<PAGE>   1
                                                                [EXECUTION COPY]


                                BANKBOSTON, N.A.
                               100 Federal Street
                           Boston, Massachusetts 02110


                                 April 24, 1998


The Caldor Corporation
20 Glover Avenue
Norwalk, Connecticut 06856-5620

Attention:  Mr. Jack Reen

                           Re:      Commitment Letter


Ladies and Gentlemen:

         You have advised BankBoston, N.A. ("BBNA") and the other financial
institutions from time to time executing a counterpart signature page to this
Commitment Letter substantially in the form attached as Exhibit B hereto and
listed on a revised Schedule A hereto (together with BBNA, the "Lenders"), that
The Caldor Corporation, as debtor and debtor-in-possession (the "Debtor") in a
case (the "Case") filed under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court"), is seeking (i)
debtor-in-possession financing in order to provide for the working capital and
general business needs of the Debtor and to repay in full the Debtor's current
debtor-in-possession credit facility dated as of October 17, 1995 (as amended,
the "Current Credit Facility"), and (ii) post-confirmation financing in
connection with a plan of reorganization to be filed by the Debtor (the "Plan")
to provide for the working capital and general business needs of the reorganized
Debtor following the effective date of the Plan (the "Plan Effective Date") as
well as to repay in full the DIP Facility (as defined below). In that regard,
the Lenders are pleased to advise you of their commitment, upon the terms and
subject to the conditions set forth in this Commitment Letter, in the term sheet
attached as Exhibit A to this Commitment Letter (the "Term Sheet") and in the
letter of even date herewith addressed to you (the "Fee Letter") providing,
among other things, for the payment of certain fees relating to the Facilities
(as defined below) (this Commitment Letter, the Term Sheet and the Fee Letter
are referred to collectively herein as the "Commitment Letter"), to provide (i)
to the Debtor a senior secured $450,000,000 guaranteed revolving credit facility
(the "DIP Facility") and (ii) to the reorganized Debtor a senior secured
$450,000,000 guaranteed revolving credit facility (the "Exit Facility" and
together with the DIP Facility, the "Facilities").
<PAGE>   2
The Caldor Corporation
April 24, 1998
Page 2



         Each Lender, severally and not jointly, agrees to provide its share of
each Facility as set forth opposite its name on Schedule A attached hereto (as
amended from time to time in accordance with the terms hereof).

         The Lenders' commitment to provide the DIP Facility in accordance with
Exhibit A attached hereto is subject to the negotiation, execution and delivery
of a Revolving Credit and Guarantee Agreement (the "DIP Credit Agreement")
reasonably appropriate security documents in connection therewith and other
definitive documentation (collectively, the "Definitive DIP Documentation") with
respect to the DIP Facility reasonably satisfactory in form and substance to the
Lenders.

         The Lenders' commitment to provide the DIP Facility is also subject to:

         (A)      The approval by the Bankruptcy Court of:

                  (i)      All aspects of this Commitment Letter (as it relates
                           to the DIP Facility) and the Definitive DIP
                           Documentation and the transactions contemplated by
                           this Commitment Letter relating to the DIP Facility
                           and by the Definitive DIP Documentation, and

                  (ii)     All actions to be taken, undertakings to be made and
                           obligations to be incurred by the Debtor and the
                           Guarantors (as defined in the Term Sheet) in
                           connection with the DIP Facility;

                  All such approvals of the Bankruptcy Court shall be evidenced
                  by the entry of one or more orders satisfactory in form and
                  substance to the Lenders;

         (B)      The Lenders' completion of and satisfaction, in the Lenders'
                  sole judgment, with the scope and results of their legal due
                  diligence investigation of the Debtor and each of the
                  Guarantors;

         (C)      The satisfaction of each of the conditions precedent to
                  effectiveness and funding applicable to the DIP Facility set
                  forth in the Term Sheet and in the DIP Credit Agreement; and

         (D)      There not having occurred or become known to any Lender any
                  material adverse change in the condition (financial and
                  otherwise), operations or assets of the Debtor and the
                  Guarantors, taken as a whole (including, without limitation,
                  any material reduction in the value of the assets of the
                  Debtor and the Guarantors, taken as a whole), from that shown
                  in the information made available to the Lenders on or prior
                  to the date of this Commitment Letter.

         The Lenders' commitment to provide the Exit Facility in accordance with
Exhibit A hereto is subject to the negotiation, execution and delivery of a
Revolving Credit and
<PAGE>   3
The Caldor Corporation
April 24, 1998
Page 3



Guarantee Agreement (the "Exit Credit Agreement"), reasonably appropriate
security documents in connection therewith and other definitive documentation
(collectively, the "Definitive Exit Documentation", and together with the
Definitive DIP Documentation, the "Definitive Documentation") with respect to
the Exit Facility, reasonably satisfactory in form and substance to the Lenders.

         The Lenders' commitment to provide the Exit Facility is also subject
to:

         (A)      The approval by the Bankruptcy Court of:

                  (i)      all aspects of this Commitment Letter (as it relates
                           to the Exit Facility) and the Definitive Exit
                           Documentation and the transactions contemplated by
                           this Commitment Letter relating to the Exit Facility
                           and by the Definitive Exit Documentation; and

                  (ii)     All actions to be taken, undertakings to be made and
                           obligations to be incurred by the reorganized Debtor
                           and the Guarantors in connection with the Exit
                           Facility;

                  All such approvals of the Bankruptcy Court shall be evidenced
                  by the entry of one or more orders satisfactory in form and
                  substance to the Lenders;

         (B)      The satisfaction of each of the conditions precedent to
                  effectiveness and to funding applicable to the Exit Facility
                  set forth in the Term Sheet and in the Exit Credit Agreement,
                  including, without limitation:

                  (i)      The final terms of the Plan and the order of the
                           Bankruptcy Court approving the Plan (the
                           "Confirmation Order") shall not be inconsistent with
                           Schedule A to the Term Sheet and otherwise reasonably
                           satisfactory to the Administrative Agent;

                  (ii)     All conditions precedent to the confirmation of the
                           Plan and to the Plan Effective Date shall have been
                           met (or the waiver thereof shall have been consented
                           to by the Administrative Agent (as defined below))
                           and the Plan Effective Date shall have occurred or
                           shall be scheduled to occur, except for the initial
                           extension of credit under the Exit Facility;

                  (iii)    Except as consented to by the Administrative Agent,
                           the Bankruptcy Court's retention of jurisdiction
                           under the Confirmation Order shall not govern the
                           enforcement of the Definitive Exit Documentation
                           after the Plan Effective Date or any rights or
                           remedies relating thereto (except with respect to the
                           granting of the Leasehold Security Interest (as
                           defined in the Term
<PAGE>   4
The Caldor Corporation
April 24, 1998
Page 4


                           Sheet) to the Collateral Agent (as defined below) for
                           its benefit and the benefit of the Administrative
                           Agent (as defined below), the Managing Agent (as
                           defined below) and the Lenders);

                  (iv)     There shall exist no defaults or events of default
                           under the DIP Facility; and

                  (v)      Simultaneous with the initial extension of credit
                           under the Exit Facility, all amounts outstanding
                           under the DIP Facility shall be paid in full in
                           immediately available funds; and

         (C)      There not having occurred or become known to any Lender any
                  material adverse change in the condition (financial and
                  otherwise), operations or assets of the Debtor and the
                  Guarantors, taken as a whole (including, without limitation,
                  any material reduction in the value of the assets of the
                  Debtor and the Guarantors, taken as a whole), from that shown
                  in the information made available to the Lenders on or prior
                  to the date of this Commitment Letter.

         The terms and conditions of the Lenders' commitments under this
Commitment Letter with respect to the Facilities are not limited to the terms
and conditions set forth in this Commitment Letter. Those matters that are not
covered by or made clear under the provisions of this Commitment Letter are
subject to the reasonable approval and agreement of the Lenders and the Debtor.

         The Lenders reserve the right, prior to or after the execution of the
Definitive DIP Documentation or the Definitive Exit Documentation, as the case
may be, to syndicate part of their respective commitments to one or more banks,
commercial finance companies or other financial institutions, in each case with
the prior written consent of the Debtor (except as set forth in the Term Sheet),
which consent shall not be unreasonably withheld, that will become parties to
such Definitive Documentation, with each syndicate member having a minimum
commitment of at least $10,000,000, although BBNA agrees to endeavor to identify
prospective syndicate members who are willing (without the payment of money or
other economic concessions on the part of BBNA) to participate in the Facilities
for a commitment of $20,000,000 or more. Accordingly, you agree to actively
assist the Lenders in completing a timely syndication that is reasonably
satisfactory to them. Such assistance shall be accomplished by a variety of
means, including direct contact during the syndication process between senior
officers and representatives of the Debtor and representatives of advisors and
consultants retained by the Debtor on the one hand, and the proposed syndicate
assignees and participants, on the other hand, and the participation at
reasonably convenient times and places by senior officers and representatives of
the Debtor (and representatives of advisors and consultants retained by the
Debtor) in one or more meetings to be arranged by a Lender with the proposed
syndicate assignees and participants.
<PAGE>   5
The Caldor Corporation
April 24, 1998
Page 5


         Although the Term Sheet sets forth the principal terms of the proposed
financing, you should understand that we reserve the right to propose terms in
addition to those terms which will not materially change or alter the terms of
this Commitment Letter (including the Term Sheet). It is agreed that if the
Lenders deem such actions advisable in order to ensure a successful syndication,
the Lenders may propose, and you agree to negotiate in good faith (although you
have no obligation to agree to such modifications), reasonable modifications to
the structure and the amount of the Facilities from that described herein or in
the Term Sheet, provided that the aggregate principal amount of each Facility,
taken as a whole, remains the same. Moreover, the Term Sheet does not purport to
include all of the representations, warranties, defaults, definitions and other
terms which will be contained in the Definitive DIP Documentation or the
Definitive Exit Documentation, all of which must be reasonably satisfactory to
the Lenders.

         To assist each Lender in its syndication efforts, you agree promptly to
provide, and to cause your advisors to provide, any Lender, upon request, with
all information deemed reasonably necessary by such Lender to complete
successfully the syndication, including, without limitation, all information
that is reasonably available and projections prepared by you or on your behalf
relating to the transactions contemplated hereby.

         Upon your acceptance of this Commitment Letter as provided herein, BBNA
will have committed, as of the date hereof, to provide the full amount of each
Facility upon the terms and subject to the conditions set forth herein and in
the Term Sheet. To the extent that additional banks, commercial finance
companies or other financial institutions assume a portion of BBNA's (or any
other Lender's) commitment by executing a counterpart signature page to this
Commitment Letter (a copy of which we will provide to you (as well as a revised
Schedule A hereto)), substantially in the form attached as Exhibit B (thereby
becoming a "Lender" hereunder), BBNA's (or such other Lender's) commitment
hereunder will be reduced dollar-for-dollar by the amount of the commitment
assumed by each such new Lender and the commitment of each Lender hereunder will
be several and not joint. Each such new Lender will be entitled to all of the
rights and benefits, and subject to all of the obligations, applicable to
Lenders under this Commitment Letter.

         You hereby represent and covenant that (a) all information concerning
the Debtor and the Guarantors (the "Information") that has been or will be made
available to the Lenders and any other financial institutions that become
parties to either Facility by you or any of your authorized representatives in
connection with the transactions contemplated by this Commitment Letter is and
will be, as of the date when so made available (or, if later, the date of this
Commitment Letter), complete and correct in all material respects and does not
and will not, as of the date when so made available (or, if later, the date of
this Commitment Letter), contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements contained in
such Information, taken as a whole, not materially misleading in light of the
circumstances under which such statements are made and (b) all financial
projections
<PAGE>   6
The Caldor Corporation
April 24, 1998
Page 6


concerning the Debtor and the Guarantors (the "Projections") that have been or
will be prepared by you and made available to the Lenders have been or will be
prepared in good faith based upon reasonable assumptions. You agree to revise
the Information and Projections from time to time in order that the foregoing
representations and warranties remain true from time to time. In arranging and
syndicating the Facilities, the Lenders will be using and relying on the
Information and Projections.

         BBNA will serve as administrative agent (the "Administrative Agent")
for itself and the other Lenders under each Facility and will perform the
customary duties related to that function. BankBoston Retail Finance, Inc.
("BBRF"), an affiliate of BBNA, will act as managing agent (in such capacity,
the "Managing Agent") and as collateral agent (in such capacity, the "Collateral
Agent") for itself and the other Lenders under each Facility and will perform
the customary duties related to that function.

         By your signature below, you further agree (a) to pay all reasonable
out-of-pocket costs and expenses incurred by BBNA, the Administrative Agent, the
Managing Agent and the Collateral Agent in connection with this Commitment
Letter, the transactions contemplated hereby (including, without limitation,
preparation, negotiation, closing and administration of the Definitive DIP
Documentation and the Definitive Exit Documentation) and BBNA's and the
Collateral Agent's ongoing due diligence in connection therewith (including,
without limitation, reasonable travel expenses; reasonable attorneys' fees and
expenses; reasonable asset evaluation expenses and reasonable audit expenses
(including, without limitation, tradename appraisals); reasonable syndication
expenses, recording and filing fees, title insurance premiums and other
reasonable charges and disbursements and any other reasonable out-of-pocket
costs and expenses of BBNA, the Administrative Agent, the Managing Agent and the
Collateral Agent), from time to time promptly upon request whether or not such
transactions are consummated, (b) to pay all fees and other amounts contemplated
by this Commitment Letter (including the Fee Letter) when such amounts are due
and (c) to indemnify and hold harmless the Administrative Agent, the Managing
Agent, the Collateral Agent, BancBoston Securities Inc., the Lenders, the other
financial institutions that become parties to either Facility and each of their
respective officers, directors, partners, beneficiaries, trustees, employees,
professionals, affiliates, agents and controlling persons (collectively, the
"Indemnified Persons") from and against any and all losses, claims, damages,
costs, expenses and liabilities to which any such Indemnified Person may become
subject arising out of, or in connection with, this Commitment Letter, the
transactions contemplated hereby or any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any of such
Indemnified Persons is a party thereto, and to reimburse each of such
Indemnified Persons, from time to time upon their demand, for any reasonable
legal or other expenses incurred in connection with investigating or defending
any of the foregoing, whether or not the transactions contemplated hereby are
consummated, provided that the foregoing indemnity set forth in this clause (c)
will not, as to any Indemnified Person, apply to losses, claims, damages,
liabilities or related expenses to the extent that they have been
<PAGE>   7
The Caldor Corporation
April 24, 1998
Page 7


determined by a court of competent jurisdiction by final non-appealable order to
arise from the bad faith, willful misconduct or gross negligence of such
Indemnified Person. All such out-of-pocket costs and expenses, fees and other
amounts and indemnities shall be considered and treated as superpriority
administrative expenses of the Debtor in the Case and in any subsequent or
superseding bankruptcy proceeding of the Debtor, subject to the Carve Out (as
defined in the Term Sheet).

         Upon execution of this Commitment Letter by the Borrower, the Borrower
will promptly seek approval from the Bankruptcy Court of a $500,000
non-refundable commitment fee (the "Commitment Fee") and the Documentation
Deposit (as defined in the Term Sheet) payable to BBNA in immediately available
funds within one business day after such approval. If the DIP Closing Date
occurs, the Commitment Fee will be credited toward the Closing Fee (as defined
in the Fee Letter).

         You agree that this Commitment Letter (including the Fee Letter) is for
your confidential use only and that it will not be disclosed by you or any of
the Guarantors to any person (including any lender bidding for any portion of
the financing contemplated by this Commitment Letter) other than to your
employees, officers, accountants, attorneys, and other advisors (subject to
appropriate confidentiality restrictions) and, to the extent necessary for
acceptance of this Commitment Letter, to the Bankruptcy Court, and then only in
connection with the transactions contemplated hereby and on a confidential
basis. However, upon your acceptance of this Commitment Letter, this Commitment
Letter may be disclosed in connection with obtaining Bankruptcy Court approval
of the terms and conditions contemplated herein.

         Each Lender agrees to keep any information delivered or made available
by you to it confidential from anyone other than such Lenders' employees,
officers, partners, beneficiaries, trustees, attorneys and other advisors who
are or are expected to become engaged in evaluating, approving, structuring or
administering the Facilities or rendering legal advice in connection therewith,
provided that nothing herein shall prevent the Lenders from disclosing such
information (a) upon the order of any court or administrative agency or upon the
request of any administrative agency or authority, (b) upon the request or
demand of any regulatory agency or authority, (c) to the extent that such
information has been publicly disclosed other than as a result of a disclosure
by the Lenders, (d) to any other Lender, (e) to any actual or potential
syndicate assignee or participant, provided that each such assignee or
participant has been notified of the provisions of this paragraph and agrees to
be bound by them, or (f) otherwise as required by law.

         You hereby agree that the Lenders' commitment hereunder to provide the
Exit Facility is separate and distinct from their commitment to provide the DIP
Facility and that the Exit Facility is subject to its own conditions precedent.
Accordingly, you agree that your obligation to repay all amounts outstanding
under the DIP Facility on the "Termination Date" thereof is absolute and
unconditional and not subject to or conditioned upon the closing of the Exit
Facility or the making of any loans thereunder.
<PAGE>   8
The Caldor Corporation
April 24, 1998
Page 8


         This Commitment Letter shall not be assignable by you without the prior
written consent of the Lenders and may not be amended or any provision hereof
waived or modified except by an instrument in writing signed by you and the
Lenders.

         This Commitment Letter supersedes all our prior letters to you
regarding the subject of this Commitment Letter.

         This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.

         If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof by signing and returning to the
Administrative Agent by telecopy not later than 5:00 p.m., Boston time, on
Friday, April 24, 1998 (with an original to follow by overnight mail), the
enclosed duplicate originals of this Commitment Letter and the Fee Letter. The
commitments contained herein shall be terminated if (a) you shall have failed to
accept this Commitment Letter and the Fee Letter in the time and manner set
forth in the previous sentence, (b) the Lenders shall not have received evidence
of the Bankruptcy Court's approval of your executing and performing this
Commitment Letter and the payment of the fees, expenses or other amounts
contemplated hereby including, without limitation, the Commitment Fee and the
Documentation Deposit, on or prior to May 30, 1998, or (c) the Lenders shall not
have received evidence of the Bankruptcy Court's approval of your executing and
performing the Fee Letter and the Definitive DIP Documentation, and the payment
of the fees, expenses or other amounts as contemplated thereby on or prior to
May 30, 1998.

         With respect to the Exit Facility, if the initial funding under the
Exit Credit Agreement has not previously or contemporaneously occurred, this
Commitment Letter (other than the indemnity and confidentiality provisions
hereof) shall expire and be of no further force and effect on the earlier to
occur of (i) termination of the DIP Facility in accordance with the terms
thereof and (ii) one (1) Business Day (as defined in the DIP Facility) after the
Plan Effective Date (or, at the request of the Borrower, within five (5)
Business Days after the Plan Effective Date).

         This Commitment Letter may be executed in any number of counterparts,
each of which shall be an original and all of which, when taken together, shall
constitute one agreement.

                            [SIGNATURE PAGES FOLLOW]
<PAGE>   9
The Caldor Corporation
April 24, 1998
Page 9


         We are pleased to have been given the opportunity to participate in
this transaction.

                                     Very truly yours,

                                     BANKBOSTON, N.A.


                                     By:
                                        ----------------------------------------
                                     Name:
                                     Title:
<PAGE>   10
The Caldor Corporation
April 24, 1998
Page 10





Agreed to and accepted as of the date first above written:

THE CALDOR CORPORATION,
as Debtor and Debtor-in-Possession



By:
   -----------------------------------
Name:
Title:
<PAGE>   11
                         Schedule A to Commitment Letter
                         -------------------------------





                             (as of April 24, 1998)



<TABLE>
<CAPTION>

                                         Commitment                      Commitment
Lender                                   Percentage                       Amount
------                                   ----------                       ------
<S>                                       <C>                          <C>
BankBoston, N.A.                          100%                         $450,000,000
</TABLE>

<PAGE>   12

                                                  Exhibit A to Commitment Letter


THE TERMS AND CONDITIONS SUMMARIZED HEREIN ARE INTENDED SOLELY AS A GENERAL
DESCRIPTION OF THE PRINCIPAL TERMS OF THE FACILITIES AND WILL BE EXTENSIVELY
SUPPLEMENTED BY THE ADMINISTRATIVE AGENT IN THE DEFINITIVE DIP DOCUMENTATION AND
THE DEFINITIVE EXIT DOCUMENTATION (AS APPLICABLE).

CAPITALIZED TERMS USED HEREIN WITHOUT DEFINITION SHALL HAVE THE SAME MEANINGS
GIVEN TO SUCH TERMS IN THE COMMITMENT LETTER TO WHICH THIS TERM SHEET IS
ATTACHED.


                             THE CALDOR CORPORATION
                DEBTOR-IN-POSSESSION AND EXIT FACILITY TERM SHEET
                                 APRIL 24, 1998

Borrower:                           The Caldor Corporation (the "Borrower").


Guarantors:                         Caldor, Inc. - CT and Caldor, Inc. - NY
                                    (collectively, the "Retail Guarantors") and
                                    each other wholly-owned subsidiary of the
                                    Borrower (other than American East, Inc.)
                                    (collectively with the Retail Guarantors,
                                    the "Guarantors")

Administrative Agent:               BankBoston, N.A. ("BBNA"), as administrative
                                    agent (the "Administrative Agent") for
                                    itself and other Lenders (as defined below).

Collateral Agent:                   BankBoston Retail Finance, Inc. (the
                                    "Collateral Agent").

Managing Agent:                     BankBoston Retail Finance, Inc. (the
                                    "Managing Agent").

Underwriter:                        BancBoston Securities Inc. ("BSI")

Lenders:                            BBNA will provide the Borrower with
                                    separate fully underwritten and committed
                                    $450,000,000 Facilities as described below.
                                    As set forth in the Commitment Letter, BBNA
                                    expressly reserves the right to syndicate
                                    part of either or both such Facilities to
                                    other financial institutions (collectively,
                                    including BBNA, the "Lenders"). The Borrower
                                    shall assist and cooperate with BBNA and the
                                    other Lenders in achieving a successful
                                    syndication, including participating in
                                    lender meetings and responding to reasonable
                                    information requests in a timely manner.

Closing Date:                       The closing of and initial funding under the
                                    DIP Facility (the "DIP Closing Date") will
                                    occur on or before May 15, 1998, or as soon
                                    as reasonably practicable thereafter (but in
                                    no event later than June 15, 1998) (provided
                                    that all conditions precedent thereto have
                                    been satisfied or waived as provided herein)
                                    and substantially concurrent with the entry
                                    of an order by the Bankruptcy Court
                                    approving the DIP Facility (the "Financing
                                    Order") provided that there is no stay of
                                    the order pending at such time. The closing
                                    of and initial funding under


                                       1
<PAGE>   13
                                    the Exit Facility (the "Exit Closing Date")
                                    will occur on or within one (1) business day
                                    after the Plan Effective Date (provided that
                                    all conditions precedent to the Exit Closing
                                    Date have been satisfied or waived as
                                    provided herein).

Facilities:                         The DIP Facility will consist of up to an
                                    eighteen (18) month debtor-in-possession
                                    revolving credit facility in a maximum
                                    principal amount of $450,000,000.

                                    The Exit Facility will consist of up to a
                                    four (4) year (less the actual term of the
                                    DIP Facility) post-confirmation revolving
                                    credit facility in a maximum principal
                                    amount of $450,000,000.

                                    With respect to either Facility, the sum of
                                    direct borrowings plus letters of credit
                                    outstanding and unpaid reimbursement
                                    obligations in respect of letters of credit
                                    shall not exceed $450,000,000. Furthermore,
                                    the sum of direct borrowings under either
                                    Facility plus letters of credit outstanding
                                    and unpaid reimbursement obligations in
                                    respect of letters of credit minus fully
                                    cash collateralized secured letters of
                                    credit (as provided below) shall not exceed
                                    the Borrowing Base described below. Both
                                    Facilities will have a sublimit of
                                    $150,000,000 for letters of credit
                                    (documentary and standby) and bankers'
                                    acceptances to be issued by BBNA.

Availability:                       During the term of either Facility,
                                    revolving credit loans will be available
                                    daily upon notice (if received prior to 3:00
                                    p.m., Boston time, on that day) for Base
                                    Rate Loans (as defined below) and upon two
                                    business days' notice, and in minimum
                                    amounts of $1,000,000 or larger integral
                                    multiples thereof, for Eurodollar Loans (as
                                    defined below). The Borrower may not have
                                    more than seven Eurodollar Loans outstanding
                                    at any one time. Letters of credit will be
                                    available upon notice customary for
                                    facilities of this type in agreed upon
                                    amounts. Notwithstanding the foregoing, the
                                    Administrative Agent may in its sole
                                    discretion make Base Rate Loans available to
                                    the Borrower on a same day basis.

Termination Date:                   All obligations under the DIP Facility will
                                    be due and payable, and all commitments
                                    under the DIP Facility shall be permanently
                                    terminated, on the earlier to occur of (a)
                                    the Plan Effective Date or (b) eighteen (18)
                                    months from the DIP Closing Date (the "DIP
                                    Termination Date").

                                    All obligations under the Exit Facility will
                                    be due and payable, and all commitments
                                    under the Exit Facility shall be permanently
                                    terminated, four (4) years (less the actual
                                    term of the DIP Facility) from the Exit
                                    Closing Date (the "Exit Termination Date").


                                       2
<PAGE>   14
Prepayments; Repayments:            Loans under both Facilities shall be repaid
                                    on a daily basis from the proceeds of
                                    collections received in the Borrower's cash
                                    concentration account to be maintained at
                                    BBNA, as provided below. Immediate
                                    prepayment shall be required if and to the
                                    extent that loans outstanding under either
                                    Facility exceed any availability limitations
                                    thereunder. The Borrower shall also
                                    immediately (and, in any event, on the same
                                    business day) reimburse BBNA for any drawing
                                    under any letter of credit or bankers
                                    acceptance through the conversion of an
                                    availability reserve in connection with such
                                    letter of credit and bankers' acceptance to
                                    a loan under either Facility or otherwise.
                                    Subject to applicable conditions, amounts
                                    prepaid under either Facility may be
                                    reborrowed prior to the applicable
                                    Termination Date. No loans repaid or prepaid
                                    at any time under either Facility shall be
                                    charged a premium or penalty except for
                                    breakage costs associated with Eurodollar
                                    Loans as provided below and default interest
                                    as provided herein.

Interest:                           All loans outstanding under either Facility
                                    shall bear interest at the Administrative
                                    Agent's Alternate Base Rate in effect from
                                    time to time or, at the Borrower's option,
                                    so long as no default or Event of Default
                                    (as defined below) has occurred and is then
                                    continuing, at the fully reserve adjusted
                                    Eurodollar rate (the "Eurodollar Rate") plus
                                    2.25% (2.75% during any period that the
                                    Borrower is utilizing the Overadvance Rate
                                    (as defined below)) (the "Eurodollar
                                    Applicable Margin") for interest periods of
                                    one (1) two (2) and three (3) months.
                                    Notwithstanding the foregoing, commencing
                                    with the first fiscal quarter of the
                                    Borrower beginning after receipt by the
                                    Administrative Agent of the Borrower's
                                    audited financial statements for fiscal year
                                    1998, the Eurodollar Applicable Margin will
                                    be reduced by (i) 0.25% for any fiscal
                                    quarter for which the rolling 12-month
                                    EBITDA of the Borrower for the immediately
                                    preceding 12-month period is greater than or
                                    equal to $75,000,000, but less than
                                    $100,000,000 or (ii) without duplication,
                                    0.50% for any fiscal quarter for which the
                                    rolling 12-month EBITDA of the Borrower for
                                    the immediately preceding 12-month period is
                                    greater than or equal to $100,000,000.

                                    "EBITDA" shall mean, for any period, all as
                                    determined in accordance with GAAP, the
                                    consolidated net income (or net loss) of the
                                    Borrower and the Guarantors for such period,
                                    plus (a) the sum of (i) depreciation
                                    expense, (ii) amortization expense, (iii)
                                    other non-cash expense, (iv) provision for
                                    LIFO adjustment for inventory valuation, (v)
                                    net total Federal, state and local income
                                    tax expenses, (vi) gross interest expense
                                    for such period less gross interest income
                                    for such period, (vii) extraordinary losses,
                                    (viii) the non-cash portion, if any, of any
                                    non-recurring charge or restructuring
                                    charge, (ix) the



                                       3
<PAGE>   15
                                    cumulative effect of any change in
                                    accounting principles and (x) "Chapter 11
                                    expenses" (or "administrative costs"
                                    reflecting Chapter 11 expenses) as shown on
                                    the Borrower's consolidated statement of
                                    income for such period, less extraordinary
                                    gains.

                                    The "Alternate Base Rate" shall be defined
                                    as the higher of (i) the annual rate of
                                    interest announced from time to time by the
                                    Administrative Agent at its head office in
                                    Boston, Massachusetts, as its "Base Rate" or
                                    (ii) one-half of one percent (.50%) above
                                    the Federal Funds Effective Rate. "Federal
                                    Funds Effective Rate" shall mean, for any
                                    day, the rate per annum equal to the
                                    weighted average of the rates on overnight
                                    federal funds transactions with members of
                                    the Federal Reserve System arranged by
                                    federal funds brokers, as published for such
                                    day (or, if such day is not a business day,
                                    for the next preceding business day) by the
                                    Federal Reserve Bank of New York; or, if
                                    such rate is not published for any day that
                                    is a business day, the average of the
                                    quotations for such day on such transactions
                                    received by the Administrative Agent from
                                    three funds brokers of recognized standing
                                    selected by the Administrative Agent.

                                    Loans bearing interest based on the
                                    Alternate Base Rate shall herein be referred
                                    to as "Base Rate Loans" and loans bearing
                                    interest based on the Eurodollar Rate shall
                                    herein be referred to as "Eurodollar Loans."
                                    For both Facilities, interest on Base Rate
                                    Loans shall be payable monthly in arrears on
                                    the first business day of each calendar
                                    month following the month in which such
                                    interest accrued, commencing on the first
                                    such date after the applicable Closing Date,
                                    and at maturity. Interest on all Eurodollar
                                    Loans shall be payable at the end of the
                                    applicable interest period. The Borrower
                                    will be responsible for all costs related to
                                    the termination for any reason of any
                                    Eurodollar Loan prior to its scheduled
                                    maturity.

Letters of Credit:                  Letters of credit will support ordinary
                                    course obligations of the Borrower and the
                                    Guarantors and will be issued in a form
                                    acceptable to the Administrative Agent. At
                                    the request of the Borrower, letters of
                                    credit will be issued under the DIP Facility
                                    on the DIP Closing Date to support
                                    documentary and/or standby letters of credit
                                    outstanding on the DIP Closing Date which
                                    have been issued by other financial
                                    institutions. Letters of credit issued under
                                    either Facility will have expiration dates
                                    of no later than, (i) for standby letters of
                                    credit, one (1) year from the date of
                                    issuance (with agreed upon renewal
                                    provisions) and (ii) for documentary letters
                                    of credit, 180 days from the date of
                                    issuance. In no event shall any letters of
                                    credit expire later than ninety (90) days
                                    after the DIP Termination Date, or, if the
                                    Exit Closing Date has occurred, ninety (90)
                                    days after the Exit Termination Date.



                                       4
<PAGE>   16
Letter of Credit Fees:              For standby and documentary letters of
                                    credit, a letter of credit fee of 1.50% per
                                    annum (the "L/C Fee") on the maximum amount
                                    available to be drawn under each such letter
                                    of credit. All L/C Fees will be payable to
                                    the Administrative Agent (for the pro-rata
                                    account of the Lenders), monthly in arrears
                                    based on the average daily outstanding
                                    undrawn face amount of all letters of
                                    credit. In addition, the Borrower will pay
                                    to the Administrative Agent for its own
                                    account an issuance fee of 0.125% per annum
                                    on the face amount of each letter of credit
                                    as well as customary fees to cover the costs
                                    of negotiation, issuance, settlement,
                                    amendment and processing of such letters of
                                    credit.

Agency Fee:                         To be paid in accordance with the Fee
                                    Letter.

Borrowing Base:                     DIP Facility: The "Borrowing Base" for the
                                    DIP Facility shall be equal to the lesser of
                                    (a) the sum of (i) seventy-two percent (72%)
                                    (the "Inventory Advance Rate") (or, during
                                    the fiscal months of March through December
                                    only, 77% (the "Overadvance Rate"); provided
                                    that the Overadvance Rate shall not increase
                                    the Borrowing Base by more than $30,000,000)
                                    of the cost value of the Borrower's and the
                                    Retail Guarantors' Eligible Inventory (as
                                    defined below) and, without duplication,
                                    Eligible Letter of Credit Inventory (as
                                    defined below), Eligible In-Transit
                                    Inventory and Eligible FOB Inventory minus
                                    applicable Reserves (as described below),
                                    (ii) eighty percent (80%) of the Borrower's
                                    Eligible Accounts Receivable (as defined
                                    below) minus applicable Reserves and (iii)
                                    the lesser of (A) $45,000,000 and (B)
                                    seventy percent (70%) of the "low
                                    liquidation value" of the Borrower's and the
                                    Guarantors' leasehold interests in real
                                    estate (as determined by Keen Realty in an
                                    appraisal dated October 7, 1997), but only
                                    to the extent that the Collateral Agent has
                                    an enforceable first-priority perfected
                                    security interest in such leasehold
                                    interests as provided under "Priority and
                                    Security" below (the "Perfection
                                    Conditions"); and (b) $450,000,000.

                                    Exit Facility: The "Borrowing Base" for the
                                    Exit Facility shall be equal to the lesser
                                    of (a) the sum of (i) seventy-five percent
                                    (75%) (seventy-three percent (73%) for the
                                    months of January and February of each year)
                                    (the "Inventory Advance Rate") of the cost
                                    value of the Borrower's and the Retail
                                    Guarantors' Eligible Inventory (as defined
                                    below) and, without duplication, Eligible
                                    Letter of Credit Inventory (as defined
                                    below), Eligible In-Transit Inventory and
                                    Eligible FOB Inventory minus applicable
                                    Reserves (as described below), (ii) eighty
                                    percent (80%) of the Borrower's Eligible
                                    Accounts Receivable (as defined below) minus
                                    applicable Reserves and (iii) the lesser of
                                    (A) $40,000,000 and (B) sixty percent (60%)
                                    of the "low liquidation value" of the
                                    Borrower's and the Guarantors'



                                       5
<PAGE>   17
                                    leasehold interests in real estate (as
                                    determined by Keen Realty in an appraisal
                                    dated October 7, 1997), subject to the
                                    Perfection Conditions; and (b) $450,000,000.

                                    "Eligible Inventory" will consist of stock
                                    ledger inventory calculated by the retail
                                    method of accounting valued at cost less
                                    capitalized cost. The Lender must have a
                                    valid and perfected first-priority security
                                    interest in such inventory for it to be
                                    included for Borrowing Base purposes.
                                    Eligible Inventory will exclude inventory
                                    that is not salable, including, without
                                    limitation: non-merchandise categories
                                    (labels, bags, packaging, etc.), inventory
                                    in foreign locations (except for Eligible
                                    Letter of Credit Inventory (as defined
                                    below), and samples. Eligible Inventory will
                                    specifically exclude damaged goods and
                                    return-to-vendor merchandise and consignment
                                    goods.

                                    "Eligible Accounts Receivable" will consist
                                    of current amounts due to the Borrower from
                                    major credit card companies (the "Accounts
                                    Receivable") which are unpaid for no more
                                    than five (5) business days from the date of
                                    sale and which companies have signed a
                                    payment direction agreement (a "Payment
                                    Direction Agreement") satisfactory to the
                                    Administrative Agent and subject to certain
                                    other eligibility criteria customary for
                                    credit card receivables. The Lender must
                                    have a valid and perfected first-priority
                                    security interest in such Accounts
                                    Receivable for them to be included in the
                                    Borrowing Base.

                                    "Eligible Letter of Credit Inventory" will
                                    consist of inventory which has not been
                                    received by the Borrower and for which a
                                    documentary letter of credit has been issued
                                    which has an expiration date within 75 days
                                    of the inclusion of such inventory as
                                    Eligible Letter of Credit Inventory.

                                    "Eligible In-Transit Inventory" will consist
                                    of inventory in an aggregate amount not to
                                    exceed $65,000,000 at any time (i) for which
                                    a documentary letter of credit has been
                                    issued and paid, but such inventory has not
                                    yet been received in the Borrower's
                                    warehouse and, if such inventory is in the
                                    possession of any of the Borrower's customs
                                    brokers, it is, if required by the
                                    Collateral Agent, subject to a customs
                                    broker agreement in form and substance
                                    reasonably satisfactory to the Collateral
                                    Agent (a "Customs Broker Agreement") and
                                    (ii) that has been received in the
                                    Borrower's warehouse, but has not yet been
                                    recorded in the Borrower's stock ledger
                                    report.

                                    "Eligible FOB Inventory" will consist of
                                    inventory which has not been received by the
                                    Borrower but which has been sold to the
                                    Borrower "FOB shipping point," is subject to
                                    a common carrier agreement in form and
                                    substance reasonably satisfactory to the
                                    Collateral Agent (a "Common Carrier



                                       6
<PAGE>   18
                                    Agreement") and the invoice with respect to
                                    such inventory is not dated earlier than 30
                                    days prior to the date of the then-current
                                    Borrowing Base certificate provided to the
                                    Collateral Agent. The amount of Eligible FOB
                                    Inventory to be included in the Borrowing
                                    Base at any time shall be determined by the
                                    Administrative Agent in its sole discretion.
                                    The Eligible FOB Inventory amount will be
                                    initially set at zero (-0-) at least until
                                    such time as the Borrower is able to deliver
                                    to the Administrative Agent a detailed
                                    methodology for tracking Eligible FOB
                                    Inventory through invoices on a weekly basis
                                    that is acceptable to the Administrative
                                    Agent; provided, however, that the
                                    Administrative Agent will be under no
                                    obligation to increase the amount of the
                                    Eligible FOB Inventory above zero in the
                                    event that such a methodology is delivered
                                    to the Administrative Agent, any such
                                    increase to remain in the sole discretion of
                                    the Administrative Agent.

                                    The Collateral Agent shall be entitled to
                                    obtain periodic inventory liquidation
                                    analyses performed by Gordon Brothers
                                    Companies, Inc., or another liquidation
                                    analysis firm chosen by the Collateral Agent
                                    in its reasonable discretion, and follow-up
                                    reviews of the Borrower's books and records
                                    to be conducted by a commercial finance
                                    audit firm chosen by the Collateral Agent.
                                    The Administrative Agent shall be entitled
                                    to make reasonable adjustments to the
                                    Borrowing Base of either or both Facilities
                                    on the basis of the results of such analysis
                                    and review, provided that such adjustment
                                    shall take effect seven (7) business days
                                    after written notice to the Borrower.

Reserves:                           Accounts receivable, inventory availability
                                    and other Borrowing Base reserves may be
                                    established by the Administrative Agent in
                                    its reasonable discretion. An initial
                                    Borrowing Base reserve will include a
                                    "Professional Fee Carve Out Reserve"
                                    consisting of the accrued and unpaid
                                    professional fees arising from the Case in
                                    an amount not to exceed $6,000,000. In
                                    addition, with respect to the Exit Facility,
                                    to the extent that, at any time (based upon
                                    appraisals conducted by the Collateral
                                    Agent), the loan-to-inventory value ratio of
                                    the Borrower and the Retail Guarantors
                                    exceeds eighty-five percent (85%) (using the
                                    same methodology previously disclosed to the
                                    Borrower by the Collateral Agent as of the
                                    DIP Closing Date) a Borrowing Base reserve
                                    will be established with respect to such
                                    excess. Changes to reserves will be
                                    initiated on seven business days notice to
                                    the Borrower.

Use of Proceeds:                    DIP Facility: To repay in full the Current
                                    Credit Facility and to fund the working
                                    capital and general business needs of the
                                    Borrower and the Retail Guarantors.

                                    Exit Facility: To repay in full the DIP
                                    Facility and to fund the working capital and
                                    general business needs of the reorganized



                                       7
<PAGE>   19
                                    Borrower and the Retail Guarantors following
                                    the Plan Effective Date.

Unused Line Fee:                    During the term of both Facilities, an
                                    unused line fee (the "Unused Line Fee") in
                                    the amount of 0.25% per annum on the average
                                    daily unused amount for the immediately
                                    preceding calendar month of the then
                                    existing Facility will accrue for the pro
                                    rata benefit of all Lenders. The aggregate
                                    amount of outstanding letters of credit
                                    issued under the applicable Facility will be
                                    treated as a use of the Facilities in such
                                    amount for purposes of calculating the
                                    Unused Line Fee. The Unused Line Fee will be
                                    payable for the period from the DIP Closing
                                    Date to the DIP Termination Date (or, if the
                                    Exit Closing Date has occurred, the Exit
                                    Termination Date), monthly in arrears on the
                                    first business day of each month commencing
                                    on the first such date after the DIP Closing
                                    Date with the final payment due on the DIP
                                    Termination Date.

Closing Fee:                        To be paid in accordance with the Fee
                                    Letter.

Diligence and Documentation Fees:   The Borrower will obtain Bankruptcy Court
                                    approval for a documentation deposit of
                                    $150,000 (the "Documentation Deposit") to
                                    cover a portion of BBNA's continuing due
                                    diligence costs and expenses, including
                                    appraisals, field examinations, legal costs
                                    and expenses related to this Commitment
                                    Letter and other normal costs and expenses
                                    associated with a transaction of this nature
                                    and legal costs and expenses in preparing
                                    and negotiating the Definitive DIP
                                    Documentation and closing the DIP Facility.
                                    The Documentation Deposit shall be in
                                    addition to the $100,000 due diligence
                                    deposit (the "Diligence Deposit") to be
                                    provided to BBNA pursuant to a separate
                                    order of the Bankruptcy Court. Such approval
                                    shall be obtained as promptly as possible
                                    after the date hereof. Any unused amount of
                                    the Diligence Deposit will be returned to
                                    the Borrower upon the termination of the
                                    Commitment Letter or execution of the
                                    Definitive DIP Documentation.

Nature of Fees:                     Non-refundable under all circumstances
                                    except for any unused amount of the
                                    Diligence Deposit.

Calculations, Payments:             All computations of interest and fees shall
                                    be based on a 360-day year and paid for the
                                    actual number of days elapsed. All payments
                                    shall be made to the Administrative Agent in
                                    United States dollars in immediately
                                    available funds.

Default Interest:                   Upon the occurrence and during the
                                    continuance of an Event of Default (as
                                    defined below), and notwithstanding any
                                    otherwise applicable interest rate, the
                                    interest rate shall be the interest rate
                                    then in effect plus 2.00% per annum.



                                       8
<PAGE>   20
Cash Concentration Account:         No later than the DIP Closing Date, and
                                    subject to the immediately following
                                    paragraph, BBNA will become (and shall
                                    remain throughout the terms of both
                                    Facilities) the concentration bank for the
                                    Borrower's cash management system. All
                                    collections from any source and proceeds
                                    from asset sales (including inventory) will
                                    be deposited either directly into an account
                                    with BBNA or into an account at institutions
                                    with which the Administrative Agent has in
                                    place a blocked account, agency or similar
                                    agreement satisfactory to it in its sole
                                    discretion. The Borrower will establish cash
                                    management systems reasonably satisfactory
                                    to the Administrative Agent in its sole
                                    discretion. All amounts in accounts at
                                    institutions referred to above (other than
                                    BBNA) shall be swept daily into a cash
                                    concentration account at BBNA (the "Cash
                                    Concentration Account") and applied as
                                    follows: first, to pay amounts, including
                                    interest, due and payable under the DIP
                                    Facility or Exit Facility, as applicable
                                    (other than principal of Base Rate Loans and
                                    Eurodollar Loans); second, to reduce
                                    outstanding Base Rate Loans under the DIP
                                    Facility or Exit Facility, as applicable;
                                    third, to reduce or, at the Borrower's
                                    option, cash collateralize outstanding
                                    Eurodollar Loans under the DIP Facility or
                                    Exit Facility, as applicable (with the
                                    Borrower being obligated to pay any breakage
                                    fees associated with a reduction of
                                    Eurodollar Loans); and fourth, if an Event
                                    of Default has occurred and is then
                                    continuing, to cash collateralize letters of
                                    credit outstanding under the DIP Facility or
                                    Exit Facility, as applicable, in an amount
                                    equal to 105% of the maximum amount
                                    available to be drawn under such letters of
                                    credit. As needed, the Administrative Agent
                                    will charge the concentration account for
                                    the unpaid amount of any and all fees,
                                    costs, expenses, interest and other amounts
                                    payable under the Facilities; provided that
                                    the Administrative Agent provides the
                                    Borrower with notice reasonable under the
                                    circumstances prior to any such charge. So
                                    long as no default or Event of Default has
                                    occurred and is then continuing, excess
                                    funds not applied in the manner described in
                                    the preceding sentence shall be released to
                                    the Borrower. Funds swept into the Cash
                                    Concentration Account shall be applied or
                                    released as described above as of the
                                    business day immediately following the day
                                    on which such funds are received in the Cash
                                    Concentration Account with the Borrower
                                    agreeing to indemnify BBNA against the
                                    nonpayment of any provisional items.

                                    For the first thirty (30) days following the
                                    DIP Closing Date, the Borrower may maintain
                                    its existing concentration account
                                    arrangements with Chase, and agency accounts
                                    under which funds are transferred daily or
                                    nearly daily to that concentration account,
                                    so long as Chase enters into blocked
                                    account, agency or similar agreements
                                    reasonably acceptable to the



                                       9
<PAGE>   21
                                    Administrative Agent, and pursuant to
                                    arrangements reasonably satisfactory to the
                                    Administrative Agent funds are swept daily
                                    from the Chase concentration account to the
                                    Cash Concentration Account for application
                                    as set forth above.

Priority and Security:              DIP Facility: All direct borrowings, all
                                    reimbursement obligations under letters of
                                    credit and all other obligations of the
                                    Borrower under the DIP Facility shall at all
                                    times (a) be entitled to superpriority claim
                                    status under Section 364(c)(1) of the
                                    Bankruptcy Code and have priority over any
                                    and all administrative expenses specified in
                                    Bankruptcy Code Sections 503(b), 507(b),
                                    364(c) and any subsequent Chapter 7 case
                                    pursuant to Section 364(c)(1) of the
                                    Bankruptcy Code, or otherwise, subject only
                                    to a Carve Out (as defined below) for
                                    allowed professional fees and expenses
                                    incurred by the Borrower's professionals and
                                    those of any statutory committees appointed
                                    in the Case and (b) be secured under
                                    Sections 364(c) or 364(d) of the Bankruptcy
                                    Code (as necessary to effectuate the
                                    following) by a first-priority and perfected
                                    security interest in and lien upon (i) all
                                    of the Borrower's and the Guarantors'
                                    inventory, Accounts Receivable, general
                                    intangibles, equipment, intellectual
                                    property and leasehold interests in real
                                    property (with such security interests in
                                    leaseholds to have been granted by an order
                                    of the Bankruptcy Court in form and
                                    substance satisfactory to the Administrative
                                    Agent in its sole discretion), (ii) all of
                                    the Borrower's interest in the real property
                                    associated with six stores of the Borrower
                                    listed on Schedule C hereto and (iii) all
                                    unencumbered assets of the Borrower and the
                                    Guarantors; and (c) be secured under Section
                                    364(c) of the Bankruptcy Code by a perfected
                                    second-priority security interest in and
                                    lien upon all other property, rights, and
                                    assets of the Borrower and the Guarantors.
                                    "All property, rights and assets" includes
                                    all real and personal property of the
                                    Borrower and the Guarantors, whether now
                                    owned or hereafter acquired. In any event,
                                    the DIP Facility shall be secured by at
                                    least the same collateral (with at least the
                                    same level of priority) as that securing the
                                    Current Credit Facility (but shall not be
                                    senior to any existing liens to which the
                                    Current Credit Facility is not senior
                                    (subject always to the requirement that the
                                    DIP Facility be secured by an unshared
                                    first-priority security interest in any
                                    inventory, Accounts Receivable and
                                    leaseholds included in the Borrowing Base)).

                                    "Carve Out" shall mean (i) allowed
                                    administrative expenses incurred pursuant to
                                    28 U.S.C. Section 1930(a)(6) and (ii)
                                    allowed accrued and unpaid and future fees
                                    and expenses incurred by the Debtors'
                                    professionals and any statutory committee
                                    professionals appointed in the Case pursuant
                                    to Sections 327 and 1103 of the Bankruptcy
                                    Code, which shall not exceed $6,000,000 in
                                    the aggregate subsequent to the



                                       10
<PAGE>   22
                                    occurrence of an Event of Default.

                                    Exit Facility: All direct borrowings, all
                                    reimbursement obligations under letters of
                                    credit and all other obligations of the
                                    Borrower under the Exit Facility shall at
                                    all times be secured by a first-priority
                                    perfected lien on and security interest in
                                    all existing and after acquired assets,
                                    properties, and rights of the Borrower and
                                    the Guarantors (including, without
                                    limitation, inventory, accounts receivable,
                                    general intangibles, equipment, intellectual
                                    property and real estate (including
                                    leasehold interests, such security interests
                                    in leaseholds (the "Leasehold Security
                                    Interest") to have been expressly granted
                                    and ordered by the Bankruptcy Court with
                                    such order to contain provisions acceptable
                                    to the Administrative Agent in its sole
                                    discretion to ensure that the Lenders
                                    receive at least the full benefit (economic
                                    or otherwise) of such leaseholds as would be
                                    enjoyed by the relevant lessee absent the
                                    grant of such security interest, whether now
                                    owned or hereafter acquired or arising, and
                                    all proceeds thereof, subject only to
                                    permitted liens satisfactory to the
                                    Collateral Agent. In the event that the
                                    Bankruptcy Court does not include an order
                                    as specified above with respect to the
                                    Leasehold Security Interest, the Lenders'
                                    commitment hereunder shall have full force
                                    and effect except that the Borrowing Base
                                    shall exclude clause (a)(iii), except to the
                                    extent of any leasehold mortgages that are
                                    delivered to the Collateral Agent and filed
                                    in the appropriate filing office and that
                                    otherwise comply with the provisions of
                                    paragraph 19 below. In addition, the
                                    Collateral Agent shall be named as loss
                                    payee on all insurance policies relating to
                                    property subject to the Lenders' security
                                    interest.




                                       11
<PAGE>   23
                                    All liens granted under the Facilities will
                                    be granted to the Collateral Agent for the
                                    benefit of itself, the Lenders, the Managing
                                    Agent and the Administrative Agent


Conditions to Effectiveness         The effectiveness of each Facility and the
and Initial Extension of Credit:    obligation of the Lenders to provide the
                                    initial extension of credit under the DIP
                                    Facility or, as the case may be, the Exit
                                    Facility (such closing conditions to be
                                    applicable to both Facilities unless
                                    otherwise indicated) shall be subject to the
                                    satisfaction of usual and customary
                                    conditions, including, without limitation,
                                    the applicable conditions set forth in the
                                    Commitment Letter as well as the following
                                    conditions:

                           1.       With respect to the DIP Facility, the
                                    Bankruptcy Court shall have entered the
                                    Financing Order in the Case satisfactory in
                                    form and substance to the Administrative
                                    Agent approving the Definitive DIP
                                    Documentation, the transactions contemplated
                                    hereby and thereby and including,
                                    specifically but without limiting the
                                    foregoing, the grant to the Lenders, the
                                    Administrative Agent, the Managing Agent and
                                    the Collateral Agent of superpriority
                                    status, subject to the Carve Out, and the
                                    first and second-priority liens contemplated
                                    herein under the heading "Priority and
                                    Security" and the payment and performance by
                                    the Borrower and the Guarantors of all of
                                    their obligations under the Definitive DIP
                                    Documentation. The Financing Order shall
                                    have authorized extensions of credit in the
                                    full amount of the DIP Facility or otherwise
                                    in an amount satisfactory to the Lenders,
                                    shall contain such other provisions
                                    reasonably required by the Administrative
                                    Agent and shall not have been reversed,
                                    modified, amended, or stayed, unless
                                    otherwise agreed by the Administrative
                                    Agent;

                           2.       With respect to the Exit Facility, the final
                                    terms of the Plan and the Confirmation Order
                                    shall not be inconsistent with the
                                    requirements set forth on Schedule A hereto
                                    and otherwise reasonably satisfactory to the
                                    Administrative Agent. All conditions
                                    precedent to confirmation and to the Plan
                                    Effective Date shall have been met (or the
                                    waiver thereof shall have been consented to
                                    by the Administrative Agent) and the Plan
                                    Effective Date shall have occurred or shall
                                    be scheduled to occur but for such initial
                                    extension of credit under the Exit Facility.
                                    The Confirmation Order shall not have been
                                    reversed, modified, amended, or stayed and,
                                    unless otherwise agreed by the
                                    Administrative Agent, and no appeals from
                                    the Confirmation Order shall be outstanding
                                    which could have a material adverse effect
                                    on (i) the effectiveness, priority,
                                    perfection or validity of the Collateral
                                    Agent's security interests in the collateral
                                    securing the Exit Facility (the "Exit
                                    Collateral"), (ii) the value of the Exit 
                                    Collateral or the




                                       12
<PAGE>   24
                                    Collateral Agent's or the Lenders' ability
                                    to realize thereon or (iii) the prospect of
                                    full and timely repayment of all amounts due
                                    or to be due under the DIP Facility or the
                                    Exit Facility (any such potential material
                                    adverse effect, an "Exit Facility Material
                                    Adverse Effect"), the existence or
                                    non-existence of such potential material
                                    adverse effect to be determined in an order
                                    of the Bankruptcy Court (an "MAE Order")
                                    upon a motion (an "MAE Motion") to
                                    be filed by the Administrative Agent
                                    within five (5) Business Days (as
                                    defined in the DIP Facility) of its receipt
                                    of a copy of the statement of the issues on
                                    such appeal (it being understood that (a)
                                    assuming the timely filing of the MAE Motion
                                    as provided above, the Lenders shall have no
                                    obligation to advance any funds under the
                                    Exit Facility unless and until the
                                    Bankruptcy Court has entered an MAE Order
                                    finding that such appeal will not have an
                                    Exit Facility Material Adverse Effect and
                                    two (2) Business Days have elapsed from the
                                    time of entry of such Order (provided that
                                    all of the other conditions precedent to
                                    effectiveness of the Exit Facility and
                                    funding thereunder contained herein and
                                    therein have been satisfied or waived by the
                                    Administrative Agent) and (b) if the
                                    Administrative Agent fails to file the MAE
                                    Motion within the 5-day time period provided
                                    above, the Lenders shall not be entitled to
                                    refuse to advance any funds under the Exit
                                    Facility based solely upon the existence of
                                    such appeal (although all of the other
                                    conditions precedent to effectiveness of the
                                    Exit Facility and funding thereunder
                                    contained herein and therein shall continue
                                    to apply; provided, however, that the
                                    assertion in any appeal that the Borrower
                                    cannot provide the Collateral Agent and/or
                                    the Lenders with a first-priority perfected
                                    security interest in any leasehold shall not
                                    be a basis, in whole or in part, for an Exit
                                    Facility Material Adverse Effect (provided,
                                    that such leasehold will be excluded from
                                    the Borrowing Base during the pendency of
                                    such appeal). Except as consented to by the
                                    Administrative Agent, the Bankruptcy Court's
                                    retention of jurisdiction under the
                                    Confirmation Order shall not govern the
                                    enforcement of the Definitive Exit
                                    Documentation after the Plan Effective Date
                                    or any rights or remedies relating thereto
                                    (except with respect to the granting of the
                                    Leasehold Security Interest to the
                                    Collateral Agent for its benefit and the
                                    benefit of the Administrative Agent and
                                    Lenders). The financial condition, capital
                                    structure, liabilities and financial
                                    projections, including cash flow, of the
                                    Borrower shall be reasonably satisfactory to
                                    the Administrative Agent in all respects,
                                    and the terms of any capital stock shall be
                                    reasonably satisfactory to the
                                    Administrative Agent in all respects;



                                       13
<PAGE>   25
                           3.       Execution and delivery to the Administrative
                                    Agent of the applicable Definitive
                                    Documentation (including a certified
                                    Borrowing Base certificate and reasonably
                                    appropriate security documentation);

                           4.       Receipt of other closing documents
                                    including, without limitation, if
                                    applicable, Customs Broker Agreements,
                                    Common Carrier Agreements and Payment
                                    Direction Agreements required by the
                                    Administrative Agent reasonably satisfactory
                                    in form and substance to the Administrative
                                    Agent;

                           5.       Legal opinions of counsel to the Borrower
                                    and the Guarantors reasonably satisfactory
                                    in form and substance to the Administrative
                                    Agent, including, without limitation, with
                                    respect to the enforceability and perfection
                                    of the Collateral Agent's security
                                    interests;

                           6.       Payment by the Borrower of all fees then
                                    payable as referenced herein and in the Fee
                                    Letter;

                           7.       With respect to the DIP Facility, the
                                    Administrative Agent shall have received and
                                    be satisfied with detailed one-year
                                    financial projections and business
                                    assumptions for the Borrower. With respect
                                    to the Exit Facility, the Agent shall have
                                    received no later than sixty (60) days prior
                                    to the Plan Effective Date a three year
                                    business plan for the Borrower which shall
                                    not indicate any prospective defaults under
                                    the Commitment Letter (including the Term
                                    Sheet) or the Exit Facility;

                           8.       Any other information (financial or
                                    otherwise) requested by the Administrative
                                    Agent shall have been received by the
                                    Administrative Agent and shall be in form
                                    and substance reasonably satisfactory to the
                                    Administrative Agent;

                           9.       With respect to the DIP Facility, the
                                    Collateral Agent shall be reasonably
                                    satisfied that the assets of the Borrower
                                    and the Guarantors are in the amounts and of
                                    the quality previously represented by the
                                    Borrower to the Collateral Agent, and the
                                    Collateral Agent shall have received such
                                    valuations, credit and background checks and
                                    other reports, material and information
                                    concerning such assets as shall reasonably
                                    be satisfactory to the Collateral Agent. In
                                    addition, the Collateral Agent shall be
                                    reasonably satisfied that the inventory of
                                    the Borrower is located at such places and
                                    is in the amounts and of the quality and
                                    value previously represented by the Borrower
                                    to the Collateral Agent (and that no
                                    inventory is owned by the Guarantors other
                                    than the Retail Guarantors) and the
                                    Collateral Agent shall have received such
                                    reports, material and other 



                                       14
<PAGE>   26
                                    information concerning the inventory and the
                                    Borrower's suppliers as shall be
                                    satisfactory to the Collateral Agent in its
                                    sole discretion;

                           10.      The Collateral Agent shall have received
                                    results of searches or other evidence
                                    satisfactory to the Collateral Agent (in
                                    each case dated as of a date reasonably
                                    satisfactory to the Collateral Agent)
                                    indicating the absence of liens on the
                                    assets of the Borrower and the Guarantors,
                                    except for liens permitted by the applicable
                                    Definitive Documentation and liens for which
                                    termination statements and releases
                                    reasonably satisfactory in form and
                                    substance to the Collateral Agent are being
                                    tendered concurrently with such extension of
                                    credit;

                           11.      The Collateral Agent shall have filed all
                                    such financing statements and shall have
                                    given all such notices as may be necessary
                                    for the Collateral Agent to perfect its
                                    security interest in the collateral for
                                    itself and for the benefit of the Lenders
                                    and the Administrative Agent and to assure
                                    its first- and second- priority status
                                    therein (as described above in "Priority and
                                    Security");

                           12.      With respect to the DIP Facility, the
                                    Borrower and Guarantors shall have minimum
                                    excess availability under the Borrowing Base
                                    of not less than $60 million at closing
                                    (excluding any Eligible FOB Inventory).

                           13.      There shall not have occurred or become
                                    known to the Administrative Agent any
                                    material adverse change in the financial
                                    condition, operations or assets of the
                                    Borrower or the Guarantors since January 1,
                                    1998;

                           14.      With respect to the Exit Facility, the
                                    Administrative Agent shall be reasonably
                                    satisfied with all ongoing post-confirmation
                                    litigation risks and the adequacy of all
                                    reserves therefor;

                           15.      The cash management system described above
                                    shall have been substantially implemented,
                                    including the obtaining of a blocked
                                    account, agency or similar agreement in form
                                    and substance reasonably acceptable to the
                                    Collateral Agent from each concentration
                                    bank and depository bank of the Borrower;

                           16.      All corporate proceedings and all
                                    instruments and agreements in connection
                                    with the transactions among the Borrower,
                                    the Guarantors and the Administrative Agent
                                    contemplated by the applicable Definitive
                                    Documentation shall be reasonably
                                    satisfactory in form and substance to the
                                    Administrative Agent and the Administrative
                                    Agent shall have received all information
                                    and copies of all documents or papers that
                                    it may reasonably request;



                                       15
<PAGE>   27
                           17.      The Collateral Agent shall be reasonably
                                    satisfied with the insurance arrangements of
                                    the Borrower and the Guarantors, taken as a
                                    whole, and shall have received all
                                    documentation requested in connection with
                                    such insurance including documentation
                                    naming the Collateral Agent as "loss payee"
                                    under each casualty policy and the
                                    Collateral Agent, the Administrative Agent,
                                    the Managing Agent, BSI and each Lender as
                                    an "additional insured" under each liability
                                    policy. All proceeds from insurance shall be
                                    subject to the cash management requirements
                                    outlined herein;

                           18.      With respect to the DIP Facility, the
                                    Administrative Agent shall have received a
                                    payoff letter in form and substance
                                    reasonably satisfactory to the
                                    Administrative Agent from the Borrower's
                                    existing debtor-in-possession lender as well
                                    as tender of releases and discharge of all
                                    collateral security for the Current Credit
                                    Facility.

                           19.      With respect to the Exit Facility, in order
                                    for the value of such leaseholds to be
                                    included in the Borrowing Base, the Borrower
                                    shall have delivered to the Collateral Agent
                                    (i) duly-executed and acknowledged leasehold
                                    mortgages with respect to each of its and
                                    the Guarantors' inventory locations, in form
                                    and substance satisfactory to the Collateral
                                    Agent and in form sufficient for recording
                                    in the applicable jurisdiction, (ii) binders
                                    of title insurance with respect to each such
                                    mortgage, and (iii) such other instruments,
                                    documents and opinions as reasonably deemed
                                    necessary by the Collateral Agent in
                                    connection therewith (including, without
                                    limitation, landlord and mortgagee consents,
                                    memorandums of lease (to the extent
                                    necessary to record any mortgages) and the
                                    like).

Conditions to Each
Extension of Credit:                The obligation of the Lenders to provide
                                    each extension of credit (including the
                                    initial extension of credit) shall be
                                    subject to the satisfaction of the following
                                    conditions and such other conditions
                                    determined by the Administrative Agent:

                                    (a)      No default or Event of Default
                                             shall exist or shall result from
                                             the requested extension of credit;

                                    (b)      Representations and warranties
                                             shall be true and correct in all
                                             material respects at the date of
                                             each extension of credit except to
                                             the extent that such
                                             representations and warranties
                                             expressly relate to an earlier
                                             date, in which case they shall be
                                             true and correct in all material
                                             respects as of such earlier date;

                                    (c)      Timely receipt of a notice of
                                             borrowing from the Borrower;

                                       16
<PAGE>   28
                                    (d)      The Collateral Agent shall have
                                             received a Borrowing Base
                                             certificate within three business
                                             days following the end of the prior
                                             business week (ending on the
                                             Saturday of such week), which
                                             Borrowing Base certificate shall
                                             include supporting schedules as
                                             required by the Collateral Agent;
                                             and

                                    (e)      The Borrower shall have paid the
                                             balance of all fees then due and
                                             payable as referenced herein.

                                    The request and acceptance by the Borrower
                                    of each extension of credit shall be deemed
                                    to be a representation and warranty by the
                                    Borrower that the conditions specified above
                                    have been satisfied and that after giving
                                    effect to such extension of credit the
                                    Borrower shall continue to be in compliance
                                    with the Borrowing Base.

Representations and Warranties:     With respect to each Facility (unless
                                    otherwise noted) the Borrower and the
                                    Guarantors shall represent and warrant in a
                                    manner reasonably satisfactory to the
                                    Administrative Agent as to usual and
                                    customary matters, including, without
                                    limitation, the following, with carve-outs
                                    and materiality limitations where
                                    appropriate and agreed upon by the Borrower
                                    and the Administrative Agent:

                                    (a)      Due incorporation and good
                                             standing;

                                    (b)      No required consent or approval
                                             which has not been obtained;

                                    (c)      Due authorization, execution and
                                             delivery of Definitive
                                             Documentation; no violation of
                                             other agreements; no violation of
                                             laws (including environmental
                                             laws);

                                    (d)      Absence of liens, other than liens
                                             expressly permitted by the
                                             applicable Definitive
                                             Documentation;

                                    (e)      Accuracy, fairness and completeness
                                             of financial information and
                                             financial statements previously
                                             delivered to the Administrative
                                             Agent (and that such financial
                                             statements have been prepared in a
                                             manner consistent with GAAP);

                                    (f)      Compliance in all material respects
                                             with applicable laws and
                                             regulations including, without
                                             limitation, applicable
                                             environmental laws and regulations;

                                    (g)      With respect to the DIP Facility,
                                             no material adverse change in the
                                             operations, business, properties,
                                             assets or financial condition of
                                             the Borrower since the date of the
                                             financial statements delivered
                                             prior to the date of the

                                       17
<PAGE>   29
                                             Commitment Letter. With respect to
                                             the Exit Facility, no material
                                             adverse  change in the operations,
                                             business, properties, assets or
                                             financial condition of the Borrower
                                             from that set forth in the
                                             Borrower's financial statements
                                             reflecting the Plan, other than
                                             those contemplated by the Plan;

                                    (h)      With respect to the Exit Facility,
                                             no litigation which has not been
                                             resolved or fully reserved for
                                             under the Plan which, if determined
                                             adversely, would have a material
                                             adverse effect on the operations,
                                             business, properties, assets or
                                             financial condition of the
                                             Borrower;

                                    (i)      Use of proceeds;

                                    (j)      ERISA, OSHA, environmental, labor
                                             and employment representations;

                                    (k)      Customary insurance
                                             representations;

                                    (l)      All store and other inventory
                                             locations and inventory ownership;

                                    (m)      With respect to the Exit Facility,
                                             absence of pre-petition or
                                             administrative claims or liens
                                             other than those discharged on the
                                             Plan Effective Date (which includes
                                             the DIP Facility) or,
                                             notwithstanding any other provision
                                             herein, those claims contemplated
                                             by the Plan (as approved by the
                                             Administrative Agent and in an
                                             aggregate principal amount not to
                                             exceed $20,000,000) to survive the
                                             Plan Effective Date, other than any
                                             post-petition, ordinary course
                                             expenses or trade payables (but not
                                             those which are materially
                                             delinquent);

                                    (n)      All bank account locations and
                                             numbers;

                                    (o)      Status of franchises, patents,
                                             copyrights, trademarks, tradenames,
                                             licenses and permits;

                                    (p)      That the assets of the Borrower and
                                             the Guarantors are in the amounts
                                             and of the quality previously
                                             represented by the Borrower to the
                                             Administrative Agent and the
                                             inventory of the Borrower is
                                             located at such places and is in
                                             such amounts and of the quality and
                                             value previously represented by the
                                             Borrower to the Administrative
                                             Agent;

                                    (q)      Payment of taxes (after taking into
                                             account, with respect to the Exit
                                             Facility, the deferral of any
                                             priority tax claims under the
                                             Plan);



                                       18
<PAGE>   30
                                    (r)      That no information that has been
                                             furnished by the Borrower to the
                                             Administrative Agent contains any
                                             material misstatement of fact or
                                             omits to state a material fact
                                             necessary to make the statements
                                             contained therein not misleading in
                                             light of the circumstances in which
                                             made;

                                    (s)      With respect to the DIP Facility,
                                             that the Financing Order has been
                                             entered, has not been reversed,
                                             modified, amended or stayed and
                                             otherwise remains in full force and
                                             effect; and

                                    (t)      With respect to the Exit Facility,
                                             that the Plan has become effective
                                             and that the Confirmation Order has
                                             been entered and remains in full
                                             force and effect.

Affirmative Covenants:              With respect to each Facility (unless
                                    otherwise noted), the Borrower and the
                                    Guarantors shall agree to comply with usual
                                    and customary affirmative covenants,
                                    including, without limitation, the
                                    following, with carve-outs or "baskets" and
                                    materiality limitations where appropriate
                                    and agreed upon by the Borrower and the
                                    Administrative Agent:

                                    (a)      Keep financial statements in
                                             accordance with GAAP and maintain
                                             true and complete books and
                                             records;

                                    (b)      Furnish weekly Borrowing Base
                                             certificates, monthly, quarterly
                                             and annual financial statements and
                                             other reports (in each case within
                                             appropriate time periods) as may be
                                             specified in the Definitive
                                             Documentation or as reasonably
                                             requested by the Administrative
                                             Agent or any of the Lenders, such
                                             annual financial statements to be
                                             audited and/or reviewed by the
                                             Borrower's certified public
                                             accountants in a manner consistent
                                             with the Borrower's past practices;

                                    (c)      Maintain insurance on all its
                                             property in a manner which is
                                             customary in the industry for
                                             similar companies with financially
                                             sound and responsible insurance
                                             companies and in amounts and
                                             coverages reasonably satisfactory
                                             to the Collateral Agent and
                                             maintain the Collateral Agent's
                                             status as loss payee under each
                                             casualty policy and the Collateral
                                             Agent, the Administrative Agent,
                                             the Managing Agent, BSI and each
                                             Lender as an "additional insured"
                                             under each liability policy;

                                    (d)      Do all things necessary to
                                             preserve, renew and keep in full
                                             force its corporate existence;



                                       19
<PAGE>   31
                                    (e)      Pay all sales, withholding, income
                                             and other taxes (after taking into
                                             account, with respect to the Exit
                                             Facility, the deferral of any
                                             priority tax claims under the Plan)
                                             and other obligations as and when
                                             due except where contested in good
                                             faith and by appropriate
                                             proceedings (but only if the
                                             Borrower has set aside on its books
                                             adequate reserves therefor);

                                    (f)      Notify the Administrative Agent of
                                             any default or Event of Default and
                                             of any litigation that could
                                             reasonably be expected to have a
                                             material adverse effect on the
                                             Borrower, if adversely determined;

                                    (g)      As soon as practicable and in any
                                             event no less frequently than on an
                                             annual basis and no later than 60
                                             days prior to the commencement of
                                             each fiscal year, deliver to and
                                             discuss with the Lenders its future
                                             financial projections;

                                    (h)      Permit the Administrative Agent,
                                             the Collateral Agent and their
                                             respective agents to visit the
                                             premises of the Borrower and the
                                             Guarantors, confer with officers
                                             and representatives of the Borrower
                                             and the Guarantors, review all of
                                             their books and records during
                                             regular business hours and conduct
                                             examinations, verifications and
                                             appraisals of the components of the
                                             Borrowing Base, including
                                             appraisals of leases, the other
                                             assets of the Borrower and all
                                             systems and procedures of the
                                             Borrower and the Guarantors during
                                             regular business hours, including
                                             those relating to cash management,
                                             and permit the Lenders and their
                                             agents in agreed upon circumstances
                                             to communicate directly with the
                                             Borrower's and the Guarantors'
                                             independent certified public
                                             accountants concerning the
                                             business, financial condition and
                                             other affairs of the Borrower and
                                             the Guarantors;

                                    (i)      Timely pay reasonable fees and
                                             expenses of any consultants,
                                             appraisers and advisors retained by
                                             the Administrative Agent in
                                             connection with the Facility;

                                    (j)      Establish and maintain its cash
                                             concentration system with BBNA as
                                             provided above;

                                    (k)      Comply with customary
                                             environmental, ERISA and OSHA
                                             covenants; and

                                    (l)      Maintain procedures satisfactory to
                                             the Collateral Agent for assuring
                                             and maintaining the Collateral
                                             Agent's first and second-priority
                                             perfected security interest in the



                                       20
<PAGE>   32
                                             collateral for the benefit of
                                             itself, the Administrative Agent
                                             and the Lenders.

Negative Covenants:             With respect to each Facility (unless otherwise
                                noted), the Borrower and the Guarantors shall
                                comply with usual and customary negative
                                covenants, including, without limitation, the
                                following, with materiality limitations and
                                baskets where appropriate and agreed upon by the
                                Borrower and the Administrative Agent:

                                    (a)      Not merge or consolidate with any
                                             other party (other than with
                                             subsidiaries or parent entities so
                                             long as the Borrower is the
                                             survivor), or enter into any stock
                                             or asset acquisitions;

                                    (b)      Not create or permit to exist any
                                             liens or encumbrances on any assets
                                             (including, without limitation, any
                                             inventory) or capital stock except
                                             (i) liens in favor of the
                                             Administrative Agent and (ii) such
                                             other liens as are permitted in the
                                             applicable Definitive Documentation
                                             (the Definitive Documentation will
                                             permit liens imposed by law for
                                             taxes not yet due; statutory
                                             carriers' and other like liens;
                                             pledges or deposits in connection
                                             with workers' compensation and
                                             other social security obligations
                                             and other scheduled existing liens
                                             not conflicting with the provisions
                                             of "Priority and Security" above;
                                             deposits to secure the performance
                                             of tenders, bids and other
                                             contracts, other than for the
                                             payment of borrowed money, arising
                                             in the ordinary course of business;
                                             easements and other similar
                                             encumbrances that are not material;
                                             the interests of lessors under
                                             leases of real property; liens
                                             (other than on inventory) securing
                                             purchase money indebtedness
                                             permitted by the applicable
                                             Definitive Documentation and
                                             subordinated liens created as
                                             security for the Junior Facility
                                             (as defined below));

                                    (c)      Not create or permit to exist
                                             indebtedness (excluding normal
                                             expense or merchandise payables and
                                             taxes not yet due and payable)
                                             other than: (i) indebtedness under
                                             the respective Facilities; (ii)
                                             purchase money indebtedness and
                                             indebtedness consisting of rental
                                             obligations under capital leases
                                             not to exceed, in the aggregate, an
                                             amount to be determined and
                                             refinancings of any of the
                                             foregoing thereof on terms and
                                             conditions no less favorable to the
                                             Borrower and the Lenders as the
                                             indebtedness being refinanced;
                                             (iii) with respect to the Exit
                                             Facility, other indebtedness
                                             incurred pre-petition to be
                                             discharged upon the Plan Effective
                                             Date; and (iv) certain other
                                             indebtedness to be agreed,
                                             including a junior secured credit
                                             facility (the "Junior Facility") in



                                       21
<PAGE>   33
                                             an amount not to exceed $30
                                             million, all of the terms of which
                                             shall be acceptable to the
                                             Administrative Agent in its sole
                                             discretion, and, in any event, (a)
                                             shall be subordinated in right of
                                             payment to the Exit Facility and
                                             subordinated with respect to rights
                                             in the collateral that secures the
                                             Exit Facility, (b) shall not have
                                             the ability to exercise or enforce
                                             any rights with respect to the
                                             Junior Facility or its collateral
                                             until such time as the obligations
                                             under the Exit Facility have been
                                             satisfied in full, (c) shall not
                                             contain any cross-default rights to
                                             the Exit Facility (although a right
                                             of cross-acceleration (subject to
                                             all of the other requirements
                                             herein) shall be permitted), (d)
                                             shall not provide the lenders under
                                             the Junior Facility with any right
                                             to consent to or approve any
                                             amendments, modifications,
                                             refinancings or other changes to
                                             the Exit Facility and (e) shall be
                                             subject to an intercreditor
                                             agreement with the Administrative
                                             Agent satisfactory to the
                                             Administrative Agent in its sole
                                             discretion;

                                    (d)      Not permit the financial covenants
                                             to be violated (indicative
                                             covenants and levels are outlined
                                             in Schedule B attached hereto);

                                    (e)      Not guaranty the obligations of
                                             others, except for existing
                                             guarantees;

                                    (f)      Not conduct transactions with
                                             shareholders and affiliates on
                                             anything other than an arm's length
                                             basis and in the ordinary course of
                                             business consistent with past
                                             practices;

                                    (g)      Not make investments other than
                                             investments in short term
                                             obligations of, or which are
                                             guaranteed by, the United States of
                                             America, short term commercial
                                             paper bearing the highest credit
                                             rating obtainable, certain
                                             certificates of deposit and time
                                             deposits, and certain other
                                             investments satisfactory to the
                                             Administrative Agent;

                                    (h)      Not declare or make any dividend or
                                             make any distribution on account of
                                             or purchase of capital stock of the
                                             Borrower;

                                    (i)      Not sell or otherwise dispose of
                                             assets except for (i) sales of
                                             inventory in the ordinary course of
                                             business and (ii) so long as no
                                             Event of Default has occurred and
                                             is continuing or would occur after
                                             giving effect to such sale or
                                             disposition, (A) sales of assets
                                             having a fair market value not
                                             exceeding $10,000,000 in the
                                             aggregate and (B) sales of obsolete
                                             fixtures and



                                       22
<PAGE>   34
                                             equipment no longer used or useful
                                             in the Borrower's or the
                                             Guarantors' business; and

                                    (j)      Not make any cash interest payments
                                             with respect to the term loan under
                                             that certain credit agreement,
                                             dated as of October 31, 1993 among
                                             the Borrower, the Retail
                                             Guarantors, Chemical Bank, as
                                             administrative agent and fronting
                                             bank and the other lenders thereto
                                             (the "Term Loan") or on that
                                             certain credit agreement, dated
                                             August 8, 1995, among Chemical
                                             Bank, individually and as
                                             administrative agent and collateral
                                             agent, the Borrower and the Retail
                                             Guarantors (the "Real Estate
                                             Loan").

Events of Default:                  With respect to the DIP Facility, "Events of
                                    Default" will include, without limitation,
                                    failure to pay interest, principal fees or
                                    expenses when due; conversion of the
                                    Borrower's Case (or the bankruptcy case of
                                    any Guarantor) to Chapter 7; appointment of
                                    a Chapter 11 Trustee or an examiner with
                                    powers similar to a Trustee; the grant of
                                    any other superpriority claims; the
                                    Bankruptcy Court entering a relief of stay
                                    of payment of pre-petition indebtedness in
                                    an amount exceeding amounts to be determined
                                    per annum or permitting the foreclosure upon
                                    security interests in assets of the Borrower
                                    or the Guarantors (other than the security
                                    interests created under the DIP Facility);
                                    the reversal, vacatur, stay, amendment or
                                    modification of the Financing Order; change
                                    in control; any judgment on a post-petition
                                    claim in excess of an amount to be
                                    determined; the Borrower or the Guarantors
                                    being enjoined from conducting business or
                                    the disruption of business for more than a
                                    number of days to be determined and that
                                    results in an impairment or decrease in the
                                    value of the assets of the Borrower or the
                                    Guarantors in an amount that exceeds an
                                    amount to be determined; failure to deliver
                                    to the Administrative Agent reports when
                                    due; any representation or warranty found to
                                    be incorrect in any material respect; and
                                    breach of any negative covenant or
                                    affirmative covenant. Cure periods, notice
                                    periods with respect to enforcement of
                                    remedies and "knowledge" qualifiers will be
                                    provided where appropriate, as determined by
                                    the Borrower and the Administrative Agent.

                                    With respect to the Exit Facility, "Events
                                    of Default" shall include, without
                                    limitation, failure by the Borrower to pay
                                    principal, interest, fees, or other amounts
                                    when due; breach by the Borrower or the
                                    Guarantors of any of its affirmative or
                                    negative covenants (with agreed upon grace
                                    periods where appropriate); commencement of
                                    a bankruptcy or similar proceeding by the
                                    Borrower or the Guarantors or commencement
                                    of an involuntary case against the Borrower
                                    or any Guarantor which is not dismissed
                                    within 30 days; any



                                       23
<PAGE>   35
                                    representation or warranty made by the
                                    Borrower or the Guarantors shall prove to
                                    have been incorrect in any material respect
                                    when made or deemed made; loss of any lease,
                                    permit, or agreement the loss of which could
                                    reasonably be expected to have a material
                                    adverse effect on the Borrower or any
                                    Guarantor; defaults under other agreements
                                    or obligations in agreed upon amounts and
                                    other cross default provisions to material
                                    obligations of the Borrower or any
                                    Guarantor; any material provision of the
                                    Definitive Exit Documentation shall cease to
                                    be valid and binding on the Borrower or any
                                    Guarantor or the liens in favor of the
                                    Administrative Agent shall cease to be
                                    first-priority perfected liens (subject to
                                    the liens permitted by the Administrative
                                    Agent); change of control; the Borrower or
                                    any Guarantor being enjoined from conducting
                                    its business or there shall be a disruption
                                    of its business for more than 10 days; and
                                    certain insolvency, judgment, ERISA and OSHA
                                    related defaults, with appropriate
                                    limitations and time periods. Cure periods
                                    and "knowledge" qualifiers will be provided
                                    where appropriate, as determined by the
                                    Borrower and the Administrative Agent.

                                    Then and in such event under the applicable
                                    Facility, the Administrative Agent may, and
                                    at the request of the Lenders holding 51% of
                                    outstanding obligations under such Facility
                                    shall, take all or any of the following
                                    actions:

                                    (a)      Declare the principal of and
                                             accrued interest on the outstanding
                                             borrowings to be immediately due
                                             and payable;

                                    (b)      Terminate any further commitment to
                                             lend to the Borrower or to issue
                                             letters of credit;

                                    (c)      Set off any amounts held as cash
                                             collateral or in any accounts
                                             maintained with the Administrative
                                             Agent, the Collateral Agent, the
                                             Lenders or their respective agents;

                                    (d)      Require the Borrower upon demand to
                                             furnish immediate cash collateral
                                             for letters of credit then
                                             outstanding; and

                                    (e)      Take any other action or exercise
                                             any other right or remedy permitted
                                             under the Agreement or by
                                             applicable law.

Voting:                             Consent of the Majority Lenders (as defined
                                    below) will be necessary for consents,
                                    amendments, and waivers concerning the
                                    applicable Definitive Documentation;
                                    provided, however, that the rate of
                                    interest, the terms of the Facilities, the
                                    conditions set forth on Schedule A hereto,
                                    the amount of the commitments, the date and
                                    amount of any principal payments,

                                       24
<PAGE>   36
                                    and the amount of fees may not be changed,
                                    and advance rates may not be increased
                                    (provided, however, the Administrative Agent
                                    will have the discretion, but not the
                                    obligation, to provide not more than 2
                                    "agent advances" during a fiscal year in an
                                    amount not to exceed $15,000,000 for a
                                    period not to exceed 60 days), without the
                                    consent of all Lenders under the applicable
                                    Facility. Collateral may not be released
                                    without the consent of all Lenders (with
                                    customary exceptions). "Majority Lenders"
                                    shall mean the Lenders under the applicable
                                    Facility holding at least 51% of the loans
                                    under such Facility then outstanding; and if
                                    no loans are outstanding under such
                                    Facility, then it shall mean Lenders under
                                    such Facility whose aggregate commitments
                                    constitute at least 51% of the total
                                    commitments.

Yield Protection and                Standard yield protection and
Increased Costs:                    indemnification provisions including
                                    regarding capital adequacy will be
                                    incorporated in the Definitive Documentation
                                    that will compensate the Lenders in the
                                    event that any present or future law,
                                    requirement, guideline or request of
                                    relevant authorities shall increase costs,
                                    reduce payments or earnings, or increase
                                    capital requirements.

Costs and Expenses:                 With respect to each Facility, all
                                    reasonable out-of-pocket costs and expenses
                                    of the Administrative Agent, the Managing
                                    Agent and the Collateral Agent, their
                                    business and legal advisors (including,
                                    without limitation, reasonable legal fees
                                    and fees of other agents to the
                                    Administrative Agent, the Managing Agent and
                                    the Collateral Agent, reasonable expenses in
                                    connection with (i) (a) periodic field
                                    examinations, (b) audits, and (c) collateral
                                    (including lease) appraisals; provided that
                                    the Borrower shall not be required to
                                    reimburse the Administrative Agent, the
                                    Managing Agent or the Collateral Agent for
                                    more than 3 field examinations/audits, 3
                                    inventory appraisals and 3 lease appraisals
                                    in any year (subject at all times to an
                                    aggregate yearly cap of $180,000) provided,
                                    further, that during the existence of an
                                    Event of Default, the Borrower shall pay for
                                    all field examinations/audits, inventory
                                    appraisals and lease appraisals conducted by
                                    the Administrative Agent, the Managing Agent
                                    or the Collateral Agent, without cost
                                    limitation, (ii) monitoring of assets,
                                    syndication, enforcement of rights and
                                    publicity and (iii) other miscellaneous
                                    disbursements) and legal review costs of the
                                    Administrative Agent, the Managing Agent and
                                    the Collateral Agent shall be payable by the
                                    Borrower on demand whether or not the
                                    transactions contemplated hereby are
                                    consummated.

Assignments and Participations:     Rights and obligations under each Facility
                                    will be assignable (subject to $10,000,000
                                    minimum amounts) by the Lenders to Eligible
                                    Assignees (to be defined in a manner
                                    satisfactory to the Borrower and BBNA;
                                    provided that the Borrower shall have the
                                    right to consent to such assignments (except
                                    with



                                       25
<PAGE>   37
                                    respect to assignments from current Lenders
                                    to their affiliates (or between Lenders) or
                                    subsequent to an event of default), such
                                    consent not to be unreasonably withheld) and
                                    otherwise as set forth in the Commitment
                                    Letter. All assignments shall require the
                                    consent of the Administrative Agent. The
                                    Administrative Agent will receive a
                                    processing and recordation fee of $3,000
                                    from each assignee with each assignment. The
                                    Borrower shall not be required to pay the
                                    expenses of the assignor, but shall pay its
                                    own expenses and that of the Administrative
                                    Agent with respect to each assignment. Each
                                    Lender shall have the right to sell
                                    participations in its loans, subject to
                                    customary voting limitations.

Indemnity:                          With respect to each Facility, the Borrower
                                    and the Guarantors shall indemnify and hold
                                    harmless the Administrative Agent, the
                                    Collateral Agent, the Managing Agent, BSI
                                    and the Lenders and their respective
                                    officers, directors, employees, affiliates,
                                    agents and controlling persons from and
                                    against any and all losses, claims, damages,
                                    costs, expenses and liabilities to which any
                                    such person may become subject arising out
                                    of, or in connection with, either Facility,
                                    the transactions contemplated hereby or
                                    thereby or any claim, litigation,
                                    investigation or proceeding relating to any
                                    of the foregoing, whether or not any of such
                                    indemnified persons is a party thereto, and
                                    to reimburse each of such indemnified
                                    persons, from time to time upon their
                                    demand, for any reasonable legal or other
                                    expenses incurred in connection with
                                    investigating or defending any of the
                                    foregoing, whether or not the transactions
                                    contemplated hereby or thereby are
                                    consummated; provided that the foregoing
                                    indemnity will not, as to any indemnified
                                    person, apply to losses, claims, damages,
                                    liabilities or related expenses to the
                                    extent that they arise from the bad faith,
                                    willful misconduct or gross negligence of
                                    such indemnified person as finally
                                    determined by a final non-appealable order
                                    of a court of competent jurisdiction.

Insurance Subsidiary:               Certain representations and warranties,
                                    covenants, events of default and certain
                                    other provisions of the Definitive
                                    Documentation may be made applicable to
                                    American East, Inc.

Definitive Documentation:           Satisfactory in form and substance to the
                                    Administrative Agent, the Collateral Agent,
                                    the Lenders and the Borrower.


 Governing Law:                     All Definitive Documentation shall be
                                    governed by, and construed in accordance
                                    with, the laws of the State of New York and,
                                    to the extent applicable with respect to the
                                    DIP Facility, the provisions of the
                                    Bankruptcy Code.


                                       26
<PAGE>   38
                            SCHEDULE A TO TERM SHEET

Additional Conditions to Exit Facility:

-        Repayment in full of DIP Facility

-        All equity settlement on pre-petition debt.

-        12-month rolling EBITDA of the Borrower on Exit Closing Date shall be
         no less than $60 million.

-        No existing defaults under DIP Facility and no projected defaults under
         Exit Facility or the Commitment Letter (including the Term Sheet) based
         on projections provided by the Borrower.

-        All material undisputed outstanding post-petition trade credit as of
         the Exit Closing Date must be paid to date in accordance with payment
         terms of the applicable vendor, as agreed to the Borrower.

-        Excess borrowing availability under Exit Facility on the Exit Closing
         Date (after giving effect to payment of the administrative claims under
         the Plan, including repayment of the DIP Facility, with the proceeds of
         the Exit Facility) shall be no less than the following:

<TABLE>
<CAPTION>
                    Fiscal Month in which Exit
                    Closing Date Occurs               Required Availability
                    -------------------               ---------------------
<S>                                                        <C>
                    February                               $  70,000,000
                    March                                  $  60,000,000
                    April                                  $  50,000,000
                    May                                    $  50,000,000
                    June                                   $  50,000,000
                    July                                   $  50,000,000
                    August                                 $  50,000,000
                    September                              $  50,000,000
                    October                                $  50,000,000
                    November                               $  50,000,000
                    December                               $ 110,000,000
                    January                                $  75,000,000
</TABLE>




                                       27
<PAGE>   39
                            SCHEDULE B TO TERM SHEET

DIP FACILITY COVENANTS

1.       Ratio of Accounts Payable to Inventory of the Borrower shall not be
         less than the following during each fiscal month of the Borrower:

<TABLE>
<CAPTION>
                    Fiscal Month                      Accounts Payable to
                    ------------                      -------------------
                                                      Inventory Ratio
                                                      ---------------
<S>                                                             <C>
                    February                                    30%
                    March                                       27%
                    April                                       27%
                    May                                         26%
                    June                                        23%
                    July                                        28%
                    August                                      29%
                    September                                   30%
                    October                                     30%
                    November                                    33%
                    December                                    34%
                    January                                     28%
</TABLE>


2.       Rolling 12-month EBITDA (tested on a quarterly basis) of the Borrower
         shall not be less than the following:

<TABLE>
<CAPTION>
                    Fiscal Quarter Ending On or
                    About                                 Required EBITDA
                    -----                                 ---------------
<S>                                                       <C>
                    July 31, 1998                          $  40,000,000
                    October 31, 1998                       $  40,000,000
                    January 31, 1999                       $  50,000,000
                    April 30, 1999                         $  60,000,000
                    July 31, 1999                          $  60,000,000
                    October 31, 1999                       $  65,000,000
</TABLE>


3.       Maximum annual Capital Expenditures of the Borrower to be set at the
         amount set at $40,000,000 per annum.

EXIT FACILITY COVENANTS

1.       Ratio of Accounts Payable to Inventory of the Borrower shall be as set
         forth in the DIP Facility.

2.       Rolling 12-month EBITDA (after cash restructuring costs) of the
         Borrower shall be not less than the following:



                                       28
<PAGE>   40
<TABLE>
<CAPTION>
                    Fiscal Quarter Ending On or
                    About                                 Required EBITDA
                    -----                                 ---------------
<S>                                                       <C>
                    July 31, 1998                          $  60,000,000
                    October 31, 1998                       $  60,000,000
                    January 31, 1999                       $  60,000,000
                    April 30, 1999                         $  60,000,000
                    July 31, 1999                          $  60,000,000
                    October 31, 1999                       $  65,000,000
                    January 31, 2000                       $  70,000,000
                    April 30, 2000                         $  70,000,000
                    July 31, 2000                          $  75,000,000
                    October 31, 2000                       $  80,000,000
                    January 31, 2001 and thereafter        $  80,000,000
</TABLE>


3.       Beginning at the end of the Borrower's 1999 fiscal year, the Borrower
         shall have a Fixed Charge Coverage Ratio (EBITDA - Capital Expenditures
         - cash Taxes to cash Interest (other than interest under the Term Loans
         and the Real Estate Loan) + Principal Payments) of not less than 1.25:1
         (tested quarterly on a rolling 12-month basis)

4.       Maximum annual Capital Expenditures to be $40,000,000 in the aggregate
         for fiscal year 1998, $45,000,000 in the aggregate for fiscal year 1999
         and $50,000,000 in the aggregate for fiscal year 2000 and each fiscal
         year thereafter.
<PAGE>   41
                            SCHEDULE C TO TERM SHEET

                              MORTGAGED PROPERTIES


Owned Real Properties

Caldor Store #19 - Rocky Hill
80 Town Line Road
Rocky Hill, Connecticut 06067

Caldor Store #61 - Bedford
Daniel Webster Highway and Kilton Road
Bedford, NH 03102

Caldor Store #16 - Wappingers Falls
Route 9 & Vassar Road
Wappingers Falls, NY 12590


Leasehold Interests

Caldor Store #134 - Ledgewood
Roxbury Mall 275 Route 10
Succasunna, NJ 07876

Caldor Store #70 - Westboro
Route 9 - 18 Lyman
Westboro, MA 01581

Caldor Store #77 - Swansea
Swansea Mall Route 118
Swansea, MA 02777
<PAGE>   42
                         Exhibit B to Commitment Letter

            [Form of Counterpart Signature Page of Additional Lender]

         Reference is made to the Commitment Letter, dated April 23, 1998 (the
"Commitment Letter"), among BankBoston, N.A., each of the other Lenders party
thereto, and The Caldor Corporation, as Debtor and Debtor-in-Possession.
Capitalized terms used herein without definition shall have the meanings given
to such terms in the Commitment Letter. The undersigned hereby agrees that, as
of the date set forth below, it is a Lender under the Commitment Letter with a
commitment amount equal to the amount set forth opposite its name on Schedule A
hereto (which shall be attached to the Commitment Letter as a revised Schedule A
thereto) and agrees to be bound by all of the terms and conditions thereof.

         [Date]
                                               [LENDER]


                                               By:___________________________
                                               Name:
                                               Title: