Document:

EXHIBIT NO. 10.68

                      FOURTEENTH AMENDMENT TO POSTPETITION
                     CREDIT AGREEMENT AND ADOPTING AGREEMENT

         THIS FOURTEENTH AMENDMENT TO POSTPETITION CREDIT AGREEMENT AND ADOPTING
AGREEMENT, dated as of December 14, 1999 (this "AMENDMENT"), is among LEVITZ
FURNITURE INCORPORATED, a Delaware corporation and a debtor and debtor in
possession, LEVITZ FURNITURE CORPORATION, a Florida corporation and a debtor and
debtor in possession ("LFC"), LEVITZ FURNITURE REALTY CORPORATION, a Florida
corporation and a debtor and debtor in possession, LEVITZ SHOPPING SERVICE,
INC., a Florida corporation and a debtor and debtor in possession, LEVITZ
FURNITURE COMPANY OF THE MIDWEST, INC., a Colorado corporation and a debtor and
debtor in possession, LEVITZ FURNITURE COMPANY OF THE PACIFIC, INC., a
California corporation and a debtor and debtor in possession, LEVITZ FURNITURE
COMPANY OF WASHINGTON, INC., a Washington corporation and a debtor and debtor in
possession, LEVITZ FURNITURE COMPANY OF THE MIDWEST REALTY, INC., a Colorado
corporation and a debtor and debtor in possession, LEVITZ FURNITURE COMPANY OF
THE PACIFIC REALTY, INC., a California corporation and a debtor and a debtor in
possession, LEVITZ FURNITURE COMPANY OF WASHINGTON REALTY, INC., a Washington
corporation and debtor and a debtor in possession, LEVITZ REINSURANCE
CORPORATION, JOHN M. SMYTH COMPANY, an Illinois corporation and a debtor and
debtor in possession, and JOHN M. SMYTH REALTY COMPANY, an Illinois corporation
and a debtor and debtor in possession (collectively, the "EXISTING BORROWERS"),
LEVITZ FURNITURE COMPANY OF MASSACHUSETTS, INC., a Massachusetts corporation
(the "NEW BORROWER"; and collectively with the Existing Borrowers, the
"BORROWERS"), each Revolving Lender and Overadvance Term Lender signatories
hereto (collectively, the "LENDERS") and BT COMMERCIAL CORPORATION, a Delaware
corporation, acting in its capacity as collateral agent and agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"AGENT"). Capitalized terms used in this Amendment and not otherwise defined
have the meanings assigned to such terms in the Postpetition Credit Agreement
dated as of September 5, 1997, as amended (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among the Borrowers, the Lenders and the Agent.

                             PRELIMINARY STATEMENTS:

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

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

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

                                   AGREEMENT:

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

         1.       AMENDMENTS TO CREDIT AGREEMENT.

         On the date each of the conditions set forth in SECTION 3 is satisfied
by the Borrowers (the "CLOSING DATE"), the Credit Agreement is amended as
follows:

                                       1
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                  1.1 The Credit Agreement is amended by adding New Borrower as
         a "Borrower" thereunder. Upon the effectiveness of this Amendment, all
         references to "Borrower" contained in the Credit Agreement shall be
         deemed to refer to each of the Existing Borrowers and New Borrower,
         collectively.

                  1.2 Parts 6.1, 6.9, 6.10, [OTHERS?] of Schedule B to the
         Credit Agreement are supplemented by adding the items set forth on
         Annex I hereto relating to New Borrower.

         2.       ADOPTION AND CONFIRMATION.

                  2.1 CREDIT AGREEMENT AND NOTES. By its execution and delivery
         of this Amendment, New Borrower hereby confirms that (i) upon the
         effectiveness of this Amendment it will become a "Borrower" under the
         Credit Agreement and each of the Notes, subject to all of the
         covenants, undertakings, liabilities and obligations of the Borrowers
         contained therein, including the joint and several obligations of the
         Borrowers with respect to the Postpetition Obligations as further
         provided in SECTION 11.16 of the Credit Agreement and (ii) all of the
         representations and warranties contained in the Credit Agreement that
         are applicable to it as a Borrower are true and correct as of the date
         hereof after giving effect to this Amendment.

                  2.2 POST-PETITION SECURITY AGREEMENT. By its execution and
         delivery of this Amendment, New Borrower hereby confirms that (i) upon
         the effectiveness of this Amendment it will become a "Grantor" under
         and as defined in the Post-Petition Security Agreement, subject to all
         of the covenants, undertakings, liabilities and obligations of the
         Grantors contained therein, (ii) all of the representations and
         warranties contained in the Post-Petition Security Agreement that are
         applicable to it as a Grantor are true and correct as of the date
         hereof after giving effect to this Amendment and (iii) upon the
         effectiveness of this Amendment, it grants to Collateral Agent, on
         behalf and for the benefit of the Secured Parties, to secure all the
         Secured Obligations a lien upon and security interest in, all of its
         right, title and interest in, to and under the following: (A) Accounts;
         (B) Chattel Paper; (C) Contracts; (D) Documents; (E) Equipment; (F)
         General Intangibles; (G) Instruments; (H) Inventory; (I) Real Estate;
         (J) all other of its goods and property whether tangible or intangible,
         real, personal or mixed, whether now owned or hereafter acquired by it,
         wherever located, (K) all Proceeds of each of the foregoing and all
         accessions to, substitutions and replacements for, and rents profits
         and products of, each of the foregoing, and (L) all property of New
         Borrower held by any Secured Party, including, without limitation, all
         property of every description, now or hereafter in the possession or
         custody of or in transit to such Secured Party for any purpose,
         including safekeeping, collection or pledge, for the account of New
         Borrower, or as to which New Borrower may have any right or power (all
         capitalized terms set forth in this subsection (iii), unless otherwise
         defined herein, shall have the meaning assigned to such term in the
         Post-Petition Security Agreement).

                  2.3 POST-PETITION PLEDGE AGREEMENT.

                           (a) On the Closing Date, Exhibit A to the
                  Post-Petition Pledge Agreement is amended and restated in its
                  entirety in the form set forth as Annex II hereto.

                           (b) By its execution and delivery of this Amendment,
                  New Borrower hereby confirms that (i) upon the effectiveness
                  of this Amendment it will become a "Borrower" and "Pledgor"
                  under and as defined in the Post-Petition Pledge Agreement,
                  subject to all of the covenants, undertakings, liabilities and
                  obligations of the

                                       2
<PAGE>

                  Borrowers and Pledgors contained therein, (ii) all of the
                  representations and warranties contained in the Post-Petition
                  Pledge Agreement that are applicable to it as a Borrower or
                  Pledgor thereunder are true and correct as of the date hereof
                  after giving effect to this Amendment and (iii) upon the
                  effectiveness of this Amendment, it pledges to the Collateral
                  Agent, on behalf and for the benefit of the Secured Parties,
                  to secure the Liabilities all of the following property and
                  interests in property: (a) all shares of capital stock of each
                  of the Issuers now or at any time or times hereafter owned by
                  it (collectively, the "Pledged Stock"); (b) all warrants,
                  options and other rights to acquire, and rights in and to, the
                  capital stock of the respective Issuers now or at any time or
                  times hereafter owned by it (collectively, the "Rights"); (c)
                  all other property now or at any time or times hereafter
                  received, receivable or otherwise distributed in respect of or
                  in exchange or substitution for any or all of the Pledged
                  Stock and/or the Rights, and all of its rights thereto,
                  including, without limitation, all dividends, cash and other
                  payments and distributions of any kind whatsoever; (d) the
                  Pledged Debt and the instruments evidencing the Pledged Debt,
                  and all interest, cash, instruments and other property or
                  proceeds from time to time received, receivable or otherwise
                  distributed in respect of or in exchange for any or all of the
                  Pledged Debt; (e) all additional indebtedness from time to
                  time owed to it by any obligor of the Pledged Debt or any
                  other Person and the instruments evidencing such indebtedness,
                  and all interest, cash, instruments and other property or
                  proceeds from time to time received, receivable or otherwise
                  distributed in respect of or in exchange for any or all of
                  such indebtedness; and (f) all proceeds of all of the
                  foregoing. (All capitalized terms set forth in this subsection
                  (iii), unless otherwise defined herein, shall have the meaning
                  assigned to such term in the Post-Petition Pledge Agreement
                  after giving effect to this Amendment.)

                           (c) By its execution and delivery of this Amendment,
                  [OWNER OF THE CAPITAL STOCK OF NEW BORROWER] hereby confirms
                  that upon the effectiveness of this Amendment it has pledged
                  the capital stock of New Borrower identified on Annex II to
                  the Collateral Agent, on behalf and for the benefit of the
                  Secured Parties, to secure the Liabilities (as defined in the
                  Post-Petition Pledge Agreement) and that such capital stock
                  constitutes Pledged Stock (as defined in the Post-Petition
                  Pledge Agreement).

                  2.4 BORROWING AGENCY AGREEMENT. Upon the effectiveness of this
         Amendment, New Borrower shall become a party to that certain Borrower
         Agency Agreement dated as of September 5, 1997 among LFC, as borrowing
         agent, and the Existing Borrowers, and appoints LFC as its borrowing
         agent thereunder, subject to the terms of such agreement.

                  2.5 POST-PETITION COLLATERAL AGENCY AGREEMENT. Upon the
         effectiveness of this Amendment, New Borrower acknowledges and consents
         to the Post-Petition Collateral Agency Agreement.

         3.       CONDITIONS PRECEDENT.

         This Amendment becomes effective upon satisfaction of the following
conditions:

         3.1 AMENDMENT APPROVAL ORDER. This Amendment has been approved by the
Bankruptcy Court pursuant to an order (the "AMENDMENT APPROVAL ORDER"), which
order is in full force and effect and has not been reversed, modified, amended,
appealed or stayed. The Agent shall have been satisfied with the form and
substance (and the timing of the notice) of the motion for the entry

                                       3
<PAGE>

of the Amendment Approval Order. In addition, the Agent shall have been
satisfied with the form and substance of the Amendment Approval Order.

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

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

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

                  (b)      CERTIFICATE OF INCORPORATION, ETC. The Certificate of
                           Incorporation of New Borrower certified by the
                           appropriate Secretary of State as of a recent date,
                           together with a good standing certificate from such
                           Secretary of State and a good standing certificate
                           from the Secretaries of State of each other State in
                           it is required to be qualified to transact business;

                  (c)      CERTIFIED RESOLUTIONS, ETC. A certificate of the
                           Secretary or Assistant Secretary of New Borrower
                           certifying (i) the names and true signatures of its
                           officers authorized to sign this Amendment, (ii) its
                           By-Laws and (iii) resolutions of its Board of
                           Directors approving and authorizing the execution,
                           delivery and performance of this Amendment;

                  (d)      OPINION OF COUNSEL. An opinion of counsel to New
                           Borrower;

                  (e)      UCC MATTERS. Satisfactory reports of UCC searches
                           with respect to New Borrower and such UCC-1 financing
                           statement signed by New Borrower as debtor naming the
                           Collateral Agent as secured party as the Agent my
                           require;

                  (f)      PLEDGED STOCK. For delivery to the Collateral Agent,
                           the original stock certificates evidencing the
                           capital stock of New Borrower pledged pursuant to the
                           Post-Petition Pledge Agreement, together with undated
                           stock powers duly executed in blank in connection
                           therewith; and

                  (g)      OTHER. Such other documents as the Agent may
                           reasonably request.

                                       4
<PAGE>

         4.       REPRESENTATIONS AND WARRANTIES.

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

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

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

         4.3 ENFORCEABILITY. Upon approval by the Bankruptcy Court (as
contemplated by SECTION 3.1), this Amendment and the Credit Agreement, as
amended by this Amendment, will constitute legal, valid and binding obligations
of the LFC Funds Administrator and each of the Borrowers and will be enforceable
against such Persons in accordance with their respective terms.

         4.4 CONSENTS. The execution and delivery by the LFC Funds Administrator
and each of the Borrowers of this Amendment does not require the consent or
approval of any Person other than the Bankruptcy Court (as contemplated by
SECTION 3.1), except such consents and approvals as have been obtained.

         5.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER

CREDIT DOCUMENTS.

         5.1 REFERENCES. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement and the Post-Petition Pledge Agreement to
"this Agreement", "hereunder" "hereof", "herein" or words of like import, and
each reference in each of the other Credit Documents to the "Credit Agreement"
or "Post-Petition Pledge Agreement" shall mean and be a reference to the Credit
Agreement or the Post-Petition Pledge Agreement, as the case may be, as amended
by this Amendment.

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

         6.       GOVERNING LAW.

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

                                       5
<PAGE>

         7.       HEADINGS; COUNTERPARTS.

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

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

                                   LFC FUNDS ADMINISTRATOR:

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

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

                                   BORROWERS:

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

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

                                   LEVITZ FURNITURE INCORPORATED, a Delaware
                                   corporation

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

                                       6
<PAGE>

                                   LEVITZ FURNITURE REALTY CORPORATION, a
                                   Florida corporation

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

                                   LEVITZ SHOPPING SERVICE, a Florida
                                   corporation

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

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

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

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

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

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

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

                                       7
<PAGE>

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

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

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

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

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

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

                                   JOHN M. SMYTH COMPANY, an Illinois
                                   corporation

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

                                   JOHN M. SMYTH REALTY COMPANY, an Illinois
                                   corporation

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

                                       8
<PAGE>

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

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

                                       9
<PAGE>

                                   AGENT:

                                   BT COMMERCIAL CORPORATION, in its capacity
                                   as Agent

                                   By:     /s/ DEAN J. WHALEN
                                           -------------------------------------
                                   Name:   Dean J. Whalen
                                           -------------------------------------
                                   Title:  Associate
                                           -------------------------------------

                                   REVOLVING LENDERS:

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

                                   By:     /s/ DEAN J. WHALEN
                                           -------------------------------------
                                   Name:   Dean J. Whalen
                                           -------------------------------------
                                   Title:  Associate
                                           -------------------------------------

                                   FINOVA CAPITAL CORPORATION, in its capacity
                                   as Revolving Lender

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

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

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

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

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

                                       10
<PAGE>

                                   TRANSAMERICA BUSINESS CREDIT CORPORATIONN,
                                   in its capacity as Revolving Lender

                                   By:     /s/ R. L. HEINZ
                                           -------------------------------------
                                   Name:   R. L. Heinz
                                           -------------------------------------
                                   Title:  Senior Vice President
                                           -------------------------------------

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

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

                                   OVERADVANCE TERM LENDER:

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

                                   By:     /s/ ROBERT T. SYMINGTON
                                           -------------------------------------
                                   Name:   Robert T. Symington
                                           -------------------------------------
                                   Title:  Senior Vice President
                                           -------------------------------------

                                       11EXHIBIT NO. 10.69

                       FIFTEENTH AMENDMENT TO POSTPETITION
                                CREDIT AGREEMENT

         THIS FIFTEENTH AMENDMENT TO POSTPETITION CREDIT AGREEMENT, dated as of
January 7, 2000 (this "Amendment"), is among LEVITZ FURNITURE INCORPORATED, a
Delaware corporation and a debtor and debtor in possession, LEVITZ FURNITURE
CORPORATION, a Florida corporation and a debtor and debtor in possession
("LFC"), LEVITZ FURNITURE REALTY CORPORATION, a Florida corporation and a debtor
and debtor in possession, LEVITZ SHOPPING SERVICE, INC., a Florida corporation
and a debtor and debtor in possession, LEVITZ FURNITURE COMPANY OF THE MIDWEST,
INC., a Colorado corporation and a debtor and debtor in possession, LEVITZ
FURNITURE COMPANY OF THE PACIFIC, INC., a California corporation and a debtor
and debtor in possession, LEVITZ FURNITURE COMPANY OF WASHINGTON, INC., a
Washington corporation and a debtor and debtor in possession, LEVITZ FURNITURE
COMPANY OF THE MIDWEST REALTY, INC., a Colorado corporation and a debtor and
debtor in possession, LEVITZ FURNITURE COMPANY OF THE PACIFIC REALTY, INC., a
California corporation and a debtor and a debtor in possession, LEVITZ FURNITURE
COMPANY OF WASHINGTON REALTY, INC., a Washington corporation and debtor and a
debtor in possession, LEVITZ REINSURANCE CORPORATION, JOHN M. SMYTH COMPANY, an
Illinois corporation and a debtor and debtor in possession, and JOHN M. SMYTH
REALTY COMPANY, an Illinois corporation and a debtor and debtor in possession
and LEVITZ FURNITURE COMPANY OF MASSACHUSETTS, INC., a Massachusetts corporation
(collectively, the "BORROWERS"), each Revolving Lender and Overadvance Term
Lender signatories hereto (collectively, the "LENDERS") and BT COMMERCIAL
CORPORATION, a Delaware corporation, acting in its capacity as collateral agent
and agent for the Lenders (in such capacity, together with its successors in
such capacity, the "AGENT"). Capitalized terms used in this Amendment and not
otherwise defined have the meanings assigned to such terms in the Postpetition
Credit Agreement dated as of September 5, 1997, as amended (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), among the Borrowers, the Lenders and the Agent.

                             PRELIMINARY STATEMENTS:

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

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

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

                                   AGREEMENT:

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

         1.       AMENDMENTS TO CREDIT AGREEMENT.

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

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

                                       1
<PAGE>

         BORROWING BASE means, at any time, the sum at such time of:

                  (a) the Fixed Asset Sublimit, plus

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

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

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

                  (e) at any time that an Initial Overadvance is then
         outstanding and solely for the purposes of accepting the borrowing of a
         Subsequent Overadvance, $5,000,000 (the "Subsequent Overadvance
         Amount"); provided, that, effective as of the earlier to occur of (i)
         ten (10) Business Days after the date on which the Overadvance Term
         Lender receives notice from the Agent that Excess Availability is less
         than $5,000,000 as contemplated under clause (ii) of Article 2C or (ii)
         the date on which the proceeds of a Subsequent Overadvance are received
         by the Agent for the account of the Debtors, the Subsequent Overadvance
         Amount will be automatically reduced to zero (-0-); and provided
         further, that (I) in the event that the principal amount of any
         Subsequent Overadvance is repaid as contemplated under Article 2C, the
         Subsequent Overadvance Amount will automatically be reestablished at
         $5,000,000 and (ii) notwithstanding anything to the contrary contained
         in this Agreement or any of the other Credit Documents, (x) only the
         Overadvance Term Lender shall have any obligation to fund a Subsequent
         Overadvance and (y) prior to any date on which the Subsequent
         Overadvance Amount is reduced to zero pursuant to the initial proviso
         to this paragraph (e), the Revolving Lenders shall have no obligation
         whatsoever to make any Revolving Loan or other extension of credit
         under this Agreement to the extent that, immediately before or after
         giving effect to such Revolving Loan or extension of credit, Excess
         Availability is less than $5,000,000, less

                  (f) the aggregate amount of the Borrowers' allowed
         professional fees and disbursements to which the Postpetition
         Obligations and the Prepetition Obligations may be subordinated
         pursuant to the Interim

                                       2
<PAGE>

         Financing Order and the Permanent Financing Order following a Default
         or an Event of Default;

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

         In addition, the Agent, in the exercise of its Permitted Discretion,
         may (i) establish and increase or decrease reserves against Eligible
         Accounts Receivable and Eligible Inventory, (ii) reduce the advance
         rates provided for in this definition, or restore such advance rates to
         any level equal to or below the advance rates in effect as of the date
         of this Credit Agreement, and (iii) impose additional restrictions (or
         eliminate the same) to the standards of eligibility set forth in the
         definitions of "Eligible Accounts Receivable" and "Eligible Inventory".
         The Agent will not increase the advance rates without receiving prior
         consent of the Majority Term Lenders and the Overadvance Term Lender.

         1.4 Section 1.1 of the Credit Agreement is hereby further amended by
adding the following definitions thereto in proper alphabetical order:

                  INITIAL OVERADVANCE has the meaning set forth in clause (i) of
         Article 2C hereof.

                  SUBSEQUENT OVERADVANCE has the meaning set forth in clause
         (ii) of Article 2C hereof.

         1.5 Article 2C to the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  ARTICLE 2C.  OVERADVANCE TERM LOAN

                  Subject to the terms and conditions set forth in this Credit
         Agreement, and in reliance on the representations and warranties of the
         Borrowers set forth herein, from time to time prior to the Overadvance
         Maturity Date the Overadvance Term Lender will make term loans
         (collectively, the "Overadvance Term Loan") to the Borrowers as
         follows:

                           (i) at any time that a Subsequent Overadvance is not
                  outstanding, and upon receipt of notice from the Agent that
                  Excess Availability is less than $12,000,000 (which amount
                  shall include the amount set forth in subsection (d) in the
                  definition of Borrowing Base), the Overadvance Term Lender
                  will make term loans (each an "Initial Overadvance") to the
                  Borrowers, as soon as reasonably practicable and in no event
                  more than 10 Business Days after receiving such notice from
                  the Agent, each in the original principal amount of
                  $10,000,000. In no event may more than one Initial Overadvance
                  be outstanding at any time. Notwithstanding anything to the
                  contrary contained in Section 4.7B and Section 4.11 and
                  provided that (A) no Default or Event of Default then exists
                  and (B) no Subsequent Overadvance shall be outstanding after
                  giving effect thereto, Borrowers shall repay the principal
                  amount of any Initial Overadvance in the event that Excess
                  Availability is equal to or greater than $18,000,000 for the
                  five (5) consecutive Business Days prior to the date of such
                  prepayment (after giving effect to the repayment of any
                  Subsequent Overadvance made during such five day period or
                  which is to be made contemporaneously with the repayment of a
                  Subsequent Overadvance); and

                           (ii) at any time that a Initial Overadvance is
                  outstanding, and upon receipt of notice from the Agent that
                  Excess Availability

                                       3
<PAGE>

                  is less than $5,000,000 (which amount shall include the amount
                  set forth in subsection (e) in the definition of Borrowing
                  Base), the Overadvance Term Lender will make term loans (each
                  a "Subsequent Overadvance") to the Borrowers, as soon as
                  reasonably practicable and in no event more than 10 Business
                  Days after receiving such notice from the Agent, each in the
                  original principal amount of $5,000,000. In no event may more
                  than one Subsequent Overadvance be outstanding at any time.
                  Notwithstanding anything to the contrary contained in Section
                  4.7B and Section 4.11 and provided that no Default or Event of
                  Default then exists, Borrowers shall repay the principal
                  amount of any Subsequent Overadvance in the event that Excess
                  Availability is equal to or greater than $12,000,000 for the
                  five (5) consecutive Business Days prior to the date of such
                  prepayment.

                  The proceeds of each Initial Advance and each Subsequent
         Advance will be immediately deposited with the Agent and,
         notwithstanding the provisions of Section 4.11, will be applied by the
         Agent to pay down the outstanding principal of the Revolving Loans on
         such date. The Overadvance Term Loan shall be evidenced by an
         Overadvance Term Note and shall be governed in all respects by the
         terms of this Credit Agreement and the other Credit Documents.

         1.4 Section 4.7B of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

         4.7B No Permitted Prepayment of Overadvance Term Loan.

                  Until payment in full of all Postpetition Obligations in
         respect of Revolving Loans, Term Loans and Letter of Credit Obligations
         and termination of the Revolving Commitments pursuant to the provisions
         hereof, and except as provided in Article 2C with respect to the
         repayment of (i) any Initial Overadvance in the event that Excess
         Availability is equal to or greater than $18,000,000 for five (5)
         consecutive Business Days and (ii) any Subsequent Overadvance in the
         event that Excess Availability is equal to or greater than $12,000,000
         for five (5) consecutive Business Days, the Borrowers may not prepay or
         make any other payment or distribution of any kind (in cash, securities
         or otherwise but excluding payments of accrued and unpaid interest,
         fees and expenses) in respect of or in connection with the Overadvance
         Term Loan at any time in whole or in part and all such principal
         amounts otherwise distributable in respect of or in connection with the
         Overadvance Term Loan shall be paid to the Agent for allocation to the
         Postpetition Obligations in respect of Revolving Loans, Letters of
         Credit Obligations and Term Loans as provided herein until all such
         obligations are indefeasibly paid in full in cash and the Revolving
         Commitments are fully terminated.

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

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

                                       4
<PAGE>

         2.       CONDITIONS PRECEDENT.

         This Amendment becomes effective upon satisfaction of the following
conditions:

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

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

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

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

                  (i)      AMENDED AND RESTATED OVERADVANCE TERM NOTE. For
                           delivery to the Overadvance Term Lender, an Amended
                           and Restated Overadvance Term Note, substantially in
                           the form attached as ANNEX I hereto; and

                  (j)      OTHER. Such other documents as the Agent may
                           reasonably request.

         3.       REPRESENTATIONS AND WARRANTIES.

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

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

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

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

                                       5
<PAGE>

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

         4.       REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
CREDIT DOCUMENTS.

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

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

         5.       GOVERNING LAW.

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       6
<PAGE>

         6.       HEADINGS; COUNTERPARTS.

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

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

                                   LFC FUNDS ADMINISTRATOR:

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

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

                                   BORROWERS:

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

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

                                   LEVITZ FURNITURE INCORPORATED, a Delaware
                                   corporation

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

                                       7
<PAGE>

                                   LEVITZ FURNITURE REALTY CORPORATION, a
                                   Florida corporation

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

                                   LEVITZ SHOPPING SERVICE, a Florida
                                   corporation

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

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

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

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

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

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

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

                                       8
<PAGE>

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

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

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

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

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

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

                                   JOHN M. SMYTH COMPANY, an Illinois
                                   corporation

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

                                   JOHN M. SMYTH REALTY COMPANY, an Illinois
                                   corporation

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

                                       9
<PAGE>

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

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

                                       10
<PAGE>

                                   AGENT:

                                   BT COMMERCIAL CORPORATION, in its capacity
                                   as Agent

                                   By:     /s/ DEAN J. WHALEN
                                           -------------------------------------
                                   Name:   Dean J. Whalen
                                           -------------------------------------
                                   Title:  Associate
                                           -------------------------------------

                                   REVOLVING LENDERS:

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

                                   By:     /s/ DEAN J. WHALEN
                                           -------------------------------------
                                   Name:   Dean J. Whalen
                                           -------------------------------------
                                   Title:  Associate
                                           -------------------------------------

                                   FINOVA CAPITAL CORPORATION, in its capacity
                                   as Revolving Lender

                                   By:     /s/
                                           -------------------------------------
                                   Name:
                                           -------------------------------------
                                   Title:
                                           -------------------------------------

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

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

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

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

                                       11
<PAGE>

                                   TRANSAMERICA BUSINESS CREDIT CORPORATIONN,
                                   in its capacity as Revolving Lender

                                   By:     /s/ R. L. HEINZ
                                           -------------------------------------
                                   Name:   R. L. Heinz
                                           -------------------------------------
                                   Title:  SVP
                                           -------------------------------------

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

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

                                   OVERADVANCE TERM LENDER:

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

                                   By:     /s/ ROBERT T. SYMINGTON
                                           -------------------------------------
                                   Name:   Robert T. Symington
                                           -------------------------------------
                                   Title:  Senior Vice President
                                           -------------------------------------

                                       12
<PAGE>

                         ANNEX I TO FIFTEENTH AMENDMENT

                   AMENDED AND RESTATED OVERADVANCE TERM NOTE

                                   [Attached]

                                       13
<PAGE>

                   AMENDED AND RESTATED OVERADVANCE TERM NOTE

$15,000,000.00                                             _______________, 1999

         FOR VALUE RECEIVED, each of the undersigned, (collectively, the
"Borrowers") jointly and severally promises to pay to the order of M.D. Sass
Corporate Resurgence Partners, L.P. (the "Overadvance Term Lender") at [ADDRESS]
in lawful money of the United States of America and in immediately available
funds at [DESCRIBE ACCOUNT] of the Credit Agreement, the principal amount of
fifteen MILLION DOLLARS ($15,000,000.00), or such lesser amount as may then
constitute the unpaid aggregate principal amount of the Overadvance Term Loan
evidenced by this Note, on the Overadvance Maturity Date or such earlier date as
this Note may become due in accordance with the terms of the Credit Agreement
referred to below. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned thereto in the Credit
Agreement.

         Each of the Borrowers further agrees, on a joint and several basis, to
pay to the Overadvance Term Lender (i) interest on the unpaid principal amount
owing hereunder monthly in arrears on the last Business Day of each month of the
Borrowers at an interest rate equal per annum equal to 16%, from the date hereof
until this Note is paid in full in accordance with its terms, in like money and
(ii) a fee in the amount of $75,000 payable monthly in arrears on the last
Business Day of each month of the Borrowers until this Note is paid in full in
accordance with its terms.

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

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

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

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

                                       14
<PAGE>

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

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

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

                                   LEVITZ FURNITURE CORPORATION, a Florida
                                   corporation

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

                                   LEVITZ FURNITURE INCORPORATED, a Delaware
                                   corporation

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

                                   LEVITZ FURNITURE REALTY CORPORATION, a
                                   Florida corporation

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

                                       15
<PAGE>

                                   LEVITZ SHOPPING SERVICE, INC., a Florida
                                   corporation

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

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

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

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

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

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

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

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

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

                                       16
<PAGE>

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

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

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

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

                                   JOHN M. SMYTH COMPANY, an Illinois
                                   corporation

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

                                   JOHN M. SMYTH REALTY COMPANY, an Illinois
                                   corporation

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

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

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

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