<PAGE>   1
                                                                EXHIBIT 4(a)(iv)

                    AMENDED AND RESTATED ASSUMPTION AGREEMENT
                         AND AMENDMENT TO LOAN DOCUMENTS


          THIS AMENDED AND RESTATED ASSUMPTION AGREEMENT AND AMENDMENT TO LOAN
DOCUMENTS (this "Amendment") is made and entered into as of November 9, 2000 by
and among Paul Harris Stores, Inc., Paul Harris Merchandising, Inc., Paul Harris
Retailing, Inc., and Paul Harris Distributing, Inc., as debtors and
debtors-in-possession (collectively, the "Debtors"), and The J. Peterman
Company, Peterman Property Corp. and Peterman Worldwide Corp. (the latter three
entities, collectively, the "Non-Debtor Subsidiaries," and together with the
Debtors, collectively, the "Borrowers"), and LaSalle Bank National Association
("Bank").

                                    RECITALS

          A.   Borrowers and Bank are parties to that certain Amended and
Restated Loan and Security Agreement dated as of April 28, 2000 (as amended,
restated, supplemented or otherwise modified in writing from time to time prior
to the Petition Date, the "Pre-Petition Loan Agreement" and together with the
Other Agreements (as defined in the Pre-Petition Loan Agreement as amended,
restated, supplemented or otherwise modified in writing prior to the Petition
Date, collectively, the "Pre-Petition Loan Documents"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Pre-Petition Loan Agreement, as amended hereby (the "Loan Agreement").

          B.   On or about October 13, 2000, the Non-Debtor Subsidiaries
consummated certain transactions pursuant to which substantially all of their
respective assets were sold or liquidated.

          C.   On October 16, 2000 (the "Petition Date"), Debtors filed
petitions for relief under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code"), in the United States Bankruptcy Court for the Southern
District of Indiana, Indianapolis Division (the "Bankruptcy Court"), Case No.
00-12467-11 (collectively, the "Bankruptcy Cases").

          D.   The commencement of the Bankruptcy Cases constituted an Event of
Default under the Pre-Petition Loan Agreement.




<PAGE>   2

          E.   In order to continue Debtors' operations as debtors-in-possession
under the Bankruptcy Code pending their reorganization, Borrowers have requested
that Bank continue making secured loans to Debtors pursuant to the Pre-Petition
Loan Documents, as amended hereby (the "DIP Financing"). Bank is willing to
continue financing Debtors only if, among other things, the Pre-Petition Loan
Documents are amended as hereinafter set forth, and the Bankruptcy Court enters
an Interim Financing Order and Final Financing Order approving this Amendment
and otherwise in form and substance satisfactory to Bank.

          F.   On October 17, 2000, the Bankruptcy Court entered the Interim
Financing Order approving the DIP Financing on an interim basis, and the parties
hereto entered into that certain Assumption Agreement and Amendment to Loan
Documents (the "Original Amendment") in the form attached as Annex A to the
Interim Financing Order.

          G.   Subsequently, the parties hereto agreed to amend and restate the
Original Amendment on the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree to amend and restate the Original
Amendment as follows:

          1.   Amendments. The parties hereby amend the Pre-Petition Loan
Documents as follows:

               a.  From and after the date hereof, all references in the Loan
Agreement and the Other Agreements to (i) "Paul Harris," "Merchandising,"
"Retailing," or "Distributing" or any other reference to any such entity in any
capacity shall be deemed to be references to Paul Harris Stores, Inc., Paul
Harris Merchandising, Inc., Paul Harris Retailing, Inc., or Paul Harris
Distributing, Inc., as applicable, both before the Petition Date, as
pre-petition debtors, and on or after the Petition Date, as
debtors-in-possession in the Bankruptcy Cases, and (ii) all or any portion of
the Pre-Petition Loan Agreement and the other Pre-Petition Loan Documents shall
mean and include the Pre-Petition Loan Agreement and the Pre-Petition Loan
Documents, in each case, as amended by this Amendment.

               b.  When used in the Loan Agreement and the Other Agreements, the
terms "Bankruptcy Court," "DIP Financing," "Pre-Petition Loan Documents,"
"Petition Date," "Pre-Petition Loan Agreement," and "Bankruptcy Cases" shall
have the meanings set forth in the Recitals of this Amendment.

               c.  When used in the Loan Agreement and the Other Agreements, the
terms "Debtors," "Initial Approved Budget," "Pre-Petition Collateral," "DIP
Collateral," "Non-Debtor Subsidiary," "Non-Debtor Subsidiary Collateral,"
"Pre-Petition Indebtedness," "DIP Indebtedness," "DIP Loan Documents," "Loan
Payment Date," "Prior Claims" and "Carve-Out" shall have the meanings set forth
in the Final Financing Order.

               d.  When used in the Loan Agreement and the Other Agreements, the
following terms shall have the following meanings (and to the extent such terms
are currently defined in the Pre-Petition Loan Agreement, the following
definitions shall amend and restate the applicable definitions set forth in the
Pre-Petition Loan Agreement):


                                       2
<PAGE>   3

               "Agreement" means that certain Amended and Restated Loan and
          Security Agreement dated as of April 28, 2000, among the Borrowers and
          Bank, as amended by the First Amendment to Loan and Security Agreement
          dated as of August 18, 2000 and the Forbearance Agreement and Second
          Amendment to Loan and Security Agreements dated as of October 13, 2000
          and as otherwise amended or modified in writing through the Petition
          Date and as further amended by the Assumption Agreement, and as the
          foregoing may thereafter be extended, amended, supplemented or
          otherwise modified from time to time, including, without limitation,
          pursuant to the Interim Financing Order, the Final Financing Order or
          any other order of the Bankruptcy Court to which Bank has consented in
          writing in its sole discretion.

               "Assumption Agreement" means that certain Amended and Restated
          Assumption Agreement and Amendment To Loan Documents dated as of
          November 9, 2000, among Borrowers and Bank.

               "Borrowers' Liabilities" means any and all of the respective
          obligations, liabilities and indebtedness of each Borrower to Bank or
          to any parent, affiliate or subsidiary of Bank of any and every kind
          and nature, howsoever created, arising or evidenced and howsoever
          owned, held or acquired, whether now or hereafter existing, whether
          now due or to become due, whether primary, secondary, direct,
          indirect, absolute, contingent or otherwise (including, without
          limitation, obligations of performance), whether several, joint or
          joint and several, and whether arising or existing under written or
          oral agreement or by operation of law, and whether arising or existing
          before, on or after the Petition Date. Without limiting the generality
          of the foregoing, the term "Borrowers' Liabilities" shall include all
          Pre-Petition Indebtedness and all DIP Indebtedness as those terms are
          defined in the Final Financing Order.

               "DIP Closing Date" means October 17, 2000.

               "Early Termination Date" means the Loan Payment Date, as defined
          in the Final Financing Order.

               "Final Financing Order" means an order of the Bankruptcy Court
          entered in the Bankruptcy Cases after the Final Hearing (as defined in
          the Interim Financing Order) pursuant to Sections 363 and 364 of the
          Bankruptcy Code, inter alia, authorizing the Debtors, as
          debtors-in-possession, to continue to incur secured indebtedness
          pursuant to Section 364 of the Bankruptcy Code, the Agreement and the
          Other Agreements, which order shall be in form and substance
          satisfactory to Bank in its sole discretion.

               "Interim Financing Order" means the order of the Bankruptcy Court
          entered in the Bankruptcy Cases on October 17, 2000, pursuant to
          Sections 363 and 364 of the Bankruptcy Code, inter alia, authorizing
          Debtors to incur secured indebtedness pursuant to Section 364 of the
          Bankruptcy Code and to enter into



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<PAGE>   4

          and/or assume the Assumption Agreement and the other DIP Loan
          Documents, which order shall be in form and substance satisfactory to
          Bank in its sole discretion.

               "Maturity Date" means June 30, 2001.

               "Other Agreements" means, collectively, the Agreement, the Note,
          the Mortgage, the Interim Financing Order, the Final Financing Order
          and all other agreements, instruments and documents, including,
          without limitation, letters of credit, guarantees, mortgages, trust
          deeds, pledges, powers of attorney, consents, assignments, contracts,
          notices, security agreements, leases, financing statements and all
          other writings heretofore, now or from time to time hereafter (whether
          before, on or after the Petition Date) executed by or on behalf of any
          Borrower or any other Person and delivered to Bank or to any parent,
          affiliate or subsidiary of Bank in connection with any of the
          Borrowers' Liabilities or the transactions contemplated hereby or
          thereby, as the same may be modified, amended, extended, restated or
          supplemented from time to time (including, without limitation, by any
          the DIP Loan Documents (as defined in the Final Financing Order) or
          any order of the Bankruptcy Court). Without limiting the foregoing,
          the term "Other Agreements" shall include all DIP Loan Documents.

               "Revolving Loans" means revolving loans and advances made under
          the Revolving Credit Commitment, whether made before, on or after the
          Petition Date.

               "Revolving Loan Borrowing Base" means, as at any date of
          determination thereof, an amount which is the sum of:

               (A) the product of the amounts of (i) each component of Eligible
          Inventory, (ii) outstanding and issued documentary letters of credit,
          and (iii) Carryover Inventory, multiplied by the Advance Ratio,
          subject to the maximum amount of each such product to be included in
          the Revolving Loan Borrowing Base, as follows:

               COMPONENT OF INVENTORY                       MAXIMUM AMOUNT
               ----------------------                       --------------
               Eligible Inventory on premises.              None.
               Eligible Inventory in transit.               None.
               Eligible Inventory in transit not
                    supported by a letter of credit.        None.
               Outstanding and issued documentary
                    letters of credit.                      $20,000,000
               Carryover Inventory.                         $ 5,000,000

               plus    (B)   [Intentionally omitted]

               plus    (C)   seventy percent (70%) of the fair market value of
          the Mortgaged Property, which is the amount of Four Million Four
          Hundred Eighty


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          Thousand Dollars ($4,480,000), as cumulatively reduced on the first
          day of each month commencing June, 2000 in the amount of Eighteen
          Thousand Six Hundred Sixty-Seven Dollars ($18,667) (the "Mortgaged
          Property Cap";

               plus    (D)   the Special Advance available as described in
          Paragraph 2.1(b) of this Agreement.

               For purposes hereof, "Advance Ratio" shall mean (i) up to
          Seventy-Five Percent (75%) from the Petition Date through December 22,
          2000; (ii) up to Seventy Percent (70%) from December 23, 2000 through
          December 29, 2000; and (iii) up to Fifty Nine Percent (59%) from
          December 30, 2000 through the Maturity Date.

          e.   The definition of "Eligible Inventory" in Paragraph 1.1 of the
Pre-Petition Loan Agreement is hereby amended by adding the following at the end
thereof:

               "Notwithstanding anything to the contrary herein, the term
          "Eligible Inventory" shall exclude any Inventory of any of the
          Non-Debtor Subsidiaries or any Inventory located at the stores or
          other facilities of any of the Non-Debtor Subsidiaries."

          f.   Paragraph 2.1 of the Existing Loan Agreement is hereby amended by
inserting the following at the end thereof:

          "Without limiting the right of Bank to establish other Reserves in
          accordance with the provisions of this Agreement, in the event any
          Borrower sells or otherwise disposes of any property other than
          Inventory sold in the ordinary course of business (the proceeds of
          which are required to be remitted to Bank for application to the
          Obligations), Bank shall be entitled to establish a Reserve against
          the Revolving Loan Borrowing Base in an amount equal to the proceeds
          from each such sale or other disposition."

          g.   Paragraph 2.1(b) of the Existing Loan Agreement is hereby amended
and restated in its entirety to read as follows:

               (iii)   Special Advance. Subject to all of the terms and
          conditions of this Agreement, Bank agrees to include as part of the
          Revolving Credit Commitment, a special advance to Borrowers on the DIP
          Closing Date in the principal amount of ONE MILLION FIVE HUNDRED
          THOUSAND DOLLARS ($1,500,000) (the "Special Advance"), which shall
          bear interest in accordance with Section 4.1, shall be secured by all
          of the Collateral as provided for herein, and shall be secured by all
          of the Collateral as provided herein, and shall be due and payable as
          follows: (i) $150,000 on October 20, 2000, (ii) $150,000 on October
          27, 2000, (iii) $150,000 on November 3, 2000, (iv) $150,000 on
          November 10, 2000, (v) $150,000 on November 17, 2000, (vi) $150,000 on
          November 24, 2000, (vii) $300,000 on December 1, 2000, and (viii)
          $300,000 on December 8, 2000;



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          provided, however, that any unpaid portion of the Special Advance
          shall be due and payable on the Early Termination Date.

          h.   Paragraph 2.3 of the Pre-Petition Loan Agreement and all other
applicable provisions of the Pre-Petition Loan Documents are hereby amended to
provide that no Letters of Credit will be issued from or after the Petition Date
for the account of any Non-Debtor Subsidiary under any circumstances unless
Bank, in its sole discretion, otherwise agrees in writing.

          i.   The definition of "Permitted Debt" in Paragraph 11.3(d) of the
Pre-Petition Loan Agreement is hereby amended by adding the following sentence
at the end thereof:

               "Notwithstanding anything to the contrary herein, the term
          "Permitted Debt" shall not include any Debt first incurred on or after
          the Petition Date."

          j.   The parties hereto agree and acknowledge that interest shall
accrue on all Loans and other Borrowers' Liabilities at the default rate of
interest applicable to Prime Rate Loans, and the Pre-Petition Loan Agreement is
hereby amended to so provide.

          k.   Paragraph 5 of the Pre-Petition Loan Agreement is hereby amended
to add the following new subparagraph 5.13:

               "(j) DIP Financing Fee. On the DIP Closing Date, Borrowers will
     pay to Bank a closing fee equal to $50,000, and this closing fee will be
     fully earned and nonrefundable on the DIP Closing Date."

          In addition, the Borrowers hereby reaffirm their joint and several
obligation to pay, and hereby agree to pay, the unpaid $300,000 portion of the
Closing Fee and the entire Success Fee, which Fees were previously earned on the
First Amendment Effective Date. Paragraph 3 of that certain First Amendment to
Loan and Security Agreement dated as of August 18, 2000, is hereby amended to
provide that the remaining $300,000 balance of the Closing Fee shall be due and
payable on December 15, 2000. The Success Fee shall continue to be due and
payable on December 29, 2000.

          l.   The Pre-Petition Loan Agreement is hereby amended to prohibit the
making of any LIBOR Rate Loans.

          m.   The Pre-Petition Loan Agreement is hereby amended to prohibit the
making of any Revolving Loans or other extensions of credit or any distributions
or other transfers to any Non-Debtor Subsidiary unless (A) Bank, in its sole
discretion, otherwise agrees in writing or (B) such payment or transfer to or
for the benefit of any Non-Debtor Subsidiary is permitted under the Peterman
Transaction Documents.

          n.   Paragraph 7.1 of the Pre-Petition Loan Agreement is hereby
amended and restated in its entirety as follows:

          "7.  Grant of Security Interest and Super-Priority Administrative
Status.


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<PAGE>   7

          Borrowers hereby confirm their grant to Bank of a security interest in
          the Collateral (as defined in paragraph 7 of the Pre-Petition Loan
          Agreement) pursuant to the Pre-Petition Loan Documents. Borrowers
          further confirm that the security interests granted in the
          Pre-Petition Loan Documents extend to all assets described in
          paragraph 7 of the Pre-Petition Loan Agreement, whether arising or
          acquired prior to, on or after the Petition Date and secure all
          Borrowers' Liabilities, whether arising prior to, on or after the
          Petition Date. Furthermore, subject to the Carve-Out (as defined in
          the Final Financing Order), and the provisions of ordering paragraph 6
          in the Final Financing Order, to secure the payment and performance of
          the Borrowers' Liabilities (whether arising prior to, on or after the
          Petition Date), including all renewals, extensions, restructurings and
          refinancings of any or all of the Borrowers' Liabilities, Borrowers,
          jointly and severally, hereby grant to Bank, a continuing security
          interest, lien and mortgage in and to all of the respective right,
          title and interest of Borrowers, as pre-petition debtors and
          debtors-in-possession, in all real and personal property and interests
          in real and personal property of Borrowers (as pre-petition debtors
          and debtors-in-possession in the case of the Debtors), whether arising
          or acquired prior to, on or after the Petition Date and regardless of
          where located (collectively, "Collateral"), including, without
          limitation, (a) accounts (including, without limitation, all of each
          Borrower's Accounts Receivable), chattel paper, contract rights,
          letters of credit, instruments and documents (sometimes hereinafter
          individually and collectively referred to as "Accounts"), and all
          goods whose sale, lease or other disposition by each Borrower which
          have given rise to Accounts and have been returned to or repossessed
          or stopped in transit by any Borrower; (b) Inventory; (c) goods (other
          than Inventory), machinery, Equipment, vehicles and fixtures
          (hereinafter individually and collectively referred to as "Equipment";
          (d) General Intangibles; (e) monies, reserves, deposits, deposit
          accounts and interest or dividends thereon, securities, cash, cash
          equivalents and other property now or at any time or times hereafter
          in the possession or under the control of Bank or its bailee; (f)
          liens, guarantees and other rights and privileges pertaining to any of
          the foregoing; (g) all books, records and computer records in any way
          relating to the foregoing; (h) all Facilities and the Mortgaged
          Property; (i) all other assets of each Borrower whether real,
          personal, tangible or intangible or mixed, now existing or hereafter
          acquired, created, built or otherwise coming into being together with
          all improvements thereon (including, without limitation, all of
          Borrowers' respective leasehold interests, rights of tenancy or other
          rights to occupy the premises occupied or controlled by any Borrower);
          (j) subject to the limitations in the Final Financing Order, all
          causes of action and claims of each Debtor's estate against third
          parties, including, without limitation, claims of each Debtor as
          debtor-in-possession under the Bankruptcy Code and all proceeds of
          avoidance claims of each Debtor under Sections 544, 545, 547, 548, 551
          or 553 of the Bankruptcy Code (such avoidance claims, collectively,
          "Avoidance Actions"); and (k) all additions and accessions to,
          substitutions for, and replacements, rents, profits, products and
          proceeds of any of the foregoing, including, without limitation, the
          proceeds of any insurance policies covering any of the above-described
          property. As provided in the Final Financing Order, and subject



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<PAGE>   8

          to the Carve-Out, the Borrowers' Liabilities shall have the highest
          administrative priority under Section 364(c)(1) of the Bankruptcy
          Code, and shall have priority over all other costs and expenses of
          administration of any kind, including those specified in, or ordered
          pursuant to, Sections 105, 326, 330, 331, 503(b), 506(c), 507(b) or
          726 or any other provision of the Bankruptcy Code or otherwise
          (whether incurred in any Bankruptcy Case, any conversion of any
          Bankruptcy Case pursuant to ss. 1112 of the Bankruptcy Code, or in any
          other proceedings related thereto), and shall at all times be senior
          to the rights of the Debtor, any Non-Debtor Subsidiary, any successor
          trustee or estate representative in any Bankruptcy Case or any
          subsequent case or proceeding under the Bankruptcy Code and have the
          highest administrative priority under Section 364(c)(1) of the
          Bankruptcy Code."

          o.   The definition of "Permitted Liens" in Paragraph 4.3(a) of the
Pre-Petition Loan Agreement is hereby amended by adding the following sentence
at the end thereof:

          "Notwithstanding anything to the contrary herein, the term "Permitted
          Liens" shall not include any liens, security interests, encumbrances,
          charges, restrictions, easements, or any other Liens to the extent
          they first arise on or after the Petition Date."

          p.   Paragraph 7.4 of the Pre-Petition Loan Agreement is hereby
amended (i) to delete the ";" after the word "demand" in the seventh line of
such Paragraph, and to substitute therefor ".", and (ii) to delete the proviso
at the end of such paragraph.

          q.   Paragraph 13.3 of the Pre-Petition Loan Agreement is hereby
amended by deleting the phrase "Following an Event of Default," and substituting
therefor the phrase "Subject to the Final Financing Order, as the case may be,".

          r.   Paragraph 11.2(f) of the Pre-Petition Loan Agreement is hereby
amended and restated in its entirety as follows:

          "(f) Financial Covenants.  Comply with the following financial
covenants:

                   (i)  Shall not make cumulative disbursements for, or on
behalf of, any or all Debtors in excess of the sum of the Applicable Adjustment
Amount plus the following amount for each period set forth below:

          ----------------------------------------------------------------------
          PERIOD                                  MAXIMUM DISBURSEMENT AMOUNT
          ----------------------------------------------------------------------
          10/22/00 - 10/28/00                     $  8,006,000
          ----------------------------------------------------------------------
          10/22/00 - 11/04/00                       18,916,000
          ----------------------------------------------------------------------
          10/22/00 - 11/11/00                       26,476,000
          ----------------------------------------------------------------------
          10/22/00 - 11/18/00                       33,483,000
          ----------------------------------------------------------------------
          10/22/00 - 11/25/00                       40,402,000
          ----------------------------------------------------------------------
          10/22/00 - 12/02/00                       50,454,000
          ----------------------------------------------------------------------
          10/22/00 - 12/09/00                       56,287,000
          ----------------------------------------------------------------------
          10/22/00 - 12/16/00                       60,333,000
          ----------------------------------------------------------------------



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          ----------------------------------------------------------------------
          10/22/00 - 12/23/00                       64,467,000
          ----------------------------------------------------------------------
          10/22/00 - 12/30/00                       67,828,000
          ----------------------------------------------------------------------
          10/22/00 - 1/06/01                        73,576,000
          ----------------------------------------------------------------------
          10/22/00 - 1/13/01                        78,943,000
          ----------------------------------------------------------------------
          10/22/00 - 1/20/01                        85,237,000
          ----------------------------------------------------------------------
          10/22/00 - 1/27/01                        90,216,000
          ----------------------------------------------------------------------

          As used herein, the term "Applicable Adjustment Amount" means with
          respect to any of the foregoing time periods specified in this
          subparagraph 11.2(f)(i), an amount equal to the dollar amount, if any,
          by which (i) the actual level of sales of Inventory of the Debtors in
          the ordinary course for such time period exceeds (ii) the budgeted
          amount of sales set forth in the Budget for such time period.

                   (ii)     Maintain the following minimum aggregate level of
          sales of Inventory of the Debtors in the ordinary course of business
          for each of the following periods, which sales levels shall be
          reported to Bank in writing on or before noon of the first Tuesday
          immediately following the end of the applicable time period.


          PERIOD                                  MINIMUM SALES AMOUNT
          ----------------------------------------------------------------------
          10/22/00 - 10/28/00                     $   4,000,000
          ----------------------------------------------------------------------
          10/22/00 - 11/04/00                         8,000,000
          ----------------------------------------------------------------------
          10/22/00 - 11/11/00                        13,000,000
          ----------------------------------------------------------------------
          10/22/00 - 11/18/00                        18,250,000
          ----------------------------------------------------------------------
          10/22/00 - 11/25/00                        23,300,000
          ----------------------------------------------------------------------
          10/22/00 - 12/02/00                        35,190,000
          ----------------------------------------------------------------------
          10/22/00 - 12/09/00                        44,012,000
          ----------------------------------------------------------------------
          10/22/00 - 12/16/00                        55,204,000
          ----------------------------------------------------------------------
          10/22/00 - 12/23/00                        66,430,000
          ----------------------------------------------------------------------
          10/22/00 - 12/30/00                        72,510,000
          ----------------------------------------------------------------------
          10/22/00 - 1/06/01                         76,062,000
          ----------------------------------------------------------------------
          10/22/00 - 1/13/01                         79,762,000
          ----------------------------------------------------------------------
          10/22/00 - 1/20/01                         83,759,000
          ----------------------------------------------------------------------
          10/22/00 - 1/27/01                         87,311,000
          ----------------------------------------------------------------------

                   (iii)    The Borrowers agree that they shall submit to
          Bank on or before December 15, 2000, a budget, in form and substance
          satisfactory to Bank in its sole discretion (the "2001 Budget"),
          setting forth the Debtors' projected sales, collections and
          disbursement levels and projected amounts under the other line items
          contained in the Initial Approved Budget on a weekly basis for the
          period from February 1, 2001 through June 30, 2001. Borrowers' failure
          to comply with the immediately preceding sentence shall constitute an
          immediate Event of Default. The financial covenants set forth in
          clauses (i), (ii) and (iii) in this subparagraph 11.2(f) shall be
          extended to cover the period from February 1, 2001 through June 30,
          2001, and shall be reset (as determined by the Bank) using (i) the
          projections in the 2001 Budget, (ii) February 1, 2001 as the starting
          date for



                                       9
<PAGE>   10

          each cumulative time period, and (iii) the same methodology used in
          setting the financial covenants for the period ending January 31, 2001
          (based on the Initial Approved Budget)."

          s.   Paragraph 11.2 of the Pre-Petition Loan Agreement is hereby
amended by adding the following new subparagraphs (xv) through (xviii):

          "(xv) On each Tuesday (beginning on October 24, 2000), for each week
          ending on the immediately preceding Sunday, the Borrowers will deliver
          to Bank a report, in form and substance satisfactory to Bank, (a)
          setting forth for the applicable week and on a cumulative basis for
          the post-petition period ending on such Sunday, (i) the aggregate
          amount of sales of Debtors' Inventory in the ordinary course of
          business, (ii) the aggregate amount of cash receipts, (iii) letter of
          credit issuances and payments, and (iv) the actual results under each
          of the other line items in the Approved Budget and (b) comparing all
          such actual results against the corresponding budgeted actual and
          cumulative amounts for each line item, together with a certificate
          signed by the chief financial officer or comptroller of Paul Harris,
          setting forth Borrowers' determination as to their compliance or
          non-compliance with the financial covenants set forth in Paragraph
          11.2(f)(i), (ii) and (iii);

          (xvi) On November 15, 2000, Borrowers will deliver to Bank, in form
          and substance satisfactory to Bank, a consolidated monthly projected
          income statement, balance sheet and cash flow statement for the
          Debtors covering each of the months of November and December, 2000 and
          January, 2001 (and in the case of the monthly balance sheets, as of
          the end of each such month);

          (xvii) On December 15, 2000, the Borrower shall deliver to Bank, in
          form and substance satisfactory to Bank, a consolidated monthly
          projected income statement, balance sheet and cash flow statement for
          the Debtors covering each of the months of February through June, 2001
          (and in the case of the monthly balance sheets, as of the end of each
          such month); and

          (xviii) On each Business Day (beginning on October 23, 2000), the
          Borrowers will deliver to Bank a report, in form and substance
          satisfactory to Bank, setting forth each particular disbursement made
          by any Borrower."

          t.   Paragraph 12.1 of the Pre-Petition Loan Agreement is hereby
          amended and restated to read in its entirety as follows:

          "12.1 Events of Default. The occurrence of any one of the following
          events shall constitute a default ("Event of Default") by any Borrower
          under this Agreement: (a) if any Borrower fails or neglects to
          perform, keep or observe any covenant or agreement contained in this
          Agreement or in the Other Agreements which is required to be
          performed, kept or observed by Borrowers; (b) if any representation or
          warranty made by any Borrower herein or in any Other Agreement is
          breached or is false or misleading in any material respect, or any


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<PAGE>   11

          exhibit, schedule, certificate, financial statement, report, notice or
          other writing furnished by any Borrower or any of its partners,
          shareholders, directors, officers, employees, managers, members or
          representatives to Bank is false or misleading in any material respect
          on the date as of which the facts therein are stated or certified; (c)
          if any Borrower fails to pay Borrowers' Liabilities when due and
          payable or declared due and payable; (d) [intentionally omitted]; (e)
          [intentionally omitted]; (f) [intentionally omitted]; (g)
          [intentionally omitted]; (h) [intentionally omitted]; (i) if a notice
          of lien, levy or assessment is filed of record on or after the
          Petition Date with respect to any or all of the Collateral by the
          United States or any department, agency or instrumentality thereof or
          by any state, county, municipal or any other governmental agency,
          including without limitation the PBGC, or if any taxes or debts owing
          at any time or times thereafter to any one of them becomes a lien or
          encumbrance upon any of the Collateral and the same is not released
          within thirty (30) days after the same becomes a lien or encumbrance;
          (j) [intentionally omitted]; (k) [intentionally omitted]; (l)
          [intentionally omitted]; (m) [intentionally omitted]; (n) the
          occurrence of a material breach, a default or an event of default by
          any Borrower under any of the Other Agreements; (o) any guaranty of
          Borrowers' Liability shall be terminated, curtailed or restricted in
          scope without Bank's consent; (p) [intentionally omitted]; (q) any
          post-petition material adverse change occurs in any Borrower's
          business, assets, operations, prospects or condition, financial or
          otherwise; (r) the prospect of repayment of any portion of the
          Borrowers' Liabilities where the value or priority of Bank's security
          interest in the Collateral is materially impaired at any time after
          the Petition Date; (s) any material portion of any Borrower's assets
          is seized, attached, subjected to a writ or distress warrant, is
          levied upon or comes into the possession of any judicial officer; (t)
          any Borrower shall generally not pay its post-petition debts as they
          become due; (u) any post-petition notice of any lien, levy or
          assessment is filed of record with respect to any Borrower's assets
          which is not discharged within 15 days from the occurrence thereof;
          (v) any final judgments are entered against any Borrower at any time
          after the Petition Date in an aggregate amount exceeding $100,000,
          which are not covered by insurance and which remain unpaid, unstayed,
          undischarged, unbonded or undismissed for a period of 15 days from the
          occurrence thereof; (w) any post-petition default shall occur under
          any material agreement between any Borrower and any third party,
          including, without limitation, any default which would entitle such
          third party to accelerate the maturity of any Debt of any such
          Borrower to such third party; (x) any Bankruptcy Case is converted to
          a case under Chapter 7 of the Bankruptcy Code; (y) a trustee or an
          examiner with enlarged powers (beyond those set forth in Sections
          1106(a)(3) and (4) of the Bankruptcy Code) relating to the operation
          of the business of any Debtor is appointed in any Bankruptcy Case or
          any Debtor applies for, consents to, or acquiesces in, any such
          appointment; (z) except as expressly permitted in the Final Financing
          Order (including, without limitation, ordering paragraph 11 of the
          Final Financing Order relating to the Carve-Out), any Debtor files any
          application for approval or allowance of, or any order is entered
          approving or allowing, any administrative expense claim in any
          Bankruptcy Case, having any priority over, or being pari



                                       11
<PAGE>   12

          passu with, the superadministrative priority of the Borrowers'
          Liabilities; (aa) an order is entered in any Bankruptcy Case granting
          relief from the automatic stay of Section 362 of the Bankruptcy Code
          (i) to any holder or holders of a Lien on any material collateral in
          allowing such holder or holders to foreclose or otherwise realize upon
          such Liens, or (ii) to any party in interest if such relief is of a
          kind that would otherwise not be permitted under this Agreement or any
          Other Agreement; (bb) the Final Financing Order (in form and substance
          satisfactory to Bank in its sole discretion) is not entered by the
          Bankruptcy Court on or before November 30, 2000, or such later date as
          Bank, in its sole discretion, may consent to in writing after the date
          hereof, (cc) the Interim Financing Order or the Final Financing Order
          is stayed, reversed, vacated, amended or otherwise modified in any
          respect without the prior written consent of Bank, which consent may
          be withheld in its sole discretion; (dd) the Bankruptcy Court or any
          other court enters an order or judgment in any Bankruptcy Case
          modifying, limiting, subordinating or avoiding the priority of any
          Borrowers' Liabilities or the perfection, priority or validity or
          Bank's pre-petition or post-petition Liens on any Collateral, or
          imposing, surcharging or assessing against Bank or its claims or any
          Collateral, any costs or expenses, whether pursuant to Section 506(c)
          of the Bankruptcy Code or otherwise; (ee) any Debtor violates in any
          material respect any term or provision of the Interim Financing Order
          or the Final Financing Order; (ff) any motion or application is filed
          by or on behalf of any Debtor in any Bankruptcy Case seeking the entry
          of an order, or an order is entered in any Bankruptcy Case, approving
          any subsequent debtor-in-possession facility for borrowed money or
          other extensions of credit unless such subsequent facility and such
          order expressly provide for the indefeasible payment and complete
          satisfaction in full in cash to Bank of all Borrowers' Liabilities
          prior to, or concurrently with, any initial borrowings or other
          extensions of credit under such subsequent facility; (gg) any
          Bankruptcy Case is dismissed; or (hh) any Debtor fails to deliver any
          certified Borrowing Base certificate when due."

          2.   Forbearance re: Existing Events of Default. Nothing in this
Amendment or in any of the DIP Loan Documents or the Interim Financing Order or
the Final Financing Order shall constitute or be deemed to constitute a waiver
by Bank of (i) any existing or future Events of Default (including, without
limitation, the Events of Default arising from the commencement of these
Bankruptcy Cases), or (ii) any rights or remedies of Bank against any of the
Borrowers or any property of any of the Borrowers under any of the DIP Loan
Documents. Without prejudice to, or waiver of, (x) Bank's rights and remedies
against any Borrower in respect of any Events of Default other than the Existing
Defaults (as defined below), or (y) Bank's rights and remedies against any
Person other than any Borrower, Bank agrees to forbear from foreclosing its
Liens on any Collateral or otherwise taking enforcement action against any
Borrower based solely on any Existing Default; provided that such forbearance
shall terminate upon the occurrence of any Event of Default other than an
Existing Default. As used herein, the term "Existing Default" shall mean all
Events of Default existing as of the Petition Date and as to which Bank has
actual knowledge as of the date of this Amendment.

          3.   Entire Agreement and Acknowledgements of the Parties. The parties
hereto agree that the amendments set forth in this Amendment as modified by the
Final



                                       12
<PAGE>   13

Financing Order constitute the entire agreement of the parties with respect to
the matters set forth herein, shall be limited precisely as written and shall
not be deemed to be a consent to any waiver, amendment or modification of any
other term or condition of the Loan Agreement or any Other Agreements.

          4.   Conditions Precedent. The effectiveness of this Amendment shall
be subject to satisfaction of the following conditions (any one or all of which
may be waived by Bank in its sole discretion):

          a.   Receipt by Bank of counterparts of this Amendment, duly executed
by the Borrowers and Bank; and

          b.   The Bankruptcy Court shall have approved and entered the Final
Financing Order in a form and in substance satisfactory to Bank in its sole
discretion.

          5.   References in Other Documents. All references to any Pre-Petition
Loan Document shall be deemed to be a reference to same as amended hereby.

          6.   Miscellaneous.

          a.   To induce Bank to enter into this Amendment, Borrowers hereby
jointly and severally represent and warrant to Bank that each Borrower has full
power and authority to enter into this Amendment, that this Amendment has been
duly authorized, executed and delivered by each Borrower, and that this
Amendment constitutes a legal, valid and binding obligation of each Borrower,
enforceable against each Borrower in accordance with its terms.

          b.   This Amendment may be signed in any number of counterparts each
of which constitutes an original, but all of which, taken together, shall
constitute one and the same instrument.

          c.   It is the parties' intention that this Amendment be interpreted
in such a way that it is valid and effective under applicable law; however, if
one or more of the provisions of this Amendment shall for any reason by found to
be invalid or unenforceable, the remaining provisions of this Amendment shall be
unimpaired.

          d.   The parties hereto agree that Bank shall be promptly reimbursed
jointly and severally by Borrowers without order of the Bankruptcy Court for all
costs and expenses (including, without limitation, all filing and recording
fees, attorneys' and paralegals' fees and expenses and out-of-pocket audit
expenses) incurred by Bank in connection with: (i) the preparation of any or all
of the Interim Financing Order, the Final Financing Order, the Loan Agreement,
the Other Agreements and related instruments, documents and agreements; (ii) the
preservation and protection of Bank's rights hereunder and thereunder; (iii) the
collection of any or all Pre-Petition Indebtedness and DIP Indebtedness; (iv)
the defense of any claim or action asserted or brought against Bank by any
Person that arises from or relates to any or all of the Pre-Petition Loan
Documents, the Loan Agreement, the Other Agreements, or any matters in
connection therewith; (v) the commencement or defense of, or intervention in any
court


                                       13
<PAGE>   14

proceeding in any Bankruptcy Case including any proceeding involving any
objection or complaint filed pursuant to ordering paragraph 25 of the Final
Financing Order, (vi) the filing of any petition, complaint, answer, motion or
other pleading, or taking of any other action in or with respect to the
Pre-Petition Collateral, the Non-Debtor Subsidiary Collateral or the DIP
Collateral; (viii) the review and analysis of any pleading filed in any
Bankruptcy Case: (viii) the protection, collection, lease, sale, taking
possession of, or liquidation of any of the Pre-Petition Collateral, the
Non-Debtor Subsidiary Collateral or the DIP Collateral or Bank's interest
therein, (ix) any attempt to enforce any security interest in any of the
Pre-Petition Collateral, the Non-Debtor Subsidiary Collateral or the DIP
Collateral; or (x) the rendering of any advice with respect to any of the
foregoing.

          7.   Choice of Law and Jurisdiction. To the extent not governed by the
provisions of the Bankruptcy Code, any dispute between any Borrower and Bank and
arising out of, connected with, related to, or incidental to the relationship
established between them in connection with this Amendment, and whether arising
in contract, tort, equity or otherwise, shall be resolved in accordance with the
internal laws and not the conflicts of law provisions of the State of Illinois.

          8.   Waiver of Jury Trial. THE PARTIES HERETO WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AMENDMENT OR ANY MATTER ARISING HEREUNDER.




                                       14
<PAGE>   15
          IN WITNESS WHEREOF, the parties have duly executed and delivered this
Amended and Restated Assumption Agreement and Amendment to Loan Documents as of
the day and year first above written.


                                           PAUL HARRIS STORES, INC.



                                           By:  /s/ Richard R. Hettlinger
                                                --------------------------------
                                           Its: Senior VP - CFO
                                                --------------------------------



                                           PAUL HARRIS MERCHANDISING, INC.



                                           By:  /s/ Richard R. Hettlinger
                                                --------------------------------
                                           Its: Senior VP - CFO
                                                --------------------------------



                                           PAUL HARRIS RETAILING, INC.



                                           By:  /s/ Richard R. Hettlinger
                                                --------------------------------
                                           Its: Senior VP - CFO
                                                --------------------------------



                                           PAUL HARRIS DISTRIBUTING, INC.



                                           By:  /s/ Richard R. Hettlinger
                                                --------------------------------
                                           Its: Senior VP - CFO
                                                --------------------------------



                                           THE J. PETERMAN COMPANY



                                           By:  /s/ Richard R. Hettlinger
                                                --------------------------------
                                           Its: Senior VP - CFO
                                                --------------------------------





                                       15
<PAGE>   16
                                           PETERMAN PROPERTY CORP.



                                           By:  /s/ Richard R. Hettlinger
                                                --------------------------------
                                           Its: Senior VP - CFO
                                                --------------------------------



                                           PETERMAN WORLDWIDE CORP.



                                           By:  /s/ Richard R. Hettlinger
                                                --------------------------------
                                           Its: Senior VP - CFO
                                                --------------------------------



                                           LASALLE BANK NATIONAL ASSOCIATION



                                           By:  /s/ William A. Stapel
                                                --------------------------------
                                           Its: F.V.P.
                                                --------------------------------





                                       16