<PAGE>
                                       
                             AMENDED AND RESTATED
                         LOAN AND SECURITY AGREEMENT


                                 BY AND AMONG


                          ULTIMATE ELECTRONICS, INC.

                       ULTIMATE AKQUISITION CORP., AND

                               FAST TRAK, INC.

                                     AND


                         FOOTHILL CAPITAL CORPORATION


                        DATED AS OF NOVEMBER 24, 1998


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   Page(s)
                                                                                   -------
<S>  <C>                                                                           <C>
1.   DEFINITIONS AND CONSTRUCTION                                                     1
     1.1.    DEFINITIONS                                                              1
     1.2     ACCOUNTING TERMS                                                        18
     1.3     CODE                                                                    18
     1.4     CONSTRUCTION                                                            18
     1.5     SCHEDULES AND EXHIBITS                                                  18
     1.6     THE TERM "BORROWER" OR "BORROWERS"                                      18

2.   LOAN AND TERMS OF PAYMENT                                                       19
     2.1     REVOLVING ADVANCES                                                      19
     2.2     LETTERS OF CREDIT                                                       20
     2.3     OVERADVANCES                                                            22
     2.4     INTEREST AND LETTER OF CREDIT FEES; RATES, PAYMENTS AND CALCULATIONS    22
     2.5     CREDIT CARD COLLECTIONS                                                 23
     2.6     DEPOSITORY ACCOUNTS                                                     23
     2.7     COLLECTIONS                                                             24
     2.8     CREDITING PAYMENTS; APPLICATION OF COLLECTIONS                          25
     2.9     DESIGNATED ACCOUNT                                                      25
     2.10    MAINTENANCE OF LOAN ACCOUNT; STATEMENT OF OBLIGATIONS                   25
     2.11    FEES                                                                    26
     2.12    EURODOLLAR RATE LOANS                                                   26
     2.13    ILLEGALITY                                                              28
     2.14    REQUIREMENTS OF LAW                                                     28
     2.15    TAXES                                                                   30
     2.16    INDEMNITY                                                               32
     2.17    JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION                     32

3.   CONDITIONS; TERM OF AGREEMENT                                                   33
     3.1     CONDITIONS PRECEDENT TO THE INITIAL ADVANCE AND LETTER
             OF CREDIT PURSUANT TO SEPTEMBER 30, 1998 LOAN AGREEMENT                 33
     3.1A    CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AGREEMENT             36
     3.2     CONDITIONS PRECEDENT TO ALL ADVANCES AND ALL LETTERS OF CREDIT,         37
     3.3     CONDITION SUBSEQUENT                                                    38
     3.4     TERM; AUTOMATIC RENEWAL                                                 38
     3.5     EFFECT OF TERMINATION                                                   38
     3.6     EARLY TERMINATION BY BORROWER                                           38
     3.7     TERMINATION UPON EVENT OF DEFAULT                                       40

<PAGE>

4.   CREATION OF SECURITY INTEREST                                                   40
     4.1     GRANT OF SECURITY INTEREST                                              40
     4.2     NEGOTIABLE COLLATERAL                                                   40
     4.3     COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE COLLATERAL  40
     4.4     DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED                           41
     4.5     POWER OF ATTORNEY                                                       41
     4.6     RIGHT TO INSPECT                                                        41

5.   REPRESENTATIONS AND WARRANTIES                                                  41
     5.1     NO ENCUMBRANCES                                                         42
     5.2     ELIGIBLE ACCOUNTS                                                       42
     5.3     ELIGIBLE INVENTORY                                                      42
     5.4     EQUIPMENT                                                               42
     5.5     LOCATION OF INVENTORY AND EQUIPMENT                                     42
     5.6     INVENTORY RECORDS                                                       42
     5.7     LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN                                42
     5.8     DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES                        42
     5.9     DUE AUTHORIZATION; NO CONFLICT                                          43
     5.10    LITIGATION                                                              44
     5.11    NO MATERIAL ADVERSE CHANGE                                              44
     5.12    SOLVENCY                                                                44
     5.13    EMPLOYEE BENEFITS                                                       44
     5.14    ENVIRONMENTAL CONDITION                                                 44
     5.15    YEAR 2000 COMPATIBILITY                                                 45
     5.16    LOCATIONS; LEASES                                                       45

6.   AFFIRMATIVE COVENANTS                                                           46
     6.1     ACCOUNTING SYSTEM                                                       46
     6.2     COLLATERAL AND FINANCIAL REPORTING                                      46
     6.3     [INTENTIONALLY OMITTED]                                                 50
     6.4     TAX RETURNS                                                             50
     6.5     GUARANTOR REPORTS                                                       50
     6.6     RETURNS                                                                 50
     6.7     TITLE TO EQUIPMENT                                                      50
     6.8     MAINTENANCE OF EQUIPMENT                                                50
     6.9     TAXES                                                                   50
     6.10    INSURANCE                                                               51
     6.11    NO SETOFFS OR COUNTERCLAIMS                                             52
     6.12    LOCATION OF INVENTORY AND EQUIPMENT                                     52
     6.13    COMPLIANCE WITH LAWS                                                    52
     6.14    EMPLOYEE BENEFITS                                                       52
     6.15    LEASES                                                                  53
     6.16    LANDLORD WAIVERS AND CONSENTS                                           53
     6.17    MATERIAL INVENTORY SUPPLIER                                             53

<PAGE>

     6.18    YEAR 2000 COMPATIBILITY                                                 53

7.   NEGATIVE COVENANTS                                                              54
     7.1     INDEBTEDNESS                                                            54
     7.2     LIENS                                                                   54
     7.3     RESTRICTIONS ON FUNDAMENTAL CHANGES                                     54
     7.4     DISPOSAL OF ASSETS                                                      55
     7.5     CHANGE NAME                                                             55
     7.6     GUARANTEE                                                               55
     7.7     NATURE OF BUSINESS                                                      55
     7.8     PREPAYMENTS AND AMENDMENTS                                              55
     7.9     CHANGE OF CONTROL                                                       55
     7.10    CONSIGNMENTS                                                            56
     7.11    DISTRIBUTIONS                                                           56
     7.12    ACCOUNTING METHODS                                                      56
     7.13    INVESTMENTS                                                             56
     7.14    TRANSACTIONS WITH AFFILIATES                                            56
     7.15    SUSPENSION                                                              57
     7.16    [INTENTIONALLY OMITTED]                                                 57
     7.17    USE OF PROCEEDS                                                         57
     7.18    CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE;
             INVENTORY AND EQUIPMENT WITH BAILEES                                    57
     7.19    NO PROHIBITED TRANSACTIONS UNDER ERISA                                  57
     7.20    FINANCIAL COVENANTS                                                     58
     7.21    CAPITAL EXPENDITURES                                                    58

8.   EVENTS OF DEFAULT                                                               59

9.   FOOTHILL'S RIGHTS AND REMEDIES.                                                 61
     9.1     RIGHTS AND REMEDIES                                                     61
     9.2     REMEDIES CUMULATIVE                                                     63
     9.3     LICENSE                                                                 63

10.  TAXES AND EXPENSES                                                              63

11.  WAIVERS; INDEMNIFICATION                                                        64
     11.1    DEMAND; PROTEST; ETC.                                                   64
     11.2    FOOTHILL'S LIABILITY FOR COLLATERAL                                     64
     11.3    INDEMNIFICATION                                                         64

12.  NOTICES                                                                         65

13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER                                      66

14.  DESTRUCTION OF BORROWER'S DOCUMENTS                                             66

<PAGE>

15.  GENERAL PROVISIONS                                                              66
     15.1    EFFECTIVENESS                                                           66
     15.2    SUCCESSORS AND ASSIGNS                                                  67
     15.3    SECTION HEADINGS                                                        67
     15.4    INTERPRETATION                                                          67
     15.5    SEVERABILITY OF PROVISIONS                                              67
     15.6    AMENDMENTS IN WRITING                                                   67
     15.7    COUNTERPARTS; TELEFACSIMILE EXECUTION                                   67
     15.8    REVIVAL AND REINSTATEMENT OF OBLIGATIONS                                68
     15.9    INTEGRATION                                                             68
     15.10   CONFIDENTIALITY                                                         68
</TABLE>

<PAGE>

SCHEDULES AND EXHIBITS
----------------------

Schedule E-1        Eligible Inventory Locations
Schedule P-1        Permitted Liens
Schedule 2.5        Credit Card Collection Arrangements
Schedule 2.6        Depository Account Schedule
Schedule 5.8        Subsidiaries
Schedule 5.10       Litigation
Schedule 5.13       ERISA Benefit Plans
Schedule 5.16       Leased Locations
Schedule 6.12       Location of Inventory and Equipment
Exhibit C-1         Form of Compliance Certificate
Exhibit 6-2         Form of Borrowing Base Certificate

<PAGE>


                                AMENDED AND RESTATED
                            LOAN AND SECURITY AGREEMENT


THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "AGREEMENT") is 
entered into as of November 24, 1998, by and among FOOTHILL CAPITAL 
CORPORATION, a California corporation ("FOOTHILL"), with a place of business 
located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California  
90025-3333, and ULTIMATE ELECTRONICS, INC., a Delaware corporation 
("ULTIMATE"), with its chief executive office located at 321 West 84th 
Avenue, Suite A, Thornton, Colorado 80221, ULTIMATE AKQUISITION CORP., a 
Delaware corporation ("AKQUISITION"), with its chief executive office located 
at 321 West 84th Avenue, Suite A, Thornton, Colorado  80221, and FAST TRAK, 
INC., a Minnesota corporation ("FAST TRAK"), with its chief executive office 
located at 321 West 84th Avenue, Suite A, Thornton, Colorado  80221 
(Ultimate, Akquisition, and Fast Trak being hereinafter individually and 
collectively referred to as "BORROWER", as governed by the provisions of 
SECTION 1.6 of this Agreement).

     A.     Foothill and Ultimate entered into that certain Loan and Security 
Agreement, dated as of September 30, 1998 (the "SEPTEMBER 30, 1998, LOAN 
AGREEMENT").

     B.     The parties hereto desire to add Akquisition and Fast Trak as 
co-borrowers to the credit facility established by the September 30, 1998 
Loan Agreement and to make certain revisions to the September 30, 1998 Loan 
Agreement.

     C.     To effectuate the foregoing, the parties hereto wish to 
completely amend, restate and modify (but not extinguish) the September 30, 
1998 Loan Agreement through the execution of this Agreement.

     NOW, THEREFORE, in consideration of the premises herein contained and 
other good and valuable consideration, the receipt and sufficiency of which 
are hereby acknowledged, the parties intending to be legally bound, agree as 
follows:

1.   DEFINITIONS AND CONSTRUCTION.

     1.1    DEFINITIONS.  As used in this Agreement, the following terms 
shall have the following definitions:

     "ACCOUNT DEBTOR" means any Person who is or who may become obligated 
under, with respect to, or on account of, an Account.

     "ACCOUNTS" means all currently existing and hereafter arising accounts, 
contract rights, and all other forms of obligations owing to Borrower arising 
out of the sale or lease of goods or the rendition of services by Borrower, 
irrespective of whether earned by performance, and any and all credit 
insurance, guaranties, or security therefor.

<PAGE>

     "ADJUSTED EURODOLLAR RATE" means, with respect to each Interest Period 
for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if 
necessary, to the next 1/16%) determined by dividing (a) the Eurodollar Rate 
for such Interest Period by (b) a percentage equal to (i) 100% minus (ii) the 
Reserve Percentage. The Adjusted Eurodollar Rate shall be adjusted on and as 
of the effective day of any change in the Reserve Percentage.

     "ADVANCES" has the meaning set forth in SECTION 2.1(a).

     "AFFILIATE" means, as applied to any Person, any other Person who 
directly or indirectly controls, is controlled by, is under common control 
with or is a director or officer of such Person.  For purposes of this 
definition, "control" means the possession, directly or indirectly, of the 
power to vote 5% or more of the securities having ordinary voting power for 
the election of directors or the direct or indirect power to direct the 
management and policies of a Person.

     "AGREEMENT" has the meaning set forth in the preamble hereto.

     "AKQUISITION" has the meaning set forth in the preamble hereto.

     "AKQUISITION STOCK PLEDGE AGREEMENT"  means that certain Stock Pledge 
Agreement, dated on or about the date hereof, executed by Akquisition in 
favor of Foothill, whereby Akquisition grants Foothill a first priority 
Lien in all capital stock of  Fast Trak.

     "AUTHORIZED PERSON" means any officer or other employee of Borrower.

     "AVAILABILITY" means that amount available for loans and advances as 
calculated by Foothill based upon the lending formula set forth in SECTION 
2.1(a).

     "BANKRUPTCY CODE" means the United States Bankruptcy Code (11 U.S.C. 
Section 101 ET SEQ.), as amended, and any successor statute.

     "BENEFIT PLAN" means a "defined benefit plan" (as defined in Section 
3(35) of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA 
Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within 
the past six years.

     "BLOCKED ACCOUNT AGREEMENT(S)" has the meaning set forth in SECTION 
2.7(a)(i).

     "BORROWER" has the meaning set forth in the preamble to this Agreement.

     "BORROWER'S BOOKS" means all of Borrower's books and records including: 
ledgers; records indicating, summarizing, or evidencing Borrower's properties 
or assets (including the Collateral) or liabilities; all information relating 
to Borrower's business operations or financial condition; and all computer 
programs, disk or tape files, printouts, runs, or other computer prepared 
information.

     "BORROWING BASE" has the meaning set forth in SECTION 2.1(a).

                                       2
<PAGE>

     "BUSINESS DAY" means any day that is not a Saturday, Sunday, or other 
day on which national banks are authorized or required to close.

     "BUSINESS PLAN" means the business plan of Borrower submitted to 
Foothill, which business plan is hereby incorporated by reference, and any 
revision, amendment or update to such business plan as to which Foothill has 
given written approval.

     "CHANGE OF CONTROL" shall be deemed to have occurred at such time as a 
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the 
Securities Exchange Act of 1934) (other than William J. Pearse, Barbara A. 
Pearse and the various immediate family trusts of William J. Pearse and 
Barbara A. Pearse, whether now existing or hereafter created including, 
without limitation, the Williams James Pearse III Trust No. 1, the William 
James Pearse III Trust No. 2, the Megan Pearse Trust No. 1, the Megan Pearse 
Trust No. 2, the Bradford Pearse Trust No. 1 and the Bradford Pearse Trust 
No. 2 and with respect to Akquisition, other than Ultimate, and with respect 
to Fast Trak, other than Ultimate and Akquisition) becomes the "beneficial 
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), 
directly or indirectly, of more than 15% of the total voting power of all 
classes of stock then outstanding of any Borrower entitled to vote in the 
election of directors.

     "CHATTEL PAPER" shall have the meaning set forth in the Code.

     "CLOSING DATE" means September 30, 1998.

     "CODE" means the California Uniform Commercial Code.

     "COLLATERAL" means each of the following:

            (a)    the Accounts,

            (b)    Borrower's Books,

            (c)    the Chattel Paper

            (d)    the Equipment,

            (e)    the General Intangibles,

            (f)    the Inventory,

            (g)    the Investment Property,

            (h)    the Negotiable Collateral,

            (i)    any money, or other assets of Borrower that now or 
                   hereafter come into 

                                       3
<PAGE>

the possession, custody, or control of Foothill, and

            (j)    the proceeds and products, whether tangible or intangible, 
of any of the foregoing, including proceeds of insurance covering any or all 
of the Collateral, and any and all Accounts, Borrower's Books, Equipment, 
General Intangibles, Inventory, Investment Property, Negotiable Collateral, 
money, deposit accounts, or other tangible or intangible property resulting 
from the sale, exchange, collection, or other disposition of any of the 
foregoing, or any portion thereof or interest therein, and the proceeds 
thereof.

     "COLLATERAL ACCESS AGREEMENT" means a landlord waiver, mortgagee waiver, 
bailee letter, or acknowledgment agreement of any warehouseman, processor, 
lessor, consignee, or other Person in possession of, having a Lien upon, or 
having rights or interests in the Equipment or Inventory, in each case, in 
form and substance satisfactory to Foothill.

     "COLLECTIONS" means all cash, checks, notes, instruments, and other 
items of payment (including, without limitation, all cash equivalents, 
checks, and credit card slips and receipts as arise out of the sale of the 
Collateral, insurance proceeds, proceeds of cash sales, rental proceeds, and 
tax refunds).

     "COMPLIANCE CERTIFICATE"  means a certificate substantially in the form 
of EXHIBIT C-1 and delivered by the chief accounting officer of Ultimate, on 
behalf of Borrowers, to Foothill.

     "CONCENTRATION ACCOUNT" means the Concentration Account Number 
1018169963 established pursuant to the Blocked Account Agreement with the 
Concentration Account Bank.

     "CONCENTRATION ACCOUNT BANK" means Norwest Bank Colorado NA, whose 
office is located at 1740 Broadway, Denver, Colorado  80274, and whose ABA 
number is 102000076, or such other banks as may be agreed to by Borrower and 
Foothill from time to time.

     "COST" means the calculated cost of purchases, as determined from 
invoices received by Borrower, Borrower's purchase journal or stock ledger, 
based upon Borrower's accounting principles, known to Foothill, which 
practices are in effect on the date on which this Agreement was executed.  
"Cost" does not include any inventory capitalization costs inclusive of 
advertising, but may include other charges used in Borrower's determination 
of cost of goods sold and bringing goods to market, all within Foothill's 
reasonable discretion and in accordance with GAAP.

     "COST FACTOR" means the result of 1 minus Borrower's then cumulative 
markup percent derived from Borrower's purchase journal.

     "DAILY BALANCE" means the amount of an Obligation owed at the end of a 
given day.

     "DATED ASSETS" has the meaning set forth in SECTION 2.17.

     "DATED LIABILITIES" has the meaning set forth in SECTION 2.17.

                                       4
<PAGE>


     "DEEMS ITSELF INSECURE" means that the Person deems itself insecure in 
accordance with the provisions of Section 1208 of the Code.

     "DEFAULT" means an event, condition, or default that, with the giving of 
notice, the passage of time, or both, would be an Event of Default.

     "DESIGNATED ACCOUNT" means account number 1018169955 of Ultimate 
maintained with Borrower's Designated Account Bank, or such other deposit 
account of Ultimate (located within the United States) which has been 
designated, in writing and from time to time, by Borrower to Foothill.

     "DESIGNATED ACCOUNT BANK" means Norwest Bank Colorado NA, whose office 
is located at 1740 Broadway, Denver, Colorado  80274, and whose ABA number is 
102000076, or such other bank as is acceptable to Foothill.

     "DISBURSEMENT LETTER" means an instructional letter executed and 
delivered by Borrower to Foothill regarding the extensions of credit to be 
made on the Closing Date, the form and substance of which shall be 
satisfactory to Foothill.

     "DOLLARS OR $" means United States dollars.

     "EARLY TERMINATION PREMIUM" has the meaning set forth in SECTION 3.6.

     "ELIGIBLE ACCOUNTS" means those Accounts created by Borrower in the 
ordinary course of business, that arise out of Borrower's sale of goods or 
rendition of services, that strictly comply with each and all of the 
representations and warranties respecting Accounts made by Borrower to 
Foothill in the Loan Documents, and that are and at all times continue to be 
acceptable to Foothill in all respects; PROVIDED, HOWEVER, that standards of 
eligibility may be fixed and revised from time to time by Foothill in 
Foothill's reasonable credit judgment.  Eligible Accounts shall not include 
the following:

            (a)    Accounts that the Account Debtor has failed to pay (i) 
within 90 days of original invoice date or (ii) within 60 days of original 
due date;

            (b)    Accounts owed by an Account Debtor or its Affiliates where 
50% or more of all Accounts owed by that Account Debtor (or its Affiliates) 
are deemed ineligible under clause (a) above;

            (c)    Accounts with respect to which the Account Debtor is an 
employee, Affiliate, or agent of Borrower;

            (d)    Accounts with respect to which goods are placed on 
consignment, guaranteed sale, sale or return, sale on approval, bill and 
hold, or other terms by reason of which the payment by the Account Debtor may 
be conditional;

                                       5
<PAGE>

            (e)    Accounts that are not payable in Dollars or with respect 
to which the Account Debtor: (i) does not maintain its chief executive office 
in the United States, or (ii) is not organized under the laws of the United 
States or any State thereof, or (iii) is the government of any foreign 
country or sovereign state, or of any state, province, municipality, or other 
political subdivision thereof, or of any department, agency, public 
corporation, or other instrumentality thereof, unless (y) the Account is 
supported by an irrevocable letter of credit satisfactory to Foothill (as to 
form, substance, and issuer or domestic confirming bank) that has been 
delivered to Foothill and is directly drawable by Foothill, or (z) the 
Account is covered by credit insurance in form and amount, and by an insurer, 
satisfactory to Foothill;

            (f)    Accounts with respect to which the Account Debtor is 
either (i) the United States or any department, agency, or instrumentality of 
the United States (exclusive, however, of Accounts with respect to which 
Borrower has complied, to the satisfaction of Foothill, with the Assignment 
of Claims Act, 31 U.S.C. Section 3727), or (ii) any State of the United 
States (exclusive, however, of Accounts owed by any State that does not have 
a statutory counterpart to the Assignment of Claims Act);

            (g)    Accounts with respect to which the Account Debtor is a 
creditor of Borrower, has or has asserted a right of setoff, has disputed its 
liability, or has made any claim with respect to the Account;

            (h)    Accounts with respect to an Account Debtor whose total 
obligations owing to Borrower exceed 10% of all Eligible Accounts, to the 
extent of the obligations owing by such Account Debtor in excess of such 
percentage, unless otherwise consented to by Foothill;

            (i)    Accounts with respect to which the Account Debtor is 
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of 
business;

            (j)    Accounts the collection of which Foothill, in its 
reasonable credit judgment, believes to be doubtful by reason of the Account 
Debtor's financial condition;

            (k)    Accounts with respect to which the goods giving rise to 
such Account have not been shipped and billed to the Account Debtor, the 
services giving rise to such Account have not been performed and accepted by 
the Account Debtor, or the Account otherwise does not represent a final sale;

            (l)    Accounts with respect to which the Account Debtor is 
located in the states of New Jersey, Minnesota, Indiana, or West Virginia (or 
any other state that requires a creditor to file a Business Activity Report 
or similar document in order to bring suit or otherwise enforce its remedies 
against such Account Debtor in the courts or through any judicial process of 
such state), unless Borrower has qualified to do business in New Jersey, 
Minnesota, Indiana, West Virginia, or such other states, or has filed a 
Notice of Business Activities Report with the applicable division of 
taxation, the department of revenue, or with such other state offices, as 
appropriate, for the then-current year, or is exempt from such filing 
requirement; and

                                       6
<PAGE>

            (m)    Accounts that represent progress payments or other advance 
billings that are due prior to the completion of performance by Borrower of 
the subject contract for goods or services.

     "ELIGIBLE INVENTORY" means consumer electronic products Inventory 
consisting of first quality, finished goods held for sale in the ordinary 
course of Borrower's business, net of any unearned vendors' discounts and 
Inventory Reserves (as defined below), that are located at Borrower's 
premises identified on SCHEDULE E-1, that strictly comply with each and all 
of the representations and warranties respecting Inventory made by Borrower 
to Foothill in the Loan Documents, and that are and at all times continue to 
be acceptable to Foothill in all respects; PROVIDED, HOWEVER, that standards 
of eligibility may be fixed and revised from time to time by Foothill in 
Foothill's reasonable credit judgment.  In determining the amount to be so 
included, Inventory shall be valued at the lower of cost or market on a basis 
consistent with Borrower's current and historical accounting practices.  
Without limiting the foregoing, the following shall not be Eligible Inventory:

            (a)    Inventory that is not owned solely by Borrower or in which 
Borrower does not have good, valid, and marketable title;

            (b)    Inventory that is not located at one of the locations set 
forth on SCHEDULE E-1;

            (c)    Inventory that is not located on property owned or leased 
by Borrower or in a contract warehouse, in each case (except for the County 
Line Store and Colorado Boulevard Store), subject to a Collateral Access 
Agreement executed by the mortgagee, lessor, the warehouseman, or other third 
party, as the case may be, and segregated or otherwise separately 
identifiable from goods of others, if any, stored on the premises;

            (d)    Inventory that is not subject to a valid and perfected 
first priority security interest in favor of Foothill;

            (e)    Inventory that consists of goods in transit, other than 
goods in transit between the locations specified in SCHEDULE E-1;

            (f)    Inventory that is damaged, defective, or not currently 
saleable in the normal course of Borrower's operations;

            (g)    Inventory in an amount equal to Borrower's invoice 
variance reserves;

            (h)    Discontinued consumer electronic products Inventory (to 
include obsolete and slow-moving Inventory based upon it being on hand beyond 
a number of days determined by Foothill from time to time) in an amount in 
excess of 12% of total net amount of Borrower's consumer electronic products 
Inventory (determined after deducting unearned vendors' discounts);

                                       7
<PAGE>

            (i)    Free goods;

            (j)    That portion of Borrower's consumer electronic products 
Inventory consisting of cellular phones in the net amount in excess of 
$1,000,000 (determined after deducting unearned vendors' discounts);

            (k)    Inventory that is a restrictive or custom item, 
work-in-process, a component that is not part of finished goods, or 
constitutes parts, packaging and shipping materials, supplies used or 
consumed in Borrower's business, is subject to a Lien in favor of any third 
Person, consists of bill and hold goods, or Inventory acquired on 
consignment; and

            (l)    Inventory that is non-SKU Inventory.

Foothill may establish reserves ("Inventory Reserves") from time to time in 
Foothill's discretion with respect to the determination of the saleability, 
at retail, of the Eligible Inventory or which reflect such other factors as 
affect the current Retail or market value of the Eligible Inventory.  Without 
limiting the generality of the foregoing, Inventory Reserves may include (but 
are not limited to) reserves based on the following: (i) the estimated 
reclamation claims of unpaid sellers of Inventory sold to Borrower; (ii) 
change in Inventory character, composition or mix; (iii) imbalance of 
Inventory; (iv) retail markdowns or markups inconsistent with prior period 
practice and performance; current business plans; or advertising calendar and 
planned advertising events; (v) Inventory shrinkage; or (vi) the change in 
the Orderly Liquidation Value of the Inventory.

     "EQUIPMENT" means all of Borrower's present and hereafter acquired 
machinery, machine tools, motors, equipment, furniture, furnishings, 
fixtures, vehicles (including motor vehicles and trailers), tools, parts, 
goods (other than consumer goods, farm products, or Inventory), wherever 
located, including, (a) any interest of Borrower in any of the foregoing, and 
(b) all attachments, accessories, accessions, replacements, substitutions, 
additions, and improvements to any of the foregoing.

     "ERISA" means the Employee Retirement Income Security Act of 1974, 29 
U.S.C. Sections 1000 et seq., amendments thereto, successor statutes, and 
regulations or guidance promulgated thereunder.

     "ERISA AFFILIATE" means (a) any corporation subject to ERISA whose 
employees are treated as employed by the same employer as the employees of 
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA 
whose employees are treated as employed by the same employer as the employees 
of Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 
of ERISA and Section 412 of the IRC, any organization subject to ERISA that 
is a member of an affiliated service group of which Borrower is a member 
under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA 
and Section 412 of the IRC, any party subject to ERISA that is a party to an 
arrangement with Borrower and whose employees are aggregated with the 
employees of Borrower under IRC Section 414(o).


     "ERISA EVENT" means (a) a Reportable Event with respect to any Benefit 
Plan or

                                       8
<PAGE>

Multiemployer Plan, (b) the withdrawal of Borrower, any of its 
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in 
which it was a "substantial employer" (as defined in Section 4001(a)(2) of 
ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in 
a distress termination (as described in Section 4041(c) of ERISA), (d) the 
institution by the PBGC of proceedings to terminate a Benefit Plan or 

Multiemployer Plan, (e) any event or condition (i) that provides a basis 
under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the 
appointment of a trustee to administer, any Benefit Plan or Multiemployer 
Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant 
to Section 4041A of ERISA, (f) the partial or complete withdrawal within the 
meaning of Sections 4203 and 4205 of ERISA, of Borrower, any of its 
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing 
any security to any Plan under Section 401(a)(29) of the IRC by Borrower or 
its Subsidiaries or any of their ERISA Affiliates.

     "EURODOLLAR RATE" means, with respect to the Interest Period for a 
Eurodollar Rate Loan, the rate for deposits in U.S. dollars that appears as 
the "LIBOR" or "Eurodollar" rate, as the case may be, in the BLOOMBERG 
REPORTER two Business Days prior to the commencement of such Interest Period 
as to the amount comparable to the amount of the Eurodollar Rate Loans 
requested by and available to Borrower in accordance with this Agreement, 
with a maturity of comparable duration to the Interest Period selected by 
Borrower, or if no such "LIBOR" or "Eurodollar" rate appears on such day in 
the BLOOMBERG REPORTER, the comparable "LIBOR" or "Eurodollar" rate, as the 
case may be, that appears in THE WALL STREET JOURNAL two Business Days prior 
to the commencement of such Interest Period.  If no such "LIBOR" or 
"Eurodollar Rate" appears on such date in either the BLOOMBERG REPORTER or 
THE WALL STREET JOURNAL, the term "Eurodollar" rate shall mean, with respect 
to the Interest Period for a Eurodollar Rate Loan, the interest rate per 
annum at which United States dollar deposits are offered to Foothill (or its 
Affiliates) by major banks in the London interbank market (or other 
Eurodollar Rate market elected by Foothill) on or about 11:00 a.m. (New York 
time) 2 Business Days prior to the commencement of such Interest Period in 
amounts comparable to the amount of the Eurodollar Rate Loans requested by 
and available to Borrower in accordance with this Agreement, with a maturity 
of comparable duration to the Interest Period selected by Borrower.

     "EURODOLLAR RATE LOANS" means any Advance (or any portion thereof) made 
or outstanding hereunder during any period when interest on such Advance (or 
portion thereof) is payable based on the Adjusted Eurodollar Rate.

     "EVENT OF DEFAULT" has the meaning set forth in SECTION 8.

     "EXCESS AVAILABILITY" means the amount as determined by Foothill at any 
time, equal to (a) the amount of Advances available to Borrower as of such 
time based upon the applicable lending formulas set forth in SECTION 2.1, 
subject to the sublimits, Reserves Against Availability and other reserves 
from time to time established in accordance with this Agreement minus (b) the 
amount of the outstanding Obligations (including Letters of Credit).

     "EXISTING LENDER" means Norwest Bank Colorado, National Association.

                                       9
<PAGE>

     "FAST TRAK" has the meaning set forth in the preamble to this Agreement.

     "FEIN" means Federal Employer Identification Number.

     "FOOTHILL" has the meaning set forth in the preamble to this Agreement.

     "FOOTHILL ACCOUNT" has the meaning set forth in SECTION 2.10.

     "FOOTHILL EXPENSES" means all:  costs or expenses (including taxes, and 
insurance premiums) required to be paid by Borrower under any of the Loan 
Documents that are paid or incurred by Foothill; fees or charges paid or 
incurred by Foothill in connection with Foothill's transactions with 
Borrower, including, fees or charges for photocopying, notarization, couriers 
and messengers, telecommunication, public record searches (including tax 
lien, litigation, and UCC searches and including searches with the patent and 
trademark office, the copyright office, or the department of motor vehicles), 
filing, recording, publication, appraisal (including periodic Collateral 
appraisals), real estate surveys, real estate title policies and 
endorsements, and environmental audits; costs and expenses incurred by 
Foothill in the disbursement of funds to Borrower (by wire transfer or 
otherwise); charges paid or incurred by Foothill resulting from the dishonor 
of checks; costs and expenses paid or incurred by Foothill to correct any 
default or enforce any provision of the Loan Documents, or in gaining 
possession of, maintaining, handling, preserving, storing, shipping, selling, 
preparing for sale, or advertising to sell the Collateral, or any portion 
thereof, irrespective of whether a sale is consummated; costs and expenses 
paid or incurred by Foothill in examining Borrower's Books; costs and 
expenses of third party claims or any other suit paid or incurred by Foothill 
in enforcing or defending the Loan Documents or in connection with the 
transactions contemplated by the Loan Documents or Foothill's relationship 
with Borrower or any guarantor; and Foothill's reasonable attorneys fees and 
expenses incurred in advising, structuring, drafting, reviewing, 
administering, amending, terminating, enforcing (including attorneys fees and 
expenses incurred in connection with a "workout," a "restructuring," or an 
Insolvency Proceeding concerning Borrower or any guarantor of the 
Obligations), defending, or concerning the Loan Documents, irrespective of 
whether suit is brought.

     "GAAP" means generally accepted accounting principles as in effect from 
time to time in the United States, consistently applied.

     "GENERAL INTANGIBLES" means all of Borrower's present and future general 
intangibles and other personal property (including contract rights, rights 
arising under common law, statutes, or regulations, choses or things in 
action, goodwill, patents, trade names (including, without limitation the 
trade names "Soundtrack", "Ultimate Electronics", "Fast Trak", and "Audio 
King"), trademarks, servicemarks, copyrights, blueprints, drawings, purchase 
orders, customer lists, monies due or recoverable from pension funds, route 
lists, rights to payment and other rights under any royalty or licensing 
agreements, infringement claims, computer programs, information contained on 
computer disks or tapes, literature, reports, catalogs, deposit accounts, 
insurance premium rebates, tax refunds, and tax refund claims), other than 
goods, Accounts, and Negotiable Collateral.

                                       10
<PAGE>

     "GOVERNING DOCUMENTS" means the certificate or articles of 
incorporation, by-laws, or other organizational or governing documents of any 
Person.

     "GOVERNMENTAL AUTHORITY" means any nation or government, any state or 
other political subdivision thereof and any entity exercising executive, 
legislative, judicial, regulatory or administrative functions of or 
pertaining to government.

     "GROSS MARGIN PERCENTAGE" means, with respect to the subject accounting 
period for which it is being calculated, the following (determined in 
accordance with the cost method of accounting):

            sales (minus) cost of goods sold   x  100
            --------------------------------
                   sales

     "HAZARDOUS MATERIALS" means (a) substances that are defined or listed 
in, or otherwise classified pursuant to, any applicable laws or regulations 
as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic 
substances," or any other formulation intended to define, list, or classify 
substances by reason of deleterious properties such as ignitability, 
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP 
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas, 
natural gas liquids, synthetic gas, drilling fluids, produced waters, and 
other wastes associated with the exploration, development, or production of 
crude oil, natural gas, or geothermal resources, (c) any flammable substances 
or explosives or any radioactive materials, and (d) asbestos in any form or 
electrical equipment that contains any oil or dielectric fluid containing 
levels of polychlorinated biphenyls in excess of 50 parts per million.

     "INDEBTEDNESS" means: (a) all obligations of Borrower for borrowed 
money, (b) all obligations of Borrower evidenced by bonds, debentures, notes, 
or other similar instruments and all reimbursement or other obligations of 
Borrower in respect of letters of credit, bankers acceptances, interest rate 
swaps, or other financial products, (c) all obligations of Borrower under 
capital leases, (d) all obligations or liabilities of others secured by a 
Lien on any property or asset of Borrower, irrespective of whether such 
obligation or liability is assumed, and (e) any obligation of Borrower 
guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made, 
discounted, or sold with recourse to Borrower) any indebtedness, lease, 
dividend, letter of credit, or other obligation of any other Person.

     "INSOLVENCY PROCEEDING" means any proceeding commenced by or against any 
Person under any provision of the Bankruptcy Code or under any other 
bankruptcy or insolvency law, assignments for the benefit of creditors, 
formal or informal moratoria, compositions, extensions generally with 
creditors, or proceedings seeking reorganization, arrangement, or other 
similar relief.

     "INTEREST PERIOD" means for any Eurodollar Rate Loan, the period 
commencing on the Business Day such Eurodollar Rate Loan is disbursed or 
continued, or on the Business Day on 

                                       11
<PAGE>

which a Reference Rate Loan is converted to such Eurodollar Rate Loan, and 
ending on the date 1, 2, or 3 months thereafter, as selected by Borrower and 
notified to Foothill pursuant to SECTION 2.1(c), and as further provided in 
SECTION 2.12(a).

     "INVENTORY" means all present and future inventory in which Borrower has 
any interest, including goods held for sale or lease or to be furnished under 
a contract of service and all of Borrower's present and future raw materials, 
work in process, finished goods, and packing and shipping materials, wherever 
located.

     "INVESTMENT PROPERTY" means any security, whether certificated or 
uncertificated, any security entitlement, any securities account, any 
commodity contract or any commodity account.

     "IRC" means the Internal Revenue Code of 1986, as amended, and the 
regulations thereunder.

     "L/C" has the meaning set forth in SECTION 2.2(a).

     "L/C GUARANTY" has the meaning set forth in SECTION 2.2(a).

     "LANDLORD LIEN STATE" means any state or other jurisdiction under whose 
statutory or common law the rights of a landlord in assets of that landlord's 
tenant, for unpaid rent, may be senior to a perfected security interest in 
such assets.

     "LETTER OF CREDIT" means an L/C or an L/C Guaranty, as the context 
requires.

     "LIEN" means any interest in property securing an obligation owed to, or 
a claim by, any Person other than the owner of the property, whether such 
interest shall be based on the common law, statute, or contract, whether such 
interest shall be recorded or perfected, and whether such interest shall be 
contingent upon the occurrence of some future event or events or the 
existence of some future circumstance or circumstances, including the lien or 
security interest arising from a mortgage, deed of trust, encumbrance, 
pledge, hypothecation, assignment, deposit arrangement, security agreement, 
adverse claim or charge, conditional sale or trust receipt, or from a lease, 
consignment, or bailment for security purposes and also including 
reservations, exceptions, encroachments, easements, rights-of-way, covenants, 
conditions, restrictions, leases, and other title exceptions and encumbrances 
affecting Real Property.

     "LOAN ACCOUNT" has the meaning set forth in SECTION 2.13.

     "LOAN DOCUMENTS" means this Agreement, the Disbursement Letter, the 
Letters of Credit, the Blocked Account Agreements, the Stock Pledge 
Agreements, any note or notes executed by Borrower and payable to Foothill, 
and any other agreement entered into, now or in the future, in connection 
with this Agreement.

     "MANUFACTURER PAYABLES" means Indebtedness of Borrower to the 
manufacturers, suppliers, providers, vendors or distributors of Borrower's 
Inventory incurred by Borrower for 

                                       12
<PAGE>

the acquisition of such Inventory, which Indebtedness is not secured by any 
lien, security interest or encumbrance.

     "MATERIAL ADVERSE CHANGE" means (a) a material adverse change in the 
business, prospects, operations, results of operations, assets, liabilities 
or condition (financial or otherwise) of Borrowers, taken as a whole, (b) the 
material impairment of Borrower's ability to perform its obligations under 
the Loan Documents to which it is a party or of Foothill to enforce the 
Obligations or realize upon the Collateral, (c) a material adverse effect on 
the value of the Collateral or the amount that Foothill would be likely to 
receive (after giving consideration to delays in payment and costs of 
enforcement) in the liquidation of such Collateral, or (d) a material 
impairment of the priority of Foothill's Liens with respect to the Collateral.

     "MATERIAL INVENTORY SUPPLIER" means any supplier, provider, 
manufacturer, vendor or distributor of Borrower's Inventory from whom 
Borrower purchases, directly or indirectly, two percent (2%) or more of the 
total Inventory purchased by Borrower.

     "MAXIMUM REVOLVING AMOUNT" means $40,000,000.

     "MULTIEMPLOYER PLAN" means a "multiemployer plan" (as defined in Section 
4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any ERISA 
Affiliate has contributed, or was obligated to contribute, within the past 
six years.

     "NEGOTIABLE COLLATERAL" means all of Borrower's present and future 
letters of credit, notes, drafts, instruments, investment property, security 
entitlements, securities (including the shares of stock of Subsidiaries of 
Borrower), documents, personal property leases (wherein Borrower is the 
lessor), chattel paper, and Borrower's Books relating to any of the foregoing.

     "ORDERLY LIQUIDATION VALUE" means the liquidation value of Eligible 
Inventory as determined from time to time by Ozer Valuation Services LLC, 
Gordon Brothers Retail Partners, LLC, or other appraiser reasonably 
acceptable to Foothill (in each case, as selected by Foothill).

     "OBLIGATIONS" means all loans, Advances, debts, principal, interest 
(including any interest that, but for the provisions of the Bankruptcy Code, 
would have accrued), contingent reimbursement obligations under any 
outstanding Letters of Credit, premiums (including Early Termination 
Premiums), liabilities (including all amounts charged to Borrower's Loan 
Account pursuant hereto), obligations, fees, charges, costs, or Foothill 
Expenses (including any fees or expenses that, but for the provisions of the 
Bankruptcy Code, would have accrued), lease payments, guaranties, covenants, 
and duties owing by Borrower to Foothill of any kind and description (whether 
pursuant to or evidenced by the Loan Documents or pursuant to any other 
agreement between Foothill and Borrower, and irrespective of whether for the 
payment of money), whether direct or indirect, absolute or contingent, due or 
to become due, now existing or hereafter arising, and including any debt, 
liability, or obligation owing from Borrower to others that Foothill may have 
obtained by assignment or otherwise, and further including all interest not 
paid when due and all Foothill Expenses that Borrower is required to pay or 
reimburse by the Loan Documents, by law, or otherwise.

                                       13
<PAGE>

     "ONE TURN STATE" means any state or other jurisdiction under whose 
statutory or common law the relative priority of the rights of a landlord in 
assets of that landlord's tenant, for unpaid rent, vis a vis the rights of 
the holder of a perfected security interest therein is dependent upon whether 
such security interest arose prior or subsequent to the subject asset's 
coming onto the demised premises.

     "OVERADVANCE" has the meaning set forth in SECTION 2.5.

     "PARTICIPANT" means any Person to which Foothill has sold a 
participation interest in its rights under the Loan Documents.

     "PAY-OFF LETTER" means a letter, in form and substance reasonably 
satisfactory to Foothill, from Existing Lender respecting the amount 
necessary to repay in full all of the obligations of Borrower owing to 
Existing Lender and obtain a termination or release of all of the Liens 
existing in favor of Existing Lender in and to the properties or assets of 
Borrower.

     "PBGC" means the Pension Benefit Guaranty Corporation as defined in 
Title IV of ERISA, or any successor thereto.

     "PERMITTED LIENS" means (a) Liens held by Foothill, (b) Liens for unpaid 
taxes that either (i) are not yet due and payable or (ii) are the subject of 
Permitted Protests, (c) Liens set forth on SCHEDULE P-1, (d) the interests of 
lessors under operating leases and purchase money Liens of lessors under 
capital leases to the extent that the acquisition or lease of the underlying 
asset is permitted under SECTION 7.21 and so long as the Lien only attaches 
to the asset purchased or acquired (and proceeds from the sale or transfer 
thereof) and only secures the purchase price of the asset, (e) Liens arising 
by operation of law in favor of warehousemen, landlords, carriers, mechanics, 
materialmen, laborers, or suppliers, incurred in the ordinary course of 
business of Borrower and not in connection with the borrowing of money, and 
which Liens either (i) are for sums not yet due and payable, or (ii) are the 
subject of Permitted Protests, (f) Liens arising from deposits made in 
connection with obtaining worker's compensation or other unemployment 
insurance, (g) Liens or deposits to secure performance of bids, tenders, or 
leases (to the extent permitted under this Agreement), incurred in the 
ordinary course of business of Borrower and not in connection with the 
borrowing of money, (h) Liens arising by reason of security for surety or 
appeal bonds in the ordinary course of business of Borrower, (i) Liens of or 
resulting from any judgment or award that would not cause a Material Adverse 
Change and as to which the time for the appeal or petition for rehearing of 
which has not yet expired, or in respect of which Borrower is in good faith 
prosecuting an appeal or proceeding for a review, and in respect of which a 
stay of execution pending such appeal or proceeding for review has been 
secured, and (j) with respect to any Real Property, easements, rights of way, 
zoning and similar covenants and restrictions, and similar encumbrances that 
customarily exist on properties of Persons engaged in similar activities and 
similarly situated and that in any event do not materially interfere with or 
impair the use or operation of the Collateral by Borrower or the value of 
Foothill's Lien thereon or therein, or materially interfere with the ordinary 
conduct of the business of Borrower.

                                       14
<PAGE>

     "PERMITTED PROTEST" means the right of Borrower to protest any Lien 
other than any such Lien that secures the Obligations, tax (other than 
payroll taxes or taxes that are the subject of a United States federal tax 
lien), or rental payment, provided that (a) a reserve with respect to such 
obligation is established on the books of Borrower in an amount that is 
reasonably satisfactory to Foothill, (b) any such protest is instituted and 
diligently prosecuted by Borrower in good faith, and (c) Foothill is 
satisfied that, while any such protest is pending, there will be no 
impairment of the enforceability, validity, or priority of any of the Liens 
of Foothill in and to the Collateral.

     "PERSON" means and includes natural persons, corporations, limited 
liability companies, limited partnerships, general partnerships, limited 
liability partnerships, joint ventures, trusts, land trusts, business trusts, 
or other organizations, irrespective of whether they are legal entities, and 
governments and agencies and political subdivisions thereof.

     "PERSONAL PROPERTY" means all Collateral.

     "PLAN" means any employee benefit plan, program, or arrangement 
maintained or contributed to by Borrower or with respect to which it may 
incur liability.

     "REAL PROPERTY" means any estates or interests in real property now 
owned or hereafter acquired by Borrower.

     "REFERENCE RATE" means the variable rate of interest, per annum, most 
recently announced by Norwest Bank Minnesota, National Association, or any 
successor thereto, as its "base rate," irrespective of whether such announced 
rate is the best rate available from such financial institution.

     "REFERENCE RATE LOAN" means any Advance (or any portion thereof) made or 
outstanding hereunder during any period when interest on such Advance (or 
portion thereof) is payable based on the Reference Rate.

     "RENEWAL DATE" has the meaning set forth in SECTION 3.4.

     "REPORTABLE EVENT" means any of the events described in Section 4043(c) 
of ERISA or the regulations thereunder other than a Reportable Event as to 
which the provision of 30 days notice to the PBGC is waived under applicable 
regulations.

     "REQUIREMENT OF LAW" means, as to any Person:  all (i) statutes and 
regulations and (ii) court orders and injunctions, arbitrator's decisions, 
and/or similar rulings, in each instance by any Governmental Authority, or 
other body which has jurisdiction over such Person, or any property of such 
Person, or of any other Person for whose conduct such Person would be 
responsible.

     "RESERVE PERCENTAGE" means and refers to, as of the date of 
determination thereof, the maximum percentage (rounded upward, if necessary 
to the nearest 1/100th of 1%), as determined by Foothill (or its Affiliates) 
in accordance with its (or their) usual procedures (which determination shall 
be conclusive in the absence of manifest error), that is in effect on such 
date 

                                       15
<PAGE>

as prescribed by the Federal Reserve Board for determining the reserve 
requirements ( including supplemental, marginal, and emergency reserve 
requirements) with respect to eurocurrency funding (currently referred to as 
"eurocurrency liabilities") by Foothill or its Affiliates.

     "RESERVES AGAINST AVAILABILITY" means such reserves as Foothill from 
time to time determines in Foothill's discretion as being appropriate to 
reflect impediments to Foothill's ability to realize upon the Collateral.  
Without limiting the generality of the foregoing, Reserves Against 
Availability may include (but are not limited to) reserves based on the 
following:

     (a)    Rent
            (i)    based upon past due rent, and
            (ii)   based upon Borrower's locations in a Landlord Lien State or
                   One-Turn State if no landlord waiver acceptable to Foothill
                   has been obtained.

     (b)    In store customer credits and gift certificates.

     (c)    Past due payables.

     (d)    Layaway and customer deposits, including special order customer
            deposits.

     (e)    Past due or accrued taxes and other governmental charges, including,
            ad valorem, personal property and other taxes which may have
            priority over the security interests of Foothill in the Collateral.

     (f)    Past due or accrued warehouse and storage charges.


Notwithstanding the foregoing, (i) as long as during the period beginning the 
Closing Date and continuing through December 31, 1998 Borrower's Tangible Net 
Worth is in excess of $38,500,000, no Reserves Against Availability will be 
established as to either of the items described in clauses (b) and (d) above, 
and (ii) as long as during the period beginning January 1, 1999 and 
continuing thereafter during the term of this Agreement, Borrower's Tangible 
Net Worth is in excess of $40,000,000 no Reserves Against Availability will 
be established as to either of the items described in clauses (b) and (d) 
above.

     "RETAIL" means the Cost of Inventory divided by the Cost Factor.

     "RETIREE HEALTH PLAN" means an "employee welfare benefit plan" within 
the meaning of Section 3(1) of ERISA that provides benefits to individuals 
after termination of their employment, other than as required by Section 601 
of ERISA.

     "SALE OF CONTROL" means the acquisition by a Person and any of the 
"affiliates" of such Person within the meaning of Rule 12b-2 promulgated 
under the Securities Exchange Act of 1934, as amended (other than any current 
affiliate of Borrower) of an aggregate of 75% or more of the assets of the 
Borrowers, taken as a whole, or capital stock of Ultimate.

                                       16
<PAGE>

     "SEPTEMBER 30, 1998 LOAN AGREEMENT" has the meaning set forth in the 
preamble to this Agreement.

     "SOLVENT" means, with respect to any Person on a particular date, that 
on such date (a) at fair valuations, all of the properties and assets of such 
Person are greater than the sum of the debts, including contingent 
liabilities, of such Person, (b) the present fair salable value of the 
properties and assets of such Person is not less than the amount that will be 
required to pay the probable liability of such Person on its debts as they 
become absolute and matured, (c) such Person is able to realize upon its 
properties and assets and pay its debts and other liabilities, contingent 
obligations and other commitments as they mature in the normal course of 
business, (d) such Person does not intend to, and does not believe that it 
will, incur debts beyond such Person's ability to pay as such debts mature, 
and (e) such Person is not engaged in business or a transaction, and is not 
about to engage in business or a transaction, for which such Person's 
properties and assets would constitute unreasonably small capital after 
giving due consideration to the prevailing practices in the industry in which 
such Person is engaged.  In computing the amount of contingent liabilities at 
any time, it is intended that such liabilities will be computed at the amount 
that, in light of all the facts and circumstances existing at such time, 
represents the amount that reasonably can be expected to become an actual or 
matured liability.

     "SPECIAL INVENTORY ADVANCE AMOUNT" means, at any date of determination, 
the lesser of (a) $5,000,000 or (b) five percent (5%) of the Cost of Eligible 
Inventory.

     "SPECIAL INVENTORY ADVANCES" means Advances made by Foothill to Borrower 
due to the "Special Inventory Advance Amount" portion of the Borrowing Base.

     "STOCK PLEDGE AGREEMENTS" means the Akquisition Stock Pledge Agreement 
and the Ultimate Stock Pledge Agreement.

     "SUBSIDIARY" of a Person means a corporation, partnership, limited 
liability company, or other entity in which that Person directly or 
indirectly owns or controls the shares of stock or other ownership interests 
having ordinary voting power to elect a majority of the board of directors 
(or appoint other comparable managers) of such corporation, partnership, 
limited liability company, or other entity.

     "SUSPENSION EVENT" means any occurrence, circumstance or state of facts 
which (a) is an Event of Default or (b) would become an Event of Default with 
the passage of time.

     "TANGIBLE NET WORTH" means, as of any date of determination, the sum of 
the par or stated value of all outstanding capital stock, surplus and 
undistributed profits of Borrower, less any amounts attributable to treasury 
stock, and any intangible assets, including, but not limited to, goodwill, 
patents, copyrights, mailing lists, catalogues, trademarks, bond discount and 
underwriting expenses, organization expenses and other like intangibles, 
prepaid items and deposits, all as determined on a consolidated basis in 
accordance with generally accepted accounting principles.

                                       17
<PAGE>

     "ULTIMATE" has the meaning set forth in the preamble to this Agreement.

     "ULTIMATE STOCK PLEDGE AGREEMENT" means that certain Stock Pledge 
Agreement, dated on or about the date hereof, executed by Ultimate in favor 
of Foothill whereby Ultimate grants Foothill a first priority Lien in all 
capital stock of Akquisition.

     "VOIDABLE TRANSFER" has the meaning set forth in SECTION 15.8.

     "YEAR 2000 COMPLIANT" means that Borrower's computer software programs 
(whether used in Borrower's business or licensed by or to Borrower to or from 
third parties) effectively processes data including data fields requiring 
references to dates on and after January 1, 2000 and have been designed not 
to experience or produce invalid or incorrect results or abnormal software 
operation related to or as a result of the occurrence of such dates.

     1.2.   ACCOUNTING TERMS  All accounting terms not specifically defined 
herein shall be construed in accordance with GAAP.  When used herein, the 
term "financial statements" shall include the notes and schedules thereto.  
Whenever the term "Borrower" is used in respect of a financial covenant or a 
related definition, it shall be understood to mean Borrower on a consolidated 
basis unless the context clearly requires otherwise.

     1.3.   CODE.  Any terms used in this Agreement that are defined in the 
Code shall be construed and defined as set forth in the Code unless otherwise 
defined herein.

     1.4.   CONSTRUCTION.  Unless the context of this Agreement clearly 
requires otherwise, references to the plural include the singular, references 
to the singular include the plural, the term "including" is not limiting, and 
the term "or" has, except where otherwise indicated, the inclusive meaning 
represented by the phrase "and/or."  The words "hereof," "herein," "hereby," 
"hereunder," and similar terms in this Agreement refer to this Agreement as a 
whole and not to any particular provision of this Agreement.  An Event of 
Default shall "continue" or be "continuing" until such Event of Default has 
been waived in writing by Foothill.  Section, subsection, clause, schedule, 
and exhibit references are to this Agreement unless otherwise specified.  Any 
reference in this Agreement or in the Loan Documents to this Agreement or any 
of the Loan Documents shall include all alterations, amendments, 
restatements, changes, extensions, modifications, renewals, replacements, 
substitutions, and supplements, thereto and thereof, as applicable.

     1.5.   SCHEDULES AND EXHIBITS. All of the schedules and exhibits 
attached to this Agreement shall be deemed incorporated herein by reference.

     1.6    THE TERM "BORROWER" OR "BORROWERS".  Unless otherwise 
specifically provided herein, all references to "Borrower" or "Borrowers" 
herein shall refer to and include each Borrower separately and all 
representations contained herein shall be deemed to be separately made by 
each of them, and each of the covenants, agreements and obligations set forth 
herein shall be deemed to be the joint and several covenants, agreements and 
obligations of them.  

                                       18
<PAGE>

Any notice, request, consent, report or other information or agreement 
delivered to Foothill by any Borrower shall be deemed to be ratified by, 
consented to and also delivered by each other Borrower.  Each Borrower 
recognizes and agrees that each covenant and agreement of "Borrower" or 
"Borrowers" under this Agreement and the other Loan Documents shall create a 
joint and several obligation of the Borrowers, which may be enforced against 
Borrowers, jointly or against each Borrower separately.  Without limiting the 
terms of this Agreement and the other Loan Documents, security interests, 
assets and collateral shall extend to the properties, interests, assets and 
collateral of each Borrower.  Similarly, the term "Obligations" shall 
include, without limitation, all obligations, liabilities and indebtedness of 
such corporations, or any one of them, to Foothill, whether such obligations, 
liabilities and indebtedness shall be joint, several, joint and several or 
individual.  Unless otherwise specified in this Agreement, the parties hereto 
anticipate that any notice, request, consent, report or other information or 
agreement to be delivered in connection with this Agreement by Borrowers to 
Foothill will be executed by Ultimate, on behalf of Borrowers, and that any 
such notice, request, consent, report or other information or agreement 
delivered to Foothill and executed by Ultimate shall be deemed to be executed 
by Ultimate on behalf of all the Borrowers.  In addition, unless otherwise 
specified in this Agreement, the parties hereto anticipate that any advances 
made hereunder by Foothill to Borrowers shall be disbursed directly to 
Ultimate.

2.   LOAN AND TERMS OF PAYMENT.

     2.1.   REVOLVING ADVANCES.

            (a)    Subject to the terms and conditions of this Agreement, 
Foothill agrees to make advances ("Advances") to Borrower in an amount 
outstanding not to exceed at any one time the lesser of (i) the Maximum 
Revolving Amount LESS the outstanding balance of all undrawn or unreimbursed 
Letters of Credit, or (ii) the Borrowing Base LESS the aggregate amount of 
all undrawn or unreimbursed Letters of Credit.  For purposes of this 
Agreement, "Borrowing Base", as of any date of determination, shall mean the 
result of:

                   (w)    THE LESSER OF (i) 75% of Eligible Accounts, and (ii)
             $2,500,000, PLUS

                   (x)    75% of the Cost of Eligible Inventory, PLUS

                   (y)    the Special Inventory Advance Amount, MINUS

                   (z)    the aggregate of such Reserves Against Availability as
             may have been established by Foothill.

            (b)    Each Advance shall be made upon Borrower's request 
(pursuant to the terms of SECTION 2.9), which request shall be irrevocable 
except as set forth in SECTION 2.12, specifying (i) the amount of the 
requested Advance; (ii) the requested funding date of such Advance; (iii) 
whether the Advance is to constitute a Eurodollar Rate Loan or a Reference 
Rate Loan (provided that a Special Inventory Advance must be a Reference Rate 
Loan); and (iv) if such Advance is to constitute a Eurodollar Rate Loan, the 
requested Interest Period therefor.  If 

                                       19
<PAGE>

the requested Advance constitutes a Eurodollar Rate Loan, such request must 
be delivered to Foothill no later than 11:00 a.m. (California time) two 
Business Days prior to the requested funding date therefor.

            (c)    Foothill shall have no obligation to make Advances 
hereunder to the extent they would cause the outstanding Obligations to 
exceed the Maximum Revolving Amount.

            (d)    Amounts borrowed pursuant to this SECTION 2.1 may be 
repaid and, subject to the terms and conditions of this Agreement, reborrowed 
at any time during the term of this Agreement.

     2.2.   LETTERS OF CREDIT.

            (a)    Subject to the terms and conditions of this Agreement, 
Foothill agrees to issue letters of credit for the account of Borrower (each, 
an "L/C") or to issue guarantees of payment (each such guaranty, an "L/C 
Guaranty") with respect to letters of credit issued by an issuing bank for 
the account of Borrower.  Foothill shall have no obligation to issue a Letter 
of Credit if any of the following would result:

                   (i)    100% of the aggregate amount of all undrawn and
            unreimbursed Letters of Credit would exceed the Borrowing Base LESS
            the amount of outstanding Advances and LESS the aggregate amount of
            all Reserves Against Availability; or

                   (ii)  the aggregate amount of all undrawn or unreimbursed
            Letters of Credit would exceed the lower of: (x) the Maximum
            Revolving Amount LESS the amount of outstanding Advances and LESS
            the aggregate amount of the Reserves Against Availability; or (y)
            $1,000,000; or

                   (iii) the outstanding Obligations would exceed the Maximum
            Revolving Amount.

Borrower expressly understands and agrees that Foothill shall have no 
obligation to arrange for the issuance by issuing banks of the letters of 
credit that are to be the subject of L/C Guarantees.  Borrower and Foothill 
acknowledge and agree that certain of the letters of credit that are to be 
the subject of L/C Guarantees may be outstanding on the Closing Date.  Each 
Letter of Credit shall have an expiry date no later than 60 days prior to the 
date on which this Agreement is scheduled to terminate under SECTION 3.4 
(without regard to any potential renewal term) and all such Letters of Credit 
shall be in form and substance acceptable to Foothill in its sole discretion. 
If Foothill is obligated to advance funds under a Letter of Credit, Borrower 
immediately shall reimburse such amount to Foothill and, in the absence of 
such reimbursement, the amount so advanced immediately and automatically 
shall be deemed to be an Advance hereunder and, thereafter, shall bear 
interest at the rate then applicable to Advances under SECTION 2.4.

                                       20
<PAGE>

            (b)    Borrower hereby agrees to indemnify, save, defend, and 
hold Foothill harmless from any loss, cost, expense, or liability, including 
payments made by Foothill, expenses, and reasonable attorneys fees incurred 
by Foothill arising out of or in connection with any Letter of Credit.  
Borrower agrees to be bound by the issuing bank's regulations and 
interpretations of any Letters of Credit guarantied by Foothill and opened to 
or for Borrower's account or by Foothill's interpretations of any L/C issued 
by Foothill to or for Borrower's account, even though this interpretation may 
be different from Borrower's own, and Borrower understands and agrees that 
Foothill shall not be liable for any error, negligence, or mistake, whether 
of omission or commission, in following Borrower's instructions or those 
contained in the Letter of Credit or any modifications, amendments, or 
supplements thereto.  Borrower understands that the L/C Guarantees may 
require Foothill to indemnify the issuing bank for certain costs or 
liabilities arising out of claims by Borrower against such issuing bank.  
Borrower hereby agrees to indemnify, save, defend, and hold Foothill harmless 
with respect to any loss, cost, expense (including reasonable attorneys 
fees), or liability incurred by Foothill under any L/C Guaranty as a result 
of Foothill's indemnification of any such issuing bank.

            (c)    Borrower hereby authorizes and directs any bank that 
issues a letter of credit guaranteed by Foothill to deliver to Foothill all 
instruments, documents, and other writings and property received by the 
issuing bank pursuant to such letter of credit, and to accept and rely upon 
Foothill's instructions and agreements with respect to all matters arising in 
connection with such letter of credit and the related application.  Borrower 
may or may not be the "applicant" or "account party" with respect to such 
letter of credit.

            (d)    Any and all charges, commissions, fees, and costs incurred 
by Foothill relating to the letters of credit guaranteed by Foothill shall be 
considered Foothill Expenses for purposes of this Agreement and immediately 
shall be reimbursable by Borrower to Foothill.

            (e)    Immediately upon the termination of this Agreement, 
Borrower agrees to either (i) provide cash collateral to be held by Foothill 
in an amount equal to 110% of the maximum amount of Foothill's obligations 
under Letters of Credit (such cash collateral to be released upon the release 
of all of Foothill's obligations thereunder), or (ii) cause to be delivered 
to Foothill releases of all of Foothill's obligations under outstanding 
Letters of Credit. At Foothill's discretion, any proceeds of Collateral 
received by Foothill after the occurrence and during the continuation of an 
Event of Default may be held as the cash collateral required by this SECTION 
2.2(E).

            (f)    If by reason of (i) any change in any applicable law, 
treaty, rule, or regulation or any change in the interpretation or 
application by any governmental authority of any such applicable law, treaty, 
rule, or regulation, or (ii) compliance by the issuing bank or Foothill with 
any direction, request, or requirement (irrespective of whether having the 
force of law) of any governmental authority or monetary authority including, 
without limitation, Regulation D of the Board of Governors of the Federal 
Reserve System as from time to time in effect (and any successor thereto):

                   (A)    any reserve, deposit, or similar requirement is or 
shall be imposed 

                                       21
<PAGE>

or modified in respect of any Letters of Credit issued hereunder, or

                   (B)    there shall be imposed on the issuing bank or 
Foothill any other condition regarding any letter of credit, or Letter of 
Credit, as applicable, issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the 
cost to the issuing bank or Foothill of issuing, making, guaranteeing, or 
maintaining any letter of credit, or Letter of Credit, as applicable, or to 
reduce the amount receivable in respect thereof by such issuing bank or 
Foothill, then, and in any such case, Foothill may, at any time within a 
reasonable period after the additional cost is incurred or the amount 
received is reduced, notify Borrower, and Borrower shall pay on demand such 
amounts as the issuing bank or Foothill may specify to be necessary to 
compensate the issuing bank or Foothill for such additional cost or reduced 
receipt, together with interest on such amount from the date of such demand 
until payment in full thereof at the rate set forth in SECTION 2.4(a)(i) or 
(c)(i), as applicable.  The determination by the issuing bank or Foothill, as 
the case may be, of any amount due pursuant to this SECTION 2.2(f), as set 
forth in a certificate setting forth the calculation thereof in reasonable 
detail, shall, in the absence of manifest or demonstrable error, be final and 
conclusive and binding on all of the parties hereto.

     2.3.   OVERADVANCES.  If, at any time or for any reason, the aggregate 
amount of Obligations owed by Borrower to Foothill pursuant to SECTIONS 2.1 
AND 2.2 is greater than either the Dollar or percentage limitations set forth 
in SECTIONS 2.1 OR 2.2 (an "Overadvance"), Borrower immediately shall pay to 
Foothill, in cash, the amount of such excess to be used by Foothill first, to 
repay Advances outstanding under SECTION 2.1 and, thereafter, to be held by 
Foothill as cash collateral to secure Borrower's obligation to repay Foothill 
for all amounts paid pursuant to Letters of Credit.

     2.4.   INTEREST AND LETTER OF CREDIT FEES:  RATES, PAYMENTS, AND 
CALCULATIONS.

            (a)    Interest Rate.  Except as provided in clause (c) below, 
all Obligations (except for undrawn Letters of Credit) shall bear interest on 
the Daily Balance as follows:  (i) Each Eurodollar Rate Loan shall bear 
interest at a per annum rate of two percentage points ABOVE the Adjusted 
Eurodollar Rate; (ii) each Special Inventory Advance shall bear interest at a 
per annum rate of 1.5 percentage points ABOVE the Reference Rate, and (iii) 
all other Obligations shall bear interest at a per annum rate of 0.375 
percentage points BELOW the Reference Rate.

            (b)    Letter of Credit Fee.  Borrower shall pay Foothill a fee 
(in addition to the charges, commissions, fees, and costs set forth in 
SECTION 2.2(d)) equal to 1.50% per annum times the Daily Balance of the 
aggregate undrawn amount of all outstanding Letters of Credit.

            (c)    Default Rate.  Upon the occurrence and during the 
continuation of an Event of Default, (i) all Obligations (except for undrawn 
Letters of Credit) shall bear interest at a per annum rate equal to 2.50 
percentage points ABOVE the interest rate otherwise stated in SECTION 2.4(a) 
above, and (ii) the Letter of Credit fee provided in SECTION 2.4(b) shall be 
increased to 2.50% ABOVE the rate otherwise stated in SECTION 2.4(b) herein.

                                       22
<PAGE>

            (d)    Minimum Interest.  In no event shall the rate of interest 
chargeable hereunder for any day be less than 6% per annum.  To the extent 
that interest accrued hereunder at the rate set forth herein would be less 
than the foregoing minimum daily rate, the interest rate chargeable hereunder 
for such day automatically shall be deemed increased to the minimum rate.  To 
the extent that interest accrued hereunder at the rate set forth herein 
(including the minimum interest rate) would yield less than the foregoing 
minimum amount, the interest rate chargeable hereunder for the period in 
question automatically shall be deemed increased to that rate that would 
result in the minimum amount of interest being accrued and payable hereunder.

            (e)    Payments.  Interest and Letter of Credit fees payable 
hereunder shall be due and payable, in arrears, on the first day of each 
month during the term hereof.  Borrower hereby authorizes Foothill, at its 
option, without prior notice to Borrower, to charge such interest and Letter 
of Credit fees, all Foothill Expenses (as and when incurred), the charges, 
commissions, fees, and costs provided for in SECTION 2.2(d) (as and when 
accrued or incurred), the fees and charges provided for in SECTION 2.10 (as 
and when accrued or incurred), and all installments or other payments due 
under any Loan Document to Borrower's Loan Account, which amounts thereafter 
shall accrue interest at the rate then applicable to Advances hereunder.  Any 
interest not paid when due shall be compounded and shall thereafter accrue 
interest at the rate then applicable to Advances hereunder.

            (f)    Computation.  The Reference Rate as of the date of this 
Agreement is 8.50% per annum.  In the event the Reference Rate is changed 
from time to time hereafter, the applicable rate of interest hereunder 
automatically and immediately shall be increased or decreased by an amount 
equal to such change in the Reference Rate.  All interest and fees chargeable 
under the Loan Documents shall be computed on the basis of a 360 day year for 
the actual number of days elapsed.

            (g)    Intent to Limit Charges to Maximum Lawful Rate.  In no 
event shall the interest rate or rates payable under this Agreement, plus any 
other amounts paid in connection herewith, exceed the highest rate 
permissible under any law that a court of competent jurisdiction shall, in a 
final determination, deem applicable.  Borrower and Foothill, in executing 
and delivering this Agreement, intend legally to agree upon the rate or rates 
of interest and manner of payment stated within it; PROVIDED, HOWEVER, that, 
anything contained herein to the contrary notwithstanding, if said rate or 
rates of interest or manner of payment exceeds the maximum allowable under 
applicable law, then, IPSO FACTO as of the date of this Agreement, Borrower 
is and shall be liable only for the payment of such maximum as allowed by 
law, and payment received from Borrower in excess of such legal maximum, 
whenever received, shall be applied to reduce the principal balance of the 
Obligations to the extent of such excess.

     2.5.   CREDIT CARD COLLECTIONS.

            (a)    Annexed hereto is SCHEDULE 2.5, which describes all 
arrangements to which Borrower is a party with respect to the payment to 
Borrower of the proceeds of all credit card charges for sales by Borrower.

                                       23
<PAGE>

            (b)    Payment of all credit card charges submitted by Borrower 
to credit card clearinghouses or other processors identified on SCHEDULE 2.5 
or otherwise and any other amounts payable to Borrower by such clearinghouses 
or other processors shall be directed to such account as may be designated by 
Foothill.

     2.6.   DEPOSITORY ACCOUNTS.  Annexed hereto is SCHEDULE 2.6 which 
describes all present depository accounts of Borrower, which schedule 
includes, with respect to each such depository account (i) the name and 
address of that depository; (ii) the account number(s) maintained with such 
depository; and (iii) a contact person at such depository.  In addition, the 
following depository accounts have been or will be established (and are 
referred to herein):

            (a)    The Concentration Account, the contents of which shall 
constitute Collateral and Negotiable Collateral.

                   (i)    Borrower shall contemporaneous with the execution 
of this Agreement, (x) provide Foothill with such blocked account agreements 
(the "Blocked Account Agreements"), in form and substance satisfactory to 
Foothill, of the depository with which the Concentration Account is 
maintained as may be satisfactory to Foothill; and (y) not establish any 
Concentration Account hereafter except upon not less than thirty (30) days 
prior written notice to Foothill and the delivery to Foothill of a similar 
such agreement acceptable to Foothill.

                   (ii)   Borrower shall pay all fees and charges of, and 
maintain such impressed balances as may be required by Foothill or by any 
bank in which any account is opened as required hereby (even if such account 
is opened by Foothill).

            (b)    The Designated Account.

Borrower shall not establish any depository accounts hereafter unless 
Borrower, contemporaneous with such establishment, delivers to Foothill an 
agreement (in form satisfactory to Foothill) executed on behalf of the 
depository with which such depository account is being established.

     2.7.   COLLECTIONS.

            (a)    All Collections constitute Collateral and proceeds of 
Collateral and shall be held in trust by Borrower for Foothill; shall not be 
commingled with any of Borrower's other funds; and shall be deposited and/or 
transferred daily only to the Concentration Account.

            (b)    Borrower shall cause the ACH or wire transfer to the 
Concentration Account, no less than daily (and whether or not there is then 
an outstanding balance in the Loan Account) of all Collections, including, 
without limitation:

                   (i)    The then contents of each depository account (other
                          than the Designated Account), each such transfer to be
                          net of any minimum balance, not to exceed $1,500, as
                          may be required to be maintained 

                                       24
<PAGE>


                          in the subject depository account by the bank at 
                          which such depository account is maintained.

                   (ii)   The proceeds of all credit card charges not otherwise
                          provided for pursuant hereto.

            (c)    Foothill shall transfer to the Designated Account any 
surplus (attributable to Borrower) in excess of the Obligations in Foothill 
Account remaining after the application to the Obligations referred to in 
Section 2.10 (less those amounts which are to be netted out as provided 
therein).

            (d)    Upon terms and conditions set forth in the Blocked Account 
Agreement, all Collections received in the Concentration Account shall be 
wired into an account designated by Foothill (the "Foothill Account").

     2.8.   CREDITING PAYMENTS; APPLICATION OF COLLECTIONS.  The receipt of 
any Collections by Foothill (whether from transfers to Foothill by the 
depository account banks or Concentration Account Banks or otherwise) 
immediately shall be applied provisionally to reduce the Obligations 
outstanding under SECTION 2.1, but shall not be considered a payment on 
account unless such Collection item is a wire transfer of immediately 
available federal funds and is made to Foothill Account or unless and until 
such Collection item is honored when presented for payment.  From and after 
the Closing Date, Foothill shall be entitled to charge Borrower for one 
Business Day of 'clearance' or 'float' at the rate set forth in SECTION 
2.4(a)(i) or SECTION 2.4(c)(i), as applicable, on all Collections that are 
received by Foothill (regardless of whether forwarded by the depository 
account banks or Concentration Account Banks to Foothill, whether 
provisionally applied to reduce the Obligations under SECTION 2.1, or 
otherwise).  This across-the-board one Business Day clearance or float charge 
on all Collections is acknowledged by the parties to constitute an integral 
aspect of the pricing of Foothill's financing of Borrower, and shall apply 
irrespective of the characterization of whether receipts are owned by 
Borrower or Foothill, and whether or not there are any outstanding Advances, 
the effect of such clearance or float charge being the equivalent of charging 
one Business Days of interest on such Collections.  Should any Collection 
item not be honored when presented for payment, then Borrower shall be deemed 
not to have made such payment, and interest shall be recalculated 
accordingly.  Anything to the contrary contained herein notwithstanding, any 
Collection item shall be deemed received by Foothill only if it is received 
into Foothill Account on a Business Day on or before 11:00 a.m. California 
time.  If any Collection item is received into Foothill Account on a 
non-Business Day or after 11:00 a.m. California time on a Business Day, it 
shall be deemed to have been received by Foothill as of the opening of 
business on the immediately following Business Day.

     2.9.   DESIGNATED ACCOUNT.  Foothill is authorized to make the Advances and
the Letters of Credit under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person, or
without instructions if pursuant to SECTION 2.4(e).  Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Advances requested by Borrower
and made by Foothill hereunder.  Unless otherwise agreed by Foothill and
Borrower, any 

                                       25
<PAGE>

Advance requested by Borrower and made by Foothill hereunder shall be made to 
the Designated Account.

     2.10.  MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS.  Foothill 
shall maintain an account on its books in the name of Borrower (the "Loan 
Account") on which Borrower will be charged with all Advances made by 
Foothill to Borrower or for Borrower's account, including accrued interest, 
Foothill Expenses, and any other payment Obligations of Borrower.  In 
accordance with SECTION 2.8, the Loan Account will be credited with all 
payments received by Foothill from Borrower or for Borrower's account.  
Foothill shall render statements, on a monthly basis, regarding the Loan 
Account to Borrower, including principal, interest, fees, and including an 
itemization of all charges and expenses constituting Foothill Expenses owing, 
and such statements shall be conclusively presumed to be correct and accurate 
and constitute an account stated between Borrower and Foothill unless, within 
30 days after receipt thereof by Borrower, Borrower shall deliver to Foothill 
written objection thereto describing the error or errors contained in any 
such statements.

     2.11.  FEES.  Borrower shall pay to Foothill the following fees:

     (a)    CLOSING FEE.  On the Closing Date, a closing fee of $100,000;

     (b)    FACILITY FEE.  On the Closing Date, a facility fee in an amount
            equal to 0.125% of the Maximum Revolving Amount, which facility fee
            shall be deemed fully earned as of the Closing Date and shall be
            payable in three equal installments of one-third of the facility fee
            each, with the first installment being due on the Closing Date, the
            second installment being due on the earliest to occur of the first
            anniversary of the Closing Date, the date of the termination of this
            Agreement or the date upon which Foothill declares all Obligations
            immediately due and payable, and third installment being due on the
            earliest to occur of the second anniversary of the Closing, the date
            of the termination of this Agreement or the date upon which Foothill
            declares all Obligations immediately due and payable;

     (c)    FINANCIAL EXAMINATION, DOCUMENTATION, AND APPRAISAL FEES.
            Foothill's customary fee of $650 per day per examiner, plus
            reasonable out-of-pocket expenses for each financial analysis and
            examination (i.e., audits) of Borrower performed by personnel
            employed by Foothill (except such fee of $650 per day per examiner
            shall not be payable with respect to Foothill's initial prospect
            audit of Borrower performed prior to the date of this Agreement);
            Foothill's customary appraisal fee of $1,500 per day per appraiser,
            plus reasonable out-of-pocket expenses for each appraisal of the
            Collateral performed by personnel employed by Foothill; and, the
            actual charges paid or incurred by Foothill if it elects to employ
            the services of one or more third Persons to perform such financial
            analyses and examinations (i.e., audits) of Borrower or to appraise
            the Collateral; and

     (d)    SERVICING FEE.  On the first day of each month during the term of
            this Agreement, and thereafter so long as any Obligations are
            outstanding, a servicing fee in an 

                                       26
<PAGE>


            amount equal to $5,000.00.

     2.12   EURODOLLAR RATE LOANS.  Any other provisions herein to the 
contrary notwithstanding, the following provisions shall govern with respect 
to Eurodollar Rate Loans as to the matters covered:

            (a)    BORROWING; CONVERSION; CONTINUATION.  Borrower may from time
     to time, on or after the Closing Date, request in a written or telephonic
     communication with Foothill:  (i) Advances (other than Special Inventory
     Advances) to constitute Eurodollar Rate Loans (pursuant to SECTION 2.1(c));
     (ii) that Reference Rate Loans (other than Special Inventory Advances) be
     converted into Eurodollar Rate Loans; or (iii) that existing Eurodollar
     Rate Loans continue for an additional Interest Period.  Any such request
     shall specify the aggregate amount of the requested Eurodollar Rate Loans,
     the proposed funding date therefor (which shall be a Business Day, and with
     respect to continued Eurodollar Rate Loans shall be the last day of the
     Interest Period of the existing Eurodollar Rate Loans being continued), and
     the proposed Interest Period, in each case subject to the limitations set
     forth below).  Eurodollar Rate Loans may only be made, continued, or
     extended if, as of the proposed funding date therefor each of the following
     conditions is satisfied:

                   (v)    no Event of Default exists;

                   (w)    no more than five Interest Periods may be in effect at
            any one time;

                   (x)    the amount of Eurodollar Rate Loan borrowed,
            converted, or continued must be in an amount not less than
            $1,000,000 and integral multiples of $500,000 in excess thereof;

                   (y)    Foothill shall have determined that the Interest
            Period or Adjusted Eurodollar Rate is available to Foothill and can
            be readily determined as of the date of request for such Eurodollar
            Rate Loan by Borrower; and

                   (z)    Foothill shall have received such request at least two
            Business Days prior to the proposed funding date therefor.

            Any request by Borrower to borrow Eurodollar Rate Loans, to 
convert Reference Rate Loans to Eurodollar Rate Loans, or to continue any 
existing Eurodollar Rate Loans shall be irrevocable, except to the extent 
that Foothill shall determine under SECTION 2.13, 2.14 OR 2.15 that such 
Eurodollar Rate Loans cannot be made or continued.

            (b)    DETERMINATION OF INTEREST PERIOD.  By giving notice as set 
forth in SECTION 2.12(a), Borrower shall have the option of selecting a one, 
two or three month Interest Period for such Eurodollar Rate Loan.  The 
determination of Interest Periods shall be subject to the following 
provisions:

                                       27
<PAGE>

                   (i)    in the case of immediately successive Interest
            Periods, each successive Interest Period shall commence on the day
            on which the next preceding Interest Period expires;

                   (ii)   if any Interest Period would otherwise expire on a day
            which is not a Business Day, the Interest Period shall be extended
            to expire on the next succeeding Business Day; PROVIDED, HOWEVER,
            that if the next succeeding Business Day occurs in the following
            calendar month, then such Interest Period shall expire on the
            immediately preceding Business Day;

                   (iii)  if any Interest Period begins on the last Business Day
            of a month, or on a day for which there is no numerically
            corresponding day in the calendar month at the end of such Interest
            Period, then the Interest Period shall end on the last Business Day
            of the calendar month at the end of such Interest Period; and

                   (iv)   Borrower may not select an Interest Period which
            expires later than the Renewal Date (or, in the event that the term
            of this Agreement is automatically renewed pursuant to SECTION 3.4,
            the next anniversary of the Renewal Date).

            (c)    AUTOMATIC CONVERSION; OPTIONAL CONVERSION BY FOOTHILL.  
Any Eurodollar Rate Loan shall automatically convert to a Reference Rate Loan 
upon the last day of the applicable Interest Period, unless Foothill has 
received a request to continue such Eurodollar Rate Loan at least two 
Business Days prior to the end of such Interest Period in accordance with the 
terms of SECTION 2.12(a).  Any Eurodollar Rate Loan shall, at Foothill's 
option, upon notice to Borrower, convert to a Reference Rate Loan in the 
event that (i) an Event of Default shall have occurred and be continuing as 
of the last day of the Interest Period for such Eurodollar Rate Loan, or (ii) 
this Agreement shall terminate, and Borrower shall pay to Foothill any 
amounts required by SECTION 2.16 as a result thereof.

     2.13   ILLEGALITY.  Any other provision herein to the contrary
notwithstanding, if the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof shall make it unlawful for Foothill
to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (a)
the obligation of Foothill hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such, and convert Reference Rate Loans to Eurodollar
Rate Loans shall forthwith be suspended and (b) Foothill's then outstanding
Eurodollar Rate Loans, if any, shall be converted automatically to Reference
Rate Loans on the respective last days of the then current Interest Periods with
respect thereto or within such earlier period as required by law; PROVIDED,
HOWEVER, that before making any such demand, Foothill agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions and so long as such efforts would not be disadvantageous to it, in
its reasonable discretion, in any legal, economic, or regulatory manner) to
designate a different lending office if the making of such a designation would
allow Foothill or its lending office to continue to perform its obligations to
make Eurodollar Rate Loans.  If any such conversion of a Eurodollar Rate Loan
occurs on a day which is not the last day of the then current Interest Period
with 

                                       28
<PAGE>

respect thereto, Borrower shall pay to Foothill such amounts, if any, as may 
be required pursuant to SECTION 2.16.  If circumstances subsequently change 
so that Foothill shall determine that it is no longer so affected, Foothill 
will promptly notify Borrower, and upon receipt of such notice, the 
obligations of Foothill to make or continue Eurodollar Rate Loans or to 
convert Reference Loans into Eurodollar Rate Loans shall be reinstated.

     2.14   REQUIREMENTS OF LAW.  (a) If the adoption of or any change in any 
Requirement of Law or in the interpretation or application thereof or 
compliance by Foothill with any request or directive (whether or not having 
the force of law) from any central bank or other Governmental Authority made 
subsequent to the date hereof

                   (i)    shall subject Foothill to any tax, levy, charge, fee,
            reduction, or withholding of any kind whatsoever with respect to
            this Agreement or any Advance, or change the basis of taxation of
            payments to Foothill in respect thereof (except for taxes covered by
            SECTION 2.15 and the establishment of a tax based on the net income
            of Foothill or changes in the rate of tax on the net income of
            Foothill);

                   (ii)   shall impose, modify or hold applicable any reserve,
            special deposit, compulsory loan, or similar requirement against
            assets held by, deposits or other liabilities in or for the account
            of, Advances or other extensions of credit by, or any other
            acquisition of funds by, any office of Foothill; or

                   (iii)  shall impose on Foothill any other condition with
            respect to this Agreement or any Advance;

and the result of any of the foregoing is to increase the cost to Foothill, 
by an amount which Foothill reasonably deems to be material, of making, 
converting into, continuing, or maintaining Advances or to increase the cost 
to Foothill, by an amount which Foothill deems to be material, or to reduce 
any amount receivable hereunder in respect of Advances, or to forego any 
other sum payable thereunder or make any payment on account thereof, then, in 
any such case, Borrower shall promptly pay Foothill, upon its demand, any 
additional amounts necessary to compensate Foothill for such increased cost 
or reduced amount receivable; PROVIDED, HOWEVER, that before making any such 
demand, Foothill agrees to use reasonable efforts (consistent with its 
internal policy and legal and regulatory restrictions and so long as such 
efforts would not be disadvantageous to it, in its reasonable discretion, in 
any legal, economic, or regulatory manner) to designate a different 
Eurodollar lending office if the making of such designation would allow 
Foothill or its Eurodollar lending office to continue to perform its 
obligations to make Eurodollar Rate Loans or to continue to fund or maintain 
Eurodollar Rate Loans and avoid the need for, or materially reduce the amount 
of, such increased cost.  If Foothill becomes entitled to claim any 
additional amount pursuant to this SECTION 2.14, Foothill shall promptly 
notify Borrower of the event by reason of which it has become so entitled.  A 
certificate as to any additional amounts payable pursuant to this SECTION 
2.14 submitted by Foothill to Borrower shall be conclusive in the absence of 
manifest error.  If Borrower so notifies Foothill within 5 Business Days 
after Foothill notifies Borrower of any increased cost pursuant to the 
foregoing provisions of this 

                                       29
<PAGE>

SECTION 2.14, Borrower may convert all Eurodollar Rate Loans then outstanding 
into Reference Rate Loans in accordance with SECTION 2.12 and, additionally, 
reimburse Foothill for any cost in accordance with SECTION 2.16.  This 
covenant shall survive the termination of this Agreement and the payment of 
the Advance and all other amounts payable hereunder for nine months following 
such termination and repayment.

            (b)    If Foothill shall have determined that the adoption of or 
any change in any Requirement of Law regarding capital adequacy or in the 
interpretation or application thereof or compliance by Foothill or any Person 
controlling Foothill with any request or directive regarding capital adequacy 
(whether or not having the force of law) from any Governmental Authority made 
subsequent to the date hereof does or shall have the effect of increasing the 
amount of capital required to be maintained or reducing the rate of return on 
Foothill's or such Person's capital as a consequence of its obligations 
hereunder to a level below that which Foothill or such Person could have 
achieved but for such change or compliance (taking into consideration 
Foothill's or such Person's policies with respect to capital adequacy) by an 
amount deemed by Foothill to be material, then from time to time, after 
submission by Foothill to Borrower of a prompt written request therefor, 
Borrower shall pay to Foothill such additional amount or amounts as will 
compensate Foothill or such Person for such reduction.  This covenant shall 
survive the termination of this Agreement and the payment of the Advances and 
all other amount payable hereunder for nine months following such termination 
and repayment.

     2.15   TAXES.  (a)  Except as provided below in this SECTION 2.15, all 
payments made by Borrower under this Agreement and any other Loan Documents 
shall be made free and clear of, and without deduction or withholding for or 
on account of, any present or future income, stamp or other taxes, levies, 
imposts, duties, charges, fees, deductions, or withholdings, now or hereafter 
imposed, levied, collected, withheld, or assessed by any Governmental 
Authority, excluding net income taxes and franchise taxes imposed in lieu of 
net income taxes.  If any such non-excluded taxes, levies, imposts, duties, 
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required 
to be withheld from any amounts payable to Foothill hereunder or under any 
other Loan Documents, the amounts so payable to Foothill shall be increased 
to the extent necessary to yield to Foothill (after payment of all 
Non-Excluded Taxes) interest or any such other amounts payable hereunder at 
the rates or in the amounts specified in this Agreement and any other Loan 
Documents; PROVIDED, HOWEVER, that Borrower shall be entitled to deduct and 
withhold any Non-Excluded Taxes and shall not be required to increase any 
such amounts payable to Foothill if Foothill fails or is unable to comply 
with the requirements of paragraph (b) of this SECTION 2.15.  Whenever any 
Non-Excluded Taxes are payable by Borrower, as promptly as possible 
thereafter Borrower shall send to Foothill a certified copy of an original 
official receipt received by Borrower showing payment thereof.  If Borrower 
fails to pay any Non-Excluded Taxes when due to the appropriate taxing 
authority or fails to remit to Foothill the required receipts or other 
required documentary evidence, Borrower shall indemnify Foothill for any 
incremental taxes, interest or penalties that  may become payable by Foothill 
as a result of any such failure.  The agreements in this SECTION 2.15 shall 
survive the termination of this Agreement and the payment of the Advances and 
all other amounts payable hereunder.

                                       30
<PAGE>


            (b)    Any Participant or assignee of Foothill that is not 
incorporated under the laws of the United States of America or a state 
thereof (any such Person, a "Foreign Lender") shall:

                   (i)    (x)    on or before the date of any payment by
            Borrower under this Agreement to such Foreign Lender, deliver to
            Borrower and Foothill (A) two duly completed copies of United States
            Internal Revenue Service Form 1001 or 4224, or successor applicable
            form, as the case may be, certifying that it is entitled to receive
            payments under this Agreement without any deduction or withholding
            of any United States federal income taxes and (B) a duly completed
            Internal Revenue Service Form W-8 or W-9, or successor applicable
            form, as the case may be, certifying that it is entitled to an
            exemption from United States backup withholding tax;

                          (y)    deliver to Borrower and Foothill two further
            copies of any such form or certification on or before the date that
            any such form or certification expires or becomes obsolete and after
            the occurrence of any event requiring a change in the most recent
            form previously delivered by it to Borrower, and

                          (z)    obtain such extensions of time for filing and
            complete such forms or certifications as may reasonably be requested
            by Borrower or Foothill;

            or

                   (ii)   in the case of any such Foreign Lender that is not a
            "bank" within the meaning of Section 881(c)(3)(A) of the IRC and
            that does not comply with subparagraph (i) of this paragraph (b),

                          (x)    represent to Borrower (for the benefit of
            Borrower and Foothill) that it is not a bank within the meaning of
            Section 881(c)(3)(A) of the IRC,

                          (y)    deliver to Borrower on or before the date of
            any payment by Borrower, with a copy to Foothill:  (1) a certificate
            stating that such Foreign Lender (A) is not a "bank" under Section
            881(c)(3)(A) of the IRC, is not subject to regulatory or other legal
            requirements as a bank in any jurisdiction, and has not been treated
            as a bank for purposes of any tax, securities law, or other filing
            or submission made to any Governmental Authority, any application
            made to a rating agency or qualification for any exemption from tax,
            securities law or other legal requirements, (B) is not a 10-percent
            shareholder within the meaning of Section 881(c)(3)(B) and (C) is
            not a controlled foreign corporation receiving interest from a
            related person within the meaning of Section 881(c)(3)(C) of the IRC
            (any such certificate a "U.S. TAX COMPLIANCE CERTIFICATE"); and (2)
            two duly completed copies of Internal Revenue Service Form W-8, or
            successor applicable 

                                       31
<PAGE>

            form, certifying to such Foreign Lender's legal entitlement at 
            the date of such certificate to an exemption from U.S. 
            withholding tax under the provisions of Section 881(c) of the IRC 
            with respect to payments to be made under this Agreement (and to 
            deliver to Borrower and Foothill two further copies of Form W-8 
            on or before the date it expires or becomes obsolete and after 
            the occurrence of any event requiring a change in the most 
            recently provided form and, if necessary, obtain any extensions 
            of time reasonably requested by Borrower or Foothill for filing 
            and completing such forms), and

                          (z)    agree, to the extent legally entitled to do so,
            upon reasonable request by Borrower, to provide to Borrower (for the
            benefit of Borrower and Foothill) such other forms as may be
            reasonably required in order to establish the legal entitlement of
            such Foreign Lender to an exemption from withholding with respect to
            payments under this Agreement;

     (c)    Foothill and each Foreign Lender shall, upon the reasonable 
request by Borrower, deliver to Borrower or the applicable Governmental 
Authority, as the case may be, any form or certificate required in order that 
any payment by Borrower under this Agreement may be made free and clear of, 
and without deduction or withholding for or on Non-Excluded Taxes (or to 
allow any such deduction or withholding to be at a reduced rate) imposed on 
such payment under the laws of any jurisdiction, PROVIDED that Foothill or 
such Foreign Lender, as the case may be, is legally entitled to complete, 
execute and deliver such form or certificate and such completion, execution 
or submission would not materially prejudice the legal position of Foothill 
or such Foreign Lender, as the case may be, unless in any such case any 
change in treaty, law, or regulation has occurred after the date such Person 
becomes a Foreign Lender hereunder which renders all such forms and 
certificates inapplicable or which would prevent such Foreign Lender from 
duly completing and delivering any such form or certificate with respect to 
it and such Foreign Lender so advises Borrower and Foothill. Each Person that 
shall become an assignee or a Participant shall, upon the effectiveness of 
the related transfer, be required to provide all of the forms, 
certifications, and statements required pursuant to this SECTION 2.15; 
PROVIDED, HOWEVER, that in the case of a Participant the obligations of such 
Participant pursuant to this paragraph (c) shall be determined as if such 
Participant were an assignee except that such Participant shall furnish all 
such required forms, certifications, and statements to Foothill.

     2.16   INDEMNITY.  Borrower agrees to indemnify Foothill and to hold 
Foothill harmless from any loss or expense which Foothill may sustain or 
incur as a consequence of (a) default by Borrower in payment when due of the 
principal amount of or interest on any Eurodollar Rate Loan, (b) default by 
Borrower in making a borrowing of, conversion into, or continuation of 
Eurodollar Rate Loans after Borrower has given a notice requesting the same 
in accordance with the provisions of this Agreement, (c) default by Borrower 
in making any prepayment after Borrower has given a notice thereof in 
accordance with the provisions of this Agreement, or (d) the making of a 
prepayment of Eurodollar Rate Loans on a day which is not the last day of an 
Interest Period with respect thereto (whether due to the termination of this 
Agreement upon an Event of Default or otherwise), including, in each case, 
any such loss or expense (but excluding loss of margin) arising from the 
reemployment of funds obtained by it or from fees payable to 

                                       32
<PAGE>

terminate the deposits from which such funds were obtained. Calculation of 
all amounts payable to Foothill under this SECTION 2.16 shall be made as 
though Foothill had actually funded the relevant Eurodollar Rate Loan through 
the purchase of a deposit bearing interest at the Eurodollar Rate in an 
amount equal to the amount of such Eurodollar Rate Loan and having a maturity 
comparable to the relevant Interest Period; PROVIDED, HOWEVER, that Foothill 
may fund each of the Eurodollar Rate Loans in any manner it sees fit, and the 
foregoing assumption shall be utilized only for the calculation of amounts 
payable under this SECTION 2.16.  This covenant shall survive the termination 
of this Agreement and the payment of the Loans and all other amounts payable 
hereunder for a period of nine months thereafter.

     2.17   JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION.

            (a)    Each Borrower states and acknowledges that:  (i) pursuant 
to this Agreement, Borrowers desire to utilize their borrowing potential on a 
consolidated basis to the same extent possible if they were merged into a 
single corporate entity; (ii) it has determined that it will benefit 
specifically and materially from the advances of credit contemplated by this 
Agreement; (iii) it is both a condition precedent to the obligations of 
Foothill and a desire of the Borrowers that each Borrower execute and deliver 
to Foothill this Agreement; and (iv) Borrowers have requested and bargained 
for the structure and terms of and security for the advances contemplated by 
this Agreement.

            (b)    Each Borrower hereby irrevocably and unconditionally:  (i) 
agrees that it is jointly and severally liable to Foothill for the full and 
prompt payment of the Obligations and the performance by each Borrower of its 
obligations hereunder in accordance with the terms hereof; (ii) agrees to 
fully and promptly perform all of its obligations hereunder with respect to 
each advance of credit hereunder as if such advance had been made directly to 
it; and (iii) agrees as a primary obligation to indemnify Foothill on demand 
for and against any loss incurred by Foothill as a result of any of the 
obligations of any Borrower being or becoming void, voidable, unenforceable 
or ineffective for any reason whatsoever, whether or not known to Foothill or 
any Person, the amount of such loss being the amount which Foothill would 
otherwise have been entitled to recover from Borrower.

            (c)    It is the intent of each Borrower that the indebtedness,
obligations and liability hereunder of no one of them be subject to challenge on
any basis.  Accordingly, as of the date hereof, the liability of each Borrower
under this SECTION 2.17, together with all of its other liabilities to all
Persons as of the date hereof and as of any other date on which a transfer is
deemed to occur by virtue of this Agreement, calculated in amount sufficient to
pay its probable net liabilities on its existing Indebtedness as the same become
absolute and matured ("DATED LIABILITIES") is, and is to be, less than the
amount of the aggregate of a fair valuation of its property as of such
corresponding date ("DATED ASSETS").  To this end, each Borrower under this
SECTION 2.17 (i) grants to and recognizes in each other Borrower, ratably,
rights of subrogation and contribution in the amount, if any, 

                                       33
<PAGE>

by which the Dated Assets of such Borrower, but for the aggregate of 
subrogation and contribution in its favor recognized herein, would exceed the 
Dated Liabilities of such Borrower or, as the case may be, (ii) acknowledges 
receipt of and recognizes its right to subrogation and contribution ratably 
from each other Borrower in the amount, if any by which the Dated Liabilities 
of such Borrower, but for the aggregate of subrogation and contribution in 
its favor recognized herein, would exceed the Dated Assets of such Borrower 
under this SECTION 2.17.  In recognizing the value of the Dated Assets and 
the Dated Liabilities, it is understood that Borrowers will recognize, to at 
least the same extent of their aggregate recognition of liabilities 
hereunder, their rights to subrogation and contribution hereunder.  It is a 
material objective of this SECTION 2.17 that each Borrower recognizes rights 
to subrogation and contribution rather than be deemed to be insolvent (or in 
contemplation thereof) by reason of any arbitrary interpretation of its joint 
and several obligations hereunder.

3.   CONDITIONS; TERM OF AGREEMENT.

     3.1.   CONDITIONS PRECEDENT TO THE INITIAL ADVANCE AND LETTER OF CREDIT 
PURSUANT TO THE SEPTEMBER 30, 1998 LOAN AGREEMENT.  The obligation of 
Foothill to make the initial Advance or to issue the initial Letter of Credit 
pursuant to the September 30, 1998 Loan Agreement is subject to the 
fulfillment, to the satisfaction of Foothill and its counsel, of each of the 
following conditions on or before the Closing Date:

            (a)    the Closing Date shall occur on or before September 30, 
1998;

            (b)    Foothill shall have received searches reflecting the 
filing of its financing statements and fixture filings;

            (c)    Foothill shall have received such appraisals as to the 
property of Ultimate as shall be required by Foothill, including, without 
limitation, an appraisal of the Net Recovery Value of the Eligible Inventory, 
each such appraisal to be in form and substance satisfactory to Foothill;

            (d)    Foothill shall have received such financial statements and 
other financial information as to Borrower as shall be required by Foothill, 
which financial statements and other financial information shall be in form 
and substance satisfactory to Foothill;

            (e)    Foothill shall have received each of the following 
documents, duly executed, and each such document shall be in full force and 
effect:

                   (i)    the Blocked Account Agreements;

                   (ii)   depository account bank notifications;

                   (iii)  [INTENTIONALLY OMITTED];

                   (iv)   the Disbursement Letter;

                   (v)    the Pay-Off Letter, together with UCC termination
                          statements or UCC assignment statements and other
                          documentation evidencing the termination or assignment
                          by Existing Lender of its Liens in 

                                       34
<PAGE>

                          and to the properties and assets of Borrower;

                   (vi)   Trademark Security Agreement;

                   (vii)  Assignment of Rights under Computer Program and
                          Software Agreement, executed by Ultimate, relating to
                          the Hardware Purchase and Tyler Management Information
                          System License Agreement between Ultimate and Tyler
                          Business Systems, Inc., now known as Tyler Retail
                          Systems, Inc., together with an Estoppel Certificate
                          and Agreement relating thereto executed by Tyler
                          Retail Systems, Inc., each in form and substance
                          acceptable to Foothill;

                   (viii) Subordination and Consent Agreement, executed by
                          Colorado National Bank as Trustee, in form and
                          substance satisfactory to Foothill; and

                   (ix)   Such other documents as shall be required by Foothill.

            (f)    Foothill shall have received a certificate from the 
Secretary of Ultimate attesting to the resolutions of Ultimate's Board of 
Directors authorizing its execution, delivery, and performance of the 
September 30, 1998 Loan Agreement and the other Loan Documents to which 
Ultimate is a party and authorizing specific officers of Ultimate to execute 
the same;

            (g)    Foothill shall have received copies of Ultimate's 
Governing Documents, as amended, modified, or supplemented to the Closing 
Date, certified by the Secretary of Ultimate;

            (h)    Foothill shall have received a certificate of status with 
respect to Ultimate, dated within 10 days of the Closing Date, such 
certificate to be issued by the appropriate officer of the jurisdiction of 
organization of Ultimate, which certificate shall indicate that Ultimate is 
in good standing in such jurisdiction;

            (i)    Foothill shall have received certificates of status with 
respect to Ultimate, each dated within 15 days of the Closing Date, such 
certificates to be issued by the appropriate officer of the jurisdictions in 
which its failure to be duly qualified or licensed would constitute a 
Material Adverse Change, which certificates shall indicate that Ultimate is 
in good standing in such jurisdictions;

            (j)    Foothill shall have received a certificate of insurance, 
together with the endorsements thereto, as are required by SECTION 6.10, the 
form and substance of which shall be satisfactory to Foothill and its counsel;

            (k)    [INTENTIONALLY OMITTED]

            (l)    Foothill shall have received such Collateral Access
Agreements (or 

                                       35
<PAGE>

assignments of the same to Foothill in form and substance acceptable to 
Foothill) from lessors, warehousemen, bailees, and other third persons as 
Foothill may require;

            (m)    Foothill shall have received an opinion of Ultimate's 
counsel in form and substance satisfactory to Foothill in its sole discretion;

            (n)    Foothill shall have received satisfactory evidence that 
all tax returns required to be filed by Borrower have been timely filed and 
all taxes upon Borrower or its properties, assets, income, and franchises 
(including real property taxes and payroll taxes) have been paid prior to 
delinquency, except such taxes that are the subject of a Permitted Protest;

            (o)    Foothill shall have received satisfactory reference checks 
of the key officers and employees of Borrower;

            (p)    On the Closing Date, Borrower shall have not less than 
$3,000,000 of Excess Availability after making the payments described in 
SECTION 7.17(a)(i), the $100,000 due on the Closing Date pursuant to SECTION 
2.11(a), and the $16,666.66 due on the Closing Date pursuant to SECTION 
2.11(b);

            (q)    Foothill shall have received from Borrower (i) a list of 
all Material Inventory Suppliers and (ii) true and correct copies of all 
agreements in effect as of the Closing Date between Borrower and each 
Material Inventory Supplier; and

            (r)    all other documents and legal matters in connection with 
the transactions contemplated by this Agreement shall have been delivered, 
executed, or recorded and shall be in form and substance satisfactory to 
Foothill and its counsel.

     3.1A   CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AGREEMENT.  The 
effectiveness of this Agreement is subject to the fulfillment, to the 
satisfaction of Foothill and its counsel, of each of the following conditions 
unless Foothill shall have waived such conditions:

                   (a)    Foothill shall have received each of the following 
documents, duly executed, and each such document shall be in full force and 
effect and in form and substance satisfactory to Foothill:

                   (i)    the Stock Pledge Agreements;

                   (ii)   all the original stock certificates evidencing all the
                          issued and outstanding capital stock of Fast Trak,
                          accompanied by stock powers duly executed in blank by
                          Akquisition;

                   (iii)  all the original  stock certificates evidencing all
                          the issued and outstanding capital stock of
                          Akquisition, accompanied by stock powers duly executed
                          in blank by Ultimate;

                                       36
<PAGE>

                   (iv)   UCC-1 financing statements in favor of Foothill
                          covering the Collateral and duly executed respectively
                          by Akquisition and Fast Trak; and

                   (v)    Such other documents as shall be required by Foothill.

            (b)    Foothill shall have received a certificate from the 
Secretary of each Borrower attesting to the resolutions of such Borrower's 
Board of Directors authorizing its execution, delivery, and performance of 
this Agreement and the other Loan Documents to which such Borrower is a party 
and authorizing specific officers of such Borrower to execute the same;

            (c)    Foothill shall have received copies of the Governing 
Documents of each of Akquisition and Fast Trak, as amended, modified, or 
supplemented to the date hereof, certified respectively by the Secretary of 
Akquisition and the Secretary of Fast Trak;

            (d)    Foothill shall have received a certificate of status with 
respect to each of Akquisition and Fast Trak, dated within 10 days of the 
date hereof, such certificate to be issued by the appropriate officer of the 
jurisdiction of organization of Akquisition or Fast Trak, as the case may be, 
which certificate shall indicate that Akquisition or Fast Trak, as the case 
may be, is in good standing in such jurisdiction;

            (e)    Foothill shall have received certificates of status with 
respect to Akquisition (Borrower hereby representing and warranting that Fast 
Trak does not need to be duly qualified or licensed in any jurisdiction other 
than Minnesota), each dated within 15 days of the date hereof, such 
certificates to be issued by the appropriate officer of the jurisdictions in 
which the failure of Akquisition to be duly qualified or licensed would 
constitute a Material Adverse Change, which certificates shall indicate that 
Akquisition is in good standing in such jurisdictions;

            (f)    Foothill shall have received an opinion of Ultimate's 
counsel in form and substance satisfactory to Foothill in its sole 
discretion; and

            (g)    all other documents and legal matters in connection with 
the transactions contemplated by this Agreement shall have been delivered, 
executed, or recorded and shall be in form and substance satisfactory to 
Foothill and its counsel.

     Ultimate hereby represents and warrants to Foothill that:

            (x)    there have been no changes to the Certificate of 
Incorporation, Bylaws or other Governing Documents of Ultimate previously 
delivered to Foothill;

            (y)    Nothing has happened since the Closing Date which would 
cause Ultimate not to be in good standing in the State of Delaware and that 
as of the date hereof the Secretary of State of Delaware would issue a good 
standing certificate to Ultimate if such a certificate was required to be 
supplied by Foothill; and

                                       37
<PAGE>

            (z)    Nothing has happened since the Closing Date which would 
cause Ultimate not to be in good standing in any of the States of Colorado, 
Idaho, Iowa, Minnesota, Nevada, New Mexico, Oklahoma, South Dakota and Utah, 
and that as of the date hereof the appropriate officer of each such state 
would issue a good standing certificate to Ultimate if such certificate was 
required to be supplied by Foothill.

     3.2.   CONDITIONS PRECEDENT TO ALL ADVANCES AND ALL LETTERS OF CREDIT.  
The following shall be conditions precedent to all Advances and all Letters 
of Credit hereunder:

            (a)    the representations and warranties contained in this 
Agreement and the other Loan Documents shall be true and correct in all 
respects on and as of the date of such extension of credit, as though made on 
and as of such date (except to the extent that such representations and 
warranties relate solely to an earlier date);

            (b)    no Default or Event of Default shall have occurred and be 
continuing on the date of such extension of credit, nor shall either result 
from the making thereof; and

            (c)    no injunction, writ, restraining order, or other order of 
any nature prohibiting, directly or indirectly, the extending of such credit 
shall have been issued and remain in force by any governmental authority 
against Borrower, Foothill, or any of their Affiliates.

     3.3.   CONDITIONS SUBSEQUENT.  As a condition subsequent to the initial 
closing of the September 30, 1998 Loan Agreement and to the execution of this 
Agreement, Ultimate shall perform or cause to be performed the following (the 
failure by Ultimate to so perform or cause to be performed constituting an 
Event of Default):

            (a)    within 30 days of the Closing Date, deliver to Foothill 
the certified copies of the policies of insurance, together with the 
endorsements thereto, as are required by SECTION 6.10, the form and substance 
of which shall be satisfactory to Foothill and its counsel.

            (b)    within 30 days of the Closing Date, deliver to Foothill 
the Credit Card Processor notifications.

            (c)    by December 1, 1998, deliver to Foothill UCC-1 Fixture 
Filings in favor of Foothill, duly executed by Borrower, and covering each 
location of Borrower, each of which UCC-1 Fixture Filing shall be in form and 
substance satisfactory to Foothill; PROVIDED, HOWEVER, Borrower shall not be 
responsible for paying more than $15,000.00 in connection with the 
preparation and filing of such UCC-1 Fixture Filings.

     3.4.   TERM; AUTOMATIC RENEWAL.  This Agreement shall become effective upon
the execution and delivery hereof by Borrower and Foothill and shall continue in
full force and effect for a term ending on the date (the "Renewal Date") that is
three years from the Closing Date and automatically shall be renewed for
successive one year periods thereafter, unless sooner terminated pursuant to the
terms hereof.  Either party may terminate this Agreement effective on 

                                       38
<PAGE>

the Renewal Date or on any one year anniversary of the Renewal Date by giving 
the other party at least 90 days prior written notice.  The foregoing 
notwithstanding, Foothill shall have the right to terminate its obligations 
under this Agreement immediately and without notice upon the occurrence and 
during the continuation of an Event of Default.

     3.5.   EFFECT OF TERMINATION.  On the date of termination of this 
Agreement, all Obligations (including contingent reimbursement obligations of 
Borrower with respect to any outstanding Letters of Credit) immediately shall 
become due and payable without notice or demand.  No termination of this 
Agreement, however, shall relieve or discharge Borrower of Borrower's duties, 
Obligations, or covenants hereunder, and Foothill's continuing security 
interests in the Collateral shall remain in effect until all Obligations have 
been fully and finally discharged and Foothill's obligation to provide 
additional credit hereunder is terminated.  If Borrower has sent a notice of 
termination pursuant to the provisions of SECTION 3.4, but fails to pay the 
Obligations in full on the date set forth in said notice, then Foothill may, 
but shall not be required to, renew this Agreement for an additional term of 
one year.

     3.6.   EARLY TERMINATION BY BORROWER.  The provisions of SECTION 3.4 
that allow termination of this Agreement by Borrower only on the Renewal Date 
and certain anniversaries thereof notwithstanding, Borrower has the option, 
at any time upon 90 days prior written notice to Foothill, to terminate this 
Agreement by paying to Foothill, in cash, the Obligations (including an 
amount equal to 110% of the undrawn amount of the Letters of Credit), in 
full, together with the relevant Early Termination Premium.  For the purposes 
of this Agreement, the term "Early Termination Premium" means the respective 
amount set forth below:

            (a)    if termination IS NOT DUE TO A SALE OF CONTROL and occurs at
            any time during the period beginning on the Closing Date and
            continuing through the day immediately preceding the first
            anniversary of the Closing Date, the amount of the Early Termination
            Premium shall be THREE PERCENT (3%) of the Maximum Revolving Amount.

            (b)    if termination IS DUE TO A SALE OF CONTROL and occurs at any
            time during the period beginning on the Closing Date and continuing
            through the day immediately preceding the first anniversary of the
            Closing Date, the amount of the Early Termination Premium shall be
            ONE PERCENT (1%) of the Maximum Revolving Amount.

            (c)    if termination IS NOT DUE TO A SALE OF CONTROL and occurs at
            any time during the period beginning on the first anniversary of the
            Closing Date and continuing through the day immediately preceding
            the second anniversary of the Closing Date, the amount of the Early
            Termination Premium shall be TWO PERCENT (2%) of the Maximum
            Revolving Amount.

            (d)    if termination IS DUE TO A SALE OF CONTROL and occurs at any
            time during the period beginning on the first anniversary of the
            Closing Date and continuing through the day immediately preceding
            the second anniversary of the Closing 

                                       39
<PAGE>

            Date, the amount of the Early Termination Premium shall be THREE-
            FOURTHS OF ONE PERCENT (0.75%) of the Maximum Revolving Amount.

            (e)    if termination IS NOT DUE TO A SALE OF CONTROL and occurs on
            or after the second anniversary of the Closing Date (unless such
            termination is otherwise permitted by the provisions of SECTION
            3.4), the amount of the Early Termination Premium shall be ONE
            PERCENT (1%) of the Maximum Revolving Amount.

            (f)    if termination IS DUE TO A SALE OF CONTROL  and occurs on or
            after the second anniversary of the Closing Date (unless such
            termination is otherwise permitted by the provisions in SECTION
            3.4), the amount of the Early Termination Premium shall be ONE-HALF
            OF ONE PERCENT (0.50%) of the Maximum Revolving Amount.

Notwithstanding anything herein to the contrary, no Early Termination Premium 
shall be payable if termination occurs within eighteen (18) months of the 
Closing Date and in connection with such termination the Obligations are 
refinanced by Norwest Bank Minnesota, National Association or any successor 
thereto.

     3.7.   TERMINATION UPON EVENT OF DEFAULT.  If Foothill terminates this 
Agreement upon the occurrence of an Event of Default, in view of the 
impracticability and extreme difficulty of ascertaining actual damages and by 
mutual agreement of the parties as to a reasonable calculation of Foothill's 
lost profits as a result thereof, Borrower shall pay to Foothill upon the 
effective date of such termination, a premium in an amount equal to the Early 
Termination Premium that would be applicable to a termination of this 
Agreement by Borrower at such time that is not due to a Sale of Control and 
not in connection with a refinancing of the Obligations by Norwest Bank 
Minnesota, National Association or any successor thereto).  The Early 
Termination Premium shall be presumed to be the amount of damages sustained 
by Foothill as the result of the early termination and Borrower agrees that 
it is reasonable under the circumstances currently existing.  The Early 
Termination Premium provided for in this SECTION 3.7 shall be deemed included 
in the Obligations.

4.   CREATION OF SECURITY INTEREST.

     4.1.   GRANT OF SECURITY INTEREST.  Borrower hereby grants to Foothill a 
continuing security interest in all currently existing and hereafter acquired 
or arising Personal Property Collateral in order to secure prompt repayment 
of any and all Obligations and in order to secure prompt performance by 
Borrower of each of its covenants and duties under the Loan Documents.  
Foothill's security interests in the Collateral shall attach to all 
Collateral without further act on the part of Foothill or Borrower.  Anything 
contained in this Agreement or any other Loan Document to the contrary 
notwithstanding, except for the sale of Inventory to buyers in the ordinary 
course of business and disposals of furniture and fixtures to the extent 
permitted in SECTION 7.4 hereof, Borrower has no authority, express or 
implied, to dispose of any item or portion of the Collateral.

     As to Ultimate, the security interests granted by Ultimate in the 
Collateral are given in 

                                       40
<PAGE>

renewal, extension and modification of the security interests previously 
granted in the Collateral to Foothill by Ultimate pursuant to the September 
30, 1998 Loan Agreement; such existing security interests granted by Ultimate 
to Foothill in the Collateral described above are not extinguished hereby; 
and the making, perfection and priority of such existing security interests 
in the Collateral described above shall continue in full force and effect.

     4.2.   NEGOTIABLE COLLATERAL.  In the event that any Collateral, 
including proceeds, is evidenced by or consists of Negotiable Collateral, 
Borrower, immediately upon the request of Foothill, shall endorse and deliver 
physical possession of such Negotiable Collateral to Foothill.

     4.3.   COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE 
COLLATERAL.  At any time, Foothill or Foothill's designee may (a) notify 
customers or Account Debtors of Borrower that the Accounts, General 
Intangibles, or Negotiable Collateral have been assigned to Foothill or that 
Foothill has a security interest therein, and (b) collect the Accounts, 
General Intangibles, and Negotiable Collateral directly and charge the 
collection costs and expenses to the Loan Account.  Borrower agrees that it 
will hold in trust for Foothill, as Foothill's trustee, any Collections that 
it receives and immediately will deliver said Collections to Foothill in 
their original form as received by Borrower.

     4.4.   DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.  At any time upon 
the request of Foothill, Borrower shall execute and deliver to Foothill all 
financing statements, continuation financing statements, fixture filings, 
security agreements, pledges, assignments, endorsements of certificates of 
title, applications for title, affidavits, reports, notices, schedules of 
accounts, letters of authority, and all other documents that Foothill 
reasonably may request, in form satisfactory to Foothill, to perfect and 
continue perfected Foothill's security interests in the Collateral, and in 
order to fully consummate all of the transactions contemplated hereby and 
under the other Loan Documents.

     4.5.   POWER OF ATTORNEY.  Borrower hereby irrevocably makes, 
constitutes, and appoints Foothill (and any of Foothill's officers, 
employees, or agents designated by Foothill) as Borrower's true and lawful 
attorney, with power to (a) if Borrower refuses to, or fails timely to 
execute and deliver any of the documents described in SECTION 4.4, sign the 
name of Borrower on any of the documents described in SECTION 4.4, (b) at any 
time that an Event of Default has occurred and is continuing or Foothill 
deems itself insecure, sign Borrower's name on any invoice or bill of lading 
relating to any Account, drafts against Account Debtors, schedules and 
assignments of Accounts, verifications of Accounts, and notices to Account 
Debtors, (c) send requests for verification of Accounts, (d) endorse 
Borrower's name on any Collection item that may come into Foothill's 
possession, (e) at any time that an Event of Default has occurred and is 
continuing or Foothill deems 

                                       41
<PAGE>

itself insecure, notify the post office authorities to change the address for 
delivery of Borrower's mail to an address designated by Foothill, to receive 
and open all mail addressed to Borrower, and to retain all mail relating to 
the Collateral and forward all other mail to Borrower, (f) at any time that 
an Event of Default has occurred and is continuing or Foothill deems itself 
insecure, make, settle, and adjust all claims under Borrower's policies of 
insurance and make all determinations and decisions with respect to such 
policies of insurance, and (g) at any time that an Event of Default has 
occurred and is continuing or Foothill deems itself insecure, settle and 
adjust disputes and claims respecting the Accounts directly with Account 
Debtors, for amounts and upon terms that Foothill determines to be 
reasonable, and Foothill may cause to be executed and delivered any documents 
and releases that Foothill determines to be necessary.  The appointment of 
Foothill as Borrower's attorney, and each and every one of Foothill's rights 
and powers, being coupled with an interest, is irrevocable until all of the 
Obligations have been fully and finally repaid and performed and Foothill's 
obligation to extend credit hereunder is terminated.

     4.6.   RIGHT TO INSPECT.  Foothill (through any of its officers, 
employees, or agents) shall have the right, from time to time hereafter to 
inspect Borrower's Books and to check, test, and appraise the Collateral in 
order to verify Borrower's financial condition or the amount, quality, value, 
condition of, or any other matter relating to, the Collateral.

5.   REPRESENTATIONS AND WARRANTIES.

            In order to induce Foothill to enter into this Agreement, 
Borrower makes the following representations and warranties which shall be 
true, correct, and complete in all respects as of the date hereof, and shall 
be true, correct, and complete in all respects as of the Closing Date and as 
of the date of execution of this Agreement, and at and as of the date of the 
making of each Advance or Letter of Credit made after the Closing Date, as 
though made on and as of the date of such Advance or Letter of Credit (except 
to the extent that such representations and warranties relate solely to an 
earlier date) and such representations and warranties shall survive the 
execution and delivery of this Agreement:

     5.1.   NO ENCUMBRANCES.  Borrower has good and indefeasible title to the 
Collateral, free and clear of Liens except for Permitted Liens.

     5.2.   ELIGIBLE ACCOUNTS.  The Eligible Accounts are bona fide existing 
obligations created by the sale and delivery of Inventory or the rendition of 
services to Account Debtors in the ordinary course of Borrower's business, 
unconditionally owed to Borrower without defenses, disputes, offsets, 
counterclaims, or rights of return or cancellation.  The property giving rise 
to such Eligible Accounts has been delivered to the Account Debtor, or to the 
Account Debtor's agent for immediate shipment to and unconditional acceptance 
by the Account Debtor.  Borrower has not received notice of actual or 
imminent bankruptcy, insolvency, or material impairment of the financial 
condition of any Account Debtor regarding any Eligible Account.

     5.3.   ELIGIBLE INVENTORY.  All Eligible Inventory is of good and 
merchantable quality, free from defects.

     5.4.   EQUIPMENT.  All of the Equipment is used or held for use in 
Borrower's business and is fit for such purposes.

     5.5.   LOCATION OF INVENTORY AND EQUIPMENT.  The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party (without Foothill's
prior written consent) and are located only at the locations identified on
SCHEDULE 6.12 or otherwise permitted by 

                                       42
<PAGE>

SECTION 6.12.

     5.6.   INVENTORY RECORDS.  Borrower keeps correct and accurate records 
itemizing and describing the kind, type, quality, and quantity of the 
Inventory, and Borrower's cost therefor.

     5.7.   LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN.  The chief executive 
office of Borrower is located at the address indicated in the preamble to 
this Agreement .  Ultimate's FEIN is 84-0585211; Akquisition's FEIN is 
84-1409705; and Fast Trak's FEIN is 41-1550460.

     5.8.   DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

            (a)    Each Borrower is duly organized and existing and in good 
standing under the laws of the jurisdiction of its incorporation and 
qualified and licensed to do business in, and in good standing in, any state 
where the failure to be so licensed or qualified reasonably could be expected 
to have a Material Adverse Change.

            (b)    Set forth on SCHEDULE 5.8 is a complete and accurate list 
of each Borrower's direct and indirect Subsidiaries, showing: (i) the 
jurisdiction of their incorporation; (ii) the number of shares of each class 
of common and preferred stock authorized for each of such Subsidiaries; and 
(iii) the number and the percentage of the outstanding shares of each such 
class owned directly or indirectly by such Borrower.  All of the outstanding 
capital stock of each such Subsidiary has been validly issued and is fully 
paid and non-assessable.

            (c)    Except as set forth on SCHEDULE 5.8, no capital stock (or 
any securities, instruments, warrants, options, purchase rights, conversion 
or exchange rights, calls, commitments or claims of any character convertible 
into or exercisable for capital stock) of any direct or indirect Subsidiary 
of  any Borrower is subject to the issuance of any security, instrument, 
warrant, option, purchase right, conversion or exchange right, call, 
commitment or claim of any right, title, or interest therein or thereto.

     5.9.   DUE AUTHORIZATION; NO CONFLICT.

            (a)    The execution, delivery, and performance by Borrower of 
this Agreement and the Loan Documents to which it is a party have been duly 
authorized by all necessary corporate action.

            (b)    The execution, delivery, and performance by Borrower of 
this Agreement and the Loan Documents to which it is a party do not and will 
not (i) violate any provision of federal, state, or local law or regulation 
(including Regulations T, U, and X of the Federal Reserve Board) applicable 
to Borrower, the Governing Documents of Borrower, or any order, judgment, or 
decree of any court or other Governmental Authority binding on Borrower, (ii) 
conflict with, result in a breach of, or constitute (with due notice or lapse 
of time or both) a default under any material contractual obligation or 
material lease of Borrower, (iii) result in or require the creation or 
imposition of any Lien of any nature whatsoever upon any properties or assets 
of Borrower, other than Permitted Liens, or (iv) require any approval of 
stockholders or 

                                       43
<PAGE>

any approval or consent of any Person under any material contractual 
obligation of Borrower.

            (c)    Other than the filing of appropriate financing statements 
and fixture filings, the execution, delivery, and performance by Borrower of 
this Agreement and the Loan Documents to which Borrower is a party do not and 
will not require any registration with, consent, or approval of, or notice 
to, or other action with or by, any federal, state, foreign, or other 
Governmental Authority or other Person.

            (d)    This Agreement and the Loan Documents to which Borrower is 
a party, and all other documents contemplated hereby and thereby, when 
executed and delivered by Borrower will be the legally valid and binding 
obligations of Borrower, enforceable against Borrower in accordance with 
their respective terms, except as enforcement may be limited by equitable 
principles or by bankruptcy, insolvency, reorganization, moratorium, or 
similar laws relating to or limiting creditors' rights generally.

            (e)    The Liens granted by Borrower to Foothill in and to its 
properties and assets pursuant to this Agreement and the other Loan Documents 
are validly created, perfected, and first priority Liens, subject only to 
Permitted Liens.

     5.10.  LITIGATION.  There are no actions or proceedings pending by or 
against Borrower before any court or administrative agency and Borrower does 
not have knowledge or belief of any pending, threatened, or imminent 
litigation, governmental investigations, or claims, complaints, actions, or 
prosecutions involving Borrower or any guarantor of the Obligations, except 
for:  (a) ongoing collection matters in which Borrower is the plaintiff; (b) 
matters disclosed on SCHEDULE 5.10; and (c) matters arising after the date 
hereof that, if decided adversely to Borrower, would not have a Material 
Adverse Change.

     5.11.  NO MATERIAL ADVERSE CHANGE.  All financial statements relating to 
Borrower or any guarantor of the Obligations that have been delivered by 
Borrower to Foothill have been prepared in accordance with GAAP (except, in 
the case of unaudited financial statements, for the lack of footnotes and 
being subject to year-end audit adjustments) and fairly present Borrower's 
(or such guarantor's, as applicable) financial condition as of the date 
thereof and Borrower's results of operations for the period then ended.  
There has not been a Material Adverse Change with respect to Borrower (or 
such guarantor, as applicable) since the date of the latest financial 
statements submitted to Foothill on or before the Closing Date.

     5.12.  SOLVENCY.  Ultimate is Solvent.  No transfer of property is being 
made by Borrower and no obligation is being incurred by Borrower in 
connection with the transactions contemplated by this Agreement or the other 
Loan Documents with the intent to hinder, delay, or defraud either present or 
future creditors of Borrower.

     5.13.  EMPLOYEE BENEFITS.  None of Borrower, any of its Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan,
other than those listed on SCHEDULE 5.13.  Borrower, each of its Subsidiaries
and each ERISA Affiliate have satisfied the minimum funding standards of ERISA
and the IRC with respect to each Benefit Plan to which it 

                                       44
<PAGE>

is obligated to contribute.  No ERISA Event has occurred nor has any other 
event occurred that may result in an ERISA Event that reasonably could be 
expected to result in a Material Adverse Change.  None of Borrower or its 
Subsidiaries, any ERISA Affiliate, or any fiduciary of any Benefit Plan is 
subject to any direct or indirect liability with respect to any Benefit Plan 
under any applicable law, treaty, rule, regulation, or agreement.  None of 
Borrower or its Subsidiaries or any ERISA Affiliate is required to provide 
security to any Benefit Plan under Section 401(a)(29) of the IRC.

     5.14.  ENVIRONMENTAL CONDITION.  None of Borrower's properties or assets 
has ever been used by Borrower or, to the best of Borrower's knowledge 
without any independent investigation, by previous owners or operators in the 
disposal of, or to produce, store, handle, treat, release, or transport, any 
Hazardous Materials, except that from time to time Borrower has stored and 
handled insignificant quantities of epoxy glues that it uses in the 
installation of car stereos in automobiles and trucks in a manner which is in 
compliance with all applicable laws.  None of Borrower's properties or assets 
has ever been designated or identified in any manner pursuant to any 
environmental protection statute as a Hazardous Materials disposal site, or a 
candidate for closure pursuant to any environmental protection statute.  No 
Lien arising under any environmental protection statute has attached to any 
revenues or to any real or personal property owned or operated by Borrower.  
Borrower has not received a summons, citation, notice, or directive from the 
Environmental Protection Agency or any other federal or state governmental 
agency concerning any action or omission by Borrower resulting in the 
releasing or disposing of Hazardous Materials into the environment.

     5.15   YEAR 2000 COMPATIBILITY.

            (a)    On the basis of a comprehensive inventory, review and 
assessment currently being undertaken by Borrower of Borrower's computer 
applications utilized by Borrower or contained in products produced or sold 
by Borrower, and upon inquiry made of each of Borrower's material suppliers 
and vendors, Borrower's management is of the considered view that Borrower, 
its products and all such suppliers and vendors will be Year 2000 Compliant 
before October 1, 1999.

            (b)    Borrower (i) has undertaken a detailed inventory, review 
and assessment of all areas within its business and operations that could be 
adversely affected by the failure of Borrower or its products to be Year 2000 
Compliant on a timely basis, (ii) has developed the plan and timeline for 
becoming Year 2000 Compliant; and (iii) to date, is implementing that plan in 
accordance with that timetable in all material respects.  Borrower reasonably 
anticipates that it will be Year 2000 Compliant on a timely basis.

     5.16   LOCATIONS; LEASES.

            (a)    The Collateral, and the books, records and papers of 
Borrower pertaining thereto, are kept and maintained solely at Borrower's 
chief executive office set forth in the beginning of this Agreement and at 
those locations which are listed on SCHEDULE 5.16 annexed hereto, which 
SCHEDULE includes all service bureaus with which any such records are 
maintained 

                                       45
<PAGE>

and the names and addresses of each of Borrower's landlords.  Except (i) to 
accomplish sales of Inventory in the ordinary course of business or (ii) to 
utilize such of the Collateral as is removed in the ordinary course of 
business (such as motor vehicles), Borrower shall not remove any Collateral 
from said executive office or those locations listed on SCHEDULE 5.16.

            (b)    Borrower will not:

                   (i)    Alter, modify or amend any provisions of any Lease 
which pertain to any Lien rights of the lessor thereunder or the waiver or 
compromise of the same without the prior written consent of Foothill.

                   (ii)   Except after prior written notice to Foothill, 
commit to, or open or close any location at which Borrower maintains, offers 
for sale or stores any of the Collateral.

            (c)    Borrower shall promptly send to Foothill copies of any 
amendments, modifications or alterations to any existing Leases and copies of 
any newly executed Leases; PROVIDED, HOWEVER, the foregoing shall not limit 
the obligations of Borrower under SECTION 5.16(b) above.

            (d)    Except as otherwise agreed by Foothill, no tangible 
personal property of Borrower is in the care or custody of any third party or 
stored or entrusted with a bailee or other third party and none shall 
hereafter be placed under such care, custody, storage or entrustment.

6.   AFFIRMATIVE COVENANTS.

            Borrower covenants and agrees that, so long as any credit 
hereunder shall be available and until full and final payment of the 
Obligations, Borrower shall do all of the following:

     6.1.   ACCOUNTING SYSTEM.  Maintain a standard and modern system of 
accounting that enables Borrower to produce financial statements in 
accordance with GAAP, and maintain records pertaining to the Collateral that 
contain information as from time to time may be requested by Foothill.  
Borrower also shall keep a modern inventory reporting system that shows all 
additions, sales, claims, returns, and allowances with respect to the 
Inventory.

     6.2    COLLATERAL AND FINANCIAL REPORTING.  Provide Foothill with the 
following documents at the following times in form satisfactory to Foothill:

            (a)    BORROWING BASE CERTIFICATE.  Borrower shall provide 
Foothill, weekly, with a Borrowing Base Certificate satisfactory to Foothill 
(in the form of EXHIBIT 6.2 annexed hereto, as such form may be revised from 
time to time by Foothill).  Such Certificate may be sent to Foothill by 
facsimile transmission, provided that the original thereof is forwarded to 
Foothill on the date of such transmission at their request.  No adjustments 
to the Borrowing Base Certificate may be made without support documentation 
and such other documentation as may be requested by Foothill from time to 
time.

                                       46
<PAGE>

            (b)    WEEKLY REPORTS.  Weekly, not later than Wednesday for the 
immediately preceding fiscal week:

                   (i)    sales audit report. to include daily sales report 
with a month to date sales by store and geographic region.

                   (ii)   collateral activity summary ("roll forward 
inventory report"), to include, without limitation, Borrower's report number 
30 or a future report equivalent thereto.

            (c)    MONTHLY REPORTS.

                   (i)    Monthly, Borrower shall provide Foothill with 
original counterparts of (each in such form as Foothill from time to time may 
specify):

                          (A)    Within fifteen (15) days of the end of the   
                                 previous month
  
                                 (1)    stock ledger (extract) inventory report
                                        by department, to include Borrower's
                                        report number 30 or a future report
                                        equivalent thereto.

                                 (2)    stock ledger (extract) inventory report
                                        by store, to include Borrower's report
                                        number 3 or a future report equivalent
                                        thereto.

                                 (3)    upon request, open to buy report.

                                 (4)    month end daily sales report which
                                        includes comparable same store
                                        information.

                                 (5)    purchases and accounts payable aging
                                        report.

                          (B)    Within thirty (30) days of the end of the
                                 previous month:

                                 (1)    Statement of gross margin (Foothill
                                        format).

                                 (2)    stock ledger inventory report
                                        reconciliation to availability and to
                                        general ledger (Foothill format).

                                 (3)    financial statement includes balance
                                        sheet and comparative income statement
                                        (consolidated and by store).

                                 (4)    inventory certificate

                                       47
<PAGE>


                                 (5)    officer's compliance certificate.

                   (ii)   Monthly, within thirty (30) days following the end 
of each month during each of Borrower's fiscal years, Borrower shall provide 
Foothill with an original counterpart of a management prepared financial 
statement of Borrowers on a consolidated basis for the period from the 
beginning of Borrower's then current fiscal year through the end of the 
subject month, with comparative information for the same period of the 
previous fiscal year, which statement shall include, at a minimum, a balance 
sheet, income statement on a "consolidated" basis and  statement of cash 
flows.

            (d)    ANNUAL REPORTS.

                   (i)    Borrower shall deliver to Foothill Ultimate's Form 
10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K Current 
Reports, and any other filings made by Ultimate with the Securities and 
Exchange Commission, if any, as soon as the same are filed, or any other 
information that is provided by Ultimate to its shareholders, and any other 
report reasonably requested by Foothill relating to the financial condition 
of Borrower.  In connection therewith, Foothill shall be delivered the annual 
management letter comments.  Borrower shall direct its independent certified 
public accountants to give notice to Foothill of any Default discovered by 
such independent certified public accountants during such audit.  In 
addition, Borrower shall direct its independent certified public accountants 
to prepare a quarterly compliance letter as to covenants, if requested to do 
so by Foothill.

                   (ii)   Each annual statement shall be accompanied by such 
accountant's Certificate indicating that to the best knowledge of such 
accountant, no event has occurred which is or which, solely with the passage 
of time or the giving of notice (or both) would be, an Event of Default.

            (e)    OFFICER'S CERTIFICATES.  Borrower shall cause either 
Ultimate's Chief Executive Officer or Ultimate's Chief Financial Officer to 
provide such Person's Certificate with those monthly, quarterly, and annual 
statements to be furnished pursuant to this Agreement, which Certificate 
shall:

                   (i)    Indicate that the subject statement was prepared in 
accordance with GAAP consistently applied, and presents fairly the 
consolidated financial condition of Borrower at the close of, and the 
consolidated results of Borrower's operations and cash flows for, the 
period(s) covered, subject, however (with the exception of the Certificate 
which accompanies such annual statement) to usual year end adjustments.

                   (ii)   Indicate either that (i) no Suspension Event, 
Default or Event of Default has occurred or (ii) if such an event has 
occurred, its nature (in reasonable detail) and the steps (if any) being 
taken or contemplated by Borrower to be taken on account thereof.

                   (iii)  Include calculations concerning Borrower's compliance
(or failure to comply) at the date of the subject statement with each of the
financial performance covenants 


                                       48
<PAGE>

included in SECTION 7.20, below.

                   (iv)   Indicate that all taxes have or have not been paid 
(and if not been paid, broken down by type and taxing authority).

                   (v)    Indicate that all rent and additional rent due 
pursuant to any store lease have or have not been paid (and if not paid, 
broken down by store location); PROVIDED, HOWEVER, that Borrower need not 
report unpaid additional rent based on year end adjustments for common area 
expenses to the extent such additional rent is disputed by Borrower.

                   (vi)   Indicate that premiums for insurance required under 
SECTION 6.10 hereof have or have not been paid.

            (f)    REPORTING AS TO ACCOUNTS.  During the period beginning on 
the Closing Date and ending on the six month anniversary date of the Closing 
Date, Borrower shall provide within fifteen (15) days of the end of the 
previous month (or with such greater frequency as Foothill may reasonably 
determine is necessary), a detailed aging of the Accounts and such other 
documentation as may be reasonably requested by Foothill. From and after the 
six month anniversary date of the Closing Date, Borrower shall provide to 
Foothill, at such times and with such frequency as is requested by Foothill, 
such information and documentation as is determined by Foothill to be 
appropriate based upon Foothill's review and analysis of the Accounts and the 
information and documentation from time to time available to Foothill. In 
addition to the foregoing, Borrower hereby agrees to implement within six 
months of the Closing Date such improvements and/or changes in Borrower's 
reporting and record keeping as to Accounts as shall be acceptable to 
Foothill, in Foothill's sole discretion, Borrower hereby agreeing and 
acknowledging that such improvements and/or changes are necessary to make its 
present reporting and record keeping adequate for purposes of Foothill's 
requirements for the proper monitoring of its Accounts by Foothill.  Borrower 
further agrees and acknowledges that if such improvements and/or changes are 
not implemented to Foothill's satisfaction within such six month period or 
collection of Borrower's Accounts during such six month period is otherwise 
unacceptable to Foothill, Foothill shall have the right, in its sole 
discretion, to terminate the "Eligible Accounts" component of the Borrowing 
Base set forth in SECTION 2.1(a)(v) or establish reserves against such 
component of the Borrowing Base and/or modify the advance rate against 
Eligible Accounts.

            (g)    INVENTORIES, APPRAISALS, AND AUDITS.

                   (i)    Foothill, at the expense of Borrower, may 
participate in and/or observe each physical count and/or inventory of so much 
of the Collateral as consists of Inventory which is undertaken on behalf of 
Borrower.

                   (ii)   Upon Foothill's request from time to time, Borrower 
shall obtain, or shall permit Foothill to obtain financial or SKU based 
physical counts and/or inventories of the Collateral, conducted by such 
inventory takers as are satisfactory to Foothill and following such 
methodology as may be required by Foothill, each of which physical counts 
and/or financial 

                                       49
<PAGE>

or SKU based inventories shall be observed by Borrower's accountants; 
provided, however, that as long as there has not occurred an Event of 
Default, Foothill will not require full on-site appraisal, more than once per 
calendar year (but may in addition require "desktop" appraisals up to once 
per calendar quarter). For each fiscal year in which this Agreement is in 
effect, Borrower shall perform (at its expense) one (1) full physical 
inventory as of fiscal year end for all locations.  Foothill may require 
mid-year physical counts during any fiscal year of Borrower (at Borrower's 
expense) if any physical inventory conducted in the prior year reveals 
shrinkage equal to or greater than five percent (5.00%) of retail sales.  
Foothill shall have the right to increase Reserves Against Availability based 
on any variance revealed by any physical inventory counts.  The results of 
such mid-year counts shall be provided to Foothill within 10 Business Days of 
completion of the count.  The draft or unaudited results of such required 
mid-year inventories or counts shall be furnished to Foothill within five (5) 
Business Days of the taking of such inventories or counts.

                   (iii)  Foothill from time to time may request the results 
of "mystery shopping" (so-called) visits to all or any of Borrower's business 
premises as conducted by or on behalf of Borrower.

            (h)    ELECTRONIC REPORTING.  At Foothill's option all 
information and reports required to be submitted to Foothill by Borrower 
shall be transmitted electronically pursuant to an electronic transmitting 
reporting system and shall be in a record layout format designated by 
Foothill from time to time, and, upon request by Foothill, Borrower shall 
provide Foothill with access to Borrower's electronic accounting and other 
data.  It is estimated that the net costs to Borrower to establish such 
electronic transmitting reporting system will not exceed $10,000.

     6.3.   [INTENTIONALLY OMITTED]

     6.4.   TAX RETURNS.  Deliver to Foothill copies of each of Borrower's 
future federal income tax returns, and any amendments thereto, within 30 days 
of the filing thereof with the Internal Revenue Service.

     6.5.   GUARANTOR REPORTS.  Cause any guarantor of any of the Obligations to
deliver its annual financial statements at the time when Borrower provides its
audited financial statements to Foothill and copies of all federal income tax
returns as soon as the same are available and in any event no later than 30 days
after the same are required to be filed by law.

     6.6.   RETURNS.  Cause returns and allowances, if any, as between 
Borrower and its Account Debtors to be on the same basis and in accordance 
with the usual customary practices of Borrower, as they exist at the time of 
the execution and delivery of this Agreement.  If, at a time when no Event of 
Default has occurred and is continuing, any Account Debtor returns any 
Inventory to Borrower, if Borrower accepts such return, Borrower shall issue 
a credit memorandum in the appropriate amount to such Account Debtor.  If, at 
a time when an Event of Default has occurred and is continuing, any Account 
Debtor returns any Inventory to Borrower, Borrower shall determine the reason 
for such return and issue a credit memorandum in the 

                                       50
<PAGE>

appropriate amount to such Account Debtor.

     6.7.   TITLE TO EQUIPMENT.  Upon Foothill's request, Borrower 
immediately shall deliver to Foothill, properly endorsed, any and all 
evidences of ownership of, certificates of title, or applications for title 
to any items of Equipment.

     6.8.   MAINTENANCE OF EQUIPMENT.  Maintain the Equipment in good 
operating condition and repair (ordinary wear and tear excepted), and make 
all necessary replacements thereto so that the value and operating efficiency 
thereof shall at all times be maintained and preserved.  Other than those 
items of Equipment that constitute fixtures on the Closing Date, Borrower 
shall not permit any item of Equipment to become a fixture to real estate or 
an accession to other property, and such Equipment shall at all times remain 
personal property.

     6.9.   TAXES.  Cause all assessments and taxes, whether real, personal, 
or otherwise, due or payable by, or imposed, levied, or assessed against 
Borrower or any of its property to be paid in full, before delinquency or 
before the expiration of any extension period, except to the extent that the 
validity of such assessment or tax  shall be the subject of a Permitted 
Protest.  Borrower shall make due and timely payment or deposit of all such 
federal, state, and local taxes, assessments, or contributions required of it 
by law, and will execute and deliver to Foothill, on demand, appropriate 
certificates attesting to the payment thereof or deposit with respect 
thereto.  Borrower will make timely payment or deposit of all tax payments 
and withholding taxes required of it by applicable laws, including those laws 
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and 
federal income taxes, and will, upon request, furnish Foothill with proof 
satisfactory to Foothill indicating that Borrower has made such payments or 
deposits.

     6.10.  INSURANCE.

            (a)    At its expense, keep the Collateral insured against loss 
or damage by fire, theft, explosion, sprinklers, and all other hazards and 
risks, and in such amounts, as are ordinarily insured against by other owners 
in similar businesses.  Borrower also shall maintain business interruption, 
public liability, product liability, and property damage insurance relating 
to Borrower's ownership and use of the Personal Property Collateral, as well 
as insurance against larceny, embezzlement, and criminal misappropriation.

            (b)    All such policies of insurance shall be in such form, with
such companies, and in such amounts as may be reasonably satisfactory to
Foothill.  All insurance required herein shall be written by companies which are
authorized to do insurance business in the State of California.  All hazard
insurance and such other insurance as Foothill shall specify, shall contain a
California Form 438BFU (NS) mortgagee endorsement, or an equivalent endorsement
satisfactory to Foothill, showing Foothill as sole loss payee thereof.  Every
policy of insurance referred to in this SECTION 6.10 shall contain an agreement
by the insurer that it will not cancel such policy for any reason (other than
non-payment of premium), except after 30 days prior written notice to Foothill
(and in the case of cancellation because of non-payment of premium except after
10 days prior written notice to Foothill) and that any loss payable thereunder
shall be payable notwithstanding any act or negligence of Borrower or Foothill
which might, absent such 

                                       51
<PAGE>

agreement, result in a forfeiture of all or a part of such insurance payment. 
 Borrower shall deliver to Foothill certified copies of such policies of 
insurance and evidence of the payment of all premiums therefor.

            (c)    Original policies or certificates thereof satisfactory to 
Foothill evidencing such insurance shall be delivered to Foothill at least 30 
days prior to the expiration of the existing or preceding policies.  Borrower 
shall give Foothill prompt notice of any loss covered by such insurance, and 
Foothill shall have the right to adjust any loss.  Foothill shall have the 
exclusive right to adjust all losses payable under any such insurance 
policies without any liability to Borrower whatsoever in respect of such 
adjustments. Any monies received as payment for any loss under any insurance 
policy including the insurance policies mentioned above, shall be paid over 
to Foothill to be applied at the option of Foothill either to the prepayment 
of the Obligations without premium, in such order or manner as Foothill may 
elect, or shall be disbursed to Borrower under stage payment terms 
satisfactory to Foothill for application to the cost of repairs, 
replacements, or restorations.  All repairs, replacements, or restorations 
shall be effected with reasonable promptness and shall be of a value at least 
equal to the value of the items or property destroyed prior to such damage or 
destruction.  Upon the occurrence of an Event of Default, Foothill shall have 
the right to apply all prepaid premiums to the payment of the Obligations in 
such order or form as Foothill shall determine. Notwithstanding the preceding 
provisions of this SECTION 6.10(c), in any situation involving a loss under 
an insurance policy where each of the following statements is true and 
accurate, Borrower shall have the exclusive right to adjust the loss payable 
under the insurance policy and to determine whether the insurance proceeds 
shall be applied to the Obligations or applied to the cost of repairs, 
replacements or restorations:  (i) no Event of Default exists under the 
Agreement or is caused by such loss, and (ii) giving effect to such loss, 
Borrower shall have not less than $3,000,000 of Excess Availability.

            (d)    Borrower shall not take out separate insurance concurrent 
in form or contributing in the event of loss with that required to be 
maintained under this SECTION 6.10, unless Foothill is included thereon as 
named insured with the loss payable to Foothill under a standard California 
438BFU (NS) Mortgagee endorsement, or its local equivalent.  Borrower 
immediately shall notify Foothill whenever such separate insurance is taken 
out, specifying the insurer thereunder and full particulars as to the 
policies evidencing the same, and originals of such policies immediately 
shall be provided to Foothill.

     6.11.  NO SETOFFS OR COUNTERCLAIMS.  Make payments hereunder and under 
the other Loan Documents by or on behalf of Borrower without setoff or 
counterclaim and free and clear of, and without deduction or withholding for 
or on account of, any federal, state, or local taxes.

     6.12.  LOCATION OF INVENTORY AND EQUIPMENT.  Keep the Inventory and
Equipment only at the locations identified on SCHEDULE 6.12; PROVIDED, HOWEVER,
that Borrower may amend SCHEDULE 6.12 so long as such amendment occurs by
written notice to Foothill prior to the date on which the Inventory or Equipment
is moved to such new location, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Foothill's security interests in
such assets and also provides to Foothill a 

                                       52
<PAGE>

Collateral Access Agreement.

     6.13.  COMPLIANCE WITH LAWS.  Comply with the requirements of all 
applicable laws, rules, regulations, and orders of any governmental 
authority, including the Fair Labor Standards Act and the Americans With 
Disabilities Act, other than laws, rules, regulations, and orders the 
non-compliance with which, individually or in the aggregate, would not have 
and could not reasonably be expected to have a Material Adverse Change.

     6.14.  EMPLOYEE BENEFITS.

            (a)    Promptly, and in any event within 10 Business Days after 
Borrower or any of its Subsidiaries knows or has reason to know that an ERISA 
Event has occurred that reasonably could be expected to result in a Material 
Adverse Change, a written statement of the chief financial officer of 
Borrower describing such ERISA Event and any action that is being taking with 
respect thereto by Borrower, any such Subsidiary or ERISA Affiliate, and any 
action taken or threatened by the IRS, Department of Labor, or PBGC.  
Borrower or such Subsidiary, as applicable, shall (i) be deemed to know all 
facts known by the administrator of any Benefit Plan of which it is the plan 
sponsor, (ii) promptly, and in any event within 3 Business Days after the 
filing thereof with the IRS, deliver, or cause to be delivered, to Foothill a 
copy of each funding waiver request filed with respect to any Benefit Plan 
and all communications received by Borrower, any of its Subsidiaries or, to 
the knowledge of Borrower, any ERISA Affiliate with respect to such request, 
and (iii) promptly, and in any event within 3 Business Days after receipt by 
Borrower, any of its Subsidiaries or, to the knowledge of Borrower, any ERISA 
Affiliate, of notice of the PBGC's intention to terminate a Benefit Plan or 
to have a trustee appointed to administer a Benefit Plan, deliver, or cause 
to be delivered, to Foothill copies of each such notice.

            (b)    Cause to be delivered to Foothill, upon Foothill's 
request, each of the following:  (i) a copy of each Plan (or, where any such 
plan is not in writing, complete description thereof) (and if applicable, 
related trust agreements or other funding instruments) and all amendments 
thereto, all written interpretations thereof and written descriptions thereof 
that have been distributed to employees or former employees of Borrower or 
its Subsidiaries; (ii) the most recent determination letter issued by the IRS 
with respect to each Benefit Plan; (iii) for the three most recent plan 
years, annual reports on Form 5500 Series required to be filed with any 
governmental agency for each Benefit Plan; (iv) all actuarial reports 
prepared for the last three plan years for each Benefit Plan; (v) a listing 
of all Multiemployer Plans, with the aggregate amount of the most recent 
annual contributions required to be made by Borrower or any ERISA Affiliate 
to each such plan and copies of the collective bargaining agreements 
requiring such contributions; (vi) any information that has been provided to 
Borrower or any ERISA Affiliate regarding withdrawal liability under any 
Multiemployer Plan; and (vii) the aggregate amount of the most recent annual 
payments made to former employees of Borrower or its Subsidiaries under any 
Retiree Health Plan.

     6.15.  LEASES.  Pay when due all rents and other amounts payable under any
leases to which Borrower is a party or by which Borrower's properties and assets
are bound, unless such 

                                       53
<PAGE>

payments are the subject of a Permitted Protest.  To the extent that Borrower 
fails timely to make payment of such rents and other amounts payable when due 
under its leases, Foothill shall be entitled, in its discretion, to reserve 
an amount equal to such unpaid amounts against the Borrowing Base.

     6.16.  LANDLORD WAIVERS AND CONSENTS.  Use its best efforts (i) to 
promptly obtain and deliver to Foothill within 90 days following the Closing 
Date a consent, waiver and subordination (satisfactory to Foothill) by the 
landlord for existing locations of Borrower (except for the County Line Store 
and Colorado Boulevard Store), and (ii) hereafter to obtain and deliver to 
Foothill a consent, waiver and subordination (satisfactory to Foothill) by 
the landlord for any new location prior to Borrower taking possession of such 
new location.

     6.17.  MATERIAL INVENTORY SUPPLIER.  Promptly after entering into any 
agreement with any Material Inventory Supplier or any amendment to any 
agreement with any Material Inventory Supplier, provide Foothill with a copy 
of such agreement or amendment (other than oral agreements and amendments).

     6.18   YEAR 2000 COMPATIBILITY.  Borrower shall take all actions 
reasonably necessary to assure that Borrower's computer based systems are 
Year 2000 Compliant.  At the request of Foothill, Borrower shall provide 
evidence reasonably satisfactory to Foothill that the foregoing actions are 
being or have been taken.

7.   NEGATIVE COVENANTS.

            Borrower covenants and agrees that, so long as any credit 
hereunder shall be available and until full and final payment of the 
Obligations, Borrower will not do any of the following without Foothill's 
prior written consent:

     7.1.   INDEBTEDNESS.  Create, incur, assume, permit, guarantee, or 
otherwise become or remain, directly or indirectly, liable with respect to 
any Indebtedness, except:

            (a)    Indebtedness evidenced by this Agreement, together with 
Indebtedness to issuers of letters of credit that are the subject of L/C 
Guarantees;

            (b)    Indebtedness set forth in the latest consolidated 
financial statements of Borrowers submitted to Foothill on or prior to the 
Closing Date;

            (c)    Indebtedness secured by Permitted Liens;

            (d)    Manufacturer Payables; and

            (e)    refinancings, renewals, or extensions of Indebtedness 
permitted under clauses (b) and (c) of this SECTION 7.1 (and continuance or 
renewal of any Permitted Liens associated therewith) so long as: (i) the 
terms and conditions of such refinancings, renewals, or extensions do not 
materially impair the prospects of repayment of the Obligations by Borrower, 

                                       54
<PAGE>

(ii) the net cash proceeds of such refinancings, renewals, or extensions do 
not result in an increase in the aggregate principal amount of the 
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings, 
renewals, refundings, or extensions do not result in a shortening of the 
average weighted maturity of the Indebtedness so refinanced, renewed, or 
extended, and (iv) to the extent that Indebtedness that is refinanced was 
subordinated in right of payment to the Obligations, then the subordination 
terms and conditions of the refinancing Indebtedness must be at least as 
favorable to Foothill as those applicable to the refinanced Indebtedness.

     7.2.   LIENS.  Create, incur, assume, or permit to exist, directly or 
indirectly, any Lien on or with respect to any of its property or assets, of 
any kind, whether now owned or hereafter acquired, or any income or profits 
therefrom, except for Permitted Liens (including Liens that are replacements 
of Permitted Liens to the extent that the original Indebtedness is refinanced 
under SECTION 7.1(d) and so long as the replacement Liens only encumber those 
assets or property that secured the original Indebtedness).

     7.3.   RESTRICTIONS ON FUNDAMENTAL CHANGES.  Enter into any merger, 
consolidation, reorganization, or recapitalization, or reclassify its capital 
stock, or liquidate, wind up, or dissolve itself (or suffer any liquidation 
or dissolution), or convey, sell, assign, lease, transfer, or otherwise 
dispose of, in one transaction or a series of transactions, all or any 
substantial part of its property or assets, other than (i) a merger, 
consolidation, or similar transaction between Akquisition and Ultimate in 
which Ultimate is the surviving entity, (ii) a liquidation or dissolution of 
Akquisition or transfer or dissolution of all or any substantial part of 
Akquisition's property or assets in which Ultimate becomes the owner of such 
property or assets, (iii) a merger, consolidation or similar transaction 
involving Fast Trak and Akquisition in which Akquisition is the surviving 
entity or if Ultimate is involved, Ultimate is the surviving entity, or (iv) 
a liquidation or dissolution of Fast Trak or transfer or dissolution of all 
or any substantial part of Fast Trak's property or assets in which Ultimate 
or  Akquisition becomes the owner of such property or assets.

     7.4.   DISPOSAL OF ASSETS.  Sell, lease, assign, transfer, or otherwise 
dispose of any of any Borrower's properties or assets other than sales of 
Inventory to buyers in the ordinary course of such Borrower's business as 
currently conducted; provided, however, that as long as no Default or Event 
of Default has occurred or would result therefrom, Borrowers may dispose of 
furniture and fixtures in an aggregate for all Borrowers which does not 
exceed a net book value of $300,000 during any fiscal year of Borrowers.  
Notwithstanding the foregoing, a transaction permitted pursuant to SECTION 
7.3(ii) or SECTION 7.3(iv) hereof shall also be a transaction permitted by 
this SECTION 7.4.

     7.5.   CHANGE NAME.  Change any Borrower's name, FEIN, corporate 
structure (within the meaning of Section 9402(7) of the Code), or identity, 
or add any new fictitious name.

     7.6.   GUARANTEE.  Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of  any Borrower or
which are transmitted or turned over to Foothill or guaranties of obligations of
employees in an amount not to exceed  for all Borrowers $20,000 in 

                                       55
<PAGE>

the aggregate at any time outstanding or guaranties by Ultimate of goods 
purchased by Fast Trak in the ordinary course of business of Fast Trak or 
guaranties by Ultimate of real estate leases entered into by Akquisition in 
the ordinary course of Akquisition's business.

     7.7.   NATURE OF BUSINESS.  Make any change in the principal nature of 
Borrower's business.

     7.8.   PREPAYMENTS AND AMENDMENTS.

            (a)    Except in connection with a refinancing permitted by 
SECTION 7.1(d) or in prepayment of up to $763,000 in the aggregate of amounts 
owing on the date of this Agreement to Colorado National Leasing a/k/a US 
Bancorp Leasing as permitted under SECTION 7.17, prepay, redeem, retire, 
defease, purchase, or otherwise acquire any Indebtedness owing to any third 
Person, other than the Obligations in accordance with this Agreement, and

            (b)    Directly or indirectly, amend, modify, alter, increase, or 
change any of the terms or conditions of any agreement, instrument, document, 
indenture, or other writing evidencing  or concerning Indebtedness permitted 
under SECTIONs 7.1(b), (c), or (e).

     7.9.   CHANGE OF CONTROL.  Cause, permit, or suffer, directly or 
indirectly, any Change of Control.

     7.10.  CONSIGNMENTS.  Consign any Inventory (except that all Borrowers 
in the aggregate may be a consignee of up to $100,000 of Inventory at any 
particular time) or sell any Inventory on bill and hold, sale or return, sale 
on approval, or other conditional terms of sale.

     7.11.  DISTRIBUTIONS.  Make any distribution or declare or pay any 
dividends (in cash or other property, other than capital stock) on, or 
purchase, acquire, redeem, or retire any of Borrower's capital stock, of any 
class, whether now or hereafter outstanding; provided, however, that (i) as 
long as no Default or Event of Default has occurred or would result therefrom 
and, after giving effect thereto, Borrower would have Availability of not 
less than $5,000,000, Ultimate may repurchase its outstanding capital stock 
from Persons that are not Affiliates, directors or officers of Ultimate 
pursuant to Ultimate's stock buy-back program and/or redeem the 10.25% first 
mortgage bonds due January 31, 2005 of Ultimate, provided that the aggregate 
amount of such repurchase and redemption by Borrower shall not exceed 
$1,500,000 during any fiscal year of Ultimate, (ii) Fast Trak may make 
distributions and declare and pay dividends to Akquisition, and (iii) 
Akquisition may make distributions and declare and pay dividends to Ultimate.

     7.12.  ACCOUNTING METHODS.  Modify or change its method of accounting or 
enter into, modify, or terminate any agreement currently existing, or at any 
time hereafter entered into with any third party accounting firm or service 
bureau for the preparation or storage of Borrower's accounting records 
without said accounting firm or service bureau agreeing to provide Foothill 
information regarding the Collateral or Borrower's financial condition.  
Borrower waives the right to assert a confidential relationship, if any, it 
may have with any accounting firm or service 

                                       56
<PAGE>

bureau in connection with any information requested by Foothill pursuant to 
or in accordance with this Agreement, and agrees that Foothill may contact 
directly any such accounting firm or service bureau in order to obtain such 
information.

     7.13.  INVESTMENTS. Directly or indirectly make, acquire, or incur any 
liabilities (including contingent obligations) for or in connection with (a) 
the acquisition of the securities (whether debt or equity) of, or other 
interests in, a Person, (b) loans, advances, capital contributions, or 
transfers of property to a Person (except that Ultimate may make advances to 
Akquisition and Fast Trak provided that such advances are short-term in 
nature, are reflected as inter-company advances on the financial records of 
Borrower, and are made and repaid in the ordinary course of business of 
Borrower, and except that as long as no Default or Event of Default has 
occurred or would result therefrom, Borrower may make loans and advances to 
Persons provided that the aggregate outstanding principal amount of all such 
advances and loans may not at any time exceed $150,000), or (c) the 
acquisition of all or substantially all of the properties or assets of a 
Person.  Notwithstanding the foregoing, a transaction permitted pursuant to 
SECTION 7.3 hereof shall also be a transaction permitted by this SECTION 7.13.

     7.14.  TRANSACTIONS WITH AFFILIATES.  Directly or indirectly enter into 
or permit to exist any material transaction  between any Borrower with 
another Borrower or between any Borrower with any Affiliate of such Borrower 
except for transactions that are in the ordinary course of such Borrower's 
business, upon fair and reasonable terms, that are fully disclosed to 
Foothill, and that are no less favorable to such Borrower than would be 
obtained in an arm's length transaction with a non-Affiliate.

     7.15.  SUSPENSION.  Except as permitted by SECTION 7.3 hereof, suspend 
or go out of a substantial portion of its business.

     7.16.  [INTENTIONALLY OMITTED]

     7.17.  USE OF PROCEEDS.  Use the proceeds of the Advances made hereunder 
for any purpose other than (a) on the Closing Date, (i) to repay in full the 
outstanding principal, accrued interest, and accrued fees and expenses owing 
to Existing Lender, (ii) to pay transactional costs and expenses incurred in 
connection with the September 30, 1998 Loan Agreement, (b) within 60 days 
after the Closing Date, to prepay up to $763,000 in the aggregate of amounts 
owing on the date of this Agreement to Colorado National Leasing, a/k/a US 
Bancorp Leasing under certain promissory notes payable thereto, and (c) after 
the Closing Date, consistent with the terms and conditions hereof, for its 
lawful and permitted corporate purposes.

     7.18.  CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES.  Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Foothill and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected Foothill's security interests and also provides to Foothill a
Collateral Access Agreement with respect to such new location.  The Inventory
and Equipment shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without 

                                       57
<PAGE>

Foothill's prior written consent.

     7.19.  NO PROHIBITED TRANSACTIONS UNDER ERISA.  Directly or indirectly:

            (a)    engage, or permit any Subsidiary of Borrower to engage, in 
any prohibited transaction which is reasonably likely to result in a civil 
penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC 
for which a statutory or class exemption is not available or a private 
exemption has not been previously obtained from the Department of Labor;

            (b)    permit to exist with respect to any Benefit Plan any 
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 
of the IRC), whether or not waived;

            (c)    fail, or permit any Subsidiary of Borrower to fail, to pay 
timely required contributions or annual installments due with respect to any 
waived funding deficiency to any Benefit Plan;

            (d)    terminate, or permit any Subsidiary of Borrower to 
terminate, any Benefit Plan where such event would result in any liability of 
Borrower, any of its Subsidiaries or any ERISA Affiliate under Title IV of 
ERISA;

            (e)    fail, or permit any Subsidiary of Borrower to fail, to 
make any required contribution or payment to any Multiemployer Plan;

            (f)    fail, or permit any Subsidiary of Borrower to fail, to pay 
any required installment or any other payment required under Section 412 of 
the IRC on or before the due date for such installment or other payment;

            (g)    amend, or permit any Subsidiary of Borrower to amend, a 
Plan resulting in an increase in current liability for the plan year such 
that either of Borrower, any Subsidiary of Borrower or any ERISA Affiliate is 
required to provide security to such Plan under Section 401(a)(29) of the 
IRC; or

            (h)    withdraw, or permit any Subsidiary of Borrower to 
withdraw, from any Multiemployer Plan where such withdrawal is reasonably 
likely to result in any liability of any such entity under Title IV of ERISA; 
which, individually or in the aggregate, results in or reasonably would be 
expected to result in a claim against or liability of Borrower, any of its 
Subsidiaries or any ERISA Affiliate in excess of $100,000.

     7.20.  FINANCIAL COVENANTS.  Borrowers on a consolidated basis shall 
observe and comply with each of the following:

            (a)    GROSS MARGIN.  Tested monthly, Gross Margin Percentage, 
measured on a rolling three-month basis, shall not vary negatively from the 
Business Plan by more than two (2%) percentage points and on a rolling 
twelve-month basis, commencing with January 1999 and measured monthly 
thereafter, the Gross Margin Percentage shall not be less than twenty-six and

                                       58
<PAGE>

one-half percent (26p%).

            (b)    INVENTORY LEVELS.  Borrower shall not permit end of the 
month inventory at cost, as measured on a rolling three (3) month basis, to 
be below a level of at least ninety percent (90%) of the Business Plan or to 
be above a level of more than one hundred fifteen percent (115%) of the 
Business Plan, provided that for purposes of computing the amount of 
Inventory for this paragraph Inventory shall be exclusive of any 
"opportunistic buys" (which are those purchases deemed extraordinary given 
trade terms granted which are different than those typically offered to 
Borrower which such exclusion is subject to Foothill's sole satisfaction upon 
receipt of supporting documentation).

            (c)    TANGIBLE NET WORTH.  Borrower shall not permit, as of the 
last day of each October, January, April and July beginning with September 
30, 1998, its Tangible Net Worth to be less than $36,000,000.

     7.21.  CAPITAL EXPENDITURES.  Make capital expenditures in any period 
set forth below in excess of the corresponding aggregate amount set forth 
below (exclusive of capitalized leased financing incurred for financing the 
acquisition of real estate in conjunction with the opening of a new store 
located on such real estate):

<TABLE>
<CAPTION>
                           PERIOD                             AMOUNT
                           ------                             ------
<S>                                                         <C>
        Closing Date through January 31, 1999               $1,000,000
        February 1, 1999 through January 31, 2000           $5,000,000
        February 1, 2000 through January 31, 2001           $6,000,000
        February 1, 2001 through September 30, 2001         $5,000,000
</TABLE>

                                       59
<PAGE>

8.   EVENTS OF DEFAULT.

            Any one or more of the following events shall constitute an event 
of default (each, an "Event of Default") under this Agreement:

            (a)    If Borrower fails to pay when due and payable or when 
declared due and payable, any portion of the Obligations (whether of 
principal, interest (including any interest which, but for the provisions of 
the Bankruptcy Code, would have accrued on such amounts), fees and charges 
due Foothill, reimbursement of Foothill Expenses, or other amounts 
constituting Obligations);

            (b)    (i) If Borrower fails or neglects to perform, keep, or 
observe any term, provision, condition, covenant, or agreement contained in 
SECTION 6.2 (Collateral and Financial Reporting), SECTION 6.4 (Tax Returns), 
SECTION 6.7 (Title to Equipment), the portion of SECTION 6.9 (Taxes) as 
pertains to state franchise taxes, SECTION 6.12 (Location of Inventory and 
Equipment), SECTION 6.13 (Compliance with Laws), SECTION 6.14 (Employee 
Benefits), or SECTION 6.15 (Leases) of this Agreement and such failure 
continues for a period of 5 Business Days; (ii) If Borrower fails or neglects 
to perform, keep, or observe any term, provision, condition, covenant, or 
agreement contained in SECTION 6.1 (Accounting System), SECTION 6.6 
(Returns), SECTION 6.8 (Maintenance of Equipment), SECTION 6.17 (Material 
Inventory Supplier) or SECTION 6.18 (Year 2000 Compatibility) of this 
Agreement and such failure continues for a period of 15 Business Days; or 
(iii) If Borrower fails or neglects to perform, keep, or observe any other 
term, provision, condition, covenant, or agreement contained in this 
Agreement, or in any of the other Loan Documents (giving effect to any grace 
periods, cure periods, or required notices, if any, expressly provided for in 
such Loan Documents); in each case, other than any such term, provision, 
condition, covenant, or agreement that is the subject of another provision of 
this SECTION 8, in which event such other provision of this SECTION 8 shall 
govern); PROVIDED that, during any period of time that any such failure or 
neglect of Borrower referred to in this paragraph exists, even if such 
failure or neglect is not yet an Event of Default by virtue of the existence 
of a grace or cure period or the pre-condition of the giving of a notice, 
Foothill shall be relieved of its obligation to extend credit hereunder;

            (c)    If there is a Material Adverse Change;

            (d)    If any material portion of Borrower's properties or assets 
considered as a whole is attached, seized, subjected to a writ or distress 
warrant, or is levied upon, or comes into the possession of any third Person;

                                       60
<PAGE>


            (e)    If an Insolvency Proceeding is commenced by Borrower;

            (f)    If an Insolvency Proceeding is commenced against Borrower 
and any of the following events occur:  (a) Borrower consents to the 
institution of the Insolvency Proceeding against it; (b) the petition 
commencing the Insolvency Proceeding is not timely controverted; (c) the 
petition commencing the Insolvency Proceeding is not dismissed within 60 
calendar days of the date of the filing thereof; PROVIDED, HOWEVER, that, 
during the pendency of such period, Foothill shall be relieved of its 
obligation to extend credit hereunder; (d) an interim trustee is appointed to 
take possession of all or a substantial portion of the properties or assets 
of, or to operate all or any substantial portion of the business of, 
Borrower; or (e) an order for relief shall have been issued or entered 
therein;

            (g)    If Borrower is enjoined, restrained, or in any way 
prevented by court order from continuing to conduct all or any material part 
of its business affairs;

            (h)    If a notice of Lien, levy, or assessment is filed of 
record with respect to any of Borrower's properties or assets by the United 
States Government, or any department, agency, or instrumentality thereof, or 
if any taxes or debts owing at any time hereafter to any one or more of such 
entities becomes a Lien, whether choate or otherwise, upon any of Borrower's 
properties or assets;

            (i)    (i) If one or more notice of Lien, levy, or assessment 
with respect to taxes or debts owing is filed of record with respect to any 
of Borrower's properties or assets by any state, county, municipal or other 
non-federal governmental agency, and the Lien, levy, or assessment is not (A) 
fully released, discharged or bonded against before the earlier of 30 days of 
the date that it first arises or 5 days of the date when such property or 
asset is subject to being forfeited, or (B) the subject of a Permitted 
Protest, or (ii) if any taxes or debts owing at any time hereafter to any one 
or more of any state, county, municipal or other non-federal governmental 
agency becomes a Lien, whether choate or otherwise, upon any of Borrower's 
properties or assets and the Lien is not fully (A) fully released, discharged 
or bonded against before the due date of such tax or debt or 5 days of the 
date when such property or asset is subject to being forfeited or (B) the 
subject of a Permitted Protest; or

            (j)    If a judgment or other claim, in excess of $250,000 
individually or in the aggregate for all such judgments or other claims, 
becomes a Lien or encumbrance upon any material portion of Borrower's 
properties or assets;

            (k)    If Borrower shall fail to pay when due the principal or 
interest on any Indebtedness of Borrower in excess of $250,000 individually 
or in the aggregate of all such Indebtedness, or a default by Borrower in the 
observance or performance of any term, covenant or agreement of Borrower in 
any agreement relating to any indebtedness of Borrower in excess of $250,000 
individually or in the aggregate, and the passage of any grace period with 
respect thereto, the effect of which default is to permit the holder of such 
indebtedness, irrespective of whether exercised, to accelerate the maturity 
of Borrower's obligations thereunder;

                                       61
<PAGE>

            (l)    If there is a default in any material agreement to which 
Ultimate is a party (or to which Akquisition or Fast Trak is a party if such 
agreement is material to the Borrowers considered as a whole) with one or 
more third Persons (other than as described in subparagraph (k) immediately 
above) and such default (a) occurs at the final maturity of the obligations 
thereunder, or (b) results in a right by such third Person(s), irrespective 
of whether exercised, to accelerate the maturity of Borrower's obligations 
thereunder;

            (m)    If Borrower makes any payment on account of Indebtedness 
that has been contractually subordinated in right of payment to the payment 
of the Obligations, except to the extent such payment is permitted by the 
terms of the subordination provisions applicable to such Indebtedness;

            (n)    If any material misstatement or misrepresentation exists 
now or hereafter in any warranty, representation, statement, or report made 
to Foothill by Borrower or any officer, employee, agent, or director of 
Borrower, or if any such warranty or representation is withdrawn; or

            (o)    If the obligation of any guarantor under its guaranty or 
other third Person under any Loan Document is limited or terminated by 
operation of law or by the guarantor or other third Person thereunder, or any 
such guarantor or other third Person becomes the subject of an Insolvency 
Proceeding.

9.   FOOTHILL'S RIGHTS AND REMEDIES

     9.1.   RIGHTS AND REMEDIES.  Upon the occurrence, and during the 
continuation, of an Event of Default Foothill may, at its election, without 
notice of its election and without demand, do any one or more of the 
following, all of which are authorized by Borrower:

            (a)    Declare all Obligations, whether evidenced by this 
Agreement, by any of the other Loan Documents, or otherwise, immediately due 
and payable;

            (b)    Cease advancing money or extending credit to or for the 
benefit of Borrower under this Agreement, under any of the Loan Documents, or 
under any other agreement between Borrower and Foothill;

            (c)    Terminate this Agreement and any of the other Loan 
Documents as to any future liability or obligation of Foothill, but without 
affecting Foothill's rights and security interests in the Collateral and 
without affecting the Obligations;

            (d)    Settle or adjust disputes and claims directly with Account 
Debtors for amounts and upon terms which Foothill considers advisable, and in 
such cases, Foothill will credit Borrower's Loan Account with only the net 
amounts received by Foothill in payment of such disputed Accounts after 
deducting all Foothill Expenses incurred or expended in connection therewith;

                                       62
<PAGE>

            (e)    Cause Borrower to hold all returned Inventory in trust for 
Foothill, segregate all returned Inventory from all other property of 
Borrower or in Borrower's possession and conspicuously label said returned 
Inventory as the property of Foothill;

            (f)    Without notice to or demand upon Borrower or any 
guarantor, make such payments and do such acts as Foothill considers 
necessary or reasonable to protect its security interests in the Collateral.  
Borrower agrees to assemble the Collateral if Foothill so requires, and to 
make the Collateral available to Foothill as Foothill may designate.  
Borrower authorizes Foothill to enter the premises where the Collateral is 
located, to take and maintain possession of the Collateral, or any part of 
it, and to pay, purchase, contest, or compromise any encumbrance, charge, or 
Lien that in Foothill's determination appears to conflict with its security 
interests and to pay all expenses incurred in connection therewith.  With 
respect to any of Borrower's owned or leased premises, Borrower hereby grants 
Foothill a license to enter into possession of such premises and to occupy 
the same, without charge, for up to 120 days in order to exercise any of 
Foothill's rights or remedies provided herein, at law, in equity, or 
otherwise;

            (g)    Without notice to Borrower (such notice being expressly 
waived), and without constituting a retention of any collateral in 
satisfaction of an obligation (within the meaning of Section 9505 of the 
Code), set off and apply to the Obligations any and all (i) balances and 
deposits of Borrower held by Foothill (including any amounts received in the 
Concentration Accounts), or (ii) indebtedness at any time owing to or for the 
credit or the account of Borrower held by Foothill;

            (h)    Hold, as cash collateral, any and all balances and 
deposits of Borrower held by Foothill, and any amounts received in the 
Concentration Accounts, to secure the full and final repayment of all of the 
Obligations;

            (i)    Ship, reclaim, recover, store, finish, maintain, repair, 
prepare for sale, advertise for sale, and sell (in the manner provided for 
herein) the Collateral.  Foothill is hereby granted a license or other right 
to use, without charge, Borrower's labels, patents, copyrights, rights of use 
of any name, trade secrets, trade names, trademarks, service marks, and 
advertising matter, or any property of a similar nature, as it pertains to 
the Collateral, in completing production of, advertising for sale, and 
selling any Collateral and Borrower's rights under all licenses and all 
franchise agreements shall inure to Foothill's benefit;

            (j)    Sell the Collateral at either a public or private sale, or 
both, by way of one or more contracts or transactions, for cash or on terms, 
in such manner and at such places (including Borrower's premises) as Foothill 
determines is commercially reasonable.  It is not necessary that the 
Collateral be present at any such sale;

            (k)    Foothill shall give notice of the disposition of the 
Collateral as follows:

                   (i)    Foothill shall give Borrower and each holder of a
security interest in the Collateral who has filed with Foothill a written
request for notice, a notice in writing of the 

                                       63
<PAGE>

time and place of public sale, or, if the sale is a private sale or some 
other disposition other than a public sale is to be made of the Collateral, 
then the time on or after which the private sale or other disposition is to 
be made;

                   (ii)   The notice shall be personally delivered or mailed, 
postage prepaid, to Borrower as provided in SECTION 12, at least 5 days 
before the date fixed for the sale, or at least 5 days before the date on or 
after which the private sale or other disposition is to be made; no notice 
needs to be given prior to the disposition of any portion of the Collateral 
that is perishable or threatens to decline speedily in value or that is of a 
type customarily sold on a recognized market.  Notice to Persons other than 
Borrower claiming an interest in the Collateral shall be sent to such 
addresses as they have furnished to Foothill;

                   (iii)  If the sale is to be a public sale, Foothill also 
shall give notice of the time and place by publishing a notice one time at 
least 5 days before the date of the sale in a newspaper of general 
circulation in the county in which the sale is to be held;

                   (iv)   Foothill may credit bid and purchase at any public 
sale; and

                   (v)    Any deficiency that exists after disposition of the 
Collateral as provided above will be paid immediately by Borrower.  Any 
excess will be returned, without interest and subject to the rights of third 
Persons, by Foothill to Borrower.

            (l)    In addition to and not in limitation of any other rights 
and remedies of Foothill hereunder and under applicable law, Foothill may 
conduct one or more going out of business sales which include the sale or 
other disposition of the Collateral.

     9.2.   REMEDIES CUMULATIVE.  Foothill's rights and remedies under this 
Agreement, the Loan Documents, and all other agreements shall be cumulative. 
Foothill shall have all other rights and remedies not inconsistent herewith 
as provided under the Code, by law, or in equity.  No exercise by Foothill of 
one right or remedy shall be deemed an election, and no waiver by Foothill of 
any Event of Default shall be deemed a continuing waiver.  No delay by 
Foothill shall constitute a waiver, election, or acquiescence by it.

     9.3    LICENSE.  Effective upon the occurrence of an Event of Default, 
Borrower hereby grants to Foothill a royalty fee non-exclusive license to 
use, apply and affix any trademark, tradename, logo or the like in which 
Borrower now or hereafter has rights, such license being with respect to 
Foothill's exercise of the rights hereunder, including, without limitation, 
in connection with any completion of the manufacture of Inventory or sale or 
other disposition of Inventory.

10.  TAXES AND EXPENSES

            If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of 

                                       64
<PAGE>

payment or deposit, all as required under the terms of this Agreement, then, 
to the extent that Foothill determines that such failure by Borrower could 
result in a Material Adverse Change, in its discretion and without prior 
notice to Borrower, Foothill may do any or all of the following:  (a) make 
payment of the same or any part thereof; (b) set up such reserves in 
Borrower's Loan Account as Foothill deems necessary to protect Foothill from 
the exposure created by such failure; or (c) obtain and maintain insurance 
policies of the type described in SECTION 6.10, and take any action with 
respect to such policies as Foothill deems prudent.  Any such amounts paid by 
Foothill shall constitute Foothill Expenses.  Any such payments made by 
Foothill shall not constitute an agreement by Foothill to make similar 
payments in the future or a waiver by Foothill of any Event of Default under 
this Agreement.  Foothill need not inquire as to, or contest the validity of, 
any such expense, tax, or Lien and the receipt of the usual official notice 
for the payment thereof shall be conclusive evidence that the same was 
validly due and owing.

11.  WAIVERS; INDEMNIFICATION

     11.1.  DEMAND; PROTEST; ETC.  Borrower waives demand, protest, notice of 
protest, notice of default or dishonor, notice of payment and nonpayment, 
nonpayment at maturity, release, compromise, settlement, extension, or 
renewal of accounts, documents, instruments, chattel paper, and guarantees at 
any time held by Foothill on which Borrower may in any way be liable.

     11.2.  FOOTHILL'S LIABILITY FOR COLLATERAL.  So long as Foothill 
complies with its obligations, if any, under Section 9207 of the Code, 
Foothill shall not in any way or manner be liable or responsible for:  (a) 
the safekeeping of the Collateral; (b) any loss or damage thereto occurring 
or arising in any manner or fashion from any cause; (c) any diminution in the 
value thereof; or (d) any act or default of any carrier, warehouseman, 
bailee, forwarding agency, or other Person.  All risk of loss, damage, or 
destruction of the Collateral shall be borne by Borrower.

     11.3.  INDEMNIFICATION.  Borrower shall pay, indemnify, defend, and hold
Foothill, each Participant and each of their respective officers, directors,
employees, counsel, agents, and attorneys-in-fact (each, an "Indemnified
Person") harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all reasonable attorneys fees and disbursements and other costs and
expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them in connection with or as a
result of or related to the execution, delivery, enforcement, performance, and
administration of this Agreement and any other Loan Documents or the
transactions contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities").  Borrower shall have no obligation to any
Indemnified Person under this SECTION 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful 

                                       65
<PAGE>

misconduct of such Indemnified Person.  This provision shall survive the 
termination of this Agreement and the repayment of the Obligations.

12.  NOTICES

            Unless otherwise provided in this Agreement, all notices or 
demands by any party relating to this Agreement or any other Loan Document 
shall be in writing and (except for financial statements and other 
informational documents which may be sent by first-class mail, postage 
prepaid) shall be personally delivered or sent by registered or certified 
mail (postage prepaid, return receipt requested), overnight courier, or 
telefacsimile to Borrower or to Foothill, as the case may be, at its address 
set forth below:

<TABLE>
<S>                                     <C>
            IF TO BORROWER:             Ultimate Electronics, Inc.
                                        321 West 84th Avenue, Suite A
                                        Thornton, Colorado  80221
                                        Attn:  Chief Financial Officer
                                        Fax No.  (303) 412-2502

            WITH COPIES TO:             Davis, Graham & Stubbs LLP
                                        370 17th Street, Suite 4700
                                        Denver, Colorado  80202
                                        Attn:  Patricia Peterson, Esq.
                                        Fax No.  (303) 892-7400

            IF TO FOOTHILL:             Foothill Capital Corporation
                                        11111 Santa Monica Boulevard
                                        Suite 1500
                                        Los Angeles, California 90025-3333
                                        Attn:  Business Finance Division Manager
                                        Fax No.  (310) 478-9788

            WITH COPIES TO:             Patton Boggs LLP
                                        2200 Ross Avenue, Suite 900
                                        Dallas, Texas 75201
                                        Attn:  Kenneth M. Vesledahl, Esq.
                                        Fax No. (214) 871-2688
</TABLE>

            The parties hereto may change the address at which they are to 
receive notices hereunder, by notice in writing in the foregoing manner given 
to the other.  All notices or demands sent in accordance with this SECTION 
12, other than notices by Foothill in connection with Sections 9504 or 9505 
of the Code, shall be deemed received on the earlier of the date of actual 
receipt or 3 days after the deposit thereof in the mail.  Borrower 
acknowledges and agrees that notices sent by Foothill in connection with 
Sections 9504 or 9505 of the Code shall be deemed sent when deposited in the 
mail or personally delivered, or, where permitted by law, transmitted 
telefacsimile or other similar method set forth above.

                                       66
<PAGE>


13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

            THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS 
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN AN ANOTHER LOAN DOCUMENT), THE 
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE 
RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING 
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED 
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF 
CALIFORNIA.  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN 
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED 
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF 
LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY 
OTHER COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS 
AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY.  
EACH OF BORROWER AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER 
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON 
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN 
ACCORDANCE WITH THIS SECTION 13. BORROWER AND FOOTHILL HEREBY WAIVE THEIR 
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON 
OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS 
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY 
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH OF BORROWER AND 
FOOTHILL REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND 
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL 
COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED 
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

14.  DESTRUCTION OF BORROWER'S DOCUMENTS.

            All documents, schedules, invoices, agings, or other papers 
delivered to Foothill may be destroyed or otherwise disposed of by Foothill 4 
months after they are delivered to or received by Foothill, unless Borrower 
requests, in writing, the return of said documents, schedules, or other 
papers and makes arrangements, at Borrower's expense, for their return.

15.  GENERAL PROVISIONS

     15.1.  EFFECTIVENESS.  This Agreement shall be binding and deemed 
effective when executed by Borrower and Foothill.

                                       67
<PAGE>

     15.2.  SUCCESSORS AND ASSIGNS.  This Agreement shall bind and inure to 
the benefit of the respective successors and assigns of each of the parties; 
PROVIDED, HOWEVER, that Borrower may not assign this Agreement or any rights 
or duties hereunder without Foothill's prior written consent and any 
prohibited assignment shall be absolutely void.  No consent to an assignment 
by Foothill shall release Borrower from its Obligations.  Foothill may assign 
this Agreement and its rights and duties hereunder and no consent or approval 
by Borrower is required in connection with any such assignment.  Foothill 
reserves the right to sell, assign, transfer, negotiate, or grant 
participations in all or any part of, or any interest in Foothill's rights 
and benefits hereunder, provided that Foothill shall endeavor to give the 
chief financial officer of Borrower telephonic notice of any such assignment 
or participation (provided that Foothill shall have no liability to Borrower 
if in fact it fails to give such notice to Borrower's chief financial 
officer), and each such assignee and participant shall enter into a 
confidentiality agreement containing provisions similar to the provisions of 
SECTION 15.10 hereof.  In connection with any such assignment or 
participation, Foothill may disclose all documents and information which 
Foothill now or hereafter may have relating to Borrower or Borrower's 
business subject to the provisions of SECTION 15.10 hereof.  To the extent 
that Foothill assigns its rights and obligations hereunder to a third Person, 
Foothill thereafter shall be released from such assigned obligations to 
Borrower and such assignment shall effect a novation between Borrower and 
such third Person.

     15.3.  SECTION HEADINGS.  Headings and numbers have been set forth 
herein for convenience only.  Unless the contrary is compelled by the 
context, everything contained in each section applies equally to this entire 
Agreement.

     15.4.  INTERPRETATION.  Neither this Agreement nor any uncertainty or 
ambiguity herein shall be construed or resolved against Foothill or Borrower, 
whether under any rule of construction or otherwise.  On the contrary, this 
Agreement has been reviewed by all parties and shall be construed and 
interpreted according to the ordinary meaning of the words used so as to 
fairly accomplish the purposes and intentions of all parties hereto.

     15.5.  SEVERABILITY OF PROVISIONS.  Each provision of this Agreement 
shall be severable from every other provision of this Agreement for the 
purpose of determining the legal enforceability of any specific provision.

     15.6.  AMENDMENTS IN WRITING.  This Agreement can only be amended by a 
writing signed by both Foothill and Borrower.

     15.7.  COUNTERPARTS; TELEFACSIMILE EXECUTION.  This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement.  Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, 

                                       68
<PAGE>

enforceability, and binding effect of this Agreement.

     15.8.  REVIVAL AND REINSTATEMENT OF OBLIGATIONS.  If the incurrence or 
payment of the Obligations by Borrower or any guarantor of the Obligations or 
the transfer by either or both of such parties to Foothill of any property of 
either or both of such parties should for any reason subsequently be declared 
to be void or voidable under any state or federal law relating to creditors' 
rights, including provisions of the Bankruptcy Code relating to fraudulent 
conveyances, preferences, and other voidable or recoverable payments of money 
or transfers of property (collectively, a "Voidable Transfer"), and if 
Foothill is required to repay or restore, in whole or in part, any such 
Voidable Transfer, or elects to do so upon the reasonable advice of its 
counsel, then, as to any such Voidable Transfer, or the amount thereof that 
Foothill is required or elects to repay or restore, and as to all reasonable 
costs, expenses, and attorneys fees of Foothill related thereto, the 
liability of Borrower or such guarantor automatically shall be revived, 
reinstated, and restored and shall exist as though such Voidable Transfer had 
never been made.

     15.9.  INTEGRATION.  This Agreement, together with the other Loan 
Documents, reflects the entire understanding of the parties with respect to 
the transactions contemplated hereby and shall not be contradicted or 
qualified by any other agreement, oral or written, before the date hereof.  
In addition to and not in limitation of the foregoing, this Agreement, 
together with the other Loan Documents, constitute a credit agreement under 
Colorado Revised Statutes Section 38-10-101 ET SEQ. which represents the 
final agreement between the parties and may not be contradicted by evidence 
of prior, contemporaneous or subsequent oral agreement between the parties.

     15.10. CONFIDENTIALITY.  Except as otherwise provided in this Agreement, 
Foothill shall not disclose any confidential information to any Person 
without the consent of Borrower, other than (a) to Foothill's Affiliates and 
its officers, directors, employees, agents and advisors and to actual or 
prospective assignees and participants, and then only on a confidential 
basis; (b) as required by any law, rule or regulation or judicial process; 
and (c) as requested or required by any state, federal or foreign authority 
or examiner regulating banks or banking.  If Foothill is required by any law, 
rule or regulation or judicial process to disclose any confidential 
information, Foothill will promptly give notice to Borrower so that Borrower 
may seek a protective order or other appropriate remedy.  If Borrower shall 
not obtain such protective order or other remedy, Foothill will endeavor to 
furnish only that portion of the confidential information which Foothill 
reasonably believes to be legally required.

                                       69
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement 
to be executed in Los Angeles, California.

                                        ULTIMATE ELECTRONICS, INC.,
                                        a Delaware corporation


                                        By:
                                           ----------------------------------
                                        Name:  Alan E. Kessock
                                        Title: Vice President - Finance


                                        FAST TRAK, INC.,
                                        a Minnesota corporation


                                        By:    
                                           ----------------------------------
                                        Name:  
                                             --------------------------------
                                        Title: 
                                              -------------------------------


                                        ULTIMATE AKQUISITON CORP.,
                                        a Delaware corporation


                                        By:    
                                           ----------------------------------
                                        Name:  
                                             --------------------------------
                                        Title: 
                                              -------------------------------


                                        FOOTHILL CAPITAL CORPORATION,
                                        a California corporation


                                        By:    
                                           ----------------------------------
                                        Name:  
                                             --------------------------------
                                        Title: 
                                              -------------------------------

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