Document:

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                                                                  Exhibit 10.13

                           LOAN AND SECURITY AGREEMENT

                                     BETWEEN

                              PARAGON CAPITAL LLC

                                       AND

                              THE WHITE HOUSE, INC.

                                 August 23,2000

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                                TABLE OF CONTENTS

<Table>
<S>                                                                                       <C>
ARTICLE 1 - THE REVOLVING CREDIT .......................................................   -1-

     1-1.   ESTABLISHMENT OF REVOLVING CREDIT ..........................................   -1-

     1-2.   AVAILABILITY ...............................................................   -1-

     1-3.   RISKS OF VALUE OF INVENTORY ................................................   -2-

     1-4.   PROCEDURES UNDER REVOLVING CREDIT ..........................................   -2-

     1-5.   THE LOAN ACCOUNT ...........................................................   -5-

     1-6.   THE MASTER NOTE ............................................................   -6-

     1-7.   PAYMENT OF LOAN ACCOUNT ....................................................   -6-

     1-8.   INTEREST ...................................................................   -6-

     1-9.   FEES .......................................................................   -6-

     1-10.  LENDER'S DISCRETION ........................................................   -8-

     1-11.  FEES FOR L/C'S .............................................................  -10-

     1-12.  CONCERNING L/C'S ...........................................................  -10-

ARTICLE 2 - GRANT OF SECURITY INTEREST .................................................  -12-

     2-1.   GRANT OF SECURITY INTEREST .................................................  -12-

     2-2.   EXTENT AND DURATION OF SECURITY INTEREST ...................................  -13-

ARTICLE 3 - DEFINITIONS ................................................................  -13-

ARTICLE 4 - CONDITIONS PRECEDENT .......................................................  -13-

     4-1.   CORPORATE DUE DILIGENCE ....................................................  -13-

     4-2.   OPINION ....................................................................  -14-

     4-3.   CASH MANAGEMENT AND ADDITIONAL DOCUMENTS ...................................  -14-
</Table>

                                      -ii-
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<S>                                                                                       <C>
     4-4.   KEY LIFE POLICIES ..........................................................  -14-

     4-5.   OFFICERS' CERTIFICATES .....................................................  -14-

     4-6.   REPRESENTATIONS AND WARRANTIES .............................................  -14-

     4-7.   INITIAL MINIMUM EXCESS AVAILABILITY ........................................  -14-

     4-8.   NO EVENT OF DEFAULT ........................................................  -15-

     4-9.   NO MATERIAL ADVERSE CHANGE .................................................  -15-

     4.10.  DELIVERY OF DOCUMENTS ......................................................  -15-

ARTICLE 5 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS ..........................  -15-

     5-1.   PAYMENT AND PERFORMANCE OF LIABILITIES .....................................  -15-

     5-2.   DUE ORGANIZATION - AUTHORIZATION - NO CONFLICTS ............................  -15-

     5-3.   TRADE NAMES ................................................................  -16-

     5-4.   LOCATIONS, LANDLORD'S CONSENTS, WAIVERS ....................................  -17-

     5.5.   TITLE TO ASSETS ............................................................  -18-

     5-6.   INDEBTEDNESS ...............................................................  -18-

     5-7.   INSURANCE POLICIES .........................................................  -19-

     5-8.   LICENSES ...................................................................  -20-

     5-9.   LEASES .....................................................................  -20-

     5-10.  REQUIREMENTS OF LAW ........................................................  -20-

     5-11.  MAINTAIN PROPERTIES ........................................................  -20-

     5-12.  PAY TAXES ..................................................................  -20-

     5-13.  NO MARGIN STOCK ............................................................  -22-

     5-14.  ERISA ......................................................................  -22-
</Table>

                                      -iii-
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<Table>
<S>                                                                                       <C>
     5-15.  HAZARDOUS MATERIALS ........................................................  -22-

     5-16.  LITIGATION .................................................................  -23-

     5-17.  DIVIDENDS OR INVESTMENTS ...................................................  -23-

     5-18.  LOANS ......................................................................  -24-

     5-19.  PROTECTION OF ASSETS .......................................................  -24-

     5-20.  LINE OF BUSINESS ...........................................................  -24-

     5-21.  AFFILIATE TRANSACTIONS .....................................................  -24-

     5-22.  EXECUTIVE PAY ..............................................................  -24-

     5-23.  ADDITIONAL ASSURANCES ......................................................  -25-

     S-24.  ADEQUACY OF DISCLOSURE .....................................................  -26-

     5-25.  MINIMUM EXCESS AVAILABILITY ................................................  -26-

     5-26.  NO MATERIAL ADVERSE CHANGE .................................................  -26-

     5-27.  2000 COMPLIANCE ............................................................  -26-

     5-28.  OTHER COVENANTS ............................................................  -26-

ARTICLE 6 - USE AND COLLECTION OF COLLATERAL ...........................................  -26-

     6-1    USE OF INVENTORY COLLATERAL ................................................  -26-

     6-2.   INVENTORY QUALITY ..........................................................  -27-

     6-3.   ADJUSTMENTS AND ALLOWANCES .................................................  -27-

     6-4.   VALIDITY OF ACCOUNTS .......................................................  -27-

     6-5.   NOTIFICATION TO ACCOUNT DEBTORS ............................................  -27-

ARTICLE 7 - CASH MANAGEMENT ............................................................  -27-
</Table>

                                      -iv-
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<Table>
<S>                                                                                       <C>
     7-1.   DEPOSITORY ACCOUNTS ........................................................  -27-

     7-2.   CREDIT CARD RECEIPTS .......................................................  -28-

     7-3.   THE CONCENTRATION ACCOUNT, THE BLOCKED ACCOUNT AND THE FUNDING ACCOUNTS ....  -29-

     7-4.   PROCEEDS AND COLLECTION OF ACCOUNTS ........................................  -29-

     7-5.   PAYMENT OF LIABILITIES .....................................................  -30-

     7-6.   THE FUNDING ACCOUNT  .......................................................  -30-

ARTICLE 8 - LENDER AS BORROWER'S ATTORNEY-IN-FACT ....................................... -30-

     8-1.   APPOINTMENT AS ATTORNEY-IN-FACT ............................................  -30-

     8-2.   NO OBLIGATION TO ACT .......................................................  -31-

ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL COVENANTS .............  -32-

     9-1.   MAINTAIN RECORDS ...........................................................  -32-

     9-2.   ACCESS TO RECORDS ..........................................................  -32-

     9-3.   IMMEDIATE NOTICE TO LENDER .................................................  -33-

     9-4.   BORROWING BASE CERTIFICATE .................................................  -34-

     9-5.   WEEKLY REPORTS .............................................................  -34-

     9-6.   MONTHLY REPORTS ............................................................  -35-

     9-7.   ANNUAL REPORTS .............................................................  -35-

     9-8.   OFFICERS' CERTIFICATES .....................................................  -35-

     9-9.   INVENTORIES, APPRAISALS, AND AUDITS ........................................  -36-

     9.10   ADDITIONAL FINANCIAL INFORMATION ...........................................  -37-
</Table>

                                       -v-
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<Table>
<S>                                                                                       <C>
     9-11.  FINANCIAL PERFORMANCE AND INVENTORY COVENANTS ..............................  -37-

     9-12.  ELECTRONIC REPORTING........................................................  -37-

ARTICLE 10 - EVENTS OF DEFAULT..........................................................  -37-

     10-1.  FAILURE TO PAY REVOLVING CREDIT  ...........................................  -38-

     10-2.  FAILURE TO MAKE OTHER PAYMENTS .............................................  -38-

     10-3.  FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD) .................  -38-

     10-4.  FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD) ....................  -38-

     10-5.  MISREPRESENTATION ..........................................................  -38-

     10-6.  ACCELERATION OF OTHER DEBT, BREACH OF LEASE ................................  -39-

     10-7.  DEFAULT UNDER OTHER AGREEMENTS  ............................................  -39-

     10-8.  CASUALTY LOS0, NON-ORDINARY COURSE SALES ...................................  -39-

     10-9.  JUDGMENT, RESTRAINT OF BUSINESS ............................................  -39-

     10-10. BUSINESS FAILURE ...........................................................  -39-

     10-11. BANKRUPTCY ................................................................   -39-

     10-12. INSECURITY .................................................................  -40-

     10-13. DEFAULT BY GUARANTOR OR RELATED ENTITY......................................  -40-

     10-14. INDICTMENT - FORFEITURE ....................................................  -40-

     10-15. TERMINATION OF GUARANTY ....................................................  -40-

     10-16. CHALLENGE TO LOAN DOCUMENTS.................................................  -40-

     10-17. EXECUTIVE MANAGEMENT .......................................................  -40-

     10-18. CHANGE IN CONTROL ..........................................................  -41-
</Table>

                                      -vi-
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<Table>
<S>                                                                                       <C>
     10-19. MATERIAL ADVERSE CHANGE ....................................................  -41-

ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT ........................................... -41-

     11-1.  RIGHTS OF ENFORCEMENT ......................................................  -41-

     11-2.  SALE OF COLLATERAL .........................................................  -41-

     11-3.  OCCUPATION OF BUSINESS LOCATION ............................................  -42-

     11-4.  GRANT OF NONEXCLUSIVE LICENSE ..............................................  -42-

     11-5.  ASSEMBLY OF COLLATERAL .....................................................  -43-

     11-6.  RIGHTS AND REMEDIES ........................................................  -43-

ARTICLE 12 - NOTICES ...................................................................  -43-

     12-1.  NOTICE ADDRESSES ...........................................................  -43-

     12-2.  NOTICE GIVEN ...............................................................  -44-

ARTICLE 13 - TERM ......................................................................  -44-

     13-1.  TERMINATION OF REVOLVING CREDIT ............................................  -45-

     13-2.  EFFECT OF TERMINATION ......................................................  -45-

     13-3.  PREPAYMENT PREMIUM .........................................................  -45-

ARTICLE 14 - GENERAL....................................................................  -46-

     14-1.  PROTECTION OF COLLATERAL ...................................................  -46-

     14-2.  SUCCESSORS AND ASSIGNS .....................................................  -46-

     14-3.  SEVERABILITY ...............................................................  -46-

     14-4.  AMENDMENTS, COURSE OF DEALING ...... .......................................  -46-

     14-5.  POWER OF ATTORNEY ..........................................................  -47-

     14-6.  APPLICATION OF PROCEEDS ....................................................  -47-
</Table>

                                      -vii-
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<Table>
     <S>                                                                                  <C>
     14-7.  LENDER'S COSTS AND EXPENSES ................................................  -47-

     14-8.  COPIES AND FACSIMILES ......................................................  -47-

     14-9.  MASSACHUSETTS LAW ..........................................................  -48-

     14-10. CONSENT TO JURISDICTION ....................................................  -48-

     14-11. INDEMNIFICATION ............................................................  -48-

     14-12. RIGHT OF SET-OFF ...........................................................  -49-

     14-13. USURY SAVINGS CLAUSE .......................................................  -49-

     14-14. WAIVERS ....................................................................  -50-

     14-15. CONFIDENTIALITY ............................................................  -50-

     14-16. RIGHT TO PUBLISH NOTICE ....................................................  -51-

     14-17. ENTITIES RELATED TO LENDER .................................................  -51-

     14-18. CREDIT INQUIRIES ...........................................................  -51-
</Table>

                                     -viii-
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                                    EXHIBITS

1-6         Master Note
3           Definitions
5-2         Related Entities
5-3         Trade Names
5-4         Locations
5-5         Encumbrances
5-6         Indebtedness
5-7         Insurance Policies
5-9         Leases
5-12        Taxes
5-16        Litigation
7-1         DDA's
7-2         Credit Card Arrangements
9-4         Borrowing Base Certificate
9-10        Business Plan
9-11        Financial Performance Covenants
9-R         Financial Reporting

                                      -ix-
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     THIS AGREEMENT is made between Paragon Capital LLC (hereinafter, "PARAGON"
OR "LENDER"), a Delaware limited liability company with its principal executive
offices at Hillsite Office Building, 75 Second Avenue, Suite 400, Needham,
Massachusetts 02494 and The White House, Inc. (hereinafter, the "BORROWER"), a
Maryland corporation with its principal executive offices at 6711 Baymeadow
Drive, Glen Burnie, Maryland 21060 in consideration of the mutual covenants
contained herein and benefits to be derived herefrom,

                                   WITNESSETH:

ARTICLE 1 - THE REVOLVING CREDIT

     1-1.   ESTABLISHMENT OF REVOLVING CREDIT.

            (a)   The Lender establishes a revolving line of credit (the
"REVOLVING CREDIT") in the Borrower's favor pursuant to which the Lender,
subject to, and in accordance with, this Agreement, shall make loans and
advances and otherwise provide financial accommodations to and for the account
of the Borrower as provided herein. The amount of the Revolving Credit shall be
determined by the Lender by reference to Availability, as determined by the
Lender from time to time hereafter. All loans made by the Lender under this
Agreement, and all of the Borrower's other Liabilities to the Lender under or
pursuant to this Agreement, are payable as provided herein.

            (b)   The Lender agrees, subject to the terms and conditions of this
Agreement, to make loans to the Borrower in an amount outstanding not to exceed
Availability at any one time.

            (c)   Availability shall be based upon Borrowing Base Certificates
furnished as provided in Section 9-4, below.

            (d)   Anything to the contrary in Section 1-1(b) above
notwithstanding, Lender, in the exercise of its discretion, may reduce Advance
Rates or create Reserves without declaring an Event of Default if it determines
that (i) there has occurred a Material Adverse Change; or (ii) Borrower is not
in compliance with covenants set forth in EXHIBIT 9-11.

            (e)   The proceeds of loans and advances under the Revolving Credit
shall be used solely in accordance with the Business Plan for working capital
purposes of the Borrower and for its Capital Expenditures, all solely to the
extent permitted by this Agreement.

     1-2.   AVAILABILITY. The Lender does not have any obligation to make any
loan or advance, or otherwise to provide any credit for the benefit of the
Borrower such that the outstanding principal balance of the Loan Account exceeds
Availability. The making of loans, advances, and credits and the providing of
financial accommodations in excess of Availability is for the benefit of the
Borrower and does not affect the obligations of the Borrower hereunder; such
loans, advances, credits, and financial accommodations constitute Liabilities.
The making of any such loans, advances, and credits and the providing of
financial accommodations, on any one occasion such that Availability is exceeded
shall not obligate the Lender to make any such loans, credits, or advances

<Page>

or to provide any financial accommodation on any other occasion nor to permit
such loans, credits, or advances to remain outstanding.

     1-3.   RISKS OF VALUE OF INVENTORY. The Lender's reference to a given asset
in connection with the making of loans and advances and the providing of
financial accommodations under the Revolving Credit and/or the monitoring of
compliance with the provisions hereof shall not be deemed a determination by the
Lender relative to the actual value of the asset in question. All risks
concerning the saleability of the Inventory are and remain upon the Borrower.
All Collateral secures the prompt, punctual, and faithful performance of the
Liabilities whether or not relied upon by the Lender in connection with the
making of loans, credits, and advances and the providing of financial
accommodations under the Revolving Credit.

     1-4.   PROCEDURES UNDER REVOLVING CREDIT.

            (a)   The Borrower may request loans and advances under the
Revolving Credit, each in an amount of not less than Ten Thousand ($10,000)
Dollars. Each such request shall be in such manner as may from time to time be
acceptable to the Lender.

            (b)   The Lender, subject to the terms and conditions of this
Agreement, will provide the Borrower with the loan or advance so requested, if
such request is received by 11:30 A.M., Boston time on a Banking Day, by the
end of business on that Banking Day; otherwise, by the end of the then next
Banking Day. The Lender may revise such schedule, from time to time, by giving
notice to Borrower at least one day in advance.

            (c)   Provided that Availability will not be exceeded (but subject,
however, to Subsection 1-4(i), below (which deals with the effect of a
Suspension Event)), a loan or advance under the Revolving Credit so requested by
the Borrower shall be made by the transfer of the proceeds of such loan or
advance to the Funding Account.

            (d)   A loan or advance shall be deemed to have been made under the
Revolving Credit upon:

                  (i)    The Lender's initiation of the transfer of the proceeds
of such loan or advance in accordance with the Borrower's instructions (if such
loan or advance is of funds requested by the Borrower).

                  (ii)   The charging of the amount of such loan or advance to
the Loan Account (in all other circumstances).

            (e)   There shall not be any recourse to, nor liability of, the
Lender on account of:

                  (i)    Any delay in the making of any loan or advance
requested under the Revolving Credit.

                                       -2-
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                  (ii)   Any delay in the proceeds of any such loan or advance
constituting collected funds.

                  (iii)  Any delay in the receipt, and/or any loss, of funds
which constitute a loan or advance under the Revolving Credit, the wire transfer
of which was initiated by the Lender in accordance with wire instructions
provided to the Lender by the Borrower.

            (f)   The Lender may rely on any request for a loan or advance or
financial accommodation which the Lender, in good faith, believes to have been
made by a person duly authorized to act on behalf of the Borrower and may
decline to make any such requested loan or advance or to provide any such
financial accommodation until the Lender is furnished with such documentation
concerning that Person's authority to act as may be satisfactory to the Lender.

            (g)   A request by the Borrower for any loan or advance or financial
accommodation under the Revolving Credit or of the issuance of an L/C shall be
irrevocable and shall constitute certification by the Borrower that as of the
date of such request, each of the following is true and correct:

                  (i)    There has been no Material Adverse Change.

                  (ii)   The Borrower is in compliance with, and has not
breached any of, its covenants contained in this Agreement.

                  (iii)  Each representation which is made herein or in any of
the Loan Documents is then true and complete as of and as if made on the date of
such request.

                  (iv)   No Suspension Event is then in existence.

            (h)   The Borrower shall immediately become indebted to the Lender
for the amount of each loan or advance under or pursuant to this Agreement when
such loan or advance is deemed to have been made.

            (i)   Upon the occurrence from time to time of any Suspension Event,
the Lender may suspend the Revolving Credit immediately and shall not be
obligated, during such suspension, to make any loan or advance or to provide any
financial accommodation hereunder.

            (j)   The Borrower may request that the Lender cause the issuance of
L/C's for the account of the Borrower.

                  (i)    Each such request shall be in such manner as may from
time to time be acceptable to the Lender.

                                       -3-
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                  (ii)   The Lender will endeavor to cause the issuance of any
L/C so requested by the Borrower, provided that the requested L/C is in form
satisfactory to the Lender and if so issued:

                         (A)    The aggregate Stated Amount of all L/C's then
                                outstanding, does not exceed Two Million
                                ($2,000,000.00) Dollars.

                         (B)    The expiry of the L/C is not later than the
                                earlier of thirty (30) days prior to the
                                Maturity Date or the following:

                                (I)    L/C's other than Documentary L/C's: One
                                       (1) year from initial issuance.

                                (II)   Documentary L/C's: ninety (90) days from
                                       issuance, or such longer period as may be
                                       agreed to in advance by the Lender, and

                         (C)    Availability would not be exceeded.

                  (iii)  The Borrower shall execute such documentation to apply
for and support the issuance of an L/C as may be required by the Issuer.

                  (iv)   There shall not be any recourse to, nor liability of,
the Lender on account of:

                         (A)    Any delay or refusal by an Issuer to issue an
                                L/C.

                         (B)    Any action or inaction of an Issuer on account
                                of or in respect to, any L/C.

                  (v)    The Borrower shall reimburse the Issuer, immediately
upon the drawing under any L/C, for the amount of such drawing. In the event
that the Borrower fails to so reimburse the Issuer, the Borrower immediately
shall reimburse the Lender for the amount of such drawing. To the extent which
the Borrower fails to so reimburse the Issuer or the Lender, the Lender, without
the request of the Borrower, may advance under the Revolving Credit any amount
which the Borrower is so obligated to pay to the Lender or the Issuer, or for
which the Borrower, the Issuer, or the Lender becomes obligated on account of,
or in respect to, any L/C. Such advance shall be made whether or not a
Suspension Event is then in existence or such advance would result in
Availability being exceeded. Such action shall not constitute a waiver of the
Lender's rights under Section l-7(b), below.

                                       -4-
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     1-5.   THE LOAN ACCOUNT.

            (a)   An account ("LOAN ACCOUNT") shall be opened on the books of
the Lender in which Loan Account a record may be kept of all loans made under or
pursuant to this Agreement and of all payments thereon.

            (b)   The Lender may also keep a record (either in the Loan Account
or elsewhere, as the Lender may from time to time elect) of all interest, fees,
service charges, costs, expenses, and other debits owed the Lender on account of
the Liabilities and of all credits against such amounts so owed.

            (c)   All credits against the Liabilities shall be conditional upon
final payment to the Lender of the items giving rise to such credits. The amount
of any item credited against the Liabilities which is charged back against the
Lender for any reason or is not so paid shall be a Liability and shall be added
to the Loan Account, whether or not the item so charged back or not so paid is
returned.

            (d)   Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which the Borrower is obligated hereunder are
payable on demand. In the determination of Availability, the Lender may deem
fees, service charges, accrued interest, and other payments or deposits as
having been advanced under the Revolving Credit if such amounts are then due and
payable inclusive of deposits for fees whether incurred at the time of deposit
or as duly accounted for in accordance with the terms set forth herein.

            (e)   The Lender, without the request of the Borrower, may advance
under the Revolving Credit any interest, fee, service charge, or other payment
to which the Lender is entitled from the Borrower pursuant hereto and may charge
the same to the Loan Account notwithstanding that such amount so advanced may
result in an Overadvance. Such action on the part of the Lender shall not
constitute a waiver of the Lender's rights under Section 1-7(b), below. Any
amount which is added to the principal balance of the Loan Account as provided
in this Section shall bear interest at the interest rate applicable from time to
time to the unpaid principal balance of the Loan Account.

            (f)   Any statement rendered by the Lender to the Borrower
concerning the Liabilities shall be considered correct and accepted by the
Borrower and shall be conclusively binding upon the Borrower unless the Borrower
provides the Lender with written objection thereto within forty-five (45) days
from the mailing of such statement, which written objection shall indicate, with
particularity, the reason for such objection. The Loan Account and the Lender's
books and records concerning the loan arrangement contemplated herein and the
Liabilities shall be prima facie evidence and proof of the items described
therein.

                                       -5-
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     1-6.   THE MASTER NOTE. The obligation to repay loans and advances under
the Revolving Credit, with interest as provided herein, may be evidenced by a
note (the "MASTER NOTE") in the form of EXHIBIT 1-6, annexed hereto, executed by
the Borrower. Neither the original nor a copy of the Master Note shall be
required, however, to establish or prove any Liability. In the event that the
Master Note is ever lost, mutilated, or destroyed, the Borrower shall execute a
replacement thereof and deliver such replacement to the Lender.

     1-7.   PAYMENT OF LOAN ACCOUNT.

            (a)   The Borrower may repay all or any portion of the principal
balance of the Loan Account from time to time until the Termination Date.

            (b)   The Borrower, without notice or demand from the Lender, shall
pay the Lender that amount, from time to time, which is necessary so that the
balance of the Loan Account does not exceed Availability.

            (c)   The Borrower shall pay the then entire unpaid balance of the
Loan Account and all other Liabilities on the Termination Date.

     1-8.   INTEREST.

            (a)   The unpaid principal balance of the Loan Account shall bear
interest, until repaid (calculated based upon a 360-day year and actual days
elapsed), at the aggregate of Base plus the Applicable Margin. In no event shall
interest accrue at less than eight (8%) percent per annum or in excess of the
maximum rate permitted by applicable law.

            (b)   Following the occurrence of any Event of Default (and whether
or not the Lender exercises any of the Lender's rights on account of such Event
of Default), at the election of the Lender, and upon notice to the Borrower, all
loans and advances made under the Revolving Credit shall bear interest, through
the End Date, unless waived by the Lender in its reasonable discretion, at a
rate which is the aggregate of that provided for in Section l-8(a), above, plus
three (3%) percent per annum.

            (c)   Accrued interest shall be payable:

                  (i)    Monthly in arrears on the first day of the month next
following that during which such interest accrued.

                  (ii)   On the Termination Date.

                  (iii)  On the End Date.

     1-9.   FEES. Borrower shall pay to the Lender the following fees:

                                       -6-
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            (a)   Annual Facility Fee. (i) Except as set forth in subsection
(ii), below, annually as of the date that each payment is due, the Agent shall
have earned a facility fee in the amount of the payment to be made for such
year. The first such payment shall be made thirty (30) days after the first
anniversary of the date of execution hereof and each subsequent payment shall be
made thirty (30) days after each subsequent anniversary of the date of execution
hereof. The annual facility fee shall be in an amount equal to that percent of
the Credit Limit - Special Subline described below:

<Table>
<Caption>
              Loan Year               % of Credit Limit - Special Subline
              ---------               -----------------------------------
         <S>                                           <C>
                  1                                    1.50%
                  2                                    1.50%
                  3                                    1.25%
                  4                                    1.00%
         Each Year Thereafter                           .75%
</Table>

            (i)   The Lender shall waive the Annual Facility Fee for any year,
if in the prior twelve (12) month period, the Borrower achieves EBITDA which
shows a negative variance of not more than the greater of (i) $400,000.00, or
(ii) fifteen percent (15%) multiplied by EBITDA projections for such year.

            (b)   Collateral Monitoring Fee. On the date of execution hereof,
and on each anniversary date hereof, an annual Collateral Monitoring Fee in the
amount of $36,000.00 per year will have been fully earned. Such fee shall be
payable monthly, in installments of $3,000.00 each, on the first day of each
month, commencing October 1, 2000. Any unpaid portion of the annual Collateral
Monitoring Fee shall be due and payable in full on the Termination Date. In
addition, the Borrower shall pay a collateral monitoring fee equal to $4,000.00
per month for any months during which there were advances under the Special
Subline. Except for reports required pursuant to Section 9-4, in any instance
where reporting as outlined in Article 9 is received by Lender beyond the period
set forth therein, Borrower shall pay, in addition to the then payable portion
of the collateral monitoring fee for the then subject month, an additional fee
equal to the amount payable under the Standard Line and the Special Subline. In
the event of two (2) consecutive months of late or incomplete reporting, the
collateral monitoring fee shall, at the election of the Lender, to be exercised
reasonably, increase thereafter, unless waived by the Lender, by Five Thousand
($5,000) Dollars per month plus twice the amount payable as set forth above
until such time as the Borrower demonstrates two (2) consecutive months of
timely and complete reporting.

            (c)   Origination Fee. On the date of execution hereof, an
origination fee of Thirty Thousand Dollars ($30,000.00) will have been fully
earned. The Origination Fee shall be payable as follows: $30,000.00 shall be
payable on December 20, 2000. In addition to the above payment, at such time as
the aggregate of the principal amount of the Revolving Credit and the Stated
Amount of all L/C's outstanding is equal to or greater than $2,500,000.00, and
for each incremental increase

                                       -7-
<Page>

of $1,500,000.00 thereafter, the Borrower shall pay to the Lender the sum of
$16,500.00 until the Origination Fee is paid in full.

            (d)   Financial Examination, Legal Investigation, Documentation, and
Appraisal Fees. Subject to the provisions of Article 9-9, Lender's actual
charges paid or incurred for each financial analysis and examination (i.e.,
audits) of Borrower performed by personnel employed by Lender; Lender's
reasonable actual charges paid or incurred for each appraisal of the Collateral
performed by personnel employed by Lender; and, the actual charges paid or
incurred by Lender if it elects to employ the services of one or more third
Persons to perform legal investigation, documentation financial analysis and
examinations (i.e., audits) of Borrower or to appraise the Collateral.

            (e)   In addition to any other right to which the Lender is then
entitled on account thereof, subject to prior written notice given by the Lender
to the Borrower, the Lender may assess an additional fee payable by the Borrower
on account of the material accommodation of Lender to the Borrower's request
that the Lender depart or dispense with one or more of the administrative
provisions of this Agreement and/or the Borrower's failure to comply with any of
such provisions.

                  (i)    By way of non-exclusive example, the Lender may assess
a fee on account of any of the following:

                         (A)    The Borrower's failure to pay that amount which
                                is necessary so that the principal balance of
                                the Loan Account does not exceed Availability
                                (as required under Section l-7(b), above).

                         (B)    The providing of a loan or advance under the
                                Revolving Credit such that Availability would be
                                exceeded.

                         (C)    The providing of a same Banking Day loan
                                requested after the time set forth in Section
                                1-4(b)(i), above.

                         (D)    The Borrower's failure to provide a financial
                                statement or report within the applicable
                                time-frame provided for such report under
                                Article 9, below.

                  (ii)   The inclusion of the foregoing right on the part of the
Lender to assess a fee does not constitute an obligation, on the part of the
Lender, to waive any provision of this Agreement under any circumstances. The
assessment of any such fee in any particular circumstance shall not constitute
the Lender's waiver of any breach of this Agreement on account of which such fee
was assessed nor a course of action on which the Borrower may rely.

            (f)   The Borrower shall not be entitled to any credit, rebate or
repayment of any Annual Facility Fee, Collateral Monitoring Fee, Origination
Fee, or other fee previously earned by

                                       -8-
<Page>

the Lender pursuant to this Section notwithstanding any termination of this
Agreement or suspension or termination of the Lender's obligation to make loans
and advances hereunder.

     1-10.  LENDER'S DISCRETION.

            (a)   Each reference in the Loan Documents to the exercise of
discretion or the like by the Lender shall be to that Lender's exercise of its
judgement, in good faith (which shall be presumed), based upon that Lender's
consideration of any such factor as the Lender, taking into account information
of which that Lender then has actual knowledge, believes:

                  (i)    Will or reasonably could be expected to affect the
value of the Collateral, the enforceability of the Lender's security and
collateral interests therein, or the amount which the Lender would likely
realize therefrom (taking into account delays which may possibly be encountered
in the Lender's realizing upon the Collateral and likely Costs of Collection).

                  (ii)   Indicates that any report or financial information
delivered to the Lender by or on behalf of the Borrower is incomplete,
inaccurate, or misleading in any material manner or was not prepared in
accordance with the requirements of this Agreement.

                  (iii)  Suggests an increase in the likelihood that the
Borrower will become the subject of a bankruptcy or insolvency proceeding.

                  (iv)   Constitutes a Suspension Event.

            (b)   In the exercise of such judgement, the Lender also may take
into account any of the following factors:

                  (i)    Those included in, or tested by, the definitions of
"ACCEPTABLE INVENTORY", "RETAIL", and "COST".

                  (ii)   The current financial and business climate of the
industry in which the Borrower competes (having regard for the Borrower's
position in that industry).

                  (iii)  General economic conditions which have a material
effect on cost structure.

                  (iv)   Material changes in or to the mix of the Borrower's
Inventory.

                  (v)    Seasonality with respect to the Borrower's Inventory
and pattern of the Borrower's retail sales versus that which was projected.

                  (vi)   Material Changes in Availability versus that which was
projected.

                                       -9-
<Page>

                  (vii)  Such other factors as the Lender determines as having a
material bearing on credit risks associated with the providing of loans and
financial accommodations to the Borrower.

            (c)   The burden of establishing the failure of the Lender to have
acted in a reasonable manner in such Lender's exercise of discretion shall be
the Borrower's.

     1-11.  FEES FOR L/C'S.

            (a)   During any month in which any L/Cs have been issued or are
undrawn, the Borrower shall pay to the Lender a monthly fee equal to one
percent (1%) per month of the average amount of issued and undrawn L/Cs.

            (b)   In addition to the fee to be paid as provided in Subsection
1-11 (a), above, the Borrower shall pay to the Lender (or to the Issuer, if so
requested by the Lender), on demand, all issuance, processing, negotiation,
amendment, and administrative fees and other amounts charged by the Issuer on
account of, or in respect to, any L/C.

     1-12.  CONCERNING L/C'S.

            (a)   None of the Issuer, the Issuer's correspondents, or any
advising, negotiating, or paying bank with respect to any L/C shall be
responsible in any way for:

                  (i)    The performance by any beneficiary under any L/C of
that beneficiary's obligations to the Borrower.

                  (ii)   The form, sufficiency, correctness, genuineness,
authority of any person signing; falsification; or the legal effect of; any
documents called for under any L/C if such documents on their face appear to be
in order.

            (b)   The Issuer may honor, as complying with the terms of any L/C
and of any drawing thereunder, any drafts or other documents otherwise in order,
but signed or issued by an administrator, executor, conservator, trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
liquidator, receiver, or other legal representative of the party authorized
under such L/C to draw or issue such drafts or other documents.

            (c)   Unless otherwise agreed to, in the particular instance, the
Borrower hereby authorizes any Issuer to:

                  (i)    Select an advising bank, if any.

                  (ii)   Select a paying bank, if any.

                                      -10-
<Page>

                  (iii)  Select a negotiating bank.

            (d)   All directions, correspondence, and funds transfers relating
to any L/C are at the risk of the Borrower. The Issuer shall have discharged the
Issuer's obligations under any L/C which, or the drawing under which, includes
payment instructions, by the initiation of the method of payment called for in,
and in accordance with, such instructions (or by any other commercially
reasonable and comparable method). Neither the Lender nor the Issuer shall have
any responsibility for any inaccuracy, interruption, error, or delay in
transmission or delivery by post, telegraph or cable, or for any inaccuracy of
translation.

            (e)   The Lender's and the Issuer's rights, powers, privileges and
immunities specified in or arising under this Agreement are in addition to any
heretofore or at any time hereafter otherwise created or arising, whether by
statute or rule of law or contract.

            (f)   Except to the extent otherwise expressly provided hereunder or
agreed to in writing by the Issuer and the Borrower, the L/C will be governed by
the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce, Publication No.500, and any subsequent
revisions thereof.

            (g)   If any change in any law, executive order or regulation, or
any directive of any administrative or governmental authority (whether or not
having the force of law), or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration
thereof, shall either:

                  (i)    Impose, modify or deem applicable any reserve, special
deposit or similar requirements against letters of credit heretofore or
hereafter issued by any Issuer or with respect to which the Lender or any Issuer
has an obligation to lend to fund drawings under any L/C.

                  (ii)   Impose on any Issuer any other condition or
requirements relating to any such letters of credit; and the result of any event
referred to in Section 1-12(g)(i) or 1-12(g)(ii), above, shall be to increase
the cost to any Issuer of issuing or maintaining any L/C (which increase in cost
shall be the result of such Issuer's reasonable allocation among that Issuer's
letter of credit customers of the aggregate of such cost increases resulting
from such events), then, upon demand by the Lender and delivery by the Lender to
the Borrower of a certificate of an officer of the subject Issuer describing
such change in law, executive order, regulation, directive, or interpretation
thereof, its effect on such Issuer, and the basis for determining such increased
costs and their allocation, the Borrower shall immediately pay to the Lender,
from time to time as specified by the Lender, such amounts as shall be
sufficient to compensate such Issuer for such increased cost. Any Issuer's
determination of costs incurred under Section 1-12(g)(i) or 1-12(g)(ii),
above, and the allocation, if any, of such costs among the Borrower and other
letter of credit customers of such Issuer, if done in good faith and made on an
equitable basis and in accordance with the officer's certificate, shall be
conclusive and binding on the Borrower.

                                      -11-
<Page>

            (h)   The obligations of the Borrower under this Agreement with
respect to L/C's are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all circumstances
whatsoever including, without limitation, the following:

                  (i)    Any lack of validity or enforceability or restriction,
restraint, or stay in the enforcement of this Agreement, any L/C, or any other
agreement or instrument relating thereto.

                  (ii)   Any amendment or waiver of, or consent to the departure
from, any L/C.

                  (iii)  The existence of any claim, set-off, defense, or other
right which the Borrower may have at any time against the beneficiary of any
L/C.

                  (iv)   Any honoring of a drawing under any L/C, which drawing
possibly could have been dishonored based upon a strict construction of the
terms of the L/C.

                  (v)    The Borrower shall not present to Lender or cause the
amendment of an L/C without satisfactory evidence of one or more of the
following: (a) change in delivery date; (b) Borrower's receipt of partial
shipment; or (c) change to original order reflected in OTB (open to Buy) or
other information which may be so reasonably requested by the Lender.

            (i)   In no event, shall Lender or Issuer have any obligation to
honor any L/C presented for payment after its expiration. In the event no
payment has been made, the Stated Amount of such L/C shall continue to be
deducted from Availability for thirty (30) days beyond expiration of said L/C.

ARTICLE 2 - GRANT OF SECURITY INTEREST

     2-1.   GRANT OF SECURITY INTEREST. To secure the Borrower's prompt,
punctual, and faithful performance of all and each of the Liabilities, the
Borrower hereby grants to the Lender a continuing security interest in and to,
and assigns to the Lender, the following, and each item thereof, whether now
owned or now due, or in which the Borrower has an interest, or hereafter
acquired, arising, or to become due, or in which the Borrower obtains an
interest (all of which, together with any other property in which the Lender may
in the future be granted a security interest, is referred to herein as the
"COLLATERAL"):

            (a)   All Inventory.

            (b)   All Accounts, accounts receivable, contracts, contract rights,
notes, bills, drafts, acceptances, General Intangibles, Instruments, Documents,
Document of Title, Chattel Paper, securities, Security Entitlements, Security
Accounts, Investment Property, choses in action, and all other debts,
obligations and liabilities in whatever form, owing to Borrower from any Person,
firm

                                      -12-
<Page>

or corporation or any other legal entity, whether now existing or hereafter
arising, now or hereafter received by or belonging or owing to Borrower, for
goods sold by it or for services rendered by it, or however otherwise same may
have been established or created, all guarantees and securities therefor, all
right, title and interest of Borrower in the merchandise or services which gave
rise thereto, including the rights of reclamation and stoppage in transit, all
rights to replevy goods, and all rights of an unpaid seller of merchandise or
services.

            (c)   All machinery, Equipment, Fixtures and other Goods whether now
owned or hereafter acquired by the Borrower and wherever located, all
replacements and substitutions therefor or accessions thereto and all proceeds
thereof.

            (d)   Leasehold Interests and rights of occupancy.

            (e)   Real Estate.

            (f)   All proceeds, products, substitutions and accessions of or to
any of the foregoing in any form, including, without limitation, all proceeds,
refunds and premium rebates of credit, fire or other insurance, and also
including, without limitation, rents and profits resulting from the temporary
use of any of the foregoing.

     2-2.   EXTENT AND DURATION OF SECURITY INTEREST. This grant of a security
interest is in addition to, and supplemental of, any security interest
previously granted by the Borrower to the Lender and shall continue in full
force and effect applicable to all Liabilities until all Liabilities have been
paid and/or satisfied in full and the security interest granted herein is
specifically terminated in writing by a duly authorized officer of the Lender.

ARTICLE 3 - DEFINITIONS

     All capitalized terms used in this agreement which are not otherwise
defined herein or in the UCC shall have the meanings assigned to them in
EXHIBIT 3, annexed hereto.

ARTICLE 4 - CONDITIONS PRECEDENT

     The effectiveness of this Agreement, the establishment of the Revolving
Credit, and the making of the first loan under the Revolving Credit, is
conditioned upon the delivery to Lender of the documents described below, each
in form and substance satisfactory to the Lender, and the satisfaction of the
conditions described below:

     4-1.   CORPORATE DUE DILIGENCE.

            (a)   A Certificate of legal existence and good standing issued by
the Secretary of State or other governing authority of the State of Borrower's
legal formation.

                                      -13-
<Page>

            (b)   Certificates of due qualification and good standing, issued by
the Secretary(ies) of State or other governing authority of each state in which
the nature of the Borrower's business conducted or assets owned could require
such qualification.

            (c)   A Certificate of the Borrower's secretary, clerk or otherwise
authorized officer or other Person attesting to the due adoption, continued
effectiveness, and setting forth the texts of, each resolution or authorization
adopted in connection with the establishment of the loan arrangement
contemplated by the Loan Documents and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.

     4-2.   OPINION. An opinion of counsel to the Borrower in form and substance
satisfactory to Lender and Lender's counsel.

     4-3.   CASH MANAGEMENT AND ADDITIONAL DOCUMENTS. Such additional
instruments and documents including, without limitation, an agreement for the
Blocked Account executed by the Borrower, Lender and the applicable bank,
agreements with Borrower's credit card processors and/or other credit service
providers executed by the Borrower, Lender and each such processor or service
provider, and any other notices or agreements required under Article 7 hereof,
as the Lender or its counsel reasonably may require or request, in each case in
form and substance satisfactory to Lender and its counsel.

     4-4.   KEY LIFE POLICIES. Intentionally deleted.

     4-5.   OFFICERS' CERTIFICATES. Certificates executed by the president or
chief executive officer and the chief financial officer of the Borrower and
stating that the representations and warranties made by the Borrower to the
Lender in the Loan Documents are true and complete as of the date of such
Certificate, and that no event has occurred which is or which, solely with the
giving of notice or passage of time (or both) would be an Event of Default.

     4-6.   REPRESENTATIONS AND WARRANTIES. Each of the representations made by
or on behalf of the Borrower in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by and
or on behalf of the Borrower shall be true and complete as of the date as of
which such representation or warranty was made.

     4-7.   INITIAL MINIMUM EXCESS AVAILABILITY. Availability, after giving
effect to the first loans and advances to be made under the Revolving Credit;
any charges to the Loan Account made in connection with the establishment of the
credit facility contemplated hereby; and L/C's to be issued at, or immediately
subsequent to, the establishment of such Revolving Credit, is not less than One
Million ($1,000,000.00) Dollars.

     4-8.   NO EVENT OF DEFAULT. No event shall have occurred, or failed to
occur, which occurrence or which failure constitutes, or which, solely with the
passage of time or the giving of notice (or both) would constitute, an Event of
Default.

                                      -14-
<Page>

     4-9.   NO MATERIAL ADVERSE CHANGE. No Material Adverse Change has occurred.

     4-10.  DELIVERY OF DOCUMENTS. No document shall be deemed delivered to the
Lender until received and accepted by the Lender at its head offices in Needham,
Massachusetts. Under no circumstances will this Agreement take effect until
executed and accepted by the Lender at said head office. In the event that
Lender agrees to make the initial advance or any subsequent advance hereunder,
prior to Borrower's delivery of any documents required under this Article 4 or
otherwise by this Agreement, an additional fee, equal to the greater of one-half
of one (0.5%) percent of the then outstanding amount of the Loan Account or Five
Hundred ($500) Dollars shall be payable weekly on Thursday until such time as
all such documents are provided.

ARTICLE 5 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

     To induce the Lender to establish the loan arrangement contemplated herein
and to make loans and advances and to provide financial accommodations under the
Revolving Credit (each of which loans shall be deemed to have been made in
reliance thereupon) the Borrower, in addition to all other representations,
warranties, and covenants made by the Borrower in any other Loan Document, makes
those representations, warranties, and covenants included in this Agreement.

     5-1.   PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrower shall pay each
Liability due Lender when due (or when demanded if payable on demand) and shall
promptly, punctually, and faithfully perform each other Liability due Lender and
pay each Liability due others in accordance with its current custom and
practice. If Borrower has any dispute with respect to any Liability, Borrower
shall give Paragon notice of said dispute.

     5-2.   DUE ORGANIZATION - AUTHORIZATION - NO CONFLICTS.

            (a)   The Borrower presently is and shall hereafter remain in good
standing as a legal entity in the state in which it is legally formed and is and
shall hereafter remain duly qualified and in good standing in every other state
in which, by reason of the nature or location of the Borrower's assets or
operation of the Borrower's business, such qualification may be necessary.

            (b)   Each Related Entity is listed on EXHIBIT 5-2, annexed hereto.
Each Related Entity is and shall hereafter remain in good standing in the state
in which legally formed and is and shall hereafter remain duly qualified in
every other state in which, by reason of the nature and location of that
entity's assets or the operation of such entity's business, such qualification
may be necessary. The Borrower shall provide the Lender with prior written
notice of any entity's becoming or ceasing to be a Related Entity.

            (c)   The Borrower has all legal corporate power and authority to
execute and deliver all and singular the Loan Documents to which the Borrower is
a party and has and will hereafter retain all requisite legal power and
authority to perform any and all of the Liabilities.

                                      -15-
<Page>

            (d)   The execution and delivery by the Borrower of each Loan
Document to which it is a party; the Borrower's consummation of the transactions
contemplated by such Loan Documents (including, without limitation, the creation
of security interests by the Borrower as contemplated hereby); the Borrower's
performance under those of the Loan Documents to which it is a party; the
borrowings hereunder; and the use of the proceeds thereof:

                  (i)    Have been duly authorized by all necessary legal
action.

                  (ii)   Do not, and will not, contravene in any material
respect any provision of any Requirement of Law or obligation of the Borrower.

                  (iii)  Will not result in the creation or imposition of, or
the obligation to create or impose, any Encumbrance upon any assets of the
Borrower pursuant to any Requirement of Law or obligation, except pursuant to
the Loan Documents.

            (e)   The Loan Documents have been duly executed and delivered by
Borrower and are the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms.

     5-3.   TRADE NAMES.

            (a)   EXHIBIT 5-3, annexed hereto, is a listing of:

                  (i)    All names under which the Borrower ever conducted its
business, all trademark and service mark registrations and applications with
respect to any trademark or service mark; and all licenses pursuant to which
Borrower has the right to use any trademark or service mark.

                  (ii)   All entities and/or Persons with whom the Borrower ever
consolidated or merged, or from whom the Borrower ever acquired in a single
transaction or in a series of related transactions substantially all of Person's
assets.

            (b)   Except (i) upon not less than twenty-one (21) days prior
written notice given the Lender, and (ii) in compliance with all other
provisions of this Agreement, the Borrower will not undertake or commit to
undertake any action such that the results of that action, if undertaken prior
to the date of this Agreement, would have been reflected on EXHIBIT 5-3.

            (c)   Except as described on EXHIBIT 5-16, the Borrower owns and
possesses, or has the right to use all patents, industrial designs, trademarks,
trade names, trade styles, brand names, service marks, logos, copyrights, trade
secrets, know-how, confidential information, and other intellectual or
proprietary property of any third Person necessary for the Borrower's conduct of
the Borrower's business.

                                      -16-
<Page>

            (d)   The conduct by the Borrower of the Borrower's business does
not infringe on the patents, industrial designs, trademarks, trade names, trade
styles, brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, or other intellectual or proprietary property of any
third Person.

     5-4.   LOCATIONS, LANDLORD'S CONSENTS, WAIVERS.

            (a)   The Collateral, and the books, records, and papers of Borrower
pertaining thereto, are kept and maintained solely at the Borrower's chief
executive offices as set forth at the beginning of this Agreement and at those
locations which are listed on EXHIBIT 5-4, annexed hereto, which exhibit
includes all service bureaus with which any such records are maintained and the
names and addresses of each of the Borrower's landlords. Except (i) to
accomplish sales of Inventory in the ordinary course of business or (ii) to
utilize such of the Collateral as is removed from such locations in the ordinary
course of business (such as motor vehicles), the Borrower shall not remove any
Collateral from said chief executive offices or those locations listed on
EXHIBIT 5-4.

            (b)   The Borrower shall obtain and deliver to the Lender a consent,
waiver and subordination (reasonably satisfactory to the Lender) by the landlord
for all of the Borrower's warehouse and distribution center locations prior to
the date of execution hereof. The Borrower shall use its best efforts to obtain
and deliver to the Lender a consent, waiver and subordination (reasonably
satisfactory to the Lender) by the landlord for the Borrower's store locations
within thirty (30) days of the date of execution hereof.

            (c)   Upon expiration of the thirty (30) day period referenced in
Section 5-4(b)above, Lender will establish an Availability Reserve for up to
thirty (30) days rent for each of the Borrower's locations in a Landlord Lien
State or in a One Turn State for which a satisfactory consent, waiver and
subordination has not been received. Such Availability Reserve may be reduced or
eliminated but only if no Suspension Event is then in existence or has not
theretofore occurred, upon the furnishing to the Lender of a consent, waiver and
subordination (in form reasonably satisfactory to the Lender) by the landlord
for the subject location.

            (d)   Without duplication of any Availability Reserve described
above, the Lender may establish an Availability Reserve for past due rent.

            (e)   The Borrower will not:

                  (i)    Execute, alter, modify, or amend any Lease, except for
Borrower's benefit and with at least ten (10) days prior written notice to
Lender.

                  (ii)   Commit to, or open or close any location at which the
Borrower maintains, offers for sale, or stores any of the Collateral except (x)
Borrower may open up to thirty-five (35) locations per year but only to the
extent provided in the Business Plan, approved by

                                      -17-
<Page>

Borrower's Board of Directors and with at least fifteen (15) days prior written
notice to Lender and (y) Borrower may close up to ten (10) locations per year
but only to the extent provided for in the Business Plan, as approved by
Borrower's Board of Directors, with at least thirty (30) days prior written
notice to Lender, and, if Borrower determines to employ an agent to effect any
such closings, whether on a guarantee or fee basis or otherwise, subject to
bidding procedures and an agreement acceptable to the Lender.

            (f)   Except as otherwise disclosed on EXHIBIT 5-4, no tangible
personal property of the Borrower is in the care or custody of any third party
or stored or entrusted with a bailee or other third party and none shall
hereafter be placed under such care, custody, storage, or entrustment. Borrower
shall obtain and deliver a consent, waiver and subordination (in form reasonably
satisfactory to the Lender) from each bailee disclosed on EXHIBIT 5-4 on or
prior to the date of execution hereof.

     5-5.   TITLE TO ASSETS.

            (a)   The Borrower is, and shall hereafter remain, the owner of the
Collateral free and clear of all Encumbrances with the exceptions of the
following:

                  (i)    The security interest created herein.

                  (ii)   Equipment purchased, sold and leased back in the
ordinary course of the Borrower's business.

                  (ii)   Those Encumbrances (if any) listed on EXHIBIT 5-5,
annexed hereto.

            (b)   The Borrower does not and shall not have possession of any
property on consignment to the Borrower.

     5-6.   INDEBTEDNESS. The Borrower does not and shall not hereafter have any
Indebtedness with the exceptions of:

            (a)   Any Indebtedness to the Lender.

            (b)   The Indebtedness (if any) listed on EXHIBIT 5-6, annexed
hereto.

            (c)   Capital Leases, not to exceed Forty Thousand ($40,000.00)
Dollars per year per store (whether for the opening of new stores or remodeling
of existing stores) and not to exceed Two Hundred Thousand ($200,000.00) Dollars
per year for the Borrower's home office, provided Lender is given prompt written
notice of any Capital Lease and no lien on the Collateral arises as a result
thereof.

     5-7.   INSURANCE POLICIES.

                                      -18-
<Page>

            (a)   EXHIBIT 5-7, annexed hereto, is a schedule of all insurance
policies owned by the Borrower or under which the Borrower is the named insured.
Each of such policies is in full force and effect. Neither the issuer of any
such policy nor the Borrower is in default or violation of any such policy.

            (b)   The Borrower shall have and maintain at all times insurance
covering such risks, in such amounts, containing such terms, in such form, for
such periods, and written by such companies as may be satisfactory to the
Lender. The coverage reflected on EXHIBIT 5-7 presently satisfies the foregoing
requirements, it being recognized by the Borrower, however, that such
requirements may change hereafter to reflect changing circumstances. All
insurance carried by the Borrower shall provide for a minimum of twenty (20)
days' written notice of cancellation to the Lender and all such insurance which
covers the Collateral shall include an endorsement in favor of the Lender, which
endorsement shall provide that the insurance, to the extent of the Lender's
interest therein, shall not be impaired or invalidated, in whole or in part, by
reason of any act or neglect of the Borrower or by the failure of the Borrower
to comply with any warranty or condition of the policy. In the event of the
failure by the Borrower to maintain insurance as required herein, the Lender, at
its option, may obtain such insurance, provided, however, the Lender's obtaining
of such insurance shall not constitute a cure or waiver of any Event of Default
occasioned by the Borrower's failure to have maintained such insurance. The
Borrower shall furnish to the Lender certificates or other evidence satisfactory
to the Lender regarding compliance by the Borrower with the foregoing insurance
provisions.

            (c)   The Borrower shall advise the Lender of each claim in excess
of Ten Thousand ($10,000) Dollars made by the Borrower under any policy of
insurance which covers the Collateral and after the occurrence of any Event of
Default, will permit the Lender, at the Lender's option in each instance, to the
exclusion of the Borrower, to conduct the adjustment of each such claim (and of
all claims following the occurrence of any Suspension Event). The Borrower
hereby appoints the Lender as the Borrower's attorney in fact, to be exercised
after the occurrence of an Event of Default, unless waived by the Lender in its
reasonable discretion, to obtain, adjust, settle, and cancel any insurance
described in this section and to endorse in favor of the Lender any and all
drafts and other instruments with respect to such insurance. This appointment,
being coupled with an interest, is irrevocable until this Agreement is
terminated by a written instrument executed by a duly authorized officer of the
Lender. The Lender shall not be liable on account of any exercise pursuant to
said power except for any exercise in actual willful misconduct and bad faith.
The Lender may apply any proceeds of such insurance against the Liabilities,
whether or not such have matured, in such order of application as the Lender may
determine.

            (d)   The Borrower shall maintain at all times those policies of
insurance obtained by the Borrower and assigned to the Lender as required by
Section 4-4, above.

     5-8.   LICENSES. Each license, distributorship, franchise, and similar
agreement issued to, or to which the Borrower is a party is in full force and
effect. No party to any such license or

                                      -19-
<Page>

agreement is in default or violation thereof. The Borrower has not received any
notice or threat of cancellation of any such license or agreement.

     5-9.   LEASES. EXHIBIT 5-9, annexed hereto, is a schedule of all presently
effective Leases and Capital Leases. Each of such Leases and Capital Leases is
in full force and effect. No party to any such Lease or Capital Lease is in
default or violation of any such Lease or Capital Lease and the Borrower has not
received any notice or threat of cancellation of any such Lease or Capital
Lease. The Borrower hereby authorizes the Lender, after prior notice to the
Borrower, at any time and from time to time to contact any of the Borrower's
landlords in order to confirm the Borrower's continued compliance with the terms
and conditions of the Lease(s) between the Borrower and that landlord and to
discuss such issues, concerning the Borrower's occupancy under such Lease(s), as
the Lender may determine.

     5-10.  REQUIREMENTS OF LAW. The Borrower is in compliance with, and shall
hereafter comply with and use its assets in compliance with, all Requirements of
Law. The Borrower has not received any notice of any violation of any
Requirement of Law (whether or not such violation is material), which violation
has not been cured or otherwise remedied.

     5-l1.  MAINTAIN PROPERTIES. The Borrower shall:

            (a)   Keep the Collateral in good order and repair (ordinary
reasonable wear and tear and insured casualty excepted).

            (b)   Not suffer or cause the waste or destruction of any material
part of the Collateral.

            (c)   Not use any of the Collateral in violation of any policy of
insurance thereon.

            (d)   Not sell, lease, or otherwise dispose of any of the
Collateral, other than the following, in each case, subject to the turning over
to the Lender of all Receipts with respect to the same as provided herein.

                  (i)    The sale of Inventory in compliance with this
Agreement.

                  (ii)   The disposal of Equipment which is obsolete, worn out,
or damaged beyond repair, which Equipment is replaced to the extent necessary to
preserve or improve the operating efficiency of the Borrower.

     5-12.  PAY TAXES.

            (a)   The federal income tax returns of the Borrower have been
audited by the Internal Revenue Service (or closed by applicable statutes) for
all fiscal years through and including the Borrower's taxable year referenced on
EXHIBIT 5-12, annexed hereto, and all deficiencies,

                                      -20-
<Page>

assessments, and other amounts asserted as a result of such examinations have
been fully paid or settled. No agreement is in existence which waives or extends
any statute of limitations applicable to the right of the Internal Revenue
Service to assert a deficiency or make any other claim for or in respect to
federal income taxes. No issue has been raised in any such examination which
reasonably could be expected to result in the assertion of a deficiency for any
fiscal year open for examination, assessment, or claim by the Internal Revenue
Service.

            (b)   All returns of the Borrower for state and local income,
excise, sales, and other taxes have been audited (or closed by applicable
statutes) for all fiscal years through and including the Borrower's taxable year
referenced on EXHIBIT 5-12, annexed hereto, and ail deficiencies, assessments,
and other amounts asserted as a result of such examinations have been fully paid
or settled. No agreement is in existence which waives or extends any statute of
limitations applicable to the right of any state taxing authority to assert a
deficiency or make any other claim for or in respect to any such state taxes. No
issue has been raised in any such examination which reasonably could be expected
to result in the assertion of a deficiency for any fiscal year open for
examination, assessment, or claim by any state or local taxing authority.

            (c)   Except as disclosed on said EXHIBIT 5-12, there are no
examinations of or with respect to the Borrower presently being conducted by the
Internal Revenue Service or any state taxing authority.

            (d)   The Borrower has, and hereafter shall: pay, as they become due
and payable, all taxes and unemployment contributions and other charges of any
kind or nature levied, assessed or claimed against the Borrower or the
Collateral by any Person or entity whose claim could result in an Encumbrance
upon any asset of the Borrower or by any governmental authority; properly
exercise any trust responsibilities imposed upon the Borrower by reason of
withholding from employees' pay; timely make all contributions and other
payments as may be required pursuant to any Employee Benefit Plan now or
hereafter established by the Borrower; and timely file all tax and other
material returns and other material reports with each governmental authority to
whom the Borrower is obligated to so file.

            (e)   At its option, the Lender may, but shall not be obligated to,
pay any taxes, unemployment contributions, and any and all other charges levied
or assessed upon the Borrower or the Collateral by any Person or entity or
governmental authority, and make any contributions or other payments on account
of the Borrower's Employee Benefit Plan as the Lender, in the Lender's
discretion, may deem necessary or desirable, to protect, maintain, preserve,
collect, or realize upon any or all of the Collateral or the value thereof or
any right or remedy pertaining thereto, provided, however, the Lender's making
of any such payment shall not constitute a cure or waiver of any Event of
Default occasioned by the Borrower's failure to have made such payment.

     5-13.  NO MARGIN STOCK. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations G, U, T, and X, of the Board of Governors of
the Federal Reserve System of the United States). No part

                                      -21-
<Page>

of the proceeds of any borrowing hereunder will be used at any time to purchase
or carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.

     5-14.  ER1SA. Neither the Borrower nor any ERISA Affiliate ever has or
hereafter shall:

            (a)   Violate or fail to be in full compliance with the Borrower's
Employee Benefit Plan.

            (b)   Fail timely to file all reports and filings required by ERISA
to be filed by the Borrower.

            (c)   Engage in any "prohibited transactions" or "reportable events"
(respectively as described in ERISA).

            (d)   Engage in, or commit, any act such that a tax or penalty could
be imposed on account thereof pursuant to ERISA.

            (e)   Accumulate any material funding deficiency within the meaning
of ERISA.

            (f)   Terminate any Employee Benefit Plan such that a lien could be
asserted of the Borrower on account thereof pursuant to ERISA.

            (g)   Be a member of, contribute to, or have any obligation under
any Employee Benefit Plan which is a multiemployer plan within the meaning of
Section 4001(a) of ERISA.

     5-15.  HAZARDOUS MATERIALS.

            (a)   The Borrower has never:

                  (i)    Been legally responsible for any release or threat of
release of any Hazardous Material.

                  (ii)   Received notification of any release or threat of
release of any Hazardous Material from any site or vessel occupied or operated
by the Borrower and/or of the incurrence of any expense or loss in connection
with the assessment, containment, or removal of any release or threat of release
of any Hazardous Material from any such site or vessel.

            (b)   The Borrower shall:

                  (i)    Dispose of any Hazardous Material only in compliance
with all Environmental Laws.

                                      -22-
<Page>

                  (ii)   Not store on any site or vessel occupied or operated by
the Borrower and not transport or arrange for the transport of any Hazardous
Material, except if such storage or transport is in the ordinary course of the
Borrower's business and is in compliance with all Environmental Laws.

            (c)   The Borrower shall provide the Lender with written notice upon
the Borrower's obtaining knowledge of any incurrence of any expense or loss by
any governmental authority or other Person in connection with the assessment,
containment, or removal of any Hazardous Material, for which expense or loss the
Borrower may be liable.

     5-16.  LITIGATION. Except as set forth on EXHIBIT 5-16, annexed hereto,
there is not presently pending or threatened by or against the Borrower any
suit, action, proceeding, or investigation which, if determined adversely to the
Borrower, would have a material adverse effect upon the Borrower's financial
condition or ability to conduct its business as such business is presently
conducted or is contemplated to be conducted in the foreseeable future.

     5-17.  DIVIDENDS OR INVESTMENTS. Without the prior written consent of the
Lender, the Borrower shall not:

            (a)   Unless in accordance with the Business Plan, pay any cash
dividend or make any other distribution in respect of any class of the
Borrower's capital stock.

            (b)   Own, redeem, retire, purchase, or acquire any of the
Borrower's capital stock.

            (c)   Invest in or purchase any stock or securities or rights to
purchase any stock or securities of any corporation or other entity.

            (d)   Merge or consolidate or be merged or consolidated with or into
any other corporation or other entity without the Lender's prior written
consent.

            (e)   Consolidate any of the Borrower's operations with those of any
other corporation or other entity without the Lender's prior written consent.

            (f)   Organize or create any Related Entity, without the prior
written consent of the Lender.

            (g)   Subordinate any debts or obligations owed to the Borrower by
any third party to any other debts owed by such third party to any other Person.

     5-18.  LOANS. The Borrower shall not make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the foregoing does
not prohibit any of the following:

                                      -23-
<Page>

            (a)   Advance payments made to the Borrower's suppliers in the
ordinary course.

            (b)   Advances to the Borrower's officers, employees, and
salespersons with respect to reasonable expenses to be incurred by such
officers, employees, and salespersons for the benefit of the Borrower, which
expenses are properly substantiated by the Person seeking such advance and
properly reimbursable by the Borrower.

     5-19.  PROTECTION OF ASSETS. The Lender, in the Lender's discretion, and
from time to time, may discharge any tax or Encumbrance on any of the
Collateral, or take any other action that the Lender may deem necessary or
desirable to repair, insure, maintain, preserve, collect, or realize upon any of
the Collateral. The Lender shall not have any obligation to undertake any of the
foregoing and shall have no liability on account of any action so undertaken
except where there is a specific finding in a judicial proceeding (in which the
Lender has had an opportunity to be heard), from which finding no further appeal
is available, that the Lender had acted in actual bad faith or in a grossly
negligent manner. The Borrower shall pay to the Lender, on demand, or the
Lender, in its discretion, may add to the Loan Account, all amounts paid or
incurred by the Lender pursuant to this section. The obligation of the Borrower
to pay such amounts is a Liability.

     5-20.  LINE OF BUSINESS. The Borrower shall not engage in any business
other than the business in which it is currently engaged or a business
reasonably related thereto.

     5-21.  AFFILIATE TRANSACTIONS. The Borrower shall not make any payment, nor
give any value to any Related Entity except for goods and services actually
purchased by the Borrower from, or sold by the Borrower to, such Related Entity
for a price which shall:

            (a)   Be competitive and fully deductible as an "ordinary and
necessary business expense" and/or fully depreciable under the Internal Revenue
Code of 1986 and the Treasury Regulations, each as amended; and

            (b)   Not differ from that which would have been charged in an arms
length transaction.

     5-22.  EXECUTIVE PAY.

            (a)   The only Executive Officers of the Borrower, at the execution
of this Agreement, are those individuals referenced in the definition of
"Executive Officers".

            (b)   Prior to the execution of this Agreement, the Borrower
furnished the Lender with copies of all written Executive Agreements and
outlines of the salient features of all unwritten Executive Agreements (as
amended to date) then in existence. There are no material unwritten agreements
or understandings between the Borrower and any Executive Officer which relate to
Executive Pay, written disclosure of which has not been made to the Lender.

                                      -24-
<Page>

            (c)   The Borrower will not without the prior consent of the
Borrower's compensation committee:

                  (i)    Enter into any Executive Agreement not existing at the
execution of this Agreement.

                  (ii)   Alter, amend, supplement, or otherwise change any
Executive Agreement.

                  (iii)  Pay, provide, or facilitate any Executive Pay other
than as provided in an Executive Agreement or, if not covered by an Executive
Agreement, as permitted pursuant to Section 5-21, above.

     5-23.  ADDITIONAL ASSURANCES.

            (a)   The Borrower is not the owner of, nor has it any interest in,
any property or asset which, immediately upon the satisfaction of the conditions
precedent to the effectiveness of the credit facility contemplated hereby
(Article 4) will not be subject to a perfected security interest in favor of the
Lender (subject only to those Encumbrances (if any) described on EXHIBIT 5-5,
annexed hereto) to secure the Liabilities.

            (b)   The Borrower will not hereafter acquire any asset or any
interest in property which is not, immediately upon such acquisition, subject to
such a perfected security interest in favor of the Lender to secure the
Liabilities (subject only to Encumbrances (if any) permitted pursuant to Section
5-5, above).

            (c)   The Borrower shall execute and deliver to the Lender such
instruments, documents, and papers, and shall do all such things from time to
time hereafter as the Lender may request to carry into effect the provisions and
intent of this Agreement; to protect and perfect the Lender's security interests
in the Collateral; and to comply with all applicable statutes and laws, and
facilitate the collection of any Receivables Collateral. The Borrower shall
execute all such instruments as may be required by the Lender with respect to
the recordation and/or perfection of the security interests created herein.

            (d)   A carbon, photographic, or other reproduction of this
Agreement or of any financing statement or other instrument executed pursuant to
this Section 5-23 shall be sufficient for filing to perfect the security
interests granted herein.

     5-24.  ADEQUACY OF DISCLOSURE.

            (a)   All financial statements furnished to the Lender by the
Borrower have been prepared in accordance with GAAP consistently applied and
present fairly the condition of the Borrower at the date(s) thereof and the
results of operations and cash flows for the period(s) covered.

                                      -25-
<Page>

There has been no change in the financial condition, results of operations, or
cash flows of the Borrower since the date(s) of such financial statements, other
than changes in the ordinary course of business, which changes have not been
materially adverse, either singularly or in the aggregate.

            (b)   The Borrower does not have any contingent obligations or
obligation under any Lease or Capita] lease which is not noted in the Borrower's
financial statements furnished to the Lender prior to the execution of this
Agreement.

            (c)   No document, instrument, agreement, or paper now or hereafter
given the Lender by or on behalf of the Borrower or any guarantor of the
Liabilities in connection with the execution of this Agreement by the Lender
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
therein not misleading. There is no fact known to the Borrower which has, or
which, in the foreseeable future could have, a material adverse effect on the
financial condition of the Borrower or any such guarantor which has not been
disclosed in writing to the Lender.

     5-25.  MINIMUM EXCESS AVAILABILITY. [See EXHIBIT 9-11.]

     5-26.  NO MATERIAL ADVERSE CHANGE. There has not been a Material Adverse
Change.

     5-27.  2000 COMPLIANCE. On the basis of a comprehensive inventory, review
and assessment currently being undertaken by Borrower of Borrower's computer
applications utilized by Borrower or contained in products produced or sold by
Borrower, and upon inquiry made of Borrower's material suppliers and vendors,
Borrower's management is of the considered view that Borrower, its products, and
all such suppliers and vendors are Year 2000 Compliant.

     5-28.  OTHER COVENANTS. The Borrower shall not indirectly do or cause to be
done any act which, if done directly by the Borrower, would breach any covenant
contained in this Agreement.

ARTICLE 6 - USE AND COLLECTION OF COLLATERAL

     6-1.   USE OF INVENTORY COLLATERAL.

            (a)   Without the prior written consent of the Lender, the Borrower
shall not engage in any sale of the Inventory other than for fair consideration
in the conduct of the Borrower's business in the ordinary course and shall not
engage in sales or other dispositions to creditors; sales or other dispositions
in bulk; and any use of any of the Inventory in breach of any provision of this
Agreement.

            (b)   No sale of Inventory shall be on consignment, approval, or
under any other circumstances such that, with the exception of the Borrower's
customary return policy applicable to the return of Inventory purchased by the
Borrower's retail customers in the ordinary course, such Inventory may be
returned to the Borrower without the consent of the Lender.

                                      -26-
<Page>

     6-2.   INVENTORY QUALITY. All Inventory now owned or hereafter acquired by
the Borrower is and will be of good and merchantable quality and free from
defects (other than defects within customary trade tolerances).

     6-3.   ADJUSTMENTS AND ALLOWANCES. The Borrower may grant such allowances
or other adjustments to the Borrower's Account Debtors (exclusive of extending
the time for payment of any Account or Account Receivable, which shall not be
done without first obtaining the Lender's prior written consent in each
instance) as the Borrower may reasonably deem to accord with sound business
practice, provided, however, the authority granted the Borrower pursuant to this
Section 6-3 may be limited or terminated by the Lender at any time in the
Lender's discretion.

     6-4.   VALIDITY OF ACCOUNTS.

            (a)   The amount of each Account shown on the books, records, and
invoices of the Borrower represented as owing by each Account Debtor is and will
be the correct amount actually owing by such Account Debtor and shall have been
fully earned by performance by the Borrower.

            (b)   The Borrower has no knowledge of any impairment of the
validity or collectibility of any of the Accounts and shall notify the Lender of
any such fact immediately after Borrower becomes aware of any such impairment.

            (c)   The Borrower shall not post any bond to secure the Borrower's
performance under any agreement to which the Borrower is a party nor cause any
surety, guarantor, or other third party obligee to become liable to perform any
obligation of the Borrower (other than to the Lender) in the event of the
Borrower's failure so to perform.

     6-5.   NOTIFICATION TO ACCOUNT DEBTORS. The Lender shall have the right at
any time after the occurrence of an Event of Default has occurred) to notify any
of the Borrower's Account Debtors to make payment directly to the Lender and to
collect all amounts due on account of the Collateral.

ARTICLE 7 - CASH MANAGEMENT

     7-1.   DEPOSITORY ACCOUNTS.

            (a)   Annexed hereto as EXHIBIT 7-1 is a Schedule of all present
DDA's, which Schedule includes, with respect to each depository (i) the name and
address of that depository; (ii) the account number(s) of the account(s)
maintained with such depository; (iii) if applicable, a contact Person at such
depository; and (iv) the telephone number of the contact Person.

            (b)   The Borrower shall, as a condition to the effectiveness of
this Agreement:

                                      -27-
<Page>

                  (i)    Establish an account in the name of, for the benefit of
and under the control of, Lender into which all Receipts shall be deposited (the
"Blocked Account")

                  (ii)   Deliver to Lender proof of the mailing, to each
depository institution with which any DDA is maintained (other than the Funding
Account or any Local DDA) of notification (in form satisfactory to the Lender)
of the Lender's interest in such DDA. In the event that Agent or Borrower shall
receive notice that any depository at which a DDA is maintained on the date
hereof, or is subsequently established as contemplated under paragraph (c)
below, refuses to accept and comply with the notifications delivered by the
Borrower to such depository institution of the Lender's interest in such DDA,
Borrower will immediately close all DDAs maintained with such depository
institution and establish new DDAs with depository institutions which accept and
agree to such notifications.

                  (iii)  Deliver to Lender an agreement (in form satisfactory to
the Lender) with any depository institution at which a Blocked Account is
maintained.

            (c)   The Borrower will not establish any DDA hereafter (other than
a Local DDA) unless Borrower, contemporaneous with such establishment, the
Borrower delivers to the Lender proof of mailing to any such institution, a
notification (in form satisfactory to the Lender) of the Lender's interest in
such DDA.

            (d)   The Borrower will establish and maintain separate accounts
exclusively for purposes of payroll.

            (e)   The contents of each DDA constitutes Collateral and Proceeds
of Collateral.

            (f)   Upon the request of the Borrower after the End Date, the
Lender shall notify the depository institutions with which DDA's are maintained
that the Lender no longer retains any interest in such DDA's.

     7-2.   CREDIT CARD RECEIPTS.

            (a)   Annexed hereto as EXHIBIT 7-2, is a Schedule which describes
all Credit Card Processors, which term shall include any "instant credit"
providers and any other arrangements to which the Borrower is a party with
respect to the payment to the Borrower of the proceeds of all credit card
charges for sales by the Borrower.

            (b)   The Borrower shall deliver to the Lender the written
acknowledgment and consent of each of the Credit Card Processors to a notice in
form satisfactory to the Lender, which notice provides that payment of all
credit card charges submitted by the Borrower to that Credit Card Processor
payable to the Borrower by such Credit Card Processor shall be directed to the
Blocked Account. The Borrower shall not change such direction or designation
except upon and with the prior written consent of the Lender.

                                      -28-
<Page>

     7-3.   THE CONCENTRATION ACCOUNT, THE BLOCKED ACCOUNT AND THE FUNDING
ACCOUNTS.

            (a)   The following accounts have been or will be established (and
are so referred to herein):

                  (i)    The Concentration Account: Established by the Lender
with The Chase Manhattan Bank, N.A.

                  (ii)   The Funding Account: Established by the Borrower with
AllFirst Bank.

                  (iii)  The Blocked Account: Established by the Borrower with
AllFirst Bank.

            (b)   The contents of all DDA's and the Blocked Account constitute
Collateral and Proceeds of Collateral.

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

     7-4.   PROCEEDS AND COLLECTION OF ACCOUNTS.

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

            (b)   The Borrower shall cause the ACH or wire transfer to the
Blocked Account, no less frequently than daily (and whether or not there is then
an outstanding balance in the Loan Account) of:

                  (i)    The then contents of each DDA (other than (A) any Local
DDA and (B) the Funding Account), each such transfer to be net of any minimum
balance, not to exceed Seven Hundred Fifty ($750) Dollars.

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

            (c)   Whether or not any Liabilities are then outstanding, the
Borrower shall cause the ACH or wire transfer to the Concentration Account, no
less frequently than daily, of the entire previous day's closing collected
balance of the Blocked Account.

                                      -29-
<Page>

            (d)   In the event that, notwithstanding the provisions of this
Section 7-4, the Borrower receives or otherwise has dominion and control of any
Receipts, or any proceeds or collections of any Collateral, such Receipts,
proceeds, and collections shall be held in trust by the Borrower for the Lender
and shall not be commingled with any of the Borrower's other funds or deposited
in any account of the Borrower other than as instructed by the Lender.

     7-5.   PAYMENT OF LIABILITIES.

            (a)   On each Banking Day, upon receipt by Lender, the Lender may
apply towards the Liabilities, the then collected balance of the Concentration
Account (net of fees charged, and of such impressed balances as may be required
by the bank at which the Concentration Account is maintained), PROVIDED,
HOWEVER, for purposes of the calculation of interest on the unpaid principal
balance of the Loan Account, such payment shall be deemed to have been made one
(1) Banking Days after such transfer.

            (b)   The Lender shall transfer to the Funding Account any surplus
in excess of the Liabilities in the Concentration Account (attributable to
Borrower) remaining after the application towards the Liabilities referred to in
Section 7-5(a), above (less those amounts which are to be netted out, as
provided therein) PROVIDED, HOWEVER, in the event that both (i) a Suspension
Event has occurred and (ii) one or more L/C's are then outstanding, the Lender
may establish a funded reserve of up to one hundred ten (110%) percent of the
aggregate Stated Amounts of such L/C's.

     7-6.   THE FUNDING ACCOUNT. All checks shall be drawn by the Borrower upon,
and other disbursements made by the Borrower solely from, the Funding Account
and such other accounts as to which the Borrower has furnished notice to the
Lender.

     7-7.   CAPITAL INFUSIONS, ETC. The proceeds of any investment in the
Borrower from any source, including without limitation, proceeds of the issuance
or sale of any capital stock or debt instruments, shall be deposited by the
purchaser thereof directly into the Blocked Account. In addition, any funds
received by Borrower other than from ordinary business operations, including
without limitation, tax refunds, insurance or condemnation proceeds or damage
awards, shall be deposited directly into the Blocked Account.

ARTICLE 8 - LENDER AS BORROWER'S ATTORNEY-IN-FACT

     8-1.   APPOINTMENT AS ATTORNEY-IN-FACT. The Borrower hereby irrevocably
constitutes and appoints the Lender as the Borrower's true and lawful attorney,
with full power of substitution, exercisable after the occurrence of any Event
of Default, not waived by the Lender in its reasonable discretion, to convert
the Collateral into cash at the sole risk, cost, and expense of the Borrower,
but for the sole benefit of the Lender. The rights and powers granted the Lender
by this appointment include but are not limited to the right and power to:

            (a)   Prosecute, defend, compromise, or release any action relating
to the Collateral.

                                      -30-
<Page>

            (b)   Sign change of address forms to change the address to which
the Borrower's mail is to be sent to such address as the Lender shall designate;
receive and open the Borrower's mail; remove any Receivables Collateral and
Proceeds of Collateral therefrom and turn over the balance of such mail either
to the Borrower or to any trustee in bankruptcy, receiver, assignee for the
benefit of creditors of the Borrower, or other legal representative of the
Borrower whom the Lender determines to be the appropriate Person to whom to so
turn over such mail.

            (c)   Endorse the name of the Borrower in favor of the Lender upon
any and all checks, drafts, notes, acceptances, or other items or instruments;
sign and endorse the name of the Borrower on, and receive as secured party, any
of the Collateral, any invoices, schedules of Collateral, freight or express
receipts, or bills of lading, storage receipts, warehouse receipts, or other
documents of title respectively relating to the Collateral.

            (d)   Sign the name of the Borrower on any notice to the Borrower's
Account Debtors or verification of the Receivables Collateral; sign the
Borrower's name on any Proof of Claim in Bankruptcy against Account Debtors, and
on notices of lien, claims of mechanic's liens, or assignments or releases of
mechanic's liens securing the Accounts.

            (e)   Take all such action as may be necessary to obtain the payment
of any letter of credit and/or banker's acceptance of which the Borrower is a
beneficiary.

            (f)   Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of the Borrower.

            (g)   Use, license or transfer any or all General Intangibles of the
Borrower.

            (h)   Sign and file or record any financing or other statements in
order to perfect or protect the Lender's security interest in the Collateral.

     8-2.   NO OBLIGATION TO ACT. The Lender shall not be obligated to do any of
the acts or to exercise any of the powers authorized by Section 8-1 herein, but
if the Lender elects to do any such act or to exercise any of such powers, it
shall not be accountable for more than it actually receives as a result of such
exercise of power, and shall not be responsible to the Borrower for any act or
omission to act except for any act or omission to act as to which there is a
final determination made in a judicial proceeding (in which proceeding the
Lender has had an opportunity to be heard) which determination includes a
specific finding that the subject act or omission to act had been grossly
negligent or in actual bad faith.

ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL COVENANTS

     9-1.   MAINTAIN RECORDS. The Borrower shall:

                                      -31-
<Page>

            (a)   At all times, keep proper books of account, in which full,
true, and accurate entries shall be made of all of the Borrower's transactions,
all in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrower at the close of, and its results
of operations for, the periods in question.

            (b)   Timely provide the Lender with those financial reports,
statements, and schedules required by this Article 9 or otherwise, each of which
reports, statements and schedules shall be prepared, to the extent applicable,
in accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of the Borrower at the close of, and its results
of operations for, the period(s) covered therein.

            (c)   At all times, keep accurate current records of the Collateral
including, without limitation, accurate current stock, cost, and sales records
of its Inventory, accurately and sufficiently itemizing and describing the
kinds, types, and quantities of Inventory and the cost and selling prices
thereof.

            (d)   At all times, retain independent certified public accountants
who are reasonably satisfactory to the Lender and instruct such accountants to
fully cooperate with, and be available to, the Lender to discuss the Borrower's
financial performance, financial condition, operating results, controls, and
such other matters, within the scope of the retention of such accountants, as
may be raised by the Lender.

            (e)   Not change the Borrower's fiscal year.

            (f)   Not change the Borrower's taxpayer identification number.

     9-2.   ACCESS TO RECORDS.

            (a)   The Borrower shall accord the Lender and the Lender's
representatives with access from time to time as the Lender and such
representatives may require to all properties owned by or over which the
Borrower has control. The Lender and the Lender's representatives shall have the
right, and the Borrower will permit the Lender and such representatives from
time to time as the Lender and such representatives may request, to examine,
inspect, copy, and make extracts from any and all of the Borrower's books,
records, electronically stored data, papers, and files. The Borrower shall make
all of the Borrower's copying facilities available to the Lender.

            (b)   The Borrower hereby authorizes the Lender and the Lender's
representatives to:

                  (i)    Inspect, copy, duplicate, review, cause to be reduced
to hard copy, run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to the Borrower, or any
service bureau, contractor, accountant, or other Person, and directs any such
service bureau, contractor, accountant, or other Person fully to cooperate with
the Lender and the Lender's representatives with respect thereto.

                                      -32-
<Page>

                  (ii)   Verify at any time the Collateral or any portion
thereof, including verification with Account Debtors, and/or with the Borrower's
computer billing companies, collection agencies, and accountants and to sign the
name of the Borrower on any notice to the Borrower's Account Debtors or
verification of the Collateral.

     9-3.   IMMEDIATE NOTICE TO LENDER.

            (a)   The Borrower shall provide the Lender with written notice
immediately upon the occurrence of any of the following events, which written
notice shall be with reasonable particularity as to the facts and circumstances
in respect of which such notice is being given:

                  (i)    Any change in the Borrower's Executive Officers,
officers, directors, controllers or key employees.

                  (ii)   The completion of any physical count of the Borrower's
Inventory (together with a copy of the certified or such other results as may
then be available thereof), to the extent that such count was completed in
connection with any store closing or was necessitated as a result of any prior
count.

                  (iii)  Any ceasing of the Borrower's making of payment, in the
ordinary course, to any of its creditors (including the ceasing of the making of
such payments on account of a dispute with the subject creditor).

                  (iv)   Any failure by the Borrower to pay rent at any of the
Borrower's locations, which failure continues for more than five (5) days
following the day on which any grace period for the Borrower's payment of rent
has expired. If Borrower has any dispute with any Landlord with respect to rent
payable or other matters, Borrower shall give Lender written notice of said
dispute unless otherwise disclosed in any officer's certificate furnished to the
Lender by the Borrower.

                  (v)    Any failure by Borrower to pay trade liabilities or
other expense liabilities in accordance with their past business practices.

                  (vi)   Any material change in the business, operations, or
financial affairs of the Borrower.

                  (vii)  The occurrence of any Suspension Event.

                  (viii) Any intention on the part of the Borrower to discharge
the Borrower's present independent accountants or any withdrawal or resignation
by such independent accountants from their acting in such capacity (as to which,
see Subsection 9-1 (d)).

                                      -33-
<Page>

                  (ix)   Any litigation which, if determined adversely to the
Borrower, might have a material adverse effect on the financial condition of the
Borrower.

                  (x)    The reduction by any of Borrower's material vendors in
the amount of trade credit or terms provided by such vendor to Borrower on the
date of execution hereof.

                  (xi)   The engagement or employment by Borrower of any
bankruptcy, restructuring or "turn-around" professionals.

            (b)   The Borrower shall:

                  (i)    Provide the Lender, when so distributed, with copies of
any materials distributed to all shareholders of the Borrower (qua such
shareholders).

                  (ii)   At the request of the Lender, from time to time,
provide the Lender with copies of all advertising (including copies of all print
advertising and duplicate tapes of all video and radio such advertising).

                  (iii)  Provide the Lender, when received by the Borrower, with
a copy of any management letter or similar communications from any accountant of
the Borrower.

     9-4.   BORROWING BASE CERTIFICATE. The Borrower shall provide the Lender,
daily, with a Borrowing Base Certificate (in the form of EXHIBIT 9-4 annexed
hereto, as such form may be revised from time to time by the Lender). Such
Certificate may be sent to the Lender by facsimile transmission, provided that
the original thereof is forwarded to the Lender on the date of such transmission
at its request. No adjustments to the Borrowing Base Certificate may be made
without support documentation and such other documentation as may be requested
by Lender from time to time.

     9-5.   WEEKLY REPORTS. Weekly, not later than Wednesday for the immediately
preceding fiscal week:

            See EXHIBIT 9-R.

In the event that Availability equals Two Hundred Fifty Thousand ($250,000)
Dollars or less for seven (7) consecutive Business Days, then Borrower shall
provide Lender, at the Lender's request, with weekly cash flow reports in form
and content satisfactory to Lender.

     9-6.   MONTHLY REPORTS.

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

                                      -34-
<Page>

                  (i)    Within fifteen (15) days of the end of the previous
                         month:

                         See EXHIBIT 9-R

                  (ii)   Within thirty (30) days of the end of the previous
                         month:
                         Statement of Gross Margin (Paragon format)

                         See EXHIBIT 9-R

            (b)   For purposes of Section 9-6(a)(i), above, the first "previous
month" in respect of which the items required by that Section shall be provided
shall be July, 2000 and for purposes of Section 9-6(a)(ii), above, the first
"previous month" in respect of which the items required by that Section shall be
provided shall be July, 2000.

     9-7.   ANNUAL REPORTS.

            (a)   In addition to the monthly reports required under Article 9-6,
annually, within ninety (90) days following the end of the Borrower's fiscal
year, the Borrower shall furnish the Lender with an original signed counterpart
of the Borrower's annual financial statement, which statement shall have been
prepared by, and bearing the unqualified opinion of, the Borrower's independent
certified public accountants (i.e. said statement shall be "certified" by such
accountants). Such annual statement shall include, at a minimum (with
comparative information for the then prior fiscal year) a balance sheet, income
statement, statement of changes in shareholders' equity, and cash flows.

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

            (c)   Borrower shall provide interim draft annual financial
statements (inclusive of subsequent periods, until year end statements are
delivered) within thirty (30) days of each year end.

     9-8.   OFFICERS' CERTIFICATES. The Borrows shall cause the Borrower's
President and Chief Financial Officer respectively to provide such Person's
Certificate with those monthly, quarterly, and annual statements to be
furnished pursuant to this Agreement, which Certificate shall:

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

                                      -35-
<Page>

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

            (c)   Include calculations concerning the Borrower's compliance (or
failure to comply) at the date of the subject statement with each of the
financial performance covenants included in Section 9-12, below.

            (d)   Indicate that all taxes (broken down by type) have or have not
been paid.

            (e)   Indicate that all rent and additional rent due pursuant to any
store lease have or have not been paid.

     9-9.   INVENTORIES, APPRAISALS, AND AUDITS.

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

            (b)   Upon the Lender's request from time to time, the Borrower
shall obtain, or shall permit the Lender to obtain (in all events, at the
Borrower's expense) financial or SKU based physical counts and/or inventories of
the Collateral, conducted by such inventory takers as are satisfactory to the
Lender and following such methodology as may be required by the Lender, each of
which physical counts and/or financial or SKU based inventories shall be
observed by the Borrower's accountants. The Lender will require the Borrower to
conduct two (2) such counts and/or inventories during each twelve (12) month
period during which this Agreement is in effect, but in its discretion, may
undertake additional such counts or inventories during such period. The draft or
unaudited results of all inventories or counts shall be furnished to Lender
immediately thereafter and final, reconciled results within ten (10) business
days of the taking of such inventories or counts. The Borrower agrees that the
Lender is entitled to request and receive directly from the inventory taker the
unaudited or draft results of any such inventory or audit.

            (c)   Upon the Lender's request from time to time, the Borrower
shall permit the Lender to obtain appraisals (in all events, at the Borrower's
expense) conducted by such appraisers as are satisfactory to the Lender.

            (d)   The Lender contemplates conducting three (3) commercial
finance audits (in each event, at the Borrower's expense) of the Borrower's
books and records during any twelve (12) month period during which this
Agreement is in effect, but in its discretion, may undertake additional such
audits during such period.

                                      -36-
<Page>

            (e)   The Lender from time to time (in all events, at the Borrower's
expense) may undertake "mystery shopping" (so-called) visits to all or any of
the Borrower's business premises. The Lender shall provide the Borrower with a
copy of any non-company confidential results of such mystery shopping.

     9-10.  ADDITIONAL FINANCIAL INFORMATION.

            (a)   In addition to all other information required to be provided
pursuant to this Article 9, the Borrower promptly shall provide the Lender with
such other and additional information concerning the Borrower and any guarantor
of the Liabilities, the Collateral, the operation of the Borrower's business,
and the Borrower's financial condition, including original counterparts of
financial reports and statements, as the Lender may from time to time request
from the Borrower.

            (b)   The Borrower has provided the Lender with its current Business
Plan, a copy of which is annexed hereto as EXHIBIT 9-10. The Borrower may
provide the Lender, from time to time hereafter, with updated Business Plans. In
all events, the Borrower, not later than sixty (60) days prior to the end of
each of the Borrower's fiscal years, shall furnish the Lender with an updated
and extended Business Plan which shall go out at least through the end of the
then next fiscal year and the final Business Plan within fifteen (15) days prior
to the end of Borrower's fiscal year. In each event, such updated and extended
Business Plans shall be prepared pursuant to a methodology and shall include
such assumptions as are satisfactory to the Lender. Routinely throughout the
year, the Lender, following the receipt of any of such revised forecast which
reflects material adverse business performance, may, but shall not be under any
obligation to, revise the financial performance covenants included on EXHIBIT
9-11, annexed hereto.

     9-11.  FINANCIAL PERFORMANCE AND INVENTORY COVENANTS. The Borrower shall
observe and comply with those financial performance and inventory covenants set
forth on EXHIBIT 9-11 annexed hereto.

     9-12.  ELECTRONIC REPORTING. At Lender's option all information and reports
required to be supplied to Lender by Borrower shall be transmitted
electronically pursuant to an electronic transmitting reporting system, to the
extent that the Borrower maintains such electronic reporting system, and shall
be in a record layout format designated by Lender from time to time.

ARTICLE 10 - EVENTS OF DEFAULT

     The occurrence of any event described in this Article 10 respectively
shall constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event
of Default described in Section 10-11, any and all Liabilities shall become due
and payable without any further act on the part of the Lender. Upon the
occurrence of any other Event of Default, any and all Liabilities shall become
immediately due and payable, at the option of the Lender and without notice or
demand. The occurrence of any Event of Default shall also constitute, without
notice or demand, a default under

                                      -37-
<Page>

all other agreements between the Lender and the Borrower and instruments and
papers given the Lender by the Borrower, whether such agreements, instruments,
or papers now exist or hereafter arise.

     10-1.  FAILURE TO PAY REVOLVING CREDIT. The failure by the Borrower to pay
any amount when due under the Revolving Credit.

     10-2.  FAILURE TO MAKE OTHER PAYMENTS. The failure by the Borrower to pay
when due (or upon demand, if payable on demand) any payment Liability other than
under the Revolving Credit.

     10-3.  FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD). The
failure by the Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any covenant or Liability not otherwise described in
section 10-1 or section 10-2, above, and included in any of the following
provisions hereof:

<Table>
<Caption>
                  Section        Relates to:
                  -------        -----------
                  <S>            <C>
                  5-4            Location of Collateral
                  5-5            Title to Assets
                  5-6            Indebtedness
                  5-7            Insurance Policies
                  5-12           Pay Taxes
                  5-21           Affiliate Transactions
                  5-23           Additional Assurances
                  Article 7      Cash Management
                  Article 9      Financial Reporting Requirements and Financial
                                 Covenants (subject to Section 10-4, below).
</Table>

     10-4.  FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The failure
by the Borrower to promptly, punctually and faithfully perform, or observe any
term, covenant or agreement on its part to be performed or observed pursuant to
any of the provisions of this Agreement, other than those described in Sections
10-1, 10-2 or 10-3, or in any other agreement with Lender which is not remedied
within the earlier of ten (10) days after (i) notice thereof by Lender to
Borrower, or (ii) the date Borrower was required to give notice to Lender
pursuant to Section 9-3(a)(vi) hereof. Notwithstanding the inclusion of the
reference to Article 9 in Section 10-3, above, once during the first year after
the date hereof, if the Borrower fails to deliver any reports required pursuant
to Sections 9-4 and 9-5, the Lender shall so notify the Borrower and the
Borrower shall not be deemed to have failed to comply if the Borrower delivers
such reports within three (3) days after notice.

                                      -38-
<Page>

     10-5.  MISREPRESENTATION. The determination by the Lender that any
representation or warranty at any time made by the Borrower to the Lender was
not true or complete in all material respects when given.

     10-6.  ACCELERATION OF OTHER DEBT, BREACH OF LEASE. The occurrence of any
event such that any Indebtedness of the Borrower to any creditor other than the
Lender could be accelerated or, without the consent of the Borrower, any Lease
could be terminated (whether or not the subject creditor or lessor takes any
action on account of such occurrence).

     10-7.  DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach or
default under any agreement between the Lender and the Borrower or instrument or
paper given the Lender by the Borrower, whether such agreement, instrument, or
paper now exists or hereafter arises (notwithstanding that the Lender may not
have exercised its rights upon default under any such other agreement,
instrument or paper).

     10-8.  CASUALTY LOSS, NON-ORDINARY COURSE SALES. The occurrence of any (a)
uninsured loss, theft, damage, or destruction of or to any material portion of
the Collateral, or (b) sale (other than sales in the ordinary course of
business) of any material portion of the Collateral.

     10-9.  JUDGMENT, RESTRAINT OF BUSINESS.

            (a)   The service of process upon the Lender or any Participant
seeking to attach, by trustee, mesne, or other process, any of the Borrower's
funds on deposit with, or assets of the Borrower in the possession of, the
Lender or such Participant.

            (b)   The entry of any judgment against the Borrower, which judgment
is not satisfied (if a money judgment) or appealed from (with execution or
similar process stayed) within fifteen (15) days of its entry.

            (c)   The entry of any order or the imposition of any other process
having the force of law, the effect of which is to restrain in any material way
the conduct by the Borrower of its business in the ordinary course.

     10-10. BUSINESS FAILURE. Any act by, against, or relating to the Borrower,
or its property or assets, which act constitutes the application for, consent
to, or sufferance of the appointment of a receiver, trustee, or other Person,
pursuant to court action or otherwise, over all, or any part of the Borrower's
property; the granting of any trust mortgage or execution of an assignment for
the benefit of the creditors of the Borrower, or the occurrence of any other
voluntary or involuntary liquidation or extension of debt agreement for the
Borrower; or the offering by or entering into by the Borrower of any
composition, extension, or any other arrangement seeking relief from or
extension of the debts of the Borrower, or the initiation of any other judicial
or non-judicial proceeding or agreement by, against, or including the Borrower
which seeks or intends to accomplish a reorganization or arrangement with
creditors.

                                      -39-
<Page>

     10-11. BANKRUPTCY. The failure by the Borrower to generally pay the debts
of the Borrower as they mature; the filing of any complaint, application, or
petition by or against the Borrower initiating any matter in which the Borrower
is or may be granted any relief from the debts of the Borrower pursuant to the
Bankruptcy Code or any other insolvency statute or procedure.

     10-12. INSECURITY. The occurrence of any event or circumstance with respect
to the Borrower such that Lender shall believe in good faith that the prospect
of payment of all or any part of the Liabilities or the performance by the
Borrower under this Agreement or any other agreement between the Lender and the
Borrower is impaired.

     10-13. DEFAULT BY GUARANTOR OR RELATED ENTITY. The occurrence of any of the
foregoing Events of Default with respect to any guarantor of the Liabilities, or
the occurrence of any of the foregoing Events of Default with respect to any
parent (if the Borrower is a corporation), subsidiary, or Related Entity, as if
such guarantor, parent, or Related Entity were the "Borrower" described therein.

     10-14. INDICTMENT - FORFEITURE. The indictment of, or institution of any
legal process or proceeding against, the Borrower, any Executive Officer or any
guarantor of the Liabilities under any federal, state, municipal, and other
civil or criminal statute, rule, regulation, order, or other requirement having
the force of law where the relief, penalties, or remedies sought or available
include the forfeiture of any material property of the Borrower and/or the
imposition of any stay or other order, the effect of which could be to restrain
in any material way the conduct by the Borrower of its business in the ordinary
course.

     10-15. TERMINATION OF GUARANTY. The termination or attempted termination of
any guaranty by any guarantor of the Liabilities.

     10-16. CHALLENGE TO LOAN DOCUMENTS.

            (a)   Any challenge by or on behalf of the Borrower or any guarantor
of the Liabilities to the validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment
made pursuant thereto.

            (b)   Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.

     10-17. EXECUTIVE MANAGEMENT. The death, disability, or failure of any
Executive Officer at any time to exercise that authority and discharge those
management responsibilities with respect to the Borrower as are exercised and
discharged by such Person at the execution of this Agreement.

                                      -40-
<Page>

unless (i) replaced by a Person then employed by the Borrower and acceptable to
the Lender within thirty (30) days thereafter or (ii) if the Borrower's
intention is to replace such Executive Officer by hiring a Person not then
employed by the Borrower, then the Borrower promptly retains an executive search
firm and diligently proceeds to hire such replacement acceptable to the Lender.

     10-18. CHANGE IN CONTROL. Any change in the ownership of the capital stock
of the Borrower such that Richard Sarmiento, Patricia Smith, and Michael Smith
do not Control the Borrower.

     10-19. MATERIAL ADVERSE CHANGE. If there is a Material Adverse Change.

ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT

     In addition to all of the rights, remedies, powers, privileges, and
discretions which the Lender is provided prior to the occurrence of an Event of
Default, the Lender shall have the following rights and remedies upon the
occurrence of any Event of Default and at any time thereafter. No stay which
otherwise might be imposed pursuant to the Bankruptcy Code or otherwise shall
stay, limit, prevent, hinder, delay, restrict, or otherwise prevent the Lender's
exercise of any of such rights and remedies.

     11-1.  RIGHTS OF ENFORCEMENT. The Lender shall have all of the rights and
remedies of a secured party upon default under the UCC, in addition to which the
Lender shall have all and each of the following rights and remedies:

            (a)   To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.

            (b)   To take possession of all or any portion of the Collateral.

            (c)   To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
the Lender deems advisable and with or without the taking of possession of any
of the Collateral.

            (d)   To conduct one or more going out of business sales, strategic
sales or other sales which include the sale or other disposition of the
Collateral.

            (e)   To apply the Receivables Collateral or the proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities.

            (f)   To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.

     11-2.  SALE OF COLLATERAL.

                                      -41-
<Page>

            (a)   Any sale or other disposition of the Collateral may be at
public or private sale upon such terms and in such manner as the Lender deems
advisable, having due regard to compliance with any statute or regulation which
might affect, limit, or apply to the Lender's disposition of the Collateral.

            (b)   The Lender, in the exercise of the Lender's rights and
remedies upon default, may conduct one or more going out of business sales, in
the Lender's own right or by one or more agents and contractors. Such sale(s)
may be conducted upon any premises owned, leased, or occupied by the Borrower.
To the extent permitted by law, the Lender and any such agent or contractor, in
conjunction with any such sale, may augment the Inventory with other goods (all
of which other goods shall remain the sole property of the Lender or such agent
or contractor). Any amounts realized from the sale of such goods which
constitute augmentations to the Inventory (net of an allocable share of the
costs and expenses incurred in their disposition) shall be the sole property of
the Lender or such agent or contractor and neither the Borrower nor any Person
claiming under or in right of the Borrower shall have any interest therein.

            (c)   Unless the Collateral is perishable or threatens to decline
speedily in value, or is of a type customarily sold on a recognized market (in
which event the Lender shall provide the Borrower with such notice as may be
practicable under the circumstances), the Lender shall give the Borrower at
least five (5) days prior written notice of the date, time, and place of any
proposed public sale, and of the date after which any private sale or other
disposition of the Collateral may be made. The Borrower agrees that such written
notice shall satisfy all requirements for notice to the Borrower which are
imposed under the UCC or other applicable law with respect to the exercise of
the Lender's rights and remedies upon default.

            (d)   The Lender may purchase the Collateral, or any portion of it
at any sale held under this Article.

            (e)   The Lender shall apply the proceeds of any exercise of the
Lender's Rights and Remedies under this Article 11 towards the Liabilities in
such manner, and with such frequency, as the Lender determines.

     11-3.  OCCUPATION OF BUSINESS LOCATION. In connection with the Lender's
exercise of the Lender's rights under this Article 11, the Lender may enter
upon, occupy, and use any premises owned or occupied by the Borrower, and may
exclude the Borrower from such premises or portion thereof as may have been so
entered upon, occupied, or used by the Lender. The Lender shall not be required
to remove any of the Collateral from any such premises upon the Lender's taking
possession thereof, and may render any Collateral unusable to the Borrower. In
no event shall the Lender be liable to the Borrower for use or occupancy by the
Lender of any premises pursuant to this Article 11, nor for any charge (such as
wages for the Borrower's employees and utilities) incurred in connection with
the Lender's exercise of the Lender's Rights and Remedies.

                                      -42-
<Page>

     11-4.  GRANT OF NONEXCLUSIVE LICENSE. The Borrower hereby grants to the
Lender a royalty free nonexclusive irrevocable license to use, apply, and affix
any trademark, tradename, logo, or the like in which the Borrower now or
hereafter has rights, such license being with respect to the Lender's exercise
of the rights hereunder including, without limitation, in connection with any
completion of the manufacture of Inventory or sale or other disposition of
Inventory.

     11-5.  ASSEMBLY OF COLLATERAL. The Lender may require the Borrower to
assemble the Collateral and make it available to the Lender at the Borrower's
sole risk and expense at a place or places which are reasonably convenient to
both the Lender and Borrower.

     11-6.  RIGHTS AND REMEDIES. The rights, remedies, powers, privileges, and
discretions of the Lender hereunder (herein, the "LENDER'S RIGHTS AND REMEDIES")
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have. No delay or omission by the Lender in exercising or enforcing
any of the Lender's Rights and Remedies shall operate as, or constitute, a
waiver thereof. No waiver by the Lender of any Event of Default or of any
default under any other agreement shall operate as a waiver of any other default
hereunder or under any other agreement. No single or partial exercise of any of
the Lender's Rights or Remedies, and no express or implied agreement or
transaction of whatever nature entered into between the Lender and any Person,
at any time, shall preclude the other or further exercise of the Lender's Rights
and Remedies. No waiver by the Lender of any of the Lender's Rights and
Remedies on any one occasion shall be deemed a waiver on any subsequent
occasion, nor shall it be deemed a continuing waiver. All of the Lender's Rights
and Remedies and all of the Lender's rights, remedies, powers, privileges, and
discretions under any other agreement or transaction are cumulative, and not
alternative or exclusive, and may be exercised by the Lender at such time or
times and in such order of preference as the Lender in its sole discretion may
determine. The Lender's Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Liabilities.

ARTICLE 12 - NOTICES

     12-1.  NOTICE ADDRESSES. All notices, demands, and other communications
made in respect of this Agreement (other than a request for a loan or advance or
other financial accommodation under the Revolving Credit) shall be made to the
following addresses, each of which may be changed upon seven (7) days written
notice to all others given by certified mail, return receipt requested:

     If to the Lender:                Paragon Capital LLC
                                      Hillsite Office Building
                                      75 Second Avenue, Suite 400
                                      Needham, Massachusetts 02494
                                      Attention: Andrew H. Moser, President
                                      Phone: (781) 707-2100
                                      Fax:   (781) 707-2107

                                      -43-
<Page>

     With a copy to:                  Robert E. Paul, Esq.
                                      Riemer & Braunstein LLP
                                      3 Center Plaza
                                      Boston, Massachusetts 02108
                                      Phone: (617) 523-9000
                                      Fax:   (617) 880-3456

     If to the Borrower:              The White House, Inc.
                                      6711 Baymeadow Drive
                                      Glen Burnie, Maryland 21060
                                      Attention: Richard Sarmiento
                                      Phone: (410) 487-7747 x105
                                      Fax:   (410) 487-4688

     With a copy to:                  Hillman, Brown & Darrow, P.A.
                                      221 Duke of Gloucester Street
                                      Annapolis, Maryland 21404-0668
                                      Attention: Jeffrey S. Marcalus, Esquire
                                      Phone: (410) 263-3131
                                      Fax:   (410) 269-5555

     12-2.  NOTICE GIVEN.

            (a)   Except as otherwise specifically provided herein, notices
shall be deemed made and correspondence received, as follows (all times being
local to the place of delivery or receipt):

                  (i)    By mail: the sooner of when actually received or three
(3) days following deposit in the United States mail, postage prepaid.

                  (ii)   By recognized overnight express delivery: the Banking
Day following the day when sent.

                  (iii)  By hand: If delivered on a Banking Day after 9:00 A.M.
and no later than three (3) hours prior to the close of customary business hours
of the recipient, when delivered. Otherwise, at the opening of the then next
Banking Day.

                  (iv)   By facsimile transmission (which must include a header
indicating the party sending such transmission): If sent on a Banking Day after
9:00 A.M. and no later than Three (3) hours prior to the close of customary
business hours of the recipient, one (1) hour after being sent. Otherwise, at
the opening of the then next Banking Day.

                                      -44-
<Page>

            (b)   Rejection or refusal to accept delivery and inability to
deliver because of a changed address or facsimile number for which no due notice
was given shall each be deemed receipt of the notice sent.

ARTICLE 13 - TERM

     13-1.  TERMINATION OF REVOLVING CREDIT. This Agreement is, and is intended
to be, a continuing agreement and shall remain in full force and effect for an
initial term ending on the earlier of (i) the Maturity Date, or (ii) December
31, 2003, unless on or before October 31, 2003 the Borrower receives the waiver
from the Borrower's stockholders of any requirement to make any mandatory
distributions of cash dividends or other payments. If such waiver is obtained
this Agreement shall after the Maturity Date be renewed for successive
twelve-month periods, each beginning on the 31st day of August (commencing
August 31, 2005) of each year and ending on August 30 of the following year
(each such twelve-month period is hereinafter referred to as a "RENEWAL TERM");
provided, however, that either party may terminate this Agreement as of the end
of the initial term or any subsequent renewal term by giving the other party
notice to terminate in writing at least ninety (90) days prior to the end of any
such period whereupon at the end of such period all Liabilities shall be due and
payable in full without presentation, demand, or further notice of any kind,
whether or not all or any part of the Liabilities is otherwise due and payable
pursuant to the agreement or instrument evidencing same. Lender may terminate
this Agreement immediately and without notice upon the occurrence of an Event of
Default. Notwithstanding the foregoing or anything in this Agreement or
elsewhere to the contrary, the security interest, Lender's rights and remedies
hereunder and Borrower's obligations and liabilities hereunder shall survive any
termination of this Agreement and shall remain in full force and effect until
all of the Liabilities outstanding, or contracted or committed for (whether or
not outstanding), before the receipt of such notice by Lender, and any
extensions or renewals thereof (whether made before or after receipt of such
notice), together with interest accruing thereon after such notice, shall be
finally and irrevocably paid in full. No Collateral shall be released or
financing statement terminated until such final and irrevocable payment in full
of the Liabilities, as described in the preceding sentence.

     13-2.  EFFECT OF TERMINATION. Upon the termination of Revolving Credit, the
Borrower shall pay the Lender (whether or not then due), in immediately
available funds, all then Liabilities including, without limitation: the entire
balance of the Loan Account; any then remaining installments of the Origination
Fee; any then remaining balances of the Annual Facility Fee and Collateral
Monitoring Fee; any Prepayment Premium and all unreimbursed costs and expenses
of the Lender for which the Borrower is responsible, and shall make such
arrangements concerning any L/C's then outstanding are reasonably satisfactory
to the Lender. Until such payment, all provisions of this Agreement, other than
those contained in Article 1 which place an obligation on the Lender to make any
loans or advances or to provide financial accommodations under the Revolving
Credit or otherwise, shall remain in full force and effect until all Liabilities
shall have been paid in full. The release by the Lender of the security
interests granted the Lender by the Borrower hereunder may be upon such
conditions and indemnifications as the Lender may require.

                                      -45-
<Page>

     13-3.  PREPAYMENT PREMIUM. If Borrower pays in full all or substantially
all of the Liabilities prior to the end of the initial term of this Agreement
(or any renewal term), other than temporarily from funds internally generated in
the ordinary course of business, or from funds made available in connection with
an initial public offering provided that this Agreement is not terminated, then
at the time of such payment Borrower shall also pay to Lender a prepayment
premium in an amount equal to: (i) three (3%) percent of the Credit Limit, if
paid during the first year after the date of this Agreement, (it) two (2%)
percent of the Credit Limit, if prepaid during the second year after the date of
this Agreement, and (iii) one-half (.5%) percent of the Credit Limit, if prepaid
after the second anniversary of this Agreement. Any tender of payment in full of
the Liabilities following an acceleration by Lender of the Liabilities pursuant
to Article 10 hereof, shall be for purposes of this section deemed to be a
prepayment requiring Borrower to pay the aforementioned prepayment premium. The
above fee shall be reduced by fifty percent (50%) if the Lender is prepaid as a
result of an initial public offering and the Lender is provided the right of
first refusal with respect to any financing in connection with such initial
public offering, or if the prepayment is based upon the sale of the stock or
assets of the Borrower, the Lender is furnished the right of first refusal to
finance the acquirer.

            Such prepayment premium shall be paid to Lender as liquidated
damages for the loss of the bargain by Lender and not as a penalty.

ARTICLE 14 - GENERAL

     14-1.  PROTECTION OF COLLATERAL. The Lender has no duty as to the
collection or protection of the Collateral beyond the safe custody of such of
the Collateral as may come into the possession of the Lender and shall have no
duty as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Lender may include reference to the Borrower (and may
utilize any logo or other distinctive symbol associated with the Borrower) in
connection with any advertising, promotion, or marketing undertaken by the
Lender.

     14-2.  SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrower and the Borrower's representatives, successors, and assigns and shall
enure to the benefit of the Lender and the Lender's successors and assigns
provided, however, no trustee or other fiduciary appointed with respect to the
Borrower shall have any rights hereunder. In the event that the Lender assigns
or transfers its rights under this Agreement, the assignee shall thereupon
succeed to and become vested with all rights, powers, privileges, and duties of
the Lender hereunder and the Lender shall thereupon be discharged and relieved
from its duties and obligations hereunder.

     14-3.  SEVERABILITY. Any determination that any provision of this Agreement
or any application thereof is invalid, illegal, or unenforceable in any respect
in any instance shall not affect the validity, legality, or enforceability of
such provision in any other instance, or the validity, legality, or
enforceability of any other provision of this Agreement.

     14-4.  AMENDMENTS, COURSE OF DEALING.

                                      -46-
<Page>

            (a)   This Agreement and the other Loan Documents incorporate all
discussions and negotiations between the Borrower and the Lender, either express
or implied, concerning the matters included herein and in such other
instruments, any custom, usage, or course of dealings to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course of
dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by the Lender to give notice to the Borrower of the Borrower's having
failed to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the amendment
of the subject Loan Document. No change made by the Lender in the manner by
which Availability is determined shall obligate the Lender to continue to
determine Availability in that manner.

            (b)   The Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Lender. No consent, modification,
amendment, or waiver of any provision of any Loan Document shall be effective
unless executed in writing by or on behalf of the party to be charged with such
modification, amendment, or waiver (and if such party is the Lender, then by a
duly authorized officer thereof). Any modification, amendment, or waiver
provided by the Lender shall be in reliance upon all representations and
warranties theretofore made to the Lender by or on behalf of the Borrower (and
any guarantor, endorser, or surety of the Liabilities) and consequently may be
rescinded in the event that any of such representations or warranties was not
true and complete in all material respects when given.

     14-5.  POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, the Borrower hereby grants unto the Lender full
power to do any and all things necessary or appropriate in connection with the
exercise of such powers as fully and effectually as the Borrower might or could
do, hereby ratifying all that said attorney shall do or cause to be done by
virtue of this Agreement. No power of attorney set forth in this Agreement shall
be affected by any disability or incapacity suffered by the Borrower and each
shall survive the same. All powers conferred upon the Lender by this Agreement,
being coupled with an interest, shall be irrevocable until this Agreement is
terminated by a written instrument executed by a duly authorized officer of the
Lender.

     14-6.  APPLICATION OF PROCEEDS. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the Lender
determines in its sole discretion. The Borrower shall remain liable for any
deficiency remaining following such application.

     14-7.  LENDER'S COSTS AND EXPENSES. The Borrower shall pay on demand all
Costs of Collection and all reasonable expenses of the Lender in connection with
the preparation, execution, and delivery of this Agreement and of any other Loan
Documents, whether now existing or hereafter arising, and all other reasonable
expenses which may be incurred by the Lender in monitoring compliance with this
Agreement and in preparing or amending this Agreement and all other

                                      -47-
<Page>

agreements, instruments, and documents related thereto, or otherwise incurred
with respect to the Liabilities, including, without limiting the generality of
the foregoing, any counsel fees or expenses incurred in any bankruptcy or
insolvency proceedings. The Borrower specifically authorizes the Lender to pay
all such fees and expenses and in the Lender's discretion, to add such fees and
expenses to the Loan Account. Borrower shall be obligated, from time to time, to
pay Lender's fees, including reasonable attorneys' fees and expenses for the
preparation, negotiation, amendment and interpretation of this Agreement and
related documents.

     14-8.  COPIES AND FACSIMILES. This Agreement and all documents which relate
thereto, which have been or may be hereinafter furnished the Lender may be
reproduced by the Lender by any photographic, microfilm, xerographic, digital
imaging, or other process, and the Lender may destroy any document so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made in the
regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such
transmission was received.

     14-9.  MASSACHUSETTS LAW. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of The Commonwealth of Massachusetts.

     14-10. CONSENT TO JURISDICTION.

            (a)   The Borrower agrees that any legal action, proceeding, case,
or controversy against the Borrower with respect to any Loan Document may be
brought in the Superior Court of Middlesex County, Massachusetts or in the
United States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Lender may elect in the Lender's sole discretion. By
execution and delivery of this Agreement, the Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.

            (b)   Nothing herein shall affect the right of the Lender to bring
legal actions or proceedings in any other competent jurisdiction.

            (c)   The Borrower agrees that any action commenced by the Borrower
asserting any claim or counterclaim arising under or in connection with this
Agreement or any other Loan Document shall be brought solely in the Superior
Court of Middlesex County, Massachusetts or in the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, and that such
Courts shall have exclusive jurisdiction with respect to any such action.

     14-11. INDEMNIFICATION. The Borrower shall indemnify, defend, and hold the
Lender and any employee, officer, or agent of the Lender (each, an "INDEMNIFIED
PERSON") harmless of and from

                                      -48-
<Page>

any damages, losses, obligations, liabilities, claims, actions or causes of
action, including without limitation, with respect to taxes and interest and
penalties with respect thereto, brought or threatened against any Indemnified
Person by the Borrower, any guarantor or endorser of the Liabilities, or any
other Person (as well as from attorneys' reasonable fees and expenses in
connection therewith) on account of the relationship of the Borrower or of any
guarantor or endorser of the Liabilities with the Lender or any other
Indemnified Person(each of which claims may be defended, compromised, settled,
or pursued by the Indemnified Person with counsel of the Lender's selection, but
at the expense of the Borrower) other than any claim as to which a final
determination is made in a judicial proceeding (in which the Lender and any
other Indemnified Person has had an opportunity to be heard), which
determination includes a specific finding that the Indemnified Person seeking
indemnification had acted in a grossly negligent manner or in actual bad faith.
This indemnification shall survive payment of the Liabilities and/or any
termination, release, or discharge executed by the Lender in favor of the
Borrower.

     14-12. RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to the undersigned from the Lender or from any participant (a
"PARTICIPANT") with the Lender in the credit facility contemplated hereby and
any cash, securities, instruments or other property of the undersigned in the
possession of the Lender or any Participant, whether for safekeeping or
otherwise (regardless of the reason such Person had received the same) shall at
all times constitute security for all Liabilities and for any and all
obligations of the undersigned to the Lender and any Participant, and may be
applied or set off against the Liabilities and against such obligations at any
time, whether or not such are then due and whether or not other collateral is
then available to the Lender or any Participant.

     14-13. USURY SAVINGS CLAUSE. It is the intention of the parties hereto to
comply strictly with applicable usury laws, if any; accordingly, notwithstanding
any provisions to the contrary in this Agreement or any other Loan Documents, in
no event shall this Agreement or such Loan Document require or permit the
payment, taking, reserving, receiving, collecting or charging of any sums
constituting interest under applicable laws which exceed the maximum amount
permitted by such laws. If any such excess interest is called for, contracted
for, charged, paid, taken, reserved, collected or received in connection with
the Liabilities or in any communication by Lender or any other Person to the
Borrower or any other Person, or in the event all or part of the principal of
the Liabilities or interest thereon shall be prepaid or accelerated, so that
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, collected, reserved, or
received on the amount of principal actually outstanding from time to time under
this Agreement shall exceed the maximum amount of interest permitted by
applicable usury laws, if any, then in any such event it is agreed as follows:
(i) the provisions of this paragraph shall govern and control, (ii) neither the
Borrower nor any other Person or entity now or hereafter liable for the payment
of the Liabilities shall be obligated to pay the amount of such interest to the
extent such interest is in excess of the maximum amount of interest permitted by
applicable usury laws, if any, (iii) any such excess which is or has been
received notwithstanding this paragraph shall be credited against the then
unpaid principal balance hereof or, if the Liabilities have been or would be
paid in full by such credit, refunded to the Borrower, and (iv) the provisions
of this Agreement and

                                      -49-
<Page>

the other Loan Documents, and any communication to the Borrower, shall
immediately be deemed reformed and such excess interest reduced, without the
necessity of executing any other document, to the maximum lawful rate allowed
under applicable laws as now or hereafter construed by courts having
jurisdiction hereof or thereof. Without limiting the foregoing, all calculations
of the rate of interest contracted for, charged, taken, collected, reserved, or
received in connection herewith which are made for the purpose of determining
whether such rate exceeds the maximum lawful rate shall be made to the extent
permitted by applicable laws by amortizing, prorating, allocating and spreading
during the period of the full term of the Liabilities, including all prior and
subsequent renewals and extensions, all interest at any time contracted for,
charged, taken, collected, reserved or received. The terms of this paragraph
shall be deemed to be incorporated in every Loan Document and communication
relating to the Liabilities.

     14-14. WAIVERS.

            (a)   The Borrower and each and every guarantor, endorser, and
surety of the Liabilities) makes each of the waivers included in Section
14-14(b), below, knowingly, voluntarily, and intentionally, and understands that
the Lender, in entering into the financial arrangements contemplated hereby and
in providing loans and other financial accommodations to or for the account of
the Borrower as provided herein, whether not or in the future, is relying on
such waivers.

            (b)   THE BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY
RESPECTIVELY WAIVES THE FOLLOWING.

                  (i)    Except as otherwise specifically required in this
Agreement, notice of non-payment, demand, presentment, protest and all forms of
demand and notice, both with respect to the Liabilities and the Collateral.

                  (ii)   Except as otherwise specifically required in this
Agreement, the right to notice and/or hearing prior to the Lender's exercising
of the Lender's rights upon default.

                  (iii)  THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE LENDER OR IN WHICH THE LENDER IS
JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN
RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN THE BORROWER OR ANY OTHER PERSON
AND THE LENDER (AND THE LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL
OF ANY SUCH CASE OR CONTROVERSY).

                  (iv)   The benefits or availability of any stay, limitation,
hindrance, delay, or restriction (including, without limitation, any automatic
stay which otherwise might be imposed pursuant to Section 362 of the Bankruptcy
Code) with respect to any action which the Lender may or may become entitled to
take hereunder.

                                      -50-
<Page>

                  (v)    Any defense, counterclaim, set-off, recoupment, or
other basis on which the amount of any Liability, as stated on the books and
records of the Lender, could be reduced or claimed to be paid otherwise than in
accordance with the tenor of and written terms of such Liability.

                  (vi)   Any claim to consequential, special, or punitive
damages.

     14-15. CONFIDENTIALITY. (a) This Agreement and the terms hereof are
confidential, and neither the contents of this Agreement or the details of this
Agreement may be shown or disclosed by the Borrower to any bank, finance company
or other lender without the prior written consent of the Lender.

            (b)   The Lender agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the consent of
the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Lender on a nonconfidential basis from a source other than the
Borrower. For the purposes of this Section, the term "INFORMATION" means all
information received from the Borrower relating to its business, other than any
such information that is available to the Lender on a nonconfidential basis
prior to disclosure by the Borrower. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

     14-16. RIGHT TO PUBLISH NOTICE. Lender may, at Lender's discretion and
expense, publicize or otherwise advertise by so-called "tombstone" advertising
or otherwise Lender's and any Participant's financing transaction with the
Borrower.

     14-17. ENTITIES RELATED TO LENDER. Borrower acknowledges notice that Lender
is affiliated with The Ozer Group, LLC ("OZER"), Ozer Valuation Service, Inc.
("OZER VALUATION"), Ozer Wholesale Services, Inc. ("OWS") and Ozer Retail
Services LLC ("ORS"). Ozer, Ozer Valuation, OWS, ORS and other entities related
to Lender may, from time to time act as a merchant consultant or provide
merchant services, appraisal services or other services (including without
limitation,

                                      -51-
<Page>

observation of physical inventories conducted in the ordinary course or in
connection with store closings) to Lender with respect to Borrower. Borrower
agrees that none of Lender, Ozer, Ozer Valuation, OWS, ORS nor any other related
entities shall have any liability to Borrower, and Borrower agrees that Borrower
shall have no claim against any of such entities, based on the existence of such
relationship.

     14-18. CREDIT INQUIRIES. Borrower authorizes Lender to (provided, however,
Lender shall incur no liability for the failure to) respond to credit inquiries
concerning Borrower in accordance with Lender's normal and customary practices.
Borrower hereby indemnifies and holds Lender harmless for any action taken by
Lender in reliance upon the foregoing authorization.

     Executed as a sealed instrument this 23rd day of August, 2000.

                                       THE WHITE HOUSE, INC.
                                       (BORROWER)

                                       By: /s/ Richard Sarmiento
                                          --------------------------------------
                                       Print Name: Richard Sarmiento
                                                   -----------------------------
                                       Title: President & CEO
                                              ----------------------------------

                                       PARAGON CAPITAL LLC
                                       (LENDER)

                                       By: /s/ [ILLEGIBLE]
                                          --------------------------------------
                                       Print Name: [ILLEGIBLE]
                                                   -----------------------------
                                       Title: EVP, Chief Credit Officer
                                              ----------------------------------

                                      -52-
<Page>

                                   EXHIBIT 1-6

                                   MASTER NOTE
                                   (REVOLVING)

$10,000,000.00                                            Needham, Massachusetts
                                                                 August 23, 2000

     For value received, the undersigned, The White House, Inc., a Maryland
corporation (the "BORROWER"), hereby promises to pay on August 30, 2005, to the
order of Paragon Capital LLC, a Delaware limited liability company (the
"LENDER"), at its main office in Needham, Massachusetts, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of Ten
Million ($10,000,000.00) Dollars or, if less, the aggregate unpaid principal
amount of all advances made by the Lender to the Borrower hereunder, together
with interest on the principal amount hereunder remaining unpaid from time to
time, computed on the basis of the actual number of days elapsed and a 360-day
year, from the date hereof until this Note is fully paid at the rate from time
to time in effect under the Loan and Security Agreement of even date herewith
(the "LOAN AGREEMENT") by and between the Lender and the Borrower. The principal
hereof and interest accruing thereon shall be due and payable as provided in the
Loan Agreement. This Note may be prepaid only in accordance with the Loan
Agreement.

     This Note is issued pursuant, and is subject, to the Loan Agreement, which
provides, among other things, for acceleration hereof. This Note is the Master
Note referred to in the Loan Agreement.

     This Note is secured, among other things, pursuant to the Loan Agreement
and may now or hereafter be secured by one or more other security agreements,
mortgages, deeds of trust, assignments or other instruments or agreements.

     The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses in the event this Note is not paid when due,
whether or not legal proceedings are commenced.

     Presentment or other demand for payment, notice of dishonor and protest are
expressly waived.

     This Note shall be deemed to be under seal.

                                          THE WHITE HOUSE, INC.

                                          By:
                                             --------------------------------

<Page>

                                    EXHIBIT 3

     "Acceptable Inventory": Such of the Borrower's Inventory, at such
locations, and of such types, character, qualities and quantities, (net of
Inventory Reserves) as the Lender in its sole discretion from time to time
determines to be acceptable for borrowing, as to which Inventory, the Lender has
a perfected security interest which is prior and superior to all security
interests, claims, and Encumbrances.

     "Account Debtor": Has the meaning given that term in the UCC.

     "Accounts Receivable" include, without limitation, "accounts" as defined in
the UCC.

     "ACH": Automated clearing house.

     "Advance Rates": Means the percentage(s) of the Cost of Acceptable
Inventory or Net Retail Liquidation Value used to calculate the Borrowing Base.

     "Affiliate": With respect to any two Persons, a relationship in which (a)
one holds, directly or indirectly, not less than twenty-five (25%) percent of
the capital stock, beneficial interests, partnership interests, or other equity
interests of the other; or (b) one has, directly or indirectly, Control of the
other; or (c) not less than twenty-five (25%) percent of their respective
ownership is directly or indirectly held by the same third Person.

     "Annual Facility Fee": Is defined in Section l-9(a).

     "Applicable Margin": The per annum rates set forth below:

<Table>
<Caption>
            Loan                             Applicable Margin
            <S>                                    <C>
            Standard Line                           .25%

            Special Subline                        2.00%

            Special Subline subject to             1.50%
            satisfaction of financial
            covenant described below
</Table>

     The Applicable Margin for the Special Subline shall be reduced on the date
that the Borrower delivers to the Lender the financial statements required under
Exhibit 9-R hereof, with the first said adjustment based on the financial
statements to be delivered for the six (6) month period ending January 27, 2000,
that the Borrower achieves ninety percent (90%) of its EBITDA projection (as
shown on Exhibit 9-11) on a trailing six (6) month basis. If the Borrower fails
to meet such projections in any quarter, the interest rate shall be set at the
highest rate for the Special Subline, shown above, until the Borrower satisfies
the terms for adjustment described above.

<Page>

     "Availability": Means at any time of determination an amount equal to the
lesser of the Borrowing Base and the Credit Limit in either case, minus (i) the
then unpaid principal balance of the Loan Account, minus (ii) the then aggregate
of such Reserves (other than Inventory Reserves) as may have been established by
Lender, minus (iii) one hundred (100%) percent of the then outstanding Stated
Amount of all L/C's plus all freight and duty charges applicable thereto, plus
(iv) the product of a percentage equal to the difference between one hundred
(100%) percent and the then applicable Advance Rate times the then outstanding
Stated Amount of all Documentary L/C's with an expiration of thirty (30) days
or less from the date of issuance.

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

            (a)   Rent (based upon past due rent and/or whether or not
     Landlord's Waiver, acceptable to the Lender, has been received by the
     Lender).

            (b)   In store customer credits and gift certificates.

            (c)   Payable (based upon payables which are past due normal trade

     terms).

            (d)   Frequent Shopper Programs.

            (e)   Layaway and Customer Deposits.

            (f)   Taxes and other governmental charges, including, ad valorem,
     personal property, and other taxes which may have priority over the
     security interests of the Lender in the Collateral.

            (g)   Held or post-dated checks.

     "Average Unused Portion of the Credit Limit": Means, as of any date of
determination, (a) the Credit Limit, minus (b) the sum of (i) the average daily
balance of advances that were outstanding dining the immediately preceding
month, plus, (ii) the average daily balance of the undrawn L/C's outstanding
during the immediately preceding month.

     "Banking Day": Any day other than (a) a Saturday, Sunday; (b) any day on
which banks in Boston, Massachusetts are not open to the general public for the
purpose of conducting commercial banking business; or (c) a day on which the
Leader is not open to the general public to conduct business.

     "Bankruptcy Code": Title 11, U.S.C., as amended from time to time.

                                       -2-
<Page>

     "Base": The Base Rate announced from time to time by Wells Fargo Bank, N.A.
(or any successor in interest to Wells Fargo Bank, N A.). In the event that said
bank (or any such successor) ceases to announce such a rate, "Base" shall refer
to that rate or index announced or published from time to time as the Lender, in
good faith, designates as the functional equivalent to said Base Rate. Any
change in "Base" shall be effective, for purposes of the calculation of interest
due hereunder, when such change is made effective generally by the bank on whose
rate or index "Base" is being set.

     "Basis Point(s)": An amount which is equal to l/100th of one (1%) percent.
For example, one and one-half (1.5%) percent equals 150 basis points.

     "Blocked Account": Is defined in Article 7-1(b)(i).

     "Borrower": Is defined in the Preamble.

     "Borrowing Base": Means the aggregate of (A) up to the lesser of (i) the
Credit Limit - Standard Line, or (ii) sixty-four (64%) percent of the Cost of
Acceptable Inventory; or (iii) eighty (80%) percent of the Net Retail
Liquidation Value (the "Standard Line"), plus, (B) during the months of
September, October, and November, up to the lesser of, (i) the Credit Limit -
Special Subline, or (ii) twenty-one (21%) percent of the Cost of Acceptable
Inventory; or (iii) twenty (20%) percent of the Net Retail Liquidation Value,
plus, (C) during all other months, up to the lesser of, (i) the Credit Limit -
Special Subline, or (ii) sixteen (16%) percent of the Cost of Acceptable
Inventory; or (iii) twenty (20%) percent of the Net Retail Liquidation Value
(subparagraphs (B) and (C), above, being referred to as, the "Special Subline").

     "Borrowing Base Certificate": Means the certificate in the same form
attached as EXHIBIT 9-4, provided to Lender in connection with any request for
advances and/or L/C's, setting forth, among other things, Availability.

     "Business Plan": The Borrower's business plan annexed hereto as EXHIBIT
9-10 and any revision, amendment, or update of such business plan to which the
Lender has provided its written sign-off.

     "Capital Expenditures": The expenditure of funds or the incurrence of
liabilities which may be capitalized in accordance with GAAP.

     "Capital Lease": Any lease which may be capitalized in accordance with
GAAP.

     "Chattel Paper": Has the meaning given that term in the UCC.

     "Collateral": Is defined in Section 2-1.

     "Concentration Account": Is defined in Section 7-3.

                                       -3-
<Page>

     "Control": The direct or indirect power to direct or cause the direction of
the management and policies of another Person, whether through ownership of
voting securities, by contract, or otherwise. Included among such powers, with
respect to a corporation, are power to cause any of following: (a) the election
of a majority of its Board of Directors; (b) the issuance of additional shares
of its common stock; (c) the issuance and designation of rights and shares of
its preferred stock (if any); (d) the distribution and timing of dividends; (e)
the award of performance bonuses to its management; (f) the termination or
severance of officers or key employees; and (g) all or any similar matters.

     "Cost": The calculated cost of purchases, as determined from invoices
received by the Borrower, the Borrower's Purchase Journal or Stock Ledger, based
upon the Borrower's accounting practices, known to the Lender, which practices
are in effect on the date on which this Agreement was executed. "Cost" does not
include any inventory capitalization costs inclusive of advertising, but may
include other charges used in the Borrower's determination of cost of goods sold
and bringing goods to market, all within Lender's sole discretion and in
accordance with GAAP.

     "Cost Factor": The result of 1 minus the Borrower's then cumulative markup
percent derived from the Borrower's purchase journal on a rolling twelve (12)
month basis.

     "Costs of Collection": includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred by the Lender's
attorneys, and all reasonable costs incurred by the Lender in the administration
of the Liabilities and/or the Loan Documents, including, without limitation,
reasonable costs and expenses associated with travel on behalf of the Lender,
which costs and expenses are directly or indirectly related to or in respect of
the Lender's; administration and management of the Liabilities; negotiation,
documentation, and amendment of any Loan Document; or efforts to preserve,
protect, collect, or enforce the Collateral, the Liabilities, and/or the
Lender's Rights and Remedies and/or any of the Lender's rights and remedies
against or in respect of any guarantor or other Lender liable in respect of the
Liabilities (whether or not suit is instituted in connection with such efforts).
The Costs of Collection are Liabilities, and at the Lender's option may bear
interest at the highest post-default rate which the Lender may charge the
Borrower hereunder as if such had been lent, advanced, and credited by the
Lender to, or for the benefit of, the Borrower.

     "Credit Card Processor": Means any Person which acts as a credit card
clearinghouse or processor of credit card payments accepted by Borrower.

     "Credit Limit": Means Ten Million ($10,000,000.00) Dollars.

     "Credit Limit - Standard Line" means Seven Million ($7,000,000.00) Dollars.

     "Credit Limit - Special Subline" means Three Million ($3,000,000.00)
Dollars.

                                       -4-
<Page>

     "DDA": Any checking or other demand daily depository account maintained by
the Borrower.

     "Documentary L/C": Means a documentary L/C issued to support the purchase
by Borrower of Inventory prior to its transport to a location set forth on
EXHIBIT 5-4 that provides that all draws thereunder must require presentation of
customary documentation (including, if applicable, commercial invoices, packing
lists, certificate of origin, bill of lading, an airway bill, customs clearance
documents, quota statement, certificate, beneficiaries statement and bill of
exchange, bills of lading, dock warrants, dock receipts, warehouse receipts or
other documents of title, in form and substance satisfactory to Lender and
reflecting passage to Borrower of title to first quality Inventory conforming to
Borrower's contract with the seller thereof.

     "Duly Authorized Person": Means any individual authorized by the Borrower
to request loans or financial accommodations and/or sign reports to Lender.

     "EBITDA": Means the Borrower's earnings from continuing operations
(excluding extraordinary items), before interest, taxes, depreciation and
amortization, each as determined in accordance with GAAP.

     "Employee Benefit Plan": As defined in ERISA.

     "Encumbrance": Each of the following:

            (a)   security interest, mortgage, pledge, hypothecation, lien,
     attachment, or charge of any kind (including any agreement to give any of
     the foregoing); the interest of a lessor under a Capital Lease; conditional
     sale or other title retention agreement; sale of accounts receivable or
     chattel paper; or other arrangement pursuant to which any Person is
     entitled to any preference or priority with respect to the property or
     assets of another Person or the income or profits of such other Person or
     which constitutes an interest in property to secure an obligation; each of
     the foregoing whether consensual or non-consensual and whether arising by
     way of agreement, operation of law, legal process or otherwise.

            (b)   The filing of any financing statement under the UCC or
     comparable law of any jurisdiction.

     "End Date": The date upon which both (a) all Liabilities have been paid in
full and (b) all obligations of the Lender to make loans and advances and to
provide other financial accommodations to the Borrower hereunder shall have been
irrevocably terminated.

     "Environmental Laws": (a) Any and all federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements which regulates or relates to, or imposes any standard of conduct
or liability on account of or in respect to environmental protection

                                       -5-
<Page>

matters, including, without limitation, Hazardous Materials, as is now or
hereafter in effect; and (b) the common law relating to damage to Persons or
property from Hazardous Materials.

     "ERISA": The Employee Retirement Security Act of 1974, as amended.

     "ERISA Affiliate": Any Person which is under common control with the
Borrower within the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which would be treated as a single employer under
Section 414 of the Internal Revenue Code of 1986, as amended.

     "Events of Default": Is defined in Article 10.

     "Executive Agreement": Any agreement or understanding (whether or not
written) to which the Borrower is a party or by which the Borrower may be bound,
which agreement or understanding relates to Executive Pay.

     "Executive Officer": Each of Richard Sarmiento, Stephen Hirsch, and any
other Person who (without regard to title) is the successor to any of the
foregoing or who exercises a substantial portion of the authority being
exercised, at the execution of this Agreement, by any of the foregoing or a
combination of the such authority of more than one of the foregoing or who
otherwise has Control of the Borrower.

     "Executive Pay": All salary, bonuses, and other value directly or
indirectly provided by or on behalf of the Borrower to or for the benefit of any
Executive Officer or any Affiliate, spouse, parent, or child of any Executive
Officer.

     "Funding Account": Is defined in Section 7-3.

     "GAAP": Principles which are consistent with those promulgated or adopted
by the Financial Accounting Standards Board and its predecessors (or successors)
in effect and applicable to that accounting period in respect of which reference
to GAAP is being made.

     "General Intangibles": Includes, without limitation, "general intangibles"
as defined in the UCC; and also all: rights to payment for credit extended;
deposits; amounts due to the Borrower; credit memoranda in favor of the
Borrower, warranty claims; tax refunds and abatements; insurance refunds and
premium rebates; all Investment Property and all means and vehicles of
investment or hedging, including, without limitation, options, warrants, and
futures contracts; records; customer lists; mailing lists; telephone numbers;
goodwill; causes of action; judgments; payments under any settlement or other
agreement; literary rights; rights to performance; royalties; license and/or
franchise fees; rights of admission; licenses; franchises; license agreements,
including all rights of the Borrower to enforce same; permits, certificates of
convenience and necessity, and similar rights granted by any governmental
authority; patents, patent applications, patents pending, and other intellectual
property; Internet addresses and domain names; developmental ideas and concepts;

                                       -6-
<Page>

proprietary processes; blueprints, drawings, designs, diagrams, plans, reports,
and charts; catalogs; manuals; technical data; computer software programs
(including the source and object codes therefor), computer records, computer
software, rights of access to computer record service bureaus, service bureau
computer contracts, and computer data; tapes, disks, semi-conductors chips and
printouts; trade secrets rights, copyrights, mask work rights and interests, and
derivative works and interests; user, technical reference, and other manuals and
materials; trade names, trademarks, service marks, and all good will relating
thereto; applications for registration of the foregoing; and all other general
intangible property of the Borrower in the nature of intellectual property;
proposals; cost estimates, and reproductions on paper, or otherwise, of any and
all concepts or ideas, and any matter related to, or connected with, the design,
development, manufacture, sale, marketing, leasing, or use of any or all
property produced, sold, or leased, by the Borrower or credit extended or
services performed, by the Borrower, whether intended for an individual customer
or the general business of the Borrower, or used or useful in connection with
research by the Borrower.

     "Gross Margin": With respect to the subject accounting period for which
being calculated, the following (determined in accordance with the cost method
of accounting):

                        Sales (Minus) Cost of Goods Sold
                                      Sales

     "Hazardous Materials": Any (a) hazardous materials, hazardous waste,
hazardous or toxic substances, petroleum products, which (as to any of the
foregoing) are defined or regulated as a hazardous material in or under any
Environmental Law and (b) oil in any physical state.

     "Indebtedness": All indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following:

            (a)   In respect of money borrowed (including any indebtedness which
     is non-recourse to the credit of such Person but which is secured by an
     Encumbrance on any asset of such Person) whether or not evidenced by a
     promissory note, bond, debenture or other written obligation to pay money.

            (b)   For the payment of the purchase price of goods or services
     deferred for more than thirty (30) days beyond then current trade terms
     provided to such Person by the supplier of such goods or services.

            (c)   In connection with any letter of credit or acceptance
     transaction (including, without limitation, the face amount of all letters
     of credit and acceptances issued for the account of such Person or
     reimbursement on account of which such Person would be obligated).

            (d)   In connection with the sale or discount of accounts receivable
     or chattel paper of such Person.

                                       -7-
<Page>

            (e)   On account of deposits or advances.

            (f)   As lessee under Capital Leases.

     "Indebtedness" of any Person shall also include:

            (a)   Indebtedness of others secured by an Encumbrance on any asset
     of such Person, whether or not such Indebtedness is assumed by such Person.

            (b)   Any guaranty, endorsement, suretyship or other undertaking
     pursuant to which that Person may be liable on account of any obligation of
     any third party.

            (c)   The Indebtedness of a partnership or joint venture in which
     such Person is a general partner or joint venturer.

     "Indemnified Person": Is defined in Section 14-11.

     "Inventory": Includes, without limitation, "inventory" as defined in the
Uniform Commercial Code and including all goods, merchandise, raw materials,
goods and work in process, finished goods, and other tangible personal property
now owned or hereafter acquired and held for sale or lease or furnished or to be
furnished under contracts of service or used or consumed in Borrower's business.

     "Inventory Reserves": Such reserves as may be established from time to time
by the Lender in the Lender's discretion with respect to the determination of
the saleability, at retail, of the Acceptable Inventory or which reflect such
other factors as affect the current Retail or market value of the Acceptable
Inventory. Without limiting the generality of the foregoing, Inventory Reserves
may include (but are not limited to) reserves based on the following:

            (a)   Obsolescence (determined based upon Inventory on hand beyond a
     given number of days).

            (b)   Seasonality.

            (c)   Shrinkage.

            (d)   Imbalance.

            (e)   Change in Inventory character, composition or mix.

            (f)   Markdowns (both permanent and point of sale).

                                       -8-
<Page>

            (g)   Retail markons or markups inconsistent with prior period
     practice and performance; current business plans; or advertising calendar
     and planned advertising events.

            (h)   The relationship between the amount expended for Inventory
     purchases and the cost of goods sold.

     "Investment Property": Has the meaning given that term in the Uniform
Commercial Code.

     "Issuer": The issuer of any L/C.

     "L/C": Any letter of credit, the issuance of which is procured by the
Lender for the account of the Borrower and any acceptance made on account of
such letter.

     "Landlord Lien State": Any state or other jurisdiction under whose
statutory or common law the rights of a landlord in assets of that landlord's
tenant, for unpaid rent, may be senior to a perfected security interest in such
assets.

     "Lease": Any lease or other agreement, no matter how styled or structured,
which the Borrower is entitled to the use or occupancy of any space.

     "Leasehold Interests": Shall mean the Borrower's leasehold estate or
interest in each of the properties at or upon which the Borrower conducts
business, offers any Inventory for sale, or maintains any of the Collateral,
whether or not for retail sale, together with Borrower's interest in any of the
improvements and fixtures located upon or appurtenant to each leasehold
interest.

     "Lender's Rights and Remedies": Is defined in Section 11-6.

     "Liabilities" (in the singular, "Liability"): Includes, without limitation,
all and each of the following, whether now existing or hereafter arising:

            (a)   Any and all direct and indirect liabilities, debts, and
     obligations of the Borrower to the Lender, each of every kind, nature, and
     description.

            (b)   Each obligation to repay any loan, advance, indebtedness,
     note, obligation, overdraft, or amount now or hereafter owing by the
     Borrower to the Lender (including all future advances whether or not made
     pursuant to a commitment by the Lender), whether or not any of such are
     liquidated, unliquidated, primary, secondary, secured, unsecured, direct,
     indirect, absolute, contingent, or of any other type, nature, or
     description, or by reason of any cause of action which the Lender may hold
     against the Borrower.

            (c)   All notes and other obligations of the Borrower now or
     hereafter assigned to or held by the Lender, each of every kind, nature,
     and description.

                                       -9-
<Page>

            (d)   All interest, fees, and charges and other amounts which may be
     charged by the Lender to the Borrower and/or which may be due from the
     Borrower to the Lender from time to time.

            (e)   All costs and expenses incurred or paid by the Lender in
     respect of any agreement between the Borrower and the Lender or instrument
     furnished by the Borrower to the Lender (including, without limitation,
     Costs of Collection, attorneys' reasonable fees, and all court and
     litigation costs and expenses).

            (f)   Any and all covenants of the Borrower to or with the Lender
     and any and all obligations of the Borrower to act or to refrain from
     acting in accordance with any agreement between the Borrower and the Lender
     or instrument furnished by the Borrower to the Lender.

     "Loan Account": Is defined in Section 1-5.

     "Loan Documents": This Agreement, each instrument and document executed
and/or delivered as contemplated by Article 4, and each other instrument or
document from time to time executed and/or delivered in connection with the
arrangements contemplated hereby, as each may be amended from time to time.

     "Local DDA": A depository account maintained by the Borrower, the only
contents of which may be transfers from the Funding Account and actually used
solely (i) for petty cash purposes; or (ii) for payroll.

     "Loan Maintenance Fee": Is defined in Section l-9(b).

     "Master Note": Is defined in Section 1-6.

     "Material Adverse Change": Means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower; including, without limitation, a
material adverse change in the business, prospects, operations, results or
operations, assets, liabilities or condition since the date of the latest
financial information submitted to Lender on or before the Closing Date, and
since the date of the latest financial information supplied hereunder or at any
time as compared to the Business Plan attached hereto on the date of execution
hereof as EXHIBIT 9-11(b); (b) the material impairment of Borrower's ability to
perform its obligations under the Loan Documents to which it is a party or of
Lender to enforce the Liabilities or realize upon the Collateral, (c) a material
adverse effect on the value of the Collateral or the amount that Lender would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, or (d) a material impairment
of the priority of Lender's liens with respect to the Collateral.

     "Maturity Date": August 30, 2005.

                                      -10-
<Page>

     "Net Retail Liquidation Value": Means the appraised liquidation value of
Acceptable Inventory less liquidation expenses as determined by Lender or its
agents from time to time.

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

     "Overadvance": Any amounts advanced hereunder which exceed Availability.

     "Participant": Is defined in Section 14-12.

     "Percentage Points": The number of whole (and, if indicated, fractions (or
decimal equivalents) of) integers of a percentage referred to in a financial
performance covenant. For example, if a projected percentage were fifty (50%)
percent and the actual percentage turned out to be fifty-five and 6/10 (55.6%)
percent, the variance would be 5.6 Percentage Points.

     "Person": Any natural person, and any corporation, limited liability
company, trust, partnership, joint venture, or other enterprise or entity.

     "Real Estate": Means any estates or interests in real property now owned or
hereafter acquired by Borrower.

     "Receipts": All cash, cash equivalents, checks, and credit card slips and
receipts as arise out of the sale of the Collateral and any other cash, cash
equivalents or checks otherwise received by Borrower, whether as a result of any
loan, investment by the Borrower, investment in the Borrower or otherwise.

     "Receivables Collateral": That portion of the Collateral which consists of
the Borrower's Accounts, Accounts Receivable, Contract Rights, General
Intangibles, Chattel Paper, Instruments, Investment Property, Documents of
Title, Documents, Securities, letters of credit for the benefit of the Borrower,
and bankers' acceptances held by the Borrower, and any rights to payment.

     "Related Entity":

            (a)   Any corporation, limited liability company, trust, partnership
     joint venture, or other enterprise which: is a parent, brother-sister,
     subsidiary, or affiliate, of the Borrower; could have such enterprise's tax
     returns or financial statements consolidated with the Borrower's; could be
     a member of the same controlled group of corporations (within the meaning
     of Section 1563(a)(l), (2) and (3) of the Internal Revenue Code of 1986, as
     amended from time to time) of which the Borrower is a member; Controls or
     is Controlled by the Borrower or by any Affiliate of the Borrower.

                                      -11-
<Page>

            (b)   Any Affiliate.

     "Requirement of Law": As to any Person:

            (a)(i) All statutes, rules, regulations, orders, or other
     requirements having the force of law and (ii) all court orders and
     injunctions, arbitrator's decisions, and/or similar rulings, in each
     instance ((i) and (ii)) of or by any federal, state, municipal, and other
     governmental authority, or court, tribunal, panel, or other body which has
     or claims jurisdiction over such Person, or any property of such Person, or
     of any other Person for whose conduct such Person would be responsible.

            (b)   That Person's charter, certificate of incorporation, articles
     of organization, and/or other organizational documents, as applicable; and
     (c) that Person's by-laws and/or other instruments which deal with
     corporate or similar governance, as applicable.

     "Reserves": All (if any) Availability Reserves, Inventory Reserves, and any
other reserves which may be established under the Loan Agreement.

     "Retail": The Cost of Inventory divided by the Cost Factor.

     "Revolving Credit": Is defined in Section 1-1.

     "Special Subline": is defined within the definition of Borrowing Base.

     "Standard Line": is defined within the definition of Borrowing Base.

     "Stated Amount": The maximum amount for which an L/C may be honored.

     "Suspension Event": Any occurrence, circumstance, or state of facts which
(a) is an Event of Default; or (b) would become an Event of Default if any
requisite notice were given and/or any requisite period of time were to run and
such occurrence, circumstance, or state of facts were not absolutely cured
within any applicable grace period.

     "Termination Date": The earliest of (a) the Maturity Date; or (b) the
occurrence of any event described in Section 10-11; or (c) the date set forth in
Lender's notice to the Borrower setting the Termination Date on account of the
occurrence of any Event of Default other than as described in Section 10-11.

     "UCC": The Uniform Commercial Code as presently in effect in Massachusetts
(Mass. Gen. Laws, Ch. 106).

     "Year 2000 Compliant": means that Borrower's computer software programs
(whether used in Borrower's business or licensed by or to Borrower to or from
third parties) effectively process data

                                      -12-
<Page>

including data fields requiring references to dates on and after January 1, 2000
and have been designed not to experience or produce invalid or incorrect results
or abnormal software operation related to or as a result of the occurrence of
such dates.

                                      -13-

<Page>

                 FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

     This First Amendment to Loan and Security Agreement (the "First Amendment")
is made as of the 25 day of June, 2001 by and between Wells Fargo Retail Finance
LLC (formerly known as Paragon Capital LLC) (hereinafter, "Lender"), a Delaware
limited liability company with its principal executive offices at One Boston
Place, Boston Massachusetts 02109 and The White House, Inc. (hereinafter, the
"Borrower"), a Maryland corporation with its principal executive offices at 6711
Baymeadow Drive, Glen Burnie, Maryland 21060 in consideration of the mutual
covenants herein contained and benefits to be derived herefrom.

                              W I T N E S S E T H:

     WHEREAS, on August 23, 2000, the Lender and the Borrowers entered in a
certain Loan and Security Agreement (the "Agreement"); and

     WHEREAS, the Borrower has requested that the Lender agree to amend the
Agreement to increase Credit Limit, provide increased advance rates, and amend
certain covenants; and

     WHEREAS, the Lender and the Borrower desire to modify certain of the
provisions of the Agreement as set forth herein.

     NOW, THEREFORE, it is hereby agreed among the Lender and the Borrower as
follows:

     1.     CAPITALIZED TERMS. All capitalized terms used herein and not
            otherwise defined shall have the same meaning herein as in the
            Agreement.

     2.     AMENDMENT TO ARTICLE 13. Section 13-3 of the Agreement is amended to
            read as follows:

                  13-3.  PREPAYMENT PREMIUM. If Borrower pays in full all or
            substantially all of the Liabilities prior to the end of the initial
            term of this Agreement (or any renewal term), other than temporarily
            from funds internally generated in the ordinary course of business,
            or from funds made available in connection with an initial public
            offering provided that this Agreement is not terminated, then at the
            time of such payment Borrower shall also pay to Lender a prepayment
            premium in an amount equal to: (i) three (3%) percent of the Credit
            Limit, if paid on or before August 30, 2003, (ii) two (2%) percent
            of the Credit Limit, if prepaid on or before August 30, 2004, (iii)
            one (1%) percent of the Credit Limit, if prepaid on or before August
            30, 2005, and (iv) one-half (.5%) percent of the Credit Limit, if
            prepaid on or before August 30, 2006. Any tender of payment in full
            of the Liabilities following an acceleration by tender of the
            Liabilities pursuant to ARTICLE 10 hereof, or on account of the
            provisions of Section 13-1 hereof, shall be for purposes of this
            section deemed to be a prepayment requiring Borrower to pay the
            aforementioned prepayment premium. The above fee shall be reduced by
            fifty percent (50%) if the Lender is prepaid as a result of an
            initial public offering and the Lender is provided the right of
            first refusal with respect to any financing in

<Page>

            connection with such initial public offering, or if the prepayment
            is based upon the sale of the stock or assets of the Borrower, the
            Lender is furnished the right of first refusal to finance the
            acquirer.

     3.     AMENDMENT TO EXHIBIT 3. The following Definitions contained in
            Exhibit 3 to the Agreement are amended to read as follows:

                  "Borrowing Base": Means for all months except for August and
            September, the aggregate of (A) up to the lesser of (i) the Credit
            Limit - Standard Line, or (ii) sixty-four (64%) percent of the Cost
            of Acceptable Inventory; or (iii) eighty (80%) percent of the Net
            Retail Liquidation Value; for the month of August, the aggregate of
            (A) up to the lesser of (i) the Credit Limit - Standard Line, or
            (ii) sixty-four (64%) percent of the Cost of Acceptable Inventory;
            or (iii) sixty-five (65%) percent of the Net Retail Liquidation
            Value; for the month of September, the aggregate of (A) up to the
            lesser of (i) the Credit Limit - Standard Line, or (ii) sixty-four
            (64%) percent of the Cost of Acceptable Inventory; or (iii)
            seventy-one (71%) percent of the Net Retail Liquidation Value (the
            "Standard Line"), plus, (B) (i) during the period from December 16
            through July 31, up to the lesser of, (x) the Credit Limit - Special
            Subline, or (y) sixteen (16%) percent of the Cost of Acceptable
            Inventory; or (z) twenty (20%) percent of the Net Retail Liquidation
            Value, or, (ii) during August, up to the lesser of, (x) the Credit
            Limit - Special Subline, or (y) thirty (30%) percent of the Cost of
            Acceptable Inventory; or (z) thirty (30%) percent of the Net Retail
            Liquidation Value or, (iii) during September, up to the lesser of,
            (x) the Credit Limit - Special Subline, or (y) twenty-three (23%)
            percent of the Cost of Acceptable Inventory; or (z) twenty-four
            (24%) percent of the Net Retail Liquidation Value or, (iv) during
            the period from October 1 through December 15, up to the lesser of,
            (x) the Credit Limit - Special Subline, or (y) twenty-one (21%)
            percent of the Cost of Acceptable Inventory; or (z) twenty (20%)
            percent of the Net Retail Liquidation Value (subparagraph (B),
            above, being referred to as, the "Special Subline"). If the Borrower
            fails to satisfy the Minimum Excess Availability requirements set
            forth on Exhibit 9-11 for the months of June and July, 2001, then in
            addition to any other rights and remedies of the Lender on account
            of such failure the definition of Borrowing Base shall be revised as
            follows:

                  "Borrowing Base": shall mean the aggregate of (A) up to the
            lesser of (i) the Credit Limit - Standard Line, or (ii) sixty-four
            (64%) percent of the Cost of Acceptable Inventory; or (iii) eighty
            (80%) percent of the Net Retail Liquidation Value (the "Standard
            Line"), plus, (B) (i) during the months of September, October, and
            November, up to the lesser of, (x) the Credit Limit - Special
            Subline, or (y) twenty-one (21%) percent of the Cost of Acceptable
            Inventory; or (z) twenty (20%) percent of the Net Retail Liquidation
            Value, or, (ii) during all other months, up to the lesser of, (x)
            the Credit Limit - Special Subline, or (y) sixteen (16%) percent of
            the Cost of Acceptable Inventory; or (z) twenty (20%) percent of the
            Net Retail Liquidation Value (subparagraph (B), above, being
            referred to as, the "Special Subline")

<Page>

            "Credit Limit": Means Twelve Million ($12,000,000.00) Dollars.

            "Credit Limit - Special Subline" means Five Million ($5,000,000.00)
            Dollars.

            "Maturity Date": August 31, 2006.

     4.     AMENDMENT TO EXHIBIT 9-11. Exhibit 9-11 is replaced with Exhibit
            9-11 annexed hereto.

     5.     RATIFICATION OF LOAN DOCUMENTS. Except as provided herein, all terms
            and conditions of the Agreement on the other Loan Documents remain
            in full force and effect.

     6.     MISCELLANEOUS.

                  (a)    Upon the execution of this First Amendment the Borrower
            shall pay to the Lender an amendment fee in the amount of
            $10,000.00.

                  (b)    This First Amendment may be executed in several
            counterparts and by each party on a separate counterpart, each of
            which when so executed and delivered shall be an original, and all
            of which together shall constitute one instrument.

                  (c)    This First Amendment expresses the entire understanding
            of the parties with respect to the transactions contemplated hereby.
            No prior negotiations or discussions shall limit, modify, or
            otherwise affect the provisions hereof.

                  (d)    Any determination that any provision of this First
            Amendment or any application hereof is invalid, illegal or
            unenforceable in any respect and in any instance shall not affect
            the validity, legality, or enforceability of such provision in any
            other instance, or the validity, legality or enforceability of any
            other provisions of this First Amendment.

                  (e)    The Borrower shall pay on demand all costs and expenses
            of the Agent and each Lender, including, without limitation,
            reasonable attorneys' fees in connection with the preparation,
            negotiation, execution and delivery of this First Amendment.

     IN WITNESS WHEREOF, the parties have hereunto caused this First Amendment
to be executed and their seals to be hereto affixed as of the date first above
written.

                                                           THE WHITE HOUSE, INC.
                                                                      (BORROWER)

                                        3
<Page>

                                            By: /s/ Stephen Hirsch
                                               ---------------------------------
                                            Print Name: Stephen Hirsch
                                                       -------------------------
                                            Title: VP, CFO
                                                   -----------------------------

                                                  WELLS FARGO RETAIL FINANCE LLC
                                                                        (LENDER)

                                            By: [ILLEGIBLE]
                                               ---------------------------------
                                            Print Name: [ILLEGIBLE]
                                                       -------------------------
                                            Title: [ILLEGIBLE]
                                                   -----------------------------
                                        4
<Page>

                                  EXHIBIT 9-11

                        FINANCIAL AND INVENTORY COVENANTS

MIN/MAX INVENTORY

     Measured monthly, and on a rolling three-month basis, with testing
     commencing EOM July 2000, average EOM inventory at cost shall be at least
     85% of plan, and not more than 115%.

MINIMUM EXCESS AVAILABILITY

     Minimum Excess Availability shall not be less than the following amounts,
     at the end of each respective fiscal month detailed below:

<Table>
     <S>                                                 <C>
          May, June, July, 2001                          $    500,000.00

         August, September, 2001                         $    350,000.00

     October, November, December, 2001                   $    500,000.00

             January, 2002                               $    350,000.00
</Table>

MAXIMUM EFFECTIVE ADVANCE RATE

     Maximum Effective Advance rate shall not exceed the following amounts, at
     the end of each respective fiscal month detailed below:

<Table>
     <S>                                                  <C>
               May, 2001                                  60%

              June, 2001                                  60%

              July, 2001                                  65%

             August, 2001                                 81%

            September, 2001                               75%

             October, 2001                                70%

      November-December 15, 2001                          70%

     December 16-December 31, 2001                        65%

            January, 2002                                 70%
</Table>

<Page>

     The Effective Advance Rate is defined as the then total balance of the Loan
     Account divided by the then total Cost of Acceptable Inventory.

STORE CONTRIBUTION

     Measured monthly on a rolling twelve months, the percentage of the Comp
     stores with Store Contribution (as a % of Sales) less than or equal to 8%
     shall not exceed 33% of total Comp Stores. Store Contribution is defined as
     Gross Profit less Direct Store Operating Expenses (excluding depreciation).

<Page>

                 SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

     This Second Amendment to Loan and Security Agreement (the "Second
Amendment") is made as of the ___ day of September, 2002 by and between Wells
Fargo Retail Finance LLC (formerly known as Paragon Capital LLC) (hereinafter,
"Lender"), a Delaware limited liability company with its principal executive
offices at One Boston Place, Boston Massachusetts 02109 and The White House,
Inc. (hereinafter, the "Borrower"), a Maryland corporation with its principal
executive offices at 6711 Baymeadow Drive, Glen Burnie, Maryland 21060 in
consideration of the mutual covenants herein contained and benefits to be
derived herefrom.

                              W I T N E S S E T H:

     WHEREAS, on August 23, 2000, the Lender and the Borrowers entered in a
certain Loan and Security Agreement as amended by a First Amendment to Loan and
Security Agreement dated as of June__, 2001 (as amended, the "Agreement"); and

     WHEREAS, the Borrower has requested that the Lender agree to amend the
Agreement to amend certain covenants; and

     WHEREAS, the Lender and the Borrower desire to modify certain of the
provisions of the Agreement as set forth herein.

     NOW, THEREFORE, it is hereby agreed among the Lender and the Borrower as
follows:

     1.     CAPITALIZED TERMS. All capitalized terms used herein and not
            otherwise defined shall have the same meaning herein as in the
            Agreement.

     2.     AMENDMENTS TO EXHIBIT 3. (a) The definition of "Borrowing Base"
            contained in Exhibit 3 of the Agreement is hereby amended by the
            addition of the following at the end thereof:

            Notwithstanding anything to the contrary contained herein, in no
            event shall the Effective Advance Rate (as defined below) exceed the
            following, measured as of the end of each fiscal month:

<Table>
            <S>                         <C>
            September, 2002             87%
            October, 2002               85%
            November, 2002              85%
            December, 2002              85%
            January, 2003               80%
</Table>

            The Effective Advance Rates for subsequent months will be
            established by the Lender based upon Business Plans hereafter
            furnished to the Lender.

            (b) The definition of "Availability Reserves" contained in Exhibit 3
            of the Agreement is hereby amended by the addition of the following
            subsection (h) at the end thereof:

                  (h) $400,000 during each September, and $500,000 at all other
                  times.

     3.     AMENDMENT TO EXHIBIT 9-11. Exhibit 9-11 is replaced with
            Exhibit 9-11 annexed hereto.

<Page>

     4.     RATIFICATION OF LOAN DOCUMENTS. Except as provided herein, all terms
            and conditions of the Agreement on the other Loan Documents remain
            in full force and effect.

     5.     MISCELLANEOUS.

                  (a)    This Second Amendment may be executed in several
            counterparts and by each party on a separate counterpart, each of
            which when so executed and delivered shall be an original, and all
            of which together shall constitute one instrument.

                  (b)    This Second Amendment expresses the entire
            understanding of the parties with respect to the transactions
            contemplated hereby. No prior negotiations or discussions shall
            limit, modify, or otherwise affect the provisions hereof.

                  (c)    Any determination that any provision of this Second
            Amendment or any application hereof is invalid, illegal or
            unenforceable in any respect and in any instance shall not affect
            the validity, legality, or enforceability of such provision in any
            other instance, or the validity, legality or enforceability of any
            other provisions of this Second Amendment.

                  (d)    The Borrower shall pay on demand all costs and expenses
            of the Agent and each Lender, including, without limitation,
            reasonable attorneys' fees in connection with the preparation,
            negotiation, execution and delivery of this Second Amendment.

     IN WITNESS WHEREOF, the parties have hereunto caused this Second Amendment
to be executed and their seals to be hereto affixed as of the date first above
written.

                                                           THE WHITE HOUSE, INC.
                                                                      (BORROWER)

                                          By: /s/ Stephen Hirsch
                                             -----------------------------------
                                          Print Name: Stephen Hirsch
                                                     ---------------------------
                                          Title: VP Finance & Administration CFO
                                                 -------------------------------

                                                  WELLS FARGO RETAIL FINANCE LLC
                                                                        (LENDER)

                                          By: /s/ Kathy A. Mahony
                                             -----------------------------------
                                          Print Name:  Kathy A. Mahony
                                                      --------------------------
                                          Title: Vice President
                                                 -------------------------------

                                        2
<Page>

                                  EXHIBIT 9-11

                        FINANCIAL AND INVENTORY COVENANTS

MIN/MAX INVENTORY

     Measured quarterly on a rolling twelve-month basis, with testing commencing
     for the fiscal quarter ending October 31, 2002, average inventory at cost
     shall be at least 85% of plan, and not more than 115%.

STORE CONTRIBUTION

     Measured quarterly on a rolling twelve-month basis, the percentage of the
     Comp stores with Store Contribution (as a % of Sales) less than or equal to
     8% shall not exceed 33%  of total Comp Stores. Store Contribution is
     defined as Gross Profit less Direct Store Operating Expenses (excluding
     depreciation).

<Page>

                 THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

     This Third Amendment to Loan and Security Agreement (the "Third Amendment")
is made as of the __ day of November, 2002 by and between Wells Fargo Retail
Finance LLC (formerly known as Paragon Capital LLC) (hereinafter, "Lender"), a
Delaware limited liability company with its principal executive offices at One
Boston Place, Boston Massachusetts 02109 and The White House, Inc. (hereinafter,
the "Borrower"), a Maryland corporation with its principal executive offices at
6711 Baymeadow Drive, Glen Burnie, Maryland 21060 in consideration of the mutual
covenants herein contained and benefits to be derived herefrom.

                              W I T N E S S E T H:

     WHEREAS, on August 23, 2000, the Lender and the Borrowers entered in a
certain Loan and Security Agreement, as amended by a First Amendment to Loan and
Security Agreement dated as of June __, 2001, as further amended by a Second
Amendment to Loan and Security Agreement dated as of September __, 2002 (as
amended, the "Agreement"); and

     WHEREAS, the Lender and the Borrower desire to modify certain of the
provisions of the Agreement as set forth herein.

     NOW, THEREFORE, it is hereby agreed among the Lender and the Borrower as
follows:

     1.     CAPITALIZED TERMS. All capitalized terms used herein and not
            otherwise defined shall have the same meaning herein as in the
            Agreement.

     2.     AMENDMENT TO ARTICLE 5. Section 5-17(a) of the Agreement is amended
            to read as follows:

                  (a)    Pay any cash dividend or make any other distribution in
            respect of any class of the Borrower's capital stock, except that
            the Borrower may make scheduled payments of principal and interest
            to the Borrower's Class C shareholders for the two quarterly periods
            commencing December 31, 2003, provided that no Event of Default is
            occurring at the time of such payment, and will not have occurred as
            a result of the making of such payment, and the Borrower maintains
            required Availability upon the making of any such payment.

     3.     AMENDMENT TO ARTICLE 13. The first two sentences of Section 13-1 of
            the Agreement are amended to read as follows:

                  13-1.  TERMINATION OF REVOLVING CREDIT. This Agreement is, and
            is intended to be, a continuing agreement and shall remain in full
            force and effect for an initial term ending on the earlier of (i)
            the Maturity Date, or (ii) June 30, 2004, unless on or before April
            30, 2004 the Borrower receives the waiver from the Borrower's
            shareholders of any requirement to make any mandatory distributions
            of cash dividends or other payments. If such waiver is obtained,
            this Agreement shall, after the Maturity Date, be renewed for
            successive twelve-month periods, each beginning on the 31st day of
            August (commencing August 31, 2006) of each year and ending on
            August 30 of the following year (each such twelve-month period is
            hereinafter referred to as a "RENEWAL TERM"); provided, however,
            that either party may terminate this Agreement as of the end of the
            initial term or any subsequent renewal term by giving the other
            party notice to terminate in writing at least ninety (90) days prior
            to the end of any such period

<Page>

            whereupon at the end of such period all Liabilities shall be due and
            payable in full without presentation, demand, or further notice of
            any kind, whether or not all or any part of the Liabilities is
            otherwise due and payable pursuant to the agreement or instrument
            evidencing same.

     4.     RATIFICATION OF LOAN DOCUMENTS. Except as provided herein, all terms
            and conditions of the Agreement on the other Loan Documents remain
            in full force and effect.

     5.     MISCELLANEOUS.

                  (a)    Upon the execution of this Third Amendment the Borrower
            shall pay to the Lender an amendment fee in the amount of
            $10,000.00.

                  (b)    This Third Amendment may be executed in several
            counterparts and by each party on a separate counterpart, each of
            which when so executed and delivered shall be an original, and all
            of which together shall constitute one instrument.

                  (c)    This Third Amendment expresses the entire understanding
            of the parties with respect to the transactions contemplated hereby.
            No prior negotiations or discussions shall limit, modify, or
            otherwise affect the provisions hereof.

                  (d)    Any determination that any provision of this Third
            Amendment or any application hereof is invalid, illegal or
            unenforceable in any respect and in any instance shall not affect
            the validity, legality, or enforceability of such provision in any
            other instance, or the validity, legality or enforceability of any
            other provisions of this Third Amendment.

                  (e)    The Borrower shall pay on demand all costs and expenses
            of the Agent and each Lender, including, without limitation,
            reasonable attorneys' fees in connection with the preparation,
            negotiation, execution and delivery of this Third Amendment,
            provided, however, in no event shall such legal fees be in an amount
            greater than $2,000.00.

                                        2

<Page>

     IN WITNESS WHEREOF, the parties have hereunto caused this Third Amendment
to be executed and their seals to be hereto affixed as of the date first above
written.

                                                           THE WHITE HOUSE, INC.
                                                                      (BORROWER)

                                            By: /s/ Stephen Hirsch
                                               ---------------------------------
                                            Print Name: Stephen Hirsch
                                                       -------------------------
                                            Title: VP Finance, CFO
                                                   -----------------------------

                                                  WELLS FARGO RETAIL FINANCE LLC
                                                                        (LENDER)

                                            By: /s/ Kathy A. Mahony
                                               ---------------------------------
                                            Print Name: Kathy A. Mahony
                                                       -------------------------
                                            Title: Vice President
                                                   -----------------------------

                                        3

<Page>

                 FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

     This Fourth Amendment to Loan and Security Agreement (the "Fourth
Amendment") is made as of the ___ day of __________, 2003 by and between Wells
Fargo Retail Finance LLC (formerly known as Paragon Capital LLC) (hereinafter,
"Lender"), a Delaware limited liability company with its principal executive
offices at One Boston Place, Boston Massachusetts 02109 and The White House,
Inc. (hereinafter, the "Borrower"), a Maryland corporation with its principal
executive offices at 6711 Baymeadow Drive, Glen Burnie, Maryland 21060 in
consideration of the mutual covenants herein contained and benefits to be
derived herefrom.

                              W I T N E S S E T H:

     WHEREAS, on August 23, 2000, the Lender and the Borrowers entered in a
certain Loan and Security Agreement, as amended by a First Amendment to Loan and
Security Agreement dated as of June __, 2001, as further amended by a Second
Amendment to Loan and Security Agreement dated as of September __, 2002, as
further amended by a Third Amendment to Loan and Security Agreement dated as of
November __, 2002 (as amended, the "Agreement"); and

     WHEREAS, the Lender and the Borrower desire to modify certain of the
provisions of the Agreement as set forth herein.

     NOW, THEREFORE, it is hereby agreed among the Lender and the Borrower as
follows:

     1.     CAPITALIZED TERMS. All capitalized terms used herein and not
            otherwise defined shall have the same meaning herein as in the
            Agreement.

     2.     AMENDMENT TO ARTICLE 1. The last sentence of Section l-8(a) of the
            Agreement is amended to read as follows:

            In no event shall interest accrue in excess of the maximum rate
            permitted by applicable law.

     3.     RATIFICATION OF LOAN DOCUMENTS. Except as provided herein, all terms
            and conditions of the Agreement and the other Loan Documents remain
            in full force and effect.

     4.     MISCELLANEOUS.

                  (a)    This Fourth Amendment may be executed in several
            counterparts and by each party on a separate counterpart, each of
            which when so executed and delivered shall be an original, and all
            of which together shall constitute one instrument.

                  (b)    This Fourth Amendment expresses the entire
            understanding of the parties with respect to the transactions
            contemplated hereby. No prior negotiations or discussions shall
            limit, modify, or otherwise affect the provisions hereof.

                  (c)    Any determination that any provision of this Fourth
            Amendment or any application hereof is invalid, illegal or
            unenforceable in any respect and in any instance shall not affect
            the validity, legality, or enforceability of such

<Page>

            provision in any other instance, or the validity, legality or
            enforceability of any other provisions of this Fourth Amendment.

                  (d)    The Borrower shall pay on demand all costs and expenses
            of the Agent and each Lender, including, without limitation,
            reasonable attorneys' fees in connection with the preparation,
            negotiation, execution and delivery of this Fourth Amendment.

     IN WITNESS WHEREOF, the parties have hereunto caused this Fourth Amendment
to be executed and their seals to be hereto affixed as of the date first above
written.

                                                           THE WHITE HOUSE, INC.
                                                                      (BORROWER)

                                               By: /s/ Stephen Hirsch
                                                  ------------------------------
                                               Print Name: Stephen Hirsch
                                                           ---------------------
                                               Title: VP Finance, CFO
                                                      --------------------------

                                                  WELLS FARGO RETAIL FINANCE LLC
                                                                        (LENDER)

                                               By: /s/ Kathy A. Mahony
                                                  ------------------------------
                                               Print Name: Kathy A. Mahony
                                                           ---------------------
                                               Title: Vice President
                                                      --------------------------

                                        2

<Page>

              FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

       This Fifth Amendment to Loan and Security Agreement (the "Fifth
Amendment") is made as of the __ day of ________, 2003 by and between Wells
Fargo Retail Finance II LLC (formerly known as Wells Fargo Retail Finance
LLC, formerly known as Paragon Capital LLC) (hereinafter, "Lender"), a
Delaware limited liability company with its principal executive offices at
One Boston Place, Boston Massachusetts 02109 and The White House, Inc.
(hereinafter, the "Borrower"), a Maryland corporation with its principal
executive offices at 6711 Baymeadow Drive, Glen Burnie, Maryland 21060 in
consideration of the mutual covenants herein contained and benefits to be
derived herefrom.

                        W I T N E S S E T H:

       WHEREAS, on August 23, 2000, the Lender and the Borrowers entered in a
certain Loan and Security Agreement, as amended by a First Amendment to Loan
and Security Agreement dated as of June __, 2001, as further amended by a
Second Amendment to Loan and Security Agreement dated as of September __,
2002, as further amended by a Third Amendment to Loan and Security Agreement
dated as of November __, 2002, as further amended by a Fourth Amendment to
Loan and Security Agreement dated as of ___________, 2003 (as amended, the
"Agreement"); and

       WHEREAS, the Lender and the Borrower desire to modify certain of the
provisions of the Agreement as set forth herein.

       NOW, THEREFORE, it is hereby agreed among the Lender and the Borrower
as follows:

       1.  CAPITALIZED TERMS. All capitalized terms used herein and not
           otherwise defined shall have the same meaning herein as in the
           Agreement.

       2.  AMENDMENT TO ARTICLE 13. The first two sentences of Section 13-1
           of the Agreement are amended to read as follows:

                13-1. TERMINATION OF REVOLVING CREDIT. This Agreement is, and
           is intended to be, a continuing agreement and shall remain in full
           force and effect for an initial term ending on the earlier of (i)
           the Maturity Date, or (ii) September 30, 2004, which date shall be
           extended until September 30, 2005 if, on or before May 30, 2004
           the Borrower furnishes the Lender with financial statements
           through the year to date ending April 30, 2004 evidencing that the
           Borrower has attained not less than ninety percent (90%) of
           planned EBITDA, based upon the most recent Business Plan approved
           by the Lender, which date shall be further extended until the
           Maturity Date if, on or before July 31, 2005 the Borrower receives
           the waiver from the Borrower's shareholders of any requirement to
           make any mandatory distributions of cash dividends or other
           payments. If such waiver is obtained, this Agreement shall, after
           the Maturity Date, be renewed for successive twelve-month periods,
           each beginning on the 31st day of August (commencing August 31,
           2006) of each year and ending on August 30 of the following year
           (each such twelve-month period is hereinafter referred to as a
           "RENEWAL TERM"); provided, however, that either party may terminate
           this Agreement as of the end of the initial term or any subsequent
           renewal term by giving the other party notice to terminate in
           writing at least ninety (90) days prior to the end of any such
           period whereupon at the end of such period all Liabilities shall be
           due and payable in full without presentation, demand, or further
           notice of

<Page>

           any kind, whether or not all or any part of the Liabilities is
           otherwise due and payable pursuant to the agreement or instrument
           evidencing same.

       3.  RATIFICATION OF LOAN DOCUMENTS. Except as provided herein, all
           terms and conditions of the Agreement and the other Loan Documents
           remain in full force and effect.

       4.  MISCELLANEOUS.

                (a) Upon the execution of this Fifth Amendment the Borrower
           shall pay to the Lender an amendment fee in the amount of
           $12,000.00.

                (b) This Fifth Amendment may be executed in several
           counterparts and by each party on a separate counterpart, each of
           which when so executed and delivered shall be an original, and all
           of which together shall constitute one instrument.

                (c) This Fifth Amendment expresses the entire understanding
           of the parties with respect to the transactions contemplated
           hereby. No prior negotiations or discussions shall limit, modify,
           or otherwise affect the provisions hereof.

                (d) Any determination that any provision of this Fifth
           Amendment or any application hereof is invalid, illegal or
           unenforceable in any respect and in any instance shall not affect
           the validity, legality, or enforceability of such provision in any
           other instance, or the validity, legality or enforceability of any
           other provisions of this Fifth Amendment.

                (e) The Borrower shall pay on demand all costs and expenses
           of the Agent and each Lender, including, without limitation,
           reasonable attorneys' fees in connection with the preparation,
           negotiation, execution and delivery of this Fifth Amendment.

       IN WITNESS WHEREOF, the parties have hereunto caused this Fifth
Amendment to be executed and their seals to be hereto affixed as of the date
first above written.

                                         THE WHITE HOUSE INC.
                                         (BORROWER)

                                         By: /s/ Stephen Hirsch
                                            -----------------------------------
                                         Print Name: Stephen Hirsch
                                                    ---------------------------
                                         Title: Vice President Finance, CFO
                                               ---------------------------------

                                         WELLS FARGO RETAIL FINANCE II LLC
                                         (LENDER)

                                         By: /s/ Kathy A. Mahony
                                            -----------------------------------
                                         Print Name: Kathy A. Mahony
                                                    ---------------------------
                                         Title: Vice President
                                               ---------------------------------

                                       2<Page>

                                                                  Exhibit 10.14

                  NONCOMPETITION AND CONFIDENTIALITY AGREEMENT

     THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT (this "Agreement") is
made as of January 19, 1999 (the "Effective Date") by and between THE WHITE
HOUSE, INC., and Maryland corporation (the "Company") and RICHARD SARMIENTO (the
"Executive")

                                    RECITALS

     The Executive is employed by the Company as the Company's President and
Chief Executive Officer.

     The execution and delivery of this Agreement by the Company and the
Executive are conditions to the purchase of shares of the Company's common stock
pursuant to a Stock Purchase Agreement of even date herewith, by the purchasers
named therein (the "Purchasers").

     Contemporaneously with the execution and delivery of this Agreement, the
Executive is selling 256,410 shares of Class A Common Stock of the Company owned
by the Executive to the Purchasers for an aggregate purchase price of $300,000
(the "Purchase Price")

     Accordingly, in consideration of the receipt of the Purchase Price, and in
consideration of the foregoing recitals and the agreements contained in this
Agreement, the parties hereto, intending to be legally bound, agree as follows:

     1.     NONCOMPETITION AND CONFIDENTIALITY.

            (a)   The Executive acknowledges that in the course of employment
with the Company he has and shall become familiar with the Company's and its
subsidiaries', if any (each, a "Subsidiary," and collectively, the
"Subsidiaries"), "trade secrets or confidential or proprietary information" (as
defined herein) and that his services have been and shall be of special, unique
and extraordinary value to the Company. Therefore, the Executive agrees that,
during the term of his employment with the Company ("the Term"), and for a
period of one year thereafter (the "Noncompete Period"), the Executive shall
not, without the prior written consent of the Company or the applicable
Subsidiary, directly or indirectly, within the United States of America, own,
manage, operate, control, invest in, be employed by or provide consulting
services to, any company or business engaged in retail sales directly competing
with the Company's or any Subsidiary's apparel businesses, as such businesses
exist (or are actively being considered and pursued by the Company or any
Subsidiary) during the Term and on the date of termination of the Term;
provided, however, that nothing herein shall prevent the Executive from owning,
as an investment, up to five percent (5%) of any class of equity

<Page>

securities issued by any competitor of the Company or any Subsidiary if such
securities are publicly traded so long as the Executive has no active
participation in the business of such competitor. During the Noncompete Period,
the Executive shall not directly or indirectly through another entity (i) induce
or attempt to induce any employee of the Company or any Subsidiary to leave the
employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any Subsidiary and any employee thereof, or
(ii) induce or attempt to induce any customer, supplier, licensor, franchisee or
other business relation of the Company or any Subsidiary to cease doing business
with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or such Subsidiary.

            (b)   Except as required by law or court order (notice of which
shall be given to the Company or the applicable Subsidiary prior to disclosure),
the Executive agrees that he will not disclose to anyone (other than the
Company, any Subsidiary, or any persons employed or designated by the Company or
any Subsidiary), or publish, utter, exploit or make use of any "trade secrets or
confidential or proprietary information" of the Company or such Subsidiary, as
long as such trade secrets and information remain "trade secrets or confidential
or proprietary information" of the Company or such Subsidiary, without the prior
written consent of the Company or such Subsidiary. For purposes of this
Agreement, "trade secrets or confidential or proprietary information" means
information (i) unique to the Company or any Subsidiary which has a business
purpose and is not known or generally available from sources outside the Company
and the Subsidiaries or typical of industry practice, and (ii) the disclosure of
which would have an adverse effect on the business of the Company and the
Subsidiaries.

            (c)   The Executive acknowledges and agrees that if he breaches any
of the provisions of this Section 1, the Company may suffer immediate and
irreparable harm for which monetary damages alone will not be a sufficient
remedy, and that, in addition to all other remedies that the Company may have,
the Company shall be entitled to seek Specific performance and/or injunctive
relief or any other form of equitable relief to remedy such breach by the
Executive and to enforce the provisions of this Agreement. In addition, in the
event of a breach or violation by the Executive of Section 1(a), the Noncompete
Period shall be rolled until such breach or violation has been duly cured.

     2.     SEVERABILITY. If any covenant, provision, or agreement contained in
Section 1 hereof is found by a court having jurisdiction to be unreasonable in
duration, geographic scope or character of restrictions, such covenant,
provision or agreement shall not be rendered unenforceable thereby, but rather
the duration, geographic scope or character of restrictions of such covenant,
provision or agreement shall be deemed reduced or modified with retroactive
effect to render such covenant, provision or agreement reasonable, and such
covenant, provision or agreement shall be enforced as modified. If the court
having jurisdiction will not review the covenant, provision or agreement, the
parties hereto shall mutually agree to a revision having an effect as close as
permitted by applicable law to the provision declared unenforceable. The parties
hereto agree that if a court having jurisdiction determines, despite the express
intent of

                                       -2-
<Page>

the parties hereto, that any portion of the covenants, provisions or agreements
contained herein are not enforceable, the remaining covenants, provisions and
agreements herein shall be valid and enforceable.

     3.     APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland, without regard to principles
of conflict of laws.

     4.     NOTICES. All notices, requests, demands, and other communications
between the parties under this Agreement shall be in writing and shall be deemed
to have been duly given if hand delivered, delivered by courier service that
provides evidence of delivery, or mailed by certified or registered mail, return
receipt requested with postage prepaid to:

                  If to the Executive;

                         Richard Sarmiento
                         7600 Energy Parkway
                         Baltimore, Maryland 21226

                  If to the Company;

                         The White House, Inc.
                         7600 Energy Parkway
                         Baltimore, Maryland 21226
                         Attn: President and Chairman of the Board

or to such other address as a party provides to the other party from time to
time. All such notices and communications shall be deemed to have been duly
given (i) when delivered by hand, if personally delivered, (ii) one (1) business
day after being deposited with a next-day air courier, or (iii) five (5)
business days after being deposited in the mail, postage prepaid, if mailed.

     5.     ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter hereof,
and supersedes any and all prior and contemporaneous agreements, understandings,
negotiations, and discussions of the parties, whether oral or written. No
amendment, modification or waiver of this Agreement shall be binding unless
executed in writing by each of the parties hereto, or in the case of a waiver,
by the party for whom such benefit was intended. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly so provided in
writing.

     6.     SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives,

                                       -3-
<Page>

successors and permitted assigns. The Executive may not assign any of his rights
or obligations hereunder without the prior written consent of the Company.

     7.     REPRESENTATIONS. The Executive acknowledges that (i) he has read
this Agreement in its entirely and understands all of its terms and conditions,
(ii) he has had the opportunity to consult with any individuals of his choice
regarding his agreement to the provisions contained herein, including legal
counsel of his choice, and any decision not to was his alone, and (ii) he is
entering into this Agreement of his own free will, without coercion from any
source. The Executive hereby represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by the Executive do not
and shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which the
Executive is a party or by which he is bound, (ii) the Executive is not a party
to or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity, and (iii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of the Executive, enforceable in accordance with its terms.

     12.    COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same Agreement.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       -4-
<Page>

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized representative, and the Executive has executed this
Agreement each as of the Effective Date.

WITNESS:                                COMPANY:

                                        THE WHITE HOUSE, INC.

                                        By: /s/ Patricia Barrow Smith (SEAL)
----------------------------               --------------------------
                                           Patricia Barrow Smith, Vice President

                                        EXECUTIVE:

/s/ [ILLEGIBLE]                         /s/ Richard Sermiento         (SEAL)
----------------------------            -----------------------------
                                        Richard Sermiento

                                       -5-

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