Document:

EXHIBIT 10.20
                               SECURITY AGREEMENT

                (Equipment, Consumer Goods, Fixtures, Inventory)

                                                              Date: July 6, 2000

MEGAMEDIA NETWORKS, INC., a Delaware corporation (the "Debtor") whose address is
57 West Pine Street, Orlando, Florida 32801,and THE ORLANDO GROUP DOWNTOWN LLC,
a Florida limited liability company (the "Secured Party") whose address is 100
S. Orange Avenue, Suite 1000, Orlando, Florida 32801, agree as follows:

         1. SECURITY INTEREST. The Debtor gives the Secured Party security title
to and a continuing and unconditional security interest ("Security Interest") in
the goods described below and in all parts, accessories, attachments, additions,
replacements, accessions, substitutions and in all proceeds thereof in any form
together with all records relating thereto (the "Collateral"):

         All of Debtor's accounts, inventory, equipment, and furniture, wherever
         held or located, whether now owned or hereafter owned or acquired by
         Debtor, together with all proceeds and products thereof, and all books
         and records and insurance proceeds relating thereto. The terms
         "accounts", "inventory," and "equipment" shall have the same respective
         meanings as are given to those terms in Chapter 679 of Florida
         Statutes, as amended.

         2. INDEBTEDNESS SECURED. This Agreement and the Security Interest
created by it secures that certain obligation of the Debtor to the Secured Party
represented by that certain Agreement and Promissory Note in the original
principal amount of $350,000.00 dated of even date hereof (the "Indebtedness").

         3. WARRANTIES OF DEBTOR. The Debtor warrants and so long as this
Agreement continues in force shall be deemed continuously to warrant that:

         (a) the Debtor is the owner of the Collateral free of all security
interests or other encumbrances, except the Security Interest;

         (b) the Debtor is authorized to enter into the Security Agreement;

         (c) the Collateral is used or bought for use primarily in business or
professional operations.

         (d) The Collateral will not become affixed to any real property.

         (e) The Debtor's principal place of business and chief executive office
in the State of Florida is located at the address specified above.

<PAGE>

         4. COVENANTS OF DEBTOR. So long as this Agreement has not been
terminated as provided in paragraph 6, the Debtor: (a) will defend the
Collateral against the claims of all other persons; will keep the Collateral
free from all security interests or other encumbrances, except the Security
Interest; and will not sell, transfer, lease, or otherwise dispose of any of the
Collateral or any interests therein without the prior written consent of the
Secured Party; (b) will not remove the Collateral from the State nor change the
location of Debtor's chief executive office without the written consent of the
Secured Party, will notify the Secured Party promptly in writing of any change
in the Debtor's address, name or identity from that specified above; and will
permit the Secured Party or its agents to inspect the Collateral; (c) will keep
the Collateral in good condition and repair and will not use the Collateral in
violation of any provisions of this Security Agreement, of any applicable
statute, regulation or ordinance or of any policy of insurance insuring the
Collateral; (d) will execute and deliver to the Secured Party such financing
statements and other documents, pay all costs including costs of title searches
and filing financing statements and other documents in any public offices
requested by the Secured Party, and take such other action as the Secured Party
may deem advisable to perfect the Security Interest created by this Agreement;
(e) will pay all taxes, assessments and other charges of every nature which may
be levied or assessed against the Collateral; (f) will insure the Collateral
against risks by obtaining policies (none of which shall be cancellable without
the prior written consent of the Secured Party) in coverage, form, and amount
and with companies satisfactory to the Secured Party, such policies to contain a
loss payee provision executed in favor of the Secured Party and at Secured
Party's request will deliver each policy or certificate of insurance therefor to
the Secured Party; (g) will prevent the Collateral or any part thereof from
being or becoming an accession to other goods not covered by the Security
Agreement; (h) unless the Collateral is specified in paragraph 3(d) as a
fixture, will prevent the Collateral or any part of the Collateral from becoming
a fixture; and (i) if any certificate of title may be issued with respect to any
of the Collateral, the Debtor will cause the Secured Party's interest under this
Agreement to be noted on the certificate and will deliver the original
certificate to the Secured Party.

         5. COLLECTION AND SEGREGATION OF ACCOUNTS AND RIGHT TO NOTIFY. Secured
Party hereby authorizes Debtor to collect the Collateral, subject to the
direction and control of Secured Party but Secured Party may, without cause or
notice, curtail or terminate said authority at any time. Upon notice by Secured
Party, whether oral or in writing, to Debtor, Debtor shall forthwith upon
receipt of all checks, drafts, cash, and other remittances in payment of or on
account of the Collateral, deposit the same in one or more special accounts
maintained with Secured Party over which Secured Party alone shall have the
power of withdrawal. The remittance of the proceeds of such Collateral shall
not, however, constitute payment or liquidation of such Collateral until Secured
Party shall receive good funds for such proceeds. Funds placed in such special
accounts shall be held by

<PAGE>

Secured Party as security for all Indebtedness secured hereunder. These proceeds
shall be deposited in precisely the form received, except for the indorsement of
Debtor where necessary to permit collection of items, which indorsement Debtor
agrees to make, and which indorsement Secured Party is also hereby authorized,
as attorney-in-fact, to make on behalf of Debtor. In the event Secured Party has
notified Debtor to make deposits to a special account, pending such deposit,
Debtor agrees that it will not commingle any such checks, drafts, cash or other
remittances with any funds or other property of Debtor, but will hold them
separate and apart therefrom, and upon an express trust for Secured Party until
deposit thereof is made in the special account. Secured Party will, from time to
time, apply the whole or any part of the Collateral funds on deposit in this
special account against such Indebtedness as are secured hereby as Secured Party
may in its sole discretion elect. At the sole election of Secured Party, any
portion of said funds on deposit in the special account which Secured Party
shall elect not to apply to the Indebtedness, may be paid over by Secured Party
to Debtor. At any time, whether Debtor is or is not in default hereunder,
Secured Party may notify persons obligated on any Collateral to make payments
directly to Secured Party and Secured Party may take control of all proceeds of
any Collateral. Until Secured Party elects to exercise such rights, Debtor, as
agent of Secured Party, shall collect and enforce all payments owed on the
Collateral.

         6. DEFAULT. (a) Any of the following shall constitute an event of
default ("Event of Default"): (i) non-payment when due whether by acceleration
or otherwise of the principal of or interest on any Indebtedness, time being of
the essence, or failure by the Debtor to perform any obligations under this
Agreement or under any other agreement between the Debtor and Secured Party;
(ii) death or incompetency of the Debtor; (iii) filing by or against the Debtor
of a petition in bankruptcy or for reorganization under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or similar law of any jurisdiction; (iv) making a
general assignment by the Debtor for the benefit of creditors; the appointment
of or taking possession by a receiver, trustee, custodian or similar official
for the Debtor or for any of the Debtor's assets; or the institution by or
against the Debtor of any kind of insolvency proceedings or any proceeding for
the dissolution or liquidation of the Debtor; (v) the occurrence of any event
described in paragraph 4(a)(ii), (iii) or (iv) hereof with respect to any
indorser or guarantor or any party liable for payment of any Indebtedness; or
(vi) material falsity in any certificate, statement, representation, warranty or
audit at any time furnished to the Secured Party by or on behalf of the Debtor
or any indorser or guarantor or any other party liable for payment of any
Indebtedness, pursuant to or in connection with the Security Agreement or
otherwise (including warranties in this Agreement) and including any omission to
disclose any substantial contingent or liquidated liabilities or any material
adverse change in facts disclosed by any certificate, statement, representation,
warranty or audit furnished to the Secured Party; or (vii) any attachment or
levy against the Collateral or any other occurrence which inhibits the Secured
Party's free access to the Collateral.

                                      -3-
<PAGE>

         (b) The Secured Party may declare all or part of the Indebtedness to be
immediately due without notice upon the happening of any Event of Default or if
the Secured Party in good faith believes that the prospect of payment of all or
any part of the Indebtedness or the performance of the Debtor's obligations
under this Agreement or any other agreement now or hereafter in effect between
the Debtor and the Secured Party is impaired. This paragraph is not intended to
affect any rights of the Secured Party with respect to any Indebtedness which
may now or hereafter be payable on demand.

         (c) Upon the happening of any Event of Default the Secured Party's
rights with respect to the Collateral shall be those of a secured party under
the Uniform Commercial Code and any other applicable law from time to time in
effect. The Secured Party shall also have any additional rights granted herein
and in any other agreement now or hereafter in effect between the Debtor and the
Secured Party. If requested by the Secured Party, the Debtor will assemble the
Collateral and make it available to the Secured Party at a place to be
designated by the Secured Party.

         (d) The Debtor agrees that any notice by the Secured Party of the sale
or disposition of the Collateral or any other intended action hereunder, whether
required by the Uniform Commercial Code or otherwise, shall constitute
reasonable notice to the Debtor if the notice is mailed by regular or certified
mail, postage prepaid, at least five days before the action to the Debtor's
address as specified in this Agreement or to any other address which the Debtor
has specified in writing to the Secured Party as the address to which notices
shall be given to the Debtor.

         (e) The Debtor shall pay all costs and expenses incurred by the Secured
Party in enforcing this Security Agreement, realizing upon any Collateral and
collecting any Indebtedness (including reasonable attorney's fees) whether suit
is brought or not and whether incurred in connection with collection, trial,
appeal or otherwise, and shall be liable for any deficiencies in the event the
proceeds of disposition of the Collateral does not satisfy the Indebtedness in
full.

         7. MISCELLANEOUS. (a) The Debtor authorizes the Secured Party at the
Debtor's expense to file any financing statement or statements relating to the
Collateral (without the Debtor's signature thereon) which the Secured Party
deems appropriate, and the Debtor appoints the Secured Party as the Debtor's
attorney-in-fact to execute any such financing statement or statements in the
Debtor's name and to perform all other acts which the Secured Party

                                      -4-
<PAGE>

deems appropriate to perfect and to continue perfection of the Security
Interest.

         (b) The Debtor hereby irrevocably consents to any act by the Secured
Party or its agents in entering upon any premises for the purpose of either (i)
inspecting the Collateral or (ii) taking possession of the Collateral after any
Event of Default; and the Debtor hereby waives Debtor's right to assert against
the Secured Party or its agents any claim based upon trespass or any similar
cause of action for entering upon any premises where the Collateral may be
located.

         (c) The Debtor authorizes the Secured Party to collect and apply
against the Indebtedness any refund of insurance premiums or any insurance
proceeds payable on account of the loss of or damage to any of the Collateral
and appoints the Secured Party as the Debtor's attorney-in-fact to indorse any
check or draft representing such proceeds or refund.

         (d) (i) As further security the Debtor grants to the Secured Party a
security interest in all property of the Debtor which is or may hereafter be in
the Secured Party's possession in any capacity including all monies owed or to
be owed by the Secured Party to the Debtor; and with respect to all of such
property, the Secured Party shall have the same rights as it has with respect to
the Collateral. (ii) Without limiting any other right of the Secured Party
whenever the Secured Party has the right to declare any Indebtedness to be
immediately due and payable (whether or not it has so declared), the Secured
Party may set off against the Indebtedness all monies then owed to the Debtor by
the Secured Party in any capacity whether due or not and the Secured Party shall
be deemed to have exercised its rights of set off immediately at the time its
right to such election accrues.

         (e) Upon the Debtor's failure to perform any of its duties hereunder
the Secured Party may, but it shall not be obligated to, perform any of such
duties and the Debtor shall forthwith upon demand reimburse the Secured Party
for any expense incurred by the Secured Party in doing so.

         (f) No delay or omission by the Secured Party in exercising any right
hereunder or with respect to any Indebtedness shall operate as a waiver of that
or any other right, and no single or partial exercise of any right shall
preclude the Secured Party from any other further exercise of any other right or
remedy. The Secured Party may cure any Event of Default by the Debtor in any
reasonable manner without waiving the Event of Default so cured and without
waiving any other prior or subsequent Event of Default by the Debtor. All rights
and remedies of the Secured Party under this Agreement and under the Uniform
Commercial Code shall be deemed cumulative.

                                      -5-
<PAGE>

         (g) The Secured Party shall have no obligation to take and the Debtor
shall have the sole responsibility for taking any steps to preserve rights
against all prior parties to any instrument or chattel paper in the Secured
Party's possession as proceeds of the Collateral. The Debtor waives notice of
dishonor and protest of any instrument constituting Collateral at any time held
by the Secured Party on which the Debtor is in any way liable and waives notice
of any other action by the Secured Party.

         (h) The rights and benefits of the Secured Party under this Agreement
shall, if the Secured Party agrees, inure to any party acquiring an interest in
the Indebtedness or any part thereof.

         (i) The terms "Secured Party" and "Debtor" as used in this Agreement
include the heirs, personal representatives, and successors and assigns of those
parties.

         (j) If more than one Debtor executes this Security Agreement, the term
"Debtor" includes each of the Debtors as well as all of them, and their
obligations under this Agreement shall be joint and several.

         (k) This Agreement may not be modified or amended nor shall any
provision of it be waived except in writing signed by the Debtor and by an
authorized officer of the Secured Party.

         (l) This Agreement shall be construed under the Uniform Commercial Code
and any other applicable Florida laws in effect from time to time.

         (m) This Security Agreement is a continuing agreement which shall
remain in force until the Secured Party shall actually receive written notice of
its termination and thereafter until all of the Indebtedness contracted for or
created before receipt of the notice and any extensions or renewals of that
Indebtedness (whether made before or after receipt of the notice) together with
all interest thereon both before and after the notice shall be paid in full.

         8. WAIVER. The Debtor hereby waives any rights Debtor may have to
notice and a hearing before possession of Collateral is effected by Secured
Party by self-help, replevin, attachment or otherwise.

         9. WAIVER OF TRIAL BY JURY. DEBTOR HEREBY, AND SECURED PARTY BY ITS
ACCEPTANCE OF THIS SECURITY AGREEMENT, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS SECURITY AGREEMENT AND ALL
AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH ANY COURSE OF CONDUCT,

                                      -6-
<PAGE>

COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER
PARTY, WHETHER IN CONNECTION WITH THE INDEBTEDNESS, THE COLLECTION THEREOF, OR
OTHERWISE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY EXTENDING
THE CREDIT ACCOMMODATION(S) COMPRISING THE INDEBTEDNESS.

                                          MEGAMEDIA NETWORKS, Inc., a Delaware
                                          corporation

                                          By:
                                             -----------------------------------
                                             David Gust, Chief Executive Officer

                                                           "Debtor"

                                      -7-EXHIBIT NUMBER 10.73

                      NINETEENTH AMENDMENT TO POSTPETITION
                                CREDIT AGREEMENT

         THIS NINETEENTH AMENDMENT TO POSTPETITION CREDIT AGREEMENT, dated as of
July 23, 2000 (this "Amendment"), is among LEVITZ FURNITURE INCORPORATED, a
Delaware corporation and a debtor and debtor in possession, LEVITZ FURNITURE
CORPORATION, a Florida corporation and a debtor and debtor in possession
("LFC"), LEVITZ FURNITURE REALTY CORPORATION, a Florida corporation and a debtor
and debtor in possession, LEVITZ SHOPPING SERVICE, INC., a Florida corporation
and a debtor and debtor in possession, LEVITZ FURNITURE COMPANY OF THE MIDWEST,
INC., a Colorado corporation and a debtor and debtor in possession, LEVITZ
FURNITURE COMPANY OF THE PACIFIC, INC., a California corporation and a debtor
and debtor in possession, LEVITZ FURNITURE COMPANY OF WASHINGTON, INC., a
Washington corporation and a debtor and debtor in possession, LEVITZ FURNITURE
COMPANY OF THE MIDWEST REALTY, INC., a Colorado corporation and a debtor and
debtor in possession, LEVITZ FURNITURE COMPANY OF THE PACIFIC REALTY, INC., a
California corporation and a debtor and a debtor in possession, LEVITZ FURNITURE
COMPANY OF WASHINGTON REALTY, INC., a Washington corporation and debtor and a
debtor in possession, LEVITZ REINSURANCE CORPORATION, JOHN M. SMYTH COMPANY, an
Illinois corporation and a debtor and debtor in possession, and JOHN M. SMYTH
REALTY COMPANY, an Illinois corporation and a debtor and debtor in possession
and LEVITZ FURNITURE COMPANY OF MASSACHUSETTS, INC., a Massachusetts corporation
(collectively, the "Borrowers"), each Revolving Lender and Overadvance Term
Lender signatories hereto (collectively, the "Lenders") and BT COMMERCIAL
CORPORATION, a Delaware corporation, acting in its capacity as collateral agent
and agent for the Lenders (in such capacity, together with its successors in
such capacity, the "Agent"). Capitalized terms used in this Amendment and not
otherwise defined have the meanings assigned to such terms in the Postpetition
Credit Agreement dated as of September 5, 1997, as amended (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Borrowers, the Lenders and the Agent.

                             PRELIMINARY STATEMENTS:

         A. The Borrowers, the Lenders and the Agent are parties to the Credit
Agreement.

         B. The Borrowers have requested that the Lenders and the Agent amend
the Credit Agreement in certain respects.

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<PAGE>

         C. The Borrowers, the Lenders and the Agent have agreed to amend the
Credit Agreement on the terms and subject to the conditions of this Amendment.

                                   AGREEMENT:

         In consideration of the premises and the mutual agreements contained in
this Amendment, the Borrowers, the Lenders and the Agent agree as follows:

1.       Amendments to Credit Agreement.

         On the date each of the conditions set forth in Section 2 is satisfied
by the Borrowers (the "Closing Date"), the Credit Agreement is amended as
follows:

         1.1      The definition of "Borrowing Base" contained in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety to read as
follows:

         Borrowing Base means, at any time, the sum at such time of:

                  (a) the Fixed Asset Sublimit, plus

                  (b) eighty-five percent (85%) of Eligible Accounts Receivable,
         plus

                  (c) seventy-five percent (75%) of Eligible Inventory; provided
         that the foregoing percentage may be adjusted by the Agent in the
         exercise of its Permitted Discretion based upon appraisals of the
         Borrowers' inventory prepared from time to time at the Agent's or the
         Majority Lenders' direction, plus

                  (d) solely for the purposes of accepting the borrowing of an
         Initial Overadvance, $10,000,000 (the "Initial Overadvance Amount");
         provided, that, effective as of the earlier to occur of (i) ten (10)
         Business Days after the date on which the Overadvance Term Lender
         receives notice from the Agent that Excess Availability is less than
         $12,000,000 as contemplated under clause (i) of Article 2C or (ii) the
         date on which the proceeds of an Initial Overadvance are received by
         the Agent for the account of the Debtors, the Initial Overadvance
         Amount will be automatically reduced to zero (-0-); and provided
         further, that (I) in the event that the principal amount of any Initial
         Overadvance is repaid as contemplated under Article 2C, the Initial
         Overadvance Amount will automatically be reestablished at $10,000,000
         and (ii) notwithstanding anything to the contrary contained in this
         Agreement or any of the other Credit Documents, (x) only the
         Overadvance Term Lender shall have any obligation to fund an Initial
         Overadvance and (y) prior to any date on which the Initial Overadvance
         Amount is reduced to zero pursuant to the initial proviso to this
         paragraph (d), the Revolving Lenders shall have no obligation
         whatsoever to make any Revolving

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<PAGE>

         Loan or other extension of credit under this Agreement to the extent
         that, immediately before or after giving effect to such Revolving Loan
         or extension of credit, Excess Availability is less than $10,000,000,
         plus

                  (e) at any time that an Initial Overadvance is then
         outstanding, an amount (the "Subsequent Overadvance Amount") equal to
         the lesser of (x) $5 million and (y) the Unfunded Subsequent
         Overadvance Commitment. For the purpose hereof, the "Unfunded
         Subsequent Overadvance Commitment" shall mean, at any date, the
         commitment of the Overadvance Term Lender to fund Subsequent
         Overadvance Term Loans in an amount equal to $45,000,000 minus the
         aggregate principal amount of all Subsequent Overadvance Term Loans
         made by the Overadvance Term Lender prior to such date pursuant to
         Article 2C(ii) hereof plus the aggregate principal amount of all
         Subsequent Overadvance Term Loans repaid by the Borrowers to the
         Overadvance Term Lender prior to such date pursuant to Article 2C(ii)
         hereof. Notwithstanding anything to the contrary contained in this
         Agreement or any of the other Credit Documents, (x) only the
         Overadvance Term Lender shall have any obligation to fund a Subsequent
         Overadvance and (y) unless the Unfunded Subsequent Overadvance
         Commitment is zero, the Revolving Lenders shall have no obligation
         whatsoever to make any Revolving Loan or other extension of credit
         under this Agreement to the extent that, immediately before or after
         giving effect to such Revolving Loan or extension of credit, Excess
         Availability is less than $5,000,000, less

                  (f) the aggregate amount of the Borrowers' allowed
         professional fees and disbursements to which the Postpetition
         Obligations and the Prepetition Obligations may be subordinated
         pursuant to the Interim Financing Order and the Permanent Financing
         Order following a Default or an Event of Default; less

                  (g) an amount equal to one hundred percent (100) of the Net
         Cash Disposition Proceeds from any Asset Disposition with respect to
         any real property, other fixed assets or any leasehold interest in real
         property of any Borrower;

         provided, that so long as the LFC Funds Administrator has delivered a
         current Borrowing Base Certificate to the Agent in accordance with the
         requirements of Section 7.2, the Agent may rely on such Borrowing Base
         Certificate for purposes of computing the amounts referred to in
         clauses (b) and (c) above.

         In addition, the Agent, in the exercise of its Permitted Discretion,
         may (i) establish and increase or decrease reserves against Eligible
         Accounts Receivable and Eligible Inventory, (ii) reduce the advance
         rates provided for in this definition, or restore such advance rates to
         any level equal

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<PAGE>

         to or below the advance rates in effect as of the date of this Credit
         Agreement, and (iii) impose additional restrictions (or eliminate the
         same) to the standards of eligibility set forth in the definitions of
         "Eligible Accounts Receivable" and "Eligible Inventory". The Agent will
         not increase the advance rates without receiving prior consent of the
         Majority Term Lenders and the Overadvance Term Lender.

         1.2      Section 1.1 of the Credit Agreement is further amended by
adding the following definition to such Section in proper alphabetical order:

         Secondary Notes mean the additional notes to be issued monthly by the
Borrowers to the Overadvance Term Lender, in form and substance satisfactory to
the Agent and Overadvance Term Lender, for fees incurred by the Borrowers
pursuant to the terms of the Fifth Amended and Restated Overadvance Term Note.
The Secondary Notes shall be secured by an interest in the Collateral pari passu
with the Overadvance Term Loan.

         1.3      Article 2C to the Credit Agreement is hereby amended by
amending and restating subsection (ii) thereof in its entirety to read as
follows:

                  (ii) at any time that a Initial Overadvance is outstanding,
         and upon receipt of notice from the Agent that Excess Availability is
         less than $6,000,000 (which amount shall include the amount set forth
         in subsection (e) in the definition of Borrowing Base), the Overadvance
         Term Lender will make term loans (each a "Subsequent Overadvance") to
         the Borrowers, as soon as reasonably practicable and in no event more
         than 10 Business Days after receiving such notice from the Agent, each
         in the original principal amount of $5,000,000. In no event may more
         than nine Subsequent Overadvances be outstanding at any time.
         Notwithstanding anything to the contrary contained in Section 4.7B and
         Section 4.11 and provided that no Default or Event of Default then
         exists, Borrowers shall repay the principal amount of one or more
         Subsequent Overadvance(s) if Excess Availability, determined on a pro
         forma basis after giving effect to such payment, would have been equal
         to or greater than $7,000,000 for the five (5) consecutive Business
         Days prior to the date of such prepayment.

         1.4      No Permitted Prepayment of Overadvance Term Loan.

                  Until payment in full of all Postpetition Obligations in
         respect of Revolving Loans, Term Loans and Letter of Credit Obligations
         and termination of the Revolving Commitments pursuant to the provisions
         hereof, and except as provided in Article 2C with respect to the
         repayment of (i) any Initial Overadvance in the event that Excess
         Availability is equal to or greater than $18,000,000 for five (5)
         consecutive Business Days and (ii) any Subsequent Overadvance

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<PAGE>

         in the event that Excess Availability, determined on a pro forma basis
         after giving effect to such payment, would have been equal to or
         greater than $7,000,000 for the five (5) consecutive Business Days
         prior to the date of such prepayment, the Borrowers may not prepay or
         make any other payment or distribution of any kind (in cash, securities
         or otherwise but excluding, in the event there is no Actionable
         Default, payments of accrued and unpaid interest) in respect of or in
         connection with the Overadvance Term Loan at any time in whole or in
         part and all such principal amounts otherwise distributable in respect
         of or in connection with the Overadvance Term Loan shall be paid to the
         Agent for allocation to the Postpetition Obligations in respect of
         Revolving Loans, Letters of Credit Obligations and Term Loans as
         provided herein until all such obligations are indefeasibly paid in
         full in cash and the Revolving Commitments are fully terminated.

         1.5      The following Section 4.7C is hereby added to the Credit
Agreement as follows:

         4.7C No Permitted Prepayment of Secondary Notes.

                  Until payment in full of all Postpetition Obligations in
         respect of Revolving Loans, Term Loans and Letter of Credit Obligations
         and termination of the Revolving Commitments pursuant to the provisions
         hereof, the Borrowers may not prepay or make any other payment or
         distribution of any kind whether at maturity or otherwise, in cash,
         securities or otherwise (but excluding (i) payments of fees by issuance
         of additional Secondary Notes and (ii) in the event there is no
         Actionable Default, payment of interest on such Secondary Notes) in
         respect of or in connection with the Secondary Notes until Agent has
         been indefeasibly paid in full in cash for allocation to the
         Postpetition Obligations in respect of Revolving Loans, Letters of
         Credit Obligations and Term Loans as provided herein and all such
         obligations and the Revolving Commitments are fully terminated.

         1.6      Section 5.2(d) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

                  (d) The Borrowers will have Excess Availability of (i) if no
         Initial Advance is then outstanding, at least $10,000,000 after giving
         effect to such Revolving Loan or Letter of Credit; provided, that if an
         Initial Advance is funded on such day by the Overadvance Term Lender as
         set forth in Article 2C and remains outstanding, then the
         representation and warranty set forth in this Section 5.2(d)(i) will
         not be applicable or (ii) if an Initial Advance is then outstanding, at
         least $5,000,000 after giving effect to such Revolving Loan or Letter
         of Credit; provided, that if all nine of the Subsequent Advances have
         been funded by the Overadvance Term Lender as set forth in Article 2C
         and

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<PAGE>

         remain outstanding, then the representation and warranty set forth in
         this Section 5.2(d)(ii) will not be applicable.

         2.       Conditions Precedent.

         This Amendment becomes effective upon satisfaction of the following
conditions:

         2.1      Amendment Approval Order. This Amendment has been approved by
the Bankruptcy Court pursuant to an order (the "Amendment Approval Order"),
which order is in full force and effect and has not been reversed, modified,
amended, appealed or stayed. Each of the Agent and the Overadvance Term Lender
shall have been satisfied with the form and substance (and the timing of the
notice) of the motion for the entry of the Amendment Approval Order. In
addition, each of the Agent and the Overadvance Term Lender shall have been
satisfied with the form and substance of the Amendment Approval Order.

         2.2      Expenses. The Agent shall have been reimbursed for all fees
and expenses incurred by the Agent in connection with this Amendment.

         2.3      Documents. The Agent has received all of the following, each
duly executed and dated as of the Closing Date (or such other date as is
satisfactory to the Agent) in form and substance satisfactory to the Agent:

                  (a) Nineteenth Amendment. Ten copies of this Amendment
         executed by the LFC Funds Administrator, the Borrowers, the Agent and
         all Lenders;

                  (b) Fifth Amended and Restated Overadvance Term Note. For
         delivery to the Overadvance Term Lender, a Fifth Amended and Restated
         Overadvance Term Note, substantially in the form attached as Annex I
         hereto; and

                  (c) Other. Such other documents as the Agent may reasonably
         request, including but not limited to the Secondary Note in the form
         attached as Annex II hereto.

3.       Representations and Warranties.

         Each of the Borrowers represents and warrants to the Agent and each
Lender that, after giving effect to this Amendment:

         3.1 Representations and Warranties. All representations and warranties
contained in the Credit Agreement and the other Credit Documents are true and
correct in all material respects on and as of the date of this Amendment, in
each case as if then made, other than representations and warranties that
expressly relate solely to an earlier date (in which case such representations
and warranties were true and accurate on and as of such earlier date).

                                       6
<PAGE>

         3.2      Events of Default. No Default or Event of Default has occurred
which has not been waived (or, in the case of an Event of Default, cured) under
the terms of the Credit Agreement.

         3.3      Enforceability. Upon approval by the Bankruptcy Court (as
contemplated by Section 2.1), this Amendment and the Credit Agreement, as
amended by this Amendment, will constitute legal, valid and binding obligations
of the LFC Funds Administrator and each of the Borrowers and will be enforceable
against such Persons in accordance with their respective terms.

         3.4      Consents. The execution and delivery by the LFC Funds
Administrator and each of the Borrowers of this Amendment does not require the
consent or approval of any Person other than the Bankruptcy Court (as
contemplated by Section 2.1), except such consents and approvals as have been
obtained.

         4.       Reference to and Effect on the Credit Agreement and the Other
Credit Documents.

         4.1      References. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder" "hereof",
"herein" or words of like import, and each reference in each of the other Credit
Documents to the "Credit Agreement" shall mean and be a reference to the Credit
Agreement as amended by this Amendment.

         4.2      Ratification. Except as expressly set forth in this Amendment,
all of the terms and conditions of the Credit Agreement and the other Credit
Documents remain in full force and effect and are ratified and confirmed in all
respects. The execution and delivery of this Amendment by the Agent and each of
the Lenders in no way obligates the Agent or any of the Lenders at any time
hereafter to consent to any other amendment or modification of any term or
provision of the Credit Agreement or any of the other Credit Documents, whether
of a similar or different nature.

5.       Governing Law.

         THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT IS
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS AND DECISIONS OF THE
STATE OF NEW YORK.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       7
<PAGE>

6.       Headings; Counterparts.

         Section headings in this Amendment are included for convenience of
reference only and do not constitute a part of this Amendment for any other
purpose. This Amendment may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date first
set forth above.

                                    LFC FUNDS ADMINISTRATOR:

                                    LEVITZ FURNITURE CORPORATION, a Florida
                                    corporation, in its capacity as LFC Funds
                                    Administrator

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    BORROWERS:

                                    LEVITZ FURNITURE CORPORATION, a Florida
                                    corporation, in its individual capacity and
                                    it its capacity as the LFC Funds
                                    Administrator

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    LEVITZ FURNITURE INCORPORATED, a Delaware
                                    corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                       8
<PAGE>

                                    LEVITZ FURNITURE REALTY CORPORATION, a
                                    Florida corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    LEVITZ SHOPPING SERVICE, a Florida
                                    corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    LEVITZ FURNITURE COMPANY OF THE MIDWEST,
                                    INC., a Colorado corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    LEVITZ FURNITURE COMPANY OF THE PACIFIC,
                                    INC., a California corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    LEVITZ FURNITURE COMPANY OF WASHINGTON,
                                    INC., a Washington corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                       9
<PAGE>

                                    LEVITZ FURNITURE COMPANY OF THE MIDWEST
                                    REALTY, INC., a Colorado corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    LEVITZ FURNITURE COMPANY OF THE PACIFIC
                                    REALTY, INC., a California corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    LEVITZ FURNITURE COMPANY OF WASHINGTON
                                    REALTY, INC., a Washington corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    JOHN M. SMYTH COMPANY, an Illinois
                                    corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                    JOHN M. SMYTH REALTY COMPANY, an Illinois
                                    corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                       10
<PAGE>

                                    LEVITZ FURNITURE COMPANY OF MASSACHUSETTS,
                                    INC., a Massachusetts corporation

                                    By:    /s/ MICHAEL E. MCCREERY
                                          --------------------------------------
                                    Name:  Michael E. McCreery
                                          --------------------------------------
                                    Title: SVP/Chief Financial Officer
                                          --------------------------------------

                                       11
<PAGE>

                                    AGENT:

                                    BT COMMERCIAL CORPORATION, in its capacity
                                    as Agent

                                    By:    /s/ FRANK FAZIO
                                          --------------------------------------
                                    Name:  Frank Fazio
                                          --------------------------------------
                                    Title: Director
                                          --------------------------------------

                                    REVOLVING LENDERS:

                                    BT COMMERCIAL CORPORATION, a Delaware
                                    corporation in its respective capacities as
                                    Revolving Lender and Collateral Agent

                                    By:    /s/ FRANK FAZIO
                                          --------------------------------------
                                    Name:  Frank Fazio
                                          --------------------------------------
                                    Title: Director
                                          --------------------------------------

                                    FINOVA CAPITAL CORPORATION, in its capacity
                                    as Revolving Lender

                                    By:    /s/ GERARD C. WORDELL
                                          --------------------------------------
                                    Name:  Gerard C. Wordell
                                          --------------------------------------
                                    Title: Authorized Signer
                                          --------------------------------------

                                    HELLER FINANCIAL, INC., in its capacity as
                                    Revolving Lender

                                    By:    /s/ DENNIS GRAHAM
                                          --------------------------------------
                                    Name:  Dennis Graham
                                          --------------------------------------
                                    Title: Assistant Vice President
                                          --------------------------------------

                                    LA SALLE NATIONAL BANK ASSOCIATION, in its
                                    capacity as Revolving Lender

                                    By:    /s/ CHRISTOPHER G. CLIFFORD
                                          --------------------------------------
                                    Name:  Christopher G. Clifford
                                          --------------------------------------
                                    Title: Sr. Vice President
                                          --------------------------------------

                                       12
<PAGE>

                                    TRANSAMERICA BUSINESS CREDIT CORPORATIONN,
                                    in its capacity as Revolving Lender

                                    By:    /s/ MICHAEL KEMPEL
                                          --------------------------------------
                                    Name:  Michael Kempel
                                          --------------------------------------
                                    Title: Vice President
                                          --------------------------------------

                                    GMAC BUSINESS CREDIT L.L.C., in its capacity
                                    as Revolving Lender

                                    By:    /s/ THOMAS BRENT
                                          --------------------------------------
                                    Name:  Thomas Brent
                                          --------------------------------------
                                    Title: Vice President
                                          --------------------------------------

                                    OVERADVANCE TERM LENDER:

                                    M.D. SASS CORPORATE RESURGENCE PARTNERS,
                                    L.P.

                                    By:    /s/ ROBERT T. SYMINGTON
                                          --------------------------------------
                                    Name:  Robert T. Symington
                                          --------------------------------------
                                    Title: Managing Director
                                          --------------------------------------

                                       13
<PAGE>

                         ANNEX I TO NINETEENTH AMENDMENT

                   AMENDED AND RESTATED OVERADVANCE TERM NOTE

                                   [Attached]

                                       14
<PAGE>

                FIFTH AMENDED AND RESTATED OVERADVANCE TERM NOTE

$55,000,000.00                                                     July 31, 2000

         FOR VALUE RECEIVED, each of the undersigned, (collectively, the
"Borrowers") jointly and severally promises to pay to the order of M.D. Sass
Corporate Resurgence Partners, L.P. (the "Overadvance Term Lender") at [ADDRESS]
in lawful money of the United States of America and in immediately available
funds at [DESCRIBE ACCOUNT] of the Credit Agreement, the principal amount of
FIFTY FIVE MILLION DOLLARS ($55,000,000.00), or such lesser amount as may then
constitute the unpaid aggregate principal amount of the Overadvance Term Loan
evidenced by this Note, on the Overadvance Maturity Date or such earlier date as
this Note may become due in accordance with the terms of the Credit Agreement
referred to below. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned thereto in the Credit
Agreement.

         Each of the Borrowers further agrees, on a joint and several basis, to
pay to the Overadvance Term Lender (i) interest on the unpaid principal amount
owing hereunder monthly in arrears on the last Business Day of each month of the
Borrowers at an interest rate per annum equal to 16%, from the date hereof until
this Note is paid in full in accordance with its terms and (ii) a fee (the
"Fee") in the amount of seventy-five (75) basis points per month on the
aggregate of (x) the unpaid principal amount owing hereunder plus (y) the
principal amount outstanding of any Secondary Notes referred to below until such
Notes are paid in full in accordance with their terms. The Borrower will pay the
Fee through the issuance of additional notes (the "Secondary Notes") in an
aggregate principal amount equal to the amount of the Fee that would be payable
with respect to this Note, if such Fee was paid in cash. The Secondary Notes
will bear interest and have interest paying features and provisions for cost and
expense reimbursement identical to this Note.

         If any payment on this Note becomes due and payable on a day other than
a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.

         This Note is the Overadvance Term Note referred to in and executed and
delivered pursuant to that certain Postpetition Credit Agreement dated as of
September 5, 1997 (as the same has been modified through (and including) the
nineteenth amendment thereto and as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrowers, the Overadvance Term Lender, certain other financial
institutions as Lenders and BT Commercial Corporation, as Agent.

         The Postpetition Obligations evidenced by this Note are secured by
certain Collateral Documents. Reference is made to such Collateral Documents and
the Credit Agreement for the terms and conditions governing the Collateral which
secured the Postpetition Obligations. Except as provided in the Credit
Agreement, no principal payment or other distribution of any kind (in cash,
securities or otherwise but excluding, (i) in the event there is no Actionable
Default, payment of accrued and unpaid interest and (ii) issuance of Secondary
Notes) shall be made in respect of the Overadvance Term Loan at any time in
whole or in part, and all such principal amounts otherwise distributable in
respect of or in connection with the Overadvance Term Loan shall be paid to the
Agent for allocation to the Postpetition Obligations in respect of Revolving
Loans, Letters of Credit Obligations and Term Loans as provided herein, until
all such Postpetition Obligations owing are indefeasibly paid in full in cash
and the Revolving Commitments are fully terminated. In addition, as provided in
the Credit Agreement and except as set forth in the Credit Agreement, the
Overadvance Term Lender shall be bound by all modifications, extensions of
maturity, waivers and amendments to the Credit Agreement executed by the Agent,
Lenders, Majority Lenders and/or Majority Term Lenders (as applicable) and that
none of same shall require advance notice to, or the consent of, any Overadvance
Term Lender.

                                       15
<PAGE>

         Borrowers promise to pay all reasonable costs and expenses, including
reasonable attorneys fees incurred in the collection and enforcement of this
Note. Borrowers and any endorsers of this Note hereby consent to renewals and
extensions of time to or after the maturity hereof, without notice.

         Each Borrower (and each endorser, guarantor or surety hereof) hereby
waives presentment, demand, protest and notice of any kind. No failure to
exercise and no delay in exercising any rights hereunder on the part of the
holder hereof shall operate as a waiver of such rights.

         THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS NOTE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

         IN WITNESS WHEREOF, each Borrower has caused this Note to be executed
and delivered by such Borrower's duly authorized officer as of the date first
set forth above.

                               LEVITZ FURNITURE CORPORATION, a Florida
                               corporation,

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE INCORPORATED, a Delaware
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE REALTY CORPORATION, a Florida
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ SHOPPING SERVICE, INC., a Florida
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF THE MIDWEST, INC., a
                               Colorado corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF THE PACIFIC, INC., a
                               California corporation

                                       16
<PAGE>

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF WASHINGTON, INC., a
                               Washington corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF THE MIDWEST REALTY,
                               INC., a Colorado corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF THE PACIFIC REALTY,
                               INC., a California corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF WASHINGTON REALTY,
                               INC., a Washington corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               JOHN M. SMYTH COMPANY, an Illinois corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               JOHN M. SMYTH REALTY COMPANY, an Illinois
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                                       17
<PAGE>

                               LEVITZ FURNITURE COMPANY OF MASSACHUSETTS, INC.,
                               a Massachusetts corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                                       18
<PAGE>

                        ANNEX II TO NINETEENTH AMENDMENT

                   AMENDED AND RESTATED FORM OF SECONDARY NOTE

                                   [Attached]

                                       19
<PAGE>

                                Secondary Note #___ for the period ending ______

                          AMENDED AND RESTATED FORM OF

                                 SECONDARY NOTE

                                                                   _______, 2000

         FOR VALUE RECEIVED, each of the undersigned (collectively, the
"Borrowers") jointly and severally promises to pay to the order of M.D. Sass
Corporate Resurgence Partners, L.P. (the "Overadvance Term Lender") at [ADDRESS]
in lawful money of the United States of America and in immediately available
funds at [DESCRIBE ACCOUNT] of the Credit Agreement, the principal amount of
[AMOUNT OF NOTE ($______)], which principal amount shall be equal to the
aggregate of (i) seventy-five (75) basis points on the unpaid aggregate
principal amount of the Overadvance Term Loan evidenced by the Overadvance Term
Note plus (y) seventy-five (75) basis points on the unpaid aggregate principal
amount of any outstanding Secondary Notes previously issued in accordance with
the terms of the Overadvance Term Note, on the Overadvance Maturity Date or such
earlier date as this Note may become due in accordance with the terms of the
Credit Agreement referred to below. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings assigned thereto in
the Credit Agreement.

         Each of the Borrowers further agrees, on a joint and several basis, to
pay to the Overadvance Term Lender interest on the unpaid principal amount owing
hereunder monthly in arrears on the last Business Day of each month of the
Borrowers at an interest rate per annum equal to sixteen percent (16%) from the
date hereof until this Note is paid in full in accordance with its terms, in
like money. Each additional Secondary Note issued pursuant to the Credit
Agreement will bear interest and have interest paying features and provisions
for cost and expense reimbursement identical to this Note.

         If any payment on this Note becomes due and payable on a day other than
a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.

         This Note is one of the Secondary Notes referred to in and executed and
delivered pursuant to that certain Postpetition Credit Agreement dated as of
September 5, 1997 (as the same has been modified through (and including) the
nineteenth amendment thereto and as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrowers, the Overadvance Term Lender, certain other financial
institutions as Lenders and BT Commercial Corporation, as Agent. This Note is
issued, and the obligations evidenced hereby are, in addition to, and not in
payment, replacement or substitution of, any other Secondary Note issued prior
to the date hereof or any obligations evidenced thereby.

         The Postpetition Obligations evidenced by this Note are secured by
certain Collateral Documents. Reference is made to such Collateral Documents and
the Credit Agreement for the terms and conditions governing the Collateral which
secured the Postpetition Obligations. Except as provided in the Credit
Agreement, no principal payment or other distribution of any kind in cash,
securities or otherwise (but excluding, in the event there is no Actionable
Default, payment of interest on this Note) shall be made in respect of the
obligations evidenced by this Note at any time in whole or in part, and all such
principal amounts otherwise distributable in respect of or in connection with
the obligations evidenced hereby shall be paid to the Agent for allocation to
the Postpetition Obligations in respect of Revolving Loans, Letters of Credit
Obligations and Term Loans as provided herein, until all

                                       20
<PAGE>

such Postpetition Obligations owing are indefeasibly paid in full in cash and
the Revolving Commitments are fully terminated. In addition, as provided in the
Credit Agreement and except as set forth in the Credit Agreement, the
Overadvance Term Lender shall be bound by all modifications, extensions of
maturity, waivers and amendments to the Credit Agreement executed by the Agent,
Lenders, Majority Lenders and/or Majority Term Lenders (as applicable) and that
none of same shall require advance notice to, or the consent of, any Overadvance
Term Lender.

         Borrowers promise to pay all reasonable costs and expenses, including
reasonable attorneys' fees incurred in the collection and enforcement of this
Note. Borrowers and any endorsers of this Note hereby consent to renewals and
extensions of time to or after the maturity hereof, without notice.

         Each Borrower (and each endorser, guarantor or surety hereof) hereby
waives presentment, demand, protest and notice of any kind. No failure to
exercise and no delay in exercising any rights hereunder on the part of the
holder hereof shall operate as a waiver of such rights.

         THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS NOTE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.

                                       21
<PAGE>

         IN WITNESS WHEREOF, each Borrower has caused this Note to be executed
and delivered by such Borrower's duly authorized officer as of the date first
set forth above.

                               LEVITZ FURNITURE CORPORATION, a Florida
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE INCORPORATED, a Delaware
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE REALTY CORPORATION, a Florida
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ SHOPPING SERVICE, INC., a Florida
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF THE MIDWEST, INC., a
                               Colorado corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF THE PACIFIC, INC., a
                               California corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF WASHINGTON, INC., a
                               Washington corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                                       22
<PAGE>

                               LEVITZ FURNITURE COMPANY OF THE MIDWEST REALTY,
                               INC., a Colorado corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF THE PACIFIC REALTY,
                               INC., a California corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF WASHINGTON REALTY,
                               INC., a Washington corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               JOHN M. SMYTH COMPANY, an Illinois corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               JOHN M. SMYTH REALTY COMPANY, an Illinois
                               corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                               LEVITZ FURNITURE COMPANY OF MASSACHUSETTS, INC.,
                               a Massachusetts corporation

                               By:
                                      ------------------------------------------
                               Name:  Michael E. McCreery
                                      ------------------------------------------
                               Title: Sr. Vice President/Chief Financial Officer
                                      ------------------------------------------

                                       23

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