Document:

<PAGE>

                                                                   Exhibit 10.15

================================================================================

                                CREDIT AGREEMENT

                                   dated as of

                                   May 3, 2001

                                      among

                         GALYAN'S TRADING COMPANY, INC.,
                                  as Borrower,

                            The Lenders Party Hereto,

                                       and

                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent

                           ---------------------------

                          J.P. MORGAN SECURITIES INC.,
                              as Lead Arranger and
                                   Bookrunner,

                                       and

                       GOLDMAN SACHS CREDIT PARTNERS L.P.,
                              as Syndication Agent

================================================================================

<PAGE>

                                             TABLE OF CONTENTS

                                                 ARTICLE I

                                                Definitions
<TABLE>
<CAPTION>
                                                                                                      Page
<S>                        <C>
SECTION 1.01.              Defined Terms.........................................................
SECTION 1.02.              Classification of Loans and Borrowings ...............................
SECTION 1.03.              Terms Generally ......................................................
SECTION 1.04.              Accounting Terms; GAAP ...............................................

                                                ARTICLE II

                                               The Credits

SECTION 2.01.              Commitments...........................................................
SECTION 2.02.              Loans and Borrowings..................................................
SECTION 2.03.              Requests for Revolving Borrowings.....................................
SECTION 2.04.              Swingline Loans.......................................................
SECTION 2.05.              Letters of Credit.....................................................
SECTION 2.06.              Funding of Borrowings.................................................
SECTION 2.07.              Interest Elections....................................................
SECTION 2.08.              Termination and Reduction of Commitments..............................
SECTION 2.09.              Repayment of Loans; Evidence of Debt   ...............................
SECTION 2.10.              Prepayment of Loans...................................................
SECTION 2.11.              Fees..................................................................
SECTION 2.12.              Interest..............................................................
SECTION 2.13.              Alternate Rate of Interest............................................
SECTION 2.14.              Increased Costs.......................................................
SECTION 2.15.              Break Funding Payments................................................
SECTION 2.16.              Taxes.................................................................
SECTION 2.17.              Payments Generally; Pro Rata Treatment; Sharing of
                               Set-Offs..........................................................
SECTION 2.18.              Mitigation Obligations; Replacement of Lenders........................
</TABLE>

                                       i
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                                               ARTICLE III

<TABLE>
                                      Representations and Warranties
<S>                        <C>
SECTION 3.01.              Organization; Powers..................................................
SECTION 3.02.              Authorization; Enforceability.........................................
SECTION 3.03.              Governmental Approvals; No Conflicts   ...............................
SECTION 3.04.              Financial Condition; No Material Adverse Change.......................
SECTION 3.05.              Properties............................................................
SECTION 3.06.              Litigation and Environmental Matters   ...............................
SECTION 3.07.              Compliance with Laws and Agreements...................................
SECTION 3.08.              Investment and Holding Company Status   ..............................
SECTION 3.09.              Taxes.................................................................
SECTION 3.10.              ERISA.................................................................
SECTION 3.11.              Disclosure............................................................
SECTION 3.12.              Subsidiaries..........................................................
SECTION 3.13.              Insurance.............................................................
SECTION 3.14.              Labor Matters.........................................................
SECTION 3.15.              Solvency..............................................................
SECTION 3.16.              Security Documents....................................................

                                                ARTICLE IV

                                                Conditions

SECTION 4.01.              Effective Date........................................................
SECTION 4.02.              Each Credit Event.....................................................

                                                ARTICLE V

                                          Affirmative Covenants

SECTION 5.01.              Financial Statements and Other Information............................
SECTION 5.02.              Notices of Material Events............................................
SECTION 5.03.              Information Regarding Collateral......................................
SECTION 5.04.              Existence; Conduct of Business........................................
SECTION 5.05.              Payment of Obligations................................................
SECTION 5.06.              Maintenance of Properties.............................................
SECTION 5.07.              Insurance.............................................................
SECTION 5.08.              Casualty and Condemnation.............................................
SECTION 5.09.              Books and Records, Inspection and Audit Rights........................
SECTION 5.10.              Compliance with Laws..................................................
SECTION 5.11.              Use of Proceeds and Letters of Credit   ..............................
SECTION 5.12.              Additional Subsidiaries...............................................
SECTION 5.13.              Further Assurances....................................................
SECTION 5.14.              Lien Waiver Agreements; Leaseholds....................................
</TABLE>

                                       ii
<PAGE>

                                                ARTICLE VI

                                            Negative Covenants
<TABLE>
<S>                        <C>
SECTION 6.01.              Indebtedness; Certain Equity Securities...............................
SECTION 6.02.              Liens.................................................................
SECTION 6.03.              Fundamental Changes...................................................
SECTION 6.04.              Investments, Loans, Advances, Guarantees and
                               Acquisitions......................................................
SECTION 6.05.              Asset Sales...........................................................
SECTION 6.06.              Hedging Agreements....................................................
SECTION 6.07.              Restricted Payments; Certain Payments of Indebtedness.................
SECTION 6.08.              Transactions with Affiliates..........................................
SECTION 6.09.              Restrictive Agreements................................................
SECTION 6.10.              Amendment of Material Documents.......................................
SECTION 6.11.              Sale and Lease-Back Transactions......................................
SECTION 6.12.              Capital Expenditures..................................................
SECTION 6.13.              Leverage Ratio........................................................
SECTION 6.14.              Coverage Ratio........................................................

                                               ARTICLE VII

Events of Default................................................................................

                                               ARTICLE VIII

The Administrative Agent.........................................................................

                                                ARTICLE IX

                                              Miscellaneous

SECTION 9.01.              Notices...............................................................
SECTION 9.02.               Waivers; Amendments..................................................

SECTION 9.03.               Expenses; Indemnity; Damage Waiver....................................
SECTION 9.04.               Successors and Assigns................................................
SECTION 9.05.               Survival..............................................................
SECTION 9.06.               Counterparts; Integration; Effectiveness..............................
SECTION 9.07.               Severability..........................................................
SECTION 9.08.               Right of Setoff.......................................................
SECTION 9.09.               Governing Law; Jurisdiction; Consent to Service of
                                Process...........................................................
SECTION 9.10.               WAIVER OF JURY TRIAL..................................................
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                         <C>
SECTION 9.11.               Headings..............................................................
SECTION 9.12.               Confidentiality.......................................................
SECTION 9.13.               Interest Rate Limitation..............................................

SCHEDULES:

Schedule 2.01              --  Commitments
Schedule 3.05              --  Properties
Schedule 3.06              --  Disclosed Matters
Schedule 3.12              --  Subsidiaries
Schedule 3.13              --  Insurance
Schedule 6.01              --  Existing Indebtedness
Schedule 6.02              --  Existing Liens
Schedule 6.04              --  Existing Investments
Schedule 6.08              --  Affiliate Transactions
Schedule 6.09              --  Existing Restrictions

EXHIBITS:

Exhibit A         --       Form of Assignment and Acceptance
Exhibit B-1-      --       Form of Opinion of O'Melveny & Myers LLP
Exhibit B-2-      --       Form of Opinion of Ice Miller
Exhibit B-3-      --       Form of  Opinion of Kummer Kaempfer Bonner & Renshaw
Exhibit C         --       Form of Borrowing Base Certificate
Exhibit D         --       Form of Indemnity, Subrogation and          Contribution Agreement
Exhibit E         --       Form of Subsidiary Guarantee Agreement
Exhibit F         --       Form of Pledge Agreement
Exhibit G         --       Form of Security Agreement
</TABLE>

                                       iv
<PAGE>

                                    CREDIT AGREEMENT dated as May 3, 2001, among
                           GALYAN'S TRADING COMPANY, INC.,  the LENDERS party
                           hereto, and THE CHASE MANHATTAN BANK, as
                           Administrative Agent.

                  The parties hereto agree as follows:

                                    ARTICLE I

                                   Definitions

                  SECTION 1.01.  Defined Terms.  As used in this Agreement, the
following terms have the meanings specified below:

                  "ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.

                  "Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.

                  "Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.

                  "Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.

                  "Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.

                  "Alternate Base Rate" means, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.

                  "Ancillary Agreement" means the Modification Agreement dated
August 31, 1999, among the Borrower, the Fund and TLI.

                  "Applicable Margin" means, for any day with respect to any ABR
Loan or Eurodollar Loan, the applicable rate per annum set forth below under the
caption "ABR Margin" or "Eurodollar Margin", as the case may be, based upon the
Leverage Ratio as of the most recent determination date:
<PAGE>

<TABLE>
<CAPTION>
                       Leverage
                       Ratio                                     Eurodollar Margin        ABR Margin
<S>                    <C>                                       <C>                     <C>
Category 1             greater than or equal to 3.50x            2.75%                    1.75%
Category 2             greater than 2.25x less than 3.50x        2.50%                    1.50%
Category 3             less than or equal to 2.25x               2.25%                    1.25%
</TABLE>

                  For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (ii) each change in the Applicable Margin
resulting from a change in the Leverage Ratio shall be effective during the
period commencing on and including the date of delivery to the Administrative
Agent of such consolidated financial statements indicating such change and
ending on the date immediately preceding the effective date of the next such
change; provided that the Leverage Ratio shall be deemed to be in Category 1 (A)
at any time that an Event of Default has occurred and is continuing or (B) at
the option of the Administrative Agent or at the request of the Required Lenders
if the Borrower fails to deliver the consolidated financial statements required
to be delivered by it pursuant to Section 5.01(a) or (b) within five Business
Days after the date due, during the period from the expiration of the time for
delivery thereof until such consolidated financial statements are delivered, it
being understood that in the event such financial statements indicate an
increase in the Applicable Margin, such increase shall be retroactive to the
date that such increase would have occurred if such financial statements had
been delivered within the time periods set forth in Section 5.01(a) or (b), as
applicable.

                  "Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.

                  "Arranger" means J.P. Morgan Securities, Inc.

                  "Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such

                                       2
<PAGE>

annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.

                  "Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.

                  "Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.

                  "Average Funded Debt" means, on any date, an amount equal to
the sum of (a) the aggregate principal amount of Indebtedness of the Borrower
and its Subsidiaries outstanding as of such date, in the amount that would be
reflected on a balance sheet prepared as of such date on a consolidated basis in
accordance with GAAP (but excluding Indebtedness in respect of the Revolving
Exposures, the Mezzanine Securities and any Replacement Mezzanine Securities),
plus (b) the aggregate principal amount of Indebtedness of the Borrower and its
Subsidiaries outstanding as of such date that is not required to be reflected on
a balance sheet in accordance with GAAP, determined on a consolidated basis (but
excluding, for purposes of this clause (b), contingent obligations as an account
party in respect of any letter of credit or letter of guaranty unless such
letter of credit or letter of guaranty supports an obligation that constitutes
Indebtedness), plus (c) the daily average total Revolving Exposures for the
fiscal quarter ended on such date (or, if such date is not the last date of a
fiscal quarter, then for the fiscal quarter most recently ended); provided that
the daily average total Revolving Exposures for the fiscal quarter in which an
IPO is consummated shall be calculated from the date of consummation of the IPO
through the end of such fiscal quarter.

                  "Base CD Rate" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

                  "Board" means the Board of Governors of the Federal Reserve
System of the United States of America.

                  "Borrower" means Galyan's Trading Company, Inc., an Indiana
corporation.

                  "Borrowing" means (a) Revolving Loans of the same Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect or (b) a Swingline Loan.

                  "Borrowing Base" means, as of any date of determination, the
sum of (a) an amount calculated by reference to the most recently delivered
Borrowing Base Certificate equal to 70% (or, during the period from the
beginning of August through the

                                       3
<PAGE>

end of November in each of the years 2001, 2002 and 2003, 77.5%) of the value
(determined as provided below) of Eligible Inventory, plus (b) the amount, if
any, of cash collateral then on deposit with the Administrative Agent that
constitutes part of the Borrowing Base as provided in Section 2.05(j). For
purposes of determining the Borrowing Base, Eligible Inventory shall be valued
at the lower of cost or market in accordance with GAAP consistently applied. The
Borrowing Base shall be computed as of the end of each fiscal month by the
Borrower and a Borrowing Base Certificate presenting the Borrower's computation
of the Borrowing Base will be delivered to the Administrative Agent promptly,
but in no event later than the 15th day of the following month; provided that
(i) the Borrower may, at its option, deliver a Borrowing Base Certificate at any
time (but not more frequently than once in any week) in order to establish a new
Borrowing Base and (ii) the Administrative Agent may require weekly computation
of the Borrowing Base if the Excess Availability is less than 5% of the
Borrowing Base, in which case the Borrowing Base shall be computed as of the end
of each week and the Borrowing Base Certificate will be delivered to the
Administrative Agent no later than the third Business Day of the following week.
The Borrowing Base at any time in effect shall be determined by reference to the
Borrowing Base Certificate most recently delivered hereunder, absent any error
in such Borrowing Base Certificate. The Administrative Agent or the
Supermajority Lenders may, in their sole discretion, from time to time (a)
decrease the advance rates for the Borrowing Base, (b) establish and revise
reserves reducing the amount of Eligible Inventory and (c) impose additional
eligibility criteria to be applicable to Eligible Inventory (any such action
referred to in clause (a), (b) or (c), a "Borrowing Base Adjustment"); provided
that (i) Borrowing Base Adjustments shall be made only in the event that the
Administrative Agent or the Supermajority Lenders determine (based upon an
evaluation or appraisal referred to in Section 5.09 or other objectively
determinable facts or circumstances) that (A) the number of days of the turnover
of Inventory for any period has adversely changed, (B) the gross margins being
realized upon the sale of Inventory for any period has adversely changed, (C)
the nature, quality or mix of the Inventory has adversely changed, (D) the
Inventory or its value, or the security interests therein granted under the
Security Agreement, are adversely affected by any events, conditions,
contingencies or risks that are not already adequately reflected in the
calculation of the Borrowing Base or (E) the Borrower's calculation of the
Borrowing Base is inaccurate, (ii) each Borrowing Base Adjustment shall bear a
reasonable relationship to the event, condition or circumstance that is the
basis therefor and (iii) each Borrowing Base Adjustment shall not be effective
until the first fiscal month-end computation that occurs at least 10 days after
delivery of notice of such Borrowing Base Adjustment to the Borrower.

                  "Borrowing Base Adjustment" has the meaning assigned to such
term in the definition of "Borrowing Base".

                  "Borrowing Base Certificate" means a certificate in the form
of Exhibit C (revised to reflect any Borrowing Base Adjustments) or any other
form approved by the Borrower and the Administrative Agent, together with all
attachments contemplated thereby.

                                       4
<PAGE>

                  "Borrowing Request" means a request by the Borrower for a
Revolving Borrowing in accordance with Section 2.03.

                  "Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City or the State of Indiana are
authorized or required by law to remain closed; provided that, when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market.

                  "Capital Expenditures" means, for any period, (a) the
additions to property, plant and equipment and other capital expenditures of the
Borrower and its consolidated Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Borrower for such period prepared in
accordance with GAAP and (b) without duplication, Capital Lease Obligations
incurred by the Borrower and its consolidated Subsidiaries during such period.

                  "Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

                  "Cash Concentration Account" means the "Cash Concentration
Account", as defined in the Security Agreement.

                  "Change in Control" means at any time, (a) prior to an IPO,
the failure by the Control Group to collectively own, directly or indirectly,
beneficially and of record, shares representing at least 50.10% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
the Borrower, (b) the failure by FS&C and its Affiliates to collectively own,
directly or indirectly, beneficially and of record, shares representing a
greater percentage of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Borrower than that owned by any
other member of the Control Group and such member's Affiliates; (c) after an
IPO, any Person or group (within the meaning of Rule 13d-5 under the United
States Securities and Exchange Act of 1934 as in effect on the date hereof),
other than the Control Group, shall beneficially own, directly or indirectly,
shares of capital stock of the Borrower representing a percentage of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Borrower that exceeds the greater of (i) the percentage
thereof represented by shares owned by FS&C and its Affiliates and (ii) 20%; (d)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who are not Continuing Directors; or (e)
while any of the Mezzanine Securities or Replacement Mezzanine Securities are
outstanding, a "Change of Control" (as defined in the Mezzanine Securities
Documents), or any analogous event provided for in the Replacement Mezzanine
Securities Documents, shall have occurred;

                                       5
<PAGE>

provided that, after an IPO, any shares of capital stock held by TLI and its
Affiliates that are issued pursuant to the exercise of the existing warrants
held by TLI on the Effective Date shall be disregarded for purposes of clause
(b) above if and so long as the number of directors on the board of directors of
the Borrower who are Affiliates of FS&C or employees, officers or directors of
FS&C and their Affiliates exceeds the number of such directors who are
Affiliates of TLI or employees, officers or directors of TLI and their
Affiliates.

                  "Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
any Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of
such Lender or by such Lender's or such Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.

                  "Code" means the Internal Revenue Code of 1986, as amended
from time to time.

                  "Collateral" means any and all "Collateral", as defined in any
applicable Security Document.

                  "Collateral Agent" means the "Collateral Agent", as defined in
any applicable Security Document.

                  "Commitment" means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to acquire participations
in Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such Commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Commitment, as
applicable. The initial aggregate amount of the Lenders' Commitments is
$160,000,000.

                  "Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period (adjusted to exclude any gains or losses realized during
such period that are attributable to sales or other dispositions of any material
assets outside the ordinary course of business), plus, without duplication and
to the extent deducted from revenues in determining Consolidated Net Income for
such period, the sum of (a) Consolidated Interest Expense for such period, (b)
the aggregate amount of letter of credit fees accrued during such period, (c)
the aggregate amount of income tax expense for such period, (d) all depreciation
and amortization expense for such period, (e) any non-cash charges

                                       6
<PAGE>

for such period, (f) all fees referred to in Section 2.11 payable to the
Administrative Agent and the Lenders during such period and (g) all
non-recurring fees and expenses payable by the Borrower during such period that
are attributable to the Transactions (including any such non-recurring fees and
expenses attributable to any resale of the Mezzanine Securities by the initial
purchasers thereof or any issuance of Replacement Mezzanine Securities), and
minus, without duplication and to the extent added to revenues in determining
Consolidated Net Income for such period, any non-cash gains for such period, all
as determined on a consolidated basis with respect to the Borrower and its
Subsidiaries in accordance with GAAP.

                  "Consolidated EBITDAR" means, for any period, Consolidated
EBITDA for such period, plus, without duplication and to the extent deducted
from revenues in determining Consolidated Net Income for such period, the
Consolidated Rent Expense for such period, all as determined on a consolidated
basis with respect to the Borrower and its Subsidiaries in accordance with GAAP.

                  "Consolidated Interest Expense" means, for any period, the
interest expense of the Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, excluding (a) fees
referred to in Section 2.11 (other than fees referred to in Section 2.11(b),
which shall be included) payable to the Administrative Agent and the Lenders
during such period and (b) all non- recurring fees and expenses payable by the
Borrower during such period that are attributable to the Transactions.

                  "Consolidated Net Income" means, for any period, the net
income or loss of the Borrower and its Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income of any Person in which any other Person (other than the
Borrower or any of the Subsidiaries or any director holding qualifying shares in
compliance with applicable law) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Borrower or
any of the Subsidiaries by such Person during such period, and (b) the income
(or loss) of any Person accrued prior to the date it becomes a Subsidiary or is
merged into or consolidated with the Borrower or any of the Subsidiaries or the
date that such Person's assets are acquired by the Borrower or any of the
Subsidiaries; and provided, further, that there shall be excluded any operating
losses attributable to investments pursuant to clause (l) of Section 6.04 in
Persons that are not Subsidiaries.

                  "Consolidated Rent Expense" means, for any period, the rent
expense of the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

                  "Continuing Directors" means the directors of the Borrower on
the Effective Date and each other director if, in each case, such other
director's nomination for election to the board of directors of the Borrower is
recommended by a majority of the

                                       7
<PAGE>

then Continuing Directors or such other director receives the vote of FS&C in
his or her election by the stockholders of the Borrower.

                  "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

                  "Control Group" means FS&C, TLI, Benchmark Capital Partners
IV, L.P., the respective Affiliates of each of the foregoing and management of
the Borrower.

                  "Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.

                  "Disclosed Matters" means the actions, suits and proceedings
and the environmental matters disclosed in Schedule 3.06.

                  "dollars" or "$" refers to lawful money of the United States
of America.

                  "Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).

                  "Eligible Inventory" means, as of any date of determination
(and subject to any Borrowing Base Adjustments), the value determined at the
lower of cost or market on a first-in, first-out basis of all Inventory owned by
the Borrower or any Subsidiary Loan Party and located in the United States of
America, less (without duplication, and only to the extent included in
Inventory): (a) Reserve for Slow-moving Items; (b) reserves for outstanding gift
certificate liabilities and store merchandise credit liabilities; (c) Shrink
Reserve; (d) Reserve for Leasehold Obligations and (e) reserves for any
works-in-process and raw materials. Each of the above referenced reserves or
ineligibles shall be taken from the books and records of the Borrower determined
(subject to any Borrowing Base Adjustments) in a manner consistent with the
Borrower's historical accounting and recordkeeping practices, subject to any
changes in such practices that are approved by the Borrower's independent
accountants (unless the Administrative Agent or the Supermajority Lenders notify
the Borrower of an objection to any such change, in which case such change shall
be disregarded for purposes of determining Eligible Inventory). Notwithstanding
the foregoing, no Inventory shall be "Eligible Inventory" if:

                  (i) such item of Inventory is held on consignment, is owned by
         the Borrower or a Subsidiary Loan Party and has been consigned to other
         Persons, or is located at, or in the possession of, a vendor of the
         Borrower or a Subsidiary Loan Party, or is in transit to or from, or
         held or stored by, third parties (other than the Borrower's or a
         Subsidiary Loan Party's agents or warehouses); or

                                       8
<PAGE>

                  (ii) such item of Inventory includes any profits or transfer
         price additions charged or accrued in connection with transfers of such
         Inventory between the Borrower and its Subsidiaries or among the
         Subsidiaries of the Borrower; provided that such Inventory shall only
         be excluded as Eligible Inventory up to an amount equal to such profits
         and transfer price additions; or

                  (iii) such item of Inventory is comprised of shipping supplies
         and/or packaging (other than prepackaged items), selling or display
         materials; or

                  (iv) the Borrower or a Subsidiary Loan Party shall not have
         good and marketable title as sole owner of such item of Inventory or
         any nonfrivolous claim disputing the title of the Borrower or a
         Subsidiary Loan Party to, or right to possession of or dominion over,
         such item of Inventory shall have been asserted; or

                  (v) such item of Inventory is not located in the United States
         of America; or

                  (vi) such item of Inventory is not subject to a valid and
         perfected, first priority (except for Permitted Encumbrances of the
         type described in clause (b) of the definition of "Permitted
         Encumbrances" that have priority as a matter of law) security interest
         in favor of the Collateral Agent pursuant to the Security Agreement; or

                  (vii) such item of Inventory is subject to any Lien
         whatsoever, other than Permitted Encumbrances and Liens created under
         the Loan Documents; or

                  (viii) (A) Inventory classified on the stock ledger as for
         return to vendors; (B) Inventory held for layaway customers; (C) food
         items; (D) store supplies; or (E) merchandise allocated for
         liquidation; or

                  (ix) such item of Inventory (A) is damaged or not in good
         condition, (B) is an item removed from inventory for the purpose of
         marketing photo-shoots or customer demonstrations which removal shall
         cause such item to be sold at lower than full retail, (C) does not meet
         all material standards imposed by any Governmental Authority having
         regulatory authority over such item of Inventory, its use or sale or
         (D) shall be believed by the Administrative Agent or the Required
         Lenders (using their commercially reasonable judgment) to be a discon
         tinued item or otherwise be not readily usable or salable under the
         customary terms upon which it usually is sold or at prices
         approximating at least the cost thereof (after giving effect to any
         write-downs applicable thereto).

                  "Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way

                                       9
<PAGE>

to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

                  "Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

                  "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.

                  "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

                  "ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

                                       10
<PAGE>

                  "Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

                  "Event of Default" has the meaning assigned to such term in
Article VII.

                  "Excess Availability" means, at any time, the Borrowing Base
then in effect minus the total Revolving Exposures at such time.

                  "Excluded Taxes" means, with respect to the Administrative
Agent, any Lender, any Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income, net profits or gross
receipts by the United States of America (or any State or other political
subdivision thereof or therein), or by the jurisdiction under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable lending office is located, (b)
any branch profits taxes imposed by the United States of America or any similar
tax imposed by any other jurisdiction described in clause (a) above and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.18(b)), any withholding tax that (i) is in effect
and would apply to amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending
office), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.16(a), or (ii) is attributable to
such Foreign Lender's failure to comply with Section 2.16(e).

                  "Existing Letter of Credit" means any "Letter of Credit" as
defined in, and issued under, the Original Credit Agreement and that is
outstanding as of the Effective Date.

                  "Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.

                  "Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Borrower.

                  "Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this

                                       11
<PAGE>

definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.

                  "Foreign Subsidiary" means any Subsidiary that is organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia.

                  "FS&C" means Freeman Spogli & Co., LLC.

                  "Fund" means FS Equity Partners IV, L.P., a limited
partnership controlled by FS&C.

                  "GAAP" means generally accepted accounting principles in the
United States of America.

                  "Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

                  "Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.

                  "Guarantee Agreement" means any Subsidiary Guarantee
Agreement.

                  "Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

                                       12
<PAGE>

                  "Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.

                  "Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA and current accounts payable incurred in the
ordinary course of business, including any such accounts payable arising under
the Services Agreement), (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor. The amount of any Indebtedness described in clause (g) above shall be
limited to the maximum amount payable under the applicable Guarantee of such
Person if such Guarantee contains limitations on the amount payable thereunder.

                  "Indemnified Taxes" means Taxes other than Excluded Taxes.

                  "Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent.

                  "Information Memorandum" means the Confidential Information
Memorandum dated May 2001, relating to the Borrower and the Transactions.

                  "Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.07.

                  "Interest Payment Date" means (a) with respect to any ABR Loan
(other than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to

                                       13
<PAGE>

the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period, and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.

                  "Interest Period" means with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.

                  "Inventory" means (a) as of any date of determination,
"inventory", as defined in the Uniform Commercial Code as in effect in the State
of New York and (b) all finished goods, wares and merchandise, finished or
unfinished parts, components, assemblies held for sale to third party customers
based on stock ledgers or perpetual inventory reports, defined and classified by
the Borrower and its Subsidiaries on a basis consistent with current and
historical accounting practice in accordance with GAAP.

                  "IPO" means the issuance by the Borrower of shares of its
common stock to the public pursuant to a bona fide underwritten public offering,
resulting in the receipt by the Borrower of at least $50,000,000 of gross cash
proceeds.

                  "Issuing Bank" means The Chase Manhattan Bank and each other
Revolving Lender that agrees in writing with the Company to issue Letters of
Credit (provided that notice of such agreement is given to the Administrative
Agent), in each case in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.05(i).
An Issuing Bank may, in its discretion, arrange for one or more Letters of
Credit to be issued by Affiliates of such Issuing Bank reasonably acceptable to
the Borrower, in which case the term "Issuing Bank" shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

                  "LC Disbursement" means a payment made by an Issuing Bank
pursuant to a Letter of Credit.

                  "LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of

                                       14
<PAGE>

all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.

                  "Leasehold Obligations" means all payments with respect to
rent (including fixed rent and percentage rent), common area maintenance charges
and other monetary obligations under any lease of real property (including any
distribution center or store) where any Inventory is stored or located.

                  "Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance or pursuant to Section 9.02(c), other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Acceptance or Section
9.02(c). Unless the context otherwise requires, the term "Lenders" includes the
Swingline Lender.

                  "Letter of Credit" means any letter of credit issued pursuant
to this Agreement.

                  "Leverage Ratio" means, on any date, the ratio of (a) the sum
of (i) the Average Funded Debt as of such date and (ii) solely for the purpose
of the Applicable Margin and not for the purpose of Section 6.13, the aggregate
principal amount of outstanding Mezzanine Securities or Replacement Mezzanine
Securities as of such date to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters of the Borrower ended on such date (or, if such date
is not the last day of a fiscal quarter, ended on the last day of the fiscal
quarter of the Borrower most recently ended prior to such date).

                  "LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Telerate Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

                  "Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such

                                       15
<PAGE>

asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

                  "Lien Risk Inventory" means any Inventory that (a) is in the
possession or control of any warehouseman, bailee, agent or processor (other
than Inventory that is in the possession of a delivery service or similar agent
providing transportation services and is in transit) or (b) is stored or
otherwise located in any distribution center, store or other site that is not
owned by a Loan Party.

                  "Lien Waiver Agreement" means a written agreement satisfying
the requirements of the last sentence of Section 4.08 of the Security Agreement
with respect to any Lien Risk Inventory.

                  "Loan Documents" means this Agreement, the promissory notes,
if any, executed and delivered pursuant to Section 2.09(e), the Guarantee
Agreements, the Indemnity, Subrogation and Contribution Agreement and the
Security Documents.

                  "Loan Parties" means the Borrower and the Subsidiary Loan
Parties.

                  "Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.

                  "Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) the
ability of any Loan Party to perform any of its obligations under any Loan
Document or (c) the ability of the Lenders to enforce any Loan Document.

                  "Material Indebtedness" means Indebtedness (other than the
Loans and Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of any one or more of the Borrower and its Subsidiaries in an
aggregate principal amount exceeding $5,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower
or any Subsidiary in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Borrower or such Subsidiary would be required to pay if such Hedging Agreement
were terminated at such time.

                  "Maturity Date" means May 3, 2004.

                  "Mezzanine Securities" means the subordinated notes and junior
subordinated notes issued by the Borrower on August 31, 1999, in the initial
aggregate principal amount of $50,000,000 (and including additional principal
representing accrued

                                       16
<PAGE>

interest thereon). Whenever reference is made to the proceeds of the issuance of
Mezzanine Securities, such reference shall include the entire amount of equity
equivalents sold as part of such Mezzanine Securities.

                  "Mezzanine Securities Documents" means the Securities Purchase
Agreement dated August 31, 1999, among the Borrower, TLI and the Fund and all
other instruments, agreements and other documents evidencing or governing any
Mezzanine Securities or providing for any Guarantee or other right in respect
thereof.

                  "Moody's" means Moody's Investors Service, Inc.

                  "Mortgage" means a mortgage, deed of trust, assignment of
leases and rents, leasehold mortgage or other security document granting a Lien
on any Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Collateral Agent.

                  "Mortgaged Property" means each parcel of real property and
improve ments thereto with respect to which a Mortgage is granted pursuant to
Section 5.12 or 5.13.

                  "Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA and in respect of which the Borrower or any ERISA
Affiliate is or within the previous six years has been obligated to make
contributions.

                  "Net Cash Proceeds" means, with respect to any event (a) the
cash proceeds received in respect of such event including (i) any cash received
in respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds, and (iii) in the case of a condemnation
or similar event, condemnation awards and similar cash payments, net of (b) the
sum of (i) all commissions, fees and out-of-pocket expenses paid by the Borrower
and its Subsidiaries to third parties (other than Affiliates) in connection with
such event, (ii) in the case of a sale, transfer or other disposition of an
asset (including pursuant to a sale and leaseback transaction or a casualty or
condemnation or similar proceeding), the amount of all payments required to be
made by the Borrower and its Subsidiaries as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event, and (iii) the amount of all
Taxes paid (or reasonably estimated to be payable) by the Borrower and its
Subsidiaries, and the amount of any reserves established by the Borrower and its
Subsidiaries to fund (A) retained liabilities relating to the assets sold or (B)
contingent liabilities reasonably estimated to be payable, in each case during
the year that such event occurred or the next succeeding year and that are
directly attributable to such event (as determined reasonably and in good faith
by the chief financial officer of the Borrower).

                  "Obligations" has the meaning assigned to such term in the
Security Agreement.

                                       17
<PAGE>

                  "Original Credit Agreement" means the Credit Agreement dated
as of August 31, 1999 among Galyan's Trading Company, Inc., the Lenders party
thereto and the Chase Manhattan Bank, as administrative agent.

                  "Other Taxes" means any and all current or future recording,
stamp, documentary, excise, transfer, sales, property or similar taxes, charges
or levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of any Loan Document.

                  "Outside Director" means any director on the Board of
Directors of the Borrower who is not a partner of FS&C or an employee or
director of TLI or any of its subsidiaries.

                  "PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.

                  "Perfection Certificate" means a certificate in the form of
Annex 2 to the Security Agreement or any other form approved by the Collateral
Agent.

                  "Permitted Acquisition" means any acquisition by the Borrower
or a Subsidiary of all or substantially all the assets of, or all the shares of
capital stock of or other equity interests in, a Person or division or line of
business of a Person if, immediately after giving effect thereto, (a) no Default
has occurred and is continuing or would result therefrom, (b) all transactions
related thereto are consummated in accordance with applicable laws, (c) each
Subsidiary formed for the purpose of or resulting from such acquisition shall be
wholly owned directly or indirectly by the Borrower and all actions required to
be taken with respect to such acquired or newly formed Subsidiary under Sections
5.12 and 5.13 have been taken, (d) the Borrower and its Subsidiaries are in
compliance, on a pro forma basis after giving effect to such acquisition
(without giving effect to any anticipated operating expense reductions or other
cost savings, except to the extent that such reductions or cost savings would be
permitted under Regulation S-X of the Securities and Exchange Commission, as in
effect on the date hereof, with respect to pro forma financial statements
prepared in accordance with such Regulation), with the covenants contained in
Sections 6.13 and 6.14 recomputed as of the last day of the most recently ended
fiscal quarter of the Borrower for which financial statements are available, as
if such acquisition (and any related incurrence or repayment of Indebtedness,
with any new Indebtedness being deemed to be amortized over the applicable
testing period in accordance with its terms, and assuming that any Revolving
Loans borrowed in connection with such acquisition are repaid with excess cash
balances when available) had occurred on the first day of each relevant period
for testing such compliance and (e) the Borrower has delivered to the
Administrative Agent an officers' certificate to the effect set forth in clauses
(a), (b), (c) and (d) above, together with all relevant financial information
for the Person or assets to be acquired.

                                       18
<PAGE>

                  "Permitted Encumbrances" means:

                  (a) Liens imposed by law for taxes or government assessments
         that are not yet due or are being contested in compliance with Section
         5.05;

                  (b) statutory Liens of landlords and licensors, statutory
         Liens of banks and carriers', warehousemen's, mechanics',
         materialmen's, repairmen's and other like Liens imposed by law, in each
         case arising in the ordinary course of business and securing
         obligations that are not overdue by more than 30 days or are being
         contested in compliance with Section 5.05;

                  (c) pledges and deposits made in the ordinary course of
         business in compliance with workers' compensation, unemployment
         insurance and other social security laws or regulations;

                  (d) deposits to secure the performance of bids, trade
         contracts, leases, statutory obligations, surety, indemnity and appeal
         bonds, performance bonds and other obligations of a like nature, in
         each case in the ordinary course of business;

                  (e) judgment liens in respect of judgments that do not
         constitute an Event of Default under clause (k) of Article VII;

                  (f) easements, zoning restrictions, rights-of-way and similar
         encumbrances on real property imposed by law or arising in the ordinary
         course of business that do not secure any monetary obligations and do
         not interfere with the ordinary conduct of business of the Borrower or
         any Subsidiary;

                  (g) any (i) interest or title of a lessor or sublessor under
         any lease not prohibited by this Agreement, (ii) restriction or
         encumbrance that the interest or title of such lessor or sublessor may
         be subject to, or (iii) subordination of the interest of the lessee or
         sublessee under such lease to any restriction or encumbrance referred
         to in the preceding clause (iii), so long as the holder of such
         restriction or encumbrance agrees to recognize the rights of such
         lessee or sublessee under such lease;

                  (h) leases or subleases granted to third parties and not
         interfering in any material respect with the ordinary conduct of the
         business of the Borrower or any of its Subsidiaries;

                  (i) Liens arising from filing UCC financing statements
         relating solely to leases not prohibited by this Agreement; provided
         that such Liens encumber only that property subject to the respective
         leases;

                                       19
<PAGE>

                  (j) Liens in favor of customs and revenue authorities arising
         as a matter of law to secure payment of customs duties in connection
         with the importation of goods; and

                  (k) licenses of patents, trademarks and other intellectual
         property rights granted by the Borrower or any of its Subsidiaries in
         the ordinary course of business and not interfering in any material
         respect with the ordinary conduct of the business of the Borrower or
         such Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

                  "Permitted Investments" means:

                  (a) direct obligations of, or obligations the principal of and
         interest on which are unconditionally guaranteed by, the United States
         of America (or by any agency thereof to the extent such obligations are
         backed by the full faith and credit of the United States of America),
         in each case maturing within one year from the date of acquisition
         thereof;

                  (b) investments in commercial paper maturing within 270 days
         from the date of acquisition thereof and having, at such date of
         acquisition, a credit rating of at least A-2 from S&P or P-2 from
         Moody's;

                  (c) investments in certificates of deposit, banker's
         acceptances and time deposits maturing within 180 days from the date of
         acquisition thereof issued or guaranteed by or placed with, and money
         market deposit accounts issued or offered by, any domestic office of
         any commercial bank organized under the laws of the United States of
         America or any State thereof which has a combined capital and surplus
         and undivided profits of not less than $100,000,000;

                  (d) fully collateralized repurchase agreements with a term of
         not more than 30 days for securities described in clause (a) above and
         entered into with a financial institution satisfying the criteria
         described in clause (c) above; and

                  (e) investments in money market or mutual funds substantially
         all the assets of which are comprised of securities of the types
         described in any of clauses (a) through (d) above.

                  "Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.

                  "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the

                                       20
<PAGE>

Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

                  "Pledge Agreement" means the Pledge Agreement, substantially
in the form of Exhibit F, among the Borrower, the Subsidiaries party thereto and
the Collateral Agent for the benefit of the Secured Parties.

                  "Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.

                  "Register" has the meaning set forth in Section 9.04.

                  "Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.

                  "Replacement Mezzanine Securities" means any subordinated debt
securities or preferred stock issued by the Borrower to refinance Mezzanine
Securities in accordance with this Agreement. Whenever reference is made to the
application of proceeds of the issuance of Replacement Mezzanine Securities,
such reference shall include the entire amount of equity equivalents sold as
part of such Replacement Mezzanine Securities.

                  "Replacement Mezzanine Securities Documents" means any
agreement providing for the purchase from the Borrower of any Replacement
Mezzanine Securities and all other instruments, agreements and other documents
evidencing or governing any Replacement Mezzanine Securities or providing for
any Guarantee or other right in respect thereof.

                  "Required Lenders" means, at any time, Lenders having
Revolving Exposures and unused Commitments representing more than 50% of the
total Revolving Exposures and unused Commitments at such time.

                  "Reserve for Leasehold Obligations" means, at any date of
determination, the aggregate amount of Leasehold Obligations that are in arrears
(other than Leasehold Obligations in respect of leases as to which the
Collateral Agent has received a Lien Waiver Agreement).

                  "Reserve for Slow-moving Items" means, as at any date of
determination (subject to any Borrowing Base Adjustments referred to in the
definition of "Borrowing Base"), the sum of (a) 50% of seasonal "carryover
inventory" and (b) 10% of inventory aged as greater than or equal to "180 days
from receipt date". Each of the terms

                                       21
<PAGE>

employed in clauses (a) and (b) are considered to be terms customarily used by
the Borrower and shall be taken from the books and records of the Borrower
determined in a manner consistent with the Borrower's historical accounting and
recordkeeping practices.

                  "Restricted Payment" means (a) any dividend or other
distribution (whether in cash, securities or other property) with respect to any
Equity Interests in the Borrower or any Subsidiary or (b) any payment (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancelation or termination of any Equity Interests in the Borrower or any
Subsidiary or any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any Subsidiary.

                  "Revolving Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure and Swingline Exposure at such time.

                  "Revolving Loan" means a Loan made pursuant to Section 2.01.

                  "S&P" means Standard & Poor's.

                  "Secured Parties" shall have the meaning assigned to such term
in the Security Agreement.

                  "Security Agreement" means the Security Agreement,
substantially in the form of Exhibit G, among the Borrower, the Subsidiary Loan
Parties and the Collateral Agent for the benefit of the Secured Parties.

                  "Security Documents" means the Security Agreement, the Pledge
Agreement, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.

                  "Services Agreement" means the Services Agreement dated as of
August 31, 1999 between the Borrower and TLI.

                  "Shrink Reserve" means, as at any date of determination, the
mathematical average of the shrink results from the most recent two physical
inventories performed during comparable seasonal periods, expressed as a
percentage of sales, multiplied by sales for the relevant year-to-date period
and adjusted for the cost complement for the relevant year-to-date period, all
determined in accordance with the calculations set forth in the form of
Borrowing Base Certificate.

                  "Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal,

                                       22
<PAGE>

special, emergency or supplemental reserves) expressed as a decimal established
by the Board to which the Administrative Agent is subject (a) with respect to
the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of
over $100,000 with maturities approximately equal to three months and (b) with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

                  "subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.

                  "Subsidiary" means any subsidiary of the Borrower.

                  "Subsidiary Guarantee Agreement" means each Subsidiary
Guarantee Agreement, substantially in the form of Exhibit E, made by a
Subsidiary Loan Party in favor of the Administrative Agent for the benefit of
the Secured Parties.

                  "Subsidiary Loan Party" means any Subsidiary other than any
Foreign Subsidiary.

                  "Supermajority Lenders" means, at any time, Lenders having
66-2/3% or more of the total Revolving Exposures and unused Commitments at such
time.

                  "Swingline Exposure" means, at any time, the aggregate
principal amount of all Swingline Loans outstanding at such time. The Swingline
Exposure of any Lender at any time shall be its Applicable Percentage of the
total Swingline Exposure at such time.

                  "Swingline Lender" means The Chase Manhattan Bank, in its
capacity as lender of Swingline Loans hereunder.

                  "Swingline Loan" means a Loan made pursuant to Section 2.04.

                                       23
<PAGE>

                  "Syndication Agent" means Goldman Sachs Credit Partners L.P.

                  "Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings imposed by any taxing authority.

                  "Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.

                  "TLI" means The Limited, Inc., a Delaware corporation.

                  "TLI Entities" means TLI and its Affiliates, other than the
Borrower and its Subsidiaries.

                  "Transaction Agreement" means the Transaction Agreement dated
as of May 3, 1999, among the Fund, TLI and the Borrower.

                  "Transactions" means the execution, delivery and performance
by each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.

                  "Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.

                  "Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.

                  SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Type (e.g., a "Eurodollar Revolving Borrowing").

                  SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context

                                       24
<PAGE>

may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

                  SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

                                   ARTICLE II

                                   The Credits

                  SECTION 2.01. Commitments. Subject to the terms and conditions
set forth herein, each Lender agrees to make Revolving Loans to the Borrower
from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) such Lender's Revolving Exposure exceeding
such Lender's Commitment or (b) the total Revolving Exposures exceeding the sum
of the Borrowing Base then in effect. Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans.

                  SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan
shall be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders

                                       25
<PAGE>

ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.

                  (b) Subject to Section 2.13, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at
its option may make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan; provided that any exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.

                  (c) At the commencement of each Interest Period for any
Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than $1,000,000. At the
time that each ABR Revolving Borrowing is made, such Borrowing shall be in an
aggregate amount that is an integral multiple of $500,000 and not less than
$1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral
multiple of $50,000 and not less than $100,000. Borrowings of more than one Type
may be outstanding at the same time; provided that there shall not at any time
be more than a total of twelve Eurodollar Borrowings outstanding.

                  (d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Eurodollar Revolving Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date.

                  SECTION 2.03. Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Borrowing to finance the
reimbursement of an LC Disbursement as contem plated by Section 2.05(e) may be
given not later than 11:00 a.m., New York City time, on the date of the proposed
Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall
be confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Borrowing Request in a form approved by the

                                       26
<PAGE>

Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:

                  (i) the aggregate amount of the requested Borrowing;

                  (ii) the date of such Borrowing, which shall be a Business
         Day;

                  (iii) whether such Borrowing is to be an ABR Borrowing or a
         Eurodollar Borrowing;

                  (iv) in the case of a Eurodollar Borrowing, the initial
         Interest Period to be applicable thereto, which shall be a period
         contemplated by the definition of the term "Interest Period"; and

                  (vi) the location and number of the Borrower's account to
         which funds are to be disbursed, which shall comply with the
         requirements of Section 2.06.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.

                  SECTION 2.04. Swingline Loans. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
to the Borrower from time to time during the Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans exceeding
$10,000,000, (ii) the total Revolving Exposures exceeding the total Commitments
or (iii) the total Revolving Exposures exceeding the Borrowing Base then in
effect; provided that the Swingline Lender shall not be required to make a
Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Swingline Loans.

                  (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline

                                       27
<PAGE>

Lender (or, in the case of a Swingline Loan made to finance the reimbursement of
an LC Disbursement as provided in Section 2.05(e), by remittance to the relevant
Issuing Bank) by 1:00 p.m., New York City time, on the requested date of such
Swingline Loan.

                  (c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will
give notice thereof to each Lender, specifying in such notice such Lender's
Applicable Percentage of such Swingline Loan or Loans. Each Lender hereby
absolutely and unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent, for the account of the Swingline Lender,
such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as
provided in Section 2.06 with respect to Loans made by such Lender (and Section
2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. The Administrative Agent shall
notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Lenders that shall have made their payments pursuant to this paragraph and
to the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.

                  SECTION 2.05. Letters of Credit. (a) General. Subject to the
terms and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the relevant Issuing Bank, at any time and from time to
time during the Availability Period. In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, an Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.

                                       28
<PAGE>

As of the Effective Date, each Existing Letter of Credit shall be deemed to
constitute a Letter of Credit hereunder, as though issued hereunder on the
Effective Date.

                  (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the relevant Issuing Bank) to
the relevant Issuing Bank and the Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by the
relevant Issuing Bank, the Borrower also shall submit a letter of credit
application on such Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension, (i) the
LC Exposure shall not exceed $15,000,000, (ii) the total Revolving Exposures
shall not exceed the total Commitments and (iii) the total Revolving Exposures
shall not exceed the Borrowing Base then in effect.

                  (c) Expiration Date. Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year after the
date of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date; provided that clause (i)
shall not prohibit the issuance of a Letter of Credit that by its terms may be
automatically extended (unless an Issuing Bank elects not to extend) for
successive one-year periods (which in no event shall extend beyond the date
referred to in clause (ii)).

                  (d) Participations. By the issuance of a Letter of Credit (or
an amendment to a Letter of Credit increasing the amount thereof) and without
any further action on the part of the relevant Issuing Bank or the Lenders, an
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of such Issuing Bank, such Lender's
Applicable Percentage of each LC Disbursement made by such Issuing Bank and not
reimbursed by the Borrower on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each

                                       29
<PAGE>

Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.

                  (e) Reimbursement. If an Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 2:00 p.m., New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 2:00 p.m., New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of the receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than the applicable minimum Borrowing amount
set forth in Section 2.02(c), the Borrower may, subject to the conditions to
borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that
such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an
equivalent amount and, to the extent so financed, the Borrower's obligation to
make such payment shall be discharged and replaced by the resulting ABR
Revolving Borrowing or Swingline Loan. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender's Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.06 with respect to Loans made by such Lender
(and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the relevant
Issuing Bank the amounts so received by it from the Lenders. Promptly following
receipt by the Administrative Agent of any payment from the Borrower pursuant to
this paragraph, the Administrative Agent shall distribute such payment to such
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse an Issuing Bank for any LC Disbursement (other than
the funding of ABR Revolving Loans or a Swingline Loan as contemplated above)
shall not constitute a Loan and shall not relieve the Borrower of its obligation
to reimburse such LC Disbursement.

                  (f) Obligations Absolute. The Borrower's obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall be
absolute, uncon-

                                       30
<PAGE>

ditional and irrevocable, and shall be performed strictly in accordance with the
terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
relevant Issuing Bank; provided that the foregoing shall not be construed to
excuse the relevant Issuing Bank from liability to the Borrower to the extent of
any direct damages (as opposed to consequential damages, claims in respect of
which are hereby waived by the Borrower to the extent permitted by applicable
law) suffered by the Borrower that are caused by such Issuing Bank's failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence or wilful misconduct on
the part of the relevant Issuing Bank (as finally determined by a court of
competent jurisdiction), such Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the relevant Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

                  (g) Disbursement Procedures. The relevant Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. Such relevant Issuing
Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Lenders with
respect to any such LC Disbursement.

                                       31
<PAGE>

                  (h) Interim Interest. If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
relevant Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to paragraph (e) of this Section to reimburse an
Issuing Bank shall be for the account of such Lender to the extent of such
payment.

                  (i) Replacement of an Issuing Bank. An Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of an
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of an Issuing Bank under this Agreement with respect to Letters
of Credit to be issued thereafter and (ii) references herein to the term
"Issuing Bank" shall be deemed to refer to such successor or to any previous
Issuing Bank, or to such successor and all previous Issuing Banks, as the
context shall require. After the replacement of an Issuing Bank hereunder, the
replaced Issuing Bank shall remain a party hereto and shall continue to have all
the rights and obligations of an Issuing Bank under this Agreement with respect
to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.

                  (j) Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that the Borrower receives notice
from the Administrative Agent or the Required Lenders demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to 105% of the LC
Exposure as of such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (h) or (i) of Article VII. The
Borrower also shall deposit cash collateral pursuant to this paragraph as and to
the extent required by Section 2.10(b), and any such cash collateral so
deposited and held by the Administrative Agent hereunder shall constitute part
of the Borrowing Base for purposes of determining compliance with this
Agreement. Each such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive

                                       32
<PAGE>

right of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Administrative Agent but for the Borrower's account and
at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse an Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Borrower for the LC Exposure at such
time or, if the maturity of the Loans has been accelerated (but subject to the
consent of the Required Lenders), be applied to satisfy other Obligations. If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived. If the Borrower is
required to provide an amount of cash collateral hereunder pursuant to Section
2.10(b), such amount (to the extent not applied as aforesaid) shall be promptly
returned to the Borrower as and to the extent that, after giving effect to such
return, the Borrower would remain in compliance with Section 2.10(b) and no
Default shall have occurred and be continuing.

                  SECTION 2.06. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders; provided that Swingline Loans shall be made as
provided in Section 2.04. The Administrative Agent will make such Loans
available to the Borrower by promptly (but in no event later than 1:00 p.m., New
York City time) crediting the amounts so received, in like funds, to an account
of the Borrower designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the applicable Issuing Bank.

                  (b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to

                                       33
<PAGE>

ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing.

                  SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have an initial Interest
Period as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. This Section shall not apply to
Swingline Borrowings, which may not be converted or continued.

                  (b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Revolving Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

                  (c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:

                  (i) the Borrowing to which such Interest Election Request
         applies and, if different options are being elected with respect to
         different portions thereof, the portions thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses (iii) and (iv) below shall be specified for each
         resulting Borrowing);

                  (ii) the effective date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;

                  (iii) whether the resulting Borrowing is to be an ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest Period to be applicable thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

                                       34
<PAGE>

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.

                  (d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.

                  (e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.

                  SECTION 2.08. Termination and Reduction of Commitments. (a)
Unless previously terminated, the Commitments shall terminate on the Maturity
Date.

                  (b) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $1,000,000 and
not less than $1,000,000 and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of Loans in
accordance with this Agreement, the sum of the Revolving Exposures would exceed
the total Commitments.

                  (c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Except as provided in paragraph (d) below, each reduction of
the Commitments shall be made ratably among the Lenders in accordance with their
respective Commitments.

                  (d) In the event the Borrower is entitled to replace a
non-consenting Lender pursuant to Section 9.02(c), the Borrower shall have the
right, upon five Business

                                       35
<PAGE>

Days' written notice to the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), to
terminate the entire Commitment of such Lender, so long as (i) all Loans,
together with accrued and unpaid interest, fees and other amounts owing to such
Lender are repaid pursuant to Section 2.10(f) concurrently with the
effectiveness of such termination and (ii) the consents required by Section
9.02(c) in connection with the prepayment shall have been obtained, and at such
time, such Lender shall no longer constitute a "Lender" for purposes of this
Agreement, except with respect to Sections 2.14, 2.15, 2.16 and 9.03 (other than
Section 9.03(c)) of this Agreement, which shall survive as to such Lender.

                  SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Maturity Date and (ii) to the Swingline
Lender the then unpaid principal amount of each Swingline Loan on the earlier of
the Maturity Date and the first date after such Swingline Loan is made that is
the 15th or last day of a calendar month and is at least two Business Days after
such Swingline Loan is made; provided that on each date that a Revolving
Borrowing is made, the Borrower shall repay all Swingline Loans that were
outstanding on the date that such Borrowing was requested.

                  (b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.

                  (c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.

                  (d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

                  (e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns) and
in a form approved by the Administrative Agent. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be

                                       36
<PAGE>

represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

                  SECTION 2.10. Prepayment of Loans. (a) The Borrower shall have
the right at any time and from time to time to prepay any Borrowing in whole or
in part, subject to the requirements of this Section.

                  (b) In the event and on each occasion that the total Revolving
Exposures exceeds the Borrowing Base then in effect, the Borrower shall prepay
Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are
outstanding, deposit cash collateral in an account with the Administrative Agent
pursuant to Section 2.05(j)) in an aggregate amount equal to such excess.
Notwithstanding the foregoing provisions of this paragraph, if at any time the
Borrower is required to make a prepayment under this paragraph the Borrower
would incur breakage costs under Section 2.15 as a result of Eurodollar Loans
being prepaid other than on the last day of an Interest Period applicable
thereto (the "Affected Eurodollar Loans"), and provided that no Default has
occurred and is continuing at the time, then the Borrower may in its sole
discretion initially deposit a portion (up to 100%) of the amounts that
otherwise would have been paid in respect of the Affected Eurodollar Loans with
the Administrative Agent (which deposit must be equal in amount to the amount of
the Affected Eurodollar Loans not immediately prepaid) to be held as security
for the obligations of the Borrower hereunder pursuant to a cash collateral
agreement to be entered into in form and substance reasonably satisfactory to
the Administrative Agent and shall provide for investments in Permitted
Investments satisfactory to the Administrative Agent and the Borrower, with such
cash collateral to be directly applied upon the first occurrence (or
occurrences) thereafter of the last day of an Interest Period applicable to the
relevant Loans that are Eurodollar Loans (or such earlier date or dates as shall
be requested by the Borrower), to repay an aggregate principal amount of such
Loans equal to the Affected Eurodollar Loans not initially prepaid pursuant to
this sentence. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, all amounts deposited as cash collateral
pursuant to the immediately preceding sentence shall be held for the sole
benefit of the Lenders whose Loans would otherwise have been immediately prepaid
with the amounts deposited and may be applied to the prepayment of such Loans
immediately if an Event of Default has occurred and is continuing.

                  (c) In the event that an IPO occurs within six months after
the Effective Date, the Borrower shall apply the Net Cash Proceeds therefrom
(minus the amount of such Net Cash Proceeds applied to redeem Mezzanine
Securities) to the prepayment of the Revolving Borrowings and Swingline
Borrowings (but the reduction of the Commitments will not be required).

                  (d) Prior to any optional or mandatory prepayment of
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be prepaid and shall

                                       37
<PAGE>

specify such selection in the notice of such prepayment pursuant to paragraph
(e) of this Section.

                   (e) The Borrower shall notify the Administrative Agent (and,
in the case of prepayment of a Swingline Loan, the Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before the date of prepayment, (ii) in the
case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New
York City time, one Business Day before the date of prepayment or (iii) in the
case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City
time, on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of optional prepayment
is given in connection with a conditional notice of termination of the
Commitments as contemplated by Section 2.08, then such notice of prepayment may
be revoked if such notice of termination is revoked in accordance with Section
2.08. Promptly following receipt of any such notice (other than a notice
relating solely to Swingline Loans), the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that would be permitted in the case of an advance of a Borrowing
of the same Type as provided in Section 2.02. Each prepayment of a Borrowing
shall be applied ratably to the Loans included in the prepaid Borrowing.
Prepayments shall be accompanied by accrued interest to the extent required by
Section 2.12.

                  (f) In the event the Borrower is entitled to replace a
non-consenting Lender pursuant to Section 9.02(c), the Borrower shall have the
right, upon five Business Days' prior written notice to the Administrative Agent
(which notice the Administrative Agent shall promptly transmit to each of the
Lenders), to prepay all Loans, together with accrued and unpaid interest, fees
and other amounts, owing to such Lender in accordance with Section 9.02(c) so
long as (i) in the case of the prepayment of the Loans of any Lender pursuant to
this Section 2.10(f), the Commitment of such Lender is terminated concurrently
with such prepayment pursuant to Section 2.08(d), and (ii) in the case of the
prepayment of the Loans of any Lender, the consents required by Section 9.02(c)
in connection with the prepayment pursuant to this Section 2.10(f) shall have
been obtained, and at such time, such Lender shall no longer constitute a
"Lender" for purposes of this Agreement, except with respect to Sections 2.14,
2.15, 2.16 and 9.03 (other than Section 9.03(c)) of this Agreement, which shall
survive as to such Lender.

                  SECTION 2.11. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the rate of 1/2 of 1% per annum on the average daily unused
amount of the Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment terminates.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the date on which the
Commitments terminate, commencing on the

                                       38
<PAGE>

first such date to occur after the date hereof. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). For
purposes of computing commitment fees, a Commitment of a Lender shall be deemed
to be used to the extent of the outstanding Revolving Loans and LC Exposure of
such Lender (and the Swingline Exposure of such Lender shall be disregarded for
such purpose).

                  (b) The Borrower agrees to pay (i) to the Administrative Agent
for the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same rate per
annum as the Applicable Margin with respect to Eurodollar Borrowings on the
average daily amount of such Lender's LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender's Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall
accrue at the rate of 1/4 of 1% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
which the Commitments terminate and any such fees accruing after the date on
which the Commit ments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

                  (c) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.

                  (d) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Absent
manifest error in the calculation thereof, fees paid shall not be refundable
under any circumstances.

                  SECTION 2.12. Interest. (a) The Loans comprising each ABR
Borrowing (including each Swingline Loan) shall bear interest at the Alternate
Base Rate plus the Applicable Margin per annum.

                                       39
<PAGE>

                  (b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin per annum.

                  (c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this
Section.

                  (d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (c) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

                  (e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

                  SECTION 2.13. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

                  (a) the Administrative Agent determines (which determination
         shall be conclusive absent manifest error) that adequate and reasonable
         means do not exist for ascertaining the Adjusted LIBO Rate for such
         Interest Period; or

                  (b) the Administrative Agent is advised by the Required
         Lenders that the Adjusted LIBO Rate for such Interest Period will not
         adequately and fairly reflect the cost to such Lenders of making or
         maintaining their Loans included in such Borrowing for such Interest
         Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administra-

                                       40
<PAGE>

tive Agent notifies the Borrower and the Lenders that the circumstances giving
rise to such notice no longer exist, (i) any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.

                  SECTION 2.14. Increased Costs. (a) If any Change in Law shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit or similar requirement against assets of, deposits with or for
         the account of, or credit extended by, any Lender (except any such
         reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing
         Bank; or

                  (ii) impose on any Lender or any Issuing Bank or the London
         interbank market any other condition affecting this Agreement or
         Eurodollar Loans made by such Lender or any Letter of Credit or
         participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or such
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.

                  (b) If any Lender or any Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or such Issuing Bank's capital or
on the capital of such Lender's or such Issuing Bank's holding company, if any,
as a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender or such Issuing Bank or
such Lender's or such Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or such Issuing
Bank's policies and the policies of such Lender's or an Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing Bank
or such Lender's or such Issuing Bank's holding company for any such reduction
suffered.

                  (c) A certificate of a Lender or an Issuing Bank setting forth
the amount or amounts necessary to compensate such Lender or such Issuing Bank
or its holding company, as the case may be, as specified in paragraph (a) or (b)
of this Section shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower

                                       41
<PAGE>

shall pay such Lender or such Issuing Bank, as the case may be, the amount shown
as due on any such certificate within 10 days after receipt thereof.

                  (d) Failure or delay on the part of any Lender or any Issuing
Bank to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or such Issuing Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate a
Lender or an Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender or
such Issuing Bank, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender's or
such Issuing Bank's intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

                  SECTION 2.15. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.10(e) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.18, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section, shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.

                  SECTION 2.16. Taxes. (a) Any and all payments by or on account
of any obligation of the Borrower hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other

                                       42
<PAGE>

Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.

                  (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

                  (c) The Borrower shall indemnify the Administrative Agent,
each Lender and such Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or such Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or an Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or an Issuing
Bank, shall be conclusive absent manifest error.

                  (d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

                  (e) Any Lender that is entitled to an exemption from or
reduction of the deduction, withholding or payment of an Indemnified Tax or
Other Tax under the law of the United States or the jurisdiction in which the
Borrower is located (or any political subdivision thereof), or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate.

                  (f) If the Administrative Agent or a Lender determines in good
faith, but in its sole discretion, that it has received a refund (or a reduction
in Taxes attributable to foreign tax credits) in respect of any Indemnified
Taxes or Other Taxes as to which it has

                                       43
<PAGE>

been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.16, it shall pay over such refund
to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.16 with respect to
the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund or reduction in Taxes); provided, however, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
Nothing contained in this Section 2.16(f) shall require the Administrative Agent
or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.

                  SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing
of Set- offs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.14,
2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to an Issuing Bank or Swing
line Lender as expressly provided herein and except that payments pursuant to
Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
dollars.

                  (b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disburse ments, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.

                                       44
<PAGE>

                  (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in LC Disbursements or
Swingline Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Revolving Loans and participations in
LC Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans and participations in LC Disbursements and Swingline Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
participations in LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set- off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

                  (d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or an Issuing Bank hereunder
that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
Issuing Bank, as the case may be, the amount due. In such event, if the Borrower
has not in fact made such payment, then each of the Lenders or such Issuing
Bank, as the case may be, severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender or such Issuing
Bank with interest thereon, for each day from and including the date such amount
is distributed to it to but excluding the date of payment to the Administrative
Agent, at the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

                  (e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.17(d) or
9.03(c), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the

                                       45
<PAGE>

account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid.

                  SECTION 2.18. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.14, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.14 or 2.16, as the case may be, in the future and (ii) in the
reasonable judgment of such Lender, would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

                  (b) If any Lender requests compensation under Section 2.14, or
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Commitment is being assigned, the Issuing Banks and Swingline Lender),
which consent shall not be unreasonably withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.14 or payments required to be made pursuant to Section 2.16, such assignment
will result in a material reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.

                                       46
<PAGE>

                                   ARTICLE III

                         Representations and Warranties

                  The Borrower represents and warrants to the Lenders that:

                  SECTION 3.01. Organization; Powers. Each of the Borrower and
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

                  SECTION 3.02. Authorization; Enforceability. The Transactions
to be entered into by each Loan Party are within such Loan Party's corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to which
any Loan Party is to be a party, when executed and delivered by such Loan Party,
will constitute, a legal, valid and binding obligation of the Borrower or such
Loan Party (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

                  SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except (i) such
as have been obtained or made and are in full force and effect, (ii) filings
necessary to perfect Liens created under the Loan Documents, and (iii) routine
corporate filings to maintain the good standing of the Borrower and its
Subsidiaries, (b) will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of the Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon the Borrower or any of its Subsidiaries or its assets, or give rise to a
right thereunder to require any payment (other than the payments required to be
made under the Loan Documents and the Original Credit Agreement) to be made by
the Borrower or any of its Subsidiaries, provided that the representation in
this clause (c) is subject to obtaining certain consents that are required under
certain of such agreements or other instruments, which either have been obtained
or the failure to obtain such consents would not reasonably be expected to have
a Material Adverse Effect, and (d) will not result in the creation or imposition
of any Lien on any asset of the Borrower or any of its Subsidiaries, except
Liens created under the Loan Documents.

                                       47
<PAGE>

                  SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its consolidated
balance sheet and statements of income, stockholders' equity and cash flows as
of and for the fiscal year ended February 3, 2001, reported on by Deloitte &
Touche LLP independent public accountants. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower as of such date and for such period in
accordance with GAAP.

                  (b) Except as disclosed in the financial statements referred
to above or the notes thereto or in the Information Memorandum and except for
the Disclosed Matters, none of the Borrower or its Subsidiaries has, as of the
Effective Date, any material contingent liabilities, unusual long-term
commitments or unrealized losses.

                  (c) Since February 3, 2001, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.

                  SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.

                  (b) Each of the Borrower and its Subsidiaries owns, or is
licensed to use, all trademarks, trade names, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

                  (c) Schedule 3.05 sets forth the address of any real property
that is owned or leased by the Borrower or any of its Subsidiaries as of the
Effective Date.

                  SECTION 3.06. Litigation and Environmental Matters. (a) There
are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.

                  (b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither the
Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit,

                                       48
<PAGE>

license or other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received notice of any claim
with respect to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.

                  (c) Since the date of this Agreement, there has been no change
in the status of the Disclosed Matters that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.

                  SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.

                  SECTION 3.08. Investment and Holding Company Status. Neither
the Borrower nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.

                  SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries
has timely filed or caused to be filed all income tax returns and other material
Tax returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower or
such Subsidiary, as applicable, has set aside on its books adequate reserves or
(b) to the extent that the failure to do so would not reasonably be expected to
result in a Material Adverse Effect.

                  SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed by more than $2,000,000 the fair market value of the assets of such Plan,
and the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $5,000,000 the
fair market value of the assets of all such underfunded Plans.

                  SECTION 3.11. Disclosure. The Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
the Borrower or any of its Subsidiaries is subject, and all other matters known
to any of them, that,

                                       49
<PAGE>

individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither the Information Memorandum nor any of the other
reports, financial statements, certificates or other information furnished by or
on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or any other Loan Document or
delivered hereunder or thereunder contained, as of the date that such
Information Memorandum, report, financial statement, certificate or other
information was so furnished, any material misstatement of fact or omitted to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not materially misleading;
provided that, with respect to projected financial information contained in the
materials referred to above, the Borrower represents only that such information
was prepared in good faith based upon assumptions believed by management of the
Borrower to be reasonable at the time, it being recognized that actual results
during the period or periods covered by such information may differ from the
projected or estimated results set forth therein.

                  SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name
and jurisdiction of organization of, and the ownership interest of the Borrower
in, each Subsidiary as of the Effective Date.

                  SECTION 3.13. Insurance. Schedule 3.13 sets forth a
description of all insurance maintained by or on behalf of the Borrower and its
Subsidiaries as of the Effective Date. As of the Effective Date, all premiums in
respect of such insurance have been paid. The Borrower believes that the
insurance maintained by or on behalf of the Borrower and its Subsidiaries is
adequate.

                  SECTION 3.14. Labor Matters. As of the Effective Date, there
are no strikes, lockouts or slowdowns against the Borrower or any Subsidiary
pending or, to the knowledge of the Borrower, threatened. Except for any
violations and failures to make payments that, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect (a) the Borrower and
the Subsidiaries have not been in violation of the Fair Labor Standards Act or
any other applicable Federal, state, local or foreign law dealing with the hours
worked by or payments made to employees or any similar matters and (b) all
payments due from the Borrower or any Subsidiary, or for which any claim may be
made against the Borrower or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary. The consummation of
the Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any Subsidiary is bound.

                  SECTION 3.15. Solvency. As of the Effective Date and
immediately following the making of each Loan made on the Effective Date and
after giving effect to the application of the proceeds of such Loans, (a) the
fair value of the assets of each Loan Party, at a fair valuation, will exceed
its debts and liabilities, subordinated, contingent or otherwise; (b) the
present fair saleable value of the property of each Loan Party will be

                                       50
<PAGE>

greater than the amount that will be required to pay the probable liability of
its debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (c) each Loan Party
will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (d)
each Loan Party will not have unreasonably small capital with which to conduct
the business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Effective Date.

                  SECTION 3.16. Security Documents. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when such Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of each pledgor thereunder in such Collateral, in each case prior and
superior in right to any other Person.

                  (b) The Security Agreement is effective to create in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Security Agreement) and, when financing statements in appropriate form are filed
in the offices specified on Schedule 6 to the Perfection Certificate, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral, to the extent that a security interest can be perfected in such
Collateral by filing, recording or registering a financing statement or
analogous document in the United States (or any political subdivision thereof)
and its territories and possessions pursuant to the Uniform Commercial Code or
other applicable law in such jurisdiction, in each case prior and superior in
right to any other Person, other than with respect to Liens expressly permitted
by Section 6.02.

                  (c) When the Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Intellectual Property
(as defined in the Security Agreement) in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, in each case prior and
superior in right to any other Person other than Liens expressly permitted by
Section 6.02 (it being understood that subsequent recordings in the United
States Patent and Trademark Office and the United States Copyright Office may be
necessary to perfect a Lien on registered trademarks, trademark applications and
copyrights acquired by the Loan Parties after the date hereof).

                                       51
<PAGE>

                                   ARTICLE IV

                                   Conditions

                  SECTION 4.01. Effective Date. The obligations of the Lenders
to make Loans and of the Issuing Banks to issue Letters of Credit hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 9.02):

                  (a) The Administrative Agent (or its counsel) shall have
         received from each party hereto either (i) a counterpart of this
         Agreement signed on behalf of such party or (ii) written evidence
         satisfactory to the Administrative Agent (which may include telecopy
         transmission of a signed signature page of this Agreement) that such
         party has signed a counterpart of this Agreement.

                  (b) The Administrative Agent shall have received favorable
         written opinions (addressed to the Administrative Agent and the Lenders
         and dated the Effective Date) of O'Melveny & Myers LLP, counsel for the
         Borrower, of Ice Miller, Indiana counsel for the Borrower and of Kummer
         Kaempfer Bonner & Renshaw, Nevada counsel for Galyan's Nevada, Inc.
         substantially in the form of Exhibits B-1, B-2 and B-3, respectively,
         and covering such other matters relating to the Loan Parties, the Loan
         Documents or the Transactions as the Required Lenders shall reasonably
         request. The Borrower hereby requests such counsel to deliver such
         opinions.

                  (c) The Administrative Agent shall have received such
         documents and certificates as the Administrative Agent or its counsel
         may reasonably request relating to the organization, existence and good
         standing of each Loan Party, the authorization of the Transactions and
         any other legal matters relating to the Loan Parties, the Loan
         Documents or the Transactions, all in form and substance satisfactory
         to the Administrative Agent and its counsel.

                  (d) The Administrative Agent shall have received a
         certificate, dated the Effective Date and signed by the President, a
         Vice President or a Financial Officer of the Borrower, confirming
         compliance with the conditions set forth in paragraphs (a), (b) and (c)
         of Section 4.02.

                  (e) The Administrative Agent shall have received all fees and
         other amounts due and payable on or prior to the Effective Date,
         including, to the extent invoiced, reimbursement or payment of all
         out-of-pocket expenses required to be reimbursed or paid by any Loan
         Party hereunder or under any other Loan Document.

                  (f) The Administrative Agent shall have received counterparts
         of the Pledge Agreement signed on behalf of the Borrower.

                                       52
<PAGE>

                  (g) The Administrative Agent shall have received counterparts
         of the Security Agreement signed on behalf of the Borrower, together
         with the following:

                           (i) all documents and instruments, including Uniform
                  Commercial Code financing statements, required by law or
                  reasonably requested by the Administrative Agent to be filed,
                  registered or recorded to create or perfect the Liens intended
                  to be created under the Security Agreement;

                           (ii) a completed Perfection Certificate dated the
                  Effective Date and signed by an executive officer or Financial
                  Officer of the Borrower, together with all attachments
                  contemplated thereby, including the results of a search of the
                  Uniform Commercial Code (or equivalent) filings made with
                  respect to the Loan Parties in the jurisdictions contemplated
                  by the Perfection Certificate and copies of the financing
                  statements (or similar documents) disclosed by such search and
                  evidence reasonably satisfactory to the Administrative Agent
                  that the Liens indicated by such financing statements (or
                  similar documents) are permitted by Section 6.02 or have been
                  released; and

                           (iii) evidence that the lockbox and concentration
                  account arrangements contemplated by the Security Agreement
                  have been established.

                  (h) The Administrative Agent shall be reasonably satisfied
         that the Borrower's cash management system as contemplated by the
         Security Agreement is in place.

                  (i) The Administrative Agent shall have received evidence
         satisfactory to it that the insurance required by Section 5.07 is in
         effect.

                  (j) The Borrower (i) shall terminate the Commitments under the
         Original Credit Agreement; provided that the Borrower shall not be
         required to terminate the Existing Letters of Credit and (ii) shall
         have repaid all the amounts owing under such Credit Agreement. The
         Administrative Agent shall have received evidence satisfactory to it
         that all Liens created under the Original Credit Agreement have been
         released.

                  (k) All consents and approvals required to be obtained from
         any Governmental Authority or other Person in connection with the
         Transactions shall have been obtained without the imposition of any
         burdensome conditions.

                  (l) The Lenders shall have received (a) the financial
         statements described in Section 3.04 and (b) unaudited consolidated
         balance sheets and related statements of income, stockholders' equity
         and cash flows of the Borrower for

                                       53
<PAGE>

         each fiscal quarter and month ended after the date of the most recent
         balance sheet described in Section 3.04 and ended 30 days prior to the
         Effective Date (to the extent not delivered to Administrative Agent
         prior to the date hereof), which unaudited financial statements shall
         not be materially inconsistent with the financial statements or
         forecasts previously provided to the Lenders.

                  (m) The Lenders shall have received the pro forma consolidated
         balance sheet of the Borrower described in Section 3.04, reflecting all
         pro forma adjustments as if the Transactions had been consummated on
         such date, and such pro forma consolidated balance sheet shall be
         consistent in all material respects with the forecasts and other
         information previously provided to the Lenders. After giving effect to
         the Transactions, the Borrower shall not have outstanding any shares of
         preferred stock or any Indebtedness, other than (i) Indebtedness
         incurred under the Loan Documents, (ii) the Mezzanine Securities and
         (iii) other Indebtedness permitted under Section 6.01(a).

                  (o) The Administrative Agent shall be reasonably satisfied
         with the results of an examination by Hilco Appraisal Services, LLC of
         (i) the inventory of the Borrower and (ii) the systems providing for
         the monitoring and reporting of such inventory.

                  (p) The Administrative Agent shall have received a completed
         Borrowing Base Certificate dated the Effective Date and signed by a
         Financial Officer of the Borrower.

                  The Administrative Agent shall notify the Borrower and the
Lenders of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of an Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on May
3, 2001 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).

                  SECTION 4.02. Each Credit Event. The obligation of each Lender
to make a Loan on the occasion of any Borrowing, and of any Issuing Bank to
issue, amend, renew or extend any Letter of Credit, is subject to receipt of the
request therefor in accordance herewith and to the satisfaction of the following
conditions:

                  (a) The representations and warranties of each Loan Party set
         forth in the Loan Documents shall be true and correct on and as of the
         date of such Borrowing or the date of issuance, amendment, renewal or
         extension of such Letter of Credit, as applicable.

                                       54
<PAGE>

                  (b) At the time of and immediately after giving effect to such
         Borrowing or the issuance, amendment, renewal or extension of such
         Letter of Credit, as applicable, no Default shall have occurred and be
         continuing.

                  (c) At the time of and immediately after giving effect to such
         Borrowing or the issuance, amendment, renewal or extension of such
         Letter of Credit, as applicable, the total Revolving Exposures shall
         not exceed the Borrowing Base then in effect.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a), (b)
and (c) of this Section.

                                    ARTICLE V

                              Affirmative Covenants

                  Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:

                  SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:

                  (a) within 90 days after the end of each fiscal year of the
         Borrower, the Borrower's audited consolidated and, to the extent there
         are any Subsidiaries that are engaged in retail business, unaudited
         consolidating balance sheets and related statements of operations,
         stockholders' equity and cash flows as of the end of and for such year,
         setting forth in each case in comparative form the figures for the
         previous fiscal year, all reported on by Deloitte & Touche LLP or other
         independent public accountants of recognized national standing (without
         a "going concern" or like qualification or exception and without any
         qualification or exception as to the scope of such audit) to the effect
         that such consolidated financial statements present fairly in all
         material respects the financial condition and results of operations of
         the Borrower and its consolidated Subsidiaries on a consolidated basis
         in accordance with GAAP consistently applied;

                  (b) within 45 days after the end of each of the first three
         fiscal quarters of each fiscal year of the Borrower, the Borrower's
         consolidated and, to the extent there are any Subsidiaries that are
         engaged in retail business, consolidating balance sheet and related
         statements of operations, stockholders' equity and cash flows and cash
         flows as of the end of and for such fiscal quarter and the then elapsed
         portion of the fiscal year, setting forth in each case in comparative
         form

                                       55
<PAGE>

         the figures for the corresponding period or periods of (or, in the case
         of the balance sheet, as of the end of) the previous fiscal year, all
         certified by one of its Financial Officers as presenting fairly in all
         material respects the financial condition and results of operations of
         the Borrower and its consolidated Subsidiaries on a consolidated and,
         if applicable, consolidating basis in accordance with GAAP consistently
         applied, subject to normal year-end audit adjustments and the absence
         of footnotes;

                  (c) within 15 days after the end of each month (other than the
         last month) of each fiscal quarter of the Borrower, the Borrower's
         consolidated balance sheet and related statements of operations,
         stockholders' equity and cash flows as of the end of and for such
         fiscal month and the then elapsed portion of the fiscal year, all
         certified by one of its Financial Officers as presenting in all
         material respects the financial condition and results of operations of
         the Borrower and its consolidated Subsidiaries on a consolidated basis
         in accordance with GAAP consistently applied, subject to normal
         year-end audit adjustments and the absence of footnotes;

                  (d) concurrently with any delivery of financial statements
         under clause (a) or (b) above, a certificate of a Financial Officer of
         the Borrower (i) certifying as to whether a Default has occurred and,
         if a Default has occurred, specifying the details thereof and any
         action taken or proposed to be taken with respect thereto, (ii) setting
         forth reasonably detailed calculations demonstrating compliance with
         Sections 6.12, 6.13 and 6.14 and (iii) stating whether any change in
         GAAP or in the application thereof has occurred since the date of the
         Borrower's audited financial statements referred to in Section 3.04
         and, if any such change has occurred, specifying the effect of such
         change on the financial statements accompanying such certificate;

                  (e) concurrently with any delivery of financial statements
         under clause (a) above, a certificate of the accounting firm that
         reported on such financial statements stating whether they obtained
         knowledge during the course of their examination of such financial
         statements of any Default (which certificate may be limited to the
         extent required by accounting rules or guidelines);

                  (f) within 15 days after the end of each fiscal month, a
         completed Borrowing Base Certificate calculating and certifying the
         Borrowing Base as of the last day of such fiscal month, signed on
         behalf of the Borrower by a Financial Officer and accompanied by the
         reports and supporting information contemplated by Schedule 1 to
         Exhibit C; provided that, at any time that the Excess Availability is
         less than 5% of the Borrowing Base, the Administrative Agent may (by
         notice to the Borrower) require weekly computation of the Borrowing
         Base, in which case such completed Borrowing Base Certificate shall be
         delivered within three Business Days after the end of each week
         certifying and calculating the Borrowing Base as of the last day of
         such week;

                                       56
<PAGE>

                  (g) as soon as the same are available, but in no event more
         than 90 days after the commencement of each fiscal year of the
         Borrower, a detailed consolidated budget for such fiscal year
         (including a projected consolidated balance sheet and related
         statements of projected operations and cash flow as of the end of and
         for such fiscal year) and, promptly when available, any significant
         revisions of such budget;

                  (h) promptly after the same become publicly available, copies
         of all periodic and other reports, proxy statements and other materials
         filed by the Borrower or any Subsidiary with the Securities and
         Exchange Commission, or any Governmental Authority succeeding to any or
         all of the functions of said Commission, or with any national
         securities exchange, or distributed by the Borrower to its shareholders
         generally, as the case may be;

                  (i) promptly following any request therefor, such other
         information regarding the operations, business affairs and financial
         condition of the Borrower or any Subsidiary, or compliance with the
         terms of any Loan Document, as the Administrative Agent or any Lender
         may reasonably request; and

                  (j) at the same time as it delivers the financial statements
         required under the provisions of this Section 5.01(a), a copy of the
         "management letter" (if any) delivered to the Borrower by its
         independent certified public accountants in connection with the
         delivery of such financial statements.

                  SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:

                  (a) the occurrence of any Default;

                  (b) the filing or commencement of any action, suit or
         proceeding by or before any arbitrator or Governmental Authority
         against or affecting the Borrower or any of its Subsidiaries in which
         the amount claimed is $1,500,000 or more and is not covered by
         insurance or in which injunctive or similar relief is sought that, if
         adversely determined, could reasonably be expected to result in a
         Material Adverse Effect;

                  (c) the occurrence of any ERISA Event that, alone or together
         with any other ERISA Events that have occurred, could reasonably be
         expected to result in liability of the Borrower and its Subsidiaries in
         an aggregate amount exceeding $1,000,000; and

                  (d) any other development that results in, or could reasonably
         be expected to result in, a Material Adverse Effect.

                                       57
<PAGE>

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

                  SECTION 5.03. Information Regarding Collateral. (a) The
Borrower will furnish to the Administrative Agent prompt written notice of any
change (i) in any Loan Party's corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Loan Party's chief executive office, its
principal place of business, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral
owned by it is located (including the establishment of any such new office or
facility), other than changes in location of collateral that is in transit to an
office or facility of which the Administrative Agent already has notice, (iii)
in any Loan Party's identity , jurisdiction of organization or corporate
structure or (iv) in any Loan Party's Federal Taxpayer Identification Number.
The Borrower agrees that, in the event of any change referred to in the
preceding sentence, the Borrower will cause all filings to be made under the
Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected security interest in all of the Collateral (subject only to
cooperation of the Collateral Agent in signing any necessary financing
statements). The Borrower also agrees promptly to notify the Administrative
Agent if any material portion of the Collateral is damaged or destroyed.

                  (b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer of the Borrower (i) setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Effective Date or the date of the
most recent certificate delivered pursuant to this Section and (ii) certifying
that all Uniform Commercial Code financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the security interests under the Security Agreement in such
jurisdictions for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation statements
to be filed within such period).

                  SECTION 5.04. Existence; Conduct of Business. The Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names

                                       58
<PAGE>

material to the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.

                  SECTION 5.05. Payment of Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its Indebtedness and other
obligations, including Tax liabilities and Leasehold Obligations, before the
same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP, (c) such contest effectively
suspends collection of the contested obligation and the enforcement of any Lien
securing such obligation and (d) the failure to make payment pending such
contest would not reasonably be expected to result in a Material Adverse Effect.

                  SECTION 5.06. Maintenance of Properties. The Borrower will,
and will cause each of its Subsidiaries to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted.

                  SECTION 5.07. Insurance. (a) The Borrower will, and will cause
each of its Subsidiaries to, maintain, with financially sound and reputable
insurance companies (i) adequate insurance for its insurable properties, all to
such extent and against such risks, including fire, casualty and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, (ii) such
other insurance as is required pursuant to the terms of any Security Document
and (iii) business interruption insurance, insuring against loss of gross
earnings for a period of not less than 12 months arising from any risks or
occurrences required to be covered by insurance pursuant to this Section 5.07.

                  (b) Fire and extended coverage policies maintained with
respect to any Collateral shall be endorsed or otherwise amended to include (i)
a non-contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in each case in
favor of the Collateral Agent and providing for losses thereunder to be payable
to the Collateral Agent or its designee, (ii) a provision to the effect that
neither the Collateral Agent nor any other party shall be a coinsurer and (iii)
such other provisions as the Administrative Agent may reasonably require from
time to time to protect the interests of the Lenders. Commercial general
liability policies shall be endorsed to name the Collateral Agent as an
additional insured. Business interruption policies shall name the Collateral
Agent as loss payee. Each such policy referred to in this paragraph also shall
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium except upon not less than 10 days' prior written notice
thereof by the insurer to the Collateral Agent (giving the Collateral Agent the
right to cure defaults in the payment of premiums) or (ii) for any other reason
except upon not less than 30 days' prior written notice thereof by the insurer
to the Collateral Agent. The Borrower shall deliver to the Administrative Agent,
prior to the cancelation, modification or nonrenewal of any such policy of
insurance, a copy of a renewal or replacement policy (or other evidence of
renewal of a policy previously

                                       59
<PAGE>

delivered to the Administrative Agent) together with evidence satisfactory to
the Administrative Agent of payment of the premium therefor.

                  SECTION 5.08. Casualty and Condemnation. (a) The Borrower will
furnish to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any material portion of any Collateral or
the commencement of any action or proceeding for the taking of any Collateral or
any part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding.

                  (b) If any event described in paragraph (a) of this Section
results in Net Cash Proceeds (whether in the form of insurance proceeds,
condemnation award or otherwise), the Collateral Agent is authorized to collect
such Net Cash Proceeds and, if received by the Borrower or any Subsidiary, such
Net Cash Proceeds shall be paid over to the Collateral Agent; provided that (i)
if the aggregate Net Cash Proceeds in respect of such event (other than proceeds
of business income insurance) are less than $500,000, such Net Cash Proceeds
shall be paid over to the Borrower unless a Default has occurred and is
continuing, and (ii) all proceeds of business income insurance shall be paid
over to the Borrower unless a Default has occurred and is continuing. All such
Net Cash Proceeds retained by or paid over to the Collateral Agent shall be held
by the Collateral Agent and released from time to time to pay the costs of
repairing, restoring or replacing the affected property in accordance with the
terms of the applicable Security Document, subject to the provisions of the
applicable Security Document regarding application of such Net Cash Proceeds
during a Default.

                  SECTION 5.09. Books and Records; Inspection and Audit Rights.

                  (a) The Borrower will, and will cause each of its Subsidiaries
to, keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its business
and activities. The Borrower will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent or any Lender,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested; provided that the
Borrower shall be given the opportunity to be present at any discussion with its
independent accountants.

                  (b) The Borrower will, and will cause each of its Subsidiaries
to, permit the Administrative Agent or any representatives designated by the
Administrative Agent (including any consultants, accountants, lawyers and
appraisers retained by the Administrative Agent) to conduct evaluations of the
Borrower's computation of the Borrowing Base, the assets included in the
Borrowing Base and related systems and procedures, all at such reasonable times
and as often as reasonably requested. The Borrower shall pay the reasonable fees
and expenses of the Administrative Agent or any representatives retained by the
Administrative Agent to conduct any such evaluation; provided that, subject to
(i) the Borrower providing cooperation and support comparable to that provided
in connection with the initial evaluation and appraisal performed prior to

                                       60
<PAGE>

the Effective Date and (ii) the scope of required work not materially increasing
as a result of a substantial change in the Borrower's operations, the Borrower
shall not be required to pay such fees and expenses exceeding $80,000 during any
calendar year unless an Event of Default has occurred and is continuing.

                  (c) The Borrower will, and will cause each of its Subsidiaries
to, permit any representatives designated by the Administrative Agent or the
Required Lenders (including any consultants, accountants, lawyers and
appraisers) to conduct a liquidation analysis, evaluation and appraisal of the
Inventory, all at such reasonable times and as often as reasonably requested.
The Borrower shall pay the reasonable fees and expenses of any representatives
retained by the Administrative Agent or the Required Lenders to conduct such
liquidation analysis, evaluation or appraisal; provided that, subject to (i) the
Borrower providing cooperation and support comparable to that provided in
connection with the initial evaluation and appraisal performed prior to the
Effective Date and (ii) the scope of required work not materially increasing as
a result of a substantial change in the Borrower's operations, the Borrower
shall not be required to pay such fees and expenses exceeding $60,000 during any
calendar year unless an Event of Default has occurred and is continuing.

                  SECTION 5.10. Compliance with Laws. The Borrower will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

                  SECTION 5.11. Use of Proceeds and Letters of Credit. The
proceeds of the Loans will be used (a) for the payment of amounts outstanding
under the Original Credit Agreement, (b) for the payment of fees and expenses
incurred in connection with the Transactions, and (c) for general corporate
purposes, including Capital Expenditures and working capital. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations T, U and X. Letters of Credit will be issued only for
general corporate purposes.

                  SECTION 5.12. Additional Subsidiaries. If any additional
Subsidiary is formed or acquired after the Effective Date, the Borrower will
notify the Administrative Agent and the Lenders thereof and (a) if such
Subsidiary is a Subsidiary Loan Party, (i) the Borrower will cause such
Subsidiary to execute and deliver a Subsidiary Guarantee Agreement, (ii) the
Borrower and such Subsidiary will execute and deliver (or, if already executed
and delivered, the Borrower will cause such Subsidiary to become a party to) the
Indemnity Subrogation and Contribution Agreement and (iii) the Borrower will
cause such Subsidiary to become a party to each applicable Security Document in
the manner provided therein, in each case within three Business Days after such
Subsidiary is formed or acquired and promptly take such actions to create and
perfect Liens on such Subsidiary's assets to secure the Obligations as the
Administrative Agent or the Required

                                       61
<PAGE>

Lenders shall reasonably request and (b) if any Equity Interests or Indebtedness
of such Subsidiary are owned by or on behalf of any Loan Party, the Borrower
will cause such Equity Interests and promissory notes evidencing such
Indebtedness to be pledged pursuant to the Pledge Agreement within three
Business Days after such Subsidiary is formed or acquired (except that, if such
Subsidiary is a Foreign Subsidiary, shares of voting stock of such Subsidiary to
be pledged pursuant to the Pledge Agreement may be limited to 65% of the
outstanding shares of voting stock of such Subsidiary).

                  SECTION 5.13. Further Assurances. (a) The Borrower will, and
will cause each Subsidiary Loan Party to, execute any and all further documents,
financing statements, agreements and instruments, and take all such further
actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), which may be required
under any applicable law, or which the Administrative Agent or the Required
Lenders may reasonably request, to effectuate the transactions contemplated by
the Loan Documents or to grant, preserve, protect or perfect the Liens created
or intended to be created by the Security Documents or the validity or priority
of any such Lien, all at the expense of the Loan Parties. The Borrower also
agrees to provide to the Administrative Agent, from time to time upon request,
evidence reasonably satisfactory to the Administrative Agent as to the
perfection and priority of the Liens created or intended to be created by the
Security Documents.

                  (b) If any material assets (including any real property or
improvements thereto or any interest therein but excluding any assets that are
subject to a Lien permitted by clauses (d) and (e) of Section 6.02 to the extent
the terms on which such Lien exists prohibit a Lien securing the Obligations on
such assets) are acquired by the Borrower or any Subsidiary Loan Party after the
Effective Date (other than assets constituting Collateral under the Security
Agreement that become subject to the Lien of the Security Agreement upon
acquisition thereof), the Borrower will notify the Administrative Agent and the
Lenders thereof, and, if requested by the Administrative Agent or the Required
Lenders, the Borrower will cause such assets to be subjected to a Lien securing
the Obligations and will take, and cause the Subsidiary Loan Parties to take,
such actions as shall be necessary or reasonably requested by the Administrative
Agent to grant and perfect such Liens, including actions described in paragraph
(a) of this Section, all at the expense of the Loan Parties.

                  SECTION 5.14. Lien Waiver Agreements; Leaseholds. (a) The
Borrower will exercise commercially reasonable efforts to obtain and deliver to
the Collateral Agent executed Lien Waiver Agreements with respect to all Lien
Risk Inventory. In any event, the Borrower will obtain Lien Waiver Agreements
such that, at all times on and after the date that is 90 days after the
Effective Date, the amount of Inventory that consists of Lien Risk Inventory
with respect to which Lien Waiver Agreements have not been so obtained does not
exceed 25% of the total amount of Inventory.

                  (b) The Borrower will, and will cause each of its Subsidiaries
to, pay all Leasehold Obligations and perform in all material respects all other
obligations under all

                                       62
<PAGE>

leases and other agreements pertaining to any premises where any Lien Risk
Inventory is stored or located, keep such leases and agreements in full force
and effect and not allow any termination or cancelation thereof, in each case to
the extent that the failure to do so would result in any Lien on any Lien Risk
Inventory. The Borrower will notify the Administrative Agent promptly in the
event of any default or alleged default under any such lease or agreement and
will exercise diligent efforts to cure any such default.

                                   ARTICLE VI

                               Negative Covenants

                  Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:

                  SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Indebtedness, except:

                  (i) Indebtedness created under the Loan Documents;

                  (ii) Indebtedness existing on the date hereof and set forth in
         Schedule 6.01, but not any extensions, renewals or replacements of any
         such Indebtedness;

                  (iii) Indebtedness of the Borrower to any Subsidiary and of
         any Subsidiary to the Borrower or any other Subsidiary; provided that
         Indebtedness of any Subsidiary that is not a Loan Party to the Borrower
         or any Subsidiary Loan Party shall be subject to Section 6.04;

                  (iv) Guarantees by the Borrower of Indebtedness of any
         Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any
         other Subsidiary; provided that Guarantees by the Borrower or any
         Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a
         Loan Party shall be subject to Section 6.04;

                  (v) Indebtedness of the Borrower or any Subsidiary incurred to
         finance the acquisition, construction or improvement of any fixed or
         capital assets (including the acquisition of store sites and the
         construction of stores), including Capital Lease Obligations and any
         Indebtedness assumed in connection with the acquisition of any such
         assets or secured by a Lien on any such assets prior to the acquisition
         thereof, and extensions, renewals and replacements of any such
         Indebtedness that do not increase the outstanding principal amount
         thereof or result in an earlier maturity date or decreased weighted
         average life thereof; provided that (A) such Indebtedness is incurred
         prior to or within 90 days after

                                       63
<PAGE>

         such acquisition or the completion of such construction or improvement,
         (B) the aggregate principal amount of Capital Lease Obligations
         permitted by this clause (v), other than as provided in clause (xii)
         below, shall not exceed $2,500,000 at any time outstanding and (C) the
         aggregate principal amount of Indebtedness, other than Capital Lease
         Obligations, incurred in reliance upon this clause (v) during any
         period set forth below shall not exceed the amount set forth below
         opposite such period, provided that, to the extent that the amount of
         such Indebtedness permitted to be incurred during any such period
         exceeds the actual amount of such Indebtedness incurred during such
         period, the excess shall be permitted in the succeeding periods in
         addition to the amount otherwise permitted:

                       Period                                       Amount

         For the fiscal year ending on 2/2/02                       $7,000,000
         For the fiscal year ending on 2/1/03                      $15,000,000
         For the fiscal year ending on 1/31/04                     $17,000,000
         For the period from 1/31/04 to the Maturity Date           $7,000,000

                  (vi) Indebtedness of (A) any Person that becomes a Subsidiary
         after the date hereof pursuant to a Permitted Acquisition to the extent
         that such Indebtedness exists at the time such Person becomes a
         Subsidiary and is not created in contemplation of or in connection with
         such Person becoming a Subsidiary, (B) the Borrower or a Subsidiary to
         the extent that such Indebtedness is assumed in connection with a
         Permitted Acquisition made by the Borrower or such Subsidiary and is
         not created in contemplation of such Permitted Acquisition and (C) the
         Borrower in respect of unsecured promissory notes issued as
         consideration for Permitted Acquisitions; provided that the aggregate
         principal amount of Indebtedness permitted by this clause (vi) shall be
         subject to the limitations set forth in clause (g) of Section 6.04;

                  (vii) Indebtedness in respect of the Mezzanine Securities and
         any Replacement Mezzanine Securities in an aggregate principal amount
         at any time outstanding not exceeding $50,000,000 plus the principal
         amount of any additional Mezzanine Securities and Replacement Mezzanine
         Securities issued to satisfy (or resulting from the capitalization of)
         obligations in respect of accrued interest in respect of the Mezzanine
         Securities and Replacement Mezzanine Securities in accordance with the
         Mezzanine Securities Documents or Replacement Mezzanine Securities
         Documents, as applicable; provided that any issuance of Replacement
         Mezzanine Securities shall be subject to the conditions that (A) either
         the terms and conditions of the Replacement Mezzanine Securities and
         the Replacement Mezzanine Securities Documents shall not be less
         favorable to the Borrower and the Lenders in any material respect than
         the terms and conditions of the Mezzanine Securities and the Mezzanine
         Securities Documents (as determined by the Administrative Agent) or the
         terms and conditions of the Replacement Mezzanine Securities and the
         Replacement Mezzanine Securities

                                       64
<PAGE>

         Documents shall be satisfactory to the Required Lenders and (B) the
         proceeds of any issuance of Replacement Mezzanine Securities (other
         than Replacement Mezzanine Securities issued to satisfy (or resulting
         from the capitalization of) obligations in respect of accrued interest
         on Replacement Mezzanine Securities previously issued) shall not be
         less than an amount sufficient to, and shall be applied to, redeem an
         equal amount (taking into account accrued or capitalized interest
         thereon) of then-outstanding Mezzanine Securities and any warrants (or
         shares of common stock issued upon the exercise thereof) sold
         contemporaneously with the Mezzanine Securities;

                  (viii) Indebtedness in respect of (A) performance bonds,
         surety bonds or customs bonds, (B) bonds required to be posted in order
         to permit the Borrower and its Subsidiaries to sell firearms licenses
         or other licenses on behalf of any Governmental Authority and (C)
         insurance premium financing, in each case in the ordinary course of
         business;

                  (ix) Indebtedness of the Borrower incurred to finance and
         refinance the construction and improvement of the retail store located
         at the Walden Galleria, Buffalo, New York, including pursuant to the
         Ancillary Agreement, in an aggregate principal amount not exceeding
         $6,000,000 at any time outstanding (which Indebtedness shall not be
         counted towards the limitation set forth in clause (v) above); provided
         that all such Indebtedness is repaid upon consummation of any
         sale-leaseback referred to in clause (b) of Section 6.11;

                  (x) other unsecured Indebtedness in an aggregate principal
         amount not exceeding $3,500,000 at any time outstanding;

                  (xi) Indebtedness of the Borrower incurred to finance and
         refinance the construction and improvement of the retail store to be
         located at The Marketplace Mall, Rochester, New York, in an aggregate
         principal amount not exceeding $6,000,000 at any time outstanding
         (which limitation shall not be counted towards the limitation set forth
         in clause (v) above); provided that all such Indebtedness is repaid
         upon consummation of any sale-leaseback referred to in clause (c) of
         Section 6.11; and

                  (xii) Capital Lease Obligations resulting from sale-leaseback
         transactions permitted by Section 6.11; provided that (A) such
         sale-leaseback transactions relate to properties that have been
         financed by incurring Indebtedness permitted by clause (v), (ix) or
         (xi) above (any such Indebtedness being referred to as "Construction
         Financing") and (B) to the extent that the amount of any such Capital
         Lease Obligation exceeds the principal amount of Construction Financing
         repaid in connection with such sale-leaseback, the amount of
         Construction Financing permitted by clause (v) above to be incurred
         during the period in which such Capital Lease Obligation is incurred
         shall be reduced by the amount of such excess.

                                       65
<PAGE>

                  (b) The Borrower will not, nor will it permit any Subsidiary
to, issue any preferred stock or other preferred Equity Interests (other than
(i) Replacement Mezzanine Securities issued as preferred stock in compliance
with the proviso to clause (viii) of Section 6.01(a) or (ii) preferred stock or
other preferred Equity Interests that are not subject to any mandatory
redemption or repayment requirement (contingent or otherwise) prior to the
Maturity Date or within 90 days thereafter and are not convertible into
Indebtedness) or be or become liable in respect of any obligation (contingent or
otherwise) to purchase, redeem, retire, acquire or make any other cash payment
in respect of any Equity Interests in the Borrower or any Subsidiary or any
option, warrant or other right to acquire any such Equity Interests, in each
case which would occur during the period beginning on the Effective Date and
ending on the date that is one year after the Maturity Date.

                  SECTION 6.02. Liens. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:

                  (a) Liens created under the Loan Documents;

                  (b) Permitted Encumbrances;

                  (c) any Lien on any property or asset of the Borrower or any
         Subsidiary existing on the date hereof and set forth in Schedule 6.02;
         provided that (i) such Lien shall not apply to any other property or
         asset of the Borrower or any Subsidiary and (ii) such Lien shall secure
         only those obligations which it secures on the date hereof and
         extensions, renewals and replacements thereof that do not increase the
         outstanding principal amount thereof;

                  (d) any Lien existing on any property or asset prior to the
         acquisition thereof by the Borrower or any Subsidiary or existing on
         any property or asset of any Person that becomes a Subsidiary after the
         date hereof prior to the time such Person becomes a Subsidiary;
         provided that (A) such Lien is not created in contemplation of or in
         connection with such acquisition or such Person becoming a Subsidiary,
         as the case may be, (B) such Lien shall not apply to any other property
         or assets of the Borrower or any Subsidiary and (C) such Lien shall
         secure only those obligations which it secures on the date of such
         acquisition or the date such Person becomes a Subsidiary, as the case
         may be and extensions, renewals and replacements thereof that do not
         increase the outstanding principal amount thereof; and

                  (e) Liens on fixed or capital assets acquired, constructed or
         improved by the Borrower or any Subsidiary; provided that (A) such
         security interests secure Indebtedness permitted by clause (v), (ix) or
         (xi) of Section 6.01(a), (B) such security interests and the
         Indebtedness secured thereby (other than Indebtedness

                                       66
<PAGE>

         permitted by clause (ix) of Section 6.01(a)) are incurred prior to or
         within 90 days after such acquisition or the completion of such
         construction or improvement, (C) the Indebtedness secured thereby does
         not exceed 90% of the cost of acquiring, constructing or improving such
         fixed or capital assets and (D) such security interests shall not apply
         to any other property or assets of the Borrower or any Subsidiary.

                  SECTION 6.03. Fundamental Changes. (a) The Borrower will not,
nor will it permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into the Borrower in a transaction in which the Borrower is
the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary
Loan Party in a transaction in which the surviving entity is a Subsidiary Loan
Party, (iii) any Subsidiary may liquidate or dissolve if the Borrower determines
in good faith that such liquidation or dissolution is in the best interests of
the Borrower and is not materially disadvantageous to the Lenders and (iv) any
Subsidiary may merge with another entity to implement a Permitted Acquisition;
provided that any such merger involving a Person that is not a wholly owned
Subsidiary immediately prior to such merger shall not be permitted unless also
permitted by Section 6.04.

                  (b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.

                  SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any Equity
Interests in, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:

                  (a) Permitted Investments;

                  (b) investments existing on the date hereof and set forth on
         Schedule 6.04, to the extent such investments would not be permitted
         under any other clause of this Section;

                  (c) investments by the Borrower and its Subsidiaries in Equity
         Interests in their respective Subsidiaries; provided that (i) any such
         Equity Interests held by a Loan Party shall be pledged pursuant to the
         applicable Security Document (subject

                                       67
<PAGE>

         to the limitations applicable to voting stock of a Foreign Subsidiary
         referred to in Section 5.12) and (ii) the Borrower shall not have any
         Foreign Subsidiaries without the prior written consent of the Required
         Lenders and, if the Required Lenders permit any Foreign Subsidiaries,
         then the aggregate amount of investments by Loan Parties in, and loans
         and advances by Loan Parties to, and Guarantees by Loan Parties of
         Indebtedness of, Subsidiaries that are not Loan Parties shall be
         subject to limitations established by the Required Lenders;

                  (d) loans or advances made by the Borrower to any Subsidiary
         and made by any Subsidiary to the Borrower or any other Subsidiary;
         provided that (i) any such loans and advances made by a Loan Party
         shall be evidenced by a promissory note pledged pursuant to the Pledge
         Agreement and (ii) the amount of all such loans and advances by Loan
         Parties to Subsidiaries that are not Loan Parties shall be subject to
         the limitation set forth in clause (c)(ii) above;

                  (e) Guarantees constituting Indebtedness permitted by Section
         6.01; provided that the aggregate principal amount of Indebtedness of
         Subsidiaries that are not Loan Parties Guaranteed by any Loan Party
         shall be subject to the limitation set forth in clause (c)(ii) above;

                  (f) investments received in connection with the bankruptcy or
         reorganization of, or settlement of delinquent accounts and disputes
         with, customers and suppliers, in each case in the ordinary course of
         business;

                  (g) Permitted Acquisitions; provided that (i) the
         consideration for each Permitted Acquisition shall consist solely of
         cash, shares of common stock of the Borrower, the assumption of
         Indebtedness of the acquired Person or encumbering the acquired assets,
         Indebtedness referred to in clause (vi) of Section 6.01(a) or a
         combination thereof and (ii) the sum of the principal amount of all
         Indebtedness so assumed or otherwise resulting from Permitted
         Acquisitions (including Indebtedness referred to in clause (vi) of
         Section 6.01(a)) plus the cash consideration paid in connection with
         Permitted Acquisitions plus the fair market value (determined in good
         faith by the board of directors of the Borrower) of common stock of the
         Borrower issued as consideration for Permitted Acquisitions shall not
         exceed, on a cumulative basis during the term of this Agreement,
         $20,000,000;

                  (h) loans or advances to employees in the ordinary course of
         business; provided that the aggregate principal amount of all loans and
         advances permitted by this clause (h) shall not exceed $1,000,000 at
         any time outstanding;

                  (i) in addition to the loans and advances permitted under
         clause (h) above, loans or advances to management of the Borrower and
         Outside Directors the proceeds of which are applied to purchase Equity
         Interests of the Borrower from the Borrower, provided that the
         aggregate principal amount of all loans and

                                       68
<PAGE>

         advances pursuant to this paragraph (i) shall not exceed $5,000,000 at
         any time outstanding;

                  (j) extensions of trade credit in the ordinary course of
         business;

                  (k) Capital Expenditures permitted by Section 6.12; and

                  (l) in addition to other investments permitted by this
         Section, investments in an aggregate amount not exceeding $5,000,000.

                  SECTION 6.05. Asset Sales. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any Equity Interests owned by it, nor will the Borrower
permit any of its Subsidiaries to issue any additional Equity Interests in such
Subsidiary, except:

                  (a) sales of inventory, used, obsolete or surplus equipment
         and Permitted Investments in the ordinary course of business;

                  (b) sales, transfers and dispositions to the Borrower or a
         Subsidiary; provided that any such sales, transfers or dispositions
         involving a Subsidiary that is not a Loan Party shall be made in
         compliance with Section 6.08;

                  (c) sales, transfers and dispositions of assets (other than
         Equity Interests in a Subsidiary) that are not permitted by any other
         clause of this Section; provided that the aggregate fair market value
         of all assets sold, transferred or otherwise disposed of in reliance
         upon this clause (c) shall not exceed $2,000,000 during any fiscal year
         of the Borrower;

                  (d) sales of fixed or capital assets made pursuant to sale and
         lease-back transactions permitted under Section 6.11; and

                  (e) leases and licenses (and subleases and sublicenses) of
         real or personal property in the ordinary course of business;

provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made for fair
value and solely for cash consideration; and provided further that up to
$250,000 of inventory may be disposed of in any fiscal year for promotional or
marketing purposes or similar non-cash barter arrangements in the ordinary
course of business.

                  SECTION 6.06. Hedging Agreements. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any Hedging Agreement,
other than Hedging Agreements entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the management of its liabilities.

                                       69
<PAGE>

                  SECTION 6.07. Restricted Payments; Certain Payments of
Indebtedness. (a) The Borrower will not, nor will it permit any of its
Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment which would occur during the period beginning
on the Effective Date and ending on the date that is one year after the Maturity
Date, except:

                  (i) the Borrower may declare and pay dividends with respect to
         its capital stock payable solely in additional shares of its common
         stock;

                  (ii) the Borrower may make Restricted Payments to cancel,
         redeem, acquire or repurchase shares of common stock of the Borrower
         held by, or stock options granted to, directors and employees of the
         Borrower in the event of death, disability, termination of employment
         or retirement of any such director or employee; provided that the
         aggregate amount of such Restricted Payments shall not exceed
         $1,000,000 in any fiscal year;

                  (iii) the Borrower may apply the proceeds of Replacement
         Mezzanine Securities to redeem common stock warrants (or shares of
         common stock issued upon the exercise thereof) issued by the Borrower
         contemporaneously with the Mezzanine Securities pursuant to the
         Mezzanine Securities Documents; and

                  (iv) Subsidiaries may make Restricted Payments to the Borrower
         and to wholly owned Subsidiaries of the Borrower and may declare and
         pay dividends ratably with respect to their capital stock.

                  (b) The Borrower will not, nor will it permit any Subsidiary
to, make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) in respect of
principal of or interest on any Mezzanine Securities or Replacement Mezzanine
Securities, or any payment or other distribution (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancelation or termination of
any Mezzanine Securities or Replacement Mezzanine Securities which would occur
during the period beginning on the Effective Date and ending on the date that is
one year after the Maturity Date, except:

                  (i) the Borrower may redeem the Mezzanine Securities with the
         Net Cash Proceeds of an IPO if such IPO is consummated within six
         months after the Effective Date and such redemption is made promptly
         following receipt of such Net Cash Proceeds;

                  (ii) the Borrower may pay accrued interest on Mezzanine
         Securities or Replacement Mezzanine Securities by the issuance of
         additional Mezzanine Securities or Replacement Mezzanine Securities, as
         applicable, in accordance with the Mezzanine Securities Documents or
         Replacement Mezzanine Securities Documents, as applicable; and

                                       70
<PAGE>

                  (iii) the Borrower may redeem or otherwise repay Mezzanine
         Securities with the proceeds of one or more substantially
         contemporaneous issuances of an equal principal amount (or, in the case
         of preferred stock, liquidation preference) of Replacement Mezzanine
         Securities in accordance with this Agreement.

                  SECTION 6.08. Transactions with Affiliates. The Borrower will
not, nor will it permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrower and its Subsidiaries that are
Subsidiary Loan Parties which do not involve any other Affiliate, (c) any
Restricted Payment permitted by Section 6.07 and any issuance by the Borrower of
shares of its capital stock, or warrants or options to purchase shares of its
capital stock, that is not otherwise prohibited by this Agreement and (d)
payments made under and in accordance with agreements specified in Schedule 6.08
(without giving effect to any amendment or modification thereof that has not
been approved by the Required Lenders).

                  SECTION 6.09. Restrictive Agreements. The Borrower will not,
nor will it permit any of its Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any of its Subsidiaries to create, incur or permit to exist any Lien
upon any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its Equity
Interests or to make or repay loans or advances to the Borrower or any other
Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by any Loan Document, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on Schedule
6.09 (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness, (v) clause (a)
of the foregoing shall not apply to customary provisions in leases or other
contracts restricting the assignment thereof, (vi) clause (a) of the foregoing
shall not apply to provisions in leases of real property restricting the
mortgage thereof and (vii) clause (a) of the foregoing shall not apply to
restrictions on Liens contained in the Mezzanine Securities Documents, and any
future replacements, amendments or modifications thereof; provided that the
terms governing any replacements, amendments or modifications shall be no more
disfavorable to the interests of the Lenders than the terms of the Mezzanine
Securities Documents.

                                       71
<PAGE>

                  SECTION 6.10. Amendment of Material Documents. The Borrower
will not, nor will it permit any Subsidiary to, amend, modify or waive any of
its rights under (a) any Mezzanine Securities Document, Replacement Mezzanine
Securities Document or any agreement specified in Schedule 6.08 or (b) its
certificate of incorporation, by-laws or other organizational documents, except
amendments and modification to agreements and documents referred to in clause
(a) or (b) shall be permitted to the extent that the cumulative effect of all
such amendments and modifications do not adversely affect the interests of the
Lenders in any material respect (as determined by the Administrative Agent in
its reasonable discretion).

                  SECTION 6.11. Sale and Lease-Back Transactions. The Borrower
will not, nor will it permit any Subsidiary to, enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred, except for (a) any such sale and leaseback
of property, the acquisition, construction or improvement of which has been
financed with Indebtedness incurred pursuant to clause (v) of Section 6.01(a),
provided that the cash consideration in respect of such sale is at least
sufficient to prepay, and is applied to prepay, such Indebtedness, (b) the sale
and leaseback of the store located at the Walden Galleria, Buffalo, New York,
and (c) the sale and leaseback of the store to be located at The Marketplace
Mall, Rochester, New York, following the completion of the construction thereof.

                  SECTION 6.12. Capital Expenditures. The Borrower will not
permit the aggregate amount of Capital Expenditures made by the Borrower and its
Subsidiaries in any fiscal year set forth below to exceed the amount set forth
below opposite such fiscal year, provided that, to the extent that Capital
Expenditures permitted for any such fiscal year exceed the actual Capital
Expenditures for such fiscal year, the excess shall be permitted in the
immediately succeeding fiscal year in addition to the amount otherwise
permitted.

                  Fiscal year                                       Amount

         For the fiscal year ended on 2/2/02                        $45,000,000
         For the fiscal year ended on 2/1/03                        $65,000,000
         For the fiscal year ended on 1/31/04                       $78,000,000

                  SECTION 6.13. Leverage Ratio. The Borrower will not permit the
Leverage Ratio on the last day of any fiscal quarter of the Borrower ending
during any period set forth below to be in excess of the ratio set forth below
opposite such period:

                                       72
<PAGE>

<TABLE>
<CAPTION>
                      Period                                                         Ratio

<S>                                                                              <C>
For the period beginning on the Effective Date and ending on and including the
last day of the second fiscal quarter of the fiscal year ending on February 2,
2002                                                                             3.00 to 1.00

For the period beginning on the first day of the third fiscal quarter of the
fiscal year ending on February 2, 2002 and ending on and including the last day
of the third fiscal quarter of the fiscal year ending on
February 2, 2002                                                                 3.50 to 1.00

For the period beginning on the first day of the fourth fiscal quarter of the
fiscal year ending on February 2, 2002 and ending on and including the last day
of the second fiscal quarter of the fiscal year ending on
February 1, 2003                                                                 3.00 to 1.00

For the period beginning on the first day of the third fiscal quarter of the
fiscal year ending on February 1, 2003 and ending on and including the last day
of the third fiscal quarter of the fiscal year ending on
February 1, 2003                                                                 3.50 to 1.00

For the period beginning on the first day of the fourth fiscal quarter of the
fiscal year ending on February 1, 2003 and ending on and including the last day
of the second fiscal quarter of the fiscal year ending on
January 31, 2004                                                                 3.00 to 1.00

                               Period                                                Ratio

For the period beginning on the first day of the third fiscal quarter of the
fiscal year ending on January 31, 2004 and ending on and including the last day
of the third fiscal quarter of the fiscal year ending on January
31, 2004                                                                         3.50 to 1.00

Thereafter                                                                       2.75 to 1.00

                  SECTION 6.14. Coverage Ratio. The Borrower will not permit the
ratio of (a) Consolidated EBITDAR to (b) the sum of Consolidated Interest
Expense and
</TABLE>

                                       73
<PAGE>

Consolidated Rent Expense, in each case for any period of four consecutive
fiscal quarters of the Borrower ending during any period set forth below, to be
less than the ratio set forth below opposite such period:

<TABLE>
<CAPTION>
                      Period                                                         Ratio

<S>                                                                              <C>
For the period beginning on the Effective Date and
ending on and including the last day of the third fiscal
quarter of the fiscal year ending on February 2, 2002                            1.50 to 1.00

Thereafter                                                                       1.75 to 1.00
</TABLE>

                                   ARTICLE VII

                                Events of Default

                  If any of the following events ("Events of Default") shall
occur:

                  (a) the Borrower shall fail to pay any principal of any Loan
         or any reimbursement obligation in respect of any LC Disbursement when
         and as the same shall become due and payable, whether at the due date
         thereof or at a date fixed for prepayment thereof or otherwise;

                  (b) the Borrower shall fail to pay any interest on any Loan or
         any fee or any other amount (other than an amount referred to in clause
         (a) of this Article) payable under this Agreement or any other Loan
         Document, when and as the same shall become due and payable, and such
         failure shall continue unremedied for a period of three Business Days;

                  (c) any representation or warranty made or deemed made by or
         on behalf of the Borrower or any of its Subsidiaries in or in
         connection with any Loan Document or any amendment or modification
         thereof or waiver thereunder, or in any report, certificate, financial
         statement or other document furnished pursuant to or in connection with
         any Loan Document or any amendment or modification thereof or waiver
         thereunder, shall prove to have been incorrect in any material respect
         when made or deemed made;

                  (d) the Borrower shall fail to observe or perform any
         covenant, condition or agreement contained in Section 5.02, 5.04 (with
         respect to the existence of the Borrower) or 5.11 or in Article VI;

                  (e) any Loan Party shall fail to observe or perform any
         covenant, condition or agreement contained in any Loan Document (other
         than those specified in clause (a), (b) or (d) of this Article), and
         such failure shall continue unremedied

                                       74
<PAGE>

         for a period of 30 days after notice thereof from the Administrative
         Agent to the Borrower (which notice will be given at the request of any
         Lender);

                  (f) the Borrower or any Subsidiary shall fail to make any
         payment (whether of principal or interest and regardless of amount) in
         respect of any Material Indebtedness, when and as the same shall become
         due and payable;

                  (g) any event or condition occurs that (i) results in any
         Material Indebtedness becoming due prior to its scheduled maturity or
         that enables or permits the holder or holders of any Material
         Indebtedness or any trustee or agent on its or their behalf to cause
         any Material Indebtedness to become due, or to require the prepayment,
         repurchase, redemption or defeasance thereof, prior to its scheduled
         maturity; provided that this clause (g) (i) shall not apply to secured
         Indebtedness that becomes due as a result of the voluntary sale or
         transfer of the property or assets securing such Indebtedness or (ii)
         would have had the results specified in clause (g)(i) of this Article,
         but for a waiver, consent or amendment for which the Borrower or any
         Subsidiary gave any consideration or benefit of any kind (including any
         increased compensation, prepayment, shortening of maturities, security
         or other credit support, but excluding reimbursement of expenses and
         payment of an amendment or waiver fee in an amount not exceeding 0.125%
         of the outstanding principal amount of the Indebtedness in respect of
         which such an amendment or waiver is obtained);

                  (h) an involuntary proceeding shall be commenced or an
         involuntary petition shall be filed seeking (i) liquidation,
         reorganization or other relief in respect of the Borrower, any
         Subsidiary or its debts, or of a substantial part of its assets, under
         any Federal, state or foreign bankruptcy, insolvency, receivership or
         similar law now or hereafter in effect or (ii) the appointment of a
         receiver, trustee, custodian, sequestrator, conservator or similar
         official for the Borrower or any Subsidiary or for a substantial part
         of its assets, and, in any such case, either (A) there shall be a
         period of 60 days during which such proceeding or petition shall not be
         dismissed, vacated or stayed pending appeal or (B) an order or decree
         approving or ordering any of the foregoing shall be entered;

                  (i) the Borrower or any Subsidiary shall (i) voluntarily
         commence any proceeding or file any petition seeking liquidation,
         reorganization or other relief under any Federal, state or foreign
         bankruptcy, insolvency, receivership or similar law now or hereafter in
         effect, (ii) consent to the institution of, or fail to contest in a
         timely and appropriate manner, any proceeding or petition described in
         clause (h) of this Article, (iii) apply for or consent to the
         appointment of a receiver, trustee, custodian, sequestrator,
         conservator or similar official for the Borrower or any Subsidiary or
         for a substantial part of its assets, (iv) file an answer admitting the
         material allegations of a petition filed against it in any such
         proceeding, (v) make a general assignment for the benefit of creditors
         or (vi) take any action for the purpose of effecting any of the
         foregoing;

                                       75
<PAGE>

                  (j) the Borrower or any Subsidiary shall become unable, admit
         in writing its inability or fail generally to pay its debts as they
         become due;

                  (k) one or more judgments for the payment of money in an
         aggregate amount (excluding amounts covered by insurance from
         financially sound insurance companies that have acknowledged liability
         in respect thereof) in excess of $5,000,000 shall be rendered against
         the Borrower, any Subsidiary or any combination thereof and either (i)
         there shall be a period of 45 consecutive days during which the same
         shall not be discharged, vacated or stayed pending appeal or (ii) any
         action shall be legally taken by a judgment creditor to attach or levy
         upon any assets of the Borrower or any Subsidiary to enforce any such
         judgment;

                  (l) an ERISA Event shall have occurred that, in the opinion of
         the Required Lenders, when taken together with all other ERISA Events
         that have occurred, could reasonably be expected to result in liability
         of the Borrower and its Subsidiaries in an aggregate amount exceeding
         (i) $2,000,000 in any year or (ii) $3,500,000 for all periods;

                  (m) any Lien purported to be created under any Security
         Document shall cease to be, or shall be asserted by any Loan Party not
         to be, a valid and perfected Lien on any Collateral, with the priority
         required by the applicable Security Document, except (i) as a result of
         the sale or other disposition of the applicable Collateral in a
         transaction permitted under the Loan Documents or (ii) as a result of
         the Collateral Agent's failure to maintain possession of any stock
         certificates, promissory notes or other instruments delivered to it
         under the Pledge Agreement; or

                  (n) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued

                                       76
<PAGE>

hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.

                                  ARTICLE VIII

                            The Administrative Agent

                  Each of the Lenders and an Issuing Bank hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.

                  The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Administrative Agent hereunder.

                  The Administrative Agent shall not have any duties or
obligations except those expressly set forth in the Loan Documents. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated by the
Loan Documents that the Administrative Agent is required to exercise in writing
by the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02), and (c)
except as expressly set forth in the Loan Documents, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document,

                                       77
<PAGE>

(iv) the validity, enforceability, effectiveness or genuineness of any Loan
Document or any other agreement, instrument or document, or (v) the satisfaction
of any condition set forth in Article IV or elsewhere in any Loan Document,
other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

                  The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

                  The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

                  Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, in consultation
with the Borrower and on behalf of the Lenders and the Issuing Banks, appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

                                       78
<PAGE>

                  Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.

                  The provisions of this Article applicable to the
Administrative Agent also shall apply to the Collateral Agent, mutatis mutandis.

                                   ARTICLE IX

                                  Miscellaneous

                  SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

                  (a) if to the Borrower, to it at 2437 East Main Street,
         Plainfield, Indiana 46168, Attention of Treasurer (Telecopy No.
         317-532-0260); with a copy to FS Equity Partners IV, L.P., 599
         Lexington Avenue, 18th Floor, New York, New York 10022, Attention of
         Todd Halloran (Telecopy No. 212-758-7499);

                  (b) if to the Administrative Agent or the Collateral Agent, to
         The Chase Manhattan Bank, Loan and Agency Services Group, One Chase
         Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of
         Janet Beldon (Telecopy No. (212) 552-5658), with a copy to The Chase
         Manhattan Bank, 270 Park Avenue, 48th Floor, New York, New York 10017,
         Attention of Maggie Lane (Telecopy No. (212) 270-5646);

                  (c) if to an Issuing Bank, to Chase Manhattan Bank Delaware,
         Letter of Credit Department, 1201 Market Street, 8th Floor, Wilmington,
         Delaware 19801, Attention of Michael Handago (Telecopy No. (302)
         428-3390);

                  (d) if to the Swingline Lender, to The Chase Manhattan Bank at
         One Chase Manhattan Plaza, 8th Floor, New York, New York 10081,
         Attention of Janet Beldon (Telecopy No. (212) 552-5658); and

                                       79
<PAGE>

                  (e) if to any other Lender or Issuing Bank, to it at its
         address (or telecopy number) set forth in its Administrative
         Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

                  SECTION 9.02. Waivers; Amendments. (a) No failure or delay by
the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender
in exercising any right or power hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, the Collateral Agent,
any Lender or any Issuing Bank may have had notice or knowledge of such Default
at the time.

                  (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent or the Collateral Agent, as applicable, and the
Loan Party or Loan Parties that are parties thereto, in each case with the
consent of the Required Lenders; provided that no such agreement shall (i)
increase the Commitment of any Lender without the written consent of such
Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.17(b) or (c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (v) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision of any Loan Document
specifying the number or percentage of Lenders required to waive, amend or
modify any rights

                                       80
<PAGE>

thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender, (vi) release any Subsidiary Loan Party from
its Guarantee under the Subsidiary Guarantee Agreement (except as expressly
provided in the applicable Subsidiary Guarantee Agreement), or limit its
liability in respect of such Guarantee, without the written consent of each
Lender, (vii) release all or substantially all of the Collateral from the Liens
of the Security Documents, without the written consent of each Lender or (viii)
change any of the provisions of the definitions of "Borrowing Base" or "Eligible
Inventory" in a manner that adversely affects the interests of the Lenders
without the written consent of the Supermajority Lenders or (ix) amend or waive
compliance with the requirements of Section 2.10(b) or Section 4.02(c), without
the written consent of the Supermajority Lenders; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Collateral Agent, any Issuing Bank or the Swingline
Lender without the prior written consent of the Administrative Agent, the
Collateral Agent, such Issuing Bank or the Swingline Lender, as the case may be.

                  (c) If, in connection with any proposed amendment,
modification, termination or waiver of or to any of the provisions of this
Agreement or the other Loan Documents contemplated by the first proviso to
Section 9.02(b) the consent of the Required Lenders is obtained but the consent
of one or more of such other Lenders whose consent is required is not obtained,
then the Borrower shall have the right to either (i) replace any such
non-consenting Lender or Lenders with one or more replacement Lenders in the
same manner as provided in Section 2.18(b) so long as at the time of such
replacement, each such replacement Lender consents to the proposed amendment,
modification, termination or waiver, or (ii) terminate any such non-consenting
Lender's Commitment and repay in full its outstanding Loans in accordance with
Sections 2.08(d) and 2.10(f); provided that unless the Commitments that are
terminated and the Loans that are repaid pursuant to the preceding clause (ii)
are immediately replaced in full at such time through the addition of new
Lenders or the increase of the Commitments and/or outstanding Loans of existing
Lenders (who in each case must specifically consent thereto), then in the case
of any action pursuant to the preceding clause (ii), each Lender (other than the
terminated Lender or Lenders) must consent to such termination.

                  SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, the Arranger, the Syndication Agent
and their respective Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent and the Collateral Agent,
in connection with the syndication of the credit facilities provided for herein,
the preparation and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by any Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all reasonable out-of-pocket
expenses incurred by the Administrative Agent, the Collateral Agent, any Issuing
Bank or any Lender,

                                       81
<PAGE>

including the reasonable fees, charges and disbursements of any counsel for the
Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
reasonable out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

                  (b) The Borrower shall indemnify the Administrative Agent, the
Collateral Agent, the Arranger, the Syndication Agent, each Issuing Bank and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of any Loan Document or
any other agreement or instrument contemplated hereby, the performance by the
parties to the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by any Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any Mortgaged
Property or any other property currently or formerly owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee.

                  (c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent, the Collateral Agent, any
Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section,
each Lender severally agrees to pay to the Administrative Agent, the Collateral
Agent, such Issuing Bank or the Swingline Lender, as the case may be, such
Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Collateral Agent, such Issuing Bank or the
Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro
rata share" shall be determined based upon its share of the total Revolving
Exposures and unused Commitments at the time.

                                       82
<PAGE>

                  (d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.

                  (e) All amounts due under this Section shall be payable
promptly after written demand therefor.

                  SECTION 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of any Issuing Bank that issues any Letter of Credit), except that
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Collateral Agent, the Issuing Banks and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

                  (b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower, the Administrative Agent, the Issuing Banks and the
Swingline Lender must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an Affiliate of a Lender or an assignment of the
entire remaining amount of the assigning Lender's Commitment, the amount of the
Commitment of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 unless
each of the Borrower and the Administrative Agent otherwise consent, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement, (iv) the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and provided further that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (h) or (i) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective

                                       83
<PAGE>

date specified in each Assignment and Acceptance the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Accep tance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.

                  (c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Collateral Agent, the Issuing Banks and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, any
Issuing Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

                  (d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

                  (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, any Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Collateral Agent, the Issuing Banks and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's

                                       84
<PAGE>

rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents;
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.14,
2.15 and 2.16 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.17(c) as though it were a Lender.

                  (f) A Participant shall not be entitled to receive any greater
payment under Section 2.14 or 2.16 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.16(e) as though it were a Lender.

                  (g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations to a Federal Reserve Bank, and with the consent of the Borrower and
Administrative Agent any Lender which is an investment fund may pledge all or
any portion of its loans to its trustee in support of its obligations to such
trustee, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto in no
event shall such Federal Reserve Bank or trustee be considered to be a "Lender"
or be entitled to require the assigning Lender to take or omit to take any
action hereunder.

                  SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Administrative
Agent, the Collateral Agent, any Issuing Bank or any Lender may have had notice
or knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this

                                       85
<PAGE>

Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

                  SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Arranger, the Syndication Agent and the Administrative Agent
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
4.01, this Agreement shall become effective when it shall have been executed by
the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

                  SECTION 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

                  SECTION 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Borrower against any of and all the obligations of the Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.

                  SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.

                                       86
<PAGE>

                  (b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against the Borrower or its properties in the courts
of any jurisdiction.

                  (c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (b) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

                  (d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.

                  SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

                                       87
<PAGE>

                  SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.

                  SECTION 9.12. Confidentiality. Each of the Administrative
Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality
of the Information (as defined below) in accordance with their customary
procedures, except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower, (h) to the extent such
Information becomes publicly available other than as a result of a breach of
this Section or becomes available to the Administrative Agent, an Issuing Bank
or any Lender on a nonconfidential basis from a source other than the Borrower
or any of its Affiliates; provided such source is not known by the receiving
party to be bound by a confidentiality agreement with or other contractual,
legal or fiduciary obligation of confidentiality to Borrower or (i) to any
direct or indirect contractual counterparty with a Lender or its Affiliates in a
swap agreement or such counterparty's professional advisor (so long as such
contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 9.12);
provided that, unless specifically prohibited by applicable law or court order,
each Lender shall notify the Borrower of any request by any regulatory authority
or representative thereof or pursuant to legal process (other than any such
request in connection with any examination of the financial condition of such
Lender by such regulatory authority) for disclosure of any such nonpublic
information prior to disclosure of such information. For the purposes of this
Section, "Information" means all information received from the Borrower or any
of its Affiliates relating to the Borrower or any of its Subsidiaries or their
respective businesses, other than any such information that is available to the
Administrative Agent, any Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrower or any of its Affiliates; provided that, in
the case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

                                       88
<PAGE>

                  SECTION 9.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively, the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.

                  SECTION 9.14. Notice of Termination of Commitments under the
Original Credit Agreement. The Administrative Agent and the Lenders release the
Borrower of its obligation under Section 2.08 (c) of the Original Credit
Agreement to notify the Administrative Agent of any election to terminate the
Commitments under the Original Credit Agreement and acknowledge that such notice
can be given on the Effective Date of this Agreement.

                                       89
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.

                                     GALYAN'S TRADING COMPANY, INC.,

                                         by  /s/ Robert A. Stout
                                            ____________________________________
                                            Name:  Robert A. Stout
                                            Title: Treasurer

                                     THE CHASE MANHATTAN BANK,
                                     individually and as Administrative Agent,

                                         by   /s/ Margaret T. Lane
                                            ____________________________________
                                            Name:  Margaret T. Lane
                                            Title: Vice President

                                     GOLDMAN SACHS CREDIT PARTNERS
                                     L.P.,

                                         by   /s/ Daniel Allen
                                            ____________________________________
                                            Name:  Daniel Allen
                                            Title: Authorized Signatory<PAGE>

                                                                   Exhibit 10.16

                                LEASE AGREEMENT
                                ---------------

        THIS LEASE AGREEMENT ("Lease"), made as of the 31st day of August, 1999,
by and between CP GAL PLAINFIELD, LLC, a Delaware limited liability company
having an address of 805 South Figueroa Street, Suite 3500, Los Angeles,
California 90017 ("Landlord"), and GALYAN'S TRADING COMPANY, INC., an Indiana
corporation having an office at 2437 East Main Street, Plainfield, IN 46168
("Tenant").

                                   Agreement
                                   ---------

Landlord and Tenant agree as follows:

1.      Demise of Premises. Landlord demises and lets to Tenant, and Tenant
        ------------------
        takes and leases from Landlord, for the Term (defined below) and upon
        the provisions specified in this Lease the following described property
        (the "Leased Premises"):

        (i)    the lot or parcel of land described in Exhibit A to this Lease,
                                                      ---------
               together with the easements, rights and appurtenances thereunto
               belonging or appertaining (the "Land");

        (ii)   the buildings, structures and other improvements on the Land
               (collectively, the "Improvements"); and

        (iii)  the machinery and equipment which is attached to the Improvements
               in such a manner as to become fixtures under applicable law,
               together with all additions and accessions thereto, substitutions
               therefor and replacements thereof permitted by this Lease
               (collectively, the "Equipment");

        excepting therefrom the Trade Fixtures.

2.      Certain Definitions.
        -------------------

        (a)    "Additional Rent" means all amounts, costs, expenses,
               liabilities, indemnification obligations and/or other obligations
               (including but not limited to Tenant's obligation to pay any Net
               Awards or Purchase Price under this Lease) which Tenant is
               required to pay pursuant to the terms of this Lease other than
               Basic Rent.

        (b)    "Adjoining Property" means all sidewalks, curbs, gores and vault
               spaces adjoining the Leased Premises.

        (c)    "Alteration" or "Alterations" means any or all changes, additions
               (whether or not adjacent to or abutting any then existing
               Improvements), expansions (whether or not adjacent to or abutting
               any then existing Improvements), improvements, reconstructions,
               removals or replacements of any of the Improvements or Equipment,
               both interior or exterior, and ordinary and extraordinary.
<PAGE>

        (d)    "Basic Rent" means Basic Rent as defined in Section 6.

        (e)    "Basic Rent Payment Dates" means the Basic Rent Payment Dates as
               defined in Section 6.

        (f)    "Casualty Purchase Price" is defined in Section 15(j)(i).

        (g)    "Casualty Purchase Offer" is defined in Section 15(j)(ii).

        (h)    "Commencement Date" means the Commencement Date as defined in
               Section 5.

        (i)    "Condemnation" means a Taking and/or a Requisition.

        (j)    "Condemnation Termination Date" means the Condemnation
               Termination Date as defined in Section 13(b)(i).

        (k)    "Default Rate" means the Default Rate as defined in Section
               19(b)(iv).

        (l)    "Equipment" means the Equipment as defined in Section 1.

        (m)    "Event of Default" means an Event of Default as defined in
               Section 19(a).

        (n)    "GMAC" shall mean GMAC Commercial Mortgage Corporation or its
               successor in interest as Lender under the GMAC Loan.

        (o)    "GMAC Loan" means the loan made by GMAC Commercial Mortgage
               Corporation to Landlord on August 31, 1999.

        (p)    "Impositions" means the Impositions as defined in Section 8.

        (q)    "Improvements" means the Improvements as defined in Section 1.

        (r)    "Insurance Requirement" or "Insurance Requirements" means, as the
               case may be, any one or more of the terms of each insurance
               policy required to be carried by Tenant under this Lease and the
               requirements of the issuer of such policy, and whenever Tenant
               shall be engaged in making any Alteration or Alterations, repairs
               or construction work of any kind (collectively, "Work"), the term
               "Insurance Requirement" or "Insurance Requirements" will be
               deemed to include a requirement that Tenant obtain or cause its
               contractor to obtain completed value builder's risk insurance
               when the estimated cost of the Work in any one instance exceeds
               the sum of $500,000 and that Tenant or its contractor shall
               obtain worker's compensation insurance or other adequate
               insurance coverage covering all persons employed in connection
               with the Work, whether by Tenant, its contractors or
               subcontractors and with respect to whom death or bodily injury
               claims could reasonably be asserted against Landlord.

        (s)    "Land" means the Land as defined in Section 1.

                                       2
<PAGE>

        (t)    "Law" means any constitution, statute, code, ordinances, orders,
               judgments, decrees, injunctions, rules, regulations and
               requirements, even if unforeseen or extraordinary, of every duly
               constituted governmental authority or agency (but excluding those
               which by their terms are not applicable to and do not impose any
               obligation on Tenant, Landlord or the Leased Premises).

        (u)    "Leased Premises" means the Leased Premises as defined in Section
               1.

        (v)    "Legal Requirement" or "Legal Requirements" means, as the case
               may be, any one or more of all present and future Laws and all
               covenants, restrictions and conditions now of record which may be
               applicable to Tenant, Landlord (with respect to the Leased
               Premises) or to all or any part of or interest in the Leased
               Premises, or to the use, manner of use, occupancy, possession,
               operation, maintenance, alteration, repair or reconstruction of
               the Leased Premises, in each case, even if compliance therewith:
               (i) necessitates structural changes or improvements (including
               changes required to comply with the "Americans with Disabilities
               Act") or results in interference with the use or enjoyment of the
               Leased Premises; or (ii) requires Tenant to carry insurance other
               than as required by the provisions of this Lease.

        (w)    "Lender" means an entity identified as such in writing to Tenant
               which makes a Loan secured by a Mortgage and evidenced by a Note
               or which is the holder of the Mortgage and Note as a result of an
               assignment thereof.

        (x)    "Loan" means a loan made, from time-to-time during the Term, by a
               Lender secured by a Mortgage and evidenced by a Note.

        (y)    "Mortgage" means a first priority mortgage or similar first lien
               security instrument hereafter executed covering the Leased
               Premises and in favor of Lender.

        (z)    "Net Award" means the entire award payable to Landlord by reason
               of a Condemnation, less any reasonable out-of-pocket expenses
               incurred by Landlord in collecting such award.

        (aa)   "Net Proceeds" means the entire proceeds of any insurance
               required under clauses (i), (iv), (v) or (vi) of Section 14(a),
               less any actual and reasonable out-of-pocket expenses incurred by
               Landlord in collecting such proceeds.

        (bb)   "Note" or "Notes" means a promissory note or notes now or
               hereafter executed to Lender, which Note or Notes will be secured
               by a Mortgage.

        (cc)   "Permitted Encumbrances" means those covenants, restrictions,
               reservations, liens, conditions, encroachments, easements and
               other matters of title that affect the Leased Premises as of the
               date of Landlord's acquisition of the Leased Premises and any
               matters created and permitted under and pursuant to the express
               terms of this Lease or expressly consented to by Landlord,
               excepting, however, any mortgage placed on the Leased Premises
               for the purpose of securing the Loan.

                                       3
<PAGE>

        (dd)   "Purchase Price" is defined in Section 13(b)(i)(B).

        (ee)   "Replacement Equipment" means Replacement Equipment, as defined
               in Section 11(d).

        (ff)   "Requisition" means any temporary condemnation or confiscation of
               the use or occupancy of the Leased Premises by any governmental
               authority, civil or military, whether pursuant to an agreement
               with such governmental authority in settlement of or under threat
               of any such requisition or confiscation, or otherwise.

        (gg)   "Restoration" means the Restoration as defined in Section
               13(c)(i).

        (hh)   "State" means the State or Commonwealth in which the Leased
               Premises is situated.

        (ii)   "Taking" means any taking of the Leased Premises or any portion
               thereof in or by condemnation or other eminent domain proceedings
               pursuant to any Law, general or special, or by reason of any
               agreement with any condemnor in settlement of or under threat of
               any such condemnation or other eminent domain proceedings or by
               any other means, or any de facto condemnation.

        (jj)   "Term" means the Term as defined in Section 5.

        (kk)   "Termination Date" means the Termination Date as defined in
               Section 19(b)

        (ll)   "Trade Fixtures" means all fixtures, equipment and other items of
               personal property (whether or not attached to the Improvements)
               which are owned by Tenant and used in the operation of the
               business conducted on the Leased Premises.

        (mm)   "Trustee" means a federally insured bank or other financial
               institution selected by Landlord and Tenant and reasonably
               satisfactory to any Lender. With Lender's consent, Landlord and
               Tenant may select Lender as the Trustee. As of the date of this
               Lease, GMAC Commercial Mortgage Corporation, the current Lender,
               is the initial Trustee.

3.      Title and Condition.
        -------------------

        (a)    The Leased Premises are demised and let "as is," "where is"
               subject to: (i) the Permitted Encumbrances; (ii) all Legal
               Requirements and Insurance Requirements, including any existing
               violation of any thereof; and (iii) the condition of the Leased
               Premises as of the commencement of the Term, in each case,
               without representation or warranty by Landlord. The recital of
               the Permitted Encumbrances in this Lease may not be construed as
               a revival of any Permitted Encumbrances which for any reason may
               have expired.

        (b)    LANDLORD HAS NOT MADE AND WILL NOT MAKE ANY INSPECTION OF ANY OF
               THE LEASED PREMISES, AND LANDLORD LEASES AND WILL LEASE, AND
               TENANT TAKES AND WILL TAKE, THE LEASED PREMISES

                                       4
<PAGE>

               "AS IS," "WHERE IS" AND TENANT ACKNOWLEDGES THAT LANDLORD
               (WHETHER ACTING AS LANDLORD UNDER THIS LEASE OR IN ANY OTHER
               CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR MAY LANDLORD BE
               DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR
               IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING
               ANY WARRANTY OR REPRESENTATION AS TO FITNESS FOR USE OR PURPOSE,
               DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE
               QUALITY OF THE MATERIAL OR WORKMANSHIP, LATENT OR PATENT, AS TO
               LANDLORD'S TITLE, OR AS TO VALUE, COMPLIANCE WITH SPECIFICATIONS,
               LOCATION, USE, CONDITION, MERCHANTABILITY, QUALITY, DESCRIPTION,
               DURABILITY OR OPERATION, IT BEING AGREED THAT, ALL RISKS OF ANY
               KIND INCIDENT TO THE OWNERSHIP, USE, OCCUPANCY, POSSESSION OR
               OPERATION OF THE LEASED PREMISES, INCLUDING, WITHOUT LIMITATION,
               ALL RISKS OF ANY KIND TO ANY PERSON IN, ON OR ABOUT THE LEASED
               PREMISES, ARE TO BE BORNE BY TENANT, BUT EXCLUDING THE WILLFUL
               MISCONDUCT OR GROSS NEGLIGENCE OF LANDLORD. Tenant acknowledges
               that the Leased Premises are of its selection and to its
               specifications, and that the Leased Premises have been inspected
               by Tenant and are satisfactory. Landlord will not have any
               responsibility or liability with respect to any defect or
               deficiency in the Leased Premises of any nature, whether patent
               or latent, or for any actual, incidental or consequential damages
               (including strict liability in tort). Tenant agrees that it has
               selected and operated the Leased Premises and that Landlord
               cannot, as a factual matter, have in any way engaged in willful
               misconduct or been grossly or otherwise negligent with respect to
               any aspect of the Leased Premises now existing. The provisions of
               this Section 3(b) have been negotiated and are intended to be a
               complete exclusion and negation of any representations and
               warranties by Landlord, express or implied, with respect to the
               Leased Premises, arising pursuant to the uniform commercial code
               or any other Law now or hereafter in effect or otherwise.

        (c)    Tenant acknowledges and agrees that Tenant has examined the title
               to the Leased Premises prior to the execution and delivery of
               this Lease and has found such title to be satisfactory for the
               purposes contemplated by this Lease.

        (d)    Landlord assigns, without recourse or warranty whatsoever, to
               Tenant, all warranties, guaranties and indemnities, express or
               implied, and similar rights which Landlord may have against any
               manufacturer, seller, engineer, contractor or builder in respect
               of the Leased Premises, including, but not limited to, any rights
               and remedies existing under contract or pursuant to the uniform
               commercial code (collectively, the "Guarantees"). Such assignment
               will remain in effect until the termination or expiration of this
               Lease. Landlord also retains the right to enforce any Guarantees
               assigned in the name of Tenant upon the occurrence of an Event of
               Default. Landlord hereby agrees to execute and deliver at
               Tenant's expense such further documents, including powers of
               attorney, as Tenant may reasonably request in order that Tenant
               may have the full benefit of the assignment effected or intended
               to be

                                       5
<PAGE>

               effected by this Section 3(d). Upon the termination or expiration
               of this Lease, the Guarantees will automatically revert to
               Landlord. The foregoing provision of reversion is self-operative
               and no further instrument of reassignment will be required in
               confirmation of such reassignment. Notwithstanding the terms of
               the preceding sentence, Tenant shall also execute and deliver
               such further documents as Landlord may reasonably request in
               order that Landlord may have full benefit to enforce Guarantees
               upon the occurrence of an Event of Default or upon termination or
               expiration of this Lease. Any monies collected by Tenant under
               any of the Guarantees after the occurrence of and during the
               continuation of an Event of Default will be held in trust by
               Tenant and promptly paid over to Landlord.

        (e)    Upon Tenant's written request, Landlord shall enter into, at
               Tenant's expense, such easements, covenants, waivers, approvals
               or restrictions for utilities, parking or other matters as are
               desirable to Tenant for operation of the Leased Premises or
               adjacent properties (collectively, "Easements"), subject to
               Landlord's and any Lender's approval of the form and substance of
               such Easement, not to be unreasonably withheld or delayed.
               Landlord need not enter into any Easement that would result in
               the diminution in the value or utility of the Leased Premises,
               that would render the use of the Leased Premises dependent upon
               any other property or that would condition the use of the Leased
               Premises upon the use of any other property. Tenant's request (i)
               must be sent to both Landlord and any Lender in writing, by
               registered or certified U.S. mail only, return receipt requested,
               postage prepaid, (ii) must certify that, in Tenant's opinion, the
               Easement would not have an effect described in the preceding
               sentence, (iii) must state the consideration or other benefit to
               the Leased Premises, if any, to be paid or received for such
               Easement; (iv) must include Tenant's written undertaking
               acknowledging that Tenant remains liable under this Lease as
               principal and not merely as a surety or guarantor notwithstanding
               the establishment of any Easement and (z) shall obligate Tenant
               to provide Landlord and any Lender with such other instruments,
               certificates and opinions of counsel as Landlord or any Lender
               may reasonably request to confirm the foregoing. If either
               Landlord or any Lender fails to approve the form of any such
               Easement, within a period of 30 days from their respective
               receipt of Tenant's request, then either Landlord or any Lender,
               as the case may be, will be deemed to have disapproved the form
               of any such Easement. Within 15 days after Landlord's or any
               Lender's written request therefor, which request must contain
               reasonable supporting information, Tenant shall pay the
               reasonable attorney fees and third-party consulting fees incurred
               by Landlord and any Lender in connection with the review of
               Tenant's request, to a maximum of $2,000 each. Any such Easement
               shall be at the cost and expense of Tenant. Any consideration
               paid in connection with any such Easement shall be paid to the
               Landlord. In no event shall Landlord be obligated to perform any
               obligations in connection with such Easement that cannot be
               assumed and/or performed by Tenant.

        (f)    Tenant shall perform all obligations of and pay all out-of-pocket
               expenses which Landlord, as owner of the Leased Premises, may be
               required to pay in accordance with any Permitted Encumbrances,
               and shall comply with all of the terms and conditions of any
               Permitted Encumbrances applicable to Landlord during the Term.

                                       6
<PAGE>

               Tenant further covenants and agrees to indemnify, defend and hold
               harmless Landlord and any Lender against any claim, loss or
               damage suffered by Landlord or any Lender by reason of Tenant's
               failure to perform any obligations or pay any expenses as
               required under any of the Permitted Encumbrances or comply with
               the terms and conditions of any of the Permitted Encumbrances as
               provided in this Section 3(f) during the Term.

4.      Use of Leased Premises; Quiet Enjoyment.
        ---------------------------------------

        (a)    Except as set forth in Section 4(d) or as otherwise prohibited by
               this Lease and in accordance with the Insurance Requirements,
               Tenant may use the Leased Premises as a distribution center or
               for any other lawful purpose so long as such other lawful purpose
               will not: (i) have a material adverse effect on the value of the
               Leased Premises; (ii) materially increase (when compared to use
               as a retail store) the reasonable likelihood that Tenant,
               Landlord or any Lender will incur liability under any
               Environmental Law referred to in Section 26; or (iii) result in
               or give rise to any material environmental or other deterioration
               or degradation of the Leased Premises. In addition, Tenant may
               not use or permit the use of the Leased Premises for any purpose
               which violates any of the provisions of any Permitted Encumbrance
               or any covenants, restrictions or agreements hereafter created by
               or consented to by Tenant applicable to the Leased Premises.
               Tenant agrees that with respect to the Permitted Encumbrances and
               any covenants, restrictions or agreements hereafter created by or
               consented to by Tenant that Tenant will observe, perform and
               comply with and carry out the provisions thereof required to be
               observed and performed by Landlord.

        (b)    Subject to Tenant's rights under Section l8, Tenant will not
               permit any unlawful occupation, business or trade to be conducted
               on the Leased Premises or any use to be made of the Leased
               Premises contrary to applicable Legal Requirements or Insurance
               Requirements. Subject to Tenant's rights under Section 18, Tenant
               will not use, occupy or permit any of the Leased Premises to be
               used or occupied, nor do or permit anything to be done in or on
               the Leased Premises, in a manner which would: (i) make void or
               voidable any insurance which Tenant is required under this Lease
               to then maintain in force with respect to the Leased Premises;
               (ii) affect the ability of Tenant to obtain any insurance which
               Tenant is required to furnish under this Lease; or (iii) cause
               any injury or damage to the Improvements unless caused in
               connection with the making of Alterations permitted under Section
               12 all of which injury or damage shall be repaired by Tenant at
               Tenant's sole cost and expense.

        (c)    Subject to all of the provisions of this Lease, so long as no
               Event of Default exists, Landlord covenants to do no act to
               disturb the peaceful and quiet occupation and enjoyment of the
               Leased Premises by Tenant.

        (d)    Tenant may not use the Leased Premises for any of the following
               uses:

               (i)     a gun range, except as may be incidental to the operation
                       of a sporting goods facility;

               (ii)    distilling, refining or smelting plant;

                                       7
<PAGE>

               (iii)   central laundry or dry cleaning plant;

               (iv)    massage parlor, adult book store, adult movie theater or
                       other sexually oriented shops, or any other establishment
                       which exhibits live to any degree nude or topless dancers
                       or waitstaff or similar establishments;

               (v)     funeral home, funeral parlor, or mortuary;

               (vi)    off-track betting establishment;

               (vii)   flea market; and

               (viii)  a labor camp, junkyard or stockyard.

5.      Term.
        ----

        (a)    Subject to the provisions of this Lease, Tenant will have and
               hold the Leased Premises for an initial term ("Initial Term")
               commencing on August 31, 1999 (the "Commencement Date"). The
               Initial Term will terminate on the date that is the twentieth
               anniversary of the last day of the calendar month in which the
               Commencement Date occurs. The Initial Term and any Renewal Terms
               (defined below) which come into effect are collectively called
               the "Term". As used in this Lease, "Lease Year" means each of (i)
               the period beginning on the Commencement Date and ending on the
               first anniversary of the last day of the calendar month in which
               the Commencement Date occurs, (ii) the one-year period beginning
               on the date (the "Anniversary Date") that is the first
               anniversary of the first day of the calendar month following the
               calendar month in which the Commencement Date occurs, and (iii)
               all other one-year periods during the Term beginning on an
               anniversary of the Anniversary Date.

        (b)    Provided this Lease has not been terminated pursuant to the
               provisions of Sections 13(b) or 19, this Lease and the Term will
               automatically extend for that number of consecutive Renewal Terms
               set forth in Exhibit B to this Lease (each, a "Renewal Term"),
                            ---------
               each for the duration set forth in Exhibit B to this Lease, upon
                                                  ---------
               the condition that Tenant may cancel any future Renewal Terms by
               giving notice ("Renewal Term Cancellation Notice") to Landlord in
               writing at least twelve months prior to the expiration of the
               then current Term (excluding any future Renewal Terms). Upon the
               giving of a Renewal Term Cancellation Notice, this Lease and the
               Term will terminate at the close of business on the later of: (i)
               the 90th day following the giving of the Renewal Term
               Cancellation Notice; and (ii) the last day of the then current
               Term (excluding any future Renewal Terms). If the effect of the
               preceding sentence is to extend the Term, then the Term will be
               so extended on the terms and conditions and for the Rent in
               effect for the Term expiring. Any Renewal Term will be subject to
               all of the provisions of this Lease, and all such provisions will
               continue in full force, except that the Basic Rent for each
               Renewal Term will be the amounts determined in accordance with
               the schedule set forth in Exhibit B to this Lease. If Tenant
                                         ---------
               timely gives a Renewal Term Cancellation Notice, then all options
               with regard to subsequent Renewal Terms will expire and be void.

6.      Rent.
        ----

                                       8
<PAGE>

        (a)    Tenant will pay to Landlord (or to any Lender, if directed by
               Landlord), as minimum annual rent for the Leased Premises during
               the Term, the amounts set forth in Exhibit B to this Lease
                                                  ---------
               ("Basic Rent"), monthly in advance commencing on the Commencement
               Date and continuing on the first day of October, 1999 and the
               first day of each subsequent month during the Term (each, a
               "Basic Rent Payment Date"). Tenant will pay the Basic Rent at
               Landlord's address set forth below, or at such other place as
               Landlord from time to time may designate to Tenant in writing, in
               funds which at the time of such payment will be legal tender for
               the payment of public or private debts in the United States of
               America and if required by any Lender by wire transfer in
               immediately available federal funds to such account in such bank
               as any Lender may reasonably designate, from time to time. If the
               Commencement Date occurs on a date other than the first day of a
               calendar month, then Basic Rent for the period from and including
               the Commencement Date through and including the last day of the
               following month will be paid on the Commencement Date in the
               amount equal to 1/30 of the monthly Basic Rent for the initial
               term set forth on Exhibit B to this Lease for each day during
                                 ---------
               such period. As long as the GMAC Loan shall remain outstanding
               and Tenant shall be paying Basic Rent directly to such Lender,
               Tenant shall provide Landlord notice of payment of Basic Rent or
               Additional Rent by Tenant directly to such Lender on the day of
               such payment.

        (b)    Tenant will pay and discharge before the imposition of any fine,
               lien, interest or penalty may be added thereto for late payment
               thereof, as Additional Rent, all other amounts and obligations
               which Tenant assumes or agrees to pay or discharge pursuant to
               this Lease, together with every fine, penalty, interest and cost
               which may be added by the party to whom such payment is due for
               nonpayment or late payment thereof. If Tenant fails to pay or
               discharge any Additional Rent, Landlord will have all rights,
               powers and remedies with respect to such Additional Rent that are
               provided in this Lease, by law or otherwise, for nonpayment of
               Basic Rent.

        (c)    If any installment of Basic Rent is not paid within three (3)
               business days after the date due, Tenant will pay to Landlord or
               any Lender, as the case may be, on demand as Additional Rent a
               late charge equal to five percent (5%) on such overdue
               installment of Basic Rent (such amount, the "Late Charge").

        (d)    It is the intent of Landlord and Tenant that this Lease is a true
               lease and does not represent a financing arrangement. Each party
               will reflect the transactions represented by this Lease in all
               applicable books, records and reports (including, without
               limitation, income tax filings) in a manner consistent with "true
               lease" treatment rather than "financing" treatment.
               Notwithstanding the foregoing, Tenant acknowledges and agrees
               that Landlord has not made any representations or warranties
               concerning the tax, accounting or legal characteristics of the
               Lease or any aspect of the transaction described herein and that
               Tenant has obtained and relied upon such tax, accounting and
               legal advice concerning this Lease and the transaction described
               herein as it deems appropriate.

                                       9
<PAGE>

7.      Net Lease; Non-Terminability.
        ----------------------------

        (a)    This is a net Lease and Basic Rent and Additional Rent will be
               paid, except as otherwise expressly set forth in this Lease,
               without notice, demand, setoff, counterclaim, recoupment,
               abatement, suspension, deferment, diminution, deduction,
               reduction, defense or relief from valuation or appraisement laws.

        (b)    Except as otherwise expressly provided in this Lease, this Lease
               will not terminate and Tenant will not have any right to
               terminate this Lease during the Term. Except as otherwise
               expressly provided in this Lease, Tenant will not be entitled to
               any setoff, counterclaim, recoupment, abatement, suspension,
               deferment, diminution, deduction, reduction or defense of or to
               Basic Rent, Additional Rent or any other sums payable under this
               Lease; and except as otherwise expressly provided in this Lease,
               the obligations of Tenant under this Lease will not be affected
               by any interference with Tenant's use of any of the Leased
               Premises for any reason, including but not limited to the
               following: (i) any damage to or destruction of any of the Leased
               Premises by any cause whatsoever; (ii) any Condemnation; (iii)
               the prohibition, limitation or restriction of Tenant's use of any
               of the Leased Premises; (iv) any eviction by paramount title or
               otherwise; (v) Tenant's acquisition of ownership of any of the
               Leased Premises other than pursuant to an express provision of
               this Lease; (vi) any default on the part of Landlord under this
               Lease or under any other agreement; (vii) any latent or other
               defect in, or any theft or loss of any of the Leased Premises;
               (viii) the breach of any warranty of any seller or manufacturer
               of any of the Equipment or any other portion of the Leased
               Premises ; (ix) any violation of Paragraph 4(c) by Landlord; or
               (x) any other cause, whether similar or dissimilar to the
               foregoing, any present or future Law to the contrary
               notwithstanding. It is the intention of the parties hereto that
               the obligations of Tenant under this Lease will be separate and
               independent covenants and agreements, and that Basic Rent,
               Additional Rent and all other sums payable by Tenant hereunder
               will continue to be payable in all events (or, in lieu thereof,
               Tenant shall pay amounts equal thereto), and that the obligations
               of Tenant under this Lease will continue unaffected, unless this
               Lease shall have been terminated pursuant to an express provision
               of this Lease.

        (c)    Tenant agrees that it will remain obligated under this Lease in
               accordance with its provisions and that, except as otherwise
               expressly provided in this Lease, Tenant will not take any action
               to terminate, rescind or avoid this Lease, notwithstanding: (i)
               the bankruptcy, insolvency, reorganization, composition,
               readjustment, liquidation, dissolution, winding-up or other
               similar proceeding affecting Landlord; (ii) the exercise of any
               remedy, including foreclosure, under the Mortgage; or (iii) any
               action with respect to this Lease (including the disaffirmance of
               this Lease) which may be taken by Landlord under the Federal
               Bankruptcy Code or by any trustee, receiver or liquidator of
               Landlord or by any court under the Federal Bankruptcy Code or
               otherwise.

        (d)    This Lease is the absolute and unconditional obligation of
               Tenant. Tenant waives all rights which are not expressly stated
               in this Lease but which may now or hereafter otherwise be
               conferred by Law: (i) to quit, terminate or surrender this Lease
               or the

                                      10
<PAGE>

               Leased Premises; (ii) to any setoff, counterclaim, recoupment,
               abatement, suspension, deferment, diminution, deduction,
               reduction or defense of or to Basic Rent or Additional Rent,
               except as otherwise expressly provided in this Lease; and (iii)
               for any statutory lien or offset right against Landlord or its
               property.

8.      Payment of Impositions; Compliance with Legal Requirements and Insurance
        ------------------------------------------------------------------------
        Requirements.
        ------------

        (a)   (i)     Subject to Section 8(a)(ii), as used in this Lease the
                      term "Impositions" means, collectively: all taxes, levies,
                      assessments and governmental charges of any kind imposed
                      by any federal, state, regional, municipal, local or other
                      governmental authority or agency, including, without
                      limitation, quasi-public agencies ("Governmental
                      Authority") of every kind and nature (including real, ad
                      valorem, personal property, gross income, franchise,
                      withholding, profits and gross receipts taxes) (A) on or
                      with respect to the Leased Premises, or (B) imposed on or
                      measured by or based, in whole or in part, on rent payable
                      to Landlord under this Lease and/or from the rental by
                      Landlord of the Leased Premises or any portion thereof, or
                      (C) based on the square footage, assessed value or other
                      measure or evaluation of any kind of the Leased Premises
                      or any portion thereof, or (D) assessed or imposed by or
                      on the operation or maintenance of any portion of the
                      Leased Premises or any portion thereof, including parking,
                      or (E) assessed or imposed by, or at the direction of, or
                      resulting from statutes or regulations, or interpretations
                      thereof, promulgated by, any Governmental Authority, or
                      (F) imposed as a license or other fee on Landlord's
                      business of leasing the Leased Premises or any portion
                      thereof; all charges and taxes for any easement or
                      agreement maintained for the benefit of the Leased
                      Premises or any portion thereof; all general and special
                      assessments, levies, permits, inspection and license fees
                      on or with respect to the Leased Premises or any portion
                      thereof and the rents therefor; all water and sewer rents
                      and other utility charges on or with respect to the Leased
                      Premises or any portion thereof; all ground rents on or
                      with respect to the Leased Premises or any portion
                      thereof; and all other public charges and taxes whether of
                      a like or different nature, even if unforeseen or
                      extraordinary, imposed or assessed upon or with respect to
                      the Leased Premises or any portion thereof, prior to or
                      during the Term, against Landlord, Tenant or the Leased
                      Premises or any portion thereof as a result of or arising
                      in respect of the occupancy, leasing, use, ownership,
                      maintenance, operation, management, repair or possession
                      of the Lease Premises or any portion thereof, or any
                      activity conducted on the Leased Premises, or the Basic
                      Rent or Additional Rent, including without limitation, any
                      gross income tax, sales tax, occupancy tax or excise tax
                      levied by any governmental or quasi-governmental body on
                      or with respect to such Basic Rent or Additional Rent.

                      If received by Landlord, Landlord will immediately deliver
                      to Tenant any bill or invoice with respect to any
                      Imposition. To the extent the Land is subject to any tax
                      increment financing agreements (the "TIF"), Tenant and
                      Landlord acknowledge and agree that Tenant shall be
                      entitled to any and all rebates

                                       11
<PAGE>

                      associated with the TIF for the Land and Landlord hereby
                      assigns its rights to any and all TIF rebates for the Land
                      to Tenant. In the event Landlord receives any TIF rebates
                      associated with the Land, Landlord agrees to promptly
                      forward such monies to Tenant.

               (ii)   Nothing herein obligates Tenant to pay, and the term
                      "Impositions" will exclude federal, state or local: (A)
                      transfer taxes as the result of a conveyance by (or
                      suffered by) Landlord; (B) franchise, capital stock or
                      similar taxes if any, of Landlord; (C) income, excess
                      profits or other taxes, if any, of Landlord, determined on
                      the basis of or measured by its net income; or (D) any
                      estate, inheritance, succession, gift, capital levy or
                      similar taxes, unless the taxes referred to in clauses (B)
                      and (C) above are in lieu of or a substitute for any other
                      tax or assessment upon or with respect to the Leased
                      Premises which, if such other tax or assessment were in
                      effect at the commencement of the Term, would be payable
                      by Tenant. If any assessment against the Leased Premises
                      may be paid in installments, Tenant will have the option
                      to pay such assessment in installments; and in such event,
                      Tenant will be liable only for those installments which
                      become due and payable during, or with respect to, the
                      Term. Tenant will prepare and file all tax reports
                      required by governmental authorities which relate to the
                      Impositions. Tenant will deliver to Landlord and to any
                      Lender, within 30 days after the receipt thereof, copies
                      of all settlements and notices pertaining to the
                      Impositions which may be issued by any governmental
                      authority and receipts for payments of all Impositions
                      made during each calendar year of the Term, within 30 days
                      after payment, except to the extent such impositions are
                      paid by Landlord or Lender.

        (b)    On each Basic Rent Payment Date, Tenant shall make a monthly
               escrow deposit into an interest-bearing account of Landlord's
               choice (the "Escrow Account") maintained with the Trustee. All
               interest earned on the funds in the Escrow Account will belong to
               Tenant, and the Trustee shall pay the interest to Tenant
               quarterly; provided, however, that if such Escrow Account is
               required to be held by a Lender acting as Trustee under the terms
               of any Loan, then Tenant shall only be entitled to such interest
               on such Escrow Account that is payable to Landlord under the
               terms of such Loan. The amount of each monthly escrow deposit
               will be equal to 1/12 of the total amount of all Impositions that
               Landlord or any Lender reasonably estimates will be due and
               payable during the next ensuing twelve months. Initially, the
               amount of each monthly escrow deposit will be $1,733.92. From
               time to time, Landlord or any Lender may change the monthly
               escrow deposit amount to an amount reasonably determined by
               Landlord or any Lender to reflect an accurate escrow of Tenant's
               estimated obligation to discharge Impositions, by giving Tenant
               30 days prior written notice. The notice must include information
               reasonably supporting the new amount. Tenant shall pay the
               noticed amount as its monthly escrow deposit for each deposit due
               after the expiration of the 30-day period.

        (c)    Before interest or penalties are due thereon, but subject to the
               provisions of Section 18, Tenant shall direct the Trustee to pay
               all Impositions from the Escrow Account.

                                       12
<PAGE>

               If the amount of funds in the Escrow Account is insufficient to
               fully pay and discharge any Impositions, Tenant shall pay the
               difference from its own accounts. If Tenant fails to pay any
               Impositions when due, or if Landlord or any Lender reasonably
               determine that because of Tenant's bankruptcy or similar
               occurrence, Tenant is unable generally to pay its bills when due,
               Tenant hereby authorizes Landlord and any Lender to use funds in
               the Escrow Account to pay the Impositions and any penalties or
               interest due thereon. If the amount of the Impositions paid by
               Landlord or any Lender exceeds the amount in the Escrow Account,
               Landlord or any Lender may bill Tenant for the excess, and Tenant
               shall pay the excess to Landlord or any Lender, as appropriate,
               within 10 business days after receiving the bill.

        (d)    During such times as Tenant maintains a Standard & Poors rating
               of BBB- or better, Tenant will not be required to maintain an
               escrow account for the payment of Impositions, but subject to the
               provisions of Section 18, Tenant shall instead pay all
               Impositions directly, before interest or penalties are due
               thereon. So long as the GMAC Loan shall be outstanding, Tenant's
               right to relief from maintenance of an escrow account for the
               payment of Impositions under this paragraph (d) shall be
               expressly conditioned on GMAC's waiving any similar escrow
               requirement imposed on Landlord under the mortgage or other
               security instrument securing the GMAC Loan.

        (e)    Subject to the provisions of Section 18, Tenant shall promptly
               comply with and conform to all of the Legal Requirements and
               Insurance Requirements.

9.      Liens; Recording and Title.
        --------------------------

        (a)    Subject to Section 18, Tenant will not, directly or indirectly,
               create or permit to be created or to remain, and will promptly
               discharge, any lien on the Leased Premises, on the Basic Rent or
               Additional Rent, other than the Mortgage, the Permitted
               Encumbrances and any mortgage, lien, encumbrance or other charge
               created by or resulting from any act or omission by Landlord or
               those claiming by, through or under Landlord (except Tenant).
               Notice is hereby given that Landlord will not be liable for any
               labor, services or materials furnished or to be furnished to
               Tenant, or to anyone holding the Leased Premises through or under
               Tenant, and that no mechanic's or other liens for any such labor,
               services or materials will attach to or affect the interest of
               Landlord in and to any of the Leased Premises.

        (b)    Landlord and Tenant will each execute, acknowledge and deliver to
               the other a written Memorandum of this Lease to be recorded in
               the appropriate land records of the jurisdiction in which the
               Leased Premises is located, to give public notice and protect the
               validity of this Lease. In the event of any discrepancy between
               the provisions of the recorded Memorandum of this Lease and the
               provisions of this Lease, the provisions of this Lease will
               prevail.

        (c)    Nothing in this Lease and no action or inaction by Landlord will
               be deemed or construed to mean that Landlord has granted to
               Tenant any right, power or permission to do any act or to make
               any agreement which may create, give rise to,

                                       13
<PAGE>

               or be the foundation for, any right, title, interest or lien in
               or upon the estate of Landlord in the Leased Premises.

        (d)    Landlord expressly disclaims any lien, direct or indirect, it may
               be deemed or construed to have, whether by statute or not, on any
               of Tenant's personal property located or used on the Leased
               Premises, including, but not limited to, any lien on Tenant's
               inventory and Trade Fixtures.

10.     Indemnification.
        ---------------

        (a)    Tenant shall defend, pay, protect, indemnify, save and hold
               harmless Landlord and any Lender, and their respective officers,
               directors, shareholders, partners, beneficial owners, trustees,
               members, managers, agents and employees (each, an "Indemnified
               Party"), from and against any and all liabilities, losses,
               damages, penalties, reasonable out-of-pocket costs and expenses
               (including attorneys' fees and expenses), causes of action,
               suits, claims, demands or judgments of any nature whatsoever,
               howsoever caused, arising from the Lease or the use, non-use,
               occupancy, operation, condition, design, construction,
               maintenance, repair or rebuilding of the Leased Premises during
               the Term, and any injury to or death of any person or persons or
               any loss of or damage to any property, real or personal, in any
               manner arising therefrom, connected therewith or occurring
               thereon, whether or not such Indemnified Party has or should have
               knowledge or notice of the defect or conditions, if any, causing
               or contributing to said injury, death, loss, damage or other
               claim; except to the extent that any such liability, loss,
               damage, penalty, cost, expense, cause of action, suit, claim,
               demand or judgment is the result of the gross negligence of such
               Indemnified Party or the intentional act of such Indemnified
               Party. If any action or proceeding is brought against any
               Indemnified Party by reason of any such claim against which
               Tenant has agreed to defend, pay, protect, indemnify, save and
               hold harmless pursuant to the preceding sentence, Tenant
               covenants, upon advance written notice received from such
               Indemnified Party, to resist or defend such Indemnified Party in
               such action, with the expenses of such defense paid by Tenant,
               and such Indemnified Party will cooperate and assist in the
               defense of such action or proceeding if reasonably requested to
               do so by Tenant.

        (b)    The obligations of Tenant under this Section 10 will survive any
               expiration or termination of this Lease.

11.     Maintenance and Repair.
        ----------------------

        (a)    Tenant will at all times during the Term put, keep and maintain
               the Leased Premises in the same condition and order of repair
               that exists as of: (i) the date of substantial completion
               thereof, if the building and related improvements are not
               complete as of the date of this Lease, (ii) with respect to
               Alterations made in accordance with Section 12, the date of
               substantial completion of such Alterations, or (iii) in all other
               cases, the date of this Lease. Tenant will at all times during
               the Term promptly make all repairs and replacements of every kind
               and nature, whether foreseen or unforseen, which may be required
               to be made upon or in connection with the Leased Premises

                                       14
<PAGE>

               during the Term in order to keep and maintain the Leased Premises
               in the order and condition required by this Section 11(a). Tenant
               will do or cause others to do all shoring of the Leased Premises
               or of foundations and walls of the Improvements and every other
               act necessary or appropriate for preservation and safety thereof
               during the Term, by reason of or in connection with any
               excavation or other building operation upon any of the Leased
               Premises, whether or not Landlord is, by reason of any Legal
               Requirements or Insurance Requirements, required to take such
               action or liable for failure to do so. Landlord will not be
               required to make any repair, whether foreseen or unforeseen, or
               to maintain any of the Leased Premises or Adjoining Property
               (except if owned by Landlord) in any way, and Tenant hereby
               expressly waives the right to make repairs at the expense of the
               Landlord, which right may be provided for in any Law now or
               hereafter in effect. Nothing in the preceding sentence will be
               deemed to preclude Tenant from being entitled to insurance
               proceeds or condemnation awards for Restoration pursuant to
               Sections 13(c) and 14(g). Tenant will, in all events, make all
               repairs for which it is responsible promptly, and all repairs
               will be in a good, proper and workmanlike manner.

        (b)    If any Improvement violates any Legal Requirements or Insurance
               Requirements as of the date hereof or at any time during the Term
               and as a result of such violation enforcement action is
               threatened or commenced against Landlord, Tenant or with respect
               to the Leased Premises, then Tenant, at the request of Landlord,
               will either: (i) obtain valid and effective waivers or
               settlements of all claims, liabilities and damages resulting from
               each such violation, whether the same will affect Landlord,
               Tenant or both; or (ii) take such action as will be necessary to
               remove such violation, including, if necessary, any Alteration.
               Any such repair or Alteration will be made in conformity with the
               provisions of Section 12 at Tenant's sole cost and expense.

        (c)    If Tenant is in default under any of the provisions of this
               Section 11 or Section 26, Landlord may after 30 business days
               written notice received by Tenant and failure of Tenant to cure
               during such 30-business-day period, but without notice in the
               event of an emergency, do whatever is necessary to cure such
               default as may be reasonably appropriate under the circumstances
               for the account of and at the expense of Tenant. If there is an
               emergency, Landlord will notify Tenant of the situation by phone
               or other available communication. All reasonable sums paid by
               Landlord and all reasonable out-of-pocket costs and expenses
               (including, without limitation, attorneys' fees and expenses)
               paid by Landlord under this Section 11, together with interest
               thereon at the Default Rate from the date of payment, will
               constitute Additional Rent payable by Tenant under this Lease and
               will be paid by Tenant to Landlord on demand.

        (d)    Tenant will from time to time replace with other operational
               equipment or parts (the "Replacement Equipment") any of the
               Equipment which becomes worn out or unusable for the purpose for
               which it is intended, is taken by a Condemnation as provided in
               Section 13, or been lost, stolen, damaged or destroyed as
               provided in Section 14. Tenant will repair at its sole cost and
               expense all damage to the Leased Premises caused by the removal
               of Equipment or Replacement Equipment or other personal property
               of Tenant or the installation of Replacement Equipment during the

                                       15
<PAGE>

               Term. All Replacement Equipment will become the property of
               Landlord, will be free and clear of all liens and rights of
               others and will become a part of the Equipment as if originally
               demised under this Lease.

12.     Alterations.
        -----------

        (a)    Tenant (i) will not make any Alterations which would (after the
               completion thereof) impair the structural integrity of the Leased
               Premises without Landlord's prior written consent, which consent
               may be withheld in Landlord's sole discretion; and (ii) may make
               any other Alterations without the prior written consent of
               Landlord provided such Alterations comply with the provisions of
               Section 12(b).

        (b)    If Landlord gives its prior written consent to any Alterations,
               or if such consent is not required, Tenant agrees that in
               connection with any Alteration: (i) the fair market value of the
               Leased Premises will not be lessened in any material respect
               after the completion of any such Alteration, nor shall the
               structural integrity of the Leased Premises be impaired; (ii) the
               Alteration and any Alteration theretofore made or thereafter to
               be made may not in the aggregate reduce the gross floor area of
               the Improvements by more than 10%; (iii) all such Alterations
               will be performed in a good and workmanlike manner, and will be
               expeditiously completed in compliance with all Legal
               Requirements; (iv) all work done in connection with any such
               Alteration will comply with all Insurance Requirements; (v)
               Tenant will promptly pay all costs and expenses of any such
               Alteration, and will (subject to the provisions of Section 18)
               discharge all liens filed against any of the Leased Premises
               arising out of the same; (vi) Tenant will, prior to making any
               Alterations, procure and pay for all permits and licenses
               required in connection with any such Alteration; (vii) in the
               case of any Alteration the estimated cost of which in any one
               instance exceeds $500,000 (A) such Alteration will be made under
               the supervision of an architect or engineer and, in accordance
               with plans and specifications which will be submitted to Landlord
               (for informational purposes only where Landlord's consent is not
               required) prior to the commencement of the Alterations, and (B)
               Tenant shall deliver or cause its general contractor to deliver
               to Landlord payment and performance bonds (issued by companies
               and in a form reasonably acceptable to Landlord) covering all
               such Alterations, provided that such requirement shall be waived
               to the extent Tenant shall have a Standard & Poor's rating of
               BBB- or better; (viii) all such Alterations will be the property
               of Landlord and will be subject to this Lease; (ix) Tenant will
               execute any documents or instruments reasonably required, if any,
               by Landlord to transfer, assign and convey such Alterations to
               Landlord, and (x) at least ten (10) days before beginning
               construction of structural Alterations, Tenant shall send written
               notice of its intent to make such structural Alterations to
               Landlord, which notice must contain plans and specifications
               relating to the contemplated Alterations. Tenant shall also
               deliver to Landlord copies of such licenses and permits that
               Tenant is required to obtain in connection with the construction
               of the Alterations, either with Tenant's notice described in the
               preceding clause (x) or within a reasonable time after receiving
               such licenses and permits. No consent of Landlord will be
               required in connection with Tenant's obligations under the
               preceding clause (x), unless such notice is otherwise required
               under Section 12(a).

                                       16
<PAGE>

13.     Condemnation.
        ------------

        (a)    Tenant, promptly after obtaining knowledge of the institution of
               any proceeding for Condemnation, will notify Landlord thereof and
               Landlord will be entitled to participate in any Condemnation
               proceeding. Landlord, promptly after obtaining knowledge of the
               institution of any proceeding for Condemnation, will notify
               Tenant thereof and Tenant will have the right to participate in
               such proceedings. Subject to the provisions of this Section 13
               and Section 15, Tenant irrevocably assigns to Lender, if any, or
               to Landlord, in that order, any award or payment in respect of
               any Condemnation of any interest in the Leased Premises, except
               that (except as provided below) nothing in this Lease will be
               deemed to assign to Landlord or any Lender any award or payment
               on account of the Trade Fixtures, moving expenses and
               out-of-pocket expenses incidental to the move, if available, to
               the extent Tenant has a right to make a separate claim therefor
               against the condemnor. Notwithstanding the preceding sentence,
               Tenant will in no event be entitled to any payment that reduces
               the award to which Landlord is or would be entitled for the
               condemnation of Landlord's interest in the Leased Premises.

        (b)    (i)     (A)   Tenant may terminate this Lease if any of the
                       following becomes the subject of a Taking by a duly
                       constituted authority or agency having jurisdiction: (I)
                       the entire Leased Premises; (II) at least 35% of the
                       Land; (III) at least 10% of the building constructed on
                       the Land; or (IV) any means of ingress, egress or access
                       to, or parking, at the Leased Premises, the loss of which
                       even after Restoration would be, in Tenant's reasonable
                       business judgment, substantially and materially adverse
                       to the business operations of Tenant at the Leased
                       Premises. In order to exercise this termination right,
                       Tenant will, not later than 90 days after a Taking has
                       occurred, serve notice ("Tenant's Termination Notice")
                       upon Landlord of Tenant's intention to terminate this
                       Lease on any Basic Rent Payment Date specified in such
                       Tenant's Termination Notice, which date (the
                       "Condemnation Termination Date") will be no sooner than
                       the first Basic Rent Payment Date occurring at least 30
                       days after the date of Tenant's Termination Notice.

                       (B)   If Tenant serves a Tenant's Termination Notice upon
                       Landlord, Tenant will, as part of such Tenant's
                       Termination Notice, offer to purchase the Leased Premises
                       and the award (or, if no part of the Leased Premises will
                       remain, the entire award) for the applicable price (the
                       "Purchase Price") computed in accordance with Exhibit C
                                                                     ---------
                       to this Lease plus all other amounts which may be due and
                       owing to Landlord by reason of any default by Tenant in
                       complying with its obligations under this Lease (the
                       "Additions to Purchase Price"), which offer may be
                       rejected by Landlord as set forth below.

                       (C)   If Landlord elects not to accept Tenant's offer to
                       purchase described in Section 13(b)(i)(B), Landlord will
                       give notice thereof to Tenant within 60 days after the
                       receipt of Tenant's Termination Notice.

                                       17
<PAGE>

                       (D)   Should an offer to purchase not be accepted by
                       Landlord, this Lease will be terminated as above provided
                       and the entire award made in the Condemnation proceeding
                       with respect to the Leased Premises will be paid to
                       Landlord.

                       (E)   Landlord's notice not to accept Tenant's offer to
                       purchase described in Section 13(b)(i)(B) will be void
                       and of no effect unless accompanied by the written notice
                       of any Lender to the effect that such Lender has
                       consented to Landlord's rejection of such offer to
                       purchase. Should such notices of Landlord or any Lender
                       rejecting Tenant's offer to purchase described in Section
                       13(b)(i)(B) not be served within the 60-day period, then
                       such offer will be deemed accepted.

               (ii)    If Landlord accepts or is deemed to have accepted
                       Tenant's offer to purchase described in Section
                       13(b)(i)(B), title shall close and the Purchase Price and
                       Additions to Purchase Price will be paid as provided in
                       this Lease. In such event Tenant will be entitled to and
                       shall receive any and all awards with respect to the
                       Leased Premises then or thereafter made in the
                       Condemnation proceeding and Landlord will assign (or in
                       case of any award previously made, deliver to Tenant on
                       the Closing Date (defined below)) such award as may be
                       made with respect to the Leased Premises. If Landlord
                       accepts Tenant's offer to purchase described in Section
                       13(b)(i)(B), or is deemed to have accepted such Tenant's
                       offer, title will close 30 days after the Condemnation
                       Termination Date defined above (the "Closing Date"), at
                       noon at the local office of Landlord's counsel, or at
                       such other time and place as the parties may agree upon,
                       this Lease will be automatically extended to and
                       including the Closing Date (or, if applicable the
                       extended Closing Date described (defined below)) and
                       Tenant will pay the Purchase Price and Additions to
                       Purchase Price by transferring immediate funds to such
                       account or accounts and in such bank or banks as Lender,
                       if any, or Landlord, in that order, may designate, upon
                       delivery of a special warranty deed (or local equivalent)
                       conveying the Leased Premises and all other required
                       documents including an assignment of any award in
                       connection with the taking of Leased Premises. The
                       special warranty deed (or local equivalent) will convey
                       title, free from encumbrances other than: (A) Permitted
                       Encumbrances; (B) liens or encumbrances created or
                       suffered by, through or under Tenant or arising by reason
                       of the failure of Tenant to observe or perform any of the
                       terms, covenants or agreements herein provided to be
                       observed and performed by Tenant; (C) any installments of
                       Impositions then affecting the Leased Premises; and (D)
                       this Lease. The Purchase Price and Additions to Purchase
                       Price payable as provided above will be charged or
                       credited, as the case may be, on the Closing Date, to
                       reflect adjustments of Basic Rent paid or payable to and
                       including the Closing Date, apportioned as of the Closing
                       Date. Tenant will pay all conveyance, transfer, sales and
                       like taxes required in connection with the purchase,
                       regardless of who is required to pay such taxes under
                       State or local law or custom (and Tenant will also pay to
                       Landlord any amount necessary to yield to Landlord the
                       entire

                                       18
<PAGE>

                       Purchase Price and Additions to Purchase Price if as a
                       matter of the Law of the State or locality such tax
                       cannot be paid directly by Tenant). If there be any liens
                       or encumbrances against the Leased Premises which
                       Landlord is obligated to remove, upon request made a
                       reasonable time before the Closing Date, Landlord will
                       provide at the Closing separate funds for the foregoing,
                       payable to the holder of such lien or encumbrances.

               (iii)   If during the month which is marked "$00" on Exhibit C to
                                                                    ---------
                       this Lease, Tenant will serve a Tenant's Termination
                       Notice upon Landlord, this Lease and the Term hereof will
                       terminate on the Condemnation Termination Date specified
                       in the Termination Notice; and in such event the entire
                       award to be made in the Condemnation proceeding will be
                       paid to Lender, if any, or to Landlord, in that order.

        (c)    (i)     If a Condemnation of any part of the Leased Premises
                       occurs which does not result in a termination of this
                       Lease, subject to the requirements of Section 15, the Net
                       Award of such Condemnation will be retained by Landlord;
                       and promptly after such Condemnation, Tenant will
                       commence and diligently continue to restore the Leased
                       Premises as nearly as possible to its value, condition
                       and character immediately prior to such Condemnation, in
                       accordance with the provisions of this Lease, including
                       but not limited to the provisions of Sections 11(a), 12
                       and 15 (such restoration following a Condemnation and
                       restoration following a casualty is, as the context shall
                       require, called a "Restoration").

               (ii)    Upon the payment to Landlord of the Net Award of a Taking
                       in accordance with this Section 13(c), Landlord and any
                       Lender will, to the extent received, make that portion of
                       the Net Award equal to the cost of Restoration (the
                       "Restoration Award") available to Tenant for Restoration,
                        -----------------
                       in accordance with the provisions of Section 15, and
                       promptly after completion of the Restoration, the balance
                       of the Net Award will be paid to Tenant and all Basic
                       Rent and Additional Rent will continue unabated and
                       unreduced.

               (iii)   If a Requisition of the Leased Premises occurs, Landlord
                       shall apply the Net Award of such Requisition, to the
                       extent available, to the installments of Basic Rent or
                       Additional Rent thereafter payable and Tenant will pay
                       any balance remaining thereafter. Upon the expiration of
                       the Term, any portion of such Net Award which has not
                       been previously credited to Tenant on account of the
                       Basic Rent and Additional Rent will be retained by
                       Landlord.

        (d)    Except with respect to an award or payment to which Tenant is
               separately entitled pursuant to the provisions of Section 13(a)
               for any Trade Fixtures, moving expenses and out-of-pocket
               expenses incidental to such move, no agreement with any condemnor
               in settlement of or under threat of any Condemnation will be made
               by either Landlord or Tenant without the written consent of the
               other, and of Lender, if the Leased Premises are then subject to
               a Mortgage, which consent will not be unreasonably withheld or
               delayed.

                                       19
<PAGE>

14.     Insurance.
        ---------

        (a)    Tenant shall obtain and maintain, or cause to be maintained,
               insurance for Tenant and the Leased Premises providing at least
               the following coverages:

               (i)     Property Insurance. Insurance with respect to the
                       Improvements and Equipment insuring against any peril
                       included within the classification "All Risks of Physical
                       Loss" in amounts at all times sufficient to prevent
                       Landlord or Lender from becoming a co-insurer within the
                       terms of the applicable policies and under applicable
                       law, but in any event such insurance shall be maintained
                       in an amount equal to the full insurable value of the
                       Improvements and Equipment, the term "full insurable
                       value" to mean the actual replacement cost of the
                       Improvements and Equipment (without taking into account
                       any depreciation, and exclusive of excavations, footings
                       and foundations, landscaping and paving) determined
                       annually by an insurer, a recognized independent
                       insurance broker or an independent appraiser selected and
                       paid by Tenant. Absent such annual adjustment, each
                       policy shall contain inflation guard coverage insuring
                       that the policy limit will be increased over time to
                       reflect the effect of inflation. Tenant shall also
                       maintain insurance against loss or damage to such
                       furniture, furnishings, fixtures, equipment and other
                       items (whether personalty or fixtures) included in the
                       Leased Premises and owned by Tenant from time to time, to
                       the extent applicable, in the amount of the cost of
                       replacing the same, in each case, with inflation guard
                       coverage to reflect the effect of inflation, or annual
                       valuation. Each policy or policies shall contain a
                       replacement cost endorsement and either an agreed amount
                       endorsement (to avoid the operation of any co-insurance
                       provisions) or a waiver of any co-insurance provisions,
                       all subject to Landlord's and Lender's approval. The
                       maximum deductible shall be $50,000.00.

               (ii)    Liability Insurance. Comprehensive general liability
                       insurance, including personal injury, bodily injury,
                       death and property damage liability, insurance against
                       any and all claims, including all legal liability to the
                       extent insurable and imposed upon Landlord and Lender and
                       all court costs and attorneys' fees and expenses, arising
                       out of or connected with the possession, use, leasing,
                       operation, maintenance or condition of the Leased
                       Premises in such amounts as are generally available at
                       commercially reasonable premiums and are generally
                       required by institutional lenders for properties
                       comparable to the Leased Premises but in no event for a
                       combined single limit of less than $3,000,000. During any
                       construction of the Leased Premises, Tenant's general
                       contractor for such construction shall also provide the
                       insurance required in this Subsection (ii). Landlord (and
                       its Lender) hereby retain the right to periodically
                       review the amount of said liability insurance being
                       maintained by Tenant and to require an increase in the
                       amount of said liability insurance should Landlord or
                       Lender deem an increase to be reasonably prudent under
                       then existing circumstances.

                                       20
<PAGE>

          (iii) Workers' Compensation Insurance. Statutory workers' compensation
                insurance with respect to any work on or about the Leased
                Premises covering all persons subject to the workers'
                compensation laws of the state in which the Leased Premises is
                located.

          (iv)  Business Interruption. Business interruption and/or loss of
                "rental income" insurance in an amount sufficient to avoid any
                co-insurance penalty and to provide proceeds which will cover a
                period of not less than one (1) year from the date of casualty
                or loss, with a six-month extended period of indemnity, the term
                "rental income" to mean the sum of (A) the total then
                ascertainable Basic Rent and Additional Rent payable under this
                Lease and (B) the total ascertainable amount of all other
                amounts to be received by Tenant from third parties which are
                the legal obligation of Tenant, reduced to the extent such
                amounts would not be received because of operating expenses not
                incurred during a period of non-occupancy of that portion of the
                Leased Premises then not being occupied. The amount of coverage
                shall be adjusted annually to reflect the Basic Rent and
                Additional Rent payable during the succeeding twelve (12) month
                period.

          (v)   Boiler and Machinery Insurance. Broad form boiler and machinery
                insurance (without exclusion for explosion) covering all boilers
                or other pressure vessels, machinery, and equipment located in,
                on or about the Leased Premises and insurance against loss of
                occupancy or use arising from any breakdown in such amount per
                accident equal to the replacement value of the improvements
                housing the machinery or $2,000,000 or such other amount
                reasonably determined by Landlord or Lender. If one or more
                large HVAC units is in operation at the Leased Premises, "System
                Breakdowns" coverage shall be required, as reasonably determined
                by Landlord and Lender. Minimum liability coverage per accident
                must equal the value of such unit(s).

          (vi)  Flood Insurance. If any part of the leased Premises is now or at
                any time in the future located within an area identified by the
                Secretary of Housing and Urban Development or any successor
                thereto as an area having special flood hazards pursuant to
                National Flood Insurance Act of 1968 or the Flood Protection Act
                of 1973, or the National Flood Insurance Reform Act of 1994, as
                each may be amended, or any successor law, flood insurance in an
                amount at least equal to the lesser of (A) the minimum amount
                required, under the terms of coverage, to compensate for any
                damage or loss on a replacement basis (or the unpaid balance of
                the Loan if replacement cost coverage is not available for the
                type of building insured); or (B) the maximum insurance
                available under the appropriate National Flood Insurance
                Administration program. The deductible may not exceed $25,000.

          (vii) Improvements. During the period of any construction, renovation
                or alteration of Improvements which exceeds the lesser of 10% of
                the principal amount of the Loan or $500,000, at Landlord's or
                Lender's request, a

                                       21
<PAGE>

                 completed value, "All Risk" Builder's Risk form, or "Course of
                 Construction" insurance policy in non-reporting form for any
                 Improvements under construction, renovation or alteration in an
                 amount reasonably approved by Landlord and Lender may be
                 required. During the period of any construction of any addition
                 to the existing Improvements, a completed value, "All Risk"
                 Builder's Risk form or "Course of Construction" insurance
                 policy in non-reporting form, in an amount reasonably approved
                 by Landlord and Lender, shall be required.

          (viii) Other Insurance. Such other insurance with respect to the
                 Leased Premises or on any replacements or substitutions thereof
                 or additions thereto as may from time to time be reasonably
                 required by Landlord or Lender against other insurable hazards
                 or casualties which at the time are commonly insured against in
                 the case of property similarly situated, including, without
                 limitation, sinkhole, mine subsidence, earthquake and
                 environmental insurance, due regard being given to the height
                 and type of buildings, their construction, location, use and
                 occupancy.

     (b)  All insurance provided for in Subsection 14(a) hereof shall be
          obtained under valid and enforceable policies (the "Policies" or in
          the singular, the "Policy"), and shall be issued by one or more
          domestic primary insurer(s) having an investment grade rating of "A"
          or better ("AA" or better for loans of $25 million or more) or a
          comparable claims paying ability assigned by Standard & Poors Rating
          Services or equivalent credit Rating Agency approved by Landlord and
          Lender (a "Rating Agency") (each such insurer shall be referred to
          below as a "Qualified Insurer"). All insurers providing insurance
          required by this Lease shall be authorized to issue insurance in the
          state in which the Leased Premises is located. The Policy referred to
          in Subsection 14(a)(ii) above shall name Landlord and Lender as an
          additional named insured and the Policy referred to in Subsection
          14(a)(i), (iv), (v) and (vi) above shall provide that all proceeds
          payable to Lender be payable as set forth in the Mortgage to the
          extent Lender is Trustee hereunder. The Policies referred to in
          Subsections 14(a)(i), (v) and (vi) shall also contain: (i) a standard
          "non-contributory mortgagee" endorsement or its equivalent relating,
          inter alia, to recovery by Landlord and/or Lender notwithstanding the
          ----- ----
          negligent or willful acts or omission of Landlord and/or Lender; and
          (ii) to the extent available at commercially reasonable rates, a
          waiver of subrogation endorsement as to Landlord and Lender. All
          Policies described in Subsection 14(a) above shall contain (x) a
          provision that such Policies shall not be canceled or terminated, nor
          shall they expire, without at least thirty (30) days' prior written
          notice to Landlord and Lender in each instance; and (y) include
          effective waivers by the insurer of all claims for Insurance Premiums
          (defined below) against any mortgagee, loss payees, additional
          insureds and named insureds (other than Tenant). If the Leased
          Premises or the Improvements constitutes a legal non-conforming use
          under applicable building, zoning or land use laws or ordinances, the
          policy shall include an ordinance or law coverage endorsement which
          will contain Coverage A: "Loss Due to Operation of Law" (with a
          minimum liability limit equal to Replacement Cost With Agreed Value
          Endorsement), Coverage B:

                                       22
<PAGE>

          "Demolition Cost" and Coverage C: "Increased Cost of Construction"
          coverages. Certificates of insurance with respect to all renewal and
          replacement Policies shall be delivered to Landlord and Lender not
          less than thirty (30) days prior to the expiration date of any of the
          Policies required to be maintained hereunder which certificates shall
          bear notations evidencing payment of applicable premiums (the
          "Insurance Premiums"). Originals or certificates of such replacement
          Policies shall be delivered to Landlord and Lender promptly after
          Tenant's receipt thereof but in any case within thirty (30) days after
          the effective date thereof. If Tenant fails to maintain and deliver to
          Landlord and Lender the original Policies or certificates of insurance
          required by this Lease, upon ten (10) days' prior notice to Tenant,
          Landlord (or Lender) may procure such insurance at Tenant's sole cost
          and expense.

     (c)  Tenant shall comply with all insurance requirements and shall not
          bring or keep or permit to be brought or kept any article upon any of
          the Leased Premises or cause or permit any condition to exist thereon
          which would be prohibited by an insurance requirement, or would
          invalidate the insurance coverage required hereunder to be maintained
          by Tenant on or with respect to any part of the Leased Premises
          pursuant to this Section 14.

     (d)  If the Leased Premises shall be damaged or destroyed, in whole or in
          part, by fire or other casualty, Tenant shall give prompt notice of
          such damage to Landlord and Lender, and Tenant shall promptly commence
          and diligently prosecute the completion of the repair and restoration
          of the Leased Premises as nearly as possible to the condition the
          Leased Premises was in immediately prior to such fire or other
          casualty, with such alterations as may be approved by Landlord and
          Lender (the "Casualty Restoration") and otherwise in accordance with
          the Mortgage.

     (e)  The insurance coverage required under Section 14(a) may be effected
          under a blanket policy or policies covering the Leased Premises and
          other properties and assets; provided that any such blanket policy
          shall specify, except in the case of public liability insurance, the
          portion of the total coverage of such policy that is allocated to the
          Leased Premises, and any sublimit in such blanket policy applicable to
          the Leased Premises, and shall in any case comply in all other
          respects with the requirements of this Section 14.

     (f)  The insurance coverage required under Subsection 14(a)(ii) may be
          satisfied by a layering of commercial general liability, umbrella and
          excess liability Policies, but in no event will the commercial general
          liability Policy be written for an amount less than $1,000,000 per
          occurrence and $2,000,000 aggregate for bodily injury and property
          damage liability.

     (g)  Approval of any insurance by Landlord or Lender shall not be a
          representation of the solvency of any insurer or the sufficiency of
          any amount of insurance.

     (h)  Landlord and Lender shall not be responsible for nor incur any
          liability for the insolvency of the insurer or other failure of the
          insurer to perform, even though

                                       23
<PAGE>

          Landlord or Lender has caused the insurance to be placed with the
          insurer after failure of Tenant to furnish such insurance. Tenant
          shall not obtain insurance for the Leased Premises in addition to that
          required by Landlord or Lender without the prior written consent of
          Landlord and Lender, which consent will not be unreasonably withheld
          provided that (i) Landlord and Lender are named insured on such
          insurance, (ii) Landlord and Lender receive complete copies of all
          policies evidencing such insurance, and (iii) such insurance complies
          with all of the applicable requirements set forth herein.

     (i)  The insurance coverage required under this Section 14 shall be deemed
          satisfied so long as Tenant self insures all of the coverage referred
          to in this Section 14, subject, however, to the following conditions:
          (i) Tenant is in actual possession of the Leased Premises and is
          paying Basic Rent and Additional Rent pursuant to this Lease; (ii)
          this Lease is in full force and effect and no default or event of
          default exists hereunder; (iii) Tenant has credit rating of "BBB" or
          better by Standard & Poor's Rating Services (or, if rated by another
          Rating Agency, a rating in an equivalent category by such other Rating
          Agency); and (iv) the tangible net worth of Tenant is no less than
          $100,000,000 as determined in accordance with generally accepted
          accounting principles consistently applied. If, during the Term, any
          damage or destruction occurs and Tenant is self-insuring under this
          Section 12(i), then Tenant shall pay to the Trustee the amount of the
          proceeds that would have been payable had such insurance program been
          in effect within 30 days after the occurrence of the casualty (the
          "Tenant Insurance Payment").

     (j)  On each Basic Rent Payment Date, unless Tenant self insures under
          Section 14(i), Tenant shall make a monthly escrow deposit into an
          interest-bearing account of Landlord's choice (the "Escrow Account")
          maintained with the Trustee. All interest earned on the funds in the
          Escrow Account will belong to Tenant, and the Trustee shall pay the
          interest to Tenant quarterly; provided, however, that if such Escrow
          Account is required to be held by a Lender acting as Trustee under the
          terms of any Loan, Tenant shall be entitled to only such interest that
          is payable to Landlord under the terms of such Loan. The amount of
          each monthly escrow deposit will be equal to 1/12 of the total amount
          which would be sufficient to pay the annual insurance premiums due
          (without any consideration or deduction attributable to blanket
          coverage) for the renewal of the insurance policies required under
          this Section 14 upon the expiration thereof. Initially, the amount of
          each monthly escrow deposit will be $1,057.2 From time to time,
          Landlord or any Lender may change the monthly escrow deposit amount to
          an amount reasonably determined by Landlord or any Lender to reflect
          an accurate escrow of Tenant's estimated obligation to discharge
          Impositions, by giving Tenant 30 days prior written notice. The notice
          must include information reasonably supporting the new amount. Tenant
          shall pay the noticed amount as its monthly escrow deposit for each
          deposit due after the expiration of the 30-day period.

15.  Restoration. Net Proceeds, Restoration Award and any Tenant Insurance
     -----------
     Payment (the aggregate of which being defined as the "Restoration Fund")
     will be disbursed by the Trustee in accordance with the following
     conditions:

                                       24
<PAGE>

     (a)  If the cost of Restoration will exceed $500,000, prior to commencement
          of the Restoration the architects, general contractor(s), and plans
          and specifications for the Restoration must be approved by Landlord,
          which approval will not be unreasonably withheld or delayed; and which
          approval must be granted to the extent that the plans and
          specifications depict a Restoration which is substantially similar to
          the Improvements and Equipment which existed prior to the occurrence
          of a casualty or Taking, whichever is applicable, so long as the same
          comply with all current Legal Requirements.

     (b)  At the time of any disbursement under this Section 15, no Event of
          Default may exist and no mechanics' or materialmen's liens may have
          been filed and remain undischarged or unbonded.

     (c)  Disbursements will be made from time to time in an amount not
          exceeding the cost of the work and costs incurred since the last
          disbursement, less a retainage as provided below, upon receipt of: (i)
          satisfactory evidence, including architects' certificates of the stage
          of completion, of the estimated cost of completion and of performance
          of the work to date in a good and workmanlike manner in accordance
          with the contracts, plans and specifications; (ii) partial releases of
          liens; and (iii) other reasonable evidence of cost and payment so that
          Landlord can verify that the amounts disbursed from time to time are
          represented by work that is completed in place or delivered to the
          site and free and clear of mechanics' lien claims in accordance with
          this Lease.

     (d)  Each request for disbursement must be accompanied by Tenant's
          certificate describing the work, materials or other costs or expenses
          for which payment is requested, stating the cost incurred in
          connection therewith and stating that Tenant has not previously
          received payment for such work or expense and the certificate to be
          delivered by Tenant upon completion of the work will, in addition,
          state that the work has been substantially completed and complies with
          the applicable requirements of this Lease.

     (e)  The Trustee may retain ten percent (10%) of the Restoration Fund until
          the Restoration is substantially completed.

     (f)  The Restoration Fund will be kept in a separate interest-bearing
          federally insured account by the Trustee.

     (g)  At all times the undisbursed balance of the Restoration Fund held by
          Trustee plus any funds contributed thereto by Tenant, at Tenant's
          option, will not be less than the cost of completing the Restoration,
          free and clear of all liens.

     (h)  In addition, prior to commencement of Restoration and at any time
          during Restoration, if the estimated cost of Restoration, as
          reasonably determined by Landlord, exceeds the amount of the
          Restoration Fund, the amount of such excess will be paid by Tenant to
          the Trustee to be added to the Restoration Fund or Tenant will fund at
          its own expense the costs of such Restoration until the remaining

                                       25
<PAGE>

          Restoration Fund is sufficient for the completion of the Restoration.
          Any sum in the Restoration Fund which remains in the Restoration Fund
          upon the completion of Restoration will be paid to Tenant. For
          purposes of determining the source of funds with respect to the
          disposition of funds remaining after the completion of Restoration,
          the Net Proceeds or the Restoration Award will be deemed to be
          disbursed prior to any amount added by Tenant.

     (i)  Notwithstanding the foregoing, so long as the GMAC Loan shall be
          outstanding, the Restoration Fund shall be maintained and disbursed in
          accordance with the terms of the GMAC Loan documents in effect as of
          the date hereof.

     (j)  (i)   If at any time and from time to time during the Term, any Lender
                applies any part of the Restoration Fund to reduce amounts owing
                under the Loan (other than costs of settlement), then (A)
                Landlord shall promptly send written notice of that fact to
                Tenant, and (B) Tenant may make a rejectable purchase offer (the
                "Casualty Purchase Offer") to purchase the Leased Premises for a
                purchase price computed in accordance with Exhibit C hereto,
                                                           ---------
                plus all other amounts which may be due and owing to Landlord by
                Tenant under the Lease (the "Casualty Purchase Price"). Tenant
                shall serve Landlord with such Casualty Purchase Offer not later
                than 90 days after Tenant receives notice that Lender has
                applied Restoration Fund proceeds to amounts owing under the
                Loan (other than costs of settlement).

          (ii)  If Landlord elects not to accept Tenant's Casualty Purchase
                Offer, then Landlord will give notice thereof to Tenant within
                60 days after the receipt of such offer, which notice shall be
                accompanied by a financing commitment or other evidence that
                Landlord will have available to it within 30 days an amount
                equal to the amount of the Restoration Fund that Lender applied
                to reduce amounts owing under the Loan. Landlord shall disburse
                such amounts to Tenant in connection with the Restoration
                commencing 30 days following Landlord's rejection notice in
                accordance with the provisions of Section 15 of this Lease and
                this Lease shall remain in full force and effect.

          (iii) Should Landlord fail to reject Tenant's offer to purchase by
                timely sending Landlord's notice and providing evidence of
                availability of funds under Section 15(j)(ii), then, Landlord
                will be deemed to have accepted Tenant's Casualty Purchase
                Offer.

          (iv)  If Landlord accepts Tenant's Casualty Purchase Offer or is
                deemed to have accepted such Tenant's offer, title will close on
                the first Basic Rent Payment Date which occurs 90 days after
                Tenant served Landlord with the Casualty Purchase Offer (the
                date of actual closing, "Closing Date"), at noon at the local
                office of Landlord's counsel, or at such other time and place as
                the parties may agree upon, and this Lease will be automatically
                extended to and including the Closing Date and Tenant will pay
                the Casualty Purchase Price by transferring immediate funds to
                such account or accounts and in such bank or banks as Landlord
                may designate, upon delivery of a special warranty deed

                                       26
<PAGE>

                (or local equivalent) conveying the Leased Premises and all
                other required documents. The special warranty deed (or local
                equivalent) will convey title, free from encumbrances other
                than: (A) Permitted Encumbrances; (B) liens or encumbrances
                created or suffered by, through or under Tenant or arising by
                reason of the failure of Tenant to observe or perform any of the
                terms, covenants or agreements herein provided to be observed
                and performed by Tenant; (C) any installments of Impositions
                then affecting the Leased Premises; and (D) this Lease. The
                Casualty Purchase Price will be charged or credited, as the case
                may be, on the Closing Date, to reflect adjustments of Basic
                Rent paid or payable to and including the Closing Date,
                apportioned as of the Closing Date. Tenant will pay all
                conveyance, transfer, sales and like taxes required in
                connection with the purchase, regardless of who is required to
                pay such taxes under State or local law or custom (and Tenant
                will also pay to Landlord any amount necessary to yield to
                Landlord the entire Casualty Purchase Price if as a matter of
                the Law of the State or locality such tax cannot be paid
                directly by Tenant). If there are any liens or encumbrances
                against the Leased Premises which Landlord is obligated to
                remove (including any Mortgage), upon request made a reasonable
                time before the Closing Date, Landlord will provide at the
                Closing separate funds for the foregoing to the extent required,
                payable to the holder of such lien or encumbrances.

16.  Subordination to Financing.
     --------------------------

     (a)  (i)   Subject to the provisions of Section 16 (a)(ii), Tenant agrees
                that this Lease will at all times be subject and subordinate to
                the lien of any Mortgage, and Tenant agrees, upon demand,
                without cost, to execute instruments as may be required to
                further effectuate or confirm such subordination.

          (ii)  Except as expressly provided in this Lease by reason of the
                occurrence of an Event of Default, Tenant's tenancy and Tenant's
                rights under this Lease will not be disturbed, terminated or
                otherwise adversely affected, nor will this Lease be affected,
                by any default under any Mortgage, and in the event of a
                foreclosure or other enforcement of any Mortgage, or sale in
                lieu thereof, the purchaser at such foreclosure sale will be
                bound to Tenant for the Term of this Lease (including, without
                limitation, any Renewal Term) the rights of Tenant under this
                Lease will expressly survive, and this Lease will in all
                respects continue in full force and effect so long as no Event
                of Default has occurred and is continuing. Tenant will not be
                named as a party defendant in any such foreclosure suit, except
                as may be required by law. Any Mortgage (other than a mortgage
                or security instrument securing the GMAC Loan) to which this
                Lease is now or hereafter subordinate will provide, in effect,
                that during the time this Lease is in force insurance proceeds
                and Restoration Award will be permitted to be used for
                Restoration in accordance with the provisions of this Lease.

                                       27
<PAGE>

     (b)  Notwithstanding the provisions of Section 16(a), the holder of any
          Mortgage to which this Lease is subject and subordinate will have the
          right, at its sole option, at any time, to subordinate and subject the
          Mortgage, in whole or in part, to this Lease by recording a unilateral
          declaration to such effect, provided that such holder will have agreed
          that during the time this Lease is in force insurance proceeds and
          Restoration Award will be permitted to be used for restoration in
          accordance with the provisions of this Lease.

     (c)  At any time prior to the expiration or termination of the Term, Tenant
          agrees, at the election and upon demand of any owner of the Leased
          Premises, or of a Lender who has granted non-disturbance to Tenant
          pursuant to Section 16(a) above, to attorn, from time to time, to any
          such owner or any Lender, upon the terms and conditions of this Lease,
          for the remainder of the Term. The provisions of this Section 16(c)
          will inure to the benefit of any such owner or any Lender, will apply
          notwithstanding that, as a matter of law, this Lease may terminate
          upon the foreclosure of the Mortgage, will be self-operative upon any
          such demand, and no further instrument will be required to give effect
          to said provisions. Notwithstanding the foregoing, however, Tenant
          agrees to execute any document reasonably requested by any such owner
          or any Lender to confirm such attornment.

     (d)  Each of Tenant, Landlord and any Lender, however, upon demand of the
          other, agrees to execute, from time to time, instruments in
          confirmation of the foregoing provisions of Sections 16(a) and 16(c),
          reasonably satisfactory to the requesting party acknowledging such
          subordination, non-disturbance and attornment as are provided in such
          subsections and setting forth the terms and conditions of its tenancy.

     (e)  Each of Tenant, Landlord and any Lender agrees that, if requested by
          any of the others, each will, without charge, enter into a
          subordination, non-disturbance and attornment agreement reasonably
          requested by any Lender, provided such agreement contains provisions
          relating to non-disturbance in accordance with the provisions of
          Section 16(a) and Tenant agrees for the benefit of such Lender that
          Tenant will not: (i) without in each case the prior written consent of
          such Lender, which will not be unreasonably withheld, conditioned or
          delayed, amend or modify the Lease (provided, however, such Lender, in
                                              --------  -------
          such Lender's sole discretion may withhold or condition its consent to
          any amendment or modification which would or could: (A) alter in any
          way the amount or time for payment of any Basic Rent, Additional Rent
          or other sum payable hereunder; (B) alter in any way the absolute and
          unconditional nature of Tenant's obligations hereunder or materially
          diminish any such obligations; (C) result in any termination prior to
          the end of the Initial Term; or (D) otherwise, in such Lender's
          reasonable judgment, adversely affect the rights or obligations of
          Landlord or Tenant under this Lease), or enter into any agreement with
          Landlord so to do; (ii) without the prior written consent of such
          Lender which may be withheld in such Lender's sole discretion, cancel
          or surrender or seek to cancel or surrender the Term of this Lease, or
          enter into any agreement with Landlord to do so (the parties agreeing
          that the foregoing will not be construed to affect the rights or
          obligations of Tenant, Landlord or such Lender with respect to any
          termination permitted under the express terms of this Lease in
          connection with an offer to purchase the Leased

                                       28
<PAGE>

          Premises following certain events of condemnation as provided in
          Section 13); or (iii) pay any installment of Basic Rent more than one
          (1) month in advance of the due date thereof or otherwise than in the
          manner provided for in this Lease.

17.  Assignment, Subleasing.
     ----------------------

     (a)  Tenant may assign its interest in this Lease to a Qualified Assignee
          and may sublet the Leased Premises in whole or in part, from time to
          time, without the consent of Landlord, subject and subordinate to all
          of the terms of this Lease and provided that any such sublease: (1)
          does not extend beyond the term of the Lease; (2) is consistent with
          the terms of the Lease (and Landlord and any Lender shall have the
          right to reasonably approve the form of any such sublease); (3) is
          expressly by its terms subordinate to the Lease, provided, that if the
          Tenant defaults under the Lease while the subtenant is not in default,
          and the subtenant is not an affiliate of the Tenant, the subtenant's
          possession will not be disturbed; and (4) provides that the subtenant
          agrees to attorn to Landlord and any Lender and be subordinate to any
          Loan. Notwithstanding the foregoing, however, neither this Lease nor
          the leasehold estate created hereby may be mortgaged by Tenant, nor
          may Tenant mortgage or pledge its interest in any sublease of the
          Leased Premises or the rentals payable thereunder. Tenant may, without
          Landlord's consent, permit licensees or concessionaires to occupy
          portions of the Premises.

     (b)  No assignment or sublease may affect or reduce any of the obligations
          of Tenant under this Lease, and all such obligations will continue in
          full force and effect as obligations of a principal and not as
          obligations of a guarantor, as if no assignment, mortgage, pledge or
          sublease had been made. Notwithstanding any assignment or subletting
          Tenant will continue to remain primarily liable and responsible, as a
          principal and not as a surety, for the payment of the Basic Rent and
          Additional Rent and the performance of all of its other obligations
          under this Lease. No assignment or sublease will impose any
          obligations on Landlord under this Lease except as otherwise expressly
          provided in this Lease. Tenant agrees that in the case of an
          assignment of the Lease, Tenant will, within 15 days after the
          execution and delivery of any such assignment, deliver to Landlord:
          (i) a duplicate original of such assignment in recordable form; and
          (ii) an agreement executed and acknowledged by the assignee in
          recordable form wherein the assignee shall agree to assume and agree
          to observe and perform all of the terms and provisions of this Lease
          on the part of the Tenant to be observed and performed from and after
          the date of such assignment, and shall agree that such assignment is
          subject and subordinate to all of the terms and provisions of this
          Lease. In the case of a sublease, Tenant will, within 15 days after
          the execution and delivery of such sublease, deliver to Landlord a
          duplicate original of such sublease.

     (c)  Upon the occurrence of an Event of Default under this Lease, Landlord
          will have the right to collect and enjoy all rents and other sums of
          money payable under any sublease of any of the Leased Premises, and
          Tenant hereby irrevocably and unconditionally assigns such rents and
          money to Landlord, which assignment may be exercised upon and after
          (but not before) the occurrence of an Event of Default.

                                       29
<PAGE>

     (d)  (i)  Landlord agrees for itself, its successors and assigns, promptly
               upon Tenant's request, to enter into a non-disturbance and
               attornment agreement with any Qualified Subtenant (defined below)
               upon the terms described below, pursuant to which Landlord shall
               agree, for so long as such Qualified Subtenant is not in default
               under its Qualified Sublease (defined below) that the Qualified
               Sublease shall not be terminated as a result of any termination
               of this Lease and such Qualified Subtenant's use and occupancy of
               the Leased Premises shall not be disturbed by Landlord, and
               pursuant to which such Qualified Subtenant will agree to attorn
               to Landlord or its successor as landlord under the Qualified
               Sublease upon any termination of this Lease. Said agreement will
               further provide that nothing therein contained shall impose any
               obligation on the Landlord or any Lender to: (A) return or apply
               any security deposit under such sublease, unless such security
               deposit is transferred and turned over to the Landlord or any
               Lender or their or either of their successors; (B) expend any
               sums to make any installations or alterations provided to be made
               by the Landlord under said sublease or reimburse the Tenant under
               said sublease for any installations or alterations made by it;
               (C) be liable for any act or omission of Tenant as sublandlord
               (or any successor to Tenant as sublandlord) or be subject to any
               offsets or defense which such subtenant might have against Tenant
               as sublandlord (or any successor to Tenant as sublandlord); (D)
               be bound by any rent or additional rent which such subtenant
               might have paid for more than the current month to any prior
               landlord; or (E) be bound by any amendment or modification of the
               sublease made without the prior written consent of Landlord, the
               terms of which amendment or modification if included in the
               original sublease would have prevented such sublease from meeting
               the criteria for a Qualified Sublease.

          (ii) Any subtenant under a Qualified Sublease (defined below) is a
               "Qualified Subtenant." "Qualified Sublease" means any sublease
               (i) of all of the Leased Premises, (ii) pursuant to which the
               subtenant thereunder had, at the time such sublease was entered
               into, either a Standard & Poors rating of BBB or better or a net
               worth equal to or greater than $300,000,000, (iii) that is on the
               terms and conditions of this Lease (except that Basic Rent or
               Additional Rent (or both) may be higher), (iv) for a term not to
               exceed the Term of this Lease (and if any such Qualified Sublease
               includes all or part of any Renewal Term or Renewal Terms, then
               Tenant will be conclusively deemed to have irrevocably waived the
               right to issue a Renewal Term Cancellation Notice as to such
               Renewal Term or Renewal Terms, which waiver Tenant will confirm
               in writing to Landlord if requested to do so), (v) at fair market
               rents, confirmed by an appraisal or a broker's certification, and
               (vi) providing that such subtenant may not assign or further
               sublease the Leased Premises.

     (e)  (i)  Landlord agrees for itself, its successors and assigns, promptly
               upon Tenant's request, to enter into an agreement with any
               Qualified Assignee (defined below) pursuant to which Landlord
               will agree, for so long as such Qualified

                                       30
<PAGE>

                       Assignee is not in default of its obligations under this
                       Lease, that no defaults or Event of Default shall be
                       deemed to have occurred under this Lease by reason of the
                       occurrence of one or more of the events designated in
                       this Lease with respect to any party who was a Tenant
                       under this Lease prior to the date of the assignment of
                       this Lease to the Qualified Assignee.

               (ii)    "Qualified Assignee" means any assignee of the Tenant's
                       rights, title and interest under this Lease which, at the
                       time of the assignment to it, had either a Standard &
                       Poors rating of BBB or better or a net worth equal to or
                       greater than $300,000,000.

        (f)    Landlord agrees for itself, its successors and assigns, that in
               the event Tenant grants to any lender a chattel mortgage or other
               security interest that is secured by any Trade Fixtures or
               inventory of Tenant that is located at or used in the Leased
               Premises, then such lender, when authorized under the terms of
               the applicable loan documents, shall be permitted to enter upon
               the Leased Premises and to remove any or all of the Trade
               Fixtures or inventory of Tenant in which the lender holds a
               security interest. Tenant will and does agree to defend,
               indemnify and hold any Lender and Landlord, their respective
               officers, directors, shareholders, partners, beneficial owners,
               trustees, members, managers, agents and employees, harmless from
               and against any and all causes of actions, suits, demands or
               judgments of any nature whatsoever, losses, damages, penalties,
               expenses, fees, claims, costs (including response and remedial
               costs), and liabilities, including, but not limited to,
               reasonable out-of-pocket attorneys' fees and costs of litigation,
               arising out of or in any manner connected with such removal.

18      Permitted Contests.
        ------------------

        (a)    After prior written notice to Landlord and any Lender, Tenant
               will not be required to: (i) pay any Imposition; (ii) comply with
               any Legal Requirement; (iii) discharge or remove any lien
               referred to in Sections 9 or 12; or (iv) take any action with
               respect to any violation referred to in Section 11(b) so long as
               Tenant shall contest, in good faith and at its expense, the
               existence, the amount or the validity thereof, the amount of the
               damages caused thereby, or the extent of its or Landlord's
               liability therefor, by appropriate proceedings which shall
               operate during the pendency thereof to prevent: (A) the
               collection of, or other realization upon, the Imposition or lien
               so contested; (B) the sale, forfeiture or loss of any of the
               Leased Premises, any Basic Rent or any Additional Rent to satisfy
               the same or to pay any damages caused by the violation of any
               such Legal Requirement or by any such violation; (C) any
               interference with the use or occupancy of any of the Leased
               Premises; (D) any interference with the payment of any Basic Rent
               or any Additional Rent; and (E) the cancellation of any fire or
               other insurance policy.

        (b)    In no event may Tenant pursue any contest with respect to any
               Imposition, Legal Requirement, lien, or violation, referred to in
               Section 18(a) in such manner that exposes Landlord or any Lender
               to: (i) criminal liability, penalty or sanction; (ii) any civil
               liability, penalty or sanction for which Tenant has not made
               provisions

                                       31
<PAGE>

               reasonably acceptable to Landlord and any Lender; or (iii)
               defeasance of its interest in the Leased Premises.

        (c)    Tenant agrees that each such contest will be promptly and
               diligently prosecuted to a final conclusion, except that Tenant
               will have the right to attempt to settle or compromise such
               contest through negotiations. Tenant will pay and save any Lender
               and Landlord harmless against any and all losses, judgments,
               decrees, reasonable out-of-pocket costs and expenses (including
               all attorneys' fees and expenses) in connection with any such
               contest and will, promptly after the final determination of such
               contest, fully pay and discharge the amounts which will be
               levied, assessed, charged or imposed or be determined to be
               payable therein or in connection therewith, together with all
               penalties, fines, interest, costs and expenses thereof or in
               connection therewith, and perform all acts the performance of
               which will be ordered or decreed as a result thereof.

19.     Conditional Limitations; Default Provisions.
        -------------------------------------------

        (a)    The occurrence of any one or more of the following events (any
               such event being a "failure" or "default") will constitute an
               Event of Default under this Lease: (i) a failure by Tenant to
               make (regardless of the pendency of any bankruptcy,
               reorganization, receivership, insolvency or other proceedings, in
               law, in equity or before any administrative tribunal which had or
               might have the effect of preventing Tenant from complying with
               the provisions of this Lease): (x) any payment of Basic Rent
               which continues unremedied for a period of 3 business days after
               written notice ("Nonpayment Notice") thereof given to Tenant by
               Landlord; or (y) any payment of Additional Rent or other sum
               herein required to be paid by Tenant which continues unremedied
               for a period of 15 business days after a Nonpayment Notice is
               given to Tenant by Landlord; (ii) failure of Tenant to deliver to
               Landlord evidence of renewal and replacement Policies not less
               than 30 days prior to the expiration date(s) of such Policies as
               required by Section 14(b) hereof and such default shall continue
               for a period of 10 days after the written notice thereof is given
               by Landlord to Tenant, (iii) failure by Tenant to perform and
               observe, or a violation or breach of, any other provision in this
               Lease and such default continues for a period of 30 days after
               written notice thereof is given by Landlord to Tenant or if such
               default is of such a nature that it cannot reasonably be cured
               within such period of 30 days, such period will be extended for
               such longer time as is reasonably necessary provided that Tenant
               has commenced to cure such default within said period of 30
               business days and is actively, diligently and in good faith
               proceeding with continuity to remedy such default not to exceed
               an additional 120 days; (iv) Tenant: (A) is voluntarily
               adjudicated a bankrupt or insolvent; (B) or voluntarily consent
               to the appointment of a receiver or trustee for itself or for the
               Leased Premises; (C) voluntarily files a petition seeking relief
               under the bankruptcy or other similar laws of the United States,
               any state or any jurisdiction; or (D) voluntarily files a general
               assignment for the benefit of creditors; (v) a court enters an
               order, judgment or decree appointing, with the voluntary consent
               of Tenant, a receiver or trustee for Tenant or for the Leased
               Premises or approving a petition filed against Tenant which seeks
               relief under the bankruptcy or other similar laws of the United
               States or any State, and such order,

                                       32
<PAGE>

               judgment or decree remains in force, undischarged or unstayed,
               180 business days after it is entered; (vi) Tenant in any
               insolvency proceedings is liquidated or dissolved or voluntarily
               commences proceedings towards its liquidation or
               dissolution;(vii) the estate or interest of Tenant in the Leased
               Premises is levied upon or attached in any proceeding and such
               estate or interest is about to be sold or transferred or such
               process is not vacated or discharged within 180 business days
               after such levy or attachment; (viii) should any representation
               of Tenant in Section 33 hereof be untrue in any material respect
               as of the date made. Notwithstanding anything in the foregoing
               portions of this Section 19(a), if Landlord or any Lender
               receives notice that Tenant has not timely paid any insurance
               premiums required under this Lease, then either Landlord or such
               Lender may pay the premiums and bill Tenant for the amount of the
               premiums (which bill must include reasonable proof of payment of
               the premiums), and Tenant must pay the premiums to Landlord or
               such Lender, as applicable, within 15 days after receiving the
               bill. If Landlord or any Lender pays the insurance premiums as
               provided in the previous sentence, and Tenant reimburses Landlord
               or Lender as applicable within the 15 day period provided above,
               Tenant's failure to pay the premiums will not be considered to be
               a default under this Lease.

        (b)    If any Event of Default occurs, Landlord shall have the right, at
               its option, to do any one or more of the following without demand
               upon or notice to Tenant:

               (i)    Landlord may give Tenant notice (following the occurrence
                      of an Event of Default) of Landlord's intention to
                      terminate this Lease on a date specified in such notice
                      (which date will be no sooner than 3 business days after
                      the date the notice is received by Tenant (the
                      "Termination Date"). Upon the Termination Date, unless the
                      Event of Default for which the termination is effected is
                      a default which can be cured by the payment of money and
                      such Event of Default has been cured by Tenant, the Term
                      and the estate hereby granted and all rights of Tenant
                      hereunder will expire and terminate as if such Termination
                      Date were the date fixed for the expiration of the Term,
                      but Tenant will remain liable for all its obligations
                      under this Lease through the date otherwise fixed for the
                      expiration of the Term in Section 5, including its
                      liability for Basic Rent and Additional Rent as provided
                      below.

               (ii)   Landlord may, whether or not the Term of this Lease has
                      been terminated pursuant to clause (i) above give Tenant
                      notice (following the occurrence of an Event of Default)
                      to surrender the Leased Premises to Landlord on a date
                      specified in such notice (which date shall be no sooner
                      than 30 days after the date the notice is received by
                      Tenant), at which time Tenant will surrender and deliver
                      possession of the Leased Premises to Landlord unless the
                      Event of Default for which the termination is effected is
                      a default which can be cured by the payment of money and
                      such Event of Default has been cured by Tenant within 3
                      business days of Landlord's notice given under this
                      paragraph. Upon or at any time after taking possession of
                      the Leased Premises, Landlord may remove any persons or
                      property therefrom. Landlord will have no liability for or
                      by reason of any such entry,

                                       33
<PAGE>

                      repossession or removal. No such entry or repossession may
                      be construed as an election by Landlord to terminate this
                      Lease unless Landlord gives a written notice of such
                      intention to Tenant pursuant to clause (i) above.

               (iii)  After repossession of any of the Leased Premises pursuant
                      to clause (ii) above, whether or not this Lease has been
                      terminated pursuant to clause (i) above, Landlord may
                      relet the Leased Premises or any part thereof to such
                      tenant or tenants for such term or terms (which may be
                      greater or less than the period which would otherwise have
                      constituted the balance of the Term) for such rent, on
                      such conditions (which may include concessions or free
                      rent) and for such uses as Landlord, in its reasonable
                      discretion, may determine; and Landlord will collect and
                      receive any rents payable by reason of such reletting. The
                      rents received on such reletting will be applied: (A)
                      first to the reasonable and actual expenses of such
                      reletting and collection, including without limitation
                      necessary renovation and alterations of the Leased
                      Premises, reasonable and actual attorneys' fees and any
                      reasonable and actual real estate commissions paid; and
                      (B) thereafter toward payment of all sums due or to become
                      due Landlord hereunder. If a sufficient amount to pay such
                      expenses and sums is not realized or secured, then Tenant
                      will pay Landlord any such deficiency monthly, and
                      Landlord may bring an action therefor as such monthly
                      deficiency shall arise. Landlord will not, in any event,
                      be required to pay Tenant any sums received by Landlord on
                      a reletting of the Leased Premises in excess of the rent
                      provided in this Lease, but such excess will reduce the
                      accrued present or future obligations of Tenant under this
                      Lease. Landlord's re-entry and reletting of the Leased
                      Premises without termination of this Lease will not
                      preclude Landlord from subsequently terminating this Lease
                      as set forth in this Section. Landlord may make such
                      Alterations as Landlord in its reasonable discretion may
                      deem advisable. Tenant agrees to pay Landlord, as
                      Additional Rent, immediately upon demand, all reasonable
                      out-of-pocket costs and expenses incurred by Landlord in
                      obtaining possession, in performing Alterations and in
                      reletting any of the Leased Premises, including fees and
                      commissions of attorneys, architects, agents and brokers.

               (iv)   If Tenant fails to make payment of any installment of
                      Basic Rent or any Additional Rent on or before the date
                      when each such payment is due, Tenant will pay to
                      Landlord, an amount equal to the amount unpaid times the
                      rate (the "Default Rate") that is the greater of (A) 4%
                      per annum above the then current Prime Rate (defined
                      below) or (B) the default rate owed by Landlord under its
                      loan documents with any Lender, computed from the date
                      such payment of Basic Rent or Additional Rent was due
                      through and including the date of payment. The term "Prime
                      Rate" means the prime rate of interest published in The
                      Wall Street Journal or its successor, from time to time.

               (v)    Landlord may exercise any other right or remedy now or
                      hereafter existing by law or in equity.

                                       34
<PAGE>

        (c)    In the event of any expiration or termination of this Lease or
               repossession of any of the Leased Premises by reason of the
               occurrence of an Event of Default, Tenant will pay to Landlord
               Basic Rent and Additional Rent through and including the date of
               such expiration, termination or repossession and, thereafter,
               Tenant will, until the end of what would have been the Term in
               the absence of such expiration, termination or repossession, and
               whether or not any of the Leased Premises have been relet, be
               liable to Landlord for and will pay to Landlord as liquidated and
               agreed current damages: (i) Basic Rent, Additional Rent and all
               other sums which would be payable under this Lease by Tenant in
               the absence of such expiration, termination or repossession, less
               (ii) the net proceeds, if any, of any reletting pursuant to
               Section 19(b)(iii), after deducting from such proceeds all of
               Landlord's reasonable out-of-pocket expenses in connection with
               such reletting (including all reasonable repossession costs,
               brokerage commissions, legal expenses, attorneys' fees,
               employees' expenses, costs of Alteration and expenses of
               preparation for reletting). Tenant hereby agrees to be and remain
               liable for all such sums and Landlord may recover such damages
               from Tenant and institute and maintain successive actions or
               legal proceedings against Tenant for the recovery of such
               damages. Nothing in this subsection will be deemed to require
               Landlord to wait to begin such action or other legal proceedings
               until the date when the Term would have expired by limitation had
               there been no such Event of Default. In addition to the
               foregoing, Tenant shall pay to Landlord the yield maintenance
               premium, if any, paid by Landlord to GMAC in connection with a
               repayment by Landlord of the GMAC Loan following an acceleration
               thereof as a result of an Event of Default by Tenant hereunder.

        (d)    At any time after such expiration or sooner termination of this
               Lease pursuant to Section 19 or pursuant to law or if Landlord
               has reentered the Leased Premises, as the case may be, whether or
               not Landlord has recovered any amounts under Section 19(b)(iii)
               or 19(c), Landlord will be entitled to recover from Tenant and
               Tenant will pay to Landlord, on demand, as and for liquidated and
               agreed final damages for Tenant's default, the amount by which
               the Basic Rent, and all Additional Rent reserved under this
               Section 19 for the unexpired portion of the Term as if the Lease
               had not expired or been terminated exceeds the then fair and
               reasonable rental value of the Leased Premises for the same
               period, discounted to present worth at the annual rate of seven
               percent (7%), minus any such monthly deficiencies previously
               recovered from Tenant under Section 19(b)(iii) if applicable to
               such period.

        (e)    If any statute or rule of law governing a proceeding in which
               such liquidated final damages provided for in Section 19(d) are
               to be proved shall validly limit the amount thereof to an amount
               less than the amount above agreed upon, Landlord will be entitled
               to the maximum amount allowable under such statute or rule of
               law.

20.     Additional Rights of Landlord and Tenant.
        ----------------------------------------

        (a)    No right or remedy conferred upon or reserved to Landlord in this
               Lease is intended to be exclusive of any other right or remedy;
               and each and every right and remedy is cumulative and in addition
               to any other right or remedy contained in this Lease. No delay or
               failure by Landlord or Tenant to enforce its rights under this
               Lease will

                                       35
<PAGE>

               be construed as a waiver, modification or relinquishment of such
               rights. In addition to the other remedies provided in this Lease,
               Landlord and Tenant will be entitled, to the extent permitted by
               applicable law, to injunctive relief in case of the violation or
               attempted or threatened violation of any of the provisions of
               this Lease, or to specific performance of any of the provisions
               of this Lease.

        (b)    Tenant waives and surrenders for itself and all those claiming
               under it, including creditors of all kinds, any right and
               privilege which it or any of them may have under any present or
               future law to redeem any of the Leased Premises or to have a
               continuance of this Lease after termination of this Lease or of
               Tenant's right of occupancy or possession pursuant to any court
               order or any provision of this Lease.

        (c)    Landlord waives any right to distrain or levy upon Trade Fixtures
               or any property of Tenant and any Landlord's lien or similar lien
               upon Trade Fixtures and any other property of Tenant regardless
               of whether such lien is created or otherwise. Landlord agrees at
               the request of Tenant, to execute a waiver of any Landlord's or
               similar lien for the benefit of any present or future holder of a
               security interest in or lessor of any of Trade Fixtures or any
               other personal property of Tenant.

        (d)    Landlord acknowledges and agrees in the future to acknowledge (in
               a written form reasonably satisfactory to Tenant) to such persons
               and entities at such times and for such purposes as Tenant may
               reasonably request that the Trade Fixtures are Tenant's property
               and not part of the Improvements (regardless of whether or to
               what extent such Trade Fixtures are affixed to the Improvements)
               or otherwise subject to the terms of this Lease.

        (e)    Each of Tenant and Landlord (each, a "Paying Party") agrees to
               pay to the other party (each, a "Demanding Party") any and all
               reasonable out-of-pocket costs and expenses incurred by the
               Demanding Party in connection with any litigation or other action
               instituted by the Demanding Party to enforce the obligations of
               the Paying Party under this Lease, to the extent that the
               Demanding Party has prevailed in any such litigation or other
               action. Any amount payable by Tenant to Landlord pursuant to this
               Section 20(e) will be due and payable by Tenant to Landlord as
               Additional Rent. No sum payable by Landlord to Tenant under this
               Section 20(e) will be payable or recoverable from any sums
               pledged or assigned (or intended to have been pledged or
               assigned) by Landlord to any Lender, Tenant's right to recover
               such sums from Landlord being subordinate to the rights of any
               Lender, such sums only being recoverable after payment to any
               Lender in full of the Loan as constituted on the date of this
               Lease. As used in this Section, "costs and expenses" shall
               include, without limitation, reasonable out-of-pocket attorneys'
               fees at trial, on appeal and on any petition for review, and in
               any proceeding in bankruptcy, in addition to all other sums
               provided by law.

21.     Notices. All notices, demands, requests, consents, approvals, offers,
        -------
        statements and other instruments or communications required or permitted
        to be given pursuant to the provisions of this Lease (collectively,
        "Notice" or "Notices") must be in writing and, unless otherwise
        specified in this Lease, will be deemed to have been given for all
        purposes (except for the

                                       36
<PAGE>

        purpose of Tenant's notice to Landlord under Section 3(e), requesting
        that any Lender enter into an Easement, which notice must be sent only
        in the manner prescribed in the following clause (i)): (i) three days
        after having been sent by United States mail, by registered or certified
        mail, return receipt requested, postage prepaid, addressed to the other
        party at its address as stated below; or (ii) one day after having been
        sent by Federal Express, United Parcel or other nationally recognized
        air courier service.

               If to Landlord:

                      At the addresses set forth on Exhibit D to this Lease.
                                                    ---------

               If to Tenant:

                      Galyan's Trading Company, Inc.
                      2437 East Main Street
                      Plainfield, IN 46168
                      Attn: President

               With copies to:

                      The Limited, Inc.
                      Three Limited Parkway
                      P.O. Box 16000
                      Columbus, OH 43216
                      (Columbus, OH 43230 for overnight deliveries)
                      Attention: Corporate Real Estate

               And:

                      Freeman Spogli & Co.
                      599 Lexington Avenue
                      New York, NY 10022
                      Attn: Todd Halloran

               And:

                      O'Melveny & Myers LLC
                      One Citicorp Center
                      153 East 53rd Street
                      New York, NY 10022
                      Attn: Jeffrey Rosen, Esq.

        If any Lender has advised Tenant by Notice in the manner described above
        that it is the holder of a Mortgage and states in such Notice its
        address for the receipt of Notices, then simultaneously with the giving
        of any Notice by Tenant to Landlord, Tenant will send a copy of such
        Notice to such Lender in the manner described above. For the purposes of
        this Section 21, any party may substitute its address by giving 15 days'
        notice to the other party

                                       37
<PAGE>

        in the manner provided above. Any Notice may be given on behalf of any
        party by its counsel.

22.     Estoppel Certificates. Landlord and Tenant will at any time and from
        ---------------------
        time to time, upon not less than 20 days' prior written request by the
        other, execute, acknowledge and deliver to the other a statement in
        writing, certifying: (i) that this Lease is unmodified and in full
        effect (or, if there have been modifications, that this Lease is in full
        effect as modified, setting forth such modifications); (ii) the dates to
        which Basic Rent, payable hereunder has been paid; (iii) that to the
        knowledge of the signer of such certificate (after due inquiry) no
        default by either Landlord or Tenant exists under this Lease or
        specifying each such default of which the signer may have knowledge;
        (iv) the remaining Term under this Lease; (v) with respect to a
        certificate signed on behalf of Tenant, that to the knowledge of the
        signer of such certificate (after due inquiry), there are no proceedings
        pending or threatened against Tenant before or by any court or
        administrative agency which if adversely decided would materially and
        adversely affect the financial condition and operations of Tenant or if
        any such proceedings are pending or threatened to said signer's
        knowledge, specifying and describing the same; and (vi) such other
        matters as may reasonably be requested by the party requesting the
        certificate. It is intended that any such statements may be relied upon
        by any Lender, the recipient of such statements or their assignees or by
        any prospective purchaser, assignee or subtenant of the Leased Premises.

23.     Surrender and Holding Over.
        --------------------------

        (a)    Upon the expiration or earlier termination of this Lease, Tenant
               will peaceably leave and surrender the Leased Premises (except as
               to any portion thereof with respect to which this Lease has
               previously terminated) to Landlord. Tenant will remove from the
               Leased Premises on or prior to such expiration or earlier
               termination the Trade Fixtures and personal property which is
               owned by Tenant or third parties other than Landlord, and Tenant
               at its expense will, on or prior to such expiration or earlier
               termination, repair any damage caused by such removal. Trade
               Fixtures and personal property not so removed by the fifth day
               after the end of the Term or within thirty days after the earlier
               termination of the Term for any reason whatsoever will become the
               property of Landlord, and Landlord may thereafter cause such
               property to be removed from the Leased Premises without any
               liability to Tenant or any third party whose personal property
               Tenant permitted to be placed at the Leased Premises. The
               reasonable out-of-pocket cost of removing and disposing of such
               property and repairing any damage to any of the Leased Premises
               caused by such removal and the reimbursement cost owed to any
               third party whose personal property Tenant permitted to be placed
               at the Leased Premises will be borne by Tenant. Landlord will not
               in any manner or to any extent be obligated to reimburse Tenant
               for any property which becomes the property of Landlord as a
               result of such expiration or earlier termination.

        (b)    Any holding over by Tenant of the Leased Premises after the
               expiration or earlier termination of the Term of this Lease or
               any extensions of this Lease, with the consent of Landlord, will
               operate and be construed as tenancy from month to month only, at
               200% of the Basic Rent in effect immediately preceding the
               holdover and

                                       38
<PAGE>

               otherwise upon the same terms and conditions as contained in this
               Lease. Notwithstanding the foregoing, any holding over without
               Landlord's consent will entitle Landlord, in addition to
               collecting Basic Rent at a rate of 200% of the Basic Rent as
               provided under the previous sentence, to exercise all rights and
               remedies provided by law or in equity, including the remedies of
               Section 19(b).

24.     No Merger of Title. There will be no merger of this Lease nor of the
        ------------------
        leasehold estate created by this Lease with the fee estate in or
        ownership of any of the Leased Premises by reason of the fact that the
        same person, corporation, firm or other entity may acquire or hold or
        own, directly or indirectly: (a) this Lease or the leasehold estate
        created by this Lease or any interest in this Lease or in such leasehold
        estate; and (b) the fee estate or ownership of any of the Leased
        Premises or any interest in such fee estate or ownership. No such merger
        will occur unless and until all persons, corporations, firms and other
        entities having any interest as owner, lien holder, lessee or otherwise
        in: (i) this Lease or the leasehold estate created by this Lease; and
        (ii) the fee estate in or ownership of the Leased Premises or any part
        thereof sought to be merged join in a written instrument effecting such
        merger and duly record the same.

25.     Definition of Landlord.
        ----------------------

        (a)    Anything contained in this Lease to the contrary notwithstanding,
               any claim based on or in respect of any liability of Landlord
               under this Lease will be enforced only against the Landlord's
               interest in the Leased Premises and will not be enforced against
               the Landlord individually or personally.

        (b)    The term "Landlord" as used in this Lease so far as covenants or
               obligations on the part of Landlord are concerned, will be
               limited to mean and include only the owner or owners of the
               Leased Premises or holder of the Mortgage in possession of the
               Leased Premises at the time in question. In the event of any
               transfer or transfers of the title of the Leased Premises, the
               Landlord named in this Lease (and in case of any subsequent
               transfers or conveyances, the then grantor) shall be
               automatically freed and relieved from and after the date of such
               transfer and conveyance of all personal liability as respects the
               performance of any covenants or obligations on the part of
               Landlord contained in this Lease thereafter to be performed.

26.     Hazardous Substances.
        --------------------

        (a)    Tenant agrees that it will not on, about, or under the Leased
               Premises, make, release, treat or dispose of any "hazardous
               substances" as that term is defined in the Comprehensive
               Environmental Response, Compensation and Liability Act, and the
               rules and regulations promulgated pursuant thereto, as from time
               to time amended, 42 U.S.C.(SS).9601 et seq. (the "Act") or any
               other federal, state, or local law applicable to the Leased
               premises regulating the use, storage, release, transportation or
               any other aspect of Hazardous Materials, as defined below
               (collectively, "Environmental Law"); but the foregoing will not
               prevent the use of any hazardous substances strictly in
               accordance with applicable laws and regulations. Tenant
               represents and warrants that it will at all times comply with the
               Act and any other

                                       39
<PAGE>

               federal, state or local Laws governing "Hazardous Materials".
               "Hazardous Materials" means all chemicals, petroleum, crude oil
               or any fraction thereof, hydrocarbons, polychlorinated biphenyls
               (PCBs), asbestos, asbestos-containing materials and/or products,
               urea formaldehyde, or any substances which are classified as
               "hazardous" or "toxic" under the Act; hazardous waste as defined
               under the Solid Waste Disposal Act, as amended 42 U.S.C.(SS).
               6901 et seq.; air pollutants regulated under the Clean Air Act,
               as amended, 42 U.S.C.(SS). 7401, et seq.; pollutants as defined
               under the Clean Water Act, as amended, 33 U.S.C.(SS). 1251, et
               seq., any pesticide as defined by Federal Insecticide, Fungicide,
               and Rodenticide Act, as amended, 7 U.S.C.(SS). 136, et seq., any
               hazardous chemical substance or mixture or imminently hazardous
               substance or mixture regulated by the Toxic Substances Control
               Act, as amended, 15 U.S.C.(SS). 2601, et Seq., any substance
               listed in the United States Department of Transportation Table at
               45 CFR l72.101; any chemicals included in regulations promulgated
               under the above listed statutes; any explosives, radioactive
               material, and any chemical or other substance regulated by
               federal, state or local statutes similar to the federal statutes
               listed above and regulations promulgated under such federal,
               state or local statutes.

        (b)    To the extent required by the Act and/or any federal, state or
               local Laws governing Hazardous Materials, Tenant will remove any
               hazardous substances (as defined in the Act) and Hazardous
               Materials (as defined above) whether now or hereafter existing on
               the Leased Premises and whether or not arising out of or in any
               manner connected with Tenant's occupancy of the Leased Premises
               during the Term. In addition to, and without limiting Section 10
               of this Lease Tenant will and does agree to defend, indemnify and
               hold any Lender and Landlord, their respective officers,
               directors, shareholders, partners, beneficial owners, trustees,
               members, managers, agents and employees, harmless from and
               against any and all causes of actions, suits, demands or
               judgments of any nature whatsoever, losses, damages, penalties,
               expenses, fees, claims, costs (including response and remedial
               costs), and liabilities, including, but not limited to,
               reasonable out-of-pocket attorneys' fees and costs of litigation,
               arising out of or in any manner connected with: (i) the violation
               of any applicable Environmental Law with respect to the Leased
               Premises or Tenant's or any other person's or entity's prior
               ownership of the Leased Premises; (ii) the "release" or
               "threatened release" of or failure to remove, as required by this
               Section 26, "hazardous substances" (as defined in the Act) and
               Hazardous Materials (as defined above) at or from the Leased
               Premises or any portion or portions thereof, including any past
               or current release and any release or threatened release during
               the initial Term and any extension or Renewal Term whether or not
               arising out of or in any manner connected with Tenant's occupancy
               of the Leased Premises during the initial Term or any extension
               or Renewal Term.

        (c)    Tenant agrees that it will not install any underground storage
               tank at the Leased Premises without specific, prior written
               approval from the Landlord and any Lender, which may be withheld
               in Landlord's or such Lender's sole discretion. The Tenant agrees
               that it will not store combustible or flammable materials on the
               Leased Premises in violation of the Act or any other federal,
               state or local Laws governing Hazardous Materials.

                                       40
<PAGE>

        (d)    If Landlord shall have reason to believe that the Leased Premises
               shall not be in compliance with Environmental Law, a "release" of
               Hazardous Materials shall have occurred in, on, under or from the
               Leased Premises, or there shall be Hazardous Materials in, on or
               under the Leased Premises that are not in compliance with all
               Environmental Laws, upon Landlord's written request Tenant shall
               perform an environmental assessment for the benefit of Landlord
               and Lender which shall be prepared at Tenant's expense, provided
               that Landlord shall reimburse Tenant for the actual cost of such
               report to the extent that (a) such report reveals no violation of
               Environmental Laws and (b) such report was not legally required
               of owners or possessors of real property in the locality where
               the Leased Premises are situated.

27.     Entry by Landlord. Landlord and its authorized representatives (which
        -----------------
        includes, without limitation, any Lender) will have the right upon
        reasonable notice (which shall be not less than 2 business days except
        in the case of emergency) to enter the Leased Premises at all reasonable
        business hours (and at all other times in the event of an emergency):
        (a) for the purpose of inspecting the same or for the purpose of doing
        any work under Section 11(c), and may take all such action thereon as
        may be necessary or appropriate for any such purpose (but nothing
        contained in this Lease or otherwise will create or imply any duty upon
        the part of Landlord to make any such inspection or do any such work);
        and (b) for the purpose of showing the Leased Premises to prospective
        purchasers and mortgagees and, at any time within 6 months prior to the
        expiration of the Term of this Lease for the purpose of showing the same
        to prospective tenants. No such entry will constitute an eviction of
        Tenant but any such entry will be done by Landlord in such reasonable
        manner as to minimize any disruption of Tenant's business operation.

28.     Financial Information.
        ---------------------

        (a)    Tenant agrees to deliver the financial information hereinafter
               described to Landlord: within 120 days after the end of each
               fiscal year of Tenant, a balance sheet of Tenant and its
               consolidated subsidiaries, if any, as at the end of such year, a
               statement of changes in Tenant's financial position for such
               year, and a statement of operations and cash flows of Tenant and
               its consolidated subsidiaries, if any, for such year, setting
               forth in each case, in comparative form, the corresponding
               figures for the preceding fiscal year in reasonable detail and
               scope and certified by independent certified accountants of
               recognized national standing selected by Tenant; and within 45
               days after the end of each fiscal quarter of Tenant (other than
               the fourth fiscal quarter) a balance sheet of Tenant and its
               consolidated subsidiaries, if any, as at the end of such quarter
               and statements of operations and cash flows of Tenant and its
               consolidated subsidiaries, if any, for such quarter, setting
               forth in each case, in comparative form, the corresponding
               figures for the similar quarter of the preceding year, in
               reasonable detail and scope and certified by a financial officer
               of Tenant having knowledge thereof; the foregoing financial
               statements all being prepared in accordance with generally
               accepted accounting principles, consistently applied (subject, in
               the case of quarterly statements, to year-end adjustments and the
               absence of footnotes). Tenant shall also deliver to Landlord with
               the foregoing financial statements a quarterly statement of total
               expenses incurred and total cost of all capital improvements with
               respect to the Leased Premises for such calendar quarter. It is

                                       41
<PAGE>

               understood that all such financial statements may contain a
               legend restricting the use that may be made of such information
               and precluding public access thereto and that acceptance of such
               financial statements constitutes the agreement by the recipients
               thereof to comply with such legend, provided, however, that
               Landlord shall not have any liability for, in connection with or
               arising from any failure of any recipient of such financial
               statements to comply with such legend. Notwithstanding the
               foregoing, in the event that Tenant shall become a publicly owned
               corporation, Tenant will deliver to Landlord when filed with the
               Securities and Exchange Commission, copies of the Forms 10Q and
               10K of Tenant.

        (b)    Landlord agrees to keep all information delivered by Tenant under
               Section 28(a) confidential, provided that this confidentiality
               requirement will not apply to information of a public nature or
               learned by Landlord from any source other than Seller. Nothing
               contained in this Section 28(b) will prohibit Landlord from
               disclosing information: (i) to (A) institutional investors which,
               directly or indirectly, provide financing for Landlord
               acquisition of the Leased Premises on the date of this Lease, (B)
               such other institutional investors which acquire Landlord's
               interest in this Lease and the Premises, or from time to time
               provide or may be willing to provide, directly or indirectly,
               such financing to Landlord, (C) Landlord's agents, (D)
               prospective investors in Landlord, and (E) Landlord's
               consultants, as long as each such party referred to in this
               clause (i) enters into an agreement with Landlord and Tenant to
               keep such information confidential, (ii) to Landlord's members,
               partners and shareholders (provided that such parties will be
               obligated to abide by the provisions of this Section 28(b)),
               (iii) as required by any applicable securities requirement, law,
               or court order, or (iv) in any action between the Tenant and any
               such parties. The provisions of this Section 28(b) will survive
               the expiration or earlier termination of this Lease.

29.     No Usury. The intention of the parties being to conform strictly to the
        --------
        applicable usury laws, whenever any provision herein provides for
        payment by Tenant to Landlord of interest at a rate in excess of the
        legal rate permitted to be charged, such rate herein provided to be paid
        will be deemed reduced to such legal rate.

30.     Separability. Each and every covenant and agreement contained in this
        ------------
        Lease is, and will be construed to be, a separate and independent
        covenant and agreement, and the breach of any such covenant or agreement
        by Landlord will not discharge or relieve Tenant from its obligation to
        perform the same. If any term or provision of this Lease or the
        application thereof to any provision of this Lease or the application
        thereof to any person or circumstances will to any extent be invalid and
        unenforceable, the remainder of this Lease, or the application of such
        term or provision to person or circumstances other than those as to
        which it is invalid or unenforceable, will not be affected thereby, and
        each term and provision of this Lease will be valid and will be enforced
        to the extent permitted by law.

31.     Miscellaneous.
        -------------

        (a)    Unless otherwise stated, all section references in this Lease
               refer to sections of this Lease. The section headings in this
               Lease are used only for convenience in finding

                                       42
<PAGE>

               the subject matters and are not part of this Lease or to be used
               in determining the intent of the parties or otherwise
               interpreting this Lease.

        (b)    As used in this Lease the singular includes the plural as the
               context requires and the following words and phrases shall have
               the following meanings: (i) "including" means "including but not
               limited to"; (ii) "provisions" means "provisions, terms,
               agreements, covenants and/or conditions"; (iii) "lien" means
               "lien, charge, encumbrance; title retention agreement, pledge,
               security interest, mortgage and/or deed of trust"; and (iv)
               "obligation" means "obligation, duty, agreement, liability,
               covenant or condition".

        (c)    Any act which Landlord is permitted to perform under this Lease
               may be performed at any time and from time to time by Landlord or
               any person or entity designated by Landlord. Any act which Tenant
               is required to perform under this Lease will be performed at
               Tenant's sole cost and expense without contribution by or charge
               to Landlord at any time.

        (d)    This Lease may be modified, amended, discharged or waived only by
               an agreement in writing signed by the party against whom
               enforcement of any such modification, amendment, discharge or
               waiver is sought.

        (e)    The covenants of this Lease will run with the Land and bind
               Tenant, the successors and assigns of Tenant and all present and
               subsequent encumbrances and subtenants of any of the Leased
               Premises, and will inure to the benefit of and bind Landlord, its
               successors and assigns.

        (f)    This Lease will be simultaneously executed in several
               counterparts, each of which when so executed and delivered will
               constitute an original, fully enforceable counterpart for all
               purposes.

        (g)    This Lease will be governed by and construed according to the
               laws of the State in which the Leased Premises is located.

        (h)    Wherever the consent or approval of Landlord is required under
               this Lease, unless otherwise specified, Landlord agrees that it
               will not unreasonably withhold or delay such consent or approval.

32.     Right of First Refusal.
        ----------------------

        (a)    Landlord will not at any time during the Term sell or convey or
               agree to sell or convey the Leased Premises without first having
               complied with the requirements of this Section 32. If Landlord
               desires to sell or convey all or any portion or portions of the
               Leased Premises, Landlord will obtain from a third party a bona
               fide arms' length written offer (the "Offer"), acceptable to
               Landlord, to purchase all or such portion of the Leased Premises;
               and Landlord will submit a written copy of the Offer to Tenant
               and will give Tenant 10 days within which to elect to purchase
               the portion of the Leased Premises which is the subject of the
               Offer (the "Subject Premises") on

                                       43
<PAGE>

               the precise terms and conditions of the Offer (except that if the
               Offer is in whole or in part for consideration other than cash,
               Tenant will have the right to pay in cash the fair market value
               of such non-cash consideration). If Tenant elects to so purchase
               the Subject Premises, Tenant will give to Landlord written notice
               thereof ("Acceptance Notice") and closing will be held within 60
               days after the date of the Acceptance Notice, whereupon Landlord
               will convey the Subject Premises to Tenant. At closing, Landlord
               will deliver to Tenant a special warranty deed (or local
               equivalent), sufficient to convey to Tenant fee simple title to
               the Subject Premises free and clear of all liens, restrictions
               and encumbrances, except for the Permitted Encumbrances, liens or
               encumbrances created or suffered by, through or under Tenant or
               arising by reason of the failure of Tenant to have observed or
               performed any term, covenant or agreement under this Lease to be
               observed or performed by Tenant, the lien of any Impositions then
               affecting the Leased Premises, this Lease and, if the Subject
               Premises are to be conveyed subject to the outstanding balance of
               the Loan, the Mortgage and all other Loan documents.

        (b)    Despite Landlord's sale, from time to time, of any portion or
               portions of the Leased Premises, this right of first refusal will
               continue as to all remaining portions of the Leased Premises. If
               Tenant elects not to purchase the Subject Premises, Landlord may
               thereafter sell the Subject Premises which are the subject of the
               Offer only to the party making the Offer or its assignee(s) and
               only in accordance with the terms thereof, unless a further Offer
               is submitted to Tenant in accordance with this Section 32;
               provided, however, that Landlord will not be required to submit
               such offer to Tenant if the revised Purchase Price (including the
               fair market value of any non-cash consideration) is not less than
               97.5% of the purchase price (including the fair market value of
               any non-cash consideration) listed in the original Offer. To
               prevent Landlord from defeating the rights of Tenant under this
               Section 32, Landlord agrees that Landlord will at no time accept
               an offer to purchase all or any portion of the Leased Premises
               together with any other property, except for (i) other property
               which is leased to Tenant or an affiliate of Tenant, or (ii)
               sales of multiple properties (including the Leased Premises) as
               to which the Leased Premises is separated from the multiple-
               property sale upon Tenant's request, a separate purchase price is
               set for the Leased Premises and Tenant's rights under this
               Section 32 are otherwise preserved. In no event will the
               provisions of this Section 32 or the rights and privileges of
               Tenant under this Section 32 be construed as limiting in any
               manner any other rights granted elsewhere in this Lease to
               Tenant.

        (c)    Notwithstanding anything to the contrary in this Lease, the
               provisions of this Section 32 will not apply to: (i) any sale or
               conveyance of the Leased Premises in foreclosure (or similar
               proceeding) of a bona-fide mortgage or deed of trust or to any
               conveyance in lieu of foreclosure of such a mortgage or deed of
               trust; or (ii) any sale, conveyance, alienation, mortgage,
               encumbrance, pledge or transfer of the beneficial ownership
               interest, membership interest or other equity interest in
               Landlord, or the change of the trustee, manager or other
               controlling person of the Landlord.

        (d)    If Landlord obtains an Offer with respect to a sale or conveyance
               of all or any portion of the Leased Premises, and sells the
               Leased Premises (to Tenant or anyone else) Tenant hereby
               acknowledges and consents as follows: (i) any such sale or
               conveyance during any period in which the Loan may not be prepaid
               will be subject to the outstanding balance of the Loan, and, if
               Tenant is entitled to, and does, exercise its rights under this
               Section 32, the Loan, Note, Mortgage and other Loan

                                       44
<PAGE>

               documents will be assumed by Tenant, and the lien of the Mortgage
               may not be released during such period; (ii) such sale will be in
               accordance with and subject to the terms and provisions of the
               Note and Mortgage, whether such purchase contemplates the
               purchase of the Leased Premises subject to the lien of the
               Mortgage or for a release of the lien of the Mortgage; and (iii)
               if the lien of the Mortgage is not released in connection with
               such sale of the Leased Premises, and if Tenant acquires the
               Leased Premises, no merger of title will occur and this Lease and
               any guaranty of this Lease will remain in full force and effect
               in accordance with their terms.

        (e)    If Tenant has agreed to purchase the Subject Premises pursuant to
               an Offer under which the third party offeror was to acquire the
               Subject Premises under and subject to the lien of the Mortgage,
               and if such purchase by Tenant of the Subject Premises occurs at
               a time when the Loan may be prepaid, Tenant may purchase the
               Subject Premises for cash free and clear of the Mortgage but only
               if: (i) the cash portion of the Offer is increased by an amount
               equal to the principal and interest secured by the Mortgage; and
               (ii) Tenant pays (in addition to the purchase price) all
               prepayment premiums, yield maintenance amounts, satisfaction fees
               and other sums which become owing as a result of such prepayment;
               all to the end and effect that Landlord will net the same amount
               as Landlord would have netted had the Subject Premises been sold
               under and subject to the lien of the Mortgage, pursuant to the
               Offer. Otherwise, Tenant shall be responsible (with Landlord's
               cooperation) for obtaining any required Lender consent to the
               transfer.

33.     Tenant Representations. Tenant hereby represents and warrants to
        ----------------------
        Landlord as follows:

        (a)    Tenant is duly organized, validly existing and in good standing
               as a corporation under the laws of the State of Indiana and is
               qualified to do business and is in good standing in the State of
               Indiana.

        (b)    Tenant has all requisite power and authority, has taken all
               actions required by its organizational documents and applicable
               law, and has obtained all consents that are necessary to
               authorize or enable it to executive and deliver this Lease and
               the Lease Memorandum being executed concurrently herewith and to
               perform the obligations of Tenant as set forth in this Lease. The
               representatives executing this Lease and the Lease Memorandum on
               Tenant's behalf have been duly authorized and are empowered to
               bind Tenant to this Lease and the Lease Memorandum.

        (c)    Neither the execution of this Lease and the Lease Memorandum by
               Tenant nor the consummation by Tenant of the transactions
               contemplated thereby will (i) conflict with, or result in a
               breach of, the terms, conditions, or provisions of, or constitute
               a default under, or result in a termination of, any material
               agreement or instrument to which Tenant is a party (this
               representation being made to the knowledge of the current
               management of Tenant as to matters prior to the date of this
               Lease) and which would have a material adverse effect on

                                       45
<PAGE>

               Tenant's ability to perform its obligations hereunder, (ii)
               violate any restriction to which Tenant is subject (this
               representation being made to the knowledge of the current
               management of Tenant as to matters prior to the date of this
               Lease) and which would have a material adverse effect on Tenant's
               ability to perform its obligations hereunder, or (iii) constitute
               a violation of any applicable code, resolution, law, statute,
               regulation, ordinance, judgment, rule, decree or order of which
               Tenant is aware and which would have a material adverse effect on
               Tenant's ability to perform its obligations hereunder.

        (d)    The execution and delivery of this Lease and the performance of
               its terms by Tenant do not and will not conflict with or result
               in a breach of any of the terms, provisions or conditions of the
               articles of incorporation or bylaws of Tenant presently in
               effect.

        (e)    This Lease has been duly authorized by all necessary action on
               the part of Tenant, has been duly executed and delivered by
               Tenant, and constitutes the legally valid and enforceable
               obligations of Tenant, enforceable in accordance in accordance
               with it terms, except as enforcement may be limited by
               bankruptcy, insolvency, reorganization, moratorium or similar
               laws or by equitable principles or local landlord/tenant law
               relating to or limiting the rights of landlords generally.

34.     Landlord Representations. Landlord hereby represents and warrants to
        ------------------------
        Tenant as follows:

        (a)    Landlord has all requisite power and authority, has taken all
               actions required by its organizational documents and applicable
               law, and has obtained all consents that are necessary to
               authorize or enable it to executive and deliver this Lease and
               the Lease Memorandum being executed concurrently herewith. The
               representatives executing this Lease and the Lease Memorandum on
               Landlord's behalf have been duly authorized and are empowered to
               bind Landlord to this Lease and the Lease Memorandum.

        (b)    The execution and delivery of this Lease do not and will not
               conflict with or result in a breach of any of the terms,
               provisions or conditions of the certificate of formation or
               limited liability company agreement of Landlord presently in
               effect.

        (c)    This Lease has been duly authorized by all necessary action on
               the part of Landlord, has been duly executed and delivered by
               Landlord, and constitutes the legally valid obligations of
               Landlord.

               IN WITNESS WHEREOF, Landlord and Tenant have caused this
instrument to be executed as of the day and year first written above.

                      Landlord:   CP GAL PLAINFIELD, LLC,
                                  a Delaware limited liability company

                                     /s/ Howard G. Sands
                                  By:-------------------------------------
                                     Howard G. Sands, Manager

                                       46
<PAGE>

                      Tenant:     GALYAN'S TRADING COMPANY, INC.,
                                  an Indiana corporation

                                         /s/ Joel L. Silverman
                                  By:------------------------------
                                             Joel L. Silverman
                                  Name:----------------------------
                                             President
                                  Title:---------------------------

                                       47
<PAGE>

                                   Exhibit A

                            Description of Property
                            -----------------------

Lot 1 of the Final Plat - Westcor, Phase 1 "An Incremental Phase Plat of
Westcor" being a part of the North Half of Section 31, Township 15 North, Range
2 East located in Plainfield, Indiana and recorded as Instrument Number
9700007298 in Plat Cabinet 4, Slide 87, pages 1 & 2 in the Office of the
Recorder of Hendricks County, Indiana.
<PAGE>

                                                Exhibit B

                                                Store # 0
                                                Plainfield, IN

        Lease Year      Sept 1-Aug 31        Annual          Monthly
       ------------     -------------     ------------     -----------
           1             1999-2000        $ 725,000.00     $ 60,416.67
           2             2000-2001          735,875.04       61,322.92
           3             2001-2002          746,913.12       62,242.76
           4             2002-2003          758,116.80       63,176.40
           5             2003-2004          769,488.60       64,124.05
           6             2004-2005          781,030.92       65,085.91
           7             2005-2006          792,746.40       66,062.20
           8             2006-2007          804,637.56       67,053.13
           9             2007-2008          816,707.16       68,058.93
          10             2008-2009          828,957.72       69,079.81
          11             2009-2010          841,392.12       70,116.01
          12             2010-2011          854,013.00       71,167.75
          13             2011-2012          866,823.24       72,235.27
          14             2012-2013          879,825.60       73,318.80
          15             2013-2014          893,022.96       74,418.58
          16             2014-2015          906,418.32       75,534.86
          17             2015-2016          920,014.56       76,667.88
          18             2016-2017          933,814.80       77,817.90
          19             2017-2018          947,822.04       78,985.17
          20             2018-2019          962,039.40       80,169.95

First Option             2019-2024          962,039.40       80,169.95

Second Option            2024-2029        1,034,192.40       86,182.70

Third Option             2029-2034        1,111,756.80       92,646.40

Fourth Option            2034-2039        1,195,138.56       99,594.88

Fifth Option             2039-2044        1,284,774.00      107,064.50

Sixth Option             2044-2049        1,381,132.08      115,094.34

Seventh Option           2049-2054        1,484,717.04      123,726.42

Eighth Option            2054-2059        1,596,070.80      133,005.90

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}]]