shall not be  discharged or impaired or otherwise
affected  by the failure of the Agent or a Bank to assert any claim or demand or
to enforce any remedy under this Agreement or any other agreement, by any waiver
or  modification  of any provision  thereof,  by any default,  failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other act
or thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of the  Guarantors or would  otherwise
operate as a discharge of the  Guarantors  as a matter of law,  unless and until
the Obligations are paid in full.

            Section 8.03.  Waiver of Subrogation.  Each Guarantor  hereby waives
all rights of such Guarantor against the Borrower by way of right of subrogation
or  otherwise to the extent  arising out of any payment by any  Guarantor of any
sums to the  Agent  or a Bank  hereunder.  If any  amount  shall be paid to such
Guarantor  for the account of the  Borrower,  such amount shall be held in trust
for the  benefit of the Agent and the Banks and shall  forthwith  be paid to the
Agent and the Banks to be  credited  and  applied  to the  Obligations,  whether
matured or unmatured.

            Section 8.04. Maximum  Guaranteed Amount.  Anything herein or in any
other  document,  instrument  or agreement  executed and delivered in connection
herewith to the contrary  notwithstanding,  the maximum individual  liability of
each  Guarantor  hereunder as at any date of  determination  thereof shall in no
event  exceed  $1.00 less than the amount  which would  render such  Guarantor's
obligations  under this  Article  VIII void or voidable  under  applicable  law,
including without limitation, fraudulent conveyance law.


                                   ARTICLE IX

                                    THE AGENT


            Section 9.01. Administration by Agent. The general administration of
the  Loan  Documents  shall  be by  the  Agent.  Each  Bank  hereby  irrevocably
authorizes  the Agent,  at its  discretion,  to take or refrain from taking such
actions as agent on its behalf and to exercise or refrain from  exercising  such
powers  under the Loan  Documents  and the Notes as are  delegated  by the terms
hereof  or  thereof,  as  appropriate,   together  with  all  powers  reasonably
incidental thereto. The Agent shall have no duties or responsibilities except as
set  forth  in this  Agreement  and the  remaining  Loan  Documents.  Except  as
expressly set forth in Section 10.06 of this  Agreement,  no Co-Agent shall have
any authority,  duties or  responsibilities  solely by virtue of its status as a
Co-Agent.

            Section 9.02.  Advances and Payments.  (a) On the date of each Loan,
the Agent shall be authorized (but not obligated) to advance, for the account of
each of the Banks,  the amount of the Loan to be made by it in  accordance  with
its  Commitment  hereunder.  Should  the Agent do so,  each of the Banks  agrees
forthwith to reimburse the Agent in immediately  available  funds for the amount
so advanced on its behalf by the Agent,  together  with  interest at the Federal
Funds  Effective  Rate if not so  reimbursed  on the date due from and including
such date but not including the date of reimbursement.

           (b) Any  amounts  received  by the  Agent  in  connection  with  this
Agreement  or the Notes  (other  than  amounts  to which  the Agent is  entitled
pursuant to Sections  9.06,  10.05 and 10.06),  the  application of which is not
otherwise provided for in this Agreement shall be applied,  first, in accordance
with each Bank's  Commitment  Percentage  to pay  accrued but unpaid  Commitment
Fees,  Letter of  Credit  Fees,  and  second,  in  accordance  with each  Bank's
Commitment  Percentage  to pay accrued but unpaid  interest  with respect to the
principal balance outstanding on each Note and all unreimbursed Letter of Credit
drawings and third, in accordance with each Bank's Commitment  Percentage to pay
the  unpaid  principal  balance  outstanding  on each Note and all  unreimbursed
Letter of Credit  drawings.  All amounts to be paid to a Bank by the Agent shall
be  credited  to that  Bank,  after  collection  by the  Agent,  in  immediately
available funds either by wire transfer or deposit in that Bank's  correspondent
account  with the  Agent,  as such  Bank and the Agent  shall  from time to time
agree.

            Section 9.03. Sharing of Setoffs. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower,  including,  but not limited to, a secured claim under Section 506
of the Bankruptcy  Code or other  security or interest  arising from, or in lieu
of,  such  secured  claim  and  received  by  such  Bank  under  any  applicable
bankruptcy,  insolvency or other similar law, or  otherwise,  obtain  payment in
respect  of its Loans as a result of which the  unpaid  portion  of its Loans is
proportionately  less than the unpaid portion of the Loans of any other Bank (a)
it shall  promptly  purchase  at par  (and  shall be  deemed  to have  thereupon
purchased) from such other Bank a participation in the Loans of such other Bank,
so that the  aggregate  unpaid  principal  amount of each  Bank's  Loans and its
participation in Loans of the other Banks shall be in the same proportion to the
aggregate unpaid principal amount of all Loans then outstanding as the principal
amount of its Loans prior to the  obtaining of such payment was to the principal
amount of all Loans  outstanding  prior to the obtaining of such payment and (b)
such other  adjustments shall be made from time to time as shall be equitable to
ensure that the Banks share such  payment  pro-rata,  provided  that if any such
non-pro-rata  payment  is  thereafter  recovered  or  otherwise  set aside  such
purchase of participations  shall be rescinded (without interest).  The Borrower
expressly  consents  to the  foregoing  arrangements  and  agrees  that any Bank
holding (or deemed to be holding) a participation in a Loan may exercise any and
all rights of banker's lien,  setoff or counterclaim with respect to any and all
moneys  owning by the Borrower to such Bank as fully as if such Bank held a Note
and was the original obligee thereon, in the amount of such participation.

            Section  9.04.  Agreement  of  Required  Banks.  Upon  any  occasion
requiring or permitting an approval,  consent,  waiver, election or other action
on the part of the Required Banks, action shall be taken by the Agent for and on
behalf or for the benefit of all Banks upon the direction of the Required Banks,
and any such action shall be binding on all Banks.  No amendment,  modification,
consent,  or waiver shall be effective  except in accordance with the provisions
of Section 10.10.

            Section  9.05.  Liability  of Agent.  (a) The Agent  when  acting on
behalf of the Banks,  may execute any of its duties  under this  Agreement by or
through  its  officers,  agents,  and  employees,  and neither the Agent nor its
directors, officers, agents, or employees shall be liable to the Banks or any of
them  for  any  action  taken  or  omitted  to be  taken  in good  faith,  or be
responsible to the Banks or to any of them for the consequences of any oversight
or error of judgment,  or for any loss, unless the same shall happen through its
gross negligence or willful misconduct.  The Agent and its directors,  officers,
agents, and employees shall in no event be liable to the Banks or to any of them
for any  action  taken or  omitted to be taken by it  pursuant  to  instructions
received by it from the Required Banks or in reliance upon the advice of counsel
selected by it. Without  limiting the foregoing,  neither the Agent,  nor any of
its directors,  officers,  employees, or agents shall be responsible to any Bank
for the due execution,  validity,  genuineness,  effectiveness,  sufficiency, or
enforceability  of, or for any statement,  warranty,  or representation in, this
Agreement or any related  agreement,  document or order, or shall be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower  of any of the terms,  conditions,  covenants,  or  agreements  of this
Agreement or any of the Loan Documents.

           (b) Neither the Agent nor any of its directors,  officers, employees,
or agents shall have any  responsibility  to the Borrower or the  Guarantors  on
account of the failure or delay in  performance  or breach by any Bank or by the
Borrower or the  Guarantors of any of their  respective  obligations  under this
Agreement or the Notes or any of the Loan Documents or in connection herewith or
therewith.

           (c) The Agent, as Agent  hereunder,  shall be entitled to rely on any
communication,  instrument,  or document reasonably believed by it to be genuine
or correct and to have been signed or sent by a person or persons believed by it
to be the proper  person or persons,  and it shall be entitled to rely on advice
of  legal  counsel,  independent  public  accountants,  and  other  professional
advisers and experts selected by it.

            Section 9.06.  Reimbursement and  Indemnification.  Each Bank agrees
(i) to reimburse the Agent for such Bank's Commitment Percentage of any expenses
and fees incurred for the benefit of the Banks under this  Agreement,  the Notes
and any of the Loan Documents,  including, without limitation,  counsel fees and
compensation of agents and employees paid for services rendered on behalf of the
Banks,  and any other  expense  incurred in  connection  with the  operations or
enforcement thereof not reimbursed by the Borrower or the Guarantors and (ii) to
indemnify  and hold  harmless  the  Agent  and any of its  directors,  officers,
employees,  or agents, on demand, in the amount of its proportionate share, from
and against any and all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses,  or disbursements of any kind or
nature  whatsoever  which may be imposed on, incurred by, or asserted against it
or any of them in any way  relating  to or arising  out of this  Agreement,  the
Notes or any of the Loan  Documents  or any action taken or omitted by it or any
of them  under this  Agreement,  the Notes or any of the Loan  Documents  to the
extent not  reimbursed by the Borrower or the  Guarantors  (except such as shall
result from their gross negligence or willful misconduct).

            Section 9.07.  Rights of Agent. It is understood and agreed that ABN
AMRO shall have the same  rights and powers  hereunder  (including  the right to
give such  instructions)  as the other  Banks and may  exercise  such rights and
powers,  as well as its rights and powers under other agreements and instruments
to which it is or may be  party,  and  engage  in  other  transactions  with the
Borrower  or any  Guarantor,  as though it were not the Agent of the Banks under
this Agreement.

            Section  9.08.   Independent   Investigation  by  Banks.  Each  Bank
acknowledges  that it has decided to enter into this  Agreement  and to make the
Loans  hereunder  based on its own  analysis  of the  transactions  contemplated
hereby and of the creditworthiness of the Borrower and the Guarantors and agrees
that the Agent shall bear no responsibility therefor.

            Section  9.09.  Notice of  Transfer.  The Agent may deem and treat a
Bank party to this  Agreement  as the owner of such Bank's  portion of the Loans
for all  purposes,  unless  and until a  written  notice  of the  assignment  or
transfer thereof executed by such Banks all have been received by the Agent.

            Section  9.10.  Successor  Agent.  Subject  to the  appointment  and
acceptance of a successor agent as provided  below,  the Agent may resign at any
time by giving written  notice  thereof to the Banks and the Borrower.  Upon any
such resignation, the Required Banks shall have the right to appoint a successor
Agent, which shall be reasonably  satisfactory to the Borrower.  If no successor
Agent shall have been so appointed by the Required Banks and shall have accepted
such appointment,  within 30 days after the retiring Agent's giving of notice of
resignation, the retiring Agent may, on behalf of the Banks, appoint a successor
Agent,  which shall be a commercial  bank organized under the laws of the United
States of America or of any State  thereof  and  having a combined  capital  and
surplus of at least $100,000,000,  which shall be reasonably satisfactory to the
Borrower.  Upon  the  acceptance  of any  appointment  as Agent  hereunder  by a
successor  Agent,  such successor  Agent shall  thereupon  succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent;
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement.  After any retiring Agent's resignation  hereunder as Agent, the
provisions of this Article IX shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.


                                    ARTICLE X

                                  MISCELLANEOUS


           Section 10.01. Notices. Notices and other communications provided for
herein  shall be in writing  (including  electronic  communication  pursuant  to
agreed  upon  procedures  or  facsimile  communication)  and  shall  be  mailed,
transmitted or delivered in the case of a Bank or the Agent to it at its address
set  forth  on the  signature  pages  of this  Agreement,  or in the case of the
Borrower and each Guarantor,  to it at the address set forth below the signature
line for the Borrower or the  Guarantors,  as the case may be, on the  signature
pages of this  Agreement,  or such other  address as such party may from time to
time  designate by giving  written  notice to the other parties  hereunder.  All
notices and other  communications  given to any party hereto in accordance  with
the  provisions  of this  Agreement  shall be  deemed to have  been  given  when
received, if delivered by hand or by overnight courier, or on the fifth Business
Day after the date when sent by registered or certified mail,  postage  prepaid,
return receipt requested, if by mail; or when receipt is acknowledged, if by any
electronic  communications  or facsimile  equipment of the sender;  in each case
addressed to such party as provided in this Section 10.01 or in accordance  with
the latest unrevoked written direction from such party; provided,  however, that
in the case of notices to the Agent notices  pursuant to the preceding  sentence
and pursuant to Article II shall be effective only when received by the Agent.

           Section 10.02. Survival of Agreement, Representations and Warranties,
Etc. All warranties,  representations  and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf in connection  with this  Agreement  shall be considered to have been
relied  upon by the Banks  and  shall  survive  the  making of the Loans  herein
contemplated  and the issuance and delivery to the Banks of the Notes regardless
of any  investigation  made by any Bank or on its behalf and shall  continue  in
full force and effect so long as any  amount due or to become due  hereunder  is
outstanding and unpaid and so long as the Commitments  have not been terminated.
All statements in any such  certificate  or other  instrument  shall  constitute
representations and warranties by the Borrower and the Guarantors hereunder. All
indemnities and all other  provisions  relative to reimbursement to the Banks of
amounts  sufficient  to protect the yield of the Banks with respect to the Loans
shall  survive  the  termination  of  this  Agreement  and  the  payment  of the
Obligations.

           Section 10.03.  Successors and Assigns.  (a) This Agreement  shall be
binding upon and inure to the benefit of the  Borrower,  the Agent and the Banks
and their respective successors and assigns. Neither the Borrower nor any of the
Guarantors may assign or transfer any of their rights or  obligations  hereunder
without the prior  written  consent of all of the Banks.  With the prior written
consent of the Agent, each Bank may sell  participations to any Person in all or
part of any Loan,  or all or part of its Note or  Commitment  to another Bank or
other entity, in which event, without limiting the foregoing,  the provisions of
Sections 2.14,  2.15, 2.18 and 9.03 shall inure to the benefit of each purchaser
of a  participation  (provided  that such  participant  shall look solely to the
seller  of such  participation  for such  benefits  and the  Borrower's  and the
Guarantor's  liability,  if any,  under  Sections  2.15  and 2.18  shall  not be
increased  as a result of the sale of any such  participation)  and the pro rata
treatment of payments,  as described in Section 2.17,  shall be determined as if
such Bank had not sold such participation.  In the event any Bank shall sell any
participation,  such Bank  shall  retain the sole  right and  responsibility  to
enforce the  obligations of the Borrower and each of the Guarantors  relating to
the Loans,  including,  without limitation,  the right to approve any amendment,
modification or waiver of any provision of this Agreement other than amendments,
modifications or waivers which would (i) increase any Commitment of such Bank if
such increase would also increase the  participant's  obligations,  (ii) forgive
any amount of or postpone  the date for payment of any  principal of or interest
on any Loan or of any fee payable  hereunder  in which such  participant  has an
interest, (iii) reduce the stated rate at which interest or fees accrue or other
amounts payable hereunder in which such participant has an interest, (iv) permit
Liens on Inventory (other than as expressly permitted under Section 6.01 of this
Agreement as in effect on the Closing Date),  (v) release any Guarantor from its
obligations  hereunder,  or (vi)  increase  the  advance  rate set  forth in the
definition of "Borrowing Base".

           (b)  Subject to the  provisions  of Section  10.03(a),  each Bank may
assign  to one or more  Banks or  Eligible  Assignees  all or a  portion  of its
interests,  rights and  obligations  under this  Agreement  (including,  without
limitation,  all or a portion  of its  Commitment  and the same  portion  of the
related Loans at the time owing to it and the related Note held by it) provided,
however,  that (i) no such  assignment may occur unless the Agent,  the Fronting
Bank and, for so long as no Event of Default has occurred and is continuing, the
Borrower shall have given their respective prior written consent (which consents
shall not be unreasonably withheld), (ii) the aggregate amount of the Commitment
and/or Loans of the assigning Bank subject to each such  assignment  (determined
as of the date the Assignment and Acceptance  with respect to such assignment is
delivered  to the Agent)  shall,  unless  otherwise  agreed to in writing by the
Borrower and the Agent,  in no event be less than  $5,000,000  (or $1,000,000 in
the case of an  assignment  between  Banks)  or,  if less,  such  Bank's  entire
Commitment  and (iii) the  parties to each such  assignment  shall  execute  and
deliver to the Agent,  for its  acceptance  and  recording  in the  Register (as
defined  below),   an  Assignment  and  Acceptance  with  blanks   appropriately
completed,  together with any Note subject to such  assignment  and a processing
and  recordation fee of $3,000 (for which the Borrower shall have no liability).
Upon such  execution,  delivery,  acceptance and  recording,  from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least  five  Business  Days  after  the  execution  thereof  (unless
otherwise agreed to in writing by the Agent), (A) the assignee  thereunder shall
be a  party  thereto  and,  to  the  extent  provided  in  such  Assignment  and
Acceptance, have the rights and obligations of a Bank hereunder and (B) the Bank
thereunder  shall, to the extent provided in such Assignment and Acceptance,  be
released  from its  obligations  under this  Agreement  (and,  in the case of an
Assignment and Acceptance covering all or the remaining portion of any assigning
Bank's rights and obligations under this Agreement,  such Bank shall cease to be
a party hereto).

           (c) By executing and  delivering an Assignment  and  Acceptance,  the
Bank assignor  thereunder and the assignee  thereunder confirm to and agree with
each  other  and the  other  parties  hereto  as  follows:  (i)  other  than the
representation  and warranty  that it is the legal and  beneficial  owner of the
interest being assigned  thereby free and clear of any adverse claim,  such Bank
assignor makes no representation or warranty and assumes no responsibility  with
respect  to  any  statements,  warranties  or  representations  made  in  or  in
connection  with  this  Agreement  or any of the  other  Loan  Documents  or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this  Agreement or any of the other Loan  Documents;  (ii) such Bank assignor
makes no representation  or warranty and assumes no responsibility  with respect
to the financial  condition of the Borrower or any Guarantor or the  performance
or observance by the Borrower or any Guarantor of any of its  obligations  under
this  Agreement or any of the other Loan  Documents or any other  instrument  or
document  furnished  pursuant hereto;  (iii) such assignee  confirms that it has
received a copy of this  Agreement and the other Loan  Documents,  together with
copies of the  financial  statements  referred to in Section 3.04 and such other
documents  and  information  as it has deemed  appropriate  to make its own debt
analysis and decision to enter into such  Assignment and  Acceptance;  (iv) such
assignee  will,  independently  and without  reliance upon the Agent,  such Bank
assignor or any other Bank and based on such  documents  and  information  as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers  under this  Agreement  as are  delegated  to the Agent by the terms
hereof, together with such powers as are reasonably incidental hereof; (vi) such
assignee  agrees to be bound by the terms of this  Agreement  and the other Loan
Documents;  and (vii) such  assignee  agrees that it will perform in  accordance
with  their  terms  all  obligations  that by the  terms of this  Agreement  are
required to be performed by it as a Bank.

           (d) The Agent shall maintain at its office a copy of each  Assignment
and Acceptance  delivered to it and a register for the  recordation of the names
and addresses of the Banks and the Commitments  of, and principal  amount of the
Loans  owing to,  each from time to time (the  "Register").  The  entries in the
Register  shall  be  conclusive,  in the  absence  of  manifest  error,  and the
Borrower,  the  Guarantors,  the Agent and the Banks shall treat each Person the
name of which is recorded in the Register as a Bank  hereunder  for all purposes
of this  Agreement.  The  Register  shall be  available  for  inspection  by the
Borrower  or any  Bank at any  reasonable  time  and  from  time  to  time  upon
reasonable prior notice.

           (e) Upon its receipt of an Assignment and  Acceptance  executed by an
assigning  Bank and the assignee  thereunder  together  with any Note subject to
such assignment and the fee payable in respect thereto, the Agent shall, if such
Assignment and Acceptance has been completed with blanks  appropriately  filled,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt  notice  thereof to the  Borrower.
Within five  Business Days after  receipt of notice,  the  Borrower,  at its own
expense,  shall execute and deliver to the Agent in exchange for the surrendered
Note a new  Note to the  order  of  such  assignee  in an  amount  equal  to the
Commitment and/or Loans assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained  commitments  and/or Loans hereunder,  a
new Note to the order of the assigning Bank in an amount equal to the Commitment
and/or Loans  retained by it hereunder.  Such new Notes shall be in an aggregate
principal  amount equal to the aggregate  principal  amount of such  surrendered
Note,  shall be dated the effective  date of such  Assignment and Acceptance and
shall  otherwise  be  in  substantially   the  form  of  the  surrendered  Note.
Thereafter,  such surrendered Note shall be marked cancelled and returned to the
Borrower.

           (f) Any Bank may, in connection with any assignment or  participation
or proposed assignment or participation pursuant to this Section 10.03, disclose
to the  assignee  or  participant  or  proposed  assignee  or  participant,  any
information  relating to the Borrower or any of the Guarantors furnished to such
Bank by or on behalf of the  Borrower or any of the  Guarantors;  provided  that
prior to any disclosure of any information  marked or designated as confidential
by the Borrower or any Guarantor,  each such assignee or participant or proposed
assignee or participant  shall agree in writing to be bound by the provisions of
Section 10.04.

           (g) The Borrower  hereby agrees to actively assist and cooperate with
the Agent in the Agent's efforts to sell participations  herein (as described in
Section  10.03(a))  and to assign to one or more Banks or  Eligible  Assignees a
portion of its interests,  rights and  obligations  under this Agreement (as set
forth in Section 10.03(b)).

           Section  10.04.  Confidentiality.   Each  Bank  agrees  to  keep  any
information delivered or made available by the Borrower or any of the Guarantors
to it confidential  from anyone other than persons  employed or retained by such
Bank  who are or are  expected  to  become  engaged  in  evaluating,  approving,
structuring  or  administering  the Loans;  provided  that nothing  herein shall
prevent any Bank from disclosing such information (i) to any other Bank, (ii) to
any other person if reasonably  incidental to the  administration  of the Loans,
(iii)  upon the  order of any  court or  administrative  agency,  (iv)  upon the
request  or demand of any  regulatory  agency or  authority,  (v) which has been
publicly  disclosed  other than as a result of a disclosure  by the Agent or any
Bank which is not  permitted  by this  Agreement,  (vi) in  connection  with any
litigation to which the Agent, any Bank, or their respective Affiliates may be a
party,  (vii) to the extent reasonably  required in connection with the exercise
of any remedy  hereunder,  (viii) to such Bank's legal  counsel and  independent
auditors,  and (ix) to any actual or proposed  participant or assignee of all or
part of its rights hereunder subject to the proviso in Section 10.03(f).

           Section  10.05.  Expenses.  Whether  or not the  transactions  hereby
contemplated  shall be  consummated,  the Borrower  agrees to pay all reasonable
out-of-pocket expenses incurred by the Agent (including, but not limited to, the
reasonable fees and disbursements of Chapman and Cutler, special counsel for the
Agent,  and any other counsel that the Agent shall retain),  in connection  with
the preparation,  execution,  delivery and administration of this Agreement, the
Notes and the other Loan Documents,  the making of the Loans and the issuance of
the Letters of Credit, the syndication of the transactions  contemplated hereby,
the reasonable  costs and fees of the Agent in connection with its monitoring of
Inventory and publicity  expenses  (which  publicity  expenses  shall not in the
aggregate exceed $25,000) and all reasonable  out-of-pocket expenses incurred by
the Banks and the Agent in the  enforcement  or  protection of the rights of any
one or more of the Banks or the Agent in  connection  with this  Agreement,  the
Notes,  or the  other  Loan  Documents,  including,  but  not  limited  to,  the
reasonable  fees and  disbursements  of any counsel for the Agent and, after the
occurrence and during the  continuation  of an Event of Default,  the reasonable
fees and  disbursements  of any counsel for the Agent and each Bank  incurred in
connection  with  any  such  enforcement  or  protection  of the  Banks,  rights
hereunder (including,  in the event that a Bank does not retain outside counsel,
the allocable cost of any in-house  counsel for such Bank).  Such payments shall
be made on the  Closing  Date and  thereafter  on demand.  The  Borrower  hereby
authorizes  the Agent to charge  the loan  account  or  checking  account of the
Borrower for any amounts payable under this Section 10.05,  without prior notice
to the Borrower or any other Person.  The obligations of the Borrower under this
Section shall survive the  termination of this  Agreement  and/or the payment of
the Loans.

           Section  10.06.  Indemnity.  The Borrower and each of the  Guarantors
agrees to indemnify and hold harmless the Agent, the Co-Agents and the Banks and
their directors,  counsel, officers,  employees and agents (each an "Indemnified
Party")  from and  against any and all  expenses,  losses,  claims,  damages and
liabilities  incurred by the Indemnified Party arising out of claims made by any
Person  in  any  way  relating  to the  transactions  contemplated  hereby,  but
excluding  therefrom all expenses,  losses,  claims,  damages,  and  liabilities
arising out of or resulting from the gross  negligence or willful  misconduct of
such Indemnified Party.

           Section  10.07.  Choice of Law. THIS AGREEMENT AND THE NOTES SHALL IN
ALL  RESPECTS BE CONSTRUED  IN  ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE
STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN
SUCH STATE.

           Section 10.08. No Waiver.  No failure on the part of the Agent or any
of the Banks to exercise, and no delay in exercising, any right, power or remedy
hereunder or under the Notes or any of the other Loan Documents shall operate as
a waiver  thereof,  nor shall any single or partial  exercise of any such right,
power or remedy preclude any other or further  exercise  thereof or the exercise
of any other right,  power or remedy.  All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.

           Section 10.09. Extension of Maturity. Should any payment of principal
of or interest  on the Notes or any other  amount due  hereunder  become due and
payable  on a day other than a  Business  Day,  the  maturity  thereof  shall be
extended to the next  succeeding  Business  Day and,  in the case of  principal,
interest shall be payable thereon at the rate herein provided.

           Section 10.10.  Amendments,  Etc. (a) No  modification,  amendment or
waiver of any  provision of this  Agreement,  and no consent to any departure by
the Borrower or any Guarantor therefrom,  shall in any event be effective unless
the same shall be in writing  and signed by the  Required  Banks,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
purpose  for  which  given;  provided,   however,  that  no  such  modification,
amendment,  waiver or consent shall  without the written  consent of the Bank or
holder affected thereby (x) increase the Commitment of a Bank, or (y) reduce the
amount of any  scheduled  principal  payment on any Loan or reduce the principal
amount of any Loan or the rate of interest payable  thereon,  or extend any date
for the  payment of interest  hereunder  or reduce or extend the date of payment
for any  Fees  payable  hereunder  or  extend  the  maturity  of the  Borrower's
obligations  hereunder;  and  further  provided  that  no such  modification  or
amendment  shall  without the  written  consent of all of the Banks (i) amend or
modify any provision of this Agreement which provides for the unanimous  consent
or approval of the Banks,  (ii) amend this Section  10.10 or the  definition  of
Required Banks or Super-majority  Banks,  (iii) permit Liens on Inventory (other
than as expressly permitted under Section 6.01 of this Agreement as in effect on
the Closing Date), (iv) release any Guarantor from its obligations hereunder, or
(v)  increase  the  advance  rate set  forth in the  definition  of or amend the
definition of "Borrowing Base". Notwithstanding the terms of this Section 10.10,
if the terms of this  Agreement  permit the Agent to amend,  waive or consent to
any departures  from, the terms of this Agreement,  then the Agent may,  without
the consent or authorization of any or all of the Banks, exercise such rights to
amend,  waive or consent to the departure from, the terms of this Agreement.  No
such amendment or modification  may adversely  affect the rights and obligations
of the Agent or any Fronting Bank hereunder  without its prior written  consent.
No notice to or  demand on the  Borrower  or any  Guarantor  shall  entitle  the
Borrower or any Guarantor to any other or further  notice or demand in the same,
similar  or other  circumstances.  Each  holder of a Note  shall be bound by any
amendment,  modification,  waiver or  consent  authorized  as  provided  herein,
whether  or not a Note  shall  have been  marked  to  indicate  such  amendment,
modification,  waiver or consent and any  consent by a Bank,  or any holder of a
Note, shall bind any Person subsequently acquiring a Note, whether or not a Note
is so marked.  No amendment  to this  Agreement  shall be effective  against the
Borrower or any Guarantor  unless signed by the Borrower or such  Guarantor,  as
the case may be.

           (b)  Notwithstanding  anything to the  contrary  contained in Section
10.10(a),  in the  event  that the  Borrower  requests  that this  Agreement  be
modified or amended in a manner which would require the unanimous consent of all
of the Banks or of any  particular  Bank and such  modification  or amendment is
agreed to by the Super-majority Banks, then with the consent of the Borrower and
the  Super-majority  Banks, the Borrower and the  Super-majority  Banks shall be
permitted to amend the Agreement  without the consent of the Bank or Banks which
did not agree to the  modification or amendment  requested by the Borrower (such
Bank or  Banks,  collectively  the  "Minority  Banks")  to  provide  for (w) the
termination of the Commitment of each of the Minority Banks, (x) the addition to
this Agreement of one or more other financial  institutions (each of which shall
be an Eligible Assignee), or an increase in the Commitment of one or more of the
Super-majority  Banks, so that the Total  Commitment after giving effect to such
amendment shall be in the same amount as the Total Commitment immediately before
giving effect to such amendment, (y) if any Loans are outstanding at the time of
such  amendment,  the  making  of such  additional  Loans by such new  financial
institutions or  Super-majority  Bank or Banks, as the case may be, on a non-pro
rata basis as may be  necessary  to repay in full the  outstanding  Loans of the
Minority Banks  immediately  before giving effect to such amendment and (z) such
other  modifications to this Agreement as may be appropriate.  Any Minority Bank
which is replaced  pursuant to this Section  10.10(b) shall be released from its
obligations  under this  Agreement  upon its receipt of the aggregate  principal
amount of all  outstanding  Loans  made by it  together  with  interest  accrued
thereron and all fees hereunder accrued to the date of its replacement and shall
be entitled to retain its pro rata share of all interest and fees for the period
prior to its replacement.

           Section 10.11. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

           Section 10.12.    Headings.  Section  headings  used  herein  are for
convenience  only  and  are  not to  affect the construction of or be taken into
consideration in interpreting this Agreement.

           Section  10.13.  Execution in  Counterparts.  This  Agreement  may be
executed  in any  number of  counterparts,  each of which  shall  constitute  an
original,  but all of which taken  together  shall  constitute  one and the same
instrument.

           Section 10.14. Prior Agreements. This Agreement represents the entire
agreement of the parties with regard to the subject  matter hereof and the terms
of any letters and other  documentation  entered  into between the Borrower or a
Guarantor  and any Bank or the Agent prior to the  execution  of this  Agreement
which  relate to Loans to be made  hereunder  shall be  replaced by the terms of
this  Agreement  (except as to letters or  agreements  referred  to herein or as
otherwise  expressly provided herein with respect to that certain letter between
the Agent and the Borrower referred to in Section 2.19 hereof.

           Section 10.15. Further Assurance. Whenever and so often as reasonably
requested by the Agent,  the Borrower and the Guarantors  will promptly  execute
and  deliver  or cause to be  executed  and  delivered  all such  other  further
instruments,  documents or  assurances,  and promptly do or cause to be done all
such other and further  things as may be necessary  and  reasonably  required in
order to further and more fully vest in the Agent all rights, interests, powers,
benefits,  privileges  and  advantages  conferred or intended to be conferred by
this Agreement and the other Loan Documents.

           Section 10.16.  Submission  to  Jurisdiction;  Waiver of  Jury Trial.
Each  of  the  Borrower  and  Guarantors  hereby  submits  to the  non-exclusive
jurisdiction  of the United States  District Court for the Northern  District of
Illinois  and of any  Illinois  State  court  sitting in the City of Chicago for
purposes of all legal proceedings  arising out of or relating to this Agreement,
the other Loan  Documents or the  transactions  contemplated  hereby or thereby.
Each of the Borrower and Guarantors  irrevocably  waives,  to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such  proceeding  brought in such a court and any claim that
an such  proceeding  brought in such a court has been brought in an inconvenient
forum.  Each of the  Borrower,  the  Guarantors,  the Agent and each Bank hereby
irrevocably  waives  all  right to trial by jury in any  action,  proceeding  or
counterclaim  arising  out of or relating  to any of the Loan  Documents  or the
transactions contemplated thereby.


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

                                     CARSON PIRIE SCOTT & CO.



                                     By: /s/ Charles J. Hansen
                                         ---------------------------------------
                                        Title:  Vice President
                                     331 West Wisconsin Avenue
                                     Milwaukee, Wisconsin  53203
                                     Telecopy:  (414) 347-5333
                                     Attention:  Charles J. Hansen

                                     GUARANTORS:

                                     CPS HOLDING CO.
                                     CPS DEPARTMENT STORES, INC.
                                     FRANKLIN STREET CORPORATION
                                     TELEGRAPH-120 CORPORATION
                                     1-29 S. STATE STREET CORP.
                                     331 W. WISCONSIN AVENUE CORPORATION
                                     CARSON PIRIE SCOTT INSURANCE
                                     SERVICES, INC.
                                     CPS HOTEL MANAGEMENT SERVICES, INC.
                                     HIGHLAND AVENUE CORPORATION
                                     I-65 U.S. 30 CORP.
                                     LATHROP AVENUE CORPORATION
                                     LINCOLN CICERO CORPORATION
                                     URBANA CENTRAL DEVELOPMENT CO.
                                     151 MANNHEIM CORP.
                                     P.A. BERGNER & CO.


                                     By: /s/ Charles J. Hansen
                                         ---------------------------------------
                                        Title:  Vice President
                                     331 West Wisconsin Avenue
                                     Milwaukee, Wisconsin  53203
                                     Telecopy:  (414) 347-5333
                                     Attention:  Charles J. Hansen








        Accepted and Agreed to as of the day and year last above written.

Addresses and Amount of Commitments

Commitment:  $12,000,000             ABN AMRO BANK N.V., in its individual
                                      capacity as a Bank and as Agent

Address for Notices:                 By: /s/ Brian B. Devane
                                         ---------------------------------------
                                      Name:Brian B. Devane
ABN AMRO Bank N.V.                    Title:Senior Vice President-Branch Manager
135 South LaSalle Street
Chicago, Illinois  60674
Attention:  Ryan Robinson            By: /s/ David H. Hannah
                                         ---------------------------------------
Telephone:  (312) 904-2979            Name:David H. Hannah
Telecopy:  (312) 904-6376             Title:Group Vice President


with a copy to:

ABN AMRO Bank N.V.
1325 Avenue of the Americas
New York, New York  10019
Attention:  Linda Boardman
Telephone:  (212) 314-1724
Telecopy:  (212) 314-1712



Commitment:  $12,000,000             THE BANK OF NEW YORK


Address for Notices:                 By: /s/ Michael Flannery
                                         ---------------------------------------
                                      Name:Michael Flannery
The Bank of New York                  Title:Vice President
1 Wall Street
Retailing Industry Division, 8th Floor
New York, New York  10286
Attention:  Mike Flanery
Telephone:  (212) 635-7885
Telecopy:  (212) 635-1483



Commitment:  $12,000,000             DRESDNER BANK AG, New York and Grand Cayman
                                      Branches


Address for Notices:                 By: /s/ Beverly Cason
                                         ---------------------------------------
                                      Name:Beverly Cason
                                      Title:Vice President



Dresdner Bank AG
190 South LaSalle Street, Suite 2700
Chicago, Illinois  60603
Attention:  Jeff Mumm                By: /s/ John W. Sweeney
                                         ---------------------------------------
Telephone:  (312) 444-1317            Name:John W. Sweeney
Telecopy:  (312) 444-1305             Title:Assistant Vice President



Commitment:  $10,200,000             FIRST BANK NATIONAL ASSOCIATION


Address for Notices:                 By: /s/ Alan M. Holman
                                         ---------------------------------------
                                      Name:Alan M. Holman
First Bank National Association       Title:Vice President
201 West Milwaukee
Milwaukee, Wisconsin  53259-0911
Attention:  Alan M. Holman
Telephone:  (414) 227-5505
Telecopy:  (414) 227-5881



Commitment:  $7,200,000              BANK OF MONTREAL


Address for Notices:                 By: /s/ Robert A. Cannon
                                         ---------------------------------------
                                      Name:Robert A. Cannon
Bank of Montreal                      Title:Director
115 South LaSalle Street
Chicago, Illinois  60603
Attention:        Robert Cannon
Telephone:  (312) 750-3475
Telecopy:  (312) 750-1789



Commitment:  $7,200,000              BANKBOSTON, N.A.


Address for Notices:                 By: /s/ Peter L. Griswold
                                         ---------------------------------------
                                      Name:Peter L. Griswold
BankBoston, N.A.                      Title:Director
100 Federal Street
Mail Stop 01-09-05
Boston, Massachusetts  02110
Attention:  Peter Griswold
Telephone:  (617) 434-8312
Telecopy:  (617) 434-0630



Commitment:  $7,200,000              CAISSE NATIONALE DE CREDIT AGRICOLE


Address for Notices:                 By: /s/ David Bouhl
                                         ---------------------------------------
                                      Name:David Bouhl, F.V.P.
Caisse Nationale de Credit Agricole   Title:Head of Corporate Banking Chicago
55 East Monroe Street, Suite 4700
Chicago, Illinois  60603
Attention:  Ray Falkenberg            By:
Telephone:  (312) 917-7426               ---------------------------------------
Telecopy:  (312) 372-3724             Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------



Commitment:  $7,200,000              THE FUJI BANK, LIMITED


Address for Notices:                 By: /s/ Peter L. Chinnici
                                         ---------------------------------------
                                      Name:Peter L. Chinnici
The Fuji Bank, Limited                Title:Joint General Manager
225 West Wacker Drive, Suit 2000
Chicago, Illinois  60606
Attention:  Stephen Peca
Telephone:  (312) 621-9484
Telecopy:  (312) 621-0539