Document:

<PAGE>
                                                                   EXHIBIT 10.40

                              AMENDED AND RESTATED
                              SETTLEMENT AGREEMENT

         THIS AMENDED AND RESTATED SETTLEMENT AGREEMENT (this "Amendment"),
dated and effective this 1st day of December, 2001, is by and between HAYES
LEMMERZ, S.P.A. an Italian corporation (the "Company"), HAYES LEMMERZ
INTERNATIONAL, INC., a Delaware corporation ("HLI"), and GIANCARLO DALLERA, an
individual employed by the Company ("Dallera").

         WHEREAS, HLI is the ultimate parent corporation of the Company;

         WHEREAS, the Company and Dallera are parties to an Employment
Agreement, dated February 1, 1993 and amended as of June 6, 1996 (the
"Employment Agreement");

         WHEREAS, the Company and Dallera are also parties to a Settlement
Agreement, dated July 24, 2001 (the "Settlement Agreement");

         WHEREAS, Dallera is a 50% shareholder of Cromodora Wheels S.p.A., an
Italian corporation ("Cromodora");

         WHEREAS, there is the potential for a conflict between Dallera's
obligations to the Company under and in accordance with the Employment Agreement
and Dallera's obligations to Cromodora as a shareholder of Cromodora;

         WHEREAS, Dallera and the Company wish to resolve and settle the
conflict described above upon the terms and conditions set forth herein;

         WHEREAS, the Company, HLI and Dallera wish to amend and restate the
Settlement Agreement in its entirety and supersede and replace the Settlement
Agreement in all respects by this Amendment;

         WHEREFORE, as consideration for the mutual promises, rights and
obligations set forth herein, and other valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Dallera and the Company hereby agree
as follows:

         A. Notwithstanding the terms of the Employment Agreement, Dallera shall
continue in his current capacity to be employed by, and to render services to,
the Company (and its affiliated companies) through November 30, 2003 (or such
later date as the parties may hereafter agree in writing) (the "Termination
Date"). As of the Termination Date, the Employment Agreement shall be deemed for
any and all legal and practical effects (including indemnity for termination due
to Dallera pursuant to Italian law and collective agreements) to have been
terminated by mutual consent and waiver of notice. Thereafter, Dallera shall be
discharged from any duty, obligations and liability to the Company and its
affiliates; provided, however, that (if applicable) he shall

<PAGE>
be responsible for preparing the financial statements for the fiscal year ending
December 31, 2003 and to this effect and extent only he shall nominally keep his
position as a director and as Chairman of the Board of the Company until such
time as such financial statements have been approved by the shareholders of the
Company at a duly called meeting held for such purpose.

         B. Within one (1) day after the date of this Amendment, HLI shall pay
Dallera a one-time retention bonus of six hundred seventy thousand dollars
(USD$670,000) (the "Retention Bonus"). Dallera shall be responsible for paying
all withholding taxes, employment taxes and other taxes due with respect to such
payment and Dallera shall indemnify and hold HLI harmless from and against the
payment of, or any liability relating to, such withholding or other taxes. Upon
paying such taxes, Dallera shall promptly notify HLI of the amount of such taxes
which are paid (which notification shall include written evidence of the payment
of such taxes). The amount of the Retention Bonus less the tax amounts paid by
Dallera is referred to herein as the "After-Tax Retention Bonus Payment Amount".
The Retention Bonus is being paid on the condition that Dallera remains in the
employ of the Company for a period of not less than two (2) years (December 1,
2001 - November 30, 2003, the "Two-Year Period") and, accordingly, the after-tax
portion of the Retention Bonus shall be subject to the set-off and repayment
provisions set forth in Section C below.

         C. Notwithstanding anything to the contrary contained herein, in the
event that, during the Two-Year Period, Dallera's employment hereunder is
terminated by the Company or HLI or by Dallera, the Company and HLI shall have
the right to set-off the Repayment Amount (as defined below) against any payment
due to Dallera and Dallera shall immediately repay to HLI the balance, if any,
of the Repayment Amount that is not set-off by the Company or HLI pursuant to
this Section C. For purposes of this Amendment, the "Repayment Amount" shall
equal the product of (i) the After-Tax Retention Payment Amount multiplied by
(ii) a fraction (A) the numerator of which is the difference between 730 less
the number of days Dallera has been employed by the Company beginning on
December 1, 2001 and (B) the denominator of which is 730 (Repayment Amount =
After-Tax Retention Payment Amount x (730 - number of days employed)/730).

         D. For the period that Dallera shall continue as an employee of the
Company in accordance with the previous paragraph until the Termination Date, he
shall not, in any manner, accept or act in any management position at or for
Cromodora (whether as a director, officer or employee) and he shall not, in any
manner, represent himself to any third party as a manager, employee or
representative of Cromodora. For the period of his continued employment with the
Company until the Termination Date, Dallera shall at all times devote his full
attention and efforts to the business and affairs of the Company (and its
affiliated companies), except that Dallera may perform those duties for
Cromodora as he is required by law to perform as a result of his status as a 50%
shareholder of Cromodora. In devoting his full attention and efforts to the
business and affairs of the Company (and its affiliated companies), Dallera
shall provide full and reasonable cooperation and assistance with respect to
areas and matters in which he is

                                       2
<PAGE>
involved in his employment with the Company. Dallera shall report regularly to
the Chief Executive Officer of HLI on the business and affairs of the Company.

         E. In consideration of the agreements set forth herein, each of the
Company and Dallera hereby releases the other from and against any and all
claims, causes of action, liabilities or damages arising out of or relating to
the conflict of interest which may exist between Dallera's obligations to the
Company under and in accordance with the Employment Agreement and Dallera's
obligations to Cromodora as a shareholder of Cromodora. The foregoing release
shall not apply to any breach by a party of the terms of this Amendment.

         F. In the event of a conflict between the terms of the Employment
Agreement and the terms of this Amendment, the terms of this Amendment shall
govern and control in all respects. This Amendment supersedes and replaces the
Settlement Agreement in all respects. Except as modified and amended herein, the
Company and Dallera hereby ratify and reaffirm in all respects the terms of the
Employment Agreement, which terms as modified above remain in full force and
effect.

         WHEREFORE, Dallera and the Company have executed this Amendment as of
the date set forth above.

HAYES LEMMERZ, S.P.A.

By:_____________________________            _______________________________
           Patrick Carey                           Giancarlo Dallera
           Director

HAYES LEMMERZ INTERNATIONAL, INC.

By: _____________________________

      Its: ______________________

                                       3<PAGE>
                                                                    EXHIBIT 4(a)

                DEBTOR IN POSSESSION LOAN AND SECURITY AGREEMENT

                            FLEET RETAIL FINANCE INC.
                              ADMINISTRATIVE AGENT
                               DOCUMENTATION AGENT
                                COLLATERAL AGENT

                                     LENDERS
                                  NAMED HEREIN

                              JACOBSON STORES INC.
                          THE BORROWERS' REPRESENTATIVE
                                      FOR:
                           THE BORROWERS NAMED HEREIN

                             as of January 30, 2002
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
Article 1.  - Definitions:.................................................   1

Article 2.  - THE REVOLVING CREDIT:........................................  22
           2-1  -ESTABLISHMENT OF REVOLVING CREDIT.........................  22
           2-2  -ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS)..........  23
           2-3  -INITIAL RESERVES. CHANGES TO RESERVES.....................  23
           2-4  -RISKS OF VALUE OF COLLATERAL..............................  24
           2-5  -COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT
                 LETTERS OF CREDIT.........................................  24
           2-6  -REVOLVING CREDIT LOAN REQUESTS............................  24
           2-7  -MAKING OF REVOLVING CREDIT LOANS..........................  25
           2-8  -SWINGLINE LOANS...........................................  26
           2-9  -THE LOAN ACCOUNT..........................................  26
           2-10  -THE REVOLVING CREDIT NOTES...............................  27
           2-11  -PAYMENT OF THE LOAN ACCOUNT..............................  27
           2-12  -INTEREST ON REVOLVING CREDIT LOANS.......................  28
           2-13  -CLOSING FEE..............................................  28
           2-14  -ADMINISTRATIVE AGENT'S FEES..............................  28
           2-15  -UNUSED LINE FEE..........................................  28
           2-16  -EARLY TERMINATION FEE....................................  28
           2-17  -CONCERNING FEES..........................................  29
           2-18  -AGENTS' AND LENDERS' DISCRETION..........................  29
           2-19  -PROCEDURES FOR ISSUANCE OF L/C's.........................  29
           2-20  -FEES FOR L/C's...........................................  31
           2-21  -CONCERNING L/C's.........................................  31
           2-22  -INTENTIONALLY OMITTED....................................  33
           2-23  -DESIGNATION OF BORROWERS' REPRESENTATIVE AS
                  BORROWERS' AGENT.........................................  33
           2-24  -LENDERS' COMMITMENTS.....................................  33

Article 3.- INTENTIONALLY OMITTED..........................................  34

Article 4.- CONDITIONS PRECEDENT:..........................................  34
           4-1  -CORPORATE DUE DILIGENCE...................................  35
           4-2  -OPINIONS..................................................  35
           4-3  -Taxes.....................................................  35
           4-4  -APPRAISALS OF REAL ESTATE ASSETS..........................  35
           4-5  -HAZARDOUS WASTE ASSESSMENTS...............................  35
           4-6  -LOAN DOCUMENTS.  ADDITIONAL DOCUMENTS.....................  35
           4-7  -OFFICERS' CERTIFICATE.....................................  36
           4-8  -INTERIM BORROWING ORDER; FINAL BORROWING ORDER............  36
           4-9  -REPRESENTATIONS AND WARRANTIES............................  36
           4-10  -INTENTIONALLY OMITTED....................................  36
           4-11  -ALL FEES AND EXPENSES PAID...............................  36
           4-12  -NO BORROWER INDEFAULT....................................  36
           4-13  -NO ADVERSE CHANGE........................................  36
           4-14  -VALIDITY OF LIENS........................................  36
           4-15  -INTENTIONALLY OMITTED....................................  37
           4-16  -BENEFIT OF CONDITIONS PRECEDENT..........................  37
           4-17   MISCELLANEOUS............................................  37
</TABLE>

                                                                         Page ii
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<TABLE>
<S>                                                                          <C>
Article 5.-GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:..............  37
           5-1  -PAYMENT AND PERFORMANCE OF LIABILITIES....................  37
           5-2  -DUE ORGANIZATION. AUTHORIZATION. NO CONFLICTS.............  37
           5-3  -TRADE NAMES...............................................  38
           5-4  -INFRASTRUCTURE............................................  38
           5-6  -LOCATIONS.................................................  39
           5-7  -STORES....................................................  40
           5-8  -TITLE TO ASSETS...........................................  40
           5-9  -INDEBTEDNESS..............................................  40
           5-10  -INSURANCE................................................  41
           5-11  -LICENSES.................................................  42
           5-12  -LEASES...................................................  42
           5-13  -REQUIREMENTS OF LAW......................................  42
           5-14  -LABOR RELATIONS..........................................  42
           5-15  -MAINTAIN PROPERTIES......................................  43
           5-16  -TAXES....................................................  43
           5-17  -NO MARGIN STOCK..........................................  44
           5-18  -ERISA....................................................  44
           5-19  -HAZARDOUS MATERIALS......................................  44
           5-20  -LITIGATION...............................................  44
           5-21  -DIVIDENDS. INVESTMENTS. CORPORATE ACTION.................  44
           5-22  -LOANS....................................................  45
           5-24  -LINE OF BUSINESS.........................................  45
           5-25  -AFFILIATE TRANSACTIONS...................................  45
           5-26  -ADDITIONAL MORTGAGES. HAZARDOUS WASTE ASSESSMENTS........  46
           5-27  -FURTHER ASSURANCES.......................................  46
           5-28  -ADEQUACY OF DISCLOSURE...................................  46
           5-29  -NO RESTRICTIONS ON LIABILITIES...........................  47
           5-30  -BANKRUPTCY PROTECTIONS...................................  47
           5-31  -NO REJECTION OF LEASES...................................  47
           5-32  -OTHER COVENANTS..........................................  47

Article 6. FINANCIAL REPORTING AND PERFORMANCE COVENANTS:..................  47
           6-1  -MAINTAIN RECORDS..........................................  47
           6-2  -ACCESS TO RECORDS.........................................  48
           6-3  -PROMPT NOTICE.............................................  49
           6-4  -BORROWING BASE CERTIFICATE................................  51
           6-5  -WEEKLY AND MONTHLY REPORTS................................  51
           6-6  -QUARTERLY REPORTS.........................................  51
           6-7  -ANNUAL REPORTS............................................  51
           6-8  -OFFICERS' CERTIFICATES....................................  51
           6-9  -INVENTORIES, APPRAISALS, AND AUDITS.......................  52
           6-10  -ADDITIONAL FINANCIAL INFORMATION.........................  53
           6-11  -MINIMUM SALES. MINIMUM INVENTORY PURCHASES...............  53
           6-12  -BUSINESS PLAN............................................  54

Article 7.- USE OF COLLATERAL:.............................................  54
           7-1  -USE OF INVENTORY COLLATERAL...............................  54
           7-2  -INVENTORY QUALITY.........................................  54
           7-3  -ADJUSTMENTS AND ALLOWANCES................................  54
           7-4  -VALIDITY OF ACCOUNTS......................................  54
           7-5  -NOTIFICATION TO ACCOUNT DEBTORS...........................  55

Article 8.- CASH MANAGEMENT. PAYMENT OF LIABILITIES:.......................  55
           8-1  -DEPOSITORY ACCOUNTS.......................................  55
           8-2  -CREDIT CARD RECEIPTS......................................  55
</TABLE>

                                                                        Page iii
<PAGE>
<TABLE>
<S>                                                                          <C>
           8-3  -THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS........  56
           8-4  -PROCEEDS AND COLLECTIONS..................................  56
           8-5  -PAYMENT OF LIABILITIES....................................  57
           8-6  -THE OPERATING ACCOUNT.....................................  58

Article 9.- PRIORITY AND COLLATERAL SECURITY:..............................  58
           9-1  -SUPERPRIORITY CLAIMS AND COLLATERAL SECURITY..............  58
           9-2  -GRANT OF SECURITY INTEREST................................  58
           9-3  -COLLATERAL SECURITY PERFECTION............................  59
           9-4  -EXTENT AND DURATION OF SECURITY INTEREST..................  60

Article 10.- ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT...........  60
           10-1  -APPOINTMENT AS ATTORNEY-IN-FACT..........................  60
           10-2  -NO OBLIGATION TO ACT.....................................  61

Article 11.- EVENTS OF DEFAULT:............................................  61
           11-1  -FAILURE TO PAY THE REVOLVING CREDIT......................  61
           11-2  -FAILURE TO MAKE OTHER PAYMENTS...........................  61
           11-3  -FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE
                  PERIOD)..................................................  61
           11-4  -FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD)..  62
           11-5  -RESTRUCTURING CONSULTANT.................................  62
           11-6  -MISREPRESENTATION........................................  62
           11-7  -ACCELERATION OF OTHER DEBT...............................  63
           11-8  -DEFAULT UNDER OTHER AGREEMENTS...........................  63
           11-9  -UNINSURED CASUALTY LOSS..................................  63
           11-10  -ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.............  63
           11-11  -INDICTMENT - FORFEITURE.................................  63
           11-12  -CHALLENGE TO LOAN DOCUMENTS.............................  63
           11-13  -CHANGE IN CONTROL.......................................  63
           11-14  -CHANGE IN BORROWING ORDER...............................  64
           11-15  -APPOINTMENT OF TRUSTEE OR EXAMINER......................  64
           11-16  -CONVERSION OR DISMISSAL OF CASE.........................  64
           11-17  -RELIEF FROM STAY........................................  64
           11-18  TERMINATION OF BUSINESS..................................  64
           11-19  CERTAIN APPLICATIONS.....................................  64
           11-20  PAYMENT OF PREPETITION INDEBTEDNESS......................  64
           11-21  ADEQUATE PROTECTION ORDERS...............................  64
           11-22  MATERIAL ADVERSE ACTIONS.................................  64

Article 12: -RIGHTS AND REMEDIES UPON DEFAULT..............................  64
           12-1  ACCELERATION..............................................  64
           12-2  RIGHTS OF ENFORCEMENT.....................................  65
           12-3  SALE OF COLLATERAL........................................  65
           12-4  OCCUPATION OF BUSINESS LOCATION...........................  66
           12-5  GRANT OF NONEXCLUSIVE LICENSE.............................  67
           12-6  ASSEMBLY OF COLLATERAL....................................  67
           12-7  RIGHTS AND REMEDIES.......................................  67

Article 13:- REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:..................  67
           13-1  -REVOLVING CREDIT FUNDING PROCEDURES......................  67
           13-2  -SWINGLINE LOANS..........................................  67
           13-3  -ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:.............  68
           13-4  -ORDINARY COURSE DISTRIBUTIONS: REVOLVING CREDIT..........  70

Article 14- ACCELERATION AND LIQUIDATION:..................................  71
           14-1  ACCELERATION NOTICES:.....................................  71
</TABLE>

                                                                         Page iv
<PAGE>
<TABLE>
<S>                                                                          <C>
           14-2  -INTENTIONALLY OMITTED....................................  71
           14-3  - ACCELERATION:...........................................  71
           14-4  -INITIATION OF LIQUIDATION:...............................  71
           14-5  -ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION:......  71
           14-6  -ADMINISTRATIVE AGENT'S CONDUCT OF LIQUIDATION:...........  71
           14-7  -DISTRIBUTION OF LIQUIDATION PROCEEDS:....................  72
           14-8  -RELATIVE PRIORITIES TO PROCEEDS OF A LIQUIDATION:........  72

Article 15:- THE AGENTS:...................................................  73
           15-1  -APPOINTMENT OF THE ADMINISTRATIVE AGENT:.................  73
           15-2  -RESPONSIBILITIES OF AGENTS:..............................  73
           15-3  -CONCERNING DISTRIBUTIONS BY THE AGENTS:..................  74
           15-4  -DISPUTE RESOLUTION:......................................  75
           15-5  -DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS:...............  75
           15-6  -CONFIDENTIAL INFORMATION:................................  75
           15-7  -RELIANCE BY AGENTS:......................................  76
           15-8  -NON-RELIANCE ON AGENTS AND OTHER LENDERS:................  76
           15-9  -INDEMNIFICATION:.........................................  77
           15-10  -RESIGNATION OF AGENT:...................................  77

Article 16:- ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:...........  77
           16-1  -ADMINISTRATION OF CREDIT FACILITIES:.....................  77
           16-2  -ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS....  78
           16-3  -ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY
                  LENDERS..................................................  78
           16-4  -ACTION REQUIRING CERTAIN CONSENT.........................  79
           16-5  -ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT.......  80
           16-6  -ACTIONS REQUIRING SWINGLINE LENDER CONSENT:..............  81
           16-7  -Intentionally Omitted:...................................  81
           16-8  -ACTIONS REQUIRING AGENTS' CONSENT:.......................  81
           16-9  -MISCELLANEOUS ACTIONS:...................................  81
           16-10  -ACTIONS REQUIRING BORROWERS' CONSENT:...................  82
           16-11  -NONCONSENTING LENDER:...................................  82

Article 17:-ASSIGNMENTS BY LENDERS:........................................  83
           17-1  -ASSIGNMENTS AND ACCEPTANCES..............................  83
           17-2  -ASSIGNMENT PROCEDURES....................................  83
           17-3  -EFFECT OF ASSIGNMENT:....................................  84

Article 18:- NOTICES:......................................................  84
           18-1  -NOTICE ADDRESSES.........................................  85
           18-2  -NOTICE GIVEN.............................................  85
           18-3  -WIRE INSTRUCTIONS........................................  85

Article 19:-TERM:..........................................................  86
           19-1  -TERMINATION OF REVOLVING CREDIT..........................  86
           19-2  -ACTIONS ON TERMINATION...................................  86

Article 20:- GENERAL.......................................................  87
           20-1  -PROTECTION OF COLLATERAL.................................  87
           20-2  -PUBLICITY................................................  87
           20-3  -SUCCESSORS AND ASSIGNS...................................  87
           20-4  -SEVERABILITY.............................................  87
           20-5  -AMENDMENTS.  COURSE OF DEALING...........................  87
           20-6  -POWER OF ATTORNEY........................................  88
           20-7  -APPLICATION OF PROCEEDS..................................  88
</TABLE>

                                                                          Page v
<PAGE>
<TABLE>
<S>                                                                          <C>
           20-8  -INCREASED COSTS..........................................  88
           20-9  -COSTS AND EXPENSES OF AGENTS AND LENDERS.................  88
           20-10  -COPIES AND FACSIMILES...................................  89
           20-11  -MASSACHUSETTS LAW.......................................  89
           20-12  -INDEMNIFICATION.........................................  89
           20-13  -RULES OF CONSTRUCTION...................................  89
           20-14  -INTENT..................................................  91
           20-15  -PARTICIPATIONS..........................................  91
           20-16  -RIGHT OF SET-OFF........................................  91
           20-17  -PLEDGES TO FEDERAL RESERVE BANKS:.......................  92
           20-18  -MAXIMUM INTEREST RATE...................................  92
           20-19  -WAIVERS.................................................  92
           20-20  -COUNTERPARTS............................................  93
</TABLE>

                                                                         Page vi
<PAGE>
                                    EXHIBITS

<TABLE>
<S>                 <C>        <C>
1:1-1               :          Customs Broker Agreement
1:1-2               :          Eligible Real Estate Assets
1:1-3               :          Business Plan
2:2-8(c)            :          Form of SwingLine Note
2:2-10              :          Form of Revolving Credit Note
2:2-19(g)           :          Existing Letters of Credit
2:2-24              :          Lenders' Commitments
5:5-2               :          Corporate Information
5:5-3               :          Trade Names
5:5-6               :          Locations, Leases and Landlords
5:5-8(a)            :          Encumbrances
5:5-8(b)            :          Consigned Inventory
5:5-8(c)(ii)        :          Equipment Usage Agreement
5:5-9               :          Certain Indebtedness
5:5-10              :          Insurance Policies
5:5-12              :          Capital Leases
5:5-14(a)           :          Labor Relations
5:5-20              :          Litigation
5:5-28(b)           :          Contingent Obligations
6:6-4               :          Borrowing Base Certificate
6:6-5               :          Weekly and Monthly Financial Reporting Requirements
8:8-1               :          DDA's
8:8-2               :          Credit Card Arrangements
17:17-1             :          Assignment and Acceptance
</TABLE>

                                                                        Page vii
<PAGE>
DEBTOR IN POSSESSION
LOAN AND SECURITY AGREEMENT                            FLEET RETAIL FINANCE INC.
                              ADMINISTRATIVE, DOCUMENTATION AND COLLATERAL AGENT

                                                          as of January 30, 2002

            THIS AGREEMENT is made amongst

            Fleet Retail Finance Inc., a Delaware corporation with offices at 40
      Broad Street, Boston, Massachusetts 02109, as Administrative Agent (in
      such capacity, the "ADMINISTRATIVE AGENT"), Collateral Agent (in such
      capacity, the "COLLATERAL AGENT") and Documentation Agent (in such
      capacity, the "DOCUMENTATION AGENT"), for the benefit of (i) the
      Collateral Agent, (ii) the Documentation Agent and (iii) the "LENDERS",

      and

            The Lenders, who are, at present, those financial institutions
      identified on the signature pages of this Agreement and any Person who
      becomes a "Lender" in accordance with the provisions of Article 17:17-1 of
      this Agreement;

      and

            Jacobson Stores Inc., Jacobson Credit Corp. and Jacobson Stores
      Realty Company, each a debtor and debtor-in-possession and a Michigan
      corporation with their principal executive offices at 3333 Sargent Road,
      Jackson, Michigan 49201 (each individually, a "BORROWER" and collectively,
      the "BORROWERS");

in consideration of the mutual covenants contained herein and benefits to be
derived herefrom,

                                   WITNESSETH:

      ARTICLE 1.- DEFINITIONS:

      As used herein, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:

      "ACCELERATION": The making of demand or declaration that any indebtedness,
            not otherwise due and payable, is due and payable. Derivations of
            the word "Acceleration" (such as "Accelerate") are used with like
            meaning in this Agreement.

      "ACCELERATION NOTICE": Written notice as follows:

            (a) From the Administrative Agent to the Lenders, as provided in
            Section 14:14-1(a).

            (b) From the SuperMajority Lenders to the Administrative Agent, as
            provided in Section 14:14-1(b).

      "ACCOUNT DEBTOR": Has the meaning given that term in the UCC.

                                                                          Page 1
<PAGE>
      "ACCOUNTS"and "ACCOUNTS RECEIVABLE": "Accounts" as defined in the UCC, and
            also includes, without limitation, all: accounts, accounts
            receivable, receivables, and rights to payment (whether or not
            earned by performance) for: property that has been or is to be sold,
            leased, licensed, assigned, or otherwise disposed of; services
            rendered or to be rendered; a policy of insurance issued or to be
            issued; a secondary obligation incurred or to be incurred; energy
            provided or to be provided; for the use or hire of a vessel; arising
            out of the use of a credit or charge card or information contained
            on or used with that card; winnings in a lottery or other game of
            chance; and also all Inventory which gave rise thereto, and all
            rights associated with such Inventory, including the right of
            stoppage in transit; all reclaimed, returned, rejected or
            repossessed Inventory (if any) the sale of which gave rise to any
            Account.

      "ACH": Automated clearing house.

      "ADMINISTRATIVE AGENT": Defined in the Preamble.

      "ADMINISTRATIVE AGENT'S COVER": Defined in Section 13:13-3(c)(i).

      "ADMINISTRATIVE AGENT'S FEES": Defined in Section 2:2-14.

      "AFFILIATE": With respect to any two (2) Persons, a relationship in which
            (i) one holds, directly or indirectly, not less than twenty-five
            percent (25%) of the capital stock, beneficial interests,
            partnership interests or other equity interests of the other; (ii)
            one has, directly or indirectly, the right, under ordinary
            circumstances, to vote for the election of a majority of the
            directors (or other body or Person who has those powers customarily
            vested in a board of directors of a corporation); or (iii) not less
            than twenty-five percent (25%) of their respective ownership is
            directly or indirectly held by the same third Person.

      "AGENT": When not preceded by "Administrative", "Collateral" or
            "Documentation", the term "Agent" refers collectively and
            individually to the Administrative Agent, the Collateral Agent and
            the Documentation Agent.

      "AGENT FEE LETTER": The letter dated the date hereof and styled "Agent Fee
            Letter" between the Borrowers and FRFI, as such letter may from time
            to time be amended.

      "AGENT'S RIGHTS AND REMEDIES": Is defined in Section 12:12-7.

      "APPLICABLE LAW": As to any Person: (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.

      "APPRAISED INVENTORY LIQUIDATION VALUE": The product of (a) the Cost of
            Eligible Inventory (net of Inventory Reserves) multiplied by (b)
            that percentage, determined by the Administrative Agent from the
            then most recent appraisal of the Borrowers' Inventory undertaken at
            the request of the Administrative Agent, to reflect the appraiser's
            estimate of the net recovery on the Borrowers' Inventory in the
            event of an in-store liquidation of that Inventory.

      "APPRAISED INVENTORY PERCENTAGE": Eighty-five percent (85%).

      "APPROVED CUSTOMS BROKER": A customs broker satisfactory to the
            Administrative Agent which has entered into a Customs Broker
            Agreement with the Administrative Agent and the Borrowers.

                                                                          Page 2
<PAGE>
      "ASSIGNEE LENDER": Defined in Section 17:17-1(a).

      "ASSIGNING LENDER": Defined in Section 17:17-1(a).

      "ASSIGNMENT AND ACCEPTANCE": Defined in Section 17:17-2.

      "AVAILABILITY": The lesser of (a) or (b), where:

            (a)   is the result of

                  (i)   The Revolving Credit Ceiling.

                        Minus

                  (ii)  The aggregate unpaid balance of the Loan Account.

                        Minus

                  (iii) The aggregate undrawn Stated Amount of all then
                        outstanding L/C's.

            (b)   is the result of

                  (i)   The Borrowing Base.

                        Minus

                  (ii)  The aggregate unpaid balance of the Loan Account.

                        Minus

                  (iii) The aggregate undrawn Stated Amount of all then
                        outstanding L/C's.

                        Minus

                  (iv)  The aggregate of the Availability Reserves.

                        Minus

                  (v)   The Carve Out Reserve.

      "AVAILABILITY RESERVES": Such reserves as the Administrative Agent from
            time to time determines in the Administrative Agent's reasonable
            discretion as being appropriate to reflect the impediments to the
            Administrative Agent'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:

                  (i) Customer Credit Liabilities; provided, however, as of the
                  date hereof, the amount of Availability Reserves with respect
                  to gift certificates shall not exceed fifty percent (50%) of
                  the amount attributable to such gift certificates provided
                  that the Administrative Agent shall have the right to modify
                  such Availability Reserves in the future.

                                                                          Page 3
<PAGE>
                  (ii) Taxes and other governmental charges, including, ad
                  valorem, personal property and other taxes which might have
                  priority over the Collateral Interests of the Administrative
                  Agent in the Collateral.

                  (iii) L/C Landing Costs.

      "AVERAGE AVAILABILITY": The average of Availability at the close of each
            day of the period in respect of which Average Availability is being
            determined.

      "AVOIDANCE ACTIONS": Avoidance actions of the Borrowers under Chapter 5 or
            Section 724(a) of the Bankruptcy Code and proceeds thereof.

      "BANKRUPTCY BREACH": Any of the following: (a) any breach of Section
            5:5-30; or (b) the occurrence of any Event of Default described in
            any of Sections 11:11-14 through and including 11:11-22.

      "BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.

      "BANKRUPTCY COURT": The United States Bankruptcy Court for the Eastern
            District of Michigan (Southern Division) or such other court having
            jurisdiction over the Proceedings.

      "BASE": The Base Rate announced from time to time by Fleet National Bank
            (or any successor in interest to Fleet National Bank). 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 Administrative Agent, 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.

      "BASE MARGIN": 1.50%.

      "BASE MARGIN RATE": The aggregate of Base plus the Base Margin.

      "BLOCKED ACCOUNT": Any DDA, including, without limitation, the Local
            Accounts or the Interim Concentration Accounts.

      "BLOCKED ACCOUNT AGREEMENT": An agreement, in form and substance
            satisfactory to the Administrative Agent, which agreement recognizes
            the Administrative Agent's Collateral Interest in the contents of
            the DDA which is the subject of such agreement and agrees that such
            contents shall be controlled by the Administrative Agent and shall
            be transferred only to the Concentration Account or the Interim
            Concentration Account, as applicable, as required by Section 8:8-4
            or as otherwise instructed by the Administrative Agent.

      "BORROWER" and "BORROWERS": Defined in the Preamble.

      "BORROWERS REPRESENTATIVE": Jacobson Stores Inc.

      "BORROWING BASE": The aggregate of the following:

            (a) The face amount of Eligible Credit Card Receivables multiplied
            by the Credit Card Advance Rate.

            Plus

                                                                          Page 4
<PAGE>
            (b) The lesser of (i) the Cost of Eligible Inventory (net of
            Inventory Reserves) multiplied by the Inventory Advance Rate and
            (ii) the Appraised Inventory Percentage of the Appraised Inventory
            Liquidation Value.

            Plus

            (c) The Determined Value of Eligible Real Estate Assets multiplied
            by the Real Estate Advance Rate; provided, however, the amount
            included in the Borrowing Base pursuant to this paragraph (c) shall
            never exceed twenty percent (20%) of the entire Borrowing Base minus
            the Availability Reserves minus the Carve Out Reserve; provided,
            further, no single Eligible Real Estate Asset shall be included in
            the Borrowing Base pursuant to this paragraph (c) to the extent that
            it exceeds thirty percent (30%) of the entire amount of this
            paragraph (c) included in the Borrowing Base.

      "BORROWING BASE CERTIFICATE": Defined in Section 6:6-4.

      "BORROWING ORDERS": The Interim Borrowing Order and the Final Borrowing
            Order.

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

      "BUSINESS PLAN": The Borrowers' business plan attached hereto as EXHIBIT
            1:1-3, as such Business Plan shall be revised in accordance with
            Section 5:5-23 and as such Business Plan may be amended from time to
            time with the prior written consent of the Administrative Agent and
            each of the Lenders.

      "CAPITAL EXPENDITURES": The expenditure of funds or the incurrence of
            liabilities which may be capitalized as capital expenditures in
            accordance with GAAP.

      "CAPITAL LEASE": Any lease which may be capitalized in accordance with
            GAAP.

      "CARVE OUT RESERVE": At the time of reference thereto, the sum of (i)
            allowed administrative expenses payable pursuant to 28
            U.S.C. Section 1930(a)(6) and (ii) Priority Professional Expenses.

      "CHANGE IN CONTROL": The occurrence of either of the following:

            (a) The acquisition by any group of persons (within the meaning of
            the Securities Exchange Act of 1934, as amended) or by any Person of
            beneficial ownership (within the meaning of Rule 13d-3 of the
            Securities and Exchange Commission) of twenty percent (20%) or more
            of the issued and outstanding capital stock of the Borrowers'
            Representative having the right, under ordinary circumstances, to
            vote for the election of directors of Jacobson Stores Inc.

            (b) Any failure of Jacobson Stores Inc., directly or indirectly, to
            own, beneficially and of record, one hundred percent (100%) of the
            capital stock of all other Borrowers; provided, however, it shall
            not constitute a "Change of Control" under this Agreement if
            Jacobson Stores Inc. no longer owns one hundred percent (100%) of
            the capital stock of any other Borrower as a result of a merger or
            consolidation of such other Borrower with and into Jacobson Stores
            Inc. (with Jacobson Stores Inc. being the survivor thereof).

      "CHATTEL PAPER": Has the meaning given that term in the UCC.

      "CLOSING FEE": Defined in Section 2:2-13.

                                                                          Page 5
<PAGE>
      "COLLATERAL": Defined in Section 9:9-2.

      "COLLATERAL AGENT": Defined in the Preamble.

      "COLLATERAL INTEREST": Any interest in property to secure an obligation,
            including, without limitation, a security interest, mortgage and
            deed of trust.

      "CONCENTRATION ACCOUNT": Defined in Section 8:8-3.

      "CONSENT":Actual consent given by the Lender from whom such consent is
            sought; or the passage of seven (7) Business Days from receipt of
            written notice to a Lender from the Administrative Agent of a
            proposed course of action to be followed by the Administrative Agent
            without such Lender's giving the Administrative Agent written notice
            of that Lender's objection to such course of action, provided that
            the Administrative Agent may rely on such passage of time as consent
            by a Lender only if such written notice states that consent will be
            deemed effective if no objection is received within such time
            period.

      "CONSOLIDATED": When used to modify a financial term, test, statement or
            report, refers to the application or preparation of such term, test,
            statement or report (as applicable) based upon the consolidation, in
            accordance with GAAP, with any adjustments or modifications
            acceptable to the Administrative Agent, of the financial condition
            or operating results of the Borrowers.

      "COST": The lower of (a) or (b), where:

            (a) is the calculated cost of purchases, based upon a Borrower's
            accounting practices on a first-in, first-out (FIFO) basis, known to
            the Administrative Agent, which practices are in effect on the date
            on which this Agreement was executed as such calculated cost is
            determined from: invoices received by such Borrower; such Borrower's
            purchase journal; or such Borrower's stock ledger; and

            (b) is the cost equivalent of the lowest ticketed or promoted price
            at which the subject Inventory is offered to the public, after all
            mark-downs (whether or not such price is then reflected on such
            Borrower's accounting system), which cost equivalent is determined
            in accordance with the retail method of accounting, reflecting such
            Borrower's historic business practices;

            provided that "Cost" does not include inventory capitalization costs
            or other non-purchase price charges (such as freight) used in such
            Borrower's calculation of cost of goods sold.

      "COSTS OF COLLECTION": Includes, without limitation, all attorneys'
            reasonable fees and reasonable out-of-pocket expenses incurred by
            any Agent's attorneys, and all reasonable out-of-pocket costs
            incurred by any Agent in the administration of the Liabilities
            and/or the Loan Documents, including, without limitation, reasonable
            costs and expenses associated with travel on behalf of any Agent,
            where such costs and expenses are directly or indirectly related to
            or in respect of any Agent'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 Agent's Rights and Remedies
            and/or any of the rights and remedies of any Agent against or in
            respect of any guarantor or other person liable in respect of the
            Liabilities (whether or not suit is instituted in connection with
            such efforts). "Costs of Collection" also includes the reasonable
            fees and expenses of Lenders' Special Counsel. The Costs of
            Collection are Liabilities, and at the Administrative Agent's option
            may bear interest at the Base Margin Rate.

                                                                          Page 6
<PAGE>
      "CREDIT CARD ADVANCE RATE": Eighty-five percent (85%).

      "CREDITORS' COMMITTEE": The official unsecured creditors' committee, if
            any, appointed in the Proceedings.

      "CUSTOMER CREDIT LIABILITY": Gift certificates, customer deposits,
            merchandise credits, layaway obligations, frequent shopping programs
            and similar liabilities of any Borrower to its retail customers and
            prospective customers.

      "CUSTOMS BROKER AGREEMENT": A Customs Broker Agreement, substantially in
            the form of EXHIBIT 1:1-1 hereto, entered into among the
            Administrative Agent, the Borrowers and an Approved Customs Broker.

      "DDA": Any checking or other demand daily depository account, other than
            an Exempt DDA, maintained by any Borrower.

      "DELINQUENT LENDER": Defined in Section 13:13-3(c).

      "DEPOSIT ACCOUNT": Has the meaning given that term in the UCC.

      "DETERMINED VALUE": At the relevant time of reference thereto, the
            appraised value of such assets on a forced liquidation basis
            determined by the most recent appraisal thereof conducted pursuant
            to Section 6:6-9(d). To the extent that any Eligible Real Estate
            Asset is encumbered by a lien or encumbrance which is a Permitted
            Encumbrance not securing the Liabilities, the amount of the
            Indebtedness secured by such lien or encumbrance shall be deducted
            from the value determined in accordance with the immediately
            preceding sentence of this definition of the term "Determined
            Value". Notwithstanding the foregoing, Determined Value shall not
            exceed the maximum amount which may be recovered by the
            Administrative Agent in connection with a realization on, or
            enforcement of, its security interest in any Eligible Real Estate
            Assets.

      "DOCUMENTATION AGENT": Defined in the Preamble.

      "DOCUMENTS": Has the meaning given that term in the UCC.

      "DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.

      "ELIGIBLE ASSIGNEE": With respect to an assignee of a Lender, (i) a bank,
            insurance company, or company engaged in the business of making
            commercial loans having a combined capital and surplus in excess of
            $300,000,000, (ii) any Affiliate of any Lender, (iii) any Person to
            whom a Lender assigns its rights and obligations under this
            Agreement as part of a programmed assignment and transfer of such
            Lender's rights in and to a material portion of such Lender's
            portfolio of asset-based credit facilities or (iv) if the Borrowers
            are InDefault, any Person.

      "ELIGIBLE CREDIT CARD RECEIVABLES": (a) Accounts due in less than four (4)
            Business Days on a non-recourse basis from major credit card
            processors and (b) Eligible Private Label Credit Card Receivables.

      "ELIGIBLE INVENTORY": All of the following: (a) Any Borrower's Inventory
            (not duplicative of Eligible L/C Inventory) at such locations, and
            of such types, character, qualities and quantities, as the
            Administrative Agent in its reasonable discretion from time to time
            determines to be acceptable for borrowing, as to which Inventory the
            Administrative Agent has a perfected security interest for the
            benefit of itself and the Lenders which is prior and superior to all
            security interests, claims, and Encumbrances (other than Permitted
            Encumbrances) and (b) Eligible L/C Inventory.

                                                                          Page 7
<PAGE>
      "ELIGIBLE L/C INVENTORY": Inventory (without duplication as to
            Eligible Inventory) which has then been shipped from a foreign
            location for receipt, within 60 days, at a warehouse of any Borrower
            located in a jurisdiction in the United States in which the
            Administrative Agent will have a first and only perfected security
            interest in such Inventory and payment for the underlying Inventory
            is to be made by an L/C, provided that

            (a) Such Inventory is of such types, character, qualities and
            quantities (net of Inventory Reserves) as the Administrative Agent
            in its discretion from time to time determines to be eligible for
            borrowing; and

            (b) The documents which relate to such shipment names the
            Administrative Agent as consignee of the subject Inventory and the
            Administrative Agent has control over the documents which evidence
            ownership of the subject Inventory (such as by the providing to the
            Administrative Agent of a Customs Broker Agreement).

      "ELIGIBLE PRIVATE LABEL CREDIT CARD RECEIVABLES": Accounts due on private
            label credit card programs, which are deemed in the reasonable
            discretion of the Administrative Agent to be eligible.

      "ELIGIBLE REAL ESTATE ASSETS": Those fixed assets set forth on EXHIBIT
            1:1-2 hereof to the extent such assets are owned by a Borrower and
            are subject to a Mortgage.

      "EMPLOYEE BENEFIT PLAN": As defined in ERISA.

      "ENCUMBRANCE": A Collateral Interest or agreement to create or grant a
            Collateral Interest; 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; each of the foregoing whether
            consensual or non-consensual and whether arising by way of
            agreement, operation of law, legal process or otherwise.

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

      "ENVIRONMENTAL LAWS": All of the following:

            (a) Applicable Law which regulates or relates to, or imposes any
            standard of conduct or liability on account of or in respect to
            environmental protection matters, including, without limitation,
            Hazardous Materials, as are now or hereafter in effect.

            (b) The common law relating to damage to Persons or property from
            Hazardous Materials.

      "EQUIPMENT": Includes, without limitation, "equipment" as defined in the
            UCC, and also all furniture, store fixtures, motor vehicles, rolling
            stock, machinery, office equipment, plant equipment, tools, dies,
            molds, and other goods, property, and assets which are used and/or
            were purchased for use in the operation or furtherance of a
            Borrower's business, and any and all accessions or additions
            thereto, and substitutions therefor.

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

      "ERISA AFFILIATE": Any Person which is under common control with a
            Borrower within the meaning of Section 4001 of ERISA or is part of a
            group which includes any Borrower and

                                                                          Page 8
<PAGE>
            which would be treated as a single employer under Section 414 of the
            Internal Revenue Code of 1986, as amended.

      "EVENTS OF DEFAULT": Defined in Article 11: hereof. An "Event of Default"
            shall be deemed to have occurred and to be continuing unless and
            until that Event of Default has been duly waived by the requisite
            Lenders or by the Administrative Agent as applicable. In the event
            of such due waiver, the so-waived Event of Default shall be deemed
            never to have occurred (other than with respect to any Costs of
            Collection or any increase in the applicable interest rate pursuant
            to Section 2:2-12(f) up to the date of such waiver for which the
            Borrowers are obligated to reimburse any Agent or the Lenders, which
            reimbursement obligation is not specifically duly waived).

      "EXCESS AVAILABILITY": The difference of (a) Availability minus (b) all
            then past due obligations of the Borrowers arising subsequent to the
            Filing Date, including accounts payable which are beyond customary
            trade practices and rent obligations for leases which have not been
            rejected in the Proceedings which are beyond applicable grace
            periods.

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

      "EXISTING L/CS": The letters of credit issued pursuant to the Prepetition
            Loan Agreement and listed on EXHIBIT 2:2-19(G) hereto.

      "FARM PRODUCTS": Has the meaning given that term in the UCC.

      "FILING DATE": The date of the commencement of the Proceedings: January
            15, 2002.

      "FINAL BORROWING ORDER": A final order of the Bankruptcy Court in the
            Proceedings authorizing and approving this Agreement and the other
            Loan Documents under Sections 364(c) of the Bankruptcy Code and
            entered at or after a final hearing, in form and substance
            reasonably satisfactory to the Administrative Agent and the
            Borrowers and their counsel. The Final Borrowing Order shall, among
            other things, have:

            (i) authorized the transactions contemplated by this Agreement and
            the extensions of credit under this Agreement in an amount not
            greater than the Revolving Credit Ceiling after entry of the Final
            Borrowing Order;

            (ii) granted the claim status and Collateral Interests described in
            Article 9: hereof, and prohibited the granting of additional
            Encumbrances on the assets of the Borrowers other than Permitted
            Encumbrances;

            (iii) provided that such Collateral Interests are automatically
            perfected by the entry of the Interim Borrowing Order and also
            granted to the Administrative Agent for the benefit of the
            Administrative Agent and the Lenders, relief from the automatic stay
            of Section 362(a) of the Bankruptcy Code to enable the
            Administrative Agent, if the Administrative Agent elects to do so in
            its discretion, to make all filings and recordings and to take all
            other actions considered necessary or advisable by the
            Administrative Agent to perfect, protect and insure the priority of
            its Collateral Interests upon the Collateral as a matter of
            nonbankruptcy law;

            (iv) authorized the use of cash collateral in accordance with the
            terms of this Agreement;

            (v) provided for the preservation of certain challenges to the
            payment of the Prepetition Senior Debt and the Encumbrances securing
            the Prepetition Senior Debt but

                                                                          Page 9
<PAGE>
            subject to the requirement that any such challenges be commenced no
            later than the date which falls on the 90th day following the date
            of entry of the Interim Borrowing Order (or if such day is not a
            Business Day, on the next succeeding Business Day); and

            (vi) provided that the Collateral shall not be charged under Section
            506(c) of the Bankruptcy Code.

      "FINANCIAL COVENANT BREACH": The breach of either of the financial
            performance covenants provided for in Sections 6:6-11 and 6:6-12.

      "FISCAL": When followed by "month" or "quarter", it refers to the relevant
            fiscal period based on the Borrowers' fiscal year and accounting
            conventions (e.g. reference to the Borrowers' "Fiscal June, 2001" is
            to the Borrowers' fiscal month of June in the calendar year 2001).
            When followed by reference to a specific year, it refers to the
            fiscal year which ends in a month of the following year to which
            reference is being made (e.g. if the Borrowers' fiscal year ends in
            January 2002 reference to that year would be to the Borrowers'
            "Fiscal 2001").

      "FIXTURES": Has the meaning given that term in the UCC.

      "FRFI": Fleet Retail Finance Inc., in its individual capacity.

      "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, provided, however,
            in the event of a Material Accounting Change, then unless otherwise
            specifically agreed to by the Administrative Agent, (a) the
            Borrowers' compliance with the financial performance covenants
            imposed pursuant to Sections 6:6-11 and 6:6-12 shall be determined
            as if such Material Accounting Change had not taken place and (b)
            the Borrowers' Representative shall include, with its monthly,
            quarterly, and annual financial statements a schedule, certified by
            the Borrowers' Representative's chief financial officer, on which
            the effect of such Material Accounting Change on that statement
            shall be described.

      "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 any Borrower; credit memoranda in
            favor of any Borrower; warranty claims; tax refunds and abatements;
            insurance refunds and premium rebates; all means and vehicles of
            investment or hedging, including, without limitation, options,
            warrants, and futures contracts; records; customer 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 any 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; 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 goodwill relating thereto; applications for registration of the
            foregoing; and all other general intangible property of any Borrower
            in the nature of intellectual property; proposals; cost estimates,
            and reproductions on paper, or otherwise, of any and all

                                                                         Page 10
<PAGE>
            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 any or credit
            extended or services performed, by any Borrower, whether intended
            for an individual customer or the general business of any Borrower,
            or used or useful in connection with research by any Borrower.

      "GOODS": Has the meaning given that term in the UCC, and also includes all
            things movable when a security interest therein attaches and also
            all computer programs embedded in goods and any supporting
            information provided in connection with a transaction relating to
            the program if (i) the program is associated with the goods in such
            manner that it customarily is considered part of the goods or (ii)
            by becoming the owner of the goods, a Person acquires a right to use
            the program in connection with the goods.

      "HAZARDOUS MATERIALS": Any (a) substance which is defined or regulated as
            a hazardous material in or under any Environmental Law and (b)
            petroleum or any fraction thereof or by-products thereof, asbestos,
            polychlorinated biphenyls (PCB's) or any radioactive substance 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) 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).

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

            (d) On account of deposits or advances.

            (e) As lessee under Capital Leases.

            (f) In connection with any sale and leaseback transaction.

            "Indebtedness" of any Person also includes:

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

                  (ii) Any guaranty, endorsement, suretyship or other
                  undertaking pursuant to which that Person may be liable on
                  account of any obligation of any third party other than on
                  account of the endorsement of checks and other items in the
                  ordinary course.

                  (iii) The Indebtedness of a partnership or joint venture for
                  which such Person is liable as a general partner or joint
                  venturer.

      "INDEFAULT": Any occurrence, circumstance, or state of facts with respect
            to a Borrower which (a) is an Event of Default; or (b) would become
            an Event of Default if any requisite notice

                                                                         Page 11
<PAGE>
            were given and/or any requisite period of time were to run and such
            occurrence, circumstance, or state of facts were not cured within
            any applicable grace period.

      "INDEMNIFIED PERSON": Defined in Section 20:20-12.

      "INELIGIBLE PROFESSIONAL EXPENSES": Fees or expenses incurred by any
            Person, including the Creditors' Committee, in (A) preventing,
            hindering or delaying the Lenders' or the Administrative Agent's
            enforcement or realization upon any of the Collateral once Borrowers
            are InDefault, (B) using or seeking to use cash collateral or
            selling any other Collateral without the Administrative Agent's
            consent (except to the extent permitted by this Agreement), (C)
            incurring Indebtedness without the Administrative Agent's consent
            (except to the extent permitted by this Agreement) and (D) objecting
            to or contesting in any manner, or in raising any defenses to, the
            validity, extent, amount, perfection, priority or enforceability of
            the Prepetition Senior Debt or the Liabilities or any mortgages,
            Encumbrances, liens or security interests with respect thereto or
            any other rights or interests of the Prepetition Lenders, the
            Prepetition Agent, the Administrative Agent and the Lenders with
            respect thereto and hereto, or in asserting or prosecuting any
            claims or causes of action, including, without limitation, Avoidance
            Actions.

      "INSTRUMENTS": Has the meaning given that term in the UCC.

      "INTERIM BORROWING ORDER": An order of the Bankruptcy Court in the
            Proceedings authorizing and approving this Agreement on an interim
            basis under Sections 364(c) of the Bankruptcy Code and entered at a
            preliminary hearing under Bankruptcy Rule 4001, in form and
            substance reasonably satisfactory to the Administrative Agent and
            the Borrowers and their counsel. The Interim Borrowing Order shall,
            among other things, have:

            (i) authorized the transactions contemplated by this Agreement and
            the extensions of credit under this Agreement in an amount not
            greater than the Revolving Credit Ceiling provided for herein prior
            to the entry of the Final Borrowing Order;

            (ii) granted the claim status and Collateral Interests described in
            Article 9: hereof, and prohibited the granting of additional
            Encumbrances on the assets of the Borrowers other than Permitted
            Encumbrances;

            (iii) provided that such Collateral Interests are automatically
            perfected by the entry of the Interim Borrowing Order and also
            granted to the Administrative Agent for the benefit of the
            Administrative Agent and the Lenders, relief from the automatic stay
            of Section 362(a) of the Bankruptcy Code to enable the
            Administrative Agent, if the Administrative Agent elects to do so in
            its discretion, to make all filings and recordings and to take all
            other actions considered necessary or advisable by the
            Administrative Agent to perfect, protect and insure the priority of
            its Collateral Interests upon the Collateral as a matter of
            nonbankruptcy law;

            (iv) authorized the use of cash collateral in accordance with the
            terms of this Agreement;

            (v) provided for the preservation of certain challenges to the
            payment of the Prepetition Senior Debt and the Encumbrances securing
            the Prepetition Senior Debt but subject to the requirement that any
            such challenges be commenced no later than the date which falls on
            the 90th day following the date of entry of the Interim Borrowing
            Order (or if such day is not a Business Day, on the next succeeding
            Business Day); and

            (vi) provided that the Collateral shall not be charged under Section
            506(c) of the Bankruptcy Code.

                                                                         Page 12
<PAGE>
      "INTERIM CONCENTRATION ACCOUNT": Any DDA into which the contents of any
            other DDA is transferred (other than the Concentration Account).

      "INVENTORY": Includes, without limitation, "inventory" as defined in the
            UCC and also all: (a) Goods which are leased by a Person as lessor;
            are held by a Person for sale or lease or to be furnished under a
            contract of service; are furnished by a Person under a contract of
            service; or consist of raw materials, work in process, or materials
            used or consumed in a business; (b) Goods of said description in
            transit; (c) Goods of said description which are returned,
            repossessed and rejected; (d) packaging, advertising, and shipping
            materials related to any of the foregoing; (e) all names, marks, and
            General Intangibles affixed or to be affixed or associated thereto;
            and (f) Documents and Documents of Title which represent any of the
            foregoing.

      "INVENTORY ADVANCE RATE": The following percentages during the periods
            indicated:

<TABLE>
<CAPTION>
                             Period                           Percentage
                             ------                           ----------
<S>                                                           <C>
             December 15 through September 14 of any            62.5%
             year

             September 15 through December 14 of any            66.5%
             year
</TABLE>

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

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

            (b) Seasonality.

            (c) Shrinkage.

            (d) Imbalance.

            (e) Change in Inventory character.

            (f) Change in Inventory composition.

            (g) Change in Inventory mix.

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

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

      "INVESTMENT PROPERTY": Has the meaning given that term in the UCC.

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

                                                                         Page 13
<PAGE>
      "L/C": Any letter of credit, the issuance of which is procured by the
            Administrative Agent for the account of any Borrower and any
            acceptance made on account of such letter of credit.

      "L/C  LANDING COSTS": To the extent not included in the Stated Amount of
            an L/C, customs, duty, freight, and other out-of-pocket costs and
            expenses which will be expended to "land" the Inventory, the
            purchase of which is supported by such L/C.

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

      "LEASEHOLD INTEREST": Any interest of a Borrower as lessee under any
            Lease.

      "LENDERS": Each Lender to which reference is made in the Preamble of this
            Agreement and any other Person who becomes a "Lender" in accordance
            with the provisions of this Agreement.

      "LENDERS' SPECIAL COUNSEL": A single counsel, selected by Lenders holding
            more than fifty-one percent (51%) of the Loan Commitments (other
            than any Loan Commitments held by Delinquent Lenders) following the
            occurrence of an Event of Default to represent their interests in
            connection with the preparation, negotiation, administration,
            enforcement, attempted enforcement or preservation of any rights and
            remedies under this Agreement or any other Loan Document.

      "LETTER-OF-CREDIT RIGHT": Has the meaning given that term in UCC and also
            refers to any right to payment or performance under an L/C, whether
            or not the beneficiary has demanded or is at the time entitled to
            demand payment or performance.

      "LIABILITIES":

            (a) All and each of the following, whether now existing or hereafter
            arising under this Agreement or under any of the other Loan
            Documents, including, without limitation, the following:

                  (i) Any and all direct and indirect liabilities, debts, and
                  obligations of each Borrower to any Agent or any Lender, each
                  of every kind, nature, and description owing on account of
                  this Agreement or any other Loan Document.

                  (ii) Each obligation to repay any loan, advance, indebtedness,
                  note, obligation, overdraft, or amount now or hereafter owing
                  by any Borrower to any Agent or any Lender (including all
                  future advances whether or not made pursuant to a commitment
                  by any Agent or any 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 any Agent or any Lender may hold against any
                  Borrower.

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

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

                  (v) All costs and expenses incurred or paid by any Agent in
                  respect of any agreement between any Borrower and any Agent or
                  instrument furnished by any

                                                                         Page 14
<PAGE>
                  Borrower to any Agent (including, without limitation, Costs of
                  Collection, attorneys' reasonable fees, and all court and
                  litigation costs and expenses).

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

                  (vii) Each of the foregoing as if each reference to the "any
                  Agent or any Lender" were to each Affiliate of the
                  Administrative Agent.

            (b) Any and all direct or indirect liabilities, debts, and
            obligations of each Borrower to any Agent or any Affiliate of any
            Agent, each of every kind, nature, and description owing on account
            of any service or accommodation provided to, or for the account of
            any Borrower pursuant to this or any other Loan Document, including
            cash management services and the issuances of L/C's.

      "LIQUIDATION": The exercise, by the Administrative Agent, of those rights
            accorded to the Administrative Agent under the Loan Documents as a
            creditor of the Borrowers following and on account of the occurrence
            of an Event of Default looking towards the realization on the
            Collateral. Derivations of the word "Liquidation" (such as
            "Liquidate") are used with like meaning in this Agreement.

      "LOAN ACCOUNT": Defined in Section 2:2-9.

      "LOAN COMMITMENT": With respect to each Lender, that respective Lender's
            Revolving Credit Dollar Commitment.

      "LOAN DOCUMENTS": This Agreement, the Mortgages, each instrument and
            document executed as contemplated by Article 4: below, and each
            other instrument or document from time to time executed and/or
            delivered in connection with the arrangements contemplated hereby or
            in connection with any transaction with the Administrative or any
            Affiliate of the Administrative Agent, including, without
            limitation, any transaction which arises out of any cash management,
            depository, investment, letter of credit, interest rate protection
            or equipment leasing services provided by the Administrative Agent
            or any Affiliate of the Administrative Agent, as each may be amended
            from time to time.

      "LOCAL ACCOUNT": A local depository account subject to a Blocked Account
            Agreement.

      "MAJORITY LENDERS": Lenders (other than Delinquent Lenders) holding
            fifty-one percent (51%) or more of the Loan Commitments (other than
            any Loan Commitments held by Delinquent Lenders).

      "MATERIAL ACCOUNTING CHANGE": Any change in GAAP applicable to accounting
            periods subsequent to the Borrowers' fiscal year most recently
            completed prior to the execution of this Agreement, which change has
            a material effect on the Borrowers' Consolidated financial condition
            or operating results, as reflected on financial statements and
            reports prepared by or for the Borrowers, when compared with such
            condition or results as if such change had not taken place or where
            preparation of the Borrowers' statements and reports in compliance
            with such change results in the breach of the financial performance
            covenants imposed pursuant to Section 6:6-11 and 6:6-12 where such a
            breach would not have occurred if such change had not taken place or
            visa versa.

      "MATURITY DATE": January 30, 2003.

                                                                         Page 15
<PAGE>
      "MORTGAGED PROPERTY": Any Real Estate which is subject to any Mortgage.

      "MORTGAGES": The several mortgages and deeds of trust from any Borrower to
            the Administrative Agent with respect to the fee interests of such
            Borrower in the Real Estate and in form and substance satisfactory
            to the Administrative Agent.

      "NET CASH PROCEEDS": With respect to any sale or other disposition of
            assets of any of the Borrowers, the cash proceeds received by such
            Borrower from such sale or other disposition, net of (a) all
            reasonable costs of sale or other disposition and property transfer
            or sales taxes paid or payable as a result thereof by such Borrower
            and (b) any amounts paid to Indebtedness secured by Permitted Prior
            Liens, and with respect to the incurrence of any Indebtedness, the
            cash proceeds received from such incurrence, net of all reasonable
            costs thereof and reasonable fees and all expenses payable in
            connection therewith by the Borrowers. The term does not include
            rental payments received by a Borrower on Inventory leased by such
            Borrower in the ordinary course of its business consistent with past
            practices.

      "NOMINEE": A business entity (such as a corporation or limited
            partnership) formed by the Administrative Agent to own or manage any
            Post Foreclosure Asset.

      "NONCONSENTING LENDER": Defined in Section 16:16-11.

      "OPERATING ACCOUNT": Defined in Section 8:8-3.

      "OVERLOAN": A loan, advance or providing of credit support (such as the
            issuance of any L/C) to the extent that, immediately after its
            having been made, Availability is less than zero.

      "PARTICIPANT": Defined in Section 20:20-15.

      "PAYMENT INTANGIBLE": Has the meaning given that term in UCC and also
            refers to any general intangible under which the Account Debtor's
            primary obligation is a monetary obligation.

      "PERMITTED ASSET DISPOSITION": Any of the following:

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

            (b) The disposal of property which is obsolete, worn out, or damaged
            beyond repair in the ordinary course of business and consistent with
            past practices.

            (c) Any sale of the Real Estate set forth in the table below
            provided that (i) no Borrower shall be InDefault, (ii) the Borrowers
            shall have received Net Cash Proceeds in connection with such sale
            of not less than the amount set forth opposite such Real Estate in
            the table below, or if less, the Administrative Agent shall have
            provided its prior written consent to such lesser amount; provided,
            however, in no event shall the Net Cash Proceeds received in
            connection with such sale be less than the Determined Value of such
            Real Estate multiplied by the Real Estate Advance Rate, (iii)
            immediately upon receipt thereof, such Net Cash Proceeds shall be
            delivered to the Administrative Agent for application as provided in
            Section 8:8-5(a), and (iv) any order submitted to the Bankruptcy
            Court in connection with such sale is in a form satisfactory to the
            Administrative Agent.

                                                                         Page 16
<PAGE>
<TABLE>
<CAPTION>
                     Real Estate                 Minimum Net Cash Proceeds
                     -----------                 -------------------------
<S>                                              <C>
                     Toledo, Ohio                      $7,500,000

         Birmingham, Michigan (2 properties)           $9,000,000 (aggregate)

             East Grand Rapids, Michigan               $3,500,000

               Grosse Pointe, Michigan                 $3,500,000

                  Saginaw, Michigan                    no minimum

                    Columbus, Ohio                     no minimum
</TABLE>
            (d) Any sale or discount of Accounts Receivable, in the ordinary
            course of business and consistent with past practices, without
            recourse only in connection with the compromise thereof or the
            assignment of past due Accounts Receivable for collection provided,
            however, that after such sale, such Accounts Receivable shall no
            longer constitute Eligible Private Label Credit Card Receivables.

            (e) The sale, lease or other disposition of Collateral among
            Borrowers.

            (f) A going-out-of-business sale of Inventory at the Stores located
            in (i) Tampa, Florida, (ii) Clearwater, Florida, (iii) Osprey,
            Florida, (iv) Toledo, Ohio, (v) Columbus, Ohio, and (vi) any other
            location consented to by the Administrative Agent, provided that (A)
            the Borrowers shall have engaged a liquidator acceptable to the
            Administrative Agent to conduct each such sale, (B) the terms of
            each such sale are satisfactory to the Administrative Agent, and (C)
            any order submitted to the Bankruptcy Court in connection with such
            sales is in a form satisfactory to the Administrative Agent.

            (g) Any other disposition of any asset consented to by the
            Administrative Agent, provided that (i) the Net Cash Proceeds in
            connection with such disposition shall be (A) acceptable to the
            Administrative Agent, and to the extent they relate to Real Estate
            assets, the Net Cash Proceeds received by the Borrowers shall not be
            less than the Determined Value of such Real Estate multiplied by the
            Real Estate Advance Rate, and (B) delivered to the Administrative
            Agent for application as provided in Section 8:8-5(a) and (ii) no
            Borrower is in InDefault.

      "PERMITTED ENCUMBRANCES": The following:

            (a) Those Encumbrances permitted as provided in Section 5:5-8(a)
            hereof.

            (b) (i) Encumbrances to secure taxes, assessments and other
            government charges or claims for labor, material or supplies in
            respect of obligations not then overdue; (ii) deposits or pledges
            made in connection with, or to secure payment of, workmen's
            compensation, unemployment insurance, old age pensions or other
            social security obligations, performance bonds in connection with
            the construction of any Store to be located in North Palm Beach,
            Florida, or obligations on appeal bonds, in each case incurred or
            otherwise arising in the ordinary course of business and to secure
            obligations that are not past due; (iii) Encumbrances of carriers,
            warehousemen, mechanics and materialmen, and other like Encumbrances
            in respect of obligations not overdue more than 120 days or which
            are being contested in good faith by appropriate proceedings; and
            (iv) Encumbrances on properties consisting of easements, rights of
            way, zoning restrictions, restrictions on the use of real property
            and defects and irregularities in the title thereto, landlord's or
            lessor's Encumbrances, and other minor Encumbrances or

                                                                         Page 17
<PAGE>
            encumbrances none of which interferes materially with the use of the
            property affected in the ordinary conduct of the business of the
            Borrowers, which defects do not individually or in the aggregate
            have a materially adverse effect on the business of any Borrower
            individually or of the Borrowers as a whole or which are being
            actively contested in good faith by appropriate proceedings as to
            which the Borrowers have established reasonable reserves, it being
            understood, however, that the filing of a tax lien which includes
            any Inventory or Accounts does not constitute a "Permitted
            Encumbrance", even if being so contested.

            (c) Permitted Prior Liens.

      "PERMITTED INDEBTEDNESS": The following Indebtedness:

            (a) Indebtedness on account of the Revolving Credit.

            (b) Indebtedness arising prior to the Filing Date and set forth on
            EXHIBIT 5:5-9.

            (c) The 6.75% Senior Unsecured Notes.

            (d) Indebtedness of any Borrower as lessee under any Capital Lease
            arising in connection with sale-leaseback transactions involving the
            Stores located in East Grand Rapids, Michigan and Grosse Pointe,
            Michigan and any other location consented to in writing by the
            Administrative Agent.

            (e) Endorsements for collection, deposit or negotiation and
            warranties of products or services, in each case incurred in the
            ordinary course of business.

            (f) Any guarantee by any Borrower of any Permitted Indebtedness of
            any other Borrower.

      "PERMITTED INVESTMENTS": Marketable direct or guaranteed obligations of
            the United States of America that mature within one (1) year from
            the date of purchase by a Borrower; demand deposits, certificates of
            deposit, bankers acceptances and time deposits of United States
            banks having total assets in excess of $1,000,000,000; securities
            commonly known as "commercial paper" issued by a corporation
            organized and existing under the laws of the United States of
            America or any state thereof that at the time of purchase have been
            rated and the ratings for which are not less than "P 1" if rated by
            Moody's Investors Services, Inc., and not less than "A 1" if rated
            by Standard and Poor's; investments (not to exceed $100,000 at any
            one time) in common and preferred stock traded on national
            securities exchanges; additional investments in the capital stock of
            any other Borrower; loans permitted pursuant to Section 5:5-22(c);
            and the existing investments of Jacobson Stores Inc. in the other
            Borrowers and transactions between any of them in the ordinary
            course of business.

      "PERMITTED PRIOR LIENS": Valid, perfected and otherwise unavoidable
            Encumbrances existing as of the Filing Date, senior to the
            Encumbrances in respect of the Prepetition Senior Debt.

      "PERMITTED PROTECTIVE OVERADVANCE": Defined in Section 16:16-3(a).

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

      "POST FORECLOSURE ASSET": All or any part of the Collateral, ownership of
            which is acquired by the Administrative Agent or a Nominee on
            account of the "bidding in" at a disposition as part of a
            Liquidation or by reason of a "deed in lieu" type of transaction.

                                                                         Page 18
<PAGE>
      "PREPETITION AGENT": Fleet Retail Finance Inc., in its capacity as
            Administrative Agent, as Collateral Agent and as Documentation Agent
            for the Prepetition Lenders under and pursuant to the Prepetition
            Loan Agreement.

      "PREPETITION LENDERS": The lenders party to the Prepetition Loan
            Agreement.

      "PREPETITION LOAN AGREEMENT": That certain Amended and Restated Loan and
            Security Agreement, dated as of July 18, 2001, as amended, by and
            among the Borrowers, the Prepetition Lenders and the Prepetition
            Agent.

      "PREPETITION SENIOR DEBT": The Borrowers' indebtedness under and on
            account of the Prepetition Loan Agreement. The principal amount of
            Prepetition Senior Debt as of the Filing Date was equal to
            $91,728,538.

      "PRIORITY PROFESSIONAL EXPENSES": At the time of reference thereto,
            allowed and unpaid fees, costs and reasonable expenses of
            professionals retained in the Proceedings pursuant to Sections 327
            and 1103 of the Bankruptcy Code consisting of attorneys,
            accountants, financial advisors and consultants retained by the
            Borrowers or the Creditors' Committee; provided, however, that the
            amount of Priority Professional Expenses shall not exceed the
            Professional Expense Cap for purposes of the Carve Out Reserve. The
            term does not include any Ineligible Professional Expenses or the
            expenses of any professionals engaged by individual members of the
            Creditors' Committee.

      "PROCEEDINGS": The cases, pursuant to Chapter 11 of the Bankruptcy Code,
            respectively initiated by the Borrowers in the United States
            Bankruptcy Court for the Eastern District of Michigan (Southern
            Division).

      "PROCEEDS": Includes, without limitation, "Proceeds" as defined in the UCC
            and each type of property described in Section 9:9-2 hereof.

      "PROFESSIONAL EXPENSE CAP": $1,500,000 minus any payments of Priority
            Professional Expenses made during the continuance of any Event of
            Default other than payments made from retainers paid prior to the
            commencement of the Proceedings.

      "PRO-RATA": A proportional distribution based upon a Person's percentage
            claim to the overall aggregate amount being distributed.

      "PROTECTIVE OVERADVANCES": Revolving Credit Loans which are OverLoans, but
            as to which each of the following conditions is satisfied: (a) the
            Revolving Credit Ceiling is not exceeded; (b) when aggregated with
            all other Protective OverAdvances, such Revolving Credit Loans do
            not aggregate more than ten percent (10%) of (i) the Borrowing Base
            minus (ii) the sum of the Availability Reserves and the Carve Out
            Reserve; (c) such Revolving Credit Loans are made or undertaken in
            the Administrative Agent's discretion to (i) protect and preserve
            the Collateral and (ii) protect and preserve the interests of the
            Lenders.

      "REAL ESTATE": All real property at any time owned or leased (as lessee or
            sublessee) by any Borrower.

      "REAL ESTATE ADVANCE RATE": Fifty percent (50%).

      "RECEIPTS": All cash, cash equivalents, money, checks, credit card slips,
            receipts and other Proceeds from any sale of the Collateral.

      "RECEIVABLES COLLATERAL": That portion of the Collateral which consists of
            Accounts, Accounts Receivable, General Intangibles, Chattel Paper,
            Instruments, Documents of Title,

                                                                         Page 19
<PAGE>
            Documents, Investment Property, Payment Intangibles,
            Letter-of-Credit Rights, bankers' acceptances and all other rights
            to payment.

      "REGISTER": Defined in Section 17:17-2(c).

      "REORGANIZATION PLAN": A plan or plans of reorganization in the
            Proceedings.

      "REQUIREMENTS OF LAW": As to any Person:

            (a) Applicable Law.

            (b) That Person's organizational documents.

            (c) That Person's by-laws and/or other instruments which deal with
            corporate or similar governance, as applicable.

            (d) Without limiting the generality of the foregoing, "Requirements
            of Law" includes all requirements of the Bankruptcy Code; all rules
            adopted pursuant to the Bankruptcy Code or otherwise and applicable
            to the Borrowers and/or the Proceedings; the Borrowing Orders; and
            all other orders or rulings formally or informally entered in the
            Proceedings or in any action or proceeding which relates thereto.

      "RESERVES": The following: Carve Out Reserve, Availability Reserves and
            Inventory Reserves.

      "RESTRUCTURING CONSULTANT": A consultant with a nationally recognized
            practice in addressing issues related to the restructuring of
            companies which are debtors in cases pursuant to Chapter 11 of the
            Bankruptcy Code.

      "REVOLVING CREDIT": Defined in Section 2:2-1.

      "REVOLVING CREDIT CEILING": $100,000,000.

      "REVOLVING CREDIT DEBT": At any time, the lesser of (a) or (b), where

            (a) is the Revolving Credit Ceiling.

            (b) is Indebtedness of the Borrowers on account of loans and
            advances under the Revolving Credit which Indebtedness, when
            incurred or when Acceleration takes place, is within amounts
            available to be borrowed under the Revolving Credit or constitutes
            Protective OverAdvances, as reflected on the Borrowing Base
            Certificate (if any) in reliance on which the subject loan or
            advance was made, it being understood that, (i) in the absence of
            manifest computational error by the Borrowers' Representative, the
            Administrative Agent may rely on the determination of such
            availability as reflected on such Borrowing Base Certificate, and
            (ii) the status of indebtedness as "Revolving Credit Debt" is
            determined without regard to any subsequent declination in the
            appraised value of the Inventory or other assets on which such
            availability had been so determined. (For purposes of the
            determination of whether a loan or advance to cover the honoring of
            a L/C constitutes "Revolving Credit Debt", the date of issuance of
            the subject L/C shall constitute the date on which the subject
            indebtedness was incurred).

      "REVOLVING CREDIT DOLLAR COMMITMENT": As set forth on EXHIBIT 2:2-24
            annexed hereto (as such amounts may change in accordance with the
            provisions of this Agreement).

      "REVOLVING CREDIT EARLY TERMINATION FEE": Defined in Section 2:2-16.

                                                                         Page 20
<PAGE>
      "REVOLVING CREDIT FEES": The Unused Line Fee, Closing Fee, Revolving
            Credit Early Termination Fee, fees for L/C's which are specifically
            for the account of the Lenders and all other fees (such as a fee (if
            any) on account of the execution of an amendment of a Loan Document)
            payable by any Borrower in respect of the Revolving Credit other
            than any amount payable to any Agent as reimbursement for any cost
            or expense incurred by such Agent on account of the discharge of
            such Agent's duties under the Loan Documents.

      "REVOLVING CREDIT LOANS": Loans made under the Revolving Credit.

      "REVOLVING CREDIT NOTE": Defined in Section 2:2-10.

      "REVOLVING CREDIT OBLIGATIONS": The aggregate of the Borrowers'
            liabilities, obligations, and indebtedness of any character on
            account of or in respect to the Revolving Credit.

      "REVOLVING CREDIT PERCENTAGE COMMITMENT": As set forth on EXHIBIT 2:2-24,
            annexed hereto (as such amounts may change in accordance with the
            provisions of this Agreement).

      "SEC": The Securities and Exchange Commission.

      "STATED AMOUNT": The maximum amount for which an L/C may be honored.

      "STORE": Each location at which a Borrower regularly offers Inventory for
            sale to the public.

      "SUPERMAJORITY LENDERS": Lenders (other than Delinquent Lenders) holding
            sixty six and two-thirds percent (66-2/3%) or more the Loan
            Commitments (other than Loan Commitments held by a Delinquent
            Lender).

      "SUPERPRIORITY CLAIM". A claim against a Borrower or its estate in the
            Proceeding which is an administrative expense claim having priority
            over (i) any and all allowed administrative expenses and (ii)
            unsecured claims now existing or hereafter arising, including,
            without limitation, administrative expenses of the kind specified in
            Sections 503(b), 506(c), 507(b), 1113 or 1114 of the Bankruptcy
            Code.

      "SUPPORTING OBLIGATION": Has the meaning given that term in the UCC and
            also refers to a Letter-of-Credit Right or secondary obligation
            which supports the payment or performance of an Account, Chattel
            Paper, a Document, a General Intangible, an Instrument or Investment
            Property.

      "SWINGLINE": The facility pursuant to which the SwingLine Lender may
            advance Revolving Credit Loans aggregating up to the SwingLine Loan
            Ceiling.

      "SWINGLINE LENDER": FRFI.

      "SWINGLINE LOAN CEILING": $5,000,000.

      "SWINGLINE LOANS": Defined in Section 2:2-8.

      "TERMINATION DATE": The earliest of (a) the Maturity Date; (b) the
            Administrative Agent's notice to the Borrowers' Representative
            setting the Termination Date on account of the occurrence of any
            Event of Default; (c) that date specified by the Borrowers'
            Representative to the Administrative Agent by an irrevocable written
            notice at least ninety (90) days prior to such date, (d) the date of
            substantial consummation (as defined in Section 1101 of the
            Bankruptcy Code) of a plan of reorganization in the Proceedings that
            has been confirmed pursuant to an order of the Bankruptcy Court in
            the Proceedings or (e) March 15, 2002 if

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            the Bankruptcy Court shall not have entered the Final Borrowing
            Order on or prior to such date.

      "TITLE INSURANCE COMPANY": Any of (a) Commonwealth Land Title Company, (b)
            Lawyers Title Insurance Company and (c) Transnation Title Insurance
            Company.

      "TITLE POLICY": In relation to each Mortgaged Property, an ALTA standard
            form title insurance policy issued by the Title Insurance Company
            (with such reinsurance or co-insurance as the Administrative Agent
            may require and is available from the Title Insurance Company, any
            such reinsurance to be with direct access endorsements) in such
            amount as may be determined by agreement of the Borrowers'
            Representative and the Administrative Agent insuring the priority of
            the Mortgage of such Mortgaged Property and that a Borrowers or one
            of its Affiliates holds marketable fee simple title to or a
            leasehold interest in such Mortgaged Property, subject only to the
            encumbrances permitted by such Mortgage and which shall not contain
            exceptions for mechanics liens, persons in occupancy or matters
            which would be shown by a survey (except as may be permitted by such
            Mortgage), shall not insure over any matter except to the extent
            that any such affirmative insurance is acceptable to the
            Administrative Agent in its sole discretion, and shall contain such
            endorsements and affirmative insurance as the Administrative Agent
            in its discretion may require which is available from the Title
            Insurance Company, including but not limited to (i) comprehensive
            endorsement, (ii) variable rate of interest endorsement, (iii) usury
            endorsement, (iv) revolving credit endorsement, (v) tie-in
            endorsement, (vi) doing business endorsement and (vii) if
            customarily required or not cost-prohibitive in the reasonable
            judgment of the Administrative Agent, an ALTA form 3.1 zoning
            endorsement.

      "TRANSFER": Wire transfer pursuant to the wire transfer system maintained
            by the Board of Governors of the Federal Reserve Board, or as
            otherwise may be agreed to from time to time by the Administrative
            Agent making such Transfer and the subject Lender. Wire instructions
            may be changed in the same manner that Notice Addresses may be
            changed (Section 18:18-1), except that no change of the wire
            instructions for Transfers to any Lender shall be effective without
            the consent of the Administrative Agent.

      "UCC": The Uniform Commercial Code as in effect from time to time in
            Massachusetts.

      "UNANIMOUS CONSENT": Consent of Lenders (other than Delinquent Lenders)
            holding one hundred percent (100%) of the Loan Commitments (other
            than Loan Commitments held by a Delinquent Lender).

      "UNUSED LINE FEE": Defined in Section 2:2-15.

      "6.75% SENIOR UNSECURED NOTES": The 6.75% Senior Unsecured Notes issued by
            Jacobson Stores Inc. in the original principal amount of $34,500,000
            issued pursuant to the Indenture dated December 15, 1986, in the
            form previously delivered to the Administrative Agent.

      ARTICLE 2. - THE REVOLVING CREDIT:

      2-1 -ESTABLISHMENT OF REVOLVING CREDIT.

            (a) The Lenders hereby establish a revolving line of credit (the
            "REVOLVING CREDIT") in the Borrowers' favor pursuant to which each
            Lender, subject to, and in accordance with, this Agreement, acting
            through the Administrative Agent, shall make loans and advances and
            otherwise provide financial accommodations to, and for the account
            of, the Borrowers as provided herein.

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            (b) Loans, advances and financial accommodations under the Revolving
            Credit shall be subject to Availability. The Borrowing Base and
            Availability shall be determined by the Administrative Agent by
            reference to the Borrowing Base Certificate most recently delivered
            to the Administrative Agent, and shall be subject to the following:

                  (i) Such determination shall take into account such Reserves
                  as the Administrative Agent may determine as being applicable
                  thereto.

                  (ii) The Cost of Eligible Inventory will be determined in a
                  manner consistent with current tracking practices, based on
                  such Borrower's stock ledger inventory.

                  (iii) The Cost of Eligible L/C Inventory will be calculated at
                  the Cost of such Inventory.

            (c) The commitment of each Lender to provide such loans, advances
            and financial accommodations is subject to Section 2:2-24.

            (d) The proceeds of borrowings under the Revolving Credit shall be
            used solely as follows:

                  (i) For the issuance of L/Cs to the extent permitted by this
                  Agreement.

                  (ii) For the purposes set forth in the Business Plan in
                  accordance with Section 6:6-12.

                  (iii) Towards the retirement of the Prepetition Senior Debt.

      2-2 -ADVANCES IN EXCESS OF BORROWING BASE (OVERLOANS).

            (a) No Lender has any obligation to make any loan or advance, or
            otherwise to provide any credit to or for the benefit of the
            Borrowers where the result of such loan, advance, or credit is an
            OverLoan.

            (b) The Lenders' obligations, among themselves, are subject to
            Section 13:13-3(a) (which relates to each Lender's making amounts
            available to the Administrative Agent) and to Section 16:16-3(a)
            (which relates to Protective OverAdvances).

            (c) The Lenders' providing of an OverLoan on any one occasion does
            not affect the obligations of any Borrower hereunder (including such
            Borrower's obligation to immediately repay any amount which
            otherwise constitutes an OverLoan) nor obligate the Lenders to do so
            on any other occasion.

      2-3 -INITIAL RESERVES. CHANGES TO RESERVES.

            (a) As of the date hereof, the only Reserves are as reflected on the
            Borrowing Base Certificate dated as of the date hereof, a specimen
            of which is annexed hereto as EXHIBIT 6:6-4.

            (b) The Administrative Agent shall provide not less than seven (7)
            days prior notice to the Borrowers' Representative of the
            establishment of any Reserve (other than those established at the
            execution of this Agreement) except that the following may be
            undertaken without such prior notice:

                  (i) a change to the amount of a then existing Reserve (as
                  distinguished from a change by which such Reserve is measured
                  or determined), which

                                                                         Page 23
<PAGE>
                  change reasonably reflects changed circumstances (e.g. the
                  amount of the Reserve for Customer Credit Liability will
                  change based on the aggregate of Customer Credit Liability at
                  any one time); and

                  (ii) the creation of, or a change to an existing Reserve on
                  account of circumstances which the Administrative Agent
                  reasonably determines as having a material adverse change on
                  the maintenance of loan to collateral values.

      2-4 -RISKS OF VALUE OF COLLATERAL. The Administrative Agent's reference to
a given asset in connection with the making of loans, credits, 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 Administrative Agent or any Lender relative to the actual
value of the asset in question. All risks concerning the value of the Collateral
are and remain upon the Borrowers. All Collateral secures the prompt, punctual
and faithful performance of the Liabilities whether or not relied upon by the
Administrative Agent in connection with the making of loans, credits and
advances and the providing of financial accommodations under the Revolving
Credit.

      2-5 -COMMITMENT TO MAKE REVOLVING CREDIT LOANS AND SUPPORT LETTERS OF
CREDIT. Subject to the provisions of this Agreement, the Lenders shall make a
loan or advance under the Revolving Credit and the Administrative Agent shall
cause L/C's to be issued for the account of the Borrowers' Representative, in
each instance if duly and timely requested by the Borrowers' Representative as
provided herein provided that:

            (a) No OverLoan is then outstanding and none will result therefrom.

            (b) No Borrower is then InDefault and none will thereby become
            InDefault.

      2-6 -REVOLVING CREDIT LOAN REQUESTS.

            (a) Requests for loans and advances under the Revolving Credit may
            be requested by the Borrowers' Representative in such manner as may
            from time to time be reasonably acceptable to the Administrative
            Agent.

            (b) Subject to the provisions of this Agreement, the Borrowers'
            Representative may request a Revolving Credit Loan by giving notice
            to the Administrative Agent by no later than 1:00PM on the Business
            Day on which the subject Revolving Credit Loan is to be made.
            Revolving Credit Loans requested by the Borrowers' Representative
            shall not be less than $10,000.

            (c) Any request for a Revolving Credit Loan which is made after the
            deadline therefor as set forth above shall be deemed to have been
            made at the opening of business on the then next Business Day unless
            the Administrative Agent, in its discretion, determines to deem it
            to have been made earlier. Each request for a Revolving Credit Loan
            shall be made in such manner as may from time to time be acceptable
            to the Administrative Agent.

            (d) The Borrowers' Representative may request that the
            Administrative Agent cause the issuance by the Issuer of L/C's for
            the account of a Borrower as provided in Section 2:2-19.

            (e) The Administrative Agent may rely on any request for a loan or
            advance, or other financial accommodation under the Revolving Credit
            which the Administrative Agent, in good faith, believes to have been
            made by a Person duly authorized to act on behalf of the Borrowers'
            Representative and may decline to make any such requested loan or
            advance, or issuance, or to provide any such financial accommodation
            pending the

                                                                         Page 24
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            Administrative Agent's being furnished with such documentation
            concerning that Person's authority to act as reasonably may be
            satisfactory to the Administrative Agent.

            (f) A request by the Borrowers' Representative for loan or advance,
            or other financial accommodation under the Revolving Credit shall be
            irrevocable and shall constitute certification by each 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 in the
                  Borrowers' financial condition (taken as a whole) from the
                  most recent financial information furnished to the
                  Administrative Agent or any Lender pursuant to this Agreement.

                  (ii) Each representation, not relating to a specific date,
                  which is made herein or in any of the Loan Documents is then
                  true and correct in all material respects as of and as if made
                  on the date of such request (except (A) to the extent of
                  changes resulting from transactions contemplated or permitted
                  by this Agreement or the other Loan Documents and changes
                  occurring in the ordinary course of business which singly or
                  in the aggregate are not materially adverse and (B) to the
                  extent that such representations and warranties expressly
                  relate to an earlier date).

                  (iii) Unless accompanied by the Certificate of the Borrowers'
                  Representative's Chief Executive Officer, President, Chief
                  Financial Officer or other authorized representative
                  describing (in reasonable detail) the facts and circumstances
                  thereof and the steps (if any) being taken to remedy such
                  condition, no Borrower is InDefault.

            (g) If, at any time or from time to time, any Borrower is InDefault,
            the Administrative Agent may suspend the Revolving Credit
            immediately, in which event neither the Administrative Agent nor any
            Lender shall be obligated during such suspension to make any loans
            or advances or to provide any financial accommodation hereunder or
            to seek the issuance of any L/C.

      2-7 -MAKING OF REVOLVING CREDIT LOANS.

            (a) A loan or advance under the Revolving Credit shall be made by
            the transfer of the proceeds of such loan or advance to the
            Operating Account or as otherwise instructed by the Borrowers'
            Representative.

            (b) A loan or advance shall be deemed to have been made under the
            Revolving Credit (and the Borrowers shall be indebted to the
            Administrative Agent and the Lenders for the amount thereof
            immediately) upon any of the following:

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

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

            (c) There shall not be any recourse to or liability of any Agent or
            any Lender on account of:

                                                                         Page 25
<PAGE>
                  (i) Any delay, beyond the reasonable control of such Agent or
                  such Lender, in the making of any loan or advance requested
                  under the Revolving Credit.

                  (ii) Any delay, beyond the reasonable control of such Agent or
                  such Lender, by any bank or other depository institution in
                  treating the proceeds of any such loan or advance as 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 properly initiated by the
                  Administrative Agent in accordance with wire instructions
                  provided to the Administrative Agent by the Borrowers'
                  Representative.

      2-8 -SWINGLINE LOANS.

            (a) For ease of administration, Revolving Credit Loans may be made
            by the SwingLine Lender (in the aggregate, the "SWINGLINE LOANS") in
            accordance with the procedures set forth in this Agreement for the
            making of loans and advances under the Revolving Credit. The unpaid
            principal balance of the SwingLine Loans shall not at any time
            exceed the SwingLine Loan Ceiling.

            (b) The aggregate unpaid principal balance of SwingLine Loans shall
            bear interest at the rate applicable to Revolving Credit Loans and
            shall be repayable as a loan under the Revolving Credit.

            (c) The Borrowers' obligation to repay SwingLine Loans shall be
            evidenced by a Note in the form of EXHIBIT 2:2-8(C), annexed hereto,
            executed by the Borrowers, and payable to the SwingLine Lender.
            Neither the original nor a copy of that Note shall be required,
            however, to establish or prove any Liability. Upon the Borrowers'
            Representative's being provided with an affidavit from the
            Administrative Agent to the effect that said Note has been lost,
            mutilated or destroyed, the Borrowers shall promptly execute a
            replacement thereof and deliver such replacement to the SwingLine
            Lender.

            (d) For all purposes of this Agreement, the SwingLine Loans and the
            Borrowers' obligations to the SwingLine Lender constitute Revolving
            Credit Loans and are secured as "Liabilities".

            (e) SwingLine Loans may be subject to periodic settlement with the
            Lenders as provided in this Agreement.

      2-9 -THE LOAN ACCOUNT.

            (a) An account ("LOAN ACCOUNT") shall be opened on the books of the
            Administrative Agent in which a record shall be kept of all loans
            and advances made under the Revolving Credit.

            (b) The Administrative Agent shall also keep a record (either in the
            Loan Account or elsewhere, as the Administrative Agent may from time
            to time elect) of all interest, fees, service charges, costs,
            expenses and other debits owed to the Administrative Agent and each
            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 Administrative Agent for the account of each
            Lender of the items giving rise to such credits. The amount of any
            item credited against the Liabilities which is charged back against
            the Administrative Agent or any Lender for any reason or is not so
            paid shall be a

                                                                         Page 26
<PAGE>
            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 any Borrower is obligated hereunder are
            payable on demand. In the determination of Availability, the
            Administrative Agent may deem fees, service charges, accrued
            interest and other payments which will be due and payable between
            the date of such determination and the first day of the then next
            succeeding month as having been advanced under the Revolving Credit
            whether or not such amounts are then due and payable.

            (e) The Administrative Agent may, in its discretion, advance under
            the Revolving Credit any interest, fee, service charge, or other
            payment to which any Agent or any Lender is entitled from any
            Borrower pursuant hereto and may charge the same to the Loan Account
            notwithstanding that an OverLoan may result thereby. Such action on
            the part of the Administrative Agent shall not constitute a waiver
            of the Administrative Agent's rights or the Borrowers' obligations
            under Section 2:2-11(b). Any amount which is added to the principal
            balance of the Loan Account as provided in this Section 2:2-9(e)
            shall bear interest at the interest rate then and thereafter
            applicable to Revolving Credit Loans.

            (f) In the absence of manifest error, a statement rendered by the
            Administrative Agent or any Lender to the Borrowers' Representative
            concerning the Liabilities shall be considered correct and accepted
            by each Borrower, and shall be conclusively binding upon each
            Borrower, unless the Borrowers' Representative provides the
            Administrative Agent with written objection thereto within thirty
            (30) days from the Borrowers' Representative's receipt of such
            statement, which written objection shall indicate, with
            particularity, the reason for such objection. In the absence of
            manifest error, the Loan Account and the Administrative Agent'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.

      2-10 -THE REVOLVING CREDIT NOTES. The Borrowers' obligation to repay loans
and advances under the Revolving Credit, with interest as provided herein, may
be evidenced by Notes (each, a "REVOLVING CREDIT NOTE") in the form of EXHIBIT
2:2-10 annexed hereto, executed by each Borrower, one payable to each Lender.
Neither the original nor a copy of any Revolving Credit Note shall be required,
however, to establish or prove any Liability. Upon the Administrative Agent's
presentation to the Borrowers' Representative of an affidavit to the effect that
any Revolving Credit Note has been lost, mutilated or destroyed, the Borrowers
shall execute a replacement thereof and deliver such replacement to the
Administrative Agent.

      2-11 -PAYMENT OF THE LOAN ACCOUNT.

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

            (b) The Borrowers, without notice or demand from the Administrative
            Agent or any Lender, shall pay the Administrative Agent that amount,
            from time to time, which is necessary so that there is no OverLoan
            outstanding.

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

            (d) The Administrative Agent shall endeavor to cause the application
            of payments (if any) pursuant to Sections 2:2-11(a) and 2:2-11(b)
            against Loans then outstanding in such manner as results in the
            least cost to the Borrowers, but shall not have any affirmative

                                                                         Page 27
<PAGE>
            obligation to do so nor liability on account of the Administrative
            Agent's failure to have done so. In no event shall action or
            inaction taken by the Administrative Agent excuse any Borrower from
            any indemnification obligation under Section 2:2-11(e).

            (e) The Borrowers shall indemnify the Administrative Agent and each
            Lender and hold the Administrative Agent and each Lender harmless
            from and against any loss, cost or expense (including loss of
            anticipated profits) which the Administrative Agent or such Lender
            may sustain or incur (including, without limitation, by virtue of
            acceleration after the occurrence of any Event of Default) as a
            consequence of Default by any Borrower in making a borrowing after
            the Borrowers' Representative has given (or is deemed to have given)
            a request for a Revolving Credit Loan.

      2-12 -INTEREST ON REVOLVING CREDIT LOANS.

            (a) Each Revolving Credit Loan shall bear interest at the Base
            Margin Rate.

            (b) The Borrowers shall pay accrued and unpaid interest on each
            Revolving Credit Loan in arrears as follows:

                  (i) On the first Business Day of each month.

                  (ii) Following the occurrence of any Event of Default upon
                  demand by the Administrative Agent.

            (c) Following the occurrence of any Event of Default (and whether or
            not the Administrative Agent exercises the Administrative Agent's
            rights on account thereof), all Revolving Credit Loans shall bear
            interest, at the option of the Administrative Agent or at the
            instruction of the SuperMajority Lenders at rate which is the
            aggregate of the Base Margin Rate plus two percent (2%) per annum.

      2-13 -CLOSING FEE. In consideration of the commitment to make loans and
advances to the Borrowers under the Revolving Credit, and to maintain sufficient
funds available for such purpose, the Borrowers agree to pay the "CLOSING FEE"
(so referred to herein) to the Administrative Agent in the amount and payable as
provided in the Agent Fee Letter.

      2-14 -ADMINISTRATIVE AGENT'S FEES. In addition to any other fee or expense
to be paid by the Borrowers on account of the Revolving Credit, the Borrowers
shall pay the Administrative Agent the amounts (the "ADMINISTRATIVE AGENT'S
FEES") at the times as set forth in the Agent Fee Letter.

      2-15 -UNUSED LINE FEE. In addition to any other fee to be paid by the
Borrowers on account of the Revolving Credit, the Borrowers shall pay the
Administrative Agent, for the benefit of the Lenders, the "UNUSED LINE FEE" (so
referred to herein) of 0.50% per annum of the average difference, during the
fiscal quarter just ended (or relevant period with respect to the payment being
made on the Termination Date) between (a) the Revolving Credit Ceiling and (b)
the sum of (i) the unpaid principal balance of the Loan Account and (ii) the
undrawn Stated Amount of L/C's outstanding during such fiscal quarter. The
Unused Line Fee shall be paid in arrears on the first day of each fiscal quarter
after the execution of this Agreement and on the Termination Date.

      2-16 -EARLY TERMINATION FEE.

            (a) In the event that the Termination Date occurs for any reason
            (whether by virtue of Acceleration or otherwise) prior to the
            Maturity Date, then except as provided in Section 2:2-16(b), the
            Borrowers shall pay the Administrative Agent, for the Pro-Rata
            account of the Lenders, the "REVOLVING CREDIT EARLY TERMINATION FEE"
            (so referred to

                                                                         Page 28
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            herein) consisting of one percent (1%) of the Revolving Credit
            Ceiling in effect as of the date of this Agreement.

            (b) No Revolving Credit Early Termination Fee shall be due and
            payable in the event of the early termination of the Revolving
            Credit in connection with a refinancing of the Revolving Credit
            which is agented or provided by FRFI or any Affiliate of FRFI, it
            being understood that neither FRFI nor any affiliate of FRFI has
            agreed to provide any such refinancing.

      2-17 -CONCERNING FEES. Except as provided in Section 2:2-16(b), the
Borrowers shall not be entitled to any credit, rebate or repayment of any fee
previously earned by any Agent or any Lender pursuant to this Agreement
notwithstanding any termination of this Agreement or suspension or termination
of the Administrative Agent's and any Lender's respective obligation to make
loans and advances hereunder.

      2-18 -AGENTS' AND LENDERS' DISCRETION.

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

                  (i) Will or reasonably could be expected to affect, in more
                  than a de minimis manner, the value of the Collateral, the
                  enforceability of the Administrative Agent's Collateral
                  Interests therein, or the amount which the Administrative
                  Agent would likely realize therefrom (taking into account
                  delays which may possibly be encountered in the Administrative
                  Agent's realizing upon the Collateral and likely Costs of
                  Collection).

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

                  (iii) That any Borrower is InDefault.

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

                  (i) Those included in, or tested by, the definitions of
                  "Eligible Credit Card Receivables," "Eligible Inventory" and
                  "Cost".

                  (ii) Material changes in or to the mix of the Borrowers'
                  Inventory.

                  (iii) Seasonality with respect to the Borrowers' Inventory and
                  patterns of retail sales.

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

      2-19 -PROCEDURES FOR ISSUANCE OF L/C'S.

                                                                         Page 29
<PAGE>
            (a) The Borrowers' Representative may request that the
            Administrative Agent cause the issuance by the Issuer of L/C's for
            the account of a Borrower. Each such request shall be in such manner
            as may from time to time be reasonably acceptable to the
            Administrative Agent.

            (b) The Administrative Agent will endeavor to cause the issuance of
            any L/C so requested by the Borrowers' Representative, provided
            that, at the time that the request is made, the Revolving Credit has
            not been suspended as provided in Section 2:2-6(g) and if so issued:

                  (i) The aggregate Stated Amount of all L/C's then outstanding,
                  does not exceed $5,000,000.

                  (ii) The expiry of the L/C is not later than the following:

                        (A) Standby's: One (1) year from initial issuance.

                        (B) Documentary's: Sixty (60) days from issuance.

                  (iii) If the expiry of an L/C is later than the Maturity Date,
                  it is one hundred three percent (103%) cash collateralized at
                  its issuance.

                  (iv) An OverLoan will not result from the issuance of the
                  subject L/C.

            (c) Unless otherwise agreed between the Borrowers' Representative
            and the Administrative Agent, the Issuer of all L/C's shall be Fleet
            National Bank and any successor to Fleet National Bank.

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

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

                  (i) Any delay or refusal by an Issuer to issue an L/C;

                  (ii) Any action or inaction of an Issuer on account of or in
                  respect to, any L/C except where there is a specific finding
                  in a judicial proceeding (in which the Administrative Agent
                  has had an opportunity to be heard), from which finding no
                  further appeal is available, that the subject action or
                  omission to act had been in actual bad faith or grossly
                  negligent or constituted willful misconduct.

            (f) The Borrowers shall reimburse the Issuer for the amount of any
            honoring of a drawing under an L/C on the same day on which such
            honoring takes place. The Administrative Agent, without the request
            of any Borrower, may advance under the Revolving Credit (and charge
            to the Loan Account) the amount of any honoring of any L/C and other
            amount for which any Borrower, the Issuer, or the Lenders become
            obligated on account of, or in respect to, any L/C. Such advance
            shall be made whether or not any Borrower is InDefault or such
            advance would result in an OverLoan. Such action shall not
            constitute a waiver of the Administrative Agent's rights under
            Section 2:2-11(b) hereof.

            (g) The Existing Letters of Credit listed on EXHIBIT 2:2-19(G)
            hereof shall constitute Letters of Credit issued pursuant to this
            Agreement.

                                                                         Page 30
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      2-20 -FEES FOR L/C'S.

            (a) The Borrowers shall pay to the Administrative Agent the
            following per annum fees on account of L/C's, payable quarterly in
            arrears and on the Termination Date and on the End Date based on the
            weighted average Stated Amount of L/C's outstanding during the
            period in respect of which such fee is being paid except that,
            following the occurrence of any Event of Default (and whether or not
            the Administrative Agent exercises the Administrative Agent's rights
            on account thereof), such fees, at the option of the Administrative
            Agent or upon the direction of the SuperMajority Lenders, shall be
            the respective aggregate of those forth below plus two percent (2%)
            per annum.

                  (i) Documentaries: The Base Margin Rate minus 50 basis points.

                  (ii) Standbys: The Base Margin Rate.

            (b) In addition to the fee to be paid as provided in Subsection
            2:2-20(a), above, the Borrowers shall pay to the Administrative
            Agent (or to the Issuer, if so requested by Administrative Agent),
            on demand, all customary and reasonable issuance, processing,
            negotiation, amendment, and administrative fees and other amounts
            charged by the Issuer on account of, or in respect to, any L/C.

            (c) If any change in Applicable Law 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 any Lender or any Issuer has an obligation to lend to
                  fund drawings under any L/C; or

                  (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 2:2-20(c)(i) or (ii), above,
shall be to increase the cost to any Lender or 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 Lender's or Issuer's letter of credit customers
of the aggregate of such cost increases resulting from such events), then, upon
demand by the Administrative Agent and delivery by the Administrative Agent to
the Borrowers' Representative of a certificate of an officer of the subject
Lender or the subject Issuer describing such change in law, executive order,
regulation, directive or interpretation thereof, its effect on such Lender or
such Issuer, and the basis for determining such increased costs and their
allocation, the Borrowers shall immediately pay to the Administrative Agent,
upon demand by the Administrative Agent, such amounts as shall be sufficient to
compensate the subject Lender or the subject Issuer for such increased cost. In
the absence of manifest error, any Lender's or any Issuer's determination of
costs incurred under Section 2:2-20(c)(i) or (ii), above, and the allocation, if
any, of such costs among the Borrowers and other letter of credit customers of
such Lender or such Issuer, if done in good faith and made on an equitable basis
and in accordance with such officer's certificate, shall be conclusive and
binding on the Borrowers.

      2-21 -CONCERNING L/C'S.

            (a) None of the Issuer, the Issuer's correspondents, any Lender, any
            Agent 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 any Borrower.

                                                                         Page 31
<PAGE>
                  (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 (with
                  respect to the foregoing) 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) The Borrowers may instruct the Issuer concerning the designation
            of any advising bank, paying bank, and negotiating bank, it being
            understood that the Issuer shall honor such designation to the
            extent then practicable.

            (d) All directions, correspondence and funds transfers relating to
            any L/C are at the risk of the Borrowers. 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). None of the Administrative Agent, the Lenders or
            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) Each Agent's, each 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 Borrowers'
            Representative, documentary L/C's will be governed by the Uniform
            Customs and Practice for Documentary Credits, International Chamber
            of Commerce, Publication No. 500, and standby L/C's will be governed
            by International Standby Practices ISP98 (adopted by the
            International Chamber of Commerce on April 6, 1998) and any
            respective subsequent revisions thereof.

            (g) The obligations of the Borrowers 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 Borrower's consent to 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 any Borrower may have at any time against the
                  beneficiary of any L/C.

                  (iv) Any good faith 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.

                                                                         Page 32
<PAGE>
            (h) Each Issuer shall be deemed to have agreed as follows:

                  (i) That any action taken or omitted by that Issuer, that
                  Issuer's correspondents, or any advising, negotiating or
                  paying bank with respect to any L/C and the related drafts and
                  documents, shall be done in good faith and in compliance with
                  foreign or domestic laws.

                  (ii) That the Borrowers shall not be required to indemnify the
                  Issuer, the Issuer's correspondents or any advising,
                  negotiating or paying bank with respect to any L/C for any
                  claims, damages, losses, liabilities, costs or expenses to the
                  extent, caused by (x) the willful misconduct or gross
                  negligence of the Issuer, the Issuer's correspondents or any
                  advising, negotiating or paying bank with respect to any L/C
                  in determining whether a request presented under any Letter of
                  Credit complied with the terms of such Letter of Credit or (y)
                  the Issuer's failure to pay under any Letter of Credit after
                  the presentation to it of a request strictly complying with
                  the terms and conditions of such Letter of Credit.

      2-22 -INTENTIONALLY OMITTED.

      2-23 -DESIGNATION OF BORROWERS' REPRESENTATIVE AS BORROWERS' AGENT.

            (a) Each Borrower hereby irrevocably designates and appoints the
            Borrowers' Representative as that Borrower's agent to obtain loans
            and advances under the Revolving Credit, the proceeds of which shall
            be available to each Borrower for those uses as those set forth in
            this Agreement. As the disclosed principal for its agent, each
            Borrower shall be obligated to the Administrative Agent and each
            Lender on account of loans and advances so made as if made directly
            by the Lenders to that Borrower, notwithstanding the manner by which
            such loans and advances are recorded on the books and records of the
            Borrowers' Representative and of any Borrower.

            (b) Each Borrower recognizes that credit available to it under the
            Revolving Credit is in excess of and on better terms than it
            otherwise could obtain on and for its own account and that one of
            the reasons therefor is its joining in the credit facility
            contemplated herein with all other Borrowers. Consequently, each
            Borrower hereby assumes and agrees to discharge all Liabilities of
            each of the other Borrowers as if the Borrower which is so assuming
            and agreeing were each of the other Borrowers.

            (c) The Borrowers' Representative shall act as a conduit for each
            Borrower (including itself, as a "Borrower") on whose behalf the
            Borrowers' Representative has requested a Revolving Credit Loan.

            (d) The proceeds of each loan and advance provided under the
            Revolving Credit which is requested by the Borrowers' Representative
            shall be deposited into the Operating Account or as otherwise
            indicated by the Borrowers' Representative. The Borrowers'
            Representative shall cause the transfer of the proceeds thereof to
            the Borrower(s) on whose behalf such loan and advance was obtained.
            Neither the Administrative Agent nor any Lender shall have any
            obligation to see to the application of such proceeds.

      2-24 -LENDERS' COMMITMENTS

            (a) Subject to Section 17:17-1 (which provides for assignments and
            assumptions of commitments), each Lender's "REVOLVING CREDIT
            PERCENTAGE COMMITMENT", and "REVOLVING CREDIT DOLLAR COMMITMENT"
            (respectively so referred to herein) is set forth on EXHIBIT 2:2-24
            annexed hereto.

                                                                         Page 33
<PAGE>
                  (b) The obligations of each Lender are several and not joint.
                  No Lender shall have any obligation to make any loan or
                  advance under the Revolving Credit in excess of either of the
                  following:

                           (i) Such Lender's Revolving Credit Percentage
                           Commitment of the subject loan or advance or of
                           Availability.

                           (ii) Such Lender's Revolving Credit Dollar
                           Commitment.

                  (c) No Lender shall have any liability to the Borrowers on
                  account of the failure of any other Lender to provide any loan
                  or advance under the Revolving Credit nor any obligation to
                  make up any shortfall which may be created by such failure.

                  (d) The Revolving Credit Dollar Commitments, Revolving Credit
                  Commitment Percentages and identities of the Lenders (but not
                  the Revolving Credit Ceiling) may be changed from time to time
                  by the reallocation or assignment of Revolving Credit Dollar
                  Commitments and Revolving Credit Commitment Percentages
                  amongst the Lenders or with other Persons who determine to
                  become "Lenders".

                  (e) Upon written notice given the Borrowers' Representative
                  from time to time by the Administrative Agent, of any
                  assignment or allocation referenced in Section 2:2-24(d):

                           (i) Each Borrower shall execute one or more
                           replacement Revolving Credit Notes to reflect such
                           changed Revolving Credit Dollar Commitments,
                           Revolving Credit Commitment Percentages and
                           identities and shall deliver such replacement
                           Revolving Credit Notes to the Administrative Agent
                           (which promptly thereafter shall deliver to the
                           Borrowers' Representative the Revolving Credit Notes
                           so replaced); provided, however, in the event that a
                           Revolving Credit Note is to be exchanged following
                           its acceleration or the entry of an order for relief
                           under the Bankruptcy Code with respect to any
                           Borrower, the Administrative Agent, in lieu of
                           causing the Borrowers to execute one or more new
                           Revolving Credit Notes, may issue an Administrative
                           Agent's certificate confirming the resulting
                           Revolving Credit Dollar Commitments and Revolving
                           Credit Percentage Commitments.

                           (ii) Such change shall be effective from the
                           effective date specified in such written notice and
                           any Person added as a Lender shall have all rights,
                           privileges, and obligations of a Lender hereunder
                           thereafter as if such Person had been a signatory to
                           this Agreement and any other Loan Document to which a
                           Lender is a signatory and any Person removed as a
                           Lender shall be relieved of any obligations or
                           responsibilities of a Lender hereunder thereafter.

                  (f) From time to time on not less than ten (10) days prior
                  written notice to the Administrative Agent, the Borrowers may
                  elect to permanently decrease the Revolving Credit Ceiling in
                  $10,000,000 increments. No reduction of the Revolving Credit
                  Ceiling made pursuant to this Section 2:2-24(f) may be
                  reinstated.

         ARTICLE 3.- INTENTIONALLY OMITTED.

         ARTICLE 4.- CONDITIONS PRECEDENT:

         As a condition to the effectiveness of this Agreement, the
establishment of the Revolving Credit, the making of the first loan under the
Revolving Credit, each of the documents respectively described in Sections 4:4-1
through and including 4:4-7 (each in form and substance satisfactory to the
Administrative

                                                                         Page 34
<PAGE>
Agent) shall have been delivered to the Administrative Agent, and the conditions
respectively described in Sections 4:4-8 through and including 4:4-17 shall have
been satisfied:

         4-1 -CORPORATE DUE DILIGENCE.

                  (a) Certificates of corporate good standing for each Borrower,
                  respectively issued by the Secretary of State for the state in
                  which such Borrower is incorporated.

                  (b) Certificates of foreign qualification for each Borrower,
                  respectively issued by the Secretary of State for each state
                  in which the nature of such Borrower's business conducted or
                  assets owned require such qualification.

                  (c) Certificates of a duly authorized officer of each Borrower
                  of the due adoption, continued effectiveness, and setting
                  forth the texts of, each corporate resolution 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.

                  (d) Certificates of a duly authorized officer of each Borrower
                  attesting to, and attaching thereto, true and complete copies
                  of such Borrower's charter documents and by-laws in effect on
                  the date of this Agreement.

         4-2 -OPINIONS. An opinion of counsel to the Borrowers in form and
substance satisfactory to the Administrative Agent.

         4-3 -TAXES. Evidence of payment of real estate taxes and municipal
charges on all Mortgaged Property not delinquent on or before the date of this
Agreement.

         4-4 -APPRAISALS OF REAL ESTATE ASSETS. The Administrative Agent shall
have received appraisal reports in form and substance and from appraisers
satisfactory to the Administrative Agent, stating the then current fair market,
forced liquidation value of all Real Estate other than the Real Estate located
in Toledo, Ohio.

         4-5 -HAZARDOUS WASTE ASSESSMENTS. The Administrative Agent shall have
received hazardous waste site assessments from environmental engineers and in
form and substance satisfactory to the Administrative Agent, covering all
Eligible Real Estate Assets.

         4-6 -LOAN DOCUMENTS. ADDITIONAL DOCUMENTS. Such instruments and
documents as the Administrative Agent or its counsel reasonably may require or
request, including the following:

                  (a) The delivery to the Administrative Agent of a duly
                  executed counterpart signature page to this Agreement by each
                  of the Borrowers, the Administrative Agent and the Lenders.

                  (b) The delivery to the Administrative Agent of duly executed
                  counterpart signature pages to each of the Loan Documents by
                  each of the Borrowers and the Administrative Agent.

                  (c) The furnishing to the Administrative Agent by the
                  Borrowers' Representative of an executed counterpart of
                  engagement letter by the Borrowers' Representative with a
                  Restructuring Consultant, reasonably satisfactory to the
                  Administrative Agent, which retention letter is in form and
                  substance reasonably satisfactory to the Administrative Agent.

                                                                         Page 35
<PAGE>
                  (d) The delivery to the Administrative Agent by the Borrowers'
                  Representative of a management prepared Consolidated annual
                  financial statement for the Borrowers' Fiscal 2000.

                  (e) The delivery to the Administrative Agent of (i) duly
                  executed counterpart signature pages to the Mortgages covering
                  each of the Eligible Real Estate Assets (other than the Real
                  Estate located in Fort Myers, Florida) signed by the Borrowers
                  and (ii) Title Policies covering such Mortgages, each in form
                  and substance satisfactory to the Administrative Agent.

         4-7 -OFFICERS' CERTIFICATE. A Certificate executed by (a) either the
President or the Chief Executive Officer and (b) the Chief Financial Officer of
the Borrowers' Representative and stating that the representations and
warranties made by the Borrowers to the Agents and the Lenders in the Loan
Documents are true and complete in all material respects 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 constitute an Event of
Default.

         4-8 -INTERIM BORROWING ORDER; FINAL BORROWING ORDER. The Bankruptcy
Court shall have entered the Interim Borrowing Order or the Final Borrowing
Order on or prior to January 30, 2002, and such Borrowing Order shall be in full
force and effect and shall not have been amended, modified, vacated, stayed or
reversed. If either the Interim Borrowing Order or the Final Borrowing Order is
the subject of a pending appeal in any respect, none of such Borrowing Orders,
the making of the Revolving Credit Loans, the issuance, extension or renewal of
any L/C, or the performance by any of the Borrowers of any of the Liabilities
shall be the subject of a presently effective stay pending appeal. The
Borrowers, the Administrative Agent and the Lenders shall be entitled to rely in
good faith upon each of the Borrowing Orders notwithstanding objection thereto
or appeal therefrom by any interested party. The Borrowers, the Administrative
Agent and the Lenders shall be permitted and required to perform their
respective obligations in compliance with this Agreement, notwithstanding any
such objection or appeal unless and for so long as the relevant Borrowing Order
has been stayed by a court of competent jurisdiction.

         4-9 -REPRESENTATIONS AND WARRANTIES. Each of the representations made
by or on behalf of each Borrower in this Agreement or in any of the other Loan
Documents or in any other report, statement, document or paper provided by or on
behalf of each Borrower shall be true and complete in all material respects as
of the date as of which such representation or warranty was made.

         4-10  -INTENTIONALLY OMITTED.

         4-11 -ALL FEES AND EXPENSES PAID. All fees due at or immediately after
the first funding under the Revolving Credit and all costs and expenses incurred
by the Administrative Agent in connection with the establishment of the credit
facility contemplated hereby (including the reasonable fees and expenses of
counsel to the Administrative Agent) shall have been paid in full.

         4-12  -NO BORROWER INDEFAULT.  No Borrower is InDefault.

         4-13 -NO ADVERSE CHANGE. No event shall have occurred or failed to
occur, which occurrence or failure is or could have a materially adverse effect
upon any Borrower's financial condition (other than by virtue of the
commencement of the Proceedings) when compared with such financial condition at
the close of the Borrowers' Fiscal 2000, as supplemented by the Business Plan
through the Filing Date.

         4-14 -VALIDITY OF LIENS. This Agreement and the other Loan Documents
shall, upon entry of the Interim Borrowing Order or the Final Borrowing Order,
whichever occurs first, be effective to create in favor of the Administrative
Agent, as appropriate, for the benefit of the Lenders and the Agents, a legal,
valid and enforceable first priority (except for Permitted Encumbrances entitled
to priority under applicable

                                                                         Page 36
<PAGE>
law) Collateral Interest upon the Collateral. All filings, recordings,
deliveries of instruments and other actions necessary or desirable in the
opinion of the Administrative Agent to protect and preserve such Collateral
Interests shall have been duly effected. The Administrative Agent shall have
received evidence thereof in form and substance satisfactory to the
Administrative Agent.

         4-15 -INTENTIONALLY OMITTED.

         4-16 -BENEFIT OF CONDITIONS PRECEDENT. The conditions set forth in this
Article 4: are for the sole benefit of each Agent and each Lender and may be
waived by the Administrative Agent, in whole or in part without prejudice to any
Agent or any Lender.

         4-17 -MISCELLANEOUS. No document shall be deemed delivered to any Agent
or any Lender until received and accepted by the Administrative Agent at its
offices in Boston, Massachusetts. Under no circumstances shall this Agreement
take effect until executed and accepted by the Administrative Agent at said
offices.

         ARTICLE 5.-GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:

         To induce each Lender to establish the credit facilities contemplated
herein and to induce the Lenders to provide loans and advances under the
Revolving Credit (each of which loans shall be deemed to have been made in
reliance thereupon), as contemplated hereby, the Borrowers, in addition to all
other representations, warranties and covenants made by any Borrower in any
other Loan Document, make those representations, warranties and covenants.

         5-1 -PAYMENT AND PERFORMANCE OF LIABILITIES. The Borrowers shall pay
each payment Liability when due (or when demanded, if payable on demand) and
shall promptly, punctually, and faithfully perform each other Liability.

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

                  (a) Each Borrower presently is and hereafter shall remain in
                  good standing as a corporation under the laws of the State in
                  which it is organized 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 each Borrower's assets
                  or operation of each Borrower's business, such qualification
                  may be necessary, except where the failure to so qualify would
                  not have a material adverse effect on the business or assets
                  of such Borrower.

                  (b) Each Borrower's respective organizational identification
                  number assigned to it by the State of its incorporation and
                  its respective federal employer identification number is
                  stated on EXHIBIT 5:5-2 annexed hereto.

                  (c) No Borrower shall change its State of organization, any
                  organizational identification number assigned to that Borrower
                  by that State or that Borrower's federal taxpayer
                  identification number unless such Borrower provides at least
                  sixty (60) days prior written notice (in reasonable detail) to
                  the Administrative Agent.

                  (d) Each Affiliate is listed on EXHIBIT 5:5-2. The Borrowers'
                  Representative shall provide the Administrative Agent with
                  prior written notice of any entity's becoming or ceasing to be
                  an Affiliate.

                  (e) Each Borrower has all requisite power and authority to
                  execute and deliver all Loan Documents to which that Borrower
                  is a party and has and will hereafter retain all requisite
                  power to perform all Liabilities.

                                                                         Page 37
<PAGE>
                  (f) The execution and delivery by each Borrower of each Loan
                  Document to which it is a party, each Borrower's consummation
                  of the transactions contemplated by such Loan Documents
                  (including, without limitation, the creation of Collateral
                  Interests by that Borrower to secure the Liabilities), each
                  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
                           corporate action.

                           (ii) Do not, and will not, violate in any material
                           respect any provision of any Requirement of Law or
                           obligation of such Borrower, where such contravention
                           would have a material adverse effect on such
                           Borrower.

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

                  (g) The Loan Documents requiring execution have been duly
                  executed and delivered by each Borrower and, upon the entry of
                  a Borrowing Order, are the legal, valid and binding
                  obligations of each Borrower, enforceable against each
                  Borrower in accordance with their respective terms, except as
                  such enforceability may be subject to limitations on the
                  rights and remedies of secured creditors generally imposed
                  under bankruptcy or insolvency law and that the availability
                  of equitable relief is subject to the discretion of the court
                  from which such relief is sought.

         5-3 -TRADE NAMES.

                  (a) EXHIBIT 5:5-3 annexed hereto, sets forth:

                           (i) All names under which any Borrower conducted its
                           business since July 18, 2001.

                           (ii) All Persons with whom any Borrower, since July
                           18, 2001, consolidated or merged, or from whom any
                           Borrower, since July 18, 2001, acquired in a single
                           transaction or in a series of related transactions
                           substantially all of such Person's assets.

                  (b) The Borrowers' Representative will provide the
                  Administrative Agent with not less than twenty-one (21) days
                  prior written notice (with reasonable particularity) of any
                  change to any Borrower's name from that under which that
                  Borrower is conducting its business at the execution of this
                  Agreement and will not effect such change unless each Borrower
                  is then in compliance with all provisions of this Agreement.

         5-4 -INFRASTRUCTURE.

                  (a) Each Borrower has and will maintain a sufficient
                  infrastructure to conduct its business as presently conducted
                  and as contemplated to be conducted following its execution of
                  this Agreement.

                  (b) Each Borrower owns and possesses, or has the right to use
                  (and will hereafter own, possess, or have such 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 such Borrower's conduct of such Borrower's
                  business except

                                                                         Page 38
<PAGE>
                  where the failure to own, possess, or have such right or use
                  will not have more than a de minimis adverse effect on such
                  Borrower.

                  (c) The conduct by each Borrower of such Borrower's business
                  does not presently infringe (nor will such Borrower conduct
                  its business in the future so as to infringe) 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 except where such
                  infringement will not have no more than a de minimis adverse
                  effect on such Borrower.

         5-5 -RESTRUCTURING CONSULTANT. Each Borrower:

                  (a) Shall continue working with the Restructuring Consultant
                  engaged as contemplated by Section 4:4-6(c) in compliance with
                  and as contemplated by the engagement letter described in
                  Section 4:4-6(c).

                  (b) Shall provide reasonable access for the Administrative
                  Agent and the Lenders (and their respective participants) from
                  time to time with such Restructuring Consultant to discuss
                  such matters concerning the Borrowers as they reasonably may
                  determine (other than as to matters which the Borrowers advise
                  the Restructuring Consultant are confidential and not to be
                  then disclosed) at such times and places as the Administrative
                  Agent may reasonably request in a notice to the Borrowers'
                  Representative.

                  (c) Shall not dismiss such Restructuring Consultant without
                  (i) the prior written consent of the Administrative Agent or
                  (ii) an order of the Bankruptcy Court in the Proceedings,
                  provided that nothing contained herein shall affect the
                  obligation of the Borrowers to retain a Restructuring
                  Consultant as required herein.

         5-6 -LOCATIONS.

                  (a) The Collateral, books, records and papers of Borrowers'
                  pertaining thereto, are kept and maintained solely at the
                  following locations:

                           (i) The Borrowers' Representative's chief executive
                           offices which are at 3333 Sargent Road, Jackson,
                           Michigan 49201.

                           (ii) Those locations which are listed on EXHIBIT
                           5:5-6 annexed hereto, which EXHIBIT includes, with
                           respect to each such location, the name and address
                           of the landlord on the Lease which covers such
                           location (or an indication that a Borrower owns the
                           subject location) and of all service bureaus with
                           which any such records are maintained and the names
                           and addresses of each of the Borrowers' landlords.

                  (b) No Borrower shall remove any of the Collateral from said
                  chief executive office or those locations listed on EXHIBIT
                  5:5-6 except for the following purposes:

                           (i) To sell Inventory in the ordinary course of
                           business.

                           (ii) To move Inventory or other Collateral from one
                           such location to another such location.

                           (iii) To utilize such of the Collateral as is removed
                           from such locations in the ordinary course of
                           business (such as motor vehicles).

                           (iv) To engage in a Permitted Asset Disposition.

                                                                         Page 39
<PAGE>
                  (c) Except for the liquidation of the Stores referenced in
                  clause (f) of the definition of "Permitted Asset Disposition"
                  or where caused by a force majeure or as otherwise agreed by
                  the Administrative Agent, no Borrower shall cease the conduct
                  of business at any of its present or future Stores for more
                  than fifteen (15) consecutive days without first furnishing
                  the Administrative Agent with not less than thirty (30) days
                  (or such lesser period as the Administrative Agent may agree)
                  prior written notice thereof.

         5-7 -STORES.

                  (a) Except for the opening of a Store in North Palm Beach,
                  Florida described in the Business Plan, no Borrower is or may
                  commit to or become legally obligated to open additional
                  Stores where such commitment, obligation or opening is
                  prohibited by, or would result in a breach of, this Agreement.

                  (b) No tangible personal property of any Borrower (beyond a de
                  minimis amount of such property) is in the care or custody of
                  any third party or stored or entrusted with a bailee or other
                  third party other than as otherwise consented to by the
                  Administrative Agent.

         5-8 -TITLE TO ASSETS.

                  (a) The Borrowers are, and shall hereafter remain, the owners
                  of the Collateral free and clear of all Encumbrances with the
                  exceptions of the following:

                           (i) Encumbrances in favor of the Administrative
                           Agent.

                           (ii) Those Encumbrances (if any) listed on EXHIBIT
                           5:5-8(a) annexed hereto.

                           (iii) Permitted Encumbrances.

                  (b) Except as disclosed on EXHIBIT 5:5-8(b) annexed hereto,
                  the Borrowers do not have, and shall not have, possession of
                  any property on consignment to the Borrowers in excess of
                  $3,000,000 based upon the retail value of such property.

                  (c) No Borrower shall acquire or obtain the right to use any
                  Equipment, the acquisition or right to use of which Equipment
                  is otherwise permitted by this Agreement, in which any third
                  party has an interest, except for:

                           (i) Equipment which is merely incidental to the
                           conduct of that Borrower's business;

                           (ii) Equipment, the acquisition or right to use of
                           which has been consented to by the Administrative
                           Agent, which consent may be conditioned solely upon
                           the Administrative Agent's receipt of an agreement,
                           substantially in the form of EXHIBIT 5:5-8(c)(ii)
                           annexed hereto with the third party which has an
                           interest in such Equipment; or

                           (iii) Equipment acquired pursuant to the Business
                           Plan in accordance with Section 6:6-12.

                  (d) No Affiliate which is not a Borrower has, and none will,
                  acquire any assets other than of nominal value.

         5-9 -INDEBTEDNESS.

                                                                         Page 40
<PAGE>
                  (a) The Borrowers do not and shall not hereafter have any
                  Indebtedness with the exceptions of Permitted Indebtedness.

                  (b) The Borrowers will not make, directly or indirectly, any
                  payment or other distribution (whether in cash, securities or
                  other property) of or in respect of principal of or interest
                  on any Indebtedness (other than on account of the
                  Liabilities), except for the following:

                           (i) Payments required to be made pursuant to an order
                           of the Bankruptcy Court in the Proceedings for
                           adequate protection payments pursuant to the
                           Bankruptcy Code on account of Permitted Prior Liens.

                           (ii) Payments, in amounts reasonably acceptable to
                           the Administrative Agent, to provide funds for a
                           reclamation program, the terms of which program are
                           subject to the Administrative Agent's consent.

                           (iii) Payments of prepetition claims authorized by
                           the orders entered in the Proceedings, to which
                           orders the Administrative Agent has consented.

                           (iv) Payments of the Prepetition Senior Debt.

                           (v) Payments of any Borrower's obligations as lessee
                           under any Capital Lease entered into by such Borrower
                           in connection with the sale-leaseback transaction
                           involving the Stores located in East Grand Rapids,
                           Michigan and Grosse Pointe, Michigan.

                           (vi) Payment of any other Permitted Indebtedness
                           arising out of post-petition obligations to which the
                           Administrative Agent has consented.

         5-10 -INSURANCE.

                  (a) EXHIBIT 5:5-10 annexed hereto, sets forth all insurance
                  policies owned by the Borrowers or under which any Borrower is
                  the named insured. Each of such policies is in full force and
                  effect. Neither the issuer of any such policy nor any Borrower
                  is in default or violation of any such policy.

                  (b) The Borrowers 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 Administrative Agent.

                  (c) All insurance carried by the Borrowers shall provide for a
                  minimum of thirty (30) days' prior written notice of
                  cancellation to the Administrative Agent and all such
                  insurance which covers the Collateral shall include an
                  endorsement in favor of the Administrative Agent, which
                  endorsement shall provide that the insurance, to the extent of
                  the Administrative Agent's interest therein, shall not be
                  impaired or invalidated, in whole or in part, by reason of any
                  act or neglect of any Borrower or by the failure of any
                  Borrower to comply with any warranty or condition of the
                  policy.

                  (d) The coverage reflected on EXHIBIT 5:5-10 presently
                  satisfies the foregoing requirements, it being recognized by
                  each Borrower, however, that such requirements may change
                  hereafter to reflect changing circumstances.

                  (e) The Borrowers' Representative shall furnish the
                  Administrative Agent from time to time with certificates or
                  other evidence satisfactory to the Administrative Agent
                  regarding compliance by the Borrowers with the foregoing
                  requirements.

                                                                         Page 41
<PAGE>
                  (f) In the event of the failure by the Borrowers to maintain
                  insurance as required herein, the Administrative Agent, at its
                  option but at the sole cost and expense of the Borrower, may
                  obtain such insurance, provided, however, the Administrative
                  Agent's obtaining of such insurance shall not constitute a
                  cure or waiver of any Event of Default occasioned by the
                  Borrowers' failure to have maintained such insurance.

         5-11 -LICENSES. Each license, distributorship, franchise and similar
agreement issued to, or to which any Borrower is a party is in full force and
effect, except where the failure thereof to be in full force and effect does not
and could not reasonably be expected to have a material adverse effect on the
Borrowers. To the knowledge of the Borrowers, no party to any such license or
agreement is in default or violation thereof in any material respect. No
Borrower has received any notice or threat of cancellation of any such license
or agreement.

         5-12 -LEASES. EXHIBIT 5:5-12 annexed hereto sets forth all presently
effective Capital Leases and all other presently effective Leases. Each of such
Leases and Capital Leases is in full force and effect. To the knowledge of the
Borrowers, no party to any such Lease or Capital Lease is in default or
violation of any such Lease or Capital Lease in any material respect, except on
account of defaults the enforcement of which is stayed under Applicable Law
during the pendency of the Proceedings. Each Borrower hereby authorizes the
Administrative Agent at any time and from time to time, with the consent of the
Borrowers' Representative, to contact any of the Borrowers' landlords in order
to confirm the Borrowers' continued compliance with the terms and conditions of
the Lease(s) between the subject Borrower and the landlord party thereto and to
discuss such issues concerning the subject Borrower's occupancy under such
Lease(s) as the Administrative Agent may determine.

         5-13 -REQUIREMENTS OF LAW. Each Borrower is in compliance with, and
shall hereafter comply with and use its assets in compliance with, all
Requirements of Law except where the failure of such compliance (a) will not
have a material adverse effect on the Borrowers' business or assets or (b) is
not required under Applicable Law during the pendency of the Proceedings. No
Borrower has received any notice of any violation of any Requirement of Law
(other than of a violation which does not have a material adverse effect on the
Borrowers' business or assets), which violation has not been cured or otherwise
remedied.

         5-14 -LABOR RELATIONS.

                  (a) Except as disclosed on EXHIBIT 5:5-14(A) annexed hereto,
                  no Borrower is presently a party to any collective bargaining
                  or other labor contract.

                  (b) There is not presently pending and, to any Borrower's
                  knowledge, there is not threatened:

                           (i) Any strike, slowdown, picketing, work stoppage,
                           or material employee grievance process.

                           (ii) Any proceeding against or affecting any Borrower
                           relating to the alleged violation of any Applicable
                           Law pertaining to labor relations or before National
                           Labor Relations Board, the Equal Employment
                           Opportunity Commission, or any comparable
                           governmental body, organizational activity, or other
                           labor or employment dispute against or affecting any
                           Borrower, which, if determined adversely to such
                           Borrower could have a material adverse effect on such
                           Borrower.

                           (iii) Any lockout of any employees by any Borrower
                           (and no such action is contemplated by any Borrower).

                           (iv) Any application for the certification of a
                           collective bargaining agent.

                                                                         Page 42
<PAGE>
                  (c) To the Borrowers' knowledge, no material event has
                  occurred or circumstance exists which could provide the basis
                  for any work stoppage or other labor dispute.

                  (d) Each Borrower:

                           (i) Has complied in all material respects with all
                           Applicable Law relating to employment, equal
                           employment opportunity, nondiscrimination,
                           immigration, wages, hours, benefits, collective
                           bargaining, the payment of social security and
                           similar taxes, occupational safety and health and
                           plant closings.

                           (ii) Is not liable for the payment of a material
                           amount of compensation, damages, taxes, fines,
                           penalties or other amounts, however designated, for
                           that Borrower's failure to comply with any Applicable
                           Law referenced in Section 5:5-14(d)(i).

         5-15 -MAINTAIN PROPERTIES. The Borrowers 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:

                           (i) 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 any Borrower.

                           (ii) The turning over to the Administrative Agent of
                           all Receipts as provided herein.

                           (iii) Permitted Asset Dispositions for fair
                           consideration.

         5-16 -TAXES.

                  (a) The Borrowers have properly filed the Borrower's tax
                  returns due to be filed up to the date of this Agreement under
                  Applicable Law. All federal and state taxes and other amounts
                  in the nature of taxes for which any Borrower is liable or
                  obligated are presently due and payable without penalty, or
                  have been paid or settled, or, to the extent unpaid as of the
                  Filing Date, will be paid in accordance with Applicable Law
                  and the Borrowers' plan or reorganization in the Proceedings.

                  (b) The Borrowers shall:

                           (i) 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 any Borrower or the Collateral by any person
                           or entity whose claim could result in an Encumbrance
                           upon any asset of any Borrower or by any governmental
                           authority, except to the extent that the Borrower is
                           not required, under Applicable Law, to pay such taxes
                           and other charges during the pendency of the
                           Proceedings;

                                                                         Page 43
<PAGE>
                           (ii) properly exercise any trust responsibilities
                           imposed upon any Borrower by reason of withholding
                           from employees' pay or by reason of any Borrower's
                           receipt of sales tax or other funds for the account
                           of any third party;

                           (iii) timely make all contributions and other
                           payments as may be required pursuant to any Employee
                           Benefit Plan now or hereafter established by any
                           Borrower; and

                           (iv) timely file all tax and other returns and other
                           reports with each governmental authority to whom any
                           Borrower is obligated to so file except where failure
                           to file would not have a material adverse effect;
                           provided, however, nothing included in this Section
                           5:5-16(b) shall prevent the Borrowers from
                           contesting, in good faith and by appropriate
                           proceedings, any tax liability claimed against any
                           Borrower so long as no tax lien is filed with respect
                           thereto.

                  (c) At its option, with prior notice to the Borrower's
                  Representative, the Administrative Agent may pay any tax,
                  charge levied, assessed, or claimed upon any Borrower or the
                  Collateral by any person or entity or governmental authority,
                  and make any payments on account of any Borrower's Employee
                  Benefit Plan as the Administrative Agent, in the
                  Administrative Agent's discretion, may deem necessary or
                  desirable, to protect the Administrative Agent's Rights and
                  Remedies.

         5-17 -NO MARGIN STOCK. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T and X of the Board of Governors of the
Federal Reserve System of the United States). No part 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.

         5-18 -ERISA. The Borrowers are and shall hereafter remain in
compliance, in all material respects, with ERISA, except to the extent that the
Borrowers are not required under Applicable Law to comply therewith during the
pendency of the Proceedings.

         5-19 -HAZARDOUS MATERIALS. To the Borrowers' knowledge, none of the
real property used or operated by any Borrower contains a material amount of
Hazardous Materials.

         5-20 -LITIGATION. Except as described in EXHIBIT 5:5-20 annexed hereto
there is not presently pending or to its knowledge, threatened in writing, by or
against the Borrowers any suit, action, proceeding or investigation which (a) if
determined adversely to the Borrowers, would have a material adverse effect upon
the Borrowers' financial condition or ability to conduct their business as such
business is presently conducted or is contemplated to be conducted in the
foreseeable future, and (b) is not stayed by the commencement of, and during the
pendency of, the Proceedings.

         5-21  -DIVIDENDS. INVESTMENTS. CORPORATE ACTION.  No Borrower shall:

                  (a) Pay any cash dividend or make any other distribution in
                  respect of any class of its respective capital stock, other
                  than payments to another Borrower.

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

                  (c) Except for Permitted Investments invest in or purchase any
                  stock or securities or rights to purchase any such 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; provided that
                  nothing in this Agreement shall prevent any Borrower from
                  merging into any other Borrower.

                                                                         Page 44
<PAGE>
                  (e) Consolidate any of such Borrower's operations with those
                  of any other corporation or other entity except any of the
                  Borrowers (other than the Borrowers' Representative) may
                  consolidate into the Borrowers' Representative.

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

                  (g) Engage in any interest rate swaps, caps or similar
                  activities or any hedging activities other than in the
                  ordinary course and conduct of such Borrower's business, and
                  then only with a Lender or any affiliate of a Lender.

         5-22 -LOANS. The Borrowers shall not make any loans to, nor acquire the
Indebtedness of, any Person, provided, however, the Borrowers shall be permitted
to:

                  (a) Subject to such conditions respectively as apply thereto
                  make Permitted Investments.

                  (b) Make advances to employees of a Borrower for travel and
                  other business expenses to be incurred by such employees in
                  the ordinary course of the business of one or more of the
                  Borrowers.

                  (c) Make cash loans to employees of a Borrower not exceeding
                  $25,000 outstanding at any time to any employee nor exceeding
                  $100,000 in the aggregate outstanding at any time.

                  (d) Make advance payments to the Borrowers' suppliers in the
                  ordinary course.

                  (e) Make intercompany loans to any other Borrower.

         5-23 -REVISED BUSINESS PLAN. prior to the entry of the Final Borrowing
Order, the Borrowers shall have delivered to the Administrative Agent a revised
Business Plan for the period though the Maturity Date which revised Business
Plan shall be in form and substance satisfactory to the Administrative Agent and
each of the Lenders.

         5-24 -LINE OF BUSINESS. No Borrower shall engage in any business other
than the business in which it is currently engaged or a business reasonably
related thereto (the conduct of which reasonably related business is reflected
in the Business Plan).

         5-25 -AFFILIATE TRANSACTIONS. No Borrower shall make any payment, nor
give any value to any Affiliate (other than another Borrower) except for

                  (a) goods and services actually purchased by that Borrower
                  from, or sold by that Borrower to, such Affiliate for a price
                  and on terms which shall:

                           (i) 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

                           (ii) be no less favorable to that Borrower than those
                           which would have been charged and imposed in an arms
                           length transaction.

                  (b) Intercompany loans to the extent permitted by Section
                  5:5-22(e).

                  (c) Transfers of Inventory between Borrowers.

                                                                         Page 45
<PAGE>
         5-26 -ADDITIONAL MORTGAGES. HAZARDOUS WASTE ASSESSMENTS. (a) The
Borrowers shall use their best efforts to have delivered to the Administrative
Agent within fifteen (15) days following the date hereof or such later date
which the Administrative Agent consents to, (i) a consent of the landlord to the
Mortgage on the Real Estate located in Fort Myers, Florida in form satisfactory
to the Administrative Agent, (ii) a Mortgage on the Real Estate located in Fort
Myers, Florida and (iii) a Title Policy covering such Mortgage; and (b) within
forty-five (45) days following the date hereof, (i) the Borrowers shall have
delivered to the Administrative Agent Mortgages for all Real Estate (other than
Eligible Real Estate Assets) and such Mortgages shall have been recorded in the
appropriate real estate recording offices and (ii) hazardous waste site
assessments from environmental engineers and in form and substance satisfactory
to the Administrative Agent, covering all Mortgaged Properties (other than
Eligible Real Estate Assets).

         5-27 -FURTHER ASSURANCES.

                  (a) No Borrower is 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 5:) will not be subject to a perfected
         Collateral Interest in favor of the Administrative Agent (subject only
         to Permitted Encumbrances) to secure the Liabilities.

                  (b) Except as otherwise permitted by this Agreement, no
         Borrower will hereafter acquire any asset or any interest in property
         which is not, immediately upon such acquisition, subject to such a
         perfected Collateral Interest in favor of the Administrative Agent to
         secure the Liabilities (subject only to Permitted Encumbrances).

                  (c) Each Borrower shall execute and deliver to the
         Administrative Agent such instruments, documents, and papers, and shall
         do all such things from time to time hereafter as the Administrative
         Agent reasonably may request to carry into effect the provisions and
         intent of this Agreement; to protect and perfect the Administrative
         Agent's Collateral Interests in the Collateral; and to comply with all
         applicable statutes and laws. Each Borrower shall execute all such
         instruments as may be reasonably required by the Administrative Agent
         with respect to the recordation and/or perfection of the Collateral
         Interests created or contemplated herein.

                  (d) This Agreement constitutes an authenticated record which
         authorizes the Administrative Agent to file such financing statements
         as the Administrative Agent determines as appropriate to perfect or
         protect the Administrative Agent's Collateral Interests created hereby.

         5-28 -ADEQUACY OF DISCLOSURE.

                  (a) All financial statements furnished to the Administrative
                  Agent and each Lender by each Borrower have been prepared in
                  accordance with GAAP consistently applied and present fairly
                  the condition of the Borrowers at the date(s) thereof and the
                  results of operations and cash flows for the period(s) covered
                  (provided however, that unaudited financial statements are
                  subject to normal year end adjustments and to the absence of
                  footnotes). There has been no change in the Consolidated
                  financial condition, results of operations or cash flows of
                  the Borrowers since the date(s) of such financial statements,
                  as supplemented by the Business Plan through the Filing Date,
                  other than the commencement of the Proceedings and changes in
                  the ordinary course of business, which changes have not been
                  materially adverse, either singularly or in the aggregate.

                  (b) Except as set forth on EXHIBIT 5:5-28(b) annexed hereto,
                  no Borrower has any contingent obligations or obligation under
                  any Lease or Capital Lease which is required to be, but is
                  not, noted in the Borrowers' Consolidated financial statements
                  furnished to each Agent and each Lender prior to the execution
                  of this Agreement other than

                                                                         Page 46
<PAGE>
                  obligations which are entered into in the ordinary course of
                  business since the date of such financial statement.

                  (c) No document, instrument, agreement, or paper now or
                  hereafter given to any Agent and any Lender by or on behalf of
                  any Borrower or any guarantor of the Liabilities in connection
                  with the execution of this Agreement by each Agent and each
                  Lender (except for any projections provided by or on behalf of
                  any Borrower) 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.

         5-29 -NO RESTRICTIONS ON LIABILITIES. No Borrower shall enter into or
directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Borrower's:

                  (a) Creation of, and granting of Collateral Interests in favor
                  of the Administrative Agent.

                  (b) Incurrence of Liabilities.

         5-30 -BANKRUPTCY PROTECTIONS. The Borrowers will not seek, consent,
suffer to exist any of the following:

                  (a) Any modification, stay, vacation or amendment to the
                  Borrowing Orders to which the Administrative Agent have not
                  consented.

                  (b) A priority claim for administrative expense or unsecured
                  claim against any Borrower (now existing or hereafter arising
                  of any kind or nature whatsoever, including, without
                  limitation, any administrative expense of the kind specified
                  in Section 105, 326, 330, 331, 503(a), 503(b), 506(c), 507(a),
                  507(b), 546(c), 546(d) or 1114 of the Bankruptcy Code) equal
                  or superior to the priority claim of the Agents and the
                  Lenders in respect of the Liabilities, except with respect to
                  the Carve Out Reserve.

                  (c) Any Encumbrance on any Collateral, having a priority equal
                  or superior to the Encumbrances of the Agents and the Lenders,
                  other than Permitted Prior Liens and the Carve Out Reserve.

         5-31 NO REJECTION OF LEASES. No Borrower shall reject any Lease without
the prior written consent of the Administrative Agent. The Borrowers hereby
agree that the Administrative Agent is granted standing and is authorized to
file a motion on behalf of the Borrowers and the estates under Section 365 of
the Bankruptcy Code to cause the Borrowers to seek an extension of the time to
assume or reject any Lease, assume any Lease not previously assumed and to
assign on behalf of the Borrowers any such Lease, so long as such assignment
complies with all applicable requirements of Section 365 of the Bankruptcy Code.
In determining whether to grant the Administrative Agent in the name of the
estates such extension or assumption and assignment, the Bankruptcy Court will
apply the same standard that the Bankruptcy Court would apply if such motion
were brought by the Borrowers.

         5-32 OTHER COVENANTS. No Borrower shall indirectly do or cause to be
done any act which, if done directly by that Borrower, would breach any covenant
contained in this Agreement.

         ARTICLE 6. FINANCIAL REPORTING AND PERFORMANCE COVENANTS:

         6-1  -MAINTAIN RECORDS.  The Borrowers shall:

                  (a) At all times, keep proper books of account, which in
                  reasonable detail fairly reflect the Borrowers' financial
                  transactions, all in accordance with GAAP applied consistently
                  with prior periods (except as required by changes in GAAP) to
                  fairly reflect

                                                                         Page 47
<PAGE>
                  the Consolidated financial condition of the Borrowers at the
                  close of, and its results of operations for, the periods in
                  question.

                  (b) Timely provide the Administrative Agent with those
                  financial reports, statements, and schedules required by this
                  Article 6: 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 Consolidated financial condition of the
                  Borrowers at the close of, and the results of operations for,
                  the period(s) covered therein (provided however, that
                  unaudited financial statements are subject to normal year end
                  adjustments and to the absence of footnotes).

                  (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
                  Administrative Agent and instruct such accountants to fully
                  cooperate with, and be available to, the Administrative Agent
                  to discuss the Borrowers' 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 Administrative Agent, all
                  at such times and places as the Administrative Agent may
                  reasonably request in a notice to the Borrowers'
                  Representative.

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

         6-2  -ACCESS TO RECORDS.

                  (a) Each Borrower shall accord the Administrative Agent and
                  any Lender (if accompanied by the Administrative Agent) with
                  reasonable access on reasonable notice during customary
                  business hours from time to time as the Administrative Agent
                  reasonably may require to all properties owned by or over
                  which any Borrower has control. The Administrative Agent shall
                  have the right during customary business hours on reasonable
                  notice, and each Borrower will permit the Administrative Agent
                  from time to time as the Administrative Agent reasonably may
                  request, to examine, inspect, copy, and make extracts from any
                  and all of the Borrowers' books, records, electronically
                  stored data, papers, and files. Each Borrower shall make all
                  of that Borrower's copying facilities available to the
                  Administrative Agent.

                  (b) Each Borrower hereby authorizes the Administrative Agent
                  during customary business hours on reasonable notice 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 any
                           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 Administrative
                           Agent with respect thereto.

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

                                                                         Page 48
<PAGE>
                  (c) The Borrowers' Representative, on reasonable request from
                  time to time from the Administrative Agent, will make
                  representatives of management available from time to time to
                  discuss the Borrowers' operating results and other related
                  matters with the Administrative Agent.

                  (d) The Administrative Agent from time to time may designate
                  one or more representatives to exercise the Administrative
                  Agent's rights under this Section 6:6-2 as fully as if the
                  Administrative Agent were doing so.

         6-3 -PROMPT NOTICE.

                  (a) The Borrowers' Representative shall provide the
                  Administrative Agent with written notice promptly upon its
                  becoming aware of 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 material adverse change in the business
                           affairs of any Borrower.

                           (ii) Any change in the executive officers of the
                           Borrowers' Representative.

                           (iii) Any ceasing of the Borrowers' making of
                           post-petition payment, in the ordinary course (except
                           where there is a bona fide dispute with the relevant
                           creditor), to a material number of its creditors
                           extending credit or services after the Filing Date
                           which, in the aggregate, constitute a material amount
                           of the Borrowers' trade debt.

                           (iv) Except where the same has arisen out of a bona
                           fide dispute, any failure by the Borrowers to pay
                           post-petition rent for periods subsequent to the
                           Filing Date as and when due for ten percent (10%) or
                           more of the Borrowers' stores (other than stores
                           closed in connection with Permitted Asset
                           Dispositions), which failure continues for more than
                           five (5) Business Days following the day on which
                           such rent first came due.

                           (v) Any Borrower's becoming InDefault.

                           (vi) Any of the following with respect to the
                           Restructuring Consultant retained by the Borrowers in
                           compliance with Sections 4:4-6(c and 5:5-5:

                                    (A) Any alteration or amendment or any
                                    intention on the part of the Borrowers to
                                    alter or amend its retention letter with
                                    such professional consultants.

                                    (B) Any course of conduct or dealings which
                                    constitutes a change, initiated by either
                                    the Borrowers or such consultants, to their
                                    working relationship as contemplated by the
                                    engagement of such consultants by the
                                    Borrowers.

                                    (C) The filing of any pleading in the
                                    Proceedings which seeks to disqualify such
                                    Restructuring Consultant.

                                    (D) The entry of an order in the Proceedings
                                    which disqualifies such Restructuring
                                    Consultant.

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                                    (E) The receipt of any written communication
                                    from or on behalf of such Restructuring
                                    Consultant which suggests that such
                                    Restructuring Consultant intends to resign.

                                    (F) The resignation of such Restructuring
                                    Consultant.

                           (vii) Any intention on the part of a Borrower to
                           discharge that Borrower's present independent
                           accountants or any withdrawal or resignation by such
                           independent accountants from their acting in such
                           capacity (as to which, see Section 6:6-1(d)).

                           (viii) Any litigation which, if determined adversely
                           to a Borrower, would have a material adverse effect
                           on the financial condition of that Borrower, except
                           to the extent such litigation is stayed by the
                           commencement of, and during the pendency of, the
                           Proceedings.

                  (b) The Borrowers' Representative shall:

                           (i) Provide the Administrative Agent, when so
                           distributed, with copies of any materials distributed
                           to the shareholders of Borrowers' Representative (qua
                           shareholders), the United States Trustee in the
                           Proceedings or the Creditors' Committee.

                           (ii) At the request of the Administrative Agent
                           provide the Administrative Agent with a copy of the
                           results of any physical or cycle count of a
                           Borrower's Inventory.

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

                           (iv) Provide the Administrative Agent with copies of
                           all filings, by the Borrowers' Representative, with
                           the Securities and Exchange Commission, when so filed
                           by the Borrowers' Representative.

                           (v) Provide the Administrative Agent and the
                           Administrative Agent's counsel with copies, when so
                           filed or submitted, of any pleadings filed in the
                           Proceedings by or on behalf of the Borrower or the
                           submission by or on behalf of the Borrower of any
                           report and financial statement to any of:

                                    (A) the Bankruptcy Court in which the
                                    Proceedings are pending;

                                    (B) the office of the United States Trustee;
                                    or

                                    (C) any committee appointed in the
                                    Proceedings.

                           (vi) Provide the Administrative Agent with written
                           notice of any intended bulk sale, liquidation, or
                           other disposition of assets of any Borrower at least
                           ten (10) Business Days prior to the consummation of
                           such sale or disposition or commencement of such
                           liquidation and a detailed summary of the net
                           proceeds expected to be received therefrom. Such
                           notice shall be in addition to any notices which may
                           be required to be furnished the Administrative Agent
                           and the Lenders under the Bankruptcy Code in
                           connection with any hearings in the Proceedings to
                           approve any such sale, liquidation or disposition.

                                                                         Page 50
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         6-4 -BORROWING BASE CERTIFICATE. The Borrowers' Representative shall
provide the Administrative Agent by 1:00PM on Wednesday of each week with a
Borrowing Base Certificate (or more frequently if requested by the
Administrative Agent) in the form of EXHIBIT 6:6-4 annexed hereto, as such form
may be revised from time to time by the Administrative Agent with notice to the
Borrowers), provided, however, such Borrowing Base Certificate shall be
delivered by 1:00PM on each Business Day during any period which Excess
Availability is less than $5,000,000. The Borrowing Base Certificate may be sent
to the Administrative Agent by facsimile transmission, provided that the
original thereof is forwarded to the Administrative Agent on the date of such
transmission.

         6-5 -WEEKLY AND MONTHLY REPORTS. The Borrowers' Representative shall
provide the Administrative Agent with those financial statements and reports
described in EXHIBIT 6:6-5.

         6-6 -QUARTERLY REPORTS. Quarterly, within forty-five (45) days
following the end of each of the Borrowers' first three (3) fiscal quarters in
each fiscal year, the Borrowers' Representative shall provide the Administrative
Agent with the following:

                  (a) An original counterpart of a management prepared
                  Consolidated financial statement of the Borrowers for the
                  period from the beginning of the Borrowers' then current
                  fiscal year through the end of the subject quarter, with
                  comparative information for the same period of the previous
                  fiscal year, which statement shall include, at a minimum, a
                  balance sheet, income statement, cash flows and a schedule of
                  consolidation, as well as a comparison of same store sales and
                  operating results for the corresponding quarter of the then
                  immediately previous year and to the year-to-date period and
                  to the Business Plan or updated forecast.

                  (b) The officer's compliance certificate described in Section
                  6:6-8.

         6-7 -ANNUAL REPORTS.

                  (a) Within ninety (90) days following the end of the
                  Borrowers' Fiscal Year, the Borrowers' Representative shall
                  furnish the Administrative Agent with the following:

                           (i) The Borrowers' annual Consolidated financial
                           statement (with consolidating schedules) for the
                           Borrowers' Fiscal Year most recently ended which
                           statement shall have been prepared by the Borrowers,
                           and shall bear the unqualified opinion of the
                           Borrowers' independent certified public accountants
                           (i.e. said statement shall be "certified" by such
                           accountants), except for qualifications and
                           exceptions (A) resulting from the commencement and
                           pendency of the Proceedings and (B) with respect to
                           the ability of the Borrowers to continue as a going
                           concern. Such annual statement shall include, at a
                           minimum (with comparative information for the
                           Borrowers' previous fiscal year) a balance sheet,
                           income statement, statement of changes in
                           shareholders' equity, and cash flows.

                           (ii) The following Consolidated financial statements
                           for the Borrowers for the prior fiscal year (each
                           audited by the Borrowers' independent accountants):
                           balance sheet, income statement, statement of changes
                           in stockholders' equity and cash flow.

         6-8 -OFFICERS' CERTIFICATES. The Borrowers' Representative's Chief
Executive Officer, President, Chief Financial Officer or Controller shall
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 (except for any
                  required changes in GAAP) and presents fairly the

                                                                         Page 51
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                  Consolidated financial condition of the Borrowers at the close
                  of, and the results of the Borrowers' operations and cash
                  flows for, the period(s) covered, subject, however to the
                  following:

                           (i) Usual year-end adjustments and the absence of
                           footnotes (this exception shall not be included in
                           the Certificate which accompanies such annual
                           statement).

                           (ii) Material Accounting Changes (in which event,
                           such Certificate shall include a schedule (in
                           reasonable detail) of the effect of each such
                           Material Accounting Change) not previously
                           specifically taken into account in the determination
                           of the financial performance covenants imposed
                           pursuant to Sections 6:6-11 and 6:6-12.

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

                  (c) Include calculations concerning the Borrowers' compliance
                  (or failure to comply) at the date of the subject statement
                  with the financial performance covenants included in Sections
                  6:6-11 and 6:6-12.

         6-9 -INVENTORIES, APPRAISALS, AND AUDITS.

                  (a) The Administrative Agent may observe each inventory and
                  any cycle count of the Collateral which is undertaken on
                  behalf of any Borrower. No Borrower may change the methodology
                  to be followed in connection with the conduct of and reporting
                  on the results of such inventory from the methodology employed
                  by the Borrowers in connection with the Prepetition Senior
                  Debt. The Borrowers shall conduct not less than one physical
                  inventory, per Store and per warehouse, per fiscal year. The
                  Administrative Agent does not contemplate undertaking or
                  requiring any additional physical inventories by or of the
                  Borrowers, provided, however, the Administrative Agent may do
                  so if any Borrower becomes InDefault.

                           (i) On the Administrative Agent's request, the
                           Borrowers' Representative shall provide the
                           Administrative Agent with a copy of the preliminary
                           results of each such inventory (as well as of any
                           other physical inventory undertaken by any Borrower)
                           within ten (10) days following the completion of such
                           inventory.

                           (ii) On the Administrative Agent's request, the
                           Borrowers' Representative shall provide the
                           Administrative Agent with a reconciliation of the
                           results of each such inventory (as well as of any
                           other physical inventory undertaken by any Borrower)
                           to that Borrower's books and records within thirty
                           (30) days following the completion of such inventory.

                           (iii) The Administrative Agent, in its discretion, if
                           any Borrower becomes InDefault, may cause such
                           additional inventories to be taken as the
                           Administrative Agent determines (each, at the expense
                           of the Borrowers).

                  (b) The Administrative Agent contemplates conducting up to
                  four (4) commercial finance audits (in each event, at the
                  Borrowers' expense) of the Borrowers' books and records during
                  any twelve (12) month period during which this Agreement is in
                  effect, but following the occurrence of an Event of Default,
                  may cause additional such audits to be undertaken (in each
                  event, at the Borrowers' expense).

                                                                         Page 52
<PAGE>
                  (c) The Administrative Agent contemplates obtaining of up to
                  four (4) appraisals (in all events, at the Borrowers' expense)
                  of the Borrowers' Inventory during any twelve (12) month
                  period during which this Agreement is in effect, each
                  conducted by such appraisers as are satisfactory to the
                  Administrative Agent, but following the occurrence of an Event
                  of Default, may cause additional such appraisals to be
                  undertaken (in each event, at the Borrowers' expense).

                  (d) The Administrative Agent may obtain additional appraisals
                  of each parcel of the Real Estate (at the Borrowers' expense
                  for one (1) appraisal made during each twelve (12) month
                  period after the first anniversary of the date hereof)
                  updating the most recent such appraisal delivered to the
                  Administrative Agent pursuant to Section 4:4-4 or this Section
                  6:6-9(d), to be conducted by such appraisers as are
                  satisfactory to the Administrative Agent, and following the
                  occurrence of an Event of Default, may cause additional such
                  appraisals to be undertaken (in each event, at the Borrowers'
                  expense).

         6-10 -ADDITIONAL FINANCIAL INFORMATION.

                  (a) In addition to all other information required to be
                  provided pursuant to this Article 6:, the Borrowers'
                  Representative promptly shall provide the Administrative Agent
                  (and any guarantor of the Liabilities), with such other and
                  additional information concerning the Borrowers, the
                  Collateral, the operation of the Borrowers' business and the
                  Borrowers' financial condition, including original
                  counterparts of financial reports and statements, as the
                  Administrative Agent reasonably may from time to time request
                  from the Borrowers' Representative.

                  (b) The Borrowers' Representative may provide the
                  Administrative Agent, from time to time hereafter, with
                  updated forecasts of the Borrowers' anticipated performance
                  and operating results.

                  (c) In all events, the Borrowers' Representative, by no later
                  than thirty (30) days prior to the end of the Borrowers'
                  fiscal year, shall furnish the Administrative Agent with an
                  updated and extended forecast (which shall include, on a
                  monthly basis, balance sheets, income statements, and cash
                  flow, as well as of all components of each borrowing base)
                  which shall go out at least through the end of the then next
                  fiscal year. Such updated and extended forecast shall be
                  prepared pursuant to a methodology and shall include such
                  assumptions as are reasonably satisfactory to the
                  Administrative Agent, it being understood that such forecasts
                  are estimates and not guarantees of actual results.

                  (d) Each Borrower recognizes that all appraisals, inventories,
                  analysis, financial information and other materials which the
                  Administrative Agent may obtain, develop or receive with
                  respect to the Borrowers are confidential to the
                  Administrative Agent and that, except as otherwise provided
                  herein, no Borrower is entitled to receipt of any of such
                  appraisals, inventories, analysis, financial information and
                  other materials, nor copies or extracts thereof or therefrom,
                  provided, however, that so long as (i) no Event of Default has
                  occurred and is continuing and (ii) the Administrative Agent
                  shall have received the prior written consent of the Person
                  preparing such appraisal, the Administrative Agent shall
                  provide the Borrowers with a copy of any such appraisal
                  redacted to remove any confidential information.

         6-11 -MINIMUM SALES. MINIMUM INVENTORY PURCHASES. For any month,
commencing with Fiscal, February 2002, the Borrowers will not permit (a) gross
sales during such month to be less than an amount equal to the Gross Sales
Percentage of the amount of gross sales budgeted for such month in the Business
Plan and (b) inventory purchases during such month to be less than an amount
equal to eighty-five percent (85%) of the amount of inventory purchases budgeted
for such month in the Business Plan. As used herein, "GROSS SALES PERCENTAGE"
shall be (i) eighty percent (80%) for Fiscal, February 2002, (ii) eighty-five
percent (85%) for each of Fiscal, March 2002 and Fiscal, April 2002, and

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(iii) ninety percent (90%) for Fiscal, May 2002 and for each fiscal month
thereafter. Compliance with this Section 6:6-11 shall be determined by the
Administrative Agent based upon the Borrowing Base Certificates for such month
delivered to the Administrative Agent pursuant to Section 6:6-4 of this
Agreement.

         6-12 -BUSINESS PLAN. For any month, commencing with Fiscal, February
2002, the Borrowers will use proceeds of the Revolving Credit Loans solely up to
the amounts at the times and substantially for the purposes identified in the
Business Plan; provided, however, the Borrowers may neither (i) use proceeds of
the Revolving Credit Loans with respect to any one line item in the Business
Plan in an amount which exceeds ten percent (10%) in excess of the amount
originally identified for such line item for such month in the Business Plan nor
(ii) make payment of any expense in advance of the time for payment of such line
items reflected in the Business Plan, in each case without the prior written
consent of the Administrative Agent.

         ARTICLE 7.- USE OF COLLATERAL:

         7-1  -USE OF INVENTORY COLLATERAL.

                  (a) No Borrower shall engage in any sale of the Inventory
                  other than (i) for fair consideration in the conduct of the
                  Borrowers' business in the ordinary course, or (ii) Permitted
                  Asset Dispositions for fair consideration.

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

                  (c) Other than Inventory which is accepted for return in the
                  ordinary course of business consistent with past practices, no
                  Borrower shall consent to or suffer the entry of an order in
                  the Proceedings which authorizes the return of any of such
                  Borrower's property pursuant to Section 546(g) of the
                  Bankruptcy Code as a result of a claim pursuant to Section
                  546(c) of the Bankruptcy Code or other applicable law by a
                  seller of goods that has sold goods to such Borrower.

         7-2 -INVENTORY QUALITY. All Inventory now owned or hereafter acquired
by each Borrower is and will be acquired in the ordinary course of business
consistent with past practices.

         7-3 -ADJUSTMENTS AND ALLOWANCES. No Borrower shall amend, supplement or
otherwise modify in any material respect its policy or procedures with respect
to its private label credit card programs without the prior written consent of
the Administrative Agent.

         7-4  -VALIDITY OF ACCOUNTS.

                  (a) The amount of each Account shown on the books, records and
                  invoices of the Borrowers 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 Borrowers, subject to such Account Debtor's
                  right to return merchandise in the normal course of such
                  Borrower's business.

                  (b) The Administrative Agent from time to time may verify the
                  Receivables Collateral directly with the Borrowers' Account
                  Debtors, such verification to be undertaken in keeping with
                  commercially reasonable commercial lending standards, if the
                  Borrowers are In Default or the Administrative Agent has
                  reason to believe that the Borrowing Base

                                                                         Page 54
<PAGE>
                  Certificate most recently delivered to the Administrative
                  Agent doe not accurately reflect the amount of Eligible Credit
                  Card Receivables.

                  (c) The Borrowers have no knowledge of any impairment of the
                  validity or collectibility of any of the Eligible Credit Card
                  Receivables of which it has not informed the Administrative
                  Agent, including by delivering financial statements containing
                  an allowance for doubtful accounts.

         7-5 -NOTIFICATION TO ACCOUNT DEBTORS. The Administrative Agent shall
have the right at any time that an Event of Default has occurred to notify any
of the Borrowers' Account Debtors to make payment directly to the Administrative
Agent and to collect all amounts due on account of the Collateral.

         ARTICLE 8.- CASH MANAGEMENT. PAYMENT OF LIABILITIES:

         8-1  -DEPOSITORY ACCOUNTS.

                  (a) Annexed hereto as EXHIBIT 8:8-1 is a Schedule of all
                  present DDAs, 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) a contact person at such depository and (iv)
                  whether such DDA is a Local Account, Interim Concentration
                  Account or Exempt DDA.

                  (b) The Borrowers' Representative shall deliver to the
                  Administrative Agent, as a condition to the effectiveness of
                  this Agreement or by such later date as the Administrative
                  Agent may agree:

                           (i) Notifications executed on behalf of the relevant
                           Borrower, to each depository institution with which
                           any DDA is maintained (other than the Operating
                           Account), in form satisfactory to the Administrative
                           Agent, of the Administrative Agent's interest in such
                           DDA.

                           (ii) A Blocked Account Agreement with each depository
                           institution at which a Blocked Account is maintained.

                  (c) No Borrower will establish any DDA hereafter unless,
                  contemporaneous with such establishment, the Borrowers'
                  Representative provides a notification of the Administrative
                  Agent's interest in such DDA to such establishment and will
                  not establish any Blocked Account unless the Borrowers'
                  Representative provides the Administrative Agent with such a
                  Blocked Account Agreement.

         8-2 -CREDIT CARD RECEIPTS.

                  (a) Annexed hereto as EXHIBIT 8:8-2, is a Schedule which
                  describes all 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 Borrowers' Representative shall deliver to the
                  Administrative Agent, as a condition to the effectiveness of
                  this Agreement, notification, executed on behalf of the
                  relevant Borrower, to each of the Borrower's credit card
                  clearinghouses and processors of notice (in form satisfactory
                  to the Administrative Agent), which notice provides that
                  payment of all credit card charges submitted by any Borrower
                  to that clearinghouse or other processor and any other amount
                  payable to any Borrower by such clearinghouse or other
                  processor shall be directed to the Concentration Account or as
                  otherwise designated from time to time by the Administrative
                  Agent. No Borrower shall change

                                                                         Page 55
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                  such direction or designation except upon and with the prior
                  written consent of the Administrative Agent.

         8-3 -THE CONCENTRATION, BLOCKED, AND OPERATING ACCOUNTS.

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

                           (i) The "CONCENTRATION ACCOUNT" (so referred to
                           herein): Established by the Administrative Agent with
                           Fleet National Bank.

                           (ii) The "OPERATING ACCOUNT" (so referred to herein):
                           Established by the Borrowers' Representative with
                           Fleet National Bank.

                  (b) The contents of each DDA and of the Blocked Account
                  constitutes Collateral and Proceeds of Collateral. The
                  contents of the Concentration Account constitutes the
                  Administrative Agent's property.

                  (c) The Borrowers shall pay all fees and charges of, and
                  maintain such impressed balances as may be required by the
                  depository in which any account is opened as required hereby
                  (even if such account is opened by and/or is the property of
                  the Administrative Agent).

         8-4 -PROCEEDS AND COLLECTIONS.

                  (a) All Receipts and all cash proceeds of any sale or other
                  disposition of any of each Borrower's assets:

                           (i) Constitute Collateral and proceeds of Collateral.

                           (ii) Shall be held in trust by the Borrowers for the
                           Administrative Agent.

                           (iii) Shall not be commingled with any of any
                           Borrower's other funds.

                           (iv) Shall be deposited and/or transferred only to
                           the Blocked Account, the Local Accounts, the Interim
                           Concentration Account or the Concentration Account.

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

                           (i) The then contents of each DDA (other than any
                           Exempt DDA), each such transfer to be net of any
                           minimum balance, not to knowingly exceed the lesser
                           of $2,500 or that amount which the Borrowers'
                           Representative, in its best business judgement
                           determines as being required to be maintained in the
                           subject DDA by the bank at which such DDA is
                           maintained).

                           (ii) The then contents of each Local Account (other
                           than any Exempt DDA) no less frequently than daily on
                           each Business Day to the extent the balance in any
                           such Local Account knowingly exceeds $30,000.

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

                                                                         Page 56
<PAGE>
                  Notice shall be provided to the Administrative Agent on each
                  Business Day on which any such transfer is made.

                  (c) Whether or not any Liabilities are then outstanding, the
                  Borrowers' Representative shall cause the ACH or wire transfer
                  to the Concentration Account, no less frequently than daily,
                  of then entire available ledger balance of the Interim
                  Concentration Account, net of such minimum balance, not to
                  knowingly exceed the lesser of $2,500 or that amount which the
                  Borrowers' Representative, in its best business judgement,
                  determines as being required to be maintained in the Blocked
                  Account by the depository which the Blocked Account is
                  maintained.

                  (d) In the event that, notwithstanding the provisions of this
                  Section 8:8-4, any 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 that Borrower for the Administrative Agent
                  and shall not be commingled with any of that Borrower's other
                  funds or deposited in any account of any Borrower other than
                  as instructed by the Administrative Agent.

         8-5 -PAYMENT OF LIABILITIES.

                  (a) On each Business Day, the Administrative Agent shall apply
                  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) in accordance with the priorities set forth in
                  Section 14:14-8; provided, however, for purposes of the
                  calculation of interest on the unpaid principal balance of the
                  Loan Account, all payments other than by wire transfer shall
                  be deemed to have been made one (1) Business Day after such
                  transfer).

                  (b) The following rules shall apply to deposits and payments
                  under and pursuant to this Section 8:8-5:

                           (i) Funds shall be deemed to have been deposited to
                           the Concentration Account on the Business Day on
                           which deposited, provided that notice of such deposit
                           is available to the Administrative Agent by 2:00PM on
                           that Business Day.

                           (ii) Funds paid to the Administrative Agent, other
                           than by deposit to the Concentration Account, shall
                           be deemed to have been received on the Business Day
                           when they are good and collected funds, provided that
                           notice of such payment is available to the
                           Administrative Agent by 2:00PM on that Business Day.

                           (iii) If notice of a deposit to the Concentration
                           Account (Section 8:8-5(b)(i)) or payment (Section
                           8:8-5(b)(ii)) is not available to the Administrative
                           Agent until after 2:00PM on a Business Day, such
                           deposit or payment shall be deemed to have been made
                           at 9:00AM on the then next Business Day.

                           (iv) All deposits to the Concentration Account and
                           other payments to the Administrative Agent are
                           subject to clearance and collection.

                  (c) The Administrative Agent shall transfer to the Operating
                  Account any surplus in the Concentration Account remaining
                  after the application towards the Liabilities referred to in
                  Section 8:8-5(a), above (less those amounts which are to be
                  netted out, as provided therein) provided, however, in the
                  event that

                           (i) any Borrower is In Default; and

                                                                         Page 57
<PAGE>
                           (ii) one or more L/C's are then outstanding;

                           then the Administrative Agent may establish a funded
                           reserve of up to one hundred three percent (103%) of
                           the Stated Amounts of such L/C's. Such funded reserve
                           shall either be (i) returned to the Borrowers'
                           Representative provided that no Borrower is InDefault
                           or (ii) applied towards the Liabilities following
                           Acceleration.

         8-6 -THE OPERATING ACCOUNT. Except as otherwise specifically provided
in, or permitted by, this Agreement, all checks shall be drawn by the Borrowers'
Representative upon, and other disbursements shall be made by the Borrowers'
Representative solely from, the Operating Account.

         ARTICLE 9.- PRIORITY AND COLLATERAL SECURITY:

         9-1 -SUPERPRIORITY CLAIMS AND COLLATERAL SECURITY. Each of the
Borrowers hereby represents, warrants and covenants that, except as otherwise
expressly provided in this paragraph, the Liabilities, upon the entry of the
Interim Borrowing Order and the Final Borrowing Order:

                  (a) except for Permitted Prior Liens, Avoidance Actions and
                  the Carve Out Reserve, shall at all times constitute a
                  Superpriority Claim having priority, pursuant to Section
                  364(c)(1) of the Bankruptcy Code, over any claims of any
                  Person, including, without limitation, priority over any
                  claims under Sections 503, 506(c), 507, 1113 and 1114 of the
                  Bankruptcy Code;

                  (b) except for Permitted Prior Liens, Avoidance Actions and
                  the Carve Out Reserve, pursuant to Sections 364(c)(2) and (3)
                  of the Bankruptcy Code and the Loan Documents, shall at all
                  times be secured by a first priority perfected security
                  interest in all of the Collateral, whether now owned or
                  hereafter acquired of the Borrowers and their estates,
                  pursuant to the terms of the Loan Documents.

         Such security interest shall be senior in priority to all Encumbrances
other than Permitted Prior Liens, Avoidance Actions and the Carve Out Reserve.
The security interest securing the Liabilities shall not be subject to Section
551 of the Bankruptcy Code.

         9-2 -GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
punctual and faithful performance of all and each of the Liabilities, each
Borrower hereby grants to the Administrative Agent, for the ratable benefit of
the Lenders, a continuing security interest, lien, Encumbrance and mortgage in
and to, and assigns to the Administrative Agent, for the ratable benefit of the
Lenders, all of the assets of such Borrower, including without limitation the
following, and each item thereof, whether now owned or now due, or in which such
Borrower has an interest (and without regard to whether acquired prior or
subsequent to the initiation of the Proceedings), or hereafter acquired,
arising, or to become due, or in which such Borrower obtains an interest, and
all products, Proceeds, substitutions, and accessions of or to any of the
following (all of which, together with any other property in which the
Administrative Agent may in the future be granted a security interest, is
referred to herein as the "COLLATERAL"):

                  (a) All Accounts and Accounts Receivable.

                  (b) All Inventory.

                  (c) All General Intangibles.

                  (d) All Equipment.

                  (e) All Goods.

                  (f) All Fixtures.

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                  (g) All Farm Products.

                  (h) All Chattel Paper.

                  (i) All Leasehold Interests.

                  (j) All Letter-of-Credit Rights.

                  (k) All Payment Intangibles.

                  (l) All Supporting Obligations.

                  (m) All books, records, and information relating to the
                  Collateral and/or to the operation of each Borrower's
                  business, and all rights of access to such books, records and
                  information, and all property in which such books, records,
                  and information are stored, recorded and maintained.

                  (n) All Investment Property, Instruments, Documents, Deposit
                  Accounts, money, policies and certificates of insurance,
                  deposits, impressed accounts, compensating balances, cash or
                  other property.

                  (o) All insurance proceeds, refunds, and premium rebates,
                  including, without limitation, proceeds of fire and credit
                  insurance, whether any of such proceeds, refunds, and premium
                  rebates arise out of any of the foregoing (Section 9:9-1(a)
                  through 9:10-1(l)) or otherwise.

                  (p) All Real Estate.

                  (q) All liens, guaranties, rights, remedies, and privileges
                  pertaining to any of the foregoing (9:9-1(a) through
                  9:9-1(p)), including the right of stoppage in transit.

                  (r) Any avoidance power claims or actions under Section 549 of
                  the Bankruptcy Code if the transfer avoided or to be avoided
                  was an asset of any Borrower otherwise constituting
                  Collateral.

         9-3 -COLLATERAL SECURITY PERFECTION. Each of the Borrowers agrees to
take all action that the Administrative Agent may request as a matter of
nonbankruptcy law to perfect and protect the Administrative Agent's Collateral
Interest in the Collateral and for such Collateral Interest to obtain the
priority therefor contemplated hereby, including, without limitation, executing
and delivering such documents and instruments, financing statements, providing
such notices and assents of third parties, obtaining such governmental approvals
and providing such other instruments and documents in recordable form as the
Administrative Agent may request. Each Borrower hereby irrevocably authorizes
the Administrative Agent at any time and from time to time to file in any filing
office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as "all
assets of such Borrower" or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the Uniform Commercial Code of the Commonwealth of Massachusetts or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) provide any other information required by part 5 of Article 9 of
the Uniform Commercial Code of any jurisdiction for the sufficiency or filing
office acceptance of any financing statement or amendment, including (i) whether
such Borrower is an organization, the type of organization and any organization
identification number issued to such Borrower and, (ii) in the case of a
financing statement filed as a fixture filing, a sufficient description of real
property to which the Collateral relates. Such Borrower agrees to furnish any
such information to the Administrative Agent promptly upon the Administrative
Agent's request.

                                                                         Page 59
<PAGE>
         9-4 -EXTENT AND DURATION OF SECURITY INTEREST.

                  (a) The security interest created and granted herein is in
                  addition to, and supplemental of, any security interest
                  previously granted by any Borrower to the Administrative Agent
                  and shall continue in full force and effect applicable to all
                  Liabilities until both (a) all Liabilities have been paid
                  and/or satisfied in full and (b) the security interest created
                  herein is specifically terminated in writing by a duly
                  authorized officer of the Administrative Agent.

                  (b) It is intended that the Collateral Interests created
                  herein extend to and cover all assets of each Borrower (except
                  as otherwise provided in the Borrowing Orders).

                  (c) The Administrative Agent's Collateral Interest in any
                  Collateral which is the subject of a transfer pursuant to a
                  Permitted Asset Disposition shall automatically be released
                  upon the consummation of such Permitted Asset Disposition.

                  (d) Each of the Borrowers agrees that (i) the Liabilities
                  shall not be discharged by the entry of an order confirming a
                  Reorganization Plan (and each of the Borrowers, pursuant to
                  Section 1141(d)(4) of the Bankruptcy Code, hereby waives any
                  such discharge), (ii) the Superpriority Claims granted to the
                  Administrative Agent pursuant to the Borrowing Orders and the
                  Collateral Interests granted to the Administrative Agent
                  pursuant to the Borrowing Orders and, as the case may be, the
                  Loan Documents, shall not be affected in any manner by the
                  entry of an order confirming a Reorganization Plan and (iii)
                  none of the Borrowers shall propose or support any
                  Reorganization Plan that is not conditioned upon the payment
                  in full in cash, on or prior to the Termination Date, of all
                  of the Liabilities, and, with respect to Liabilities arising
                  after such date, thereafter for the payment in full of such
                  Liabilities in cash when due and payable.

                  (e) The Administrative Agent, in the Administrative Agent's
                  discretion, and from time to time, may discharge any tax or
                  Encumbrance on any of the Collateral or take any other action
                  which the Administrative Agent may deem necessary or desirable
                  to repair, insure, maintain, preserve, collect or realize upon
                  any of the Collateral. The Administrative Agent 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 Administrative Agent has had an
                  opportunity to be heard), from which finding no further appeal
                  is available, that the Administrative Agent had acted in
                  grossly negligent manner, in actual bad faith or in willful
                  misconduct. The Borrowers shall pay to the Administrative
                  Agent, on demand, or the Administrative Agent, in its
                  discretion, may add to the Loan Account, all amounts paid or
                  incurred by the Administrative Agent pursuant to this Section
                  9:9-4(e).

         ARTICLE 10.- ADMINISTRATIVE AGENT AS BORROWER'S ATTORNEY-IN-FACT.

         10-1 -APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby irrevocably
constitutes and appoints the Administrative Agent as such (acting through any of
its officers) Borrower's true and lawful attorney, with full power of
substitution, following the occurrence and during the continuance of an Event of
Default, to convert the Collateral into cash at the sole risk, cost, and expense
of such Borrower, but for the sole benefit of the Agents and the Lenders. The
rights and powers granted the Administrative Agent 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.

                  (b) Sign change of address forms to change the address to
                  which each Borrower's mail is to be sent to such address as
                  the Administrative Agent shall designate; receive and open
                  each Borrower's mail; remove any Receivables Collateral and
                  Proceeds of

                                                                         Page 60
<PAGE>
                  Collateral therefrom and turn over the balance of such mail
                  either to the Borrowers' Representative or to any trustee in
                  bankruptcy or receiver of the Borrowers' Representative, or
                  other legal representative of a Borrower whom the
                  Administrative Agent determines to be the appropriate person
                  to whom to so turn over such mail.

                  (c) Endorse the name of the relevant Borrower in favor of the
                  Administrative Agent upon any and all checks, drafts, notes,
                  acceptances, or other items or instruments; sign and endorse
                  the name of the relevant 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 relevant Borrower on any notice to
                  that Borrower's Account Debtors or verification of the
                  Receivables Collateral; sign the relevant 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 any 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 each
                  Borrower.

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

         10-2 -NO OBLIGATION TO ACT. The Administrative Agent shall not be
obligated to do any of the acts or to exercise any of the powers authorized by
Section 10:10-1 herein, but if the Administrative Agent 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 any 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 Administrative Agent 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 or
constituted willful misconduct.

         ARTICLE 11.- EVENTS OF DEFAULT:

         The occurrence of any event described in this Article 11: respectively
shall constitute an "EVENT OF DEFAULT" herein. Upon the occurrence of any Event
of Default, the Administrative Agent may, and on the instruction of the
SuperMajority Lenders as provided in Section 16:16-1(b), or as provided in
Section 16:16-1(c) shall, declare any and all Liabilities shall become
immediately due and payable. The occurrence of any Event of Default shall also
constitute, without notice or demand, a default under all other Loan Documents.

         11-1 -FAILURE TO PAY THE REVOLVING CREDIT. The failure by any Borrower
to pay when due any principal of, interest on or fees in respect of, the
Revolving Credit.

         11-2 -FAILURE TO MAKE OTHER PAYMENTS. The failure by any Borrower, on
three (3) days notice by the Administrative Agent to the Borrowers'
Representative, to discharge any payment Liability then due, other than under
the Revolving Credit.

         11-3 -FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD). The
failure by any Borrower to promptly, punctually, faithfully and timely perform,
discharge, or comply with any

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covenant or Liability not otherwise described in Section 11:11-1 or Section
11:11-2 hereof, and included in any of the following provisions hereof:

<TABLE>
<CAPTION>
                  Section                   Relates to:
                  -------                   ----------
<S>                                   <C>
                  5:5-2(c)                  State of Incorporation, State Identification Number and Taxpayer
                                            Identification Number
                  5:5-3(b)              Notice of Name Change
                  5:5-6                     Location of Collateral
                  5:5-8(a)              Title to Assets
                  5:5-9                     Indebtedness
                  5:5-10                    Insurance Policies
                  5:5-16                    Pay taxes
                  5:5-21                    Dividends, Investments and Other Corporate Actions
                  5:5-23                    Revised Business Plan
                  5:5-25                    Affiliate Transactions
                  5:5-30                    Bankruptcy Protections
                  6:6-3(a)              Prompt Notice
                  6:6-4                     Borrowing Base Certification Within Two Business Days
                  6:6-5                     Weekly and Monthly Reports
                  6:6-6                     Quarterly Reports
                  6:6-7                     Annual Reports
                  6:6-8                     Officers' Certificates
                  6:6-9                     Inventories, Appraisals and Audits
                  6:6-11                    Minimum Sales. Minimum Inventory Purchases.
                  6:6-12                    Business Plan
                  7:7-1                     Use of Collateral
                  Article 8:                Cash Management (except if the failure to comply is as a result of
                                            force majeure or through no fault of the Borrowers)
</TABLE>

         11-4 -FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD). The
failure by any Borrower, within thirty (30) days following the earlier of

                  (a) such Borrower's knowledge of a breach of any covenant or
                  Liability not described in any of Sections 11:11-1 through
                  11:11-3 or

                  (b) the Borrowers' Representative's receipt of written notice
                  from the Administrative Agent of the breach of any of any of
                  such covenants or Liabilities.

         11-5 -RESTRUCTURING CONSULTANT. A breach of Section 5:5-5 shall
constitute an Event of Default as follows:

                  (a) Except as provided in Section 11:11-5(b), any breach of
                  Section 5:5-5 which is not cured within the earlier of within
                  five (5) Business Days following the earlier of (i) any
                  Borrower's knowledge of such breach or (ii) the Borrowers'
                  Representative's receipt of written notice of such breach from
                  the Administrative Agent.

                  (b) The resignation, dismissal, or disqualification of the
                  Restructuring Consultant shall constitute an Event of Default,
                  unless within thirty (30) days a new Restructuring Consultant
                  is engaged that is acceptable to the Administrative Agent in
                  its reasonable judgment.

         11-6 -MISREPRESENTATION. Any representation or warranty at any time
made by any Borrower to any Agent or any Lender was not true or complete in all
material respects when given.

                                                                         Page 62
<PAGE>
         11-7 -ACCELERATION OF OTHER DEBT. The occurrence of any event such that
Indebtedness of any Borrower in excess of $1,000,000 to any creditor (other than
any Agent or any Lender) incurred subsequent to the Filing Date could be
accelerated unless, prior to the acceleration of the Liabilities on account of
such occurrence, the other creditor duly waives such default and evidence of
such written waiver is provided to the Administrative Agent.

         11-8 -DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any breach of
any covenant or Liability imposed by, or of any default under, any agreement
(including any Loan Document) between any Agent or any Lender, and any Borrower
or instrument given by any Borrower to any Agent or any Lender and the expiry,
without cure, of any applicable grace period (notwithstanding that subject Agent
or Lender may not have exercised all or any of its rights on account of such
breach or default) where the result of such breach or default, if exercised
upon, could have more than a de minimis adverse effect on a Borrower.

         11-9 -UNINSURED CASUALTY LOSS. The occurrence of any uninsured loss,
theft, damage or destruction of or to any material portion of the Collateral.

         11-10 -ATTACHMENT. JUDGMENT. RESTRAINT OF BUSINESS.

                  (a) The service of process upon any Agent or any Lender or any
                  Participant of a court order or order of any other applicable
                  governmental authority attaching, by trustee, mesne or other
                  process, any funds of any Borrower on deposit with, or assets
                  of any Borrower in the possession of, such Agent, such Lender
                  or such Participant.

                  (b) The entry of any judgment against any Borrower, which
                  judgment exceeds any applicable insurance or bond coverage by
                  more than $1,000,000 and is not satisfied (if a money
                  judgment) or appealed from (with execution or similar process
                  stayed) within thirty (30) days of 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 any Borrower of
                  its business in the ordinary course.

         11-11 -INDICTMENT - FORFEITURE. The indictment of, or institution of
any legal process or proceeding against, any Borrower 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 more than $500,000 of the property
of that 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 any Borrower of
its business.

         11-12  -CHALLENGE TO LOAN DOCUMENTS.

                  (a) Any challenge by or on behalf of the Borrowers'
                  Representative or any Borrower to the validity of any Loan
                  Document or the applicability or enforceability of any Loan
                  Document strictly in accordance with the subject 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 to any Loan
                  Document.

                  (b) Any determination by any court or any other judicial or
                  government authority that any Loan Document is not enforceable
                  strictly in accordance with such document's terms or which
                  voids, avoids, limits or otherwise adversely affects the
                  Administrative Agent's Collateral Interests in the Collateral
                  or any payment made pursuant to any Loan Document.

         11-13  -CHANGE IN CONTROL.  Any Change in Control.

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<PAGE>
         11-14 -CHANGE IN BORROWING ORDER. The entry of an order in the
Proceedings without the consent of the Administrative Agent, which order
constitutes the stay, modification, vacation, appeal or reversal of any
Borrowing Order or which otherwise affects the effectiveness of any Borrowing
Order.

         11-15 -APPOINTMENT OF TRUSTEE OR EXAMINER. The appointment in the
Proceedings of a trustee or of any examiner having expanded powers to operate
all or any part of the Borrower's business.

         11-16 -CONVERSION OR DISMISSAL OF CASE. The conversion of the
Proceedings to a case under Chapter 7 of the Bankruptcy Code or the dismissal of
any of the Proceedings.

         11-17 -RELIEF FROM STAY. The entry of any order which provides relief
from the automatic stay otherwise imposed pursuant to Section 362 of the
Bankruptcy Code, which order permits any creditor, other than the Administrative
Agent, to realize upon, or to exercise any right or remedy with respect to, any
asset of the Borrower or to terminate any license, franchise or similar
agreement, where such relief from stay could have a material adverse effect on
the Borrower's financial condition or ability to conduct its business.

         11-18 TERMINATION OF BUSINESS. Unless the Administrative Agent shall
have given its prior written consent thereto, the determination of the
Borrowers, whether by vote of the Borrowers' board of directors or otherwise to:
suspend the operation of the Borrowers' business in the ordinary course,
liquidate all or a material portion of the Borrowers' assets or Stores, or
employ an agent or other third party to conduct any so-called store closing,
store liquidation or "Going-Out-Of-Business" sales (other than in connection
with a Permitted Asset Disposition); or the filing of a motion or other
application in the Proceedings seeking authority to do any of the foregoing.

         11-19 CERTAIN APPLICATIONS. An application shall be filed by any
Borrower for the approval of any other super-priority claim in the Proceedings
which is pari passu with or senior to the claims of the Agents and the Lenders
against the Borrowers or there shall arise any such super-priority claim.

         11-20 PAYMENT OF PREPETITION INDEBTEDNESS. The Borrowers shall pay or
discharge any prepetition Indebtedness except as expressly permitted hereunder.

         11-21 ADEQUATE PROTECTION ORDERS. Any adequate protection is granted by
the Borrowers or is ordered by the Bankruptcy Court in the Proceedings in favor
of any of the Borrowers' pre-petition creditors without the consent of the
Administrative Agent, or any such adequate protection is modified or expanded
without the consent of the Administrative Agent.

         11-22 MATERIAL ADVERSE ACTIONS. The filing by any Borrower of a motion
in the Proceedings (a) except for the payment of payroll and payroll-related
expenses and as otherwise provided in the Borrowing Orders, to use cash
collateral of the Lenders under Section 363(c) of the Bankruptcy Code without
the Lenders', (b) to recover from any portions of the Collateral any costs or
expenses of preserving or disposing of such Collateral under Section 506(c) of
the Bankruptcy Code, (c) to cut off rights in the Collateral under Section
552(b) of the Bankruptcy Code, or (d) to take any other action or actions which
are materially adverse to the Lenders or their rights and remedies hereunder or
under any of the other Loan Documents or the Administrative Agent's or the
Lenders' interest in any of the Collateral.

         ARTICLE 12: -RIGHTS AND REMEDIES UPON DEFAULT.

         12-1 ACCELERATION. Upon the occurrence of any Event of Default, subject
to the provisions of the Borrowing Orders, the Administrative Agent may (and on
the issuance of Acceleration Notice(s) requisite to the causing of Acceleration,
the Administrative Agent shall) declare all Indebtedness of the Borrower to the
Lenders to be immediately due and payable and may exercise all of the
Administrative Agent's Rights and Remedies (and the Administrative Agent may
likewise exercise all of its rights and

                                                                         Page 64
<PAGE>
remedies upon default) as the Administrative Agent from time to time thereafter
determines as appropriate.

         12-2 RIGHTS OF ENFORCEMENT. Subject to the provisions of the Borrowing
Orders, the Administrative Agent shall have all of the rights and remedies of a
secured party upon default under the UCC, in addition to which the
Administrative Agent shall have all and each of the following rights and
remedies:

                  (a) To give notice to any bank at which any DDA or Blocked
                  Account is maintained and in which Proceeds of Collateral are
                  deposited, to turn over such Proceeds directly to the
                  Administrative Agent.

                  (b) To give notice to any customs broker of any of the
                  Borrowers to follow the instructions of the Administrative
                  Agent as provided in any written agreement or undertaking of
                  such broker in favor of the Administrative Agent.

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

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

                  (e) 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 Administrative Agent deems
                  advisable and with or without the taking of possession of any
                  of the Collateral.

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

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

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

         12-3 SALE OF COLLATERAL.

                  (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 Administrative Agent deems advisable, having due regard to
                  compliance with any statute or regulation which might affect,
                  limit, or apply to the Administrative Agent's disposition of
                  the Collateral.

                  (b) The Administrative Agent, in the exercise of the
                  Administrative Agent's rights and remedies upon default, may
                  conduct, or may require the Borrowers to conduct, one or more
                  going out of business sales, in the Administrative Agent'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 any Borrower. The Administrative Agent 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 Administrative Agent 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 reasonable
                  expenses incurred in their disposition) shall be the sole
                  property of the Administrative Agent or such agent or
                  contractor and neither any Borrower nor any Person claiming
                  under or in right of any Borrower shall have any interest
                  therein. The proceeds of any such going out of business sale
                  which is conducted by a Borrower at the request of the
                  Administrative Agent shall be first applied to the direct
                  costs of such sale.

                                                                         Page 65
<PAGE>
                  (c) The Administrative Agent may:

                           (i) By written notice to the Borrowers, require the
                      Borrowers to file a motion seeking to retain one or more
                      agents to sell, lease, or otherwise dispose of the
                      Collateral on terms acceptable to the Administrative
                      Agent. The Borrowers shall file such motion within ten
                      (10) Business Days of the Administrative Agent's request
                      and shall diligently prosecute such motion. If the
                      Borrowers fail to so file the motion, the Administrative
                      Agent may file and prosecute such a motion in the name of
                      the Borrowers.

                           (ii) By written notice to the Borrowers, require the
                      Borrowers to file a motion or motions seeking to sell,
                      assume, assign, or otherwise dispose of any or all of the
                      Real Estate (including, without limitation, leasehold
                      interests) of the Borrowers pursuant to Section 363 and
                      365 of the Bankruptcy Code, on terms acceptable to the
                      Administrative Agent. The Borrowers shall file such motion
                      or motions within ten (10) business days of the
                      Administrative Agent's request and shall diligently
                      prosecute such motion. If the Borrowers fail to so file
                      such motion(s), the Administrative Agent may, file and
                      prosecute such a motion(s) in the name of the Borrowers:
                      and/or

                      All proceeds realized from any of the foregoing shall be
                      turned over to the Administrative Agent for application to
                      the Liabilities under, and in accordance with the
                      provisions of this Agreement and the other Loan Documents,
                      including, without limitation, Section 14:14-8.

                  (d) 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 Administrative Agent
                  shall provide the Borrowers' Representative such notice as may
                  be practicable under the circumstances), the Administrative
                  Agent shall give the Borrowers' Representative at least ten
                  (10) 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. Each Borrower agrees that such written notice shall
                  satisfy all requirements for notice to that Borrower which are
                  imposed under the UCC or other applicable law with respect to
                  the exercise of the Administrative Agent's rights and remedies
                  upon default.

                  (e) The Administrative Agent and any Lender may purchase the
                  Collateral or any portion of it at any sale held under this
                  Article.

                  (f) If any of the Collateral is sold, leased, or otherwise
                  disposed of by the Administrative Agent on credit, the
                  Liabilities shall not be deemed to have been reduced as a
                  result thereof unless and until payment is finally received
                  thereon by the Administrative Agent.

                  (g) The Administrative Agent shall apply the proceeds of the
                  Administrative Agent's exercise of its rights and remedies
                  upon default pursuant to this Article 12: in accordance with
                  Sections 14:14-7 and 14:14-8.

         12-4 OCCUPATION OF BUSINESS LOCATION. In connection with the
Administrative Agent's exercise of the Administrative Agent's rights under this
Article 12:, the Administrative Agent may enter upon, occupy, and use any
premises owned or occupied by each Borrower, and may exclude each Borrower from
such premises or portion thereof as may have been so entered upon, occupied or
used by the Administrative Agent. The Administrative Agent shall not be required
to remove any of the Collateral from any such premises upon the Administrative
Agent's taking possession thereof, and may render any Collateral unusable to the
Borrowers. In no event shall the Administrative Agent be liable to any Borrower

                                                                         Page 66
<PAGE>
for use or occupancy by the Administrative Agent of any premises pursuant to
this Article 12:, nor for any charge (such as wages for any Borrower's employees
and utilities) incurred in connection with the Administrative Agent's exercise
of the Administrative Agent's Rights and Remedies.

         12-5 GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants to the
Administrative Agent a royalty free nonexclusive irrevocable license to use,
apply, and affix any trademark, trade name, logo or the like in which any
Borrower now or hereafter has rights, such license being with respect to the
Administrative Agent'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.

         12-6 ASSEMBLY OF COLLATERAL. The Administrative Agent may require any
Borrower to assemble the Collateral and make it available to the Administrative
Agent at the Borrowers' sole risk and expense at a place or places which are
reasonably convenient to both the Administrative Agent and the Borrowers'
Representative.

         12-7 RIGHTS AND REMEDIES. The rights, remedies, powers, privileges and
discretions of the Administrative Agent hereunder (herein, the AGENT'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 Administrative Agent
in exercising or enforcing any of the Agent's Rights and Remedies shall operate
as, or constitute, a waiver thereof. No waiver by the Administrative Agent 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 Agent's Rights or Remedies, and no
express or implied agreement or transaction of whatever nature entered into
between the Administrative Agent and any person, at any time, shall preclude the
other or further exercise of the Agent's Rights and Remedies. No waiver by the
Administrative Agent of any of the Agent'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. The Agent's Rights and Remedies may be exercised at
such time or times and in such order of preference as the Administrative Agent
may determine in its sole discretion. The Agent's Rights and Remedies may be
exercised without resort or regard to any other source of satisfaction of the
Liabilities.

         ARTICLE 13:- REVOLVING CREDIT FUNDINGS AND DISTRIBUTIONS:

         13-1 -REVOLVING CREDIT FUNDING PROCEDURES. Subject to Section 13:13-2:

                  (a) The Administrative Agent shall advise each Lender, no
                  later than 2:00PM on a date on which any Revolving Credit Loan
                  (other than a SwingLine Loan) is to be made on that date. Such
                  advice, in each instance, may be by telephone or facsimile
                  transmission, provided that if such advice is by telephone, it
                  shall be confirmed in writing. Advice of a Revolving Credit
                  Loan shall include the amount of and interest rate applicable
                  to the subject Revolving Credit Loan.

                  (b) Subject to that Lender's Revolving Credit Dollar
                  Commitment, each Lender, by no later than the end of business
                  on the day on which the subject Revolving Credit Loan is to be
                  made, shall Transfer that Lender's Revolving Credit Percentage
                  Commitment of the subject Revolving Credit Loan to the
                  Administrative Agent.

         13-2 -SWINGLINE LOANS.

                  (a) In the event that, when a Revolving Credit Loan is
                  requested, the aggregate unpaid balance of the SwingLine Loan
                  is less than the SwingLine Loan Ceiling, then the SwingLine
                  Lender may advise the Administrative Agent that the SwingLine
                  Lender has determined to include up to the amount of the
                  requested Revolving Credit Loan as part of the SwingLine Loan.
                  In such event, the SwingLine Lender shall Transfer the amount
                  of the requested Revolving Credit Loan to the Administrative
                  Agent.

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                  (b) The SwingLine Loan shall be converted to a Revolving
                  Credit Loan in which all Lenders participate as follows:

                           (i) At any time and from time to time, the SwingLine
                           Lender may advise the Administrative Agent that all,
                           or any part of the SwingLine Loan is to be converted
                           to a Revolving Credit Loan in which all Lenders
                           participate.

                           (ii) At the initiation of a Liquidation, the then
                           entire unpaid principal balance of the SwingLine Loan
                           shall be converted to a Revolving Credit Loan in
                           which all Lenders participate.

         In either such event, the Administrative Agent shall advise each Lender
         of such conversion as if, and with the same effect as if such
         conversion were the making of a Revolving Credit Loan as provided in
         Section 13:13-1.

                  (a) The SwingLine Lender, in separate capacities, may also be
                  one or more Agents and/or a Lender.

                  (b) The SwingLine Lender, in its capacity as SwingLine Lender,
                  is not a "Lender" for any of the following purposes:

                           (i) Except as otherwise specifically provided in the
                           relevant Section, any distribution pursuant to
                           Section 14:14-8.

                           (ii) Determination of whether the requisite Loan
                           Commitments have Consented to action requiring such
                           Consent.

         13-3 -ADMINISTRATIVE AGENT'S COVERING OF FUNDINGS:

                  (a) Each Lender shall make available to the Administrative
                  Agent such Lender's Revolving Credit Percentage Commitment of
                  the following:

                           (i) Each Revolving Credit Loan, up to the maximum
                           amount of that Lender's Revolving Credit Dollar
                           Commitment of the Revolving Credit Loans.

                           (ii) Up to the maximum amount of that Lender's
                           Revolving Credit Dollar Commitment of each L/C
                           Drawing (to the extent that such L/C Drawing is not
                           "covered" by a Revolving Credit Loan as provided
                           herein).

                  (b) In all circumstances, the Administrative Agent may:

                           (i) Assume that each Lender, subject to Section
                           13:13-3(a), timely shall make available to the
                           Administrative Agent that Lender's Revolving Credit
                           Percentage Commitment of each Revolving Credit Loan,
                           notice of which is provided pursuant to Section
                           13:13-1 and shall make available, to the extent not
                           "covered" by a Revolving Credit Loan, that Lender's
                           Revolving Credit Percentage Commitment of any
                           honoring of an L/C.

                           (ii) In reliance upon such assumption, make available
                           the corresponding amount to the Borrowers.

                           (iii) Assume that each Lender timely shall pay and
                           shall make available to the Administrative Agent all
                           other amounts which that Lender is obligated to so
                           pay and/or make available hereunder or under any of
                           the Loan Documents.

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                  (c) In the event that in reliance upon any of such
                  assumptions, the Administrative Agent makes available a
                  Lender's Revolving Credit Percentage Commitment of one or more
                  Revolving Credit Loans or any other amount to be made
                  available hereunder or under any of the Loan Documents, which
                  amount a Lender (a "DELINQUENT LENDER") fails to provide to
                  the Administrative Agent within One (1) Business Day of
                  written notice of such failure, then:

                           (i) The amount which had been made available by the
                           Administrative Agent is an "ADMINISTRATIVE AGENT'S
                           COVER" (and is so referred to herein).

                           (ii) All interest paid by the Borrowers on account of
                           the Revolving Credit Loan or coverage of the subject
                           L/C Drawing which consist of the Administrative
                           Agent's Cover shall be retained by the Administrative
                           Agent until the Administrative Agent's Cover, with
                           interest, has been paid.

                           (iii) The Delinquent Lender shall pay to the
                           Administrative Agent, on demand, interest at a rate
                           equal to the prevailing federal funds rate on any
                           Administrative Agent's Cover in respect of that
                           Delinquent Lender.

                           (iv) The Administrative Agent shall have succeeded to
                           all rights to payment to which the Delinquent Lender
                           otherwise would have been entitled hereunder in
                           respect of those amounts paid by or in respect of the
                           Borrowers on account of the Administrative Agent's
                           Cover together with interest until it is repaid. Such
                           payments shall be deemed made first towards the
                           amounts in respect of which the Administrative
                           Agent's Cover was provided and only then towards
                           amounts in which the Delinquent Lender is then
                           participating. For purposes of distributions to be
                           made pursuant to Section 13:13-4(a) (which relates to
                           ordinary course distributions) or Section 14:14-8
                           (which relates to distributions of proceeds of a
                           Liquidation) below, amounts shall be deemed
                           distributable to a Delinquent Lender (and
                           consequently, to the Administrative Agent to the
                           extent to which the Administrative Agent is then
                           entitled) at the highest level of distribution (if
                           applicable) at which the Delinquent Lender would
                           otherwise have been entitled to a distribution.

                           (v) Subject to Subsection 13:13-3(c)(iv), the
                           Delinquent Lender shall be entitled to receive any
                           payments from the Borrowers to which the Delinquent
                           Lender is then entitled, provided however there shall
                           be deducted from such amount and retained by the
                           Administrative Agent any interest to which the
                           Administrative Agent is then entitled on account of
                           Section 13:13-3(c)(ii), above.

                  (d) A Delinquent Lender shall not be relieved of any
                  obligation of such Delinquent Lender hereunder (all and each
                  of which shall constitute continuing obligations on the part
                  of any Delinquent Lender).

                  (e) A Delinquent Lender may cure its status as a Delinquent
                  Lender by paying the Administrative Agent the aggregate of the
                  following:

                           (i) The Administrative Agent's Cover (to the extent
                           not previously repaid by the Borrowers and retained
                           by the Administrative Agent in accordance with
                           Section 13:13-3(c)(iv), above) with respect to that
                           Delinquent Lender.

                                            Plus

                           (ii) The aggregate of the amount payable under
                           Subsection 13:13-3(c)(iii), above (which relates to
                           interest to be paid by that Delinquent Lender).

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                                            Plus

                           (iii) All such costs and expenses as may be incurred
                           by the Administrative Agent in the enforcement of the
                           Administrative Agent's rights against such Delinquent
                           Lender.

         13-4 -ORDINARY COURSE DISTRIBUTIONS: REVOLVING CREDIT. (This Section
13:13-4 applies unless the provisions of Section 14:14-8 (which relates to
distributions in the event of a Liquidation) becomes operative).

                  (a) Weekly, on such day as may be set from time to time by the
                  Administrative Agent (or more frequently at the Administrative
                  Agent's option), the Administrative Agent and each Lender
                  shall settle up on amounts advanced under the Revolving Credit
                  and collected funds received in the Concentration Account.

                  (b) The Administrative Agent shall distribute to the SwingLine
                  Lender and to each Lender, such Person's respective Pro-Rata
                  share of interest payments on the Revolving Credit Loans when
                  actually received and collected by the Administrative Agent
                  (excluding the one Business Day for settlement provided for in
                  Section 8:8-5(a), which shall be for the account of the
                  Administrative Agent only). For purposes of calculating
                  interest due to any Person, that Person shall be entitled to
                  receive interest on the actual amount contributed by that
                  Person towards the principal balance of the Revolving Credit
                  Loans outstanding during the applicable period covered by the
                  interest payment made by the Borrowers. Any net principal
                  reductions to the Revolving Credit Loans received by the
                  Administrative Agent in accordance with the Loan Documents
                  during such period shall not reduce such actual amount so
                  contributed, for purposes of calculation of interest due to
                  that Lender, until the Administrative Agent has distributed to
                  that Lender its Pro-Rata share thereof.

                  (c) The Administrative Agent shall distribute fees paid on
                  account of the Revolving Credit, as follows:

                           (i) L/C Fee (Section 2:2-20(a)): Pro-Rata to the
                           Lenders.

                           (ii) Unused Line Fee (Section 2:2-15): Pro-Rata to
                           the Lenders.

                           (iii) Revolving Credit Early Termination Fee (Section
                           2:2-16): Pro-Rata to the Lenders.

                           (iv) Closing Fee (Section 2:2-13): As provided in
                           separate letter agreements with the respective
                           Lenders.

                  (d) No Lender shall have any interest in or right to receive
                  any part of the following:

                           (i) Any interest which reflects "float" as described
                           in the proviso included in Section 8:8-5(a), all of
                           which float shall be for the account of the
                           Administrative Agent only.

                           (ii) The Administrative Agent's Fees to be paid by
                           the Borrowers to the Administrative Agent.

                           (iii) Fees described in Section 2:2-20 (which relates
                           to fees associated with, among other things, the
                           issuance of L/C's): Retained by the Issuer.

                  (e) Any amount received by the Administrative Agent as
                  reimbursement for any cost or expense (including without
                  limitation, attorneys' reasonable fees) shall be distributed
                  by the Administrative Agent to that Person which is entitled
                  to such reimbursement as provided in this

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                  Agreement (and if such Person(s) is (are) the Lenders,
                  Pro-Rata determined as of the date on which the expense, in
                  respect of which such reimbursement is being made, was
                  incurred).

                  (f) Each distribution pursuant to this Section 13:13-4 is
                  subject to Section 13:13-3(c) above (which relates to the
                  effect of the failure of any Lender to have Transferred to the
                  Administrative Agent any amount which that Lender is then
                  obligated to so Transfer pursuant to this Agreement).

         ARTICLE 14- ACCELERATION AND LIQUIDATION:

         14-1 ACCELERATION NOTICES:

                  (a) Subject to the provisions of the Borrowing Orders, the
                  Administrative Agent may give the Lenders an Acceleration
                  Notice at any time following the occurrence of an Event of
                  Default.

                  (b) Subject to the provisions of the Borrowing Orders, the
                  Majority Lenders may give the Administrative Agent an
                  Acceleration Notice at any time following the occurrence of an
                  Event of Default. Such notice may be by multiple counterparts,
                  provided that counterparts executed by the requisite Lenders
                  are received by the Administrative Agent within a period of
                  five (5) consecutive Business Days.

         14-2 -INTENTIONALLY OMITTED.

         14-3 - ACCELERATION: Unless stayed by judicial or statutory process,
subject to the provisions of the Borrowing Orders, the Administrative Agent
shall Accelerate the Revolving Credit Obligations within a commercially
reasonable time following:

                  (a) The Administrative Agent's giving of an Acceleration
                  Notice to the Lenders as provided in Section 14:14-1(a).

                  (b) The Administrative Agent's receipt of an Acceleration
                  Notice from the SuperMajority Lenders, in compliance with
                  Section 14:14-1(b).

         14-4 -INITIATION OF LIQUIDATION: Unless stayed by judicial or statutory
process, subject to the provisions of the Borrowing Orders, a Liquidation shall
be initiated by the Administrative Agent within a commercially reasonable time
following Acceleration of the Revolving Credit Obligations.

         14-5  -ACTIONS AT AND FOLLOWING INITIATION OF LIQUIDATION:

                  (a) At the initiation of a Liquidation:

                           (i) The unpaid principal balance of the SwingLine
                           Loan (if any) shall be converted, pursuant to Section
                           13:13-2(b)(ii), to a Revolving Credit Loan in which
                           all Lenders participate.

                           (ii) The Administrative Agent and the Lenders shall
                           "net out" each Lender's respective contributions
                           towards the Revolving Credit Loans, so that each
                           Lender holds that Lender's Revolving Credit
                           Percentage Commitment of the Revolving Credit Loans
                           and advances.

                  (b) Following the initiation of a Liquidation, each Lender
                  shall contribute, towards any L/C thereafter honored and not
                  immediately reimbursed by the Borrowers, that Lender's
                  Revolving Credit Percentage Commitment of such honoring.

         14-6 -ADMINISTRATIVE AGENT'S CONDUCT OF LIQUIDATION:

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                  (a) Any Liquidation shall be conducted by the Administrative
                  Agent, with the advice and assistance of the Lenders.

                  (b) The Administrative Agent may establish one or more
                  Nominees to "bid in" or otherwise acquire ownership to any
                  Post Foreclosure Asset.

                  (c) The Administrative Agent shall manage the Nominee and
                  manage and dispose of any Post Foreclosure Assets with a view
                  towards the realization of the economic benefits of the
                  ownership of the Post Foreclosure Assets and in such regard,
                  the Administrative Agent and/or the Nominee may operate,
                  repair, manage, maintain, develop, and dispose of any Post
                  Foreclosure Asset in such manner as the Administrative Agent
                  determines as appropriate under the circumstances.

                  (d) Each Agent may decline to undertake or to continue taking
                  a course of action or to execute an action plan (whether
                  proposed by an Agent or a Lender) unless indemnified Pro-Rata
                  to such Agent's satisfaction by the Lenders against any and
                  all liability and expense which may be incurred by that Agent
                  by reason of taking or continuing to take that course of
                  action or action plan.

                  (e) The Administrative Agent and each Lender shall execute all
                  such instruments and documents not inconsistent with the
                  provisions of this Agreement as the Administrative Agent
                  and/or the Nominee reasonably may request with respect to the
                  creation and governance of any Nominee, the conduct of the
                  Liquidation, and the management and disposition of any Post
                  Foreclosure Asset.

         14-7 -DISTRIBUTION OF LIQUIDATION PROCEEDS:

                  (a) The Administrative Agent may establish one or more
                  reasonably funded reserve accounts into which proceeds of the
                  conduct of any Liquidation may be deposited in anticipation of
                  future expenses which may be incurred by any Agent in the
                  exercise of rights as a secured creditor of the Borrowers and
                  prior claims which the Agents anticipate may need to be paid.

                  (b) The Administrative Agent shall distribute the net proceeds
                  of Liquidation in accordance with the relative priorities set
                  forth in Section 14-14-8.

                  (c) Each Lender, on the written request of the Administrative
                  Agent and/or any Nominee, not more frequently than once each
                  month, shall reimburse the Agents and/or any Nominee,
                  Pro-Rata, for any cost or expense reasonably incurred by the
                  Agents and/or the Nominee in the conduct of a Liquidation,
                  which amount is not covered out of current proceeds of the
                  Liquidation, which reimbursement shall be paid over to and
                  distributed by the Administrative Agent.

         14-8 -RELATIVE PRIORITIES TO PROCEEDS OF A LIQUIDATION:

                  (a) All distributions of proceeds of a Liquidation shall be
                  net of payment over to the Agents as reimbursement for all
                  reasonable third party costs and expenses incurred by the
                  Agents and to Lenders' Special Counsel.

                  (b) The proceeds of a Liquidation shall be distributed based
                  on the following relative priorities:

                           (i) First, as provided in Section 14:14-8(c); and
                           then

                           (ii) Second, towards the Revolving Credit Early
                           Termination Fee; and then

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                           (iii) Third, to all other Liabilities.

                  (c) Distributions which are made pursuant to reference to
                  Section 14:14-8(c) shall be in the following order:

                           (i) First, to the SwingLine Lender, on account of any
                           SwingLine loans not converted to Revolving Credit
                           Loans pursuant to Section 14:14-5(a)(i); and then

                           (ii) Second, to the Lenders (other than any
                           Delinquent Lender) and to FRFI or any of its
                           Affiliates providing L/Cs to the extent of any credit
                           exposure in connection therewith (but excluding any
                           fees earned on account thereof), Pro-Rata, to the
                           unpaid principal balance of Revolving Credit Debt and
                           any amounts owed on account of any L/Cs (including as
                           cash collateral for any undrawn L/Cs) and fees due to
                           the Issuer on account thereof; and then

                           (iii) Third, to the Lenders (other than any
                           Delinquent Lender), Pro-Rata, to accrued interest
                           which constitutes Revolving Credit Debt; and then

                           (iv) Fourth, to the Lenders (other than any
                           Delinquent Lender), Pro-Rata, to Revolving Credit
                           Fees, other than the Revolving Credit Early
                           Termination Fee; and then

                           (v) Fifth, to any Delinquent Lenders, Pro-Rata, to
                           amounts to which such Lenders otherwise would have
                           been entitled pursuant to Section 14:14-8.

         ARTICLE 15:- THE AGENTS:

         15-1  -APPOINTMENT OF THE ADMINISTRATIVE AGENT:

                  (a) Each Lender appoints and designates FRFI as the
                  "Administrative Agent" hereunder and under the Loan Documents.

                  (b) Each Lender authorizes each Agent:

                           (i) To execute those of the Loan Documents and all
                           other instruments relating thereto to which such
                           Agent is a party.

                           (ii) To take such action on behalf of the Lenders and
                           to exercise all such powers as are expressly
                           delegated to such Agent hereunder and in the Loan
                           Documents and all related documents, together with
                           such other powers as are reasonably incident thereto.

         15-2 -RESPONSIBILITIES OF AGENTS:

                  (a) The Administrative Agent shall have principal
                  responsibilities for and primary authority for the
                  administration of the credit facilities contemplated by this
                  Agreement and for the conduct of the Liquidation and the
                  distribution of the proceeds of such Liquidation.

                  (b) No Agent shall have any duties or responsibilities to, or
                  any fiduciary relationship with, any Lender except for those
                  expressly set forth in this Agreement.

                  (c) No Agent nor any of its Affiliates shall be responsible to
                  any Lender for any of the following:

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                           (i) Any recitals, statements, representations or
                           warranties made by any Borrower or any other Person.

                           (ii) Any appraisals or other assessments of the
                           assets of any Borrower or of any other Person
                           responsible for or on account of the Liabilities.

                           (iii) The value, validity, effectiveness,
                           genuineness, enforceability, or sufficiency of the
                           Loan Agreement, the Loan Documents or any other
                           document referred to or provided for therein.

                           (iv) Any failure by any Borrower or any other Person
                           (other than the subject Agent) to perform its
                           obligations under the Loan Documents.

                  (d) Each Agent may employ attorneys, accountants and other
                  professionals and agents and attorneys-in-fact and shall not
                  be responsible for the negligence or misconduct of any such
                  attorneys, accountants and other professionals or agents or
                  attorneys-in-fact selected by the subject Agent with
                  reasonable care. No such attorney, accountant, other
                  professional, agent or attorney-in-fact shall be responsible
                  for any action taken or omitted to be taken by any other such
                  Person.

                  (e) No Agent, nor any of its directors, officers or employees
                  shall be responsible for any action taken or omitted to be
                  taken or omitted to be taken by any other of them in
                  connection herewith in reliance upon advice of their
                  respective counsel nor, in any other event except for any
                  action taken or omitted to be taken as to which a final
                  judicial determination has been or is made (in a proceeding in
                  which such Person has had an opportunity to be heard) that
                  such Person had acted in a grossly negligent manner, in actual
                  bad faith or in willful misconduct.

                  (f) No Agent shall have any responsibility in any event for
                  more funds than that Agent actually receives and collects.

                  (g) The Agents, in their separate capacities as Lenders, shall
                  have the same rights and powers hereunder as any other Lender.

         15-3 -CONCERNING DISTRIBUTIONS BY THE AGENTS:

                  (a) Each Agent, in such Agent's reasonable discretion based
                  upon such Agent's determination of the likelihood that
                  additional payments will be received, expenses incurred,
                  and/or claims made by third parties to all or a portion of
                  such proceeds, may delay the distribution of any payment
                  received on account of the Liabilities.

                  (b) Each Agent may disburse funds prior to determining that
                  the sums which such Agent expects to receive have been finally
                  and unconditionally paid to such Agent. If and to the extent
                  such Agent does disburse funds and it later becomes apparent
                  that such Agent did not then receive a payment in an amount
                  equal to the sum paid out, then any Lender to whom such Agent
                  made the funds available, on demand from such Agent, shall
                  refund to the Administrative Agent the sum paid to that
                  person.

                  (c) If, in the opinion of an Agent, the distribution of any
                  amount received by such Agent might involve such Agent in
                  liability, or might be prohibited hereby, or might be
                  questioned by any Person, then such Agent may refrain from
                  making distribution until such Agent's right to make
                  distribution has been adjudicated by a court of competent
                  jurisdiction.

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                  (d) The proceeds of any Lender's exercise of any right of, or
                  in the nature of, set-off shall be deemed, first, to the
                  extent that a Lender is entitled to any distribution
                  hereunder, to constitute such distribution and second, shall
                  be shared with the other Lenders as if distributed pursuant to
                  (and shall be deemed as distributions under) Section
                  14-14-8(c).

                  (e) Each Lender recognizes that the crediting of the Borrowers
                  with the "proceeds" of any transaction in which a Post
                  Foreclosure Asset is acquired is a non-cash transaction and
                  that, in consequence, no distribution of such "proceeds" will
                  be made by the Administrative Agent to any Lender.

                  (f) In the event that (x) a court of competent jurisdiction
                  shall adjudge that any amount received and distributed by the
                  Administrative Agent is to be repaid or disgorged or (y) the
                  requisite Lenders (as provided in Section 16:16-4(i))
                  determine to effect such repayment or disgorgement, then each
                  Lender to which any such distribution shall have been made
                  shall repay, to the Administrative Agent which had made such
                  distribution, that Lender's Pro-Rata share of the amount so
                  adjudged or determined to be repaid or disgorged.

         15-4 -DISPUTE RESOLUTION: To the extent not subject to the jurisdiction
of the Bankruptcy Court, any dispute among the Lenders and/or any Agent
concerning the interpretation, administration, or enforcement of the financing
arrangements contemplated by this or any other Loan Document or the
interpretation or administration of this or any other Loan Document which cannot
be resolved amicably shall be resolved in the United States District Court for
the District of Massachusetts, sitting in Boston or in the Superior Court of
Suffolk County, Massachusetts, to the jurisdiction of which courts each Lender
hereto hereby submits.

         15-5 -DISTRIBUTIONS OF NOTICES AND OF DOCUMENTS: The Administrative
Agent will forward to each Lender, promptly after the Administrative Agent's
receipt thereof, a copy of each notice or other document furnished to the
Administrative Agent pursuant to this Agreement, including monthly, quarterly,
and annual financial statements received from the Borrowers' Representative
pursuant to Article 6: of this Agreement, other than any of the following:

                  (a) Routine communications associated with requests for
                  Revolving Credit Loans and/or the issuance of L/C's.

                  (b) Routine or nonmaterial communications.

                  (c) Any notice or document required by any of the Loan
                  Documents to be furnished to the Lenders by the Borrowers'
                  Representative.

                  (d) Any notice or document of which the Administrative Agent
                  has knowledge that such notice or document had been forwarded
                  to the Lenders other than by the Administrative Agent.

         15-6 -CONFIDENTIAL INFORMATION:

                  (a) Each Lender will maintain, as confidential (other than to
                  their respective attorneys, agents, accountants, participants
                  and prospective participants) all of the following:

                           (i) Proprietary approaches, techniques, and methods
                           of analysis which are applied by the Administrative
                           Agent in the administration of the credit facility
                           contemplated by this Agreement.

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                           (ii) Proprietary forms and formats utilized by the
                           Administrative Agent in providing reports to the
                           Lenders pursuant hereto, which forms or formats are
                           not of general currency.

                  (b) Confidential information provided by any Borrower pursuant
                  to the Loan Documents, other than any information which
                  becomes known to the general public through sources other than
                  that Lender.

                  (c) Nothing included herein shall prohibit the disclosure of
                  any such information as may be required to be provided by
                  judicial process or by regulatory authorities having
                  jurisdiction over any party to this Agreement.

         15-7 -RELIANCE BY AGENTS: Each Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex or
facsimile) reasonably believed by such Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts selected
by such Agent. As to any matters not expressly provided for in this Agreement,
any Loan Document or in any other document referred to therein, such Agent shall
in all events be fully protected in acting, or in refraining from acting, in
accordance with the applicable Consent required by this Agreement. Instructions
given with the requisite Consent shall be binding on all Lenders.

         15-8 -NON-RELIANCE ON AGENTS AND OTHER LENDERS:

                  (a) Each Lender represents to all other Lenders and to the
                  Agents that such Lender:

                           (i) Independently and without reliance on any
                           representation or act by any Agent or by any other
                           Lender, and based on such documents and information
                           as that Lender has deemed appropriate, has made such
                           Lender's own appraisal of the financial condition and
                           affairs of the Borrowers and decision to enter into
                           this Agreement.

                           (ii) Has relied upon that Lender's review of the Loan
                           Documents by that Lender and by counsel to that
                           Lender as that Lender deemed appropriate under the
                           circumstances.

                  (b) Each Lender agrees that such Lender, independently and
                  without reliance upon any Agent or any other Lender, and based
                  upon such documents and information as such Lender shall deem
                  appropriate at the time, will continue to make such Lender's
                  own appraisals of the financial condition and affairs of the
                  Borrowers when determining whether to take or not to take any
                  discretionary action under this Agreement.

                  (c) No Agent in the discharge of such Agent's duties
                  hereunder, shall be required to make inquiry of, or to inspect
                  the properties or books of, any Person.

                  (d) Except for notices, reports, and other documents and
                  information expressly required to be furnished to the Lenders
                  by the Administrative Agent hereunder (as to which, see
                  Section 15:15-5), the Agents shall not have any affirmative
                  duty or responsibility to provide any Lender with any credit
                  or other information concerning any Person, which information
                  may come into the possession of Agents or any Affiliate of an
                  Agent.

                  (e) Each Lender, at such Lender's request, shall have
                  reasonable access to all nonprivileged documents in the
                  possession of the Agents, which documents relate to the
                  Agents' performance of their duties hereunder.

                                                                         Page 76
<PAGE>
         15-9 -INDEMNIFICATION: Without limiting the liabilities of the
Borrowers under any this or any of the other Loan Documents, each Lender shall
indemnify each Agent, Pro-Rata, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including attorneys' reasonable
fees and expenses and other out-of-pocket expenditures) which may at any time be
imposed on, incurred by, or asserted against such Agent and in any way relating
to or arising out of this Agreement or any other Loan Document or any documents
contemplated by or referred to therein or the transactions contemplated thereby
or the enforcement of any of terms hereof or thereof or of any such other
documents, provided, however, no Lender shall be liable for any of the foregoing
to the extent that any of the foregoing arises from any action taken or omitted
to be taken by the subject Agent as to which a final judicial determination has
been or is made (in a proceeding in which the subject Agent has had an
opportunity to be heard) that the subject Agent had acted in a grossly negligent
manner, in actual bad faith, or with willful misconduct.

         15-10 -RESIGNATION OF AGENT:

                  (a) An Agent may resign at any time by giving sixty (60) days
                  prior written notice thereof to the Lenders and to the other
                  Agent. Upon receipt of any such notice of resignation, the
                  SuperMajority Lenders shall have the right to appoint a
                  successor to such Agent (and if no Event of Default has
                  occurred, with the consent of the Borrowers' Representative,
                  not to be unreasonably withheld and, in any event, deemed
                  given by the Borrowers' Representative if no written objection
                  is provided by the Borrowers' Representative to the
                  (resigning) Agent within seven (7) Business Days notice of
                  such proposed appointment). If a successor Agent shall not
                  have been so appointed and accepted such appointment within
                  thirty (30) days after the giving of notice by the resigning
                  Agent, then the resigning Agent may appoint a successor Agent,
                  which shall be a financial institution having a combined
                  capital and surplus in excess of $500,000,000 (and if no Event
                  of Default has occurred, with the consent of the Borrowers,
                  not to be unreasonably withheld and, in any event, deemed
                  given by the Borrowers if no written objection is provided by
                  the Borrower's Representative to the (resigning) Agent within
                  seven (7) Business Days after receiving notice of such
                  proposed appointment). The consent of the Borrowers'
                  Representative otherwise required by this Section 15:15-10(a)
                  shall not be required if an Event of Default has occurred.

                  (b) Upon the acceptance of any appointment as an Agent
                  hereunder by a successor Agent, such successor shall thereupon
                  succeed to, and become vested with, all the rights, powers,
                  privileges, and duties of the (resigning) Agent so replaced,
                  and the (resigning) Agent shall be discharged from the
                  (resigning) Agent's duties and obligations hereunder, other
                  than on account of any responsibility for any action taken or
                  omitted to be taken by the (resigning) Agent as to which a
                  final judicial determination has been or is made (in a
                  proceeding in which the (resigning) Person has had an
                  opportunity to be heard) that such Person had acted in a
                  grossly negligent manner, in actual bad faith or in willful
                  misconduct.

                  (c) After any retiring Agent's resignation, the provisions of
                  this Agreement and of all other Loan Documents shall continue
                  in effect for the retiring Person's benefit in respect of any
                  actions taken or omitted to be taken by it while it was acting
                  as an Agent.

         ARTICLE 16:- ACTION BY AGENTS - CONSENTS - AMENDMENTS - WAIVERS:

         16-1 -ADMINISTRATION OF CREDIT FACILITIES:

                  (a) Except as otherwise specifically provided in this
                  Agreement, the Administrative Agent may take any action with
                  respect to the credit facility contemplated by the Loan
                  Documents as the Administrative Agent determines to be
                  appropriate within its respective areas of responsibility and
                  authority, as set forth in Sections 15:15-2(a) and (b),
                  provided,

                                                                         Page 77
<PAGE>
                  however, the Administrative Agent is under no affirmative
                  obligation to take any action which it is not required by this
                  Agreement or the Loan Documents specifically to so take.

                  (b) Except as specifically provided in the following Sections
                  of this Agreement, whenever a Loan Document or this Agreement
                  provides that action may be taken or omitted to be taken in
                  the Administrative Agents' discretion, the Administrative
                  Agent shall have the sole right to take, or refrain from
                  taking, such action without, and notwithstanding, any vote of
                  the Lenders:

<TABLE>
<CAPTION>
                  Actions Described in Section     Type of Consent Required
                  ------------------------------------------------------------
<S>                                                <C>
                           16:16-2                 Majority Lenders
                           16:16-3                 SuperMajority Lenders
                           16:16-4                          Certain Consent
                           16:16-5                 Unanimous Consent
                           16:16-6                 Consent of SwingLine Lender
                           16:16-8                 Consent of the Agents
</TABLE>

                  (c) The rights granted to the Lenders in those sections
                  referenced in Section 16:16-1(b) shall not otherwise limit or
                  impair the Administrative Agent's exercise of its discretion
                  under the Loan Documents.

         16-2 -ACTIONS REQUIRING OR ON DIRECTION OF MAJORITY LENDERS. Except as
otherwise provided in this Agreement, the Consent or direction of the Majority
Lenders is required for any amendment, waiver or modification of any Loan
Document.

         16-3 -ACTIONS REQUIRING OR ON DIRECTION OF SUPERMAJORITY LENDERS: The
Consent or direction of the SuperMajority Lenders is required as follows:

                  (a) Any loan or advance under the Revolving Credit which
                  results in a Protective OverAdvance may be made by the
                  Administrative Agent with the Consent of each of the Lenders
                  (including without limitation any Protective OverAdvance which
                  shall be outstanding for more than 45 consecutive Business
                  Days). (Any Protective OverAdvance which is permitted by this
                  Section 16:16-3(a) is referred to as a "PERMITTED PROTECTIVE
                  OVERADVANCE").

                  (b) If any Borrower is then InDefault, the SuperMajority
                  Lenders may direct the Administrative Agent to suspend the
                  Revolving Credit, whereupon as long as a Borrower is
                  InDefault, the only Revolving Credit Loans which may be made
                  are the following:

                           (i) Revolving Credit Loans made to "cover" the
                           honoring of L/C's.

                           (ii) Permitted Protective OverAdvances.

                           (iii) Revolving Credit Loans made with Consent of the
                           SuperMajority Lenders.

                  (c) If an Event of Default has occurred and not been duly
                  waived, the SuperMajority Lenders (subject to the provisions
                  of the Borrowing Orders) may:

                           (i) Give the Administrative Agent an Acceleration
                           Notice in accordance with Section 14:14-1(b).

                                                                         Page 78
<PAGE>
                           (ii) Direct the Administrative Agent to increase the
                           rate of interest to the default rate of interest as
                           provided in, and to the extent permitted by, this
                           Agreement and the Borrowing Orders.

         16-4 -ACTION REQUIRING CERTAIN CONSENT. The following Consents shall be
required for the following actions:

<TABLE>
<CAPTION>
ACTION                                                          REQUIRED CONSENT
----------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>
Waiver or amendment of any of the following Sections or         Majority Lenders.
provisions of this Agreement:
Section 5:5-5 ("Restructuring Consultant")
Section 5:5-30 ("Bankruptcy Protections")
Section 11:11-5 ("Restructuring Consultant")
Any Bankruptcy Breach
----------------------------------------------------------------------------------------------------------------------

Any increase in any Lender's Revolving Credit Dollar            All Lenders other than any Delinquent Lender.
Commitment or Revolving Credit Percentage Commitment
(other than by reason of the application of Section
16:16-11 (which deals with NonConsenting Lenders) or
Section 17:17-1 (which deals with assignments and
participations)), it being understood that this Section
16:16-4 addresses changes to commitments inter se and not
any increase in the overall size of the Revolving Credit.
----------------------------------------------------------------------------------------------------------------------

Any forgiveness of all or any portion of any payment            All Lenders whose payment Liability is being so
Liability.                                                      forgiven (other than any Delinquent Lender, if
                                                                otherwise applicable).
----------------------------------------------------------------------------------------------------------------------

Any decrease in any interest rate, fee or assessment            All Lenders adversely affected thereby (other
payable under any of the Loan Documents or                      than any Delinquent Lender, if otherwise applicable).
postponement  or extension of any
regularly scheduled date for the payment of
interest on the Loans.
----------------------------------------------------------------------------------------------------------------------

Disgorgement as described in Section 15:15-3(f).                The SuperMajority Lenders.
----------------------------------------------------------------------------------------------------------------------

Any increase of the SwingLine Loan Ceiling.                     The SwingLine Lender
                                                                and
                                                                SuperMajority Lenders
</TABLE>

                                                                         Page 79
<PAGE>
<TABLE>
<CAPTION>
ACTION                                                          REQUIRED CONSENT
----------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>
Any amendment of the following definitions other than an        Majority Lenders.
amendment to permit up to $750,000 of Indebtedness
secured by purchase money security interests in Equipment:
         "Encumbrance"
         "Indebtedness"
         "Leasing Debt"
         "Permitted Encumbrances"
         "Permitted Indebtedness"
----------------------------------------------------------------------------------------------------------------------

Any amendment of the definitions of "Permitted Asset            SuperMajority Lenders.
Disposition"
</TABLE>

         16-5 -ACTIONS REQUIRING OR DIRECTED BY UNANIMOUS CONSENT. None of the
following may take place except with Unanimous Consent:

                  (a) Any extension of the Maturity Date.

                  (b) Any release of a material portion of the Collateral not
                  otherwise required or provided for in the Loan Documents or to
                  facilitate a Liquidation.

                  (c) Any amendment of the definition of the terms "Borrowing
                  Base" or "Availability" or of any definition of any component
                  thereof, such that more credit would be available to the
                  Borrowers, based on the same assets, as would have been
                  available to the Borrowers immediately prior to such
                  amendment, it being understood, however, that:

                           (i) The foregoing shall not limit the adjustment by
                           the Administrative Agent of any Reserve in the
                           Administrative Agent's administration of the
                           Revolving Credit as otherwise permitted by this
                           Agreement.

                           (ii) The foregoing shall not prevent the
                           Administrative Agent, in its administration of the
                           Revolving Credit, from restoring any component of
                           Borrowing Base which had been lowered by the
                           Administrative Agent back to the value of such
                           component, as stated in this Agreement or to an
                           intermediate value.

                  (d) Any release of any Person obligated on account of the
                  Liabilities.

                  (e) The making of any Revolving Credit Loan which, when made,
                  exceeds Availability and is not a Permitted Protective
                  OverAdvance, provided, however,

                           (i) no Consent shall be required in connection with
                           the making of any Revolving Credit Loan to "cover"
                           any honoring of a drawing under any L/C; and

                           (ii) each Lender recognizes that subsequent to the
                           making of a Revolving Credit Loan which does not
                           constitute a Permitted Protective OverAdvance, the
                           unpaid principal balance of the Loan Account may
                           exceed the Borrowing Base on account of changed
                           circumstances beyond the control of the
                           Administrative Agent (such as a drop in collateral
                           value).

                                                                         Page 80
<PAGE>
                  (f) The waiver of the obligation of the Borrowers to reduce
                  the unpaid principal balance of loans under the Revolving
                  Credit to an amount which does not exceed a Permitted
                  Protective OverAdvance or, subject to the time limits included
                  in Section 16:16-3(a) (which places time and frequency limits
                  on Permitted Protective OverAdvances).

                  (g) Any amendment of this Article 16:.

                  (h) Amendment of any of the following Sections of this
                  Agreement:

                           (i) 3:3-3

                           (ii) 4:4-8

                           (iii) 5:5-23

                           (iv) 13:13-4

                           (i) 13:13-5

                           (vi) 14:14-8

                  (i) Amendment of any of the following Definitions:

                                "Business Plan"
                                "Collateral"
                                "Consent"
                                "Financial Covenant Breach"
                                "Majority Lenders"
                                "Majority Lenders"
                                "Permitted Protective OverAdvance"
                                "Standstill Period"
                                "SuperMajority Lenders"
                                "SuperMajority Lenders"
                                "Unanimous Consent"

         16-6 -ACTIONS REQUIRING SWINGLINE LENDER CONSENT: No action, amendment,
or waiver of compliance with, any provision of the Loan Documents or of this
Agreement which affects the SwingLine Lender may be undertaken without the
Consent of the SwingLine Lender.

         16-7 -INTENTIONALLY OMITTED:

         16-8 -ACTIONS REQUIRING AGENTS' CONSENT:

                  (a) No action, amendment, or waiver of compliance with, any
                  provision of the Loan Documents or of this Agreement which
                  affects an Agent in its capacity as an Agent may be undertaken
                  without the written consent of such Agent.

                  (b) No action referenced herein which affects the rights,
                  duties, obligations, or liabilities of an Agent shall be
                  effective without the written consent of such Agent.

         16-9 -MISCELLANEOUS ACTIONS:

                  (a) Notwithstanding any other provision of this Agreement, no
                  single Lender independently may exercise any right of action
                  or enforcement against or with respect to any Borrower.

                                                                         Page 81
<PAGE>
                  (b) Each Agent shall be fully justified in failing or refusing
                  to take action under this Agreement or any Loan Document on
                  behalf of any Lender unless such Agent shall first:

                           (i) receive such clear, unambiguous, written
                           instructions as such Agent deems appropriate; and

                           (ii) be indemnified to such Agent's satisfaction by
                           the Lenders against any and all liability and expense
                           which may be incurred by such Agent by reason of
                           taking or continuing to take any such action, unless
                           such action had been grossly negligent, in willful
                           misconduct, or in bad faith.

                  (c) Each Agent may establish reasonable procedures for the
                  providing of direction and instructions from the Lenders to
                  such Agent, including its reliance on multiple counterparts,
                  facsimile transmissions, and time limits within which such
                  direction and instructions must be received in order to be
                  included in a determination of whether the requisite Loan
                  Commitments has provided its direction, Consent, or
                  instructions.

                  (d) The Lenders acknowledge that the Agents' performance of
                  their obligations under this Agreement and the other Loan
                  Documents is subject to the provisions of the Borrowing Orders
                  and any other orders entered by the Bankruptcy Court in the
                  Proceedings. No Agent shall have any liability to any Lender
                  by virtue of such Agent's compliance with any such order in
                  the Proceedings.

         16-10 -ACTIONS REQUIRING BORROWERS' CONSENT:

         The Borrowers' consent is required for any amendment of this Agreement.

         16-11  -NONCONSENTING LENDER:

                  (a) In the event that a Lender (in this Section 16:16-11, a
                  "NonConsenting Lender") does not provide its Consent to a
                  proposal by the Administrative Agent to take action which
                  requires consent under this Article 16:, then one or more
                  Lenders who provided Consent to such action may require the
                  assignment, without recourse and in accordance with the
                  procedures outlined in Section 17:17-1, below, of the
                  NonConsenting Lender's commitment hereunder on five (5) days
                  written notice to the Administrative Agent and to the
                  NonConsenting Lender.

                  (b) At the end of such five (5) days, and provided that the
                  NonConsenting Lender delivers the Note held by the
                  NonConsenting Lender to the Administrative Agent, the Lenders
                  who have given such written notice shall Transfer the
                  following to the NonConsenting Lender:

                           (i) Such NonConsenting Lender's Pro-Rata share of the
                           principal and interest of the Loans to the date of
                           such assignment.

                           (ii) All fees distributable hereunder to the
                           NonConsenting Lender to the date of such assignment.

                           (iii) Any out-of-pocket costs and expenses for which
                           the NonConsenting Lender is entitled to reimbursement
                           from the Borrowers.

                  (c) In the event that the NonConsenting Lender fails to
                  deliver to the Administrative Agent the Note held by the
                  NonConsenting Lender as provided in Section 16:16-11(b), then:

                                                                         Page 82
<PAGE>
                           (i) The amount otherwise to be Transferred to the
                           NonConsenting Lender shall be Transferred to the
                           Administrative Agent and held by the Administrative
                           Agent, without interest, to be turned over to the
                           NonConsenting Lender upon delivery of the Note held
                           by that NonConsenting Lender.

                           (ii) The Note held by the NonConsenting Lender shall
                           have no force or effect whatsoever.

                           (iii) The NonConsenting Lender shall cease to be a
                           "Lender".

                           (iv) The Lender(s) which have Transferred the amount
                           to the Administrative Agent as described above shall
                           have succeeded to all rights and become subject to
                           all of the obligations of the NonConsenting Lender as
                           "Lender".

                  (d) In the event that more than One (1) Lender wishes to
                  require such assignment, the NonConsenting Lender's commitment
                  hereunder shall be divided among such Lenders, pro-rata based
                  upon their respective Loan Commitments, with the
                  Administrative Agent coordinating such transaction.

                  (e) The Administrative Agent shall coordinate the retirement
                  of the Note held by the NonConsenting Lender and the issuance
                  of Notes to those Lenders which "take-out" such NonConsenting
                  Lender, provided, however, no processing fee otherwise to be
                  paid as provided in Section 17:17-2(b) shall be due under such
                  circumstances.

         ARTICLE 17:-ASSIGNMENTS BY LENDERS:

                  17-1 -ASSIGNMENTS AND ACCEPTANCES: Except as provided herein,
         each Lender (in this Section 17:17-1, an "ASSIGNING LENDER") may assign
         to one or more Eligible Assignees (in this Section 17:17-1, each an
         "ASSIGNEE LENDER") all or a portion of that Lender's interests, rights
         and obligations under this Agreement and the Loan Documents (including
         all or a portion of its Loan Commitment) and the same portion of the
         Loans at the time owing to it, and of the Note (if any) held by the
         Assigning Lender, provided that:

                  (a) The Administrative Agent shall have given its prior
                  written consent to such assignment, which consent shall not be
                  unreasonably withheld, but need not be given if the proposed
                  assignment would result in any resulting Lender's having a
                  Dollar Commitment of less than the "minimum hold" amount
                  specified in Section 17:17-1(c).

                  (b) Each such assignment shall be of a constant, and not a
                  varying, percentage of all the Assigning Lender's rights and
                  obligations under this Agreement.

                  (c) Following the effectiveness of such assignment, the
                  Assigning Lender's Dollar Commitment (if not an assignment of
                  all of the Assigning Lender's Commitment) shall not be less
                  than $10,000,000.

                  (d) If no Event of Default has occurred, such assignment shall
                  be subject to the consent of the Borrowers' Representative,
                  not to be unreasonably withheld or delayed and which consent
                  shall be deemed given if no written objection is received
                  within seven (7) days of the Borrowers' Representative's
                  receipt of notice of such proposed assignment.

         17-2 -ASSIGNMENT PROCEDURES. (This Section 17:17-2 describes the
procedures to be followed in connection with an assignment effected pursuant to
this Article 17: and permitted by Section 17:17-1).

                                                                         Page 83
<PAGE>
                  (a) The parties to such an assignment shall execute and
                  deliver to the Administrative Agent, for recording in the
                  Register, an Assignment and Acceptance substantially in the
                  form of EXHIBIT 17:17-1 annexed hereto.

                  (b) The Assigning Lender shall deliver to the Administrative
                  Agent, with such Assignment and Acceptance, the Note held by
                  the subject Assigning Lender and the Administrative Agent's
                  processing fee of $3,000, provided, however, no such
                  processing fee shall be due where the Assigning Lender is one
                  of the Lenders at the initial execution of this Agreement.

                  (c) The Administrative Agent shall maintain a copy of each
                  Assignment and Acceptance delivered to it and a register or
                  similar list (the "REGISTER") for the recordation of the names
                  and addresses of the Lenders and of the Loan Commitments, the
                  Revolving Credit Percentage Commitment and Revolving Credit
                  Percentage Commitment of each Lender. The Register shall be
                  available for inspection by the Lenders at any reasonable time
                  and from time to time upon reasonable prior notice. In the
                  absence of manifest error, the entries in the Register shall
                  be conclusive and binding on all Lenders. The Administrative
                  Agent and the Lenders may treat each Person whose name is
                  recorded in the Register as a "Lender" hereunder for all
                  purposes of this Agreement.

                  (d) The Assigning Lender and Assignee Lender, directly between
                  themselves, shall make all appropriate adjustments in payments
                  for periods prior to the effective date of an Assignment and
                  Acceptance.

         17-3 -EFFECT OF ASSIGNMENT:

                  (a) From and after the effective date specified in an
                  Assignment and Acceptance which has been executed, delivered
                  and recorded (which effective date the Administrative Agent
                  may delay by up to five (5) Business Days after the delivery
                  of such Assignment and Acceptance):

                           (i) The Assignee Lender:

                                    (A) Shall be a party to this Agreement and
                                    the Loan Documents (and to any amendments
                                    thereof) as fully as if the Assignee Lender
                                    had executed each.

                                    (B) Shall have the rights of a Lender
                                    hereunder to the extent of the Loan
                                    Commitment, the Revolving Credit Dollar
                                    Commitment and Revolving Credit Percentage
                                    Commitment assigned by such Assignment and
                                    Acceptance.

                           (ii) The Assigning Lender shall be released from the
                           Assigning Lender's obligations under this Agreement
                           and the Loan Documents to the extent of the Loan
                           Commitment assigned by such Assignment and
                           Acceptance.

                           (iii) The Administrative Agent shall undertake to
                           obtain and distribute replacement Revolving Credit
                           Notes to the subject Assigning Lender and Assignee
                           Lender.

                  (b) By executing and delivering an Assignment and Acceptance,
                  the parties thereto confirm to and agree with each other and
                  with all parties to this Agreement as to those matters which
                  are set forth in the subject Assignment and Acceptance.

         ARTICLE 18:- NOTICES:

                                                                         Page 84
<PAGE>
         18-1 -NOTICE ADDRESSES. All notices, demands and other communications
made in respect of any Loan Document (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 any Agent:
                                    Fleet Retail Finance Inc.
                                    40 Broad Street
                                    Boston, Massachusetts 02109
                                    Attention: James J. Ward, Director
                                    Fax: 617-434-4312

         With a copy to:
                                    Bingham Dana LLP
                                    150 Federal Street
                                    Boston, Massachusetts  02110
                                    Attention: Robert A.J. Barry, Esquire
                                    Fax: 617-951-8294

         If to the Borrowers' Representative
         And All Borrowers:
                                    Jacobson Stores Inc.
                                    3333 Sargent Road
                                    Jackson, Michigan 49201
                                    Attention: Chief Financial Officer
                                    Fax: 517-764-7983

         With copies to:
                                    Honigman Miller Schwartz and Cohn LLP
                                    2290 First National Building
                                    660 Woodward Avenue
                                    Detroit, Michigan 48226-3583
                                    Attention: Robert J. Krueger, Esq.
                                    Fax: 313-465-7453

         18-2 -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
                           Business Day following the day when sent.

                           (iii) By Hand: If delivered on a Business Day after
                           9:00 AM 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 Business Day.

                           (iv) By Facsimile transmission (which must include a
                           header on which the party sending such transmission
                           is indicated): If sent on a Business Day after 9:00
                           AM and no later than three (3) hours prior to the
                           close of customary

                                                                         Page 85
<PAGE>
                           business hours of the recipient, one (1) hour after
                           being sent. Otherwise, at the opening of the then
                           next Business Day.

                  (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.

         18-3 -WIRE INSTRUCTIONS. Subject to change in the same manner that a
notice address may be changed (as to which, see Section 18:18-1), wire transfers
to the Administrative Agent shall be made in accordance with the following wire
instructions:

                            Fleet National Bank
                            ABA No.           011000138
                            Acct Name:        Fleet Retail Finance Inc.
                            Acct No. :        9428428068
                            Reference:        Jacobson Stores, Inc.

         ARTICLE 19:-TERM:

         19-1 -TERMINATION OF REVOLVING CREDIT. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section 2:2-6(g) hereof)
until the Termination Date.

         19-2  -ACTIONS ON TERMINATION.

                  (a) On the Termination Date, the Borrowers shall pay the
                  Administrative Agent (whether or not then due), in immediately
                  available funds, all then Liabilities including, without
                  limitation: the following:

                           (i) The entire balance of the Loan Account (including
                           the unpaid principal balance of the Revolving Credit
                           Loans and the SwingLine Loan.

                           (ii) Any then remaining unpaid installments of the
                           Closing Fee.

                           (iii) Any then remaining unpaid installments of the
                           Administrative Agent's Fees.

                           (iv) Any payments due on account of the
                           indemnification obligations included in Section
                           2:2-11(e).

                           (v) Any accrued and unpaid Unused Line Fee.

                           (vi) Any applicable Revolving Credit Early
                           Termination Fee.

                           (vii) All unreimbursed costs and expenses of each
                           Agent and of Lenders' Special Counsel for which each
                           Borrower is responsible.

                  (b) On the Termination Date, the Borrowers shall also shall
                  make such arrangements concerning any L/C's then outstanding
                  as are reasonably satisfactory to the Administrative Agent
                  (such as their being cash collateralized at one hundred three
                  percent (103%) of their then Stated Amount).

                  (c) Until such payment (Section 19:19-2(a)) and arrangements
                  concerning L/C's (Section 19:19-2(b)), all provisions of this
                  Agreement, other than those included in Article 2: which place
                  any obligation on the Administrative Agent or any Lender to
                  make any

                                                                         Page 86
<PAGE>
                  loans or advances or to provide any financial accommodations
                  to any Borrower shall remain in full force and effect until
                  all Liabilities shall have been paid in full.

                  (d) The release by the Administrative Agent of the Collateral
                  Interests granted the Administrative Agent by the Borrowers
                  hereunder may be upon such conditions and indemnifications as
                  the Administrative Agent reasonably may require.

         ARTICLE 20:- GENERAL.

         20-1 -PROTECTION OF COLLATERAL. The Administrative Agent does not have
any 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
Administrative Agent.

         20-2 -PUBLICITY. The Administrative Agent may issue a "tombstone"
notice of the establishment of the credit facility contemplated by this
Agreement and may make reference to each Borrower (and may utilize any logo or
other distinctive symbol associated with each Borrower) in connection with any
advertising, promotion, or marketing undertaken by the Administrative Agent.

         20-3 -SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Borrowers' Representative, each Borrower and their
respective representatives, successors and assigns and shall be binding upon and
inure to the benefit of each Agent and each Lender and their respective
successors and assigns, provided, however, no trustee or other fiduciary
appointed with respect to any Borrower shall have any rights hereunder. In the
event that any Agent or any 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 such assignor hereunder and such
assignor shall thereupon be discharged and relieved from its duties and
obligations hereunder.

         20-4 -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.

         20-5  -AMENDMENTS.  COURSE OF DEALING.

                  (a) This Agreement and the other Loan Documents incorporate
                  all discussions and negotiations between each Borrower and
                  each Agent and each 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 any
                  Agent or any Lender to give notice to the Borrowers'
                  Representative of any 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.

                  (b) Each 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 Administrative Agent. Subject to Article 16:,
                  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 Administrative Agent then by a duly authorized
                  officer thereof). Any modification, amendment, or waiver
                  provided by the Administrative Agent shall be in reliance upon
                  all representations and warranties theretofore made to the
                  Administrative Agent by or on behalf of the Borrowers (and any
                  guarantor, endorser, or surety of the Liabilities) and
                  consequently may be rescinded in

                                                                         Page 87
<PAGE>
                  the event that any of such representations or warranties was
                  not true and complete in all material respects when given.

         20-6 -POWER OF ATTORNEY. In connection with all powers of attorney
included in this Agreement, each Borrower hereby grants unto the Administrative
Agent (acting through any of its officers) full power to do any and all things
necessary or appropriate in connection with the exercise of such powers as fully
and effectually as that 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 any Borrower and each shall survive the same. All powers
conferred upon the Administrative Agent 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 Administrative Agent.

         20-7 -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
Administrative Agent determines in its sole discretion, consistent, however,
with Section 14:14-8 and any other applicable provisions of this Agreement. The
Borrowers shall remain liable for any deficiency remaining following such
application.

         20-8 -INCREASED COSTS. If, as a result of any Requirement of Law, or of
the interpretation or application thereof by any court or by any governmental or
other authority or entity charged with the administration thereof, whether or
not having the force of law, which:

                  (a) subjects any Lender to any taxes or changes the basis of
                  taxation, or increases any existing taxes, on payments of
                  principal, interest or other amounts payable by any Borrower
                  to the Administrative Agent or any Lender under this Agreement
                  (except for taxes on the Administrative Agent or any Lender
                  based on net income or capital imposed by the jurisdiction in
                  which the principal or lending offices of the Administrative
                  Agent or that Lender are located);

                  (b) imposes, modifies or deems applicable any reserve, cash
                  margin, special deposit or similar requirements against assets
                  held by, or deposits in or for the account of or loans by or
                  any other acquisition of funds by the relevant funding office
                  of any Lender;

                  (c) imposes on any Lender any other condition with respect to
                  any Loan Document; or

                  (d) imposes on any Lender a requirement to maintain or
                  allocate capital in relation to the Liabilities;

and the result of any of the foregoing, in such Lender's reasonable opinion, is
to increase the cost to such Lender of making or maintaining any loan, advance
or financial accommodation or to reduce the income receivable by that Lender in
respect of any loan, advance or financial accommodation by an amount which that
Lender deems to be material, then upon written notice from the Administrative
Agent to the Borrowers' Representative (such notice to set out in reasonable
detail the facts giving rise to and a summary calculation of such increased cost
or reduced income), the Borrowers shall forthwith pay to the Administrative
Agent, for the benefit such Lender, upon receipt of such notice, that amount
which shall compensate such Lender for such additional cost or reduction in
income.

         20-9 -COSTS AND EXPENSES OF AGENTS AND LENDERS.

                  (a) The Borrowers shall pay from time to time on demand all
                  Costs of Collection and all reasonable costs, expenses and
                  disbursements (including attorneys' reasonable fees and
                  expenses) which are incurred by the Administrative Agent in
                  connection with the preparation, negotiation, execution and
                  delivery of this Agreement and of any other Loan

                                                                         Page 88
<PAGE>
                  Documents, and all other reasonable costs, expenses and
                  disbursements (including collateral auditing and other
                  professional fees and expenses) which may be incurred in
                  connection with or in respect to the credit facility
                  contemplated hereby or which otherwise are incurred with
                  respect to the Liabilities.

                  (b) The Borrowers shall pay from time to time on demand all
                  reasonable costs and expenses (including attorneys' reasonable
                  fees and expenses) incurred, following the occurrence of any
                  Event of Default, by the Lenders to Lenders' Special Counsel.

                  (c) Each Borrower authorizes the Administrative Agent to pay
                  all such fees and expenses and in the Administrative Agent's
                  discretion, to add such fees and expenses to the Loan Account.

                  (d) The undertaking on the part of each Borrower in this
                  Section 20:20-9 shall survive payment of the Liabilities
                  and/or any termination, release, or discharge executed by any
                  Agent in favor of any Borrower, other than a termination,
                  release or discharge which makes specific reference to this
                  Section 20:20-9.

         20-10 -COPIES AND FACSIMILES. Each Loan Document and all documents and
papers which relate thereto which have been or may be hereinafter furnished any
Agent or any Lender may be reproduced by any Lender or by any Agent by any
photographic, microfilm, xerographic, digital imaging or other process, and such
Person making such reproduction 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.

         20-11 -MASSACHUSETTS LAW. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the law of the Commonwealth of Massachusetts.

         20-12 -INDEMNIFICATION. The Borrowers' Representative and each Borrower
shall indemnify, defend, and hold each Agent and each Lender and any of their
respective employees, officers or agents (each, an "INDEMNIFIED PERSON")
harmless of and from any claim brought or threatened against any Indemnified
Person by any Borrower, any guarantor or endorser of the Liabilities or any
other Person (as well as from attorneys' reasonable fees, expenses, and
disbursements in connection therewith) on account of the relationship of the
Borrowers' Representative, the Borrowers or of any other guarantor or endorser
of the Liabilities with them, including all costs, expenses, liabilities and
damages as may be suffered by any Indemnified Person in connection with (x) the
Collateral; (y) the occurrence of any Event of Default; or (z) the exercise of
any rights or remedies under any of the Loan Documents (each of which claims may
be defended, compromised, settled, or pursued by the Indemnified Person with
counsel of the Administrative Agent's selection, but at the expense of the
Borrowers' Representative and the Borrowers) other than any claim as to which a
final determination is made in a judicial proceeding (in which the
Administrative Agent 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 or willful misconduct. This indemnification shall survive
payment of the Liabilities and/or any termination, release, or discharge
executed by the Administrative Agent in favor of the Borrowers' Representative
and/or the Borrowers, other than a termination, release, or discharge duly
executed on behalf of the Administrative Agent which makes specific reference to
this Section 20:20-12.

         20-13 -RULES OF CONSTRUCTION. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of this
Agreement and of the other Loan Documents:

                                                                         Page 89
<PAGE>
                  (a) Unless otherwise specifically provided for herein,
                  interest and any fee or charge which is stated as a per annum
                  percentage shall be calculated based on a 360 day year and
                  actual days elapsed.

                  (b) Words in the singular include the plural and words in the
                  plural include the singular.

                  (c) Any reference, herein, to a circumstance or event's having
                  "more than a de minimis adverse effect" and any similar
                  reference is to a circumstance or event which (x) in a
                  well-managed enterprise, would receive the active attention of
                  senior management with a view towards its being reversed or
                  remedied; or (y) if not reversed or remedied could reasonably
                  be expected to lead to its becoming a material adverse effect.

                  (d) Cross references to Sections in this Agreement begin with
                  the Article in which that Section appears, followed by a
                  colon, and then the Section to which reference is made. (For
                  example, a reference to "Section 4:4-6" is to Section 4-6,
                  which appears in Article 4 of this Agreement).

                  (e) Titles, headings (indicated by being underlined or shown
                  in SMALL CAPITALS) and any Table of Contents are solely for
                  convenience of reference; do not constitute a part of the
                  instrument in which included; and do not affect such
                  instrument's meaning, construction, or effect.

                  (f) The words "includes" and "including" are not limiting.

                  (g) Text which follows the words "including, without
                  limitation" (or similar words) is illustrative and not
                  limiting.

                  (i) Text which is shown in italics (except for parenthesized
                  italicized text), shown in BOLD, shown IN ALL CAPITAL LETTERS,
                  or in any combination of the foregoing, shall be deemed to be
                  conspicuous.

                  (j) The words "may not" are prohibitive and not permissive.

                  (k) Any reference to a Person's "knowledge" (or words of
                  similar import) are to such Person's knowledge assuming that
                  such Person has undertaken reasonable and diligent
                  investigation with respect to the subject of such "knowledge"
                  (whether or not such investigation has actually been
                  undertaken).

                  (l) Terms which are defined in one section of any Loan
                  Document are used with such definition throughout the
                  instrument in which so defined.

                  (m) The symbol "$" refers to United States Dollars.

                  (n) Unless limited by reference to a particular Section or
                  provision, any reference to "herein", "hereof", or "within" is
                  to the entire Loan Document in which such reference is made.

                  (o) References to "this Agreement" or to any other Loan
                  Document is to the subject instrument as amended to the date
                  on which application of such reference is being made.

                  (p) Except as otherwise specifically provided, all references
                  to time are to Boston time.

                                                                         Page 90
<PAGE>
                  (q) In the determination of any notice, grace, or other period
                  of time prescribed or allowed hereunder:

                           (i) Unless otherwise provided (I) the day of the act,
                           event, or default from which the designated period of
                           time begins to run shall not be included and the last
                           day of the period so computed shall be included
                           unless such last day is not a Business Day, in which
                           event the last day of the relevant period shall be
                           the then next Business Day and (II) the period so
                           computed shall end at 5:00 PM on the relevant
                           Business Day.

                           (ii) The word "from" means "from and including".

                           (iii) The words "to" and "until" each mean "to, but
                           excluding".

                           (iv) The word "through" means "to and including".

                  (r) The Loan Documents shall be construed and interpreted in a
                  harmonious manner and in keeping with the intentions set forth
                  in Section 20:20-14 hereof, provided, however, in the event of
                  any inconsistency between the provisions of this Agreement and
                  any other Loan Document, the provisions of this Agreement
                  shall govern and control.

         20-14 -INTENT. It is intended that:

                  (a) This Agreement take effect as a sealed instrument.

                  (b) The scope of all Collateral Interests created by any
                  Borrower to secure the Liabilities be broadly construed in
                  favor of the Administrative Agent and that they cover all
                  assets of each Borrower.

                  (c) All Collateral Interests created in favor of the
                  Administrative Agent at any time and from time to time by any
                  Borrower secure all Liabilities, whether now existing or
                  contemplated or hereafter arising.

                  (d) All reasonable costs, expenses, and disbursements incurred
                  by any Agent, and, to the extent provide in Section 20:20-9
                  each Lender, in connection with such Person's relationship(s)
                  with any Borrower shall be borne by the Borrowers.

                  (e) Unless otherwise explicitly provided herein, the
                  Administrative Agent's consent to any action of any Borrower
                  which is prohibited unless such consent is given may be given
                  or refused by the Administrative Agent in its sole discretion
                  and without reference to Section 2:2-18 hereof.

         20-15 -PARTICIPATIONS. Each Lender may sell participations to one or
more financial institutions (each, a "PARTICIPANT") in that Lender's interests
herein provided that no such participation shall include any provision which
accords that Participant with any rights, vis a vis any Agent, with respect to
any requirement herein for approval by a requisite number or proportion of the
Lenders. No such sale of a participation shall relieve a Lender from that
Lender's obligations hereunder nor obligate any Agent to any Person other than a
Lender.

         20-16 -RIGHT OF SET-OFF. Any and all deposits or other sums at any time
credited by or due to any Borrower from any Agent or any Lender or any
Participant or from any Affiliate of any of the foregoing, and any cash,
securities, instruments or other property of any Borrower in the possession of
any of the foregoing, whether for safekeeping or otherwise (regardless of the
reason such Person had received the same) to the extent permitted by law, shall
at all times constitute security for all Liabilities and for any and all
obligations of each Borrower to each Agent and such Lender or any Participant or

                                                                         Page 91
<PAGE>
such Affiliate and following the occurrence of an Event of Default 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 any Agent or that Lender.

         20-17 -PLEDGES TO FEDERAL RESERVE BANKS: Nothing included in this
Agreement shall prevent or limit any Lender, to the extent that such Lender is
subject to any of the twelve Federal Reserve Banks organized under Section 4 of
the Federal Reserve Act (12 U.S.C. Section 341) from pledging all or any portion
of that Lender's interest and rights under this Agreement, provided, however,
neither such pledge nor the enforcement thereof shall release the pledging
Lender from any of its obligations hereunder or under any of the Loan Documents.

         20-18 -MAXIMUM INTEREST RATE. Regardless of any provision of any Loan
Document, neither any Agent nor any Lender shall be entitled to contract for,
charge, receive, collect, or apply as interest on any Liability, any amount in
excess of the maximum rate imposed by Applicable Law. Any payment which is made
which, if treated as interest on a Liability would result in such interest's
exceeding such maximum rate shall be held, to the extent of such excess, as
additional collateral for the Liabilities as if such excess were "Collateral."

         20-19  -WAIVERS.

                  (a) The Borrowers' Representative and each Borrower (and all
                  guarantors, endorsers, and sureties of the Liabilities) make
                  each of the waivers included in Section 20:20-19(b), below,
                  knowingly, voluntarily and intentionally, and each understands
                  that each Agent and each Lender, in establishing the
                  facilities contemplated hereby and in providing loans and
                  other financial accommodations to or for the account of the
                  Borrowers as provided herein, whether not or in the future, is
                  relying on such waivers.

                  (b) THE BORROWERS' REPRESENTATIVE, EACH BORROWER AND EACH SUCH
                  GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY WAIVES THE
                  FOLLOWING:

                           (i) Except as otherwise specifically required hereby,
                           notice of non-payment, demand, presentment, protest
                           and all forms of demand and notice, both with respect
                           to the Liabilities and the Collateral, all defenses
                           which may be available by virtue of any valuation,
                           stay, moratorium law or other similar law now or
                           hereafter in effect, any right to require the
                           marshalling of assets of the Borrowers or any other
                           entity or other person primarily or secondarily
                           liable with respect to any of the Liabilities, and
                           all suretyship defenses generally

                           (ii) Except as otherwise specifically required
                           hereby, the right to notice and/or hearing prior to
                           an Agent's exercising of that Agent's rights upon
                           default.

                           (iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
                           CONTROVERSY IN WHICH ANY AGENT OR ANY LENDER IS OR
                           BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS
                           INITIATED BY OR AGAINST ANY AGENT OR ANY LENDER OR IN
                           WHICH ANY AGENT OR ANY 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 BORROWERS' REPRESENTATIVE, ANY BORROWER OR ANY
                           OTHER PERSON AND THE AGENT AND EACH LENDER LIKEWISE
                           WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH
                           CASE OR CONTROVERSY).

                           (iv) Except for manifest error, any defense,
                           counterclaim, set-off, recoupment, or other basis on
                           which the amount of any Liability, as stated on the

                                                                         Page 92

<PAGE>
                           books and records of the Administrative Agent or any
                           Lender, could be reduced or claimed to be paid
                           otherwise than in accordance with the tenor of and
                           written terms of such Liability.

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

         20-20 -COUNTERPARTS. This Agreement and any amendment hereto may be
executed in several counterparts and by each party on a separate counterpart,
each of which when executed and delivered shall be an original, and all of which
shall constitute one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
<PAGE>
                                                   THE BORROWERS' REPRESENTATIVE
                                                            JACOBSON STORES INC.

                                By  /s/   Kevin C. Binkley
                                    ------------------------------------------

                        Print Name:     Kevin C. Binkley
                                    ------------------------------------------

                             Title:     VP-Treasurer
                                    ------------------------------------------

                                                                  THE BORROWERS:
                                                            JACOBSON STORES INC.

                                By  /s/   Kevin C. Binkley
                                    ------------------------------------------

                        Print Name:     Kevin C. Binkley
                                    ------------------------------------------

                             Title:     VP-Treasurer
                                    ------------------------------------------

                                                           JACOBSON CREDIT CORP.

                                By  /s/   Kevin C. Binkley
                                    ------------------------------------------

                        Print Name:     Kevin C. Binkley
                                    ------------------------------------------

                             Title:     VP-Treasurer
                                    ------------------------------------------

                                                  JACOBSON STORES REALTY COMPANY

                                By  /s/   Kevin C. Binkley
                                    ------------------------------------------

                        Print Name:     Kevin C. Binkley
                                    ------------------------------------------

                             Title:     VP-Treasurer
                                    ------------------------------------------
<PAGE>
                                      ADMINISTRATIVE AGENT, COLLATERAL AGENT
                                                         AND DOCUMENTATION AGENT
                                                       FLEET RETAIL FINANCE INC.

                                By  /s/   James J. Ward
                                    ------------------------------------------

                        Print Name:  James J. Ward
                                    ------------------------------------------

                             Title:  Director
                                    ------------------------------------------
<PAGE>
                                                                    THE LENDERS:
                                                       FLEET RETAIL FINANCE INC.

                                By  /s/   James J. Ward
                                    ------------------------------------------

                        Print Name:  James J. Ward
                                    ------------------------------------------

                             Title:  Director
                                    ------------------------------------------

                                                    FOOTHILL CAPITAL CORPORATION

                                By  /s/   Eileen Quinn
                                    ------------------------------------------

                        Print Name:  Eileen Quinn
                                    ------------------------------------------

                             Title:  Vice President
                                    ------------------------------------------

                                                          HELLER FINANCIAL, INC.

                                By  /s/   Richard J. Holston
                                    -------------------------------------------

                        Print Name:  Richard J. Holston
                                    -------------------------------------------

                            Title:     AVP
                                   --------------------------------------------

                                                      STANDARD FEDERAL BANK N.A.
                                                  (f/k/a Michigan National Bank)

                                By  /s/   Matthew Barbuscak
                                    -------------------------------------------

                       Print Name:  Matthew Barbuscak
                                   --------------------------------------------

                            Title:  Vice President
                                   --------------------------------------------

                                                   ORIX FINANCIAL SERVICES, INC.

                                By  /s/   Dawn M. Dieter
                                   --------------------------------------------

                        Print Name:  Dawn M. Dieter
                                    -------------------------------------------

                             Title:  Vice President
                                    -------------------------------------------
<PAGE>
                                                              THE PROVIDENT BANK

                                By  /s/   Cary M. Sierzputowski
                                   --------------------------------------------

                        Print Name:  Cary M. Sierzputowski
                                   --------------------------------------------

                             Title:  Vice President
                                   --------------------------------------------

                                       IBJ WHITEHALL BUSINESS CREDIT CORPORATION

                                By  /s/   Bruce Kasper
                                   --------------------------------------------

                        Print Name: Bruce Kasper
                                    -------------------------------------------

                             Title: Vice President
                                    -------------------------------------------

                                                                   COMERICA BANK

                                By  /s/   Andrew Ottaway
                                   --------------------------------------------

                        Print Name: Andrew Ottaway
                                    -------------------------------------------

                             Title: Vice President
                                    -------------------------------------------

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