Dated as of October 16, 1997



Carson Pirie Scott & Co.                        National Bank of the Great Lakes
331 West Wisconsin Avenue                       c/o Carson Pirie Scott & Co.
Milwaukee, Wisconsin 53203                      331 West Wisconsin Avenue
Attention:  Charles J. Hansen, Esq.             Milwaukee, Wisconsin 53203
                                                Attention: Darren R. Jackson
CPS Department Stores, Inc.
331 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
Attention:  Charles J. Hansen, Esq.


        Re:      Third Amendment of Amended and Restated Receivables
                 Purchase Agreement dated as of July 22, 1994 (this "Amendment")

Ladies and Gentlemen:

         Reference  is  hereby  made  to  that  certain   Amended  and  Restated
Receivables  Purchase  Agreement,  dated as of July 22,  1994  (as  amended  and
supplemented  through the date hereof,  the "Purchase  Agreement"),  among Great
Lakes Credit Corp., a Delaware  corporation  (the  "Purchaser")  and the sellers
from time to time party thereto (the  "Sellers").  You have  requested  that the
Purchaser  agree to amend the Purchase  Agreement which the Purchaser is willing
to do  subject to the terms and  conditions  hereof.  Terms used  herein and not
otherwise defined herein which are defined in the Purchase  Agreement shall have
the same meaning herein as defined therein.

         1.  Accordingly,  subject to the following  terms and  conditions,  the
Purchase  Agreement shall be, and it hereby is,  effective as of the date hereof
(the  "Effective  Date")  subject  to  Section 3 of this  Amendment,  amended as
follows:

                  (a) Section 2.7 of the Purchase Agreement shall be, and hereby
         is,  amended  by (i)  replacing  the text in  clause  (c) in the  first
         sentence thereof (exclusive of the parenthetical  expression at the end
         of such  sentence) with the phrase  "[Intentionally  Omitted]" and (ii)
         deleting the proviso at the end of the last sentence thereof.

                  (b) Section  5.2(a) of the  Purchase  Agreement  shall be, and
         hereby is,  amended by  deleting  the  phrase  "and under the  security
         agreement  related to the Working Capital Credit  Agreement" at the end
         thereof.

                  (c) Section 9.3 of the Purchase Agreement shall be, and hereby
         is,  amended by  deleting  the  phrase ",  except as  permitted  by the
         Intercreditor Agreement" at the end thereof.

         2. The  Purchaser  and the Sellers each  represents  and warrants as to
itself for the benefit of the Purchaser and the Secured Parties that:

                  (a) it is in full  compliance  with all of the material terms,
         conditions  and all other  provisions of this  Amendment,  the Purchase
         Agreement and each of the other Transaction Documents,  in each case as
         of the Effective Date; and

<PAGE>
                  (b)  its  representations  and  warranties  contained  in this
         Amendment,  the Purchase Agreement and the other Transaction  Documents
         are true and correct in all material  respects,  in each case as though
         made  on  and as of the  Effective  Date,  except  to the  extent  such
         representations  and  warranties  relate solely to an earlier date (and
         then as of such earlier date); and

                  (c) both before and after giving effect to this Amendment,  no
         Purchase Termination Event nor any event or condition which but for the
         lapse of time or the  giving of notice,  or both,  would  constitute  a
         Purchase  Termination  Event has  occurred and is  continuing  or would
         result from the execution  and delivery of this  Amendment or any other
         document arising in connection with or pursuant to this Amendment; and

                  (d) this  Amendment  has been duly  authorized,  executed  and
         delivered on its behalf, and each of (i) the Purchase  Agreement,  both
         before  being  amended  and  supplemented  hereby  and as  amended  and
         supplemented  hereby,  (ii) each of the other Transaction  Documents to
         which it is a party and (iii) this  Amendment,  constitutes  its legal,
         valid and binding obligation  enforceable against it in accordance with
         the terms hereof or thereof.

         3. Section 1 of this Amendment shall become  effective only once all of
the preconditions set forth below in this Section 3 have been satisfied:

                  (a) the third  amendment  of the  Transfer  Agreement  and the
         termination of the Intercreditor  Agreement,  each dated as of the date
         hereof, shall be effective; and

                  (b) the Agent has received, in form and substance satisfactory
         to the Agent, all documents, certificates and opinions as the Agent may
         reasonably  request and all other  matters  incident  to the  execution
         hereof are satisfactory to the Agent.

         4. The Purchase  Agreement,  as amended and  supplemented  hereby or as
contemplated herein, and all rights and powers created thereby and thereunder or
under the other  Transaction  Documents,  and all other  documents  executed  in
connection therewith, are in all respects ratified and confirmed. From and after
the Effective  Date,  the Purchase  Agreement  shall be deemed to be amended and
supplemented as herein provided, and, except as so amended and supplemented, the
Purchase  Agreement,  each of the  other  Transaction  Documents  and all  other
documents  executed  in  connection  therewith  shall  remain in full  force and
effect.

         5. This Amendment may be executed in two or more counterparts,  each of
which  shall  constitute  an  original  but  both or all of  which,  when  taken
together, shall constitute but one instrument.


<PAGE>
         Please  signify  your  agreement  and  acceptance  of the  foregoing by
executing this Amendment in the space provided below.

                                        Very truly yours,


                                        GREAT LAKES CREDIT CORP., as
                                        Purchaser

                                        By: /s/ Charles J. Hansen
                                            ------------------------------------
                                        Title: Vice President

Accepted and Agreed to:

CARSON PIRIE SCOTT & CO., as
  a Seller

By: /s/ Charles J. Hansen
    ---------------------------
Title: Vice President


CPS DEPARTMENT STORES, INC., as
  a Seller

By: /s/ Charles J. Hansen
    ---------------------------
Title: Vice President


NATIONAL BANK OF THE GREAT LAKES,
  as a Seller and Servicer

By: /s/ Charles J. Hansen
    ---------------------------
Title: Vice President


Consented to:

LASALLE NATIONAL BANK, as Collateral Agent

By: /s/ Brian D. Ames
    ---------------------------
Title: Trust Officer


ABN AMRO BANK N.V., as Agent

By: /s/ W. Robert Poff
    ---------------------------
Title: Vice President

By: /s/ Thomas J. Educate
    ---------------------------
Title: Vice President