Document:

TRANSPRO, INC

Exhibit 10.1

TRANSPRO, INC.

100 Gando Drive

New Haven, CT  06513

October 28, 2004

Modine Manufacturing Company

1500 DeKoven Avenue

Racine, WI  53403

Attention:  Bradley C. Richardson

Ladies and Gentlemen:

This letter outlines the terms upon which Transpro, Inc. ("Transfer") proposes to acquire the business of Modine Manufacturing Company ("Thermal") relating to the design, manufacturing, marketing, packaging and distributing of thermal management products and systems to be supplied as replacement parts through the vehicular aftermarket, excluding generally any such products or systems supplied, directly or indirectly, to original equipment manufacturers for any purpose (the "Business").

	Transaction Structure.  The proposed transaction would be comprised of (i) the consolidation into Modine Aftermarket Holdings, Inc., a wholly owned subsidiary of Thermal ("Newco"), of (A) all of the assets (other than intellectual property) of Thermal that relate to or are used in the Business and (B) all intellectual property of Thermal that is used exclusively in the Business (the "Contribution"), (ii) the distribution by Thermal of all of the issued and outstanding capital stock of Newco to Thermal's shareholders on a pro rata basis (the "Spin-Off"), and (iii) the acquisition by Transfer of all of the issued and outstanding capital stock of Newco, through a merger of Newco with and into Transfer in which the outstanding Newco stock would be converted into shares of Transfer common stock (the "Merger").  For federal income tax purposes, it is contemplated that (i) the Spin-Off would be tax-free to Thermal and to the shareholders of Thermal pursuant to Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the Merger would qualify as a tax-free reorganization within the meaning of Section 368 of the Code.  Immediately following the Merger, Thermal's shareholders would hold 54% of the shares of Transfer and Transfer's shareholders would hold 46% of the shares of Transfer, calculated as if shares of common stock into which all outstanding Transfer preferred stock is convertible are outstanding and outstanding Transfer stock options are fully exercised, consistent with the example set forth in Annex A hereto.

	OEM Stock Sale.  Immediately prior to the Merger, Thermal would purchase from Transfer, and Transfer would sell and deliver to Thermal, all of the issued and outstanding shares of capital stock of G&O Manufacturing, Inc., a wholly owned subsidiary of Transfer ("G&O"), for a purchase price of $17 million in cash (the "OEM Stock Sale").  Thermal and Transfer would agree to take all actions necessary to make an election under Section 338(h)(10) of the Code in respect of the OEM Stock Sale.  The Contribution, the Spin-Off, the OEM Stock Sale and the Merger are sometimes collectively referred to herein as the "Transaction."

	Closing.  It is anticipated that definitive agreements concerning the Transaction would be executed in November 2004 and that the closing of the Transaction (the "Closing") would occur as soon as practicable thereafter, following the satisfaction or waiver of all conditions to Closing set forth in the definitive agreements providing for the Transaction (the "Definitive Agreements").

	Investigation and Due Diligence.  Following execution of this letter by the parties, Thermal and Transfer will be entitled to continue their respective due diligence investigations of the Business and G&O and each will provide the other with monthly financial statements regarding the Business and the business of G&O, as applicable; provided, however, that each party acknowledges that it believes it has completed the basic transactional due diligence reviews necessary to permit it to enter into the Definitive Agreements and agrees that, other than with respect to environmental matters as described below, the Transaction terms outlined in this letter will not be subject to change based upon the parties' ongoing due diligence investigations.  Thermal will have the right to conduct further reasonable environmental investigations, testing and/or due diligence (the "Environmental Due Diligence") at Transfer's Jackson, Mississippi facility (the "Jackson Facility") and Transfer will have the right to conduct reasonable Environmental Due Diligence at Thermal's Mill, Netherlands facility, provided, that Thermal or Transfer, as the case may be, provides the other reasonable advance notice of any such Environment Due Diligence and the scope thereof and endeavors to complete its respective Environmental Due Diligence as expeditiously as practicable and with minimal disruption to the other's normal operations.  The Definitive Agreements would provide that if, as of the Closing, the midpoint of the range of estimated clean-up and related costs of one of the facilities exceeds the midpoint of the range of estimated clean-up and related costs of the other facility, the owner of the former facility prior to the Closing would bear the cost differential, on a discounted cash flow basis.  Each party will be solely responsible for all costs and expenses incurred in conducting its respective Environmental Due Diligence and solely liable for any injuries or other losses suffered or incurred by the persons conducting such Environmental Due Diligence on its behalf.

	Definitive Agreements.  The legal counsel of Transfer and Thermal will collectively draft a definitive contribution agreement providing for the Contribution and the Spin-Off, a definitive merger agreement providing for the Merger and a definitive stock purchase agreement providing for the OEM Stock Sale consistent with this letter containing representations, warranties, agreements, conditions and non-compete covenants of the type normally associated with such transactions, including without limitation, customary representations and warranties that will expire at Closing and a five-year noncompete binding upon Transfer with respect to G&O's business and a five-year noncompete binding upon Thermal with respect to the Business; provided, that the foregoing non-competes will have customary exceptions for ownership of publicly traded entities that engage in the restricted business and the acquisition and subsequent ownership and operation by Transfer or Thermal, as applicable, of any diversified company having attributes that do not exceed certain mutually agreed to thresholds and certain other mutually agreed to exceptions.  The parties will negotiate in good faith with respect to other provisions that may be appropriate in the circumstances, including possible provisions for the registration of stock received in the Merger by Thermal's employee benefit plans.

	Conditions.  The parties' obligations to consummate the Transaction pursuant to the Definitive Agreements would be subject to a number of customary conditions, including but not necessarily limited to the following, as appropriate:

	all necessary corporate actions shall have been taken;
	the satisfaction of all governmental conditions or obligations, including without limitation pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the obtaining of any other agreed to third-party consents or approvals necessary for the consummation of the transactions contemplated herein, including without limitation the consent of Thermal's and Transfer's lenders;
	all assets (other than intellectual property), including the Jackson Facility, owned by Transfer and used primarily by G&O, and all intellectual property owned by Transfer and used exclusively in the business of G&O, shall have been transferred to G&O prior to the effective time of the OEM Stock Sale;
	the receipt of a ruling from the United States Internal Revenue Service or, if acceptable to both parties, an opinion of Ernst & Young LLP regarding the Transaction and in form and substance reasonably satisfactory to Thermal and, in respect of the Merger, to Transfer, including a ruling that the Contribution, the Spin-Off and the Merger are tax-free as transactions described in Sections 355 and 368 of the Code;
	Transfer's shares shall be listed on the Nasdaq Stock Market or a mutually acceptable stock exchange to be determined as of the effective time of the Closing;
	each party's accountants shall have provided two customary comfort letters, one dated as of the date the Form S-4 relating to the Transaction ("Form S-4") filed with the Securities and Exchange Commission (the "SEC") is declared effective and one dated as of the date of the Closing (the "Closing Date");
	the Form S-4 shall have been declared effective prior to the mailing of the disclosure document constituting a part thereof by each of Thermal and Transfer to their respective shareholders;
	Newco shall have $6.3 million in cash as of consummation of the Spin-Off and net working capital (assuming a $2.0 million increase in cash) consistent with past practice in light of its results of operations from December 31, 2003 to the Closing Date;
	Thermal shall have implemented, at its option, a customer sponsored program to factor NAPA's accounts receivable to Thermal, estimated to be $2.5 million;
	no material adverse change shall have occurred with respect to the Business or G&O, as applicable, in any case arising from or relating to a breach by the applicable party of any of its covenants or representations or warranties in the Definitive Agreements that results from an act of or omission by such breaching party;
	Transfer shall have delivered to Thermal audited financial statements of G&O for the 2003 calendar year and through June 30, 2004 (the "G&O Financial Statements");
	Thermal shall have delivered to Transfer financial statements, including a balance sheet, prepared by Thermal for the Business for the period ending as close as practicable to the Closing Date; and
	at a mutually agreed to time prior to the Closing, Thermal and Transfer shall have delivered to each other supporting information that confirms certain financial summaries previously provided to each other.

	Certain Governance Matters.  The surviving company in the Merger would be governed by a ten-member Board of Directors, which would include six members of Transfer's existing Board and four members selected by Thermal.  One of Transfer's current outside directors will serve as chairman of the surviving company's Board, and Charles E. Johnson will serve as the surviving company's chief executive officer.

	Transition Services, Supply and Licensing Arrangements.    In order to facilitate Thermal's transition of the business of G&O from Transfer to Thermal and Thermal's transition of the Business to Newco, Transfer and Thermal will enter into a Transition Services Agreement and Newco and Thermal will enter into a Transition Services Agreement (collectively, the "TSAs").  The TSAs will contain customary terms and conditions.  Under each TSA, Transfer or Thermal, as the case may be, will provide (a "Provider") certain transition services after the Closing for an initial period to be agreed upon (the "Initial Transition Period"), and Thermal or Transfer, as applicable, will pay the Provider its fully allocated costs of providing such services.  However, if the Provider provides transition services after the Initial Transition Period, the beneficiary of the services may terminate the applicable TSA sooner upon 30 days' notice as to categories of services, and Thermal or Transfer, as applicable, will pay the Provider its fully allocated costs of providing such services plus an additional amount to be agreed upon.

	Thermal and Transfer will enter into a Supply Agreement relating to the G&O business and Thermal and Newco will enter into a Supply Agreement relating to the Business, pursuant to which Transfer will sell to Thermal and Thermal will sell to Newco, as applicable, certain products, to be agreed upon. 
	The parties will enter into mutually acceptable long-term, royalty-free, non-exclusive licenses permitting (i) Newco to use patents and other intellectual property of Thermal that are not currently used exclusively in the Business, as identified therein, including improvements, and (ii) Thermal to use patents and other intellectual property of Transfer that are not currently used exclusively in G&O's business, as identified therein, including improvements.

	No-Shop, Break-Up Fee and Expenses.    Prior to December 15, 2004 or such later date to which the parties agree in writing to extend this letter agreement (the "Termination Date"), neither party will initiate discussions or negotiations with any other party relating to a merger, purchase or sale of assets or stock or other transaction that would be intended or reasonably expected to preclude the completion of the Transaction, including the sale of Transfer's G&O business to another party or the sale of the Business to a third party or any such merger, purchase or sale of assets or stock or other transaction involving Thermal or Transfer that would prohibit, materially delay or otherwise materially and adversely affect the likelihood of completing the Transaction (any such merger, purchase or sale of assets or stock or other transaction, a "Competing Transaction"); provided, however, that the foregoing will not limit or restrict Transfer's possible sale of its A/C business as previously described to Thermal.  For the avoidance of doubt, this paragraph will not, however, preclude either party from taking such action as its board of directors determines is necessary to comply with its fiduciary duties in response to any unsolicited proposal for a Competing Transaction.

	If the Definitive Agreements are not executed prior to the Termination Date, each of Transfer and Thermal will bear its own expenses incurred in connection with this letter, except that filing fees under the antitrust laws will be borne equally by Thermal and Transfer.  Notwithstanding the foregoing, in the event that prior to the Termination Date a party receives an unsolicited proposal or offer for a Competing Transaction which it does not unconditionally reject within 10 business days after receipt, then such party will pay to the other party a break-up fee equal to $2.5 million.
	If the Definitive Agreements are executed, they would contain an expense-sharing arrangement pursuant to which Newco would bear an amount of Thermal's reasonable out-of-pocket third party Transaction expenses (excluding expenses associated with Thermal's audit of the Business, which will be borne solely by Thermal) equivalent to the amount of out-of-pocket third party expenses incurred by Transfer in connection with the Transaction (disregarding for this purpose all expenses associated with Transfer's audit of the G&O business), payable to Thermal at the Closing, and provisions for customary break-up fees and customary remedies for intentional breaches of the applicable Definitive Agreements.  If the Definitive Agreements are executed but the Transaction is not consummated, Thermal and Transfer will each bear its own out-of-pocket expenses, except that filing fees under the antitrust laws and expenses incurred in connection with the filing, printing and mailing of the Form S-4 and associated proxy/information statement will be shared equally.
	Neither party will have any liability or obligation hereunder or otherwise relating in any way to the Transaction in the event that the parties do not enter into Definitive Agreements, except as provided in paragraph 9(b) and except that nothing herein will affect a party's rights or obligations under the confidentiality and standstill agreement previously entered into by the parties.

	Publicity.  Following execution of this letter, each of Transfer and Thermal will make a separate public announcement relating to the execution of this letter and the Transaction, such announcements to be coordinated by the parties and the content thereof to be approved in advance by each of the parties.  The parties will endeavor in good faith to consult with each other after the date hereof concerning any subsequent press releases or similar public announcements as well as communications, and the content thereof, to employees, customers, suppliers and any other person or entity.

	General Provisions.  The parties acknowledge that this letter omits many terms, some of which are material.  This letter is intended to be, and will be construed only as, a letter of intent and not a binding agreement, as the respective rights and obligations of the parties remain to be defined in the Definitive Agreements (if and when executed by the parties thereto), into which this letter of intent and all prior discussions will merge; provided, however, the obligations of the parties under paragraphs 9, 10 and 11 herein and the last sentence of paragraph 4 herein will be binding upon the parties upon the execution of this letter by the parties.  Notwithstanding anything to the contrary in this letter, the termination of this letter will not diminish or otherwise affect the liability of a party for any intentional breach of paragraph 9 occurring on or prior to such termination.  This letter will be governed by and construed in accordance with the laws of the State of Delaware, other than the provisions governing conflict of laws thereof.  This letter may be executed in counterparts which, taken together, will constitute a single original document.

[Remainder of Page Intentionally Left Blank]

Please sign this letter in the space provided below, whereupon this letter will be, to the extent provided herein, a valid and binding agreement of the parties hereto.
Very truly yours,

TRANSPRO, INC.

By:  /s/Charles B. Johnson

Name:  Charles B. Johnson

Title:  President and CEO

Agreed:

MODINE MANUFACTURING COMPANY

By:  /s/Bradley C. Richardson

Name:  Bradley C. Richardson

Title: VP, Finance and Chief Financial Officer

Date: October 28, 2004

Annex A

EXAMPLE

Assumptions:

Closing price of a share of Transfer Common Stock$6.00

Transfer option shares:191,817.00

Shares issuable upon conversion of Transfer preferred stock:  213,017.00

Outstanding shares of Transfer common stock:7,106,023.00

TOTAL7,510,857.00

Calculation:

7,510,857 divided by  .46 = 16,327,950 total shares for purposes of the calculation

Thermal's shareholders would receive 8,817,093 shares (i.e., 16,327,950 x .54)

Transfer's shareholders would retain 7,106,023 shares and all options and preferred stock would remain outstandingEXHIBIT 10.1

                          LOAN AND SECURITY AGREEMENT

                                 BY AND AMONG

                           THE BOMBAY COMPANY, INC.

                                      AND

             EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

                                 AS BORROWERS,

                    THE LENDERS THAT ARE SIGNATORIES HERETO

                                  AS LENDERS,

                                      AND

                        WELLS FARGO RETAIL FINANCE, LLC

                     AS ARRANGER AND ADMINISTRATIVE AGENT

                        DATED AS OF SEPTEMBER 29, 2004

<PAGE>
                               TABLE OF CONTENTS

                                                                           Page

1.    DEFINITIONS AND CONSTRUCTION...........................................1

      1.1.  Definitions......................................................1

      1.2.  Accounting Terms................................................35

      1.3.  Code............................................................35

      1.4.  Construction....................................................35

      1.5.  Schedules and Exhibits..........................................36

2.    LOAN AND TERMS OF PAYMENT.............................................36

      2.1.  Revolver Advances...............................................36

      2.2.  Borrowing Procedures and Settlements............................38

      2.3.  Payments and Reductions.........................................50

      2.4.  Overadvances....................................................54

      2.5.  Interest Rates, Letter of Credit Fee, Bankers' Acceptance
            Fee, Rates, Payments, and Calculations
            54

      2.6.  Cash Management.................................................57

      2.7.  Crediting Payments; Float Charge................................58

      2.8.  Designated Account..............................................59

      2.9.  Maintenance of Loan Account; Statements of Obligations..........60

      2.10. Fees............................................................60

      2.11. Credit Instruments..............................................60

      2.12. LIBOR Option....................................................66

      2.13. Capital Requirements............................................69

      2.14. Joint and Several Liability of U.S. Borrowers...................69

      2.15. Judgment Currency; Contractual Currency.........................72

3.    CONDITIONS; TERM OF AGREEMENT.........................................73

      3.1.  Conditions Precedent to the Initial Extension of Credit.........73

      3.2.  Reserved........................................................75

      3.3.  Conditions Precedent to all Extensions of Credit................76
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      3.4.  Term............................................................76

      3.5.  Effect of Termination...........................................76

      3.6.  Early Termination by Borrowers..................................77

4.    CREATION OF SECURITY INTEREST.........................................77

      4.1.  Grant of Security Interest......................................77

      4.2.  Other Collateral................................................78

      4.3.  Collection of Accounts, General Intangibles, and Negotiable
            Collateral......................................................78

      4.4.  Authorization to File Financing Statements......................79

      4.5.  Power of Attorney...............................................79

      4.6.  Right to Inspect; Inventories, Appraisals and Audits,
            Environmental Assessments.......................................80

      4.7.  Control Agreements..............................................81

      4.8.  Grant of Non-Exclusive License..................................82

5.    REPRESENTATIONS AND WARRANTIES........................................82

      5.1.  No Encumbrances.................................................82

      5.2.  Accounts........................................................83

      5.3.  Eligible Inventory..............................................83

      5.4.  Location of Inventory...........................................83

      5.5.  Inventory Records...............................................83

      5.6.  Jurisdiction of Incorporation; Location of Chief Executive
            Office; FEIN; Organizational ID Number
            83

      5.7.  Due Organization and Qualification; Subsidiaries................84

      5.8.  Due Authorization; No Conflict..................................85

      5.9.  Litigation......................................................85

      5.10. No Material Adverse Change......................................86

      5.11. Fraudulent Transfer.............................................86

      5.12. Employee Benefits...............................................86
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      5.13. Environmental Condition.........................................86

      5.14. Brokerage Fees..................................................87

      5.15. Intellectual Property...........................................87

      5.16. Leases..........................................................87

      5.17. Deposit Accounts................................................87

      5.18. Complete Disclosure.............................................87

      5.19. Credit Card Receipts............................................88

      5.20. Holding Company and Investment Company Acts.....................88

      5.21. Absence of Financing Statements, etc............................88

      5.22. Certain Transactions............................................88

      5.23. Regulations U and X.............................................88

      5.24. Labor Relations.................................................88

      5.25. Indebtedness....................................................89

      5.26. Payment of Taxes................................................89

      5.27. Foreign Assets Control Regulations, Etc.........................89

6.    AFFIRMATIVE COVENANTS.................................................89

      6.1.  Accounting System...............................................90

      6.2.  Collateral Reporting............................................90

      6.3.  Financial Statements, Reports, Certificates.....................90

      6.4.  Returns.........................................................92

      6.5.  Maintenance of Properties.......................................92

      6.6.  Taxes...........................................................93

      6.7.  Insurance.......................................................93

      6.8.  Location of Inventory...........................................93

      6.9.  Compliance with Laws............................................94

      6.10. Leases..........................................................94

      6.11. Existence.......................................................94
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<PAGE>

      6.12. Environmental...................................................94

      6.13. Disclosure Updates..............................................94

      6.14. Formation of Domestic Subsidiaries..............................95

      6.15. Additional Collateral Covenants.................................95

      6.16. Investment Proceeds, Etc........................................95

      6.17. Immediate Notice to Agent.......................................95

      6.18. Inactive Subsidiaries...........................................97

      6.19. Further Assurances..............................................97

7.    NEGATIVE COVENANTS....................................................97

      7.1.  Indebtedness....................................................97

      7.2.  Liens...........................................................98

      7.3.  Restrictions on Negative Pledges and Upstream Limitation........98

      7.4.  Restrictions on Fundamental Changes.............................99

      7.5.  Disposal of Assets; Sale and Leaseback..........................99

      7.6.  Change Name....................................................100

      7.7.  [Reserved.]....................................................100

      7.8.  Prepayments and Amendments.....................................100

      7.9.  Consignments...................................................100

      7.10. Distributions..................................................100

      7.11. Accounting Methods.............................................101

      7.12. Investments, Acquisitions......................................101

      7.13. Transactions with Affiliates...................................101

      7.14. Suspension.....................................................101

      7.15. Use of Proceeds................................................101

      7.16. Inventory with Bailees.........................................101

      7.17. Store Openings and Closings....................................102

      7.18. Securities Accounts............................................102
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<PAGE>
      7.19. Employee Benefit Plans.........................................102

      7.20. Deposit Accounts, Credit Card Agreements, etc..................102

      7.21. Minimum Availability...........................................103

8.    EVENTS OF DEFAULT....................................................103

9.    THE LENDER GROUP'S RIGHTS AND REMEDIES...............................105

      9.1.  Rights and Remedies............................................105

      9.2.  Securities and Deposits........................................108

      9.3.  Standards for Exercising Rights and Remedies...................108

      9.4.  Remedies Cumulative............................................109

10.   TAXES AND EXPENSES...................................................109

11.   WAIVERS; INDEMNIFICATION.............................................110

      11.1. Demand; Protest; etc...........................................110

      11.2. The Lender Group's Liability for Collateral....................110

      11.3. Indemnification................................................110

12.   NOTICES..............................................................111

13.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...........................112

14.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...........................113

      14.1. Assignments and Participations.................................113

      14.2. Successors.....................................................116

15.   AMENDMENTS; WAIVERS..................................................117

      15.1. Amendments and Waivers.........................................117

      15.2. Replacement of Holdout Lender..................................118

      15.3. No Waivers; Cumulative Remedies................................118

16.   AGENT; THE LENDER GROUP..............................................118

      16.1. Appointment and Authorization of Agent.........................119

      16.2. Delegation of Duties...........................................119

      16.3. Liability of Agent.............................................120
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      16.4. Reliance by Agent..............................................120

      16.5. Notice of Default or Event of Default..........................121

      16.6. Credit Decision................................................121

      16.7. Costs and Expenses; Indemnification............................121

      16.8. Agent in Individual Capacity...................................122

      16.9. Successor Agent, Canadian Agent................................122

      16.10.Lender in Individual Capacity..................................123

      16.11.Payments to, and Distributions by, Agent.......................124

      16.12.Duties in the Case of Enforcement..............................124

      16.13.Agent May File Proofs of Claim.................................124

      16.14.Withholding Taxes..............................................125

      16.15.Collateral Matters.............................................127

      16.16.Restrictions on Actions by Lenders; Sharing of Payments........128

      16.17.Agency for Perfection..........................................129

      16.18.Payments by Agent to Lenders...................................129

      16.19.Concerning the Collateral and Related Loan Documents...........129

      16.20.Field Audits and Examination Reports; Confidentiality;
            Disclaimers by Lenders; Other Reports and Information
            129

      16.21.Several Obligations; No Liability..............................131

      16.22.Legal Representation of Agent..................................131

      16.23.Quebec, Canada - Power of Attorney.............................131

17.   GENERAL PROVISIONS...................................................132

      17.1. Effectiveness..................................................132

      17.2. Section Headings...............................................132

      17.3. Interpretation.................................................132

      17.4. Severability of Provisions.....................................132

      17.5. Amendments in Writing..........................................132
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      17.6. Counterparts; Telefacsimile Execution..........................132

      17.7. Revival and Reinstatement of Obligations.......................132

      17.8. Confidentiality................................................133

      17.9. Integration....................................................133

      17.10.Parent as Agent for Borrowers..................................134
                                    vii
<PAGE>

<TABLE>

<CAPTION>
                            EXHIBITS AND SCHEDULES

<S>                     <C>
Exhibit A-1             Form of Assignment and Acceptance
Exhibit B-1             Form of Borrowing Base Certificate
Exhibit C-1             Form of Compliance Certificate
Exhibit C-2             Form of Confirmation of Increase in Commitment
Exhibit L-1             Form of LIBOR Notice
Exhibit N-1             Form of Note
Schedule A-1            Agent's Account
Schedule C-1            Commitments
Schedule D-1            Designated Account
Schedule E-1            Eligible Inventory Locations
Schedule P-1            Permitted Liens
Schedule 5.4            Locations of Inventory
Schedule 5.6            States of Organization, Chief Executive Offices, FEINS
Schedule 5.7(b)         Capitalization of Borrowers
Schedule 5.7(c)         Capitalization of Borrowers' Subsidiaries
Schedule 5.9            Litigation
Schedule 5.13           Environmental Matters
Schedule 5.17           Deposit Accounts and Securities Accounts
Schedule 5.19           Credit Card Receipts
Schedule 5.25           Permitted Indebtedness
Schedule 6.2            Collateral Reporting
Schedule 7.13           Borrowers' Affiliates
Schedule 7.20           Concentration Accounts, Deposit Accounts, Credit Card
                        Agreements

</TABLE>

<PAGE>

                          LOAN AND SECURITY AGREEMENT

      THIS  LOAN  AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of September 29, 2004  by and among, on the one hand, the lenders identified on
the  signature pages hereof  (such  lenders,  together  with  their  respective
successors and permitted assigns, are referred to hereinafter each individually
as, a "Lender" and collectively as, the "Lenders"), WELLS FARGO RETAIL FINANCE,
LLC, a  Delaware  limited liability company, as the arranger and administrative
agent for Lenders ("Agent"),  and, on the other hand, THE BOMBAY COMPANY, INC.,
a Delaware corporation ("Parent"), and each of Parent's Subsidiaries identified
on the signature pages hereof (such  Subsidiaries,  together  with  Parent, are
referred  to  hereinafter  each individually as, a "Borrower", and individually
and collectively, jointly and severally, as, the "Borrowers").

      The parties agree as follows:

1.    DEFINITIONS AND CONSTRUCTION.

      1.1.  DEFINITIONS.  As  used in this Agreement, the following terms shall
have the following definitions:

            "Acceptance  Agreement"  has  the  meaning  set  forth  in  Section
2.11(c).

            "Acceptance Face  Amount" means, the aggregate amount, from time to
time, of the face amount of all  Bankers'  Acceptances  created and outstanding
hereunder.

            "Accordion    Activation"   has   the   meaning   set   forth    in
Section 2.2.A.(h).

            "Accordion Activation  Fee"  means  the fee payable by Borrowers to
the Accordion Lenders as required by Section 2.2.A.(h)  and  in accordance with
the terms of the Fee Letter.

            "Accordion Amount" means an amount up to $50,000,000.

            "Accordion  Commitment" means the commitments of Accordion  Lenders
to fund the Accordion Amount as set forth in Section 2.2.A.(h).

            "Accordion Lenders"  means after the Accordion Activation, the U.S.
Lenders identified as "Accordion Lenders"  on  Schedule  C-1  to this Agreement
and, when used in the context of a particular Accordion Commitment,  shall mean
Accordion Lenders having that Accordion Commitment.

            "Account  Debtor"  means  any  Person  who  is  or  who  may become
obligated under, with respect to, or on account of, an Account.

            "Accounts"  means  an  "account"  (as  such term is defined in  the
Code), and any and all supporting obligations in respect thereof.
                                    1
<PAGE>

            "ACH Transactions" means any cash management  or  related  services
(including   the  Automated  Clearing  House  processing  of  electronic  funds
transfers through the direct Federal Reserve Fedline system) provided by a Bank
Product  Provider   for   the   account   of  Administrative  Borrower  or  its
Subsidiaries.

            "Adjusted Availability" means as  of  any date of determination, if
such date is a Business Day, and determined at the  close  of  business  on the
immediately  preceding  Business  Day,  if  such date of determination is not a
Business Day, the amount as determined by Agent  at  any time, in its Permitted
Discretion equal to (x) the Aggregate Borrowing Base,  minus  (y)  the Revolver
Usage  (in  each  case,  determined  after  giving effect to all sublimits  and
Reserves then applicable hereunder).

            "Adjusted Seasonal Period" means  the  period commencing on October
15 through and including November 15 of each Fiscal Year.

            "Adjusted Seasonal Period Amount" means  an  amount  equal  to  the
greater  of  (a) $15,000,000 or (b) 10% of the Cost of Eligible Inventory owned
by U.S. Borrowers.

            "Adjustment  Date"  means  the  first  day of the month immediately
following  the  month  in which a Compliance Certificate  is  to  be  delivered
pursuant to Section 6.3(a)(iii).

            "Administrative  Borrower"  has  the  meaning  set forth in Section
17.10.

            "Advances" means collectively U.S. Advances and Canadian Advances.

            "Affiliate" means, as applied to any Person, any  other Person who,
directly or indirectly, controls, is controlled by, or is under  common control
with,  such  Person.   For  purposes  of  this definition, "control" means  the
possession, directly or indirectly, of the  power  to direct the management and
policies of a Person, whether through the ownership  of  Stock, by contract, or
otherwise; provided, however, that, for purposes of Section  7.14  hereof:  (a)
any  Person  which  owns directly or indirectly 20% or more of the Stock having
ordinary voting power  for  the  election  of directors or other members of the
governing body of a Person or 20% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed to control such Person; and (b) each director (or comparable manager) of
a Person shall be deemed to be an Affiliate of such Person.

            "Agent" means WFRF, solely in its  capacity as administrative agent
for Lenders hereunder, and any other holder of Obligations,  and  any successor
thereto.

            "Agent Advances" has the meaning set forth in Section 2.2.A.(e)(i).

            "Agent-Related  Persons"  means Agent and Canadian Agent,  together
with  each  of  their respective Affiliates,  officers,  directors,  employees,
attorneys, and agents.

            "Agent's Account" means the account identified on Schedule A-1.

            "Agent's  Liens"  means  the  Liens  granted  by Borrowers or their
Subsidiaries to Agent under this Agreement or the other Loan Documents.
                                    2
<PAGE>

            "Aggregate Borrowing Base" means as of any date  of  determination,
an amount equal to the U.S. Borrowing Base plus the Canadian Borrowing Base.

            "Agreement" has the meaning set forth in the preamble hereto.

            "Applicable  Margin"  means  for  each  period  commencing  on   an
Adjustment Date through the date immediately preceding the next Adjustment Date
(each  a  "Rate  Adjustment  Period"),  the  Applicable  Margin  shall  be  the
applicable  margin  set  forth  below with respect to Availability based on the
average Availability for the Fiscal  Quarter  ended  immediately  prior  to the
applicable Rate Adjustment Period:

<TABLE>
<CAPTION>
Level                     Performance Criteria                  LIBOR   Bankers' Acceptances and Documentary     Standby
                                                                 Rate             Letters of Credit             Letters of
                                                                Margin                                            Credit
<S>      <C>                                                    <C>                     <C>                       <C>
I        Availability greater than or equal to $50,000,000      1.00%                   0.75%                     1.00%
II       Availability greater than or equal to $35,000,000      1.25%                   0.75%                     1.25%
                            and less than $50,000,000
III      Availability greater than or equal to $25,000,000      1.50%                   1.00%                     1.50%
                            and less than $35,000,000
IV       Availability less than $25,000,000                     1.75%                   1.25%                     1.75%
</TABLE>

Notwithstanding   the   foregoing,   (a)  for  Advances  outstanding,  Bankers'
Acceptance and Letter of Credit fees payable  during  the  period commencing on
the Closing Date and ending on March 31, 2005, the Applicable  Margin  shall be
the  Applicable  Margin  set forth in Level II above, and (b) if Administrative
Borrower  fails to deliver  any  Compliance  Certificate  pursuant  to  Section
6.3(a)(iii)  hereof then, for the period commencing on the next Adjustment Date
to occur subsequent  to such failure through the date immediately following the
date on which such Compliance  Certificate  is delivered, the Applicable Margin
shall be the highest Applicable Margin set forth above.

            "Approved  Customs  Broker"  means a  customs  broker  selected  by
Borrowers acceptable to Agent in its Permitted  Discretion  (and  which  may be
affiliated with one of the Lender Group) to perform port of entry services,  to
accept  and  process Inventory imported by a U.S. Borrower and who has executed
and delivered  a customs broker agreement in form and substance satisfactory to
Agent in its Permitted  Discretion,  duly  executed and delivered to Agent by a
Customs Broker and the applicable Borrower.
                                    3
<PAGE>

            "Approved  Inventory Servicer" means  RGIS  Inventory  Specialists,
Western Inventory Service,  Washington  Inventory  Service  and any other third
parties  acceptable  to  Agent in its Permitted Discretion (and  which  may  be
affiliated with one of the Lender Group.

            "Assignee" has the meaning set forth in Section 14.1(a).

            "Assignment and  Acceptance"  means  an  Assignment  and Acceptance
Agreement substantially in the form of Exhibit A-1.

            "Authorized  Person" means the Chief Executive Officer,  President,
Chief  Financial Officer, Vice  President  -  Financial  Planning  &  Analysis,
Treasurer,  Assistant  Treasurer,  and  Secretary of Administrative Borrower or
Bombay Canada, as applicable.

            "Availability" means, as of any date of determination, if such date
is a Business Day, and determined at the  close  of business on the immediately
preceding Business Day, if such date of determination  is  not  a Business Day,
the  amount  as  determined  by  Agent at any time, in its Permitted Discretion
equal  to  (x) the lesser of (i) the  Maximum  Revolver  Amount  and  (ii)  the
Aggregate  Borrowing  Base,  minus  (y)  the  Revolver  Usage  (in  each  case,
determined after  giving  effect  to all sublimits and Reserves then applicable
hereunder).

            "Bailee Acknowledgment"  means  a  record  in  form  and  substance
satisfactory to Agent authenticated by any bailee, warehouseman or other  third
party in possession of any Inventory acknowledging that it holds possession  of
the  applicable  Inventory  for  the  benefit of Agent, on behalf of the Lender
Group.

            "Bank  Products"  means  any financial  accommodation  extended  to
Administrative Borrower or its Subsidiaries  by  a Bank Product Provider (other
than pursuant to this Agreement) including:  (a) credit  cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts  or  services,
or (g) transactions under any Hedge Agreement.

            "Bank  Product  Agreements"  means  those  certain  cash management
service agreements entered into from time to time by Administrative Borrower or
its Subsidiaries in connection with any of the Bank Products.

            "Bank  Product  Obligations"  means  all  obligations, liabilities,
contingent   reimbursement   obligations,   fees,   and   expenses   owing   by
Administrative Borrower or its Subsidiaries to Bank Product  Provider  pursuant
to or evidenced by the Bank Product Agreements and irrespective of whether  for
the  payment  of money, whether direct or indirect, absolute or contingent, due
or to become due,  now  existing  or  hereafter arising, and including all such
amounts that a Borrower is obligated to reimburse to Agent or any member of the
Lender Group as a result of Agent or such member of the Lender Group purchasing
participations  or  executing indemnities  or  reimbursement  obligations  with
respect  to  the Bank Products  provided  to  Administrative  Borrower  or  its
Subsidiaries pursuant to the Bank Product Agreements.

            "Bank Product Provider" means Wells Fargo or any of its Affiliates.
                                    4
<PAGE>

            "Bank Product Reserves" means, as of any date of determination, the
amount of reserves  that Agent has established (based upon Wells Fargo's or its
Affiliate's reasonable  determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding.

            "Bankers' Acceptances" means Eligible Drafts of U.S. Borrowers that
have been or are accepted from time to time pursuant to Section 2.11(c).

            "Bankers' Acceptance  Discount  Rate" means a rate (computed on the
basis of a year of three hundred sixty (360)  days for the actual days elapsed)
equal  to  the sum of (a) the per annum average discount  rate  quoted  to  the
Issuing Lender  on  the  day an Eligible Draft is presented for discount by the
Issuing Lender's bankers'  acceptance  traders for acceptances which are of the
type described in paragraph 7 of section  13 of the Federal Reserve Act (12 USC
{section}372), as amended from time to time, or any successor statute and which
approximate the face amount and mature on the  maturity  date  of such Eligible
Draft plus (b) the Applicable Margin.

            "Bankruptcy  Code"  means title 11 of the United States  Bankruptcy
Code, as in effect from time to time.

            "Base LIBOR Rate" means  for  any Interest Period with respect to a
LIBOR Rate Loan, the rate of interest equal  to  (i) the rate determined by the
Agent at which Dollar deposits for such Interest Period  are  offered  based on
information  presented  on  Page 3750 of the Dow Jones Market Service (formerly
known as the Telerate Service)  as  of  11:00  a.m. (London time) on the second
Business Day prior to the first day of such Interest  Period, divided by (ii) a
number  equal  to  1.00  minus  the  Eurocurrency Reserve Rate.   If  the  rate
described  above  does  not appear on the  Dow  Jones  Market  Service  on  any
applicable interest determination  date,  the  LIBOR  Rate  shall  be  the rate
(rounded  upward,  if  necessary,  to  the nearest one hundred-thousandth of  a
percentage point), determined on the basis of the offered rates for deposits in
Dollars for a period of time comparable  to  such  LIBOR  Rate  Loan  which are
offered  by  four  major  banks in the London interbank market at approximately
11:00 a.m. (London time), on  the second Business Day prior to the first day of
such Interest Period as selected  by the Agent.  The principal London office of
each of the four major London banks will be requested to provide a quotation of
its Dollar deposit offered rate.  If at least two such quotations are provided,
the rate for that date will be the arithmetic mean of the quotations.  If fewer
than two quotations are provided as  requested,  the rate for that date will be
determined on the basis of the rates quoted for loans  in  Dollars  to  leading
European  banks for a period of time comparable to such Interest Period offered
by major banks in New York City at approximately 11:00 a.m. (New York, New York
time), on the  second  Business  Day  prior  to  the first day of such Interest
Period.  In the event that the Agent is unable to  obtain any such quotation as
provided above, it will be considered that LIBOR Rate  pursuant to a LIBOR Rate
Loan cannot be determined.

            "Benefit  Plan"  means  a  "defined benefit plan"  (as  defined  in
Section 3(35) of ERISA) subject to Title  IV of ERISA for which any Borrower or
any Subsidiary or ERISA Affiliate of any Borrower  has  been  an "employer" (as
defined in Section 3(5) of ERISA) within the past six years.

            "Bingham" has the meaning as set forth in Section 16.22.
                                    5
<PAGE>
            "Board  of  Directors" means the board of directors (or  comparable
managers) of Parent or any  committee  thereof duly authorized to act on behalf
thereof.

            "Bombay Canada" means The Bombay Furniture Company of Canada Inc. a
corporation continued under the laws of the Province of Ontario.

            "Bombay Office Complex" means  the  Parent's  office  buildings and
Real Property located in Tarrant County, Texas.

            "Books"  means  all  of  each Borrower's and its Subsidiaries'  now
owned or hereafter acquired books and  records  (including  all  of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities,  all  of each Borrower's or its Subsidiaries' Records relating  to
its or their business  operations  or  financial  condition,  and  all  of each
Borrower's  or  its  Subsidiaries' goods or General Intangibles related to such
information).

            "Borrower"  and  "Borrowers" have the respective meanings set forth
in the preamble to this Agreement.

            "Borrowing" means a borrowing hereunder consisting of U.S. Advances
made on the same day by U.S. Lenders (or Agent, on behalf thereof), or Canadian
Advances made on the same day  by  the  Canadian Lenders, or by Swing Lender in
the case of Swing Loans or by Canadian Swing  Agent  in  the  case  of Canadian
Swing  Loans,  or  by  Agent in the case of an Agent Advance, in each case,  to
Administrative Borrower or Bombay Canada, as the case may be.

            "Borrowing Base"  means  as  the  context  may  require,  the  U.S.
Borrowing Base, and/or the Canadian Borrowing Base.

            "Borrowing  Base  Certificate"  means  a certificate in the form of
Exhibit B-1, with respect to the Aggregate Borrowing  Base and as such form may
be revised from time to time by Agent.

            "Business  Day" means any day that is not a  Saturday,  Sunday,  or
other day on which national  banks  are  authorized or required to close in the
States of New York, Massachusetts or Texas  and in addition, in the case of the
Canadian  Advances  made  to  Bombay  Canada,  also  a  day  in  which  banking
institutions  in  Toronto,  Canada  are  open for the  transaction  of  banking
business, except that, if a determination  of  a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall  exclude  any  day on which
banks  are  closed  for  dealings  in  Dollar  deposits in the London interbank
market.

            "Business Plan" means the set of Projections of Borrowers for the 1
year period following the Closing Date (on a month by month basis), in form and
substance (including as to scope and underlying  assumptions)  satisfactory  to
Agent,  together  with any amendment, modification or revision thereto approved
by Agent in its Permitted Discretion.

            "Canadian Advances" has the meaning set forth in Section 2.1.B.
                                    6
<PAGE>
            "Canadian  Agent"  means Trans Canada Credit Corporation, solely in
its capacity as agent for the Canadian  Lenders hereunder and any other holders
of Obligations related to the Canadian Advances and any successor thereto.

            "Canadian Availability" means  as  of any date of determination, if
such date is a Business Day, and determined at the  close  of  business  on the
immediately preceding Business Day, the amount determined by Agent at any  time
in its Permitted Discretion equal to (x) the lesser of (i) the Maximum Canadian
Revolver  Amount,  (ii)  the Maximum Revolver Amount minus U.S. Revolver Usage,
and (iii) the Canadian Borrowing  Base,  minus  (y) the Canadian Revolver Usage
(in each case, determined after giving effect to  all  sublimits  and  Reserves
(without duplication) then applicable hereunder).

            "Canadian Borrowing Base" means, with respect to Bombay Canada,  as
of any date of determination, an amount equal to:

            (a)   the  lesser of (i) 85% of the Net Retail Liquidation Value of
      Eligible Inventory  owned  by  Bombay  Canada, or (ii) 75% of the Cost of
      Eligible Inventory owned by Bombay Canada; plus,

            (b)   85% of the face amount of Eligible Credit Card Receivables of
      Bombay Canada, minus,

            (c)   the aggregate of such Reserves  as  may have been established
      by Agent.

            "Canadian Commitments" means with respect to  each Canadian Lender,
its  Canadian  Commitment,  and,  with respect to all Canadian  Lenders,  their
Canadian Commitments, in each case  as such Dollar amounts are set forth beside
such Canadian Lender's name under the  applicable heading on Schedule C-1 or in
the Assignment and Acceptance pursuant to  which  such Canadian Lender became a
Canadian Lender hereunder in accordance with the provisions of Section 14.1

            "Canadian Lenders" means Lenders which  make  Canadian  Advances to
Bombay Canada pursuant to each Lender's Canadian Commitment.

            "Canadian  Priority  Payables"  means, at any time with respect  to
Bombay Canada:

            (a) the amount past due and owing  by Bombay Canada, or the accrued
amount for which Bombay Canada has an obligation  to  remit  to  a Governmental
Authority  or other Person pursuant to any applicable law, rule or  regulation,
in respect of  (i) pension fund obligations; (ii) unemployment insurance; (iii)
goods and services  taxes,  sales  taxes, employee income taxes and other taxes
payable or to be remitted or withheld; (iv) workers' compensation; (v) vacation
pay; and (vi) other like charges and demands; in each case, in respect of which
any Governmental Authority or other Person may claim a security interest, lien,
trust or other claim ranking or capable  of ranking prior to or pari passu with
one or more of the Liens granted in the Loan Documents; and

            (b) the amount equal to the percentage  applicable  to Inventory in
the  calculation  of  the  Canadian Borrowing Base multiplied by the  aggregate
                                    7
<PAGE>

value of the Eligible Inventory  which  the  Canadian  Agent,  in  good  faith,
considers  is  or  may  be  subject to a right of a supplier to repossess goods
pursuant to Section 81.1 of the  Bankruptcy  and Insolvency Act (Canada) or any
applicable laws granting revendication or similar rights to unpaid suppliers or
any similar laws of Canada or any other applicable  jurisdiction, in each case,
where such supplier's right ranks or is capable of ranking  prior  to  or  pari
passu with one or more of the Liens granted in the Loan Documents.

            "Canadian  Revolver  Usage" means, as of any date of determination,
the sum of the then extant amount of outstanding Canadian Advances.

            "Canadian Security Documents"  means  each  of the various Canadian
security  agreements  by and among Bombay Canada and Agent,  and  any  and  all
acknowledgments of security,  or  similar  agreements made in favor of Agent by
Bombay  Canada,  and  any agreement delivered on  or  after  the  Closing  Date
(including by way of supplement to the foregoing) by any Person granting a Lien
on the assets of such Person  to  secure all or any part of the Obligations, or
any bond issued by Bombay Canada to  Agent,  including, without limitation, any
security granted by Bombay Canada pursuant to  the  laws  of  the  Province  of
Quebec,  in each case as amended, supplemented or modified from time to time in
accordance with its terms.

            "Canadian  Swing  Loan"  has  the  meaning  set  forth  in  Section
2.2.B.(d)(i).

            "Capitalized   Lease"   means  a  lease  that  is  required  to  be
capitalized for financial reporting purposes in accordance with GAAP.

            "Capitalized Lease Obligation"  means  any Indebtedness represented
by obligations under a Capitalized Lease.

            "Cash Dominion Event" means (a) on or prior  to  December 31, 2004,
the  occurrence  and  continuance of an Event of Default and (b)  at  any  time
thereafter, either (i)  the occurrence and continuance of any Event of Default,
or (ii) the period commencing  with  each  failure  by  Borrowers  to  maintain
Adjusted Availability in an amount of less than (A) $15,000,000 for a period of
5  consecutive Business Days or (B) $10,000,000 at any time and, in each  case,
ending with the occurrence of a Cash Dominion Reversion; provided, however that
(1)  no  more  than 2 Cash Dominion Reversions may occur in any 12 month period
and (2) if an additional  Cash  Dominion  Event  occurs  during  such  12 month
period, no further Cash Dominion Reversions may occur through and including the
Maturity Date.

            "Cash   Dominion   Reversion"   means  that  Borrowers  shall  have
maintained Adjusted Availability in an amount  of not less than $20,000,000 for
a  period  of  30  consecutive  Business  Days  as evidenced  by  a  Compliance
Certificate delivered to Agent; provided, however  that (1) no more than 2 Cash
Dominion Reversions may occur in any 12 month period  and  (2) if an additional
Cash  Dominion  Event  occurs  during  such  12  month period, no further  Cash
Dominion Reversions may occur through and including the Maturity Date.

            "Cash Equivalents" means (a) marketable  direct  obligations issued
or  unconditionally  guaranteed  by the United States or issued by  any  agency
thereof and backed by the full faith  and  credit of the United States, in each
case  maturing  within  1  year  from  the  date of  acquisition  thereof,  (b)
marketable direct obligations issued by any state  of  the United States or any
                                    8
<PAGE>

political  subdivision of any such state or any public instrumentality  thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition,  having  the highest rating obtainable from either S&P or Moody's,
(c)  commercial  paper maturing  no  more  than  270  days  from  the  date  of
acquisition thereof  and, at the time of acquisition, having a rating of A-2 or
P-2, or better, from S&P  or  Moody's,  and  (d)  certificates  of  deposit  or
bankers'  acceptances  maturing  within  1  year  from  the date of acquisition
thereof either (i) issued by any bank organized under the  laws  of  the United
States or any state thereof which bank has a rating of A or A2, or better, from
S&P or Moody's, or (ii) certificates of deposit less than or equal to  $100,000
in  the  aggregate  issued  by  any  other  bank insured by the Federal Deposit
Insurance Corporation.

            "Cash Management Bank" has the meaning set forth in Section 2.6(a).

            "Change of Control" means (a) any  "person"  or "group" (within the
meaning  of  Sections  13(d)  and  14(d)  of  the  Exchange Act),  becomes  the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50%, or more, of the Stock of Parent  having  the  right to vote
for the election of members of the Board of Directors, or (b) a majority of the
members  of  the Board of Directors do not constitute Continuing Directors,  or
(c) any Borrower ceases to own and control, directly or indirectly, 100% of the
outstanding capital  Stock of each of its Subsidiaries extant as of the Closing
Date other than with respect  to (i) any Subsidiary the Stock of which was sold
or otherwise disposed of in a transaction permitted by Section 7.4, or (ii) any
Subsidiary that is merged or consolidated in a transaction permitted by Section
7.4.

            "Closing Date" means  the date of the making of the initial Advance
(or other extension of credit) hereunder  or  the  date  on  which  Agent sends
Administrative Borrower a written notice that each of the conditions  precedent
set forth in Section 3.1 either have been satisfied or have been waived.

            "Code"  means  the  New  York Uniform Commercial Code, as in effect
from time to time.

            "Collateral" means all of  each  Borrower's  now owned or hereafter
acquired right, title, and interest in and to each of the following:

            (a)   all of its Accounts,

            (b)   all of its Books relating to the Specified Collateral,

            (c)   all  of  its  Deposit  Accounts  relating  to  the  Specified
      Collateral,  (it  being  understood  and  agreed  that  Deposit  Accounts
      relating to payroll obligations, tax liabilities, and third  party  funds
      shall not be deemed to relate to the Specified Collateral),

            (d)   all of its Documents relating to the Specified Collateral,

            (e)   all  of  its  General  Intangibles  relating to the Specified
      Collateral,

            (f)   all of its Inventory,
                                    9
<PAGE>

            (g)   all  of  its  Investment  Property  (including   all  of  its
      securities and Securities Accounts) relating to the Specified Collateral,

            (h)   all  of  its  Negotiable Collateral relating to the Specified
      Collateral,

            (i)   money or other  assets of such Borrower that now or hereafter
      come into the possession, custody, or control of any member of the Lender
      Group (other than money placed  into an escrow account in connection with
      sale leaseback transactions permitted by Section 7.5), and

            (j)   the proceeds and products, whether tangible or intangible, of
      any of the foregoing, including proceeds of insurance covering any or all
      of the foregoing, and any and all Collateral, money, or other tangible or
      intangible property resulting from  the  sale,  exchange,  collection, or
      other  disposition  of  any  of the foregoing, or any portion thereof  or
      interest therein, and the proceeds thereof.

            "Collateral Access Agreement" means a waiver or consent in form and
substance satisfactory to Agent executed  by any lessor of Real Property leased
by a Borrower or any other Person having a  Lien  upon,  or  having  rights  or
interests in the Inventory pledged hereunder or a Bailee Acknowledgment.

            "Collections"   means  all  cash,  checks,  credit  card  slips  or
receipts, notes, instruments,  and  other items of payment (including insurance
proceeds,  proceeds  of  cash  sales, rental  proceeds,  and  tax  refunds)  of
Borrowers.

            "Commitment" means as  the  context may require, each U.S. Lender's
U.S. Commitments and each Canadian Lender's  Canadian  Commitments  or any such
Commitment.

            "Compliance Certificate"  means a certificate substantially  in the
form  of Exhibit C-1 delivered by the chief financial officer of Administrative
Borrower to Agent.

            "Concentration  Account"  has  the  meaning  set  forth  in Section
2.6(a).

            "Confirmation of Increase in Commitment" has the meaning set  forth
in Section 2.2(h)

            "Continuing  Director"  means  (a)  any  member  of  the  Board  of
Directors  who  was a director (or comparable manager) of Parent on the Closing
Date, and (b) any  individual  who  becomes  a member of the Board of Directors
after  the  Closing  Date if such individual was  appointed  or  nominated  for
election to the Board  of  Directors  by  a  majority  of  the  then Continuing
Directors.

            "Control  Agreement"  means  an  agreement,  in  form and substance
satisfactory  to  Agent,  executed  and  delivered by the applicable  Borrower,
Agent, and the applicable securities intermediary  or  bank, which agreement is
sufficient to give Agent "control" over the subject Securities Account, Deposit
Account or Investment Property as provided in the Code.
                                   10
<PAGE>

            "Cost" means the calculated cost of purchases,  as  determined from
invoices  received  by  a Borrower, such Borrower's purchase journal  or  stock
ledger, based upon such Borrower's  accounting practices, known to Agent, which
practices are in effect on the date on  which  this  Agreement  was executed or
subsequently  adopted  with  the  written approval of Agent.  "Cost"  does  not
include the value of any capitalized  costs  unrelated  to  the acquisitions of
Inventory  used in the Borrowers' calculation of cost of goods  sold,  but  may
include other  charges  used  in such Borrower's determination of cost of goods
sold and bringing goods to market,  all within Agent's Permitted Discretion and
in accordance with GAAP.

            "Credit Card Agreements"  means  those certain credit card receipts
agreements, each in form and substance reasonably  satisfactory  to  Agent  and
each of which is among Agent, the applicable Borrower and the applicable Credit
Card Processors.

            "Credit Card Issuer" means collectively (a) MasterCard or Visa bank
credit  or  debit  cards  or  other  bank  credit or debit cards issued through
MasterCard  International,  Inc., Visa, U.S.A.,  Inc.  or  Visa  International,
American Express, Discover, and  Diners  Club (or their respective successors),
and (b) private label credit cards of Borrowers,  provided,  however,  Accounts
due  from  private  label credit card issuers shall not be included in Eligible
Credit Card Receivables  unless  and  until (i) Agent has completed a review of
such Accounts, including, without limitation, any agreements between a Borrower
and  a  private label credit card provider,  the  results  of  which  shall  be
satisfactory to Agent in its reasonable discretion, and (ii) Agent has notified
Administrative  Borrower  of its consent to such inclusion and to the amount of
any  Reserves  which  shall  be   taken  in  connection  with  such  inclusion.
Accordingly, Borrowers acknowledge  and  agree  that  Accounts due from private
label credit card issuers shall not be included in the  calculation of the U.S.
Borrowing Base or the Canadian Borrowing Base on the Closing Date.

            "Credit Card Processor" means any Person that acts as a credit card
clearinghouse  or  processor  with respect to any sales transactions  involving
credit card purchases by customers using credit cards issued by any Credit Card
Issuer.

            "Credit  Instrument"   means   Letters   of   Credit  and  Bankers'
Acceptances.

            "Daily Balance" means, with respect to each day  during the term of
this Agreement, the amount of an Obligation owed at the end of such day.

            "Default"  means  an  event, condition, or default that,  with  the
giving of notice, the passage of time, or both, would be an Event of Default.

            "Defaulting Lender" means  any  Lender  (whether a U.S. Lender or a
Canadian  Lender,  as  applicable)  that fails to make any  Advance  (or  other
extension of credit) that it is required  to make hereunder on the date that it
is required to do so hereunder.

            "Defaulting Lender Rate" means  (a)  for  the first 3 days from and
after the date the relevant payment is due, the Prime Rate, and (b) thereafter,
the interest rate then applicable to Advances that are Prime Rate Loans.
                                   11
<PAGE>

            "Deposit Account" means any checking or other  deposit  account (as
that term is defined in the Code).

            "Designated  Account"  means  collectively, the Deposit Account  of
Administrative Borrower or Bombay Canada, as  the  case  may  be, identified on
Schedule D-1.

            "Designated Account Bank" means the bank identified  on Schedule D-
1.

            "Disbursement  Letter"  means an instructional letter executed  and
delivered by Administrative Borrower  to  Agent  regarding  the  extensions  of
credit  to  be  made  on  the  Closing Date, the form and substance of which is
satisfactory to Agent.

            "Documents" means any  document  (as  that  term  is defined in the
Code).

            "Dollars" or "$" means United States dollars.

            "Domestic Subsidiary" means each direct or indirect  Subsidiary  of
Parent formed under the laws of the United States or any state thereof.

            "Due Diligence Letter" means the due diligence letter, checklist or
Perfection  Certificate  sent  by  Agent  or  Agent's counsel to Administrative
Borrower, together with Administrative Borrower's  completed  responses  to the
inquiries  set  forth  therein,  the form and substance of such responses to be
satisfactory to Agent.

            "Eligible Accounts" means  those  Accounts  created by Wholesale in
the ordinary course of its business in connection with or that arise out of its
sale  of  goods  on  a  whole-sale  basis,  that  comply  with  each   of   the
representations  and  warranties  respecting Eligible Accounts made in the Loan
Documents, and that are not excluded  as ineligible by virtue of one or more of
the excluding criteria set forth below;  provided,  however, that such criteria
may be revised from time to time by Agent in Agent's  Permitted Discretion.  In
determining the amount to be included, Eligible Accounts  shall  be  calculated
net  of  customer  deposits  and  unapplied cash.  Eligible Accounts shall  not
include the following:

            (a)   Accounts that the  Account Debtor has failed to pay within 60
      days of original invoice date or Accounts with selling terms of more than
      60 days,

            (b)   Accounts owed by an  Account Debtor (or its Affiliates) where
      50%  or  more  of  all  Accounts owed by  that  Account  Debtor  (or  its
      Affiliates) are deemed ineligible under clause (a) above,

            (c)   Accounts with  respect  to  which  the  Account  Debtor is an
      Affiliate  of a U.S. Borrower or an employee or agent of a U.S.  Borrower
      or any Affiliate of a U.S. Borrower,

            (d)   Accounts arising in a transaction wherein goods are placed on
      consignment  or are sold pursuant to a guaranteed sale, a sale or return,
      a sale on approval,  a  bill  and  hold,  or any other terms by reason of
      which the payment by the Account Debtor may be conditional,
                                   12
<PAGE>

            (e)   Accounts that are not payable in Dollars,

            (f)   Accounts with respect to which  the Account Debtor either (i)
      does not maintain its chief executive office  in  the  United  States, or
      (ii)  is  not organized under the laws of the United States or any  state
      thereof, or  (iii)  is the government of any foreign country or sovereign
      state,  or  of any state,  province,  municipality,  or  other  political
      subdivision thereof, or of any department, agency, public corporation, or
      other instrumentality  thereof, unless (y) the Account is supported by an
      irrevocable  letter  of  credit   satisfactory  to  Agent  (as  to  form,
      substance,  and  issuer  or  domestic  confirming  bank)  that  has  been
      delivered to Agent and is directly drawable  by Agent, or (z) the Account
      is covered by credit insurance in form, substance,  and amount, and by an
      insurer, satisfactory to Agent,

            (g)   Accounts with respect to which the Account  Debtor  is either
      (i)  the  United States or any department, agency, or instrumentality  of
      the United  States (exclusive, however, of Accounts with respect to which
      Wholesale has complied, to the reasonable satisfaction of Agent, with the
      Assignment of  Claims  Act,  31 USC {section} 3727), or (ii) any state of
      the United States,

            (h)   Accounts with respect  to  which  the  Account  Debtor  is  a
      creditor  of  Wholesale,  has  or  has asserted a right of setoff, or has
      disputed its obligation to pay all or  any portion of the Account, to the
      extent of such claim, right of setoff, or dispute,

            (i)   Accounts  with  respect  to an  Account  Debtor  whose  total
      obligations owing to Wholesale exceed 10% (such percentage, as applied to
      a particular Account Debtor, being subject  to  reduction by Agent in its
      Permitted  Discretion  if  the  creditworthiness of such  Account  Debtor
      deteriorates) of all Eligible Accounts,  to the extent of the obligations
      owing  by  such Account Debtor in excess of  such  percentage;  provided,
      however, that,  in  each  case,  the amount of Eligible Accounts that are
      excluded because they exceed the foregoing percentage shall be determined
      by Agent based on all of the otherwise  Eligible Accounts prior to giving
      effect to any eliminations based upon the foregoing concentration limit,

            (j)   Accounts with respect to which  the Account Debtor is subject
      to an Insolvency Proceeding, is not Solvent, has gone out of business, or
      as  to  which  Wholesale has received notice of  an  imminent  Insolvency
      Proceeding or a  material  impairment  of the financial condition of such
      Account Debtor,

            (k)   Accounts, the collection of  which,  Agent,  in its Permitted
      Discretion,  believes  to  be doubtful by reason of the Account  Debtor's
      financial condition,

            (l)   Accounts that are  not subject to a valid and perfected first
      priority Agent's Lien,

            (m)   Accounts with respect  to  which (i) the goods giving rise to
      such Account have not been shipped and billed  to  the Account Debtor, or
      (ii) the services giving rise to such Account have not been performed and
      billed to the Account Debtor, or
                                   13
<PAGE>

            (n)  Accounts  that  represent  the  right  to  receive   progress
      payments  or  other advance billings that are due prior to the completion
      of performance  by  the  Wholesale  of  the subject contract for goods or
      services.

Notwithstanding  the  foregoing,  that  portion  of  the  U.S.  Borrowing  Base
attributable to Eligible Accounts shall not exceed $12,000,000 at any time.  In
addition, Eligible Accounts shall not be included  in  the  calculation  of the
U.S. Borrowing Base, unless and until (i) Agent has completed a review of  such
Accounts, the results of which shall be satisfactory to Agent in its reasonable
discretion,  and  (ii) Agent has notified Administrative Borrower in writing of
its consent to such  inclusion and to the amount of any Reserves which shall be
taken  in  connection  with   such   inclusion.   Accordingly,  U.S.  Borrowers
acknowledge and agree that Eligible Accounts  shall  not  be  included  in  the
calculation of the U.S. Borrowing Base on the Closing Date.

            "Eligible  Credit  Card  Receivables"  means  Accounts  (other than
      Eligible  Accounts)  due  to  a  Borrower on a non recourse basis from  a
      Credit  Card Issuer or Credit Card  Processor  arising  in  the  ordinary
      course of  business  and  net of such Credit Card Issuer's or Credit Card
      Processor's  expenses  and  chargebacks,   which   have  been  earned  by
      performance and are not deemed by Agent in its Permitted Discretion to be
      ineligible  for  inclusion  in the calculation of the Borrowing  Base  by
      virtue of one or more of the  excluding criteria set forth below.  Unless
      otherwise approved in writing by  Agent,  none  of the following shall be
      deemed to be Eligible Credit Card Receivables:

            (a)   Accounts that have been outstanding for  more than 5 Business
      Days from the date of sale;

            (b)   Accounts with respect to which a Borrower does not have good,
      valid  and marketable title thereto, free and clear of  any  Lien  (other
      than Liens  granted  to Agent, for its benefit and the ratable benefit of
      Lenders, pursuant to the Loan Documents);

            (c)   Accounts that  are  not  subject to a first priority security
      interest in favor of Agent, for the benefit of itself and Lenders;

            (d)   Accounts which are disputed,  subject  to  recourse against a
      Borrower,  or  with  respect  to which a claim, counterclaim,  offset  or
      chargeback has been asserted (to  the extent of such claim, counterclaim,
      offset or chargeback); or

            (e)   Accounts, the collection  of  which,  Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition

            "Eligible  Draft"  means  a draft in a form satisfactory  to  Agent
being issued to finance purchase of inventory  and  for  other  general working
capital purposes, which draft (a) is payable to the order of Agent,  signed  by
Borrowers,  as maker, and dated the date of presentment; (b) has a maturity not
longer than 180  days;  provided,  that  in no event shall such maturity extend
beyond the Maturity Date unless, prior to  the time of issuance, Borrowers have
delivered to Agent cash collateral in the face  amount  of such Eligible Draft;
and  (c)  is,  if  accepted  by  a  member bank of the Federal Reserve  System,
eligible for discount with a Federal  Reserve Bank under applicable law and all
applicable rules, regulations and interpretations  of the Board of Governors of
the  Federal  Reserve  System.  An Eligible Draft shall  in  no  event  include
bankers' acceptances issued outside of this Agreement.
                                   14
<PAGE>

            "Eligible In-Transit  Inventory"  means Inventory of U.S. Borrowers
that does not qualify as Eligible Inventory under  clause (b) of the definition
of  Eligible Inventory solely because it is not at a  location  in  the  United
States  set  forth  on  Schedule  E-1 or in transit among such locations in the
United States and that meets the following  criteria,  which  criteria  may  be
revised  by  Agent  in  its  Permitted  Discretion  from time to time after the
Closing Date:

            (a)  the Inventory was the subject of a Qualified Import Letter of
      Credit, or was paid for in full by a U.S. Borrower,

            (b)  such Inventory currently is in transit  (whether  by  vessel,
      air,  or  land)  to  a  location  set forth on Schedule E-1 in the United
      States that is the subject of a Bailee  Acknowledgment  or  a  Collateral
      Access Agreement,

            (c)  title  to  such  Inventory has passed to the applicable  U.S.
      Borrower,

            (d)  such Inventory is  insured  against  types  of  loss, damage,
      hazards,  and  risks,  and  in  amounts,  satisfactory  to  Agent in  its
      Permitted Discretion,

            (e)  such  Inventory  is  either  (1)  the subject of a negotiable
      document of title that (x) is in the name of the  Agent,  a U.S. Borrower
      or  an  Approved Customs Broker and has not been consigned to  any  third
      parties other  than  to the Agent, a U.S. Borrower or an Approved Customs
      Broker (either directly  or  by means of endorsements), (y) was issued by
      the carrier or consolidator respecting  the subject Inventory, and (z) is
      either (I) in the possession of the Borrowers  (and held at a location in
      the  United  States  listed on Schedule E-1), the Agent  or  an  Approved
      Customs Broker or (II)  the subject of a telefacsimile copy that Agent or
      a U.S. Borrower has received  from the Underlying Issuer which issued the
      Underlying Letter of Credit and as to which Agent or a U.S. Borrower also
      has  received  a  confirmation from  such  Underlying  Issuer  that  such
      document is in-transit  by  air-courier  to  Agent,  U.S.  Borrower or an
      Approved  Customs  Broker;  or (2) at a port of entry in a State  of  the
      United States,

            (f)  Administrative Borrower  has  provided a certificate to Agent
      that certifies that, to the best knowledge  of  Borrowers, such Inventory
      meets all of Borrowers' representations and warranties  contained  in the
      Loan  Documents concerning Eligible Inventory, that Borrowers know of  no
      reason  why  such  Inventory  would  not  be  accepted  by the applicable
      Borrower when it arrives in the United States, and that the  shipment  as
      evidenced by the documents conforms to the related order documents, and

            (g)  if  subject  to  a  Qualified  Import  Letter  of Credit, the
      Underlying  Letter  of  Credit  has  been  drawn  upon  in  full and  the
      Underlying  Issuer  has  honored  such drawing and Agent has honored  its
      obligations  to  the Underlying Issuer  under  the  applicable  Qualified
      Import Letter of Credit.

Notwithstanding the foregoing, (i) that portion of the Aggregate Borrowing Base
attributable to Eligible  In-Transit  Inventory  shall  not  exceed  15% of the
                                   15
<PAGE>

Aggregate  Borrowing  Base at any time and (ii) Inventory located at a port  of
entry in a State of the United States pursuant to clause (e)(2) above shall not
be included in the U.S. Borrowing Base unless and until (A) Agent has completed
a review of such Inventory  the results of which shall be satisfactory to Agent
in  it's  reasonable discretion  and  (b)  Agent  has  notified  Administrative
Borrower in  writing  of its consent to such inclusion and to the amount of any
Reserves which shall be  taken  in connection with such inclusion. Accordingly,
U.S. Borrowers acknowledge and agree that Inventory included pursuant to clause
(e)(2) above shall not be included  in  the  calculation  of the U.S. Borrowing
Base on the Closing Date.

In  addition,  Agent may revise from time to time the foregoing  criteria  with
respect to Inventory being subject to a negotiable document of title and modify
such criteria to  include  Inventory  subject  to  non-negotiable documents and
other  related  parameters  so  long as Agent shall be satisfied  in  its  sole
discretion that (i) Agent shall have  a valid and perfected first priority Lien
in  such  Inventory  and  (ii)  Borrowers shall  provide  to  Agent  all  other
documentation, including opinions  of  counsel,  satisfactory to Agent which in
Agent's  opinion is appropriate to evidence Agent's  perfected  first  priority
Lien in such Inventory.

            "Eligible  Inventory"  means (a) Eligible In-Transit Inventory, and
(b) Inventory of Borrowers consisting  of  finished  goods held for sale in the
ordinary course of Borrowers' business located at one  of  Borrowers'  business
locations set forth on Schedule E-1 (or in-transit between any such locations),
that  complies  with  each  of  the  representations  and warranties respecting
Eligible Inventory made by Borrowers in the Loan Documents,  and  that  is  not
excluded  as  ineligible by virtue of one or more of the excluding criteria set
forth below, which criteria may be fixed and revised from time to time by Agent
in its Permitted  Discretion  to  address the results of any audit or appraisal
performed by Agent from time to time  after  the  Closing Date.  In determining
the value of Eligible Inventory, Inventory shall be valued at the lower of Cost
or market on a basis consistent with Borrowers' accounting practices.

            An  item of Inventory (that is not Eligible  In-Transit  Inventory)
shall not be included in Eligible Inventory if:

            (a)  a  Borrower  does  not  have good, valid and marketable title
      thereto (including Inventory acquired on consignment),

            (b)  (i) in the case of U.S. Borrowers,  it  is not located at one
      of  the locations in the United States set forth on Schedule  E-1  or  in
      transit  from  one  such  location  to  another  such  location,  as such
      locations  are  updated  by  U.S.  Borrowers from time to time by written
      notice to Agent, and (ii) in the case of Bombay Canada, it is not located
      at one of the locations in Canada set forth on Schedule E-1 or in transit
      from one such location to another such  location,  as  such locations are
      updated by Bombay Canada from time to time by written notice to Agent,

            (c)  it  is located at a warehouse, distribution center  or  other
      real property (other  than  a retail store location) leased by a Borrower
      or in a fulfillment center or contract warehouse, in each case, unless it
      is  subject to a Collateral Access  Agreement  executed  by  the  lessor,
      fulfillment services provider or other applicable third party,
                                   16
<PAGE>

            (d)  it  is located in a contract warehouse or is otherwise stored
      with a bailee, warehouseman  or  similar third party unless it is subject
      to a Bailee Acknowledgment executed by the bailee, warehouseman, or other
      third party, as the case may be, and unless it is segregated or otherwise
      separately identifiable from goods  of  others,  if  any,  stored  on the
      premises,

            (e)  it  is  not  subject  to a valid and perfected first priority
      security Agent's Lien,

            (f)  it consists of goods returned  or  rejected  by  a Borrower's
      customers  unless such goods are repackaged and saleable in the  ordinary
      course of such Borrower's business, or

            (g)  other  than  saleable clearance goods arising in the ordinary
      course of business consistent  with past practice, consists of goods that
      are obsolete or slow moving (for  example,  more  than  18  months  old),
      custom  items,  work-in-process,  raw materials, or goods that constitute
      spare parts, packaging and shipping  materials, supplies used or consumed
      in  a  Borrower's business, bill and hold  goods,  defective  goods,  and
      "seconds," or Inventory acquired on consignment.

            "Eligible  Transferee"  means (a) in connection with Obligations of
U.S. Borrowers, the U.S. Commitments  and  the  other rights and obligations of
U.S.  Lenders hereunder, a commercial bank organized  under  the  laws  of  the
United  States,  or  any  state  thereof,  and having total assets in excess of
$250,000,000, (i) a commercial bank organized  under  the  laws  of  any  other
country  which  is  a  member  of the Organization for Economic Cooperation and
Development or a political subdivision  of any such country and which has total
assets in excess of $250,000,000, provided  that  such bank is acting through a
branch  or  agency  located  in  the  United States, (ii)  a  finance  company,
insurance company, or other financial institution  or  fund  that is engaged in
making, purchasing, or otherwise investing in commercial loans  in the ordinary
course of its business and having (together with its Affiliates)  total  assets
in  excess  of $250,000,000, (iii) any Affiliate (other than individuals) of  a
Lender, and (iv) any other Person approved by Agent and, so long as no Event of
Default has occurred and is continuing, Administrative Borrower (which approval
of Administrative  Borrower  shall  not  be  unreasonably withheld, delayed, or
conditioned)  and  (b) in connection with Obligations  of  Bombay  Canada,  the
Canadian Commitments  and  the other rights and obligations of Canadian Lenders
hereunder, means (i) a person resident in Canada for purposes of the Income Tax
Act (Canada), (ii) an authorized  foreign  bank which at all times holds all of
its  interest in any Canadian Advances and other  Obligations  owed  by  Bombay
Canada hereunder in the course of its Canadian banking business for purposes of
subsection  212(13.3)  of  the  Income  Tax Act (Canada) or (iii) any Lender or
Eligible Transferee as determined by paragraph  (a)  able  to  establish to the
satisfaction of the Administrative Borrower, Bombay Canada and the  Agent based
on  applicable law in effect on the date on which it becomes a Canadian  Lender
that  such  lender  is  not  subject  to  deduction or withholding of income or
similar  Taxes  imposed  by  Canada  (or any political  subdivision  or  taxing
authority thereof or therein) with respect  to  any  payments to such Lender of
interest, fees, commissions, or any other amount payable by Bombay Canada under
the Loan Documents.
                                   17
<PAGE>

            "Employee Benefit Plan" means any employee  benefit plan within the
meaning of {section}3(3) of ERISA maintained or contributed  to by any Borrower
or any ERISA Affiliate, other than a Guaranteed Pension Plan or a Multiemployer
Plan.

            "Environmental  Actions"  means  any complaint, summons,  citation,
notice,  directive,  order,  claim,  litigation,  investigation,   judicial  or
administrative proceeding, judgment, letter, or other communication,  each,  by
or from any Governmental Authority, or any third party involving (x) violations
of  Environmental  Laws  or  (y)  releases  of Hazardous Materials from (a) any
assets,  properties,  or  businesses  of any Borrower  or  any  predecessor  in
interest, (b) from adjoining properties  or businesses, or (c) from or onto any
facilities which received Hazardous Materials  generated by any Borrower or any
predecessor in interest.

            "Environmental   Law"   means   any  applicable   federal,   state,
provincial, foreign or local statute, law, rule,  regulation,  ordinance, code,
binding  and enforceable guideline, binding and enforceable written  policy  or
rule of common  law  now or hereafter in effect and in each case as amended, or
any judicial or administrative  interpretation  thereof, including any judicial
or administrative order, consent decree or judgment,  to  the extent binding on
Borrowers,  relating  to  the  environment,  employee  health  and  safety,  or
Hazardous  Materials,  including  CERCLA;  RCRA;  the  Federal  Water Pollution
Control Act, 33 USC {section}1251 et seq. the Toxic Substances Control  Act, 15
USC {section}2601 et seq. the Clean Air Act, 42 USC {section}7401 et seq.;  the
Safe Drinking Water Act, 42 USC {section}3803 et seq.; the Oil Pollution Act of
1990,  33  USC  {section}2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act  of  1986,  42  USC  {section}11001  et  seq.;  the Hazardous
Material Transportation Act, 49 USC {section}1801 et seq.; and the Occupational
Safety and Health Act, 29 USC {section}651 et seq. (to the extent it  regulates
occupational  exposure  to Hazardous Materials); any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.

            "Environmental   Liabilities  and  Costs"  means  all  liabilities,
monetary obligations, Remedial  Actions,  losses,  damages,  punitive  damages,
consequential  damages,  treble  damages,  costs  and  expenses  (including all
reasonable   fees,   disbursements   and   expenses  of  counsel,  experts,  or
consultants,  and  costs  of  investigation and  feasibility  studies),  fines,
penalties, sanctions, and interest  incurred as a result of any claim or demand
by any Governmental Authority or any  third  party,  and  which  relate  to any
Environmental Action.

            "Environmental  Lien"  means  any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.

            "Equipment" means "equipment" (as  that  term  is  defined  in  the
Code).

            "ERISA"  means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.

            "ERISA Affiliate"  means  any  Person  which is treated as a single
employer with a Borrower under {section}414 of IRC.

            "ERISA Reportable Event" means a reportable event with respect to a
Guaranteed Pension Plan within the meaning of {section}4043  of  ERISA  and the
regulations promulgated thereunder.
                                   18
<PAGE>

            "Eurocurrency  Reserve  Rate"  means for any day with respect to  a
LIBOR Rate Loan, the maximum rate (expressed  as  a  decimal) at which any bank
subject thereto would be required to maintain reserves  under  Regulation  D of
the  Board  of  Governors  of  the  Federal Reserve System (or any successor or
similar   regulations   relating   to  such   reserve   requirements)   against
"Eurocurrency Liabilities" (as that  term  is  used  in  Regulation D), if such
liabilities were outstanding.  The Eurocurrency Reserve Rate  shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate.

            "Event of Default" has the meaning set forth in Section 8.

            "Exchange  Act" means the Securities Exchange Act of  1934,  as  in
effect from time to time.

            "Existing Credit  Agreement"  means the Amended and Restated Credit
Agreement, dated as of July 5, 2002 among the Parent and the Existing Lenders.

            "Existing Lenders" means Bank of  America,  N.A.  and  each  of the
other  financial institutions party to the Existing Credit Agreement as lenders
thereunder.

            "Fee  Letter"  means that certain fee letter, dated as of even date
herewith, between Borrowers  and  Agent,  in form and substance satisfactory to
Agent.

            "FEIN" means Federal Employer Identification Number.

            "Fiscal Period" means one of the  three  fiscal periods in a Fiscal
Quarter, the first of such periods comprised of four weeks,  the second of such
periods  comprised  of five weeks, and the third of such periods  comprised  of
four weeks, with each  of  the weeks in a Fiscal Quarter ending on the close of
business on a Saturday (except  that  the last fiscal period in the last Fiscal
Quarter  of  a 53 week year shall be five  weeks).   There  are  twelve  Fiscal
Periods in a Fiscal Year.

            "Fiscal  Quarter"  means  one  of  four  thirteen  or fourteen week
quarters  in  a Fiscal Year, with the first of such quarters beginning  on  the
first day of a  Fiscal Year and ending on the Saturday of the last week in such
quarter.

            "Fiscal Year" means the fifty-two or fifty-three week period ending
on the Saturday closest to the last day of January of any calendar year.

            "Fund"  means  any Person (other than a natural person) that is (or
will be) engaged in making,  purchasing,  holding  or  otherwise  investing  in
commercial loans and similar extensions of credit in the ordinary course of its
business.

            "Funding Date" means the date on which a Borrowing occurs.

            "Funding Losses" has the meaning set forth in Section 2.12(b)(ii).

            "GAAP"  means generally accepted accounting principles that are (i)
recognized as such by  the Financial Accounting Standards Board or the American
Institute  of  Certified  Public   Accountants  (or  any  generally  recognized
successor of any of the foregoing),  and  (ii) consistently  applied  with past
                                   19
<PAGE>

financial statements of Borrowers adopting the same principles.  If any  change
in  any  accounting  practice is required by the Financial Accounting Standards
Board  or the American  Institute  of  Certified  Public  Accountants  (or  any
successor  of  any of the foregoing) in order for such principle or practice to
continue as a generally  accepted accounting principle or practice, all reports
and financial statements required  hereunder  or  in connection herewith may be
prepared   in   accordance   with   such  change,  but  all  calculations   and
determinations to be made hereunder may  be made in accordance with such change
only after notice of such change is given  to each Lender, and Parent, Required
Lenders and Agent agree to such change.

            "General Intangibles" means general  intangibles  (as  that term is
defined in the Code).

            "Governing  Documents"  means,  with  respect  to  any Person,  the
certificate  or  articles  of  incorporation,  by-laws,  unanimous shareholders
agreements or declarations, or other organizational documents of such Person.

            "Governmental   Authority"  means  any  foreign,  federal,   state,
provincial, municipal, local,  or  other  governmental  or administrative body,
instrumentality,  department, or agency or any court, tribunal,  administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.

            "Guaranteed  Pension  Plan" means any employee pension benefit plan
within the meaning of {section}3(2)  of  ERISA  maintained or contributed to by
any Borrower or any ERISA Affiliate the benefits  of  which  are  guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.

            "Guaranty" means the Guaranty of U.S. Borrowers in favor  of Agent,
dated  the  date hereof, guarantying the Obligations of Bombay Canada, in  form
and substance satisfactory to Agent.

            "Hazardous  Materials"  means  (a) substances  that  are defined or
listed  in,  or  otherwise  classified  pursuant  to,  any  applicable laws  or
regulations  as  "hazardous  substances,"  "hazardous  materials,"   "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or   classify   substances   by   reason  of  deleterious  properties  such  as
ignitability, corrosivity, reactivity,  carcinogenicity, reproductive toxicity,
or "EP toxicity", (b) oil, petroleum, or  petroleum derived substances, natural
gas, natural gas liquids, synthetic gas, drilling  fluids, produced waters, and
other  wastes associated with the exploration, development,  or  production  of
crude oil,  natural  gas, or geothermal resources, (c) any flammable substances
or explosives or any radioactive  materials,  and  (d)  asbestos in any form or
electrical  equipment  that  contains  any oil or dielectric  fluid  containing
levels of polychlorinated biphenyls in excess of 50 parts per million.

            "Hedge Agreement" means any  and  all  transactions, agreements, or
documents  now  existing  or  hereafter  entered  into  between  Administrative
Borrower or its Subsidiaries and a Bank Product Provider,  which provide for an
interest  rate, credit, commodity or equity swap, cap, floor,  collar,  forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
                                    20
<PAGE>

option, or  any  combination  of,  or  option with respect to, these or similar
transactions,  for  the purpose of hedging  Administrative  Borrower's  or  its
Subsidiaries' exposure  to  fluctuations  in  interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.

            "Holdout Lender" has the meaning set forth in Section 15.2.

            "Indebtedness"  As to any Person means,  without  duplication:  (a)
all  obligations  for  borrowed  money, (b) all obligations evidenced by bonds,
debentures, notes, or other similar  instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c)  all  obligations  as  a  lessee  under
Capital  Leases, (d) all obligations or liabilities of others secured by a Lien
on any asset  of  a  Person  or  its Subsidiaries, irrespective of whether such
obligation or liability is assumed,  (e)  all  obligations  to pay the deferred
purchase price of assets (other than trade payables incurred  in  the  ordinary
course  of  business),  (f)  all  obligations  owing  under hedge agreements or
similar  agreements, (g) all sales by such Person of (i)  accounts  or  general
intangibles  for money due or to become due, (ii) chattel paper, instruments or
documents creating  or  evidencing  a right to payment of money, or (iii) other
receivables  (collectively  "receivables"),  whether  pursuant  to  a  purchase
facility or otherwise, other  than  in  connection  with the disposition of the
business  operations  of  such  Person  relating thereto or  a  disposition  of
defaulted receivables for collection and  not  as  a financing arrangement, and
together  with  any  obligation of such Person to pay any  discount,  interest,
fees, indemnities, penalties, recourse, expenses or other amounts in connection
therewith, (h) every obligation  of  such  Person  (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise  acquire  for  value  any
shares  of  Stock  issued by such Person or any rights measured by the value of
such Stock, (i) every obligation in respect of Indebtedness of any other entity
(including any partnership  in  which  such Person is a general partner) to the
extent  that  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 that the terms of such Indebtedness  provide  that  such  Person  is not
liable  therefor  and  such terms are enforceable under applicable law; (j) any
obligation  guaranteeing   or   intended  to  guarantee  (whether  directly  or
indirectly guaranteed, endorsed,  co-made,  discounted,  or sold with recourse)
any obligation of any other Person that constitutes Indebtedness  under  any of
clauses  (a)  through  (i) above, and (k) every obligation of such Person under
any Synthetic Lease.

            "Indemnified  Liabilities"  has  the  meaning  set forth in Section
11.3.

            "Indemnified Person" has the meaning set forth in Section 11.3.

            "Insolvency  Proceeding"  means  any  proceeding  commenced  by  or
against any Person under any provision of the Bankruptcy Code,  the  Bankruptcy
and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada),
or  under  any other state or federal bankruptcy or insolvency law, assignments
for the benefit  of  creditors,  formal  or  informal  moratoria, compositions,
extensions  generally  with  creditors, or proceedings seeking  reorganization,
arrangement, or other similar relief.

            "Interest Payment  Date"  means  (a)  as to any Prime Rate Loan, in
arrears on the first day of the calendar month with respect to interest accrued
during such prior calendar month; and (b) as to any  LIBOR Rate Loan in respect
                                   21
<PAGE>

of which the Interest Period is (i) 3 months or less,  the  last  day  of  such
Interest Period and (ii) more than 3 months, the date that is 3 months from the
first  day  of  such  Interest  Period  and,  in addition, the last day of such
Interest Period.

            "Interest Period" means, with (a) respect  to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR  Rate  Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Prime Rate  Loan  to a
LIBOR  Rate  Loan)  and  ending 1, 2, 3, or 6 months thereafter, as applicable;
provided, however, that (i)  if  any Interest Period would end on a day that is
not a Business Day, such Interest  Period shall be extended (subject to clauses
((iii)-(v) below) to the next succeeding  Business  Day,  (ii)  interest  shall
accrue at the applicable rate based upon the LIBOR Rate from and including  the
first  day  of  each  Interest  Period  to, but excluding, the day on which any
Interest Period expires, (iii) any Interest Period that would end on a day that
is not a Business Day shall be extended to  the  next  succeeding  Business Day
unless  such  Business Day falls in another calendar month, in which case  such
Interest Period shall end on the next preceding Business Day, (iv) with respect
to an Interest  Period that begins on the last Business Day of a calendar month
(or on a day for  which  there  is  no  numerically  corresponding  day  in the
calendar  month  at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, 3, or 6 months
after the date on  which  the  Interest  Period  began,  as applicable, and (v)
Borrowers  (or  Administrative  Borrower on behalf thereof) may  not  elect  an
Interest Period which will end after the Maturity Date, and (b) with respect to
each Prime Rate Loan, initially the period commencing on the date of the making
of such Prime Rate Loan and ending  on  the  last day of the calendar month and
thereafter each period commencing on the last  day  of  each preceding Interest
Period  and  ending on the last day of the calendar month;  provided,  however,
that if any Interest Period would end on a day that is not a Business Day, that
Interest Period  shall end on the next succeeding Business Day and any Interest
Period that would  otherwise  extend  beyond the Maturity Date shall end on the
Maturity Date.

            "Inventory" means "inventory"  (as  that  term  is  defined  in the
Code).

            "Inventory Reserves" means such reserves as may be established from
time  to  time  by  Agent  in  its  Permitted  Discretion  with  respect to the
determination of the saleability, at retail, of the Eligible Inventory or which
reflect  such  other  factors  as  affect  the  market  value  of  the Eligible
Inventory.   Without  limiting  the  generality  of  the  foregoing,  Inventory
Reserves   may  include  (but  are  not  limited  to)  (a)  reserves  based  on
obsolescence  or  inventory  shrinkage, (b) the estimated reclamation claims of
unpaid  sellers of Inventory sold  to  a  Borrower,  (c)  change  in  Inventory
character,  composition or mix, (d) imbalance of Inventory, retail markdowns or
markups inconsistent  with  prior  period  practice  and  performance,  current
business plans, or advertising calendar and planned advertising events, (e) the
change  in  the  Net  Retail  Liquidation  Value  of  the  Inventory, or (f) as
reasonably required by Agent to protect Collateral value based  upon changes to
the ordinary course of business of Borrowers.

            "Investment"  means, with respect to any Person, any investment  by
such Person in any other Person  (including  Affiliates)  in the form of loans,
guarantees,  advances,  or  capital  contributions  (excluding (a)  commission,
travel, and similar advances to officers and employees  of  such Person made in
the  ordinary  course  of business, and (b) bona fide Accounts arising  in  the
ordinary course of business  consistent with past practice), purchases or other
                                   22
<PAGE>

acquisitions of Indebtedness,  Stock, or all or substantially all of the assets
of  such other Person (or of any  division  or  business  line  of  such  other
Person),  and any other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP.

            "Investment  Property" means "investment property" (as that term is
defined  in the Code), and  any  and  all  supporting  obligations  in  respect
thereof.

            "IRC"  means  the  Internal Revenue Code of 1986, as in effect from
time to time.

            "Issuing Lender" means  WFRF  in its capacity as Issuing Lender for
the  purpose  of  issuing  (a)  L/Cs  or  L/C  Undertakings,  or  (b)  Bankers'
Acceptances.

            "Judgment Conversion Date" has the meaning  set  forth  in  Section
2.15(a).

            "Judgment Currency" has the meaning set forth in Section 2.15(a).

            "L/C" has the meaning set forth in Section 2.11(a).

            "L/C  Disbursement"  means  a  payment  made  by the Issuing Lender
pursuant to a Letter of Credit.

            "L/C Undertaking" has the meaning set forth in Section 2.11(a).

            "Lender" and "Lenders" have the respective meanings  set  forth  in
the  preamble  to  this  Agreement,  and  shall include Accordion Lenders, U.S.
Lenders, Canadian Lenders, Swing Lender and  any  other  Person made a party to
this Agreement in accordance with the provisions of Section 14.1.

            "Lender  Group" means, individually and collectively,  each  Lender
(including the Canadian  Lenders, U.S. Lender and the Issuing Lender), Canadian
Agent and Agent.

            "Lender Group  Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums)  required  to  be  paid  by  a  Borrower  or its
Subsidiaries  under  any  of  the  Loan  Documents  that are paid, advanced, or
incurred by the Lender Group, (b) reasonable fees or  charges  paid or incurred
by Agent or Canadian Agent, as the case may be, in connection with  the  Lender
Group's  transactions with Borrowers or their Subsidiaries, including, fees  or
charges   for    photocopying,    notarization,    couriers   and   messengers,
telecommunication, public record searches (including  tax lien, litigation, and
UCC  and PPSA searches), filing, recording, publication,  appraisal  (including
periodic  Collateral  appraisals  or business valuations), (c) reasonable costs
and expenses incurred by Agent or Canadian  Agent,  as  the case may be, and in
the disbursement of funds to or for the account of Borrowers  (by wire transfer
or  otherwise),  (d) reasonable charges paid or incurred by Agent  or  Canadian
Agent,  as the case  may  be,  resulting  from  the  dishonor  of  checks,  (e)
reasonable  costs  and expenses paid or incurred by the Lender Group to correct
any default or enforce  any  provision  of  the  Loan  Documents, or in gaining
possession of, maintaining, handling, preserving, storing,  shipping,  selling,
preparing  for  sale,  or  advertising  to  sell the Collateral, or any portion
thereof,  irrespective of whether a sale is consummated,  (f)  audit  fees  and
expenses of  Agent  or  Canadian  Agent,  as  the case may be, related to audit
examinations of the Books permitted by the Loan Documents, (g) reasonable costs
                                   23
<PAGE>

and expenses of third party claims or any other  suit  paid  or incurred by the
Lender Group in enforcing or defending the Loan Documents or in connection with
the  transactions  contemplated  by  the  Loan Documents or the Lender  Group's
relationship with any Borrower or any Subsidiary  of a Borrower, (h) Agent's or
Canadian Agent's, as the case may be, reasonable costs  and expenses (including
attorneys  fees)  incurred  in  advising,  structuring,  drafting,   reviewing,
administering,   syndicating,   or  amending  the  Loan  Documents,  and  other
instrument mentioned herein, in connection  with  each  closing  hereunder, any
amendments, modifications, approvals, consents or waivers hereto or  hereunder,
or the cancellation of any Loan Document upon payment in full in cash of all of
the  Obligations  or pursuant to any terms of such Loan Document providing  for
such cancellation,  and  (i)  Agent's  or Canadian Agent's, as the case may be,
reasonable  fees  and  expenses (including,  but  not  limited  to,  attorneys,
accountants, consultants,  and  other  advisors  fees and expenses) incurred in
terminating, enforcing (including, but not limited  to  attorneys, accountants,
consultants, and other advisors fees and expenses incurred in connection with a
"workout,"  a  "restructuring,"  or  an  Insolvency Proceeding  concerning  any
Borrower or any Subsidiary of a Borrower or  in  exercising  rights or remedies
under  the  Loan  Documents),  preserving  or  defending  the  Loan  Documents,
irrespective  of  whether  suit  is brought, in the administration of the  Loan
Documents after a Default exists,  or  in taking any Remedial Action concerning
the Collateral.  Notwithstanding the foregoing,  Bombay  Canada  shall  only be
obligated  to  pay Lender Group Expenses set forth in clauses (a)-(i) above  to
the extent arising  out  of  or  related  to the Collateral of Bombay Canada or
Obligations of Bombay Canada, including pursuant to Canadian Advances.

            "Lender-Related Person" means,  with  respect  to  any Lender, such
Lender,  together  with such Lender's Affiliates, and the officers,  directors,
employees, and agents of such Lender.

            "Letter  of  Credit"  means  an  L/C  or an L/C Undertaking, as the
context requires.

            "Letter of Credit Usage" means, as of any  date  of  determination,
the aggregate undrawn amount of all outstanding Letters of Credit  plus 100% of
the  amount  of outstanding time drafts accepted by an Underlying Issuer  as  a
result of drawings under Underlying Letters of Credit.

            "LIBOR Deadline" has the meaning set forth in Section 2.12(b)(i).

            "LIBOR Notice" means a written notice in the form of Exhibit L-1.

            "LIBOR Option" has the meaning set forth in Section 2.12(a).

            "LIBOR  Rate"  means,  for each Interest Period, the rate per annum
determined by Agent (rounded upwards,  if  necessary,  to  the  next 1/100%) by
dividing  (a) the Base LIBOR Rate for such Interest Period, by (b)  100%  minus
the Reserve  Percentage.   The  LIBOR  Rate  shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.

            "LIBOR  Rate Loan" means each portion  of  an  Advance  that  bears
interest at a rate determined by reference to the LIBOR Rate.
                                   24
<PAGE>

            "Lien" means  any  interest in an asset securing an obligation owed
to, or a claim by, any Person other  than  the owner of the asset, whether such
interest  is  based  on  the common law, statute,  or  contract,  whether  such
interest is recorded or perfected, and whether such interest is contingent upon
the occurrence of some future  event  or events or the existence of some future
circumstance or circumstances, including  the lien or security interest arising
from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, security agreement, conditional  sale,  trust  receipt  or
other  title retention agreement, or from a lease, consignment, or bailment for
security  purposes  and also including reservations, exceptions, encroachments,
easements, rights-of-way,  covenants,  conditions,  restrictions,  leases,  and
other title exceptions and encumbrances affecting Real Property.

            "Loan Account" has the meaning set forth in Section 2.9.

            "Loan  Documents"  means  this  Agreement,  the  Canadian  Security
Documents,   the  Guaranty,  the  Bank  Product  Agreements,  the  Credit  Card
Agreements, the  Control Agreements, the Disbursement Letter, the Due Diligence
Letter, the Fee Letter, the Perfection Certificate, the Credit Instruments, the
Post  Closing Letter,  any  certificates  (including  without  limitation,  the
Borrowing  Base  Certificate  and the Compliance Certificate) from time to time
delivered by a Borrower pursuant  to this Agreement or any other Loan Document,
any Note or Notes executed by a Borrower  in connection with this Agreement and
payable  to  a member of the Lender Group, Uniform  Commercial  Code  financing
statements, PPSA   registration  statements and registrations in Quebec, Canada
required under this Agreement, and  any other agreement entered into, now or in
the  future,  by any Borrower and the Lender  Group  in  connection  with  this
Agreement.

            "Local Account" has the meaning set forth in Section 2.6(a).

            "Material  Adverse  Change"  means (a) a material adverse change in
the  business,  operations,  results  of  operations,  assets,  liabilities  or
financial condition of Borrowers and their  Subsidiaries taken as a whole (b) a
material impairment of a Borrower's ability to  perform  its  obligations under
the Loan Documents to which it is a party or of the Lender Group's  ability  to
enforce  the  Obligations  or  realize  upon  the Collateral, or (c) a material
impairment of the validity, enforceability, attachment,  perfection or priority
of Agent's Liens with respect to the Collateral.

            "Maturity Date" means September 15, 2009 and as  such  date  may be
modified pursuant to Section 3.4.

            "Maximum  Canadian  Revolver Amount" means the aggregate amount  of
all Canadian Advances and other Obligations  that may be borrowed by or made to
Bombay  Canada  under  this  Agreement; provided,  however,  that  the  Maximum
Canadian Revolver Amount shall  in  no  event  exceed  $18,000,000,  as  may be
increased  by  Canadian Agent is its sole discretion from to time to time after
an Accordion Activation.

            "Maximum  Revolver  Amount"  means  the  aggregate  amount  of  all
Advances  and  other  Obligations  that may be borrowed by or made to Borrowers
under this Agreement, as such amount may be increased or decreased from time to
time in accordance with this Agreement;  provided,  however,  that  the Maximum
Revolver  Amount  shall in no event exceed (a) $125,000,000 prior to Borrowers'
                                   25
<PAGE>

exercise of the Accordion  Activation  and  (b) $175,000,000  after  Borrowers'
exercise of the Accordion Activation, as may be reduced by Borrowers from  time
to time in accordance with Section 3.6.

            "Minimum  Adjusted  Availability Requirement" means, as of any date
of determination, the lesser of (a)  $10,000,000  and (b) 7.5% of the Aggregate
Borrowing Base.

            "Moody's" means Moody's Investors Service, Inc., or its successor.

            "Multiemployer  Plan"  means  any  multiemployer  plan  within  the
meaning of {section}3(37) of ERISA maintained or contributed to by any Borrower
or any ERISA Affiliate.

            "Negotiable  Collateral"  means collectively,  letters  of  credit,
letter of credit rights, instruments, promissory  notes, drafts, documents, and
chattel paper (including electronic chattel paper and  tangible chattel paper),
and any and all supporting obligations in respect thereof arising from the sale
of Inventory or Accounts.

            "Net Liquidation Percentage" means, at any date  of  determination,
the  percentage  of  the  Cost value of Borrowers' Eligible Inventory  that  is
estimated  to  be recoverable  in  an  orderly  liquidation  of  such  Eligible
Inventory, net of  liquidation  expenses,  such  percentage to be as determined
from  time  to  time by Agent in its Permitted Discretion  or  by  a  qualified
appraisal company selected by Agent.

            "Net Retail Liquidation Value" means, at any date of determination,
the result (expressed  in  Dollars) of the Net Liquidation Percentage times the
Cost value of Eligible Inventory as of such date.

            "Note" or "Notes"  means one or more of the promissory notes issued
pursuant to Section 2.1(k) to evidence the Advances hereunder and substantially
in the form of Exhibit N-1 annexed  hereto,  as  amended, endorsed or otherwise
modified from time to time.

            "Obligation Currency" has the meaning set forth in Section 2.15(a).

            "Obligations"  means  (a)  all loans, Advances,  debts,  principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code,  Bankruptcy  and  Insolvency  Act  (Canada)   or   Companies'   Creditors
Arrangement   Act   (Canada)  would  have  accrued),  contingent  reimbursement
obligations  with  respect   to   outstanding   Credit  Instruments,  premiums,
liabilities (including all amounts charged to Borrowers' Loan Accounts pursuant
hereto), obligations, fees (including the fees provided for in the Fee Letter),
charges, costs, Lender Group Expenses (including any fees or expenses that, but
for the provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties,  covenants,  and  duties  of  any  kind and  description  owing  by
Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents or
Hedge Agreements and irrespective of whether for  the payment of money, whether
direct or indirect, absolute or contingent, due or  to become due, now existing
or hereafter arising, and including all interest not  paid  when  due  and  all
Lender  Group  Expenses  that Borrowers are required to pay or reimburse by the
Loan Documents, by law, or  otherwise,  and  (b)  all Bank Product Obligations.
Any  reference in this Agreement or in the Loan Documents  to  the  Obligations
shall  include  all  amendments,  changes, extensions, modifications, renewals,
replacements,  substitutions,  and  supplements,   thereto   and   thereof,  as
                                   26
<PAGE>

applicable,  both prior and subsequent to any Insolvency Proceeding.   For  the
purposes of Sections 2.3(c)(iii),  2.3(e),  2.5(a)  and 16.1, the definition of
Required  Lenders, and determining whether an Overadvance  has  occurred  under
Section 2.4, the term "Obligations" shall not include Bank Product Obligations.

            "Originating Lender" has the meaning set forth in Section 14.1(e).

            "Overadvance" has the meaning set forth in Section 2.4.

            "Parent"  has  the  meaning  set  forth  in  the  preamble  to this
Agreement.

            "Participant" has the meaning set forth in Section 14.1(e).

            "Pay-Off Letter" means a letter, in form and substance satisfactory
to  Agent, from Bank of America, N.A., as administrative agent for the Existing
Lenders  to  Agent  respecting the amount necessary to repay in full all of the
obligations of Borrowers  and  their Subsidiaries owing to Existing Lenders and
obtain a release of all of the Liens  existing  in favor of Existing Lenders in
and to the assets of Borrowers and their Subsidiaries  pursuant to the Existing
Credit Agreement.

            "PBGC"  means the Pension Benefit Guaranty Corporation  created  by
{section}4002 of ERISA  and  any  successor  entity  or entities having similar
responsibilities.

            "Perfection Certificate" means, collectively,  (a)  the  Perfection
Certificate submitted by Administrative Borrower to Agent with respect  to each
U.S.  Borrower,  together  with  U.S.  Borrowers'  completed  responses  to the
inquiries  set  forth therein, and (b) the Perfection Certificate submitted  by
Bombay Canada to  Agent  with  respect  to  Bombay Canada, together with Bombay
Canada's completed responses to the inquiries  set  forth therein, the form and
substance of each such responses to be satisfactory to Agent.

            "Permitted Acquisitions" means acquisitions of all or substantially
all  of  the assets of a Person in or of any division or  business  line  of  a
Person or  Stock  of  a  Person,  provided,  (a) Agent shall receive at least 3
Business  Days  prior written notice of such acquisition,  which  notice  shall
include a reasonably  detailed description of such acquisition, (b) such assets
are  located  in  the United  States  or  Canada  (except  that  such  location
requirement shall not apply to acquisitions of assets or stores from a licensee
or franchisee of a  Borrower  or  any  Subsidiary  of a Borrower) and are those
assets of a business that would comply with Section 6.5(d),  and which business
would not subject Agent or any Lender to regulatory or third party approvals in
connection with the exercise of its rights and remedies under this Agreement or
any  Loan  Documents,  (c) no Default or Event of Default exists  prior  to  or
immediately after giving  effect  to such acquisition, (d) Agent is granted, to
the extent and in accordance with the  scope  required  by  Section  4, a valid
first  priority  perfected security interest in the assets so acquired (subject
to any Permitted Liens)  and  the  applicable Borrower or Subsidiary shall have
delivered to Agent evidence reasonably satisfactory to Agent that all liens and
encumbrances  with respect to the assets  so  acquired,  other  than  Permitted
Liens, have been  discharged  in full, (e) the seller of such assets or capital
Stock is not an Affiliate of any Borrower or any of their Subsidiaries, (f) the
terms of such acquisition are on  an  arms  length  basis,  (g) Section 6.14 is
complied with at the time of consummation of such acquisition  (or concurrently
                                   27
<PAGE>

therewith), (h) the board of directors and (if required by applicable  law) the
shareholders,  or  the  equivalent thereof, of the business to be acquired  has
approved such acquisition  in the event such Permitted Acquisition would result
in a change of control of the  acquired  Person, (A) the applicable Borrower or
Subsidiary shall have delivered to Agent (i)  evidence  satisfactory  to  Agent
that  such  Borrower  or  such  Subsidiary  has  completed  such acquisition in
accordance with the terms of the contracts and agreements entered  into by such
Person  in  connection with such acquisition, and (B) certified copies  of  all
such  documents   shall  have  been  delivered  to  Agent,  (j)  no  additional
Indebtedness, contingent  obligations  or  other  liabilities shall be incurred
assumed or otherwise be reflected on a consolidated  balance sheet of Borrowers
and Parent after giving effect to such acquisition, except,  (I)  Advances made
hereunder,  and  (II)  ordinary  course  trade  payables, accrued expenses  and
unsecured Indebtedness of Borrowers and (III) Indebtedness  otherwise permitted
under  Section  7.1,  and  (k)  after  giving  effect  to any such acquisition,
Availability shall not be less than $25,000,000 and the Administrative Borrower
shall  have  delivered  to  Agent  a  Compliance  Certificate  and  Projections
demonstrating that Borrowers shall have Availability of at least $25,000,000 at
all times for the 2 Fiscal Quarters immediately succeeding such acquisition.

In  addition, the Accounts shall not be included in Eligible Accounts  and  the
Inventory  so  acquired shall not be included in Eligible Inventory, unless and
until (i) Agent  has  completed  a  review of such assets, the results of which
shall be satisfactory to Agent in its reasonable discretion, and (ii) Agent has
notified Administrative Borrower in writing  of  its  consent to such inclusion
and to the amount of any Reserves which shall be taken  in connection with such
inclusion.

            "Permitted Discretion" means a determination made in good faith and
in  the exercise of reasonable (from the perspective of a  secured  asset-based
lender) business judgment.

            "Permitted  Dispositions"  means (a) sales or other dispositions by
Administrative Borrower or its Subsidiaries  of Equipment that is substantially
worn, damaged, or obsolete in the ordinary course  of  business,  (b)  sales by
Administrative  Borrower  or  its  Subsidiaries  of  Inventory to buyers in the
ordinary  course  of  business,  (c)  the  use  or transfer of  money  or  Cash
Equivalents by Administrative Borrower or its Subsidiaries  in a manner that is
not prohibited by the terms of this Agreement or the other Loan  Documents, (d)
the  licensing  by  Administrative  Borrower  or  its  Subsidiaries, on a  non-
exclusive  basis,  of patents, trademarks, copyrights, and  other  intellectual
property rights in the  ordinary  course of business, (e) a disposition between
Borrowers,  and  (f)  the  surrender  or  waiver  of  contract  rights  or  the
disposition, settlement, release or surrender of contract, tort or other claims
of any kind in the ordinary course of business,  and  (g)  any  disposition  of
defaulted  receivables  that  arose  in  the  ordinary  course  of business for
collection.

            "Permitted  Investments"  means  (a) Investments in cash  and  Cash
Equivalents,  (b)  Investments in negotiable instruments  for  collection,  (c)
advances made in connection with purchases of goods or services in the ordinary
course of business,  (d) Investments received in settlement of amounts due to a
Borrower or any Subsidiary  of  a  Borrower  effected in the ordinary course of
business or owing to a Borrower or any Subsidiary  of a Borrower as a result of
Insolvency Proceedings involving an Account Debtor or  upon  the foreclosure or
enforcement of any Lien in favor of a Borrower or any Subsidiary of a Borrower,
(e)  (i)  Investments  in  a  Borrower, (ii) Investments in a Subsidiary  of  a
                                   28
<PAGE>

Borrower, and (iii) to the extent otherwise permitted hereunder, Investments in
any Person who, simultaneously  with  such  Investment, becomes a Subsidiary of
Parent  and complies with Section 6.14 hereof  provided,  however,  that  after
giving effect  to  any  such Permitted Investments pursuant to clauses (e) (ii)
and (iii) above, Availability  shall  not  be  less  than  $25,000,000  and the
Administrative  Borrower shall have delivered to Agent a Compliance Certificate
and Projections demonstrating  that  Borrowers  shall  have  Availability of at
least $25,000,000 at all times for the 2 Fiscal Quarters immediately succeeding
such  Permitted  Investments, (f) Investments in The Bombay Furniture  Company,
Inc. in an amount  not to exceed $5,000,000 in any Fiscal Year; (g) Investments
the net aggregate book value of which does not at any time exceed the amount of
$1,000,000, (h) so long  as  the  Revolver Usage is equal to $0, investments in
(i) commercial notes and bonds or variable  rate  demand  notes,  issued by any
commercial institution with a rating of not less than A, as determined  by  S&P
or  Moody's,  (ii)  Eurodollar deposits, and (iii) money market or other mutual
funds substantially all  of  whose  assets  comprise  securities  of  the types
described  in  the  definition  of  "Cash  Equivalents"  or  clause (h) hereof;
provided,  that  notwithstanding  the foregoing, no such Investments  shall  be
permitted (i) after the occurrence  of  a Default or Event of Default, and (ii)
unless such Investments are pledged to Agent  as  additional Collateral for the
Obligations  pursuant to such agreements as may be required  by  Agent  in  its
Permitted Discretion.

            "Permitted  Liens" means (a) Liens held by Agent for the benefit of
Agent and Lenders, (b) Liens  for  unpaid  taxes  that  either  (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject  of  Permitted Protests, (c) Liens set forth on Schedule P-1,  (d)  the
interests of lessors  under  operating  leases, (e) purchase money Liens or the
interests of lessors under Capitalized Leases  to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired  and the proceeds thereof, (f)
Liens  arising by operation of law including those in  favor  of  warehousemen,
landlords,  carriers,  mechanics, materialmen, laborers, or suppliers, incurred
in the ordinary course of  Borrowers'  business  and not in connection with the
borrowing of money, and which Liens either (I) are for sums not yet delinquent,
or (II) are the subject of Permitted Protests, (g)  Liens arising from deposits
made in connection with obtaining worker's compensation  or  other unemployment
insurance,  (h)  Liens or deposits to secure performance of bids,  tenders,  or
leases incurred in  the  ordinary course of business and not in connection with
the borrowing of money, (i)  Liens  granted  as  security  for surety or appeal
bonds  in  connection  with  obtaining  such  bonds in the ordinary  course  of
business, (j) Liens resulting from any judgment  or  award that is not an Event
of Default hereunder, (k) with respect to any Real Property,  easements, rights
of  way,  minor  encroachments, and zoning restrictions that do not  materially
interfere with or  impair  the  use or operation thereof, (l) 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, (m) Liens resulting
from the filing of precautionary  UCC  financing  statements, PPSA registration
statements or registrations in Quebec, Canada relating  to  operating leases of
any Credit Party which are entered into in the ordinary course  of business and
which are limited solely to the assets subject thereto, and (n) Liens  securing
Permitted  Office  Building Indebtedness so long as such Lien attaches only  to
the Real Property related  to  Parent's  chief executive offices, the buildings
and fixtures thereon, and the proceeds thereof  (including  insurance proceeds)
and  Liens  on  money  placed  in  an  escrow account in connection  with  sale
leaseback transactions permitted by Section 7.5.
                                   29
<PAGE>

            "Permitted   Office  Building  Indebtedness"   means   Indebtedness
incurred  by a U.S. Borrower  or  any  of  its  Subsidiaries  in  an  aggregate
principal amount  at  any  time  outstanding not to exceed 90% of the appraised
value (based upon an independent third-party  appraisal)  of the portion of the
Bombay Office Complex securing such Indebtedness.

            "Permitted Protest" means the right of Administrative  Borrower  or
any  of  its  Subsidiaries,  as applicable, to protest any Lien (other than any
such Lien that secures the Obligations),  taxes  (other  than  payroll taxes or
taxes  that  are  the subject of a United States federal tax lien),  or  rental
payment, provided that  (a)  a  reserve  with  respect  to  such  obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest  is  instituted  promptly  and  prosecuted diligently by Administrative
Borrower or any of its Subsidiaries, as applicable,  in  good  faith,  and  (c)
Agent  is  satisfied  that, while any such protest is pending, there will be no
impairment of the enforceability,  validity,  perfection  or priority of any of
Agent's Liens.

            "Permitted Purchase Money Indebtedness" means,  as  of  any date of
determination, Purchase Money Indebtedness incurred after the Closing  Date  in
an  aggregate  amount  outstanding at any one time not in excess of $2,000,000.
In no event shall Permitted  Purchase  Money  Indebtedness include Indebtedness
incurred for the purpose of financing all or any  part  of the acquisition Cost
of any Inventory.

            "Person"  means  natural persons, corporations,  limited  liability
companies,  limited  partnerships,   general  partnerships,  limited  liability
partnerships, joint ventures, trusts,  land  trusts,  business trusts, or other
organizations,  irrespective  of  whether  they  are  legal entities,  and  any
Governmental Authority.

            "PPSA"  means  the Personal Property Security  Act  (Ontario),  or,
where the context requires,  the  legislation of other provinces or territories
in  Canada  relating  to  security in personal  property  generally,  including
Accounts Receivable and Inventory,  as  adopted  by  and in effect from time to
time in such provinces or territories in Canada, as applicable.

            "Prime  Rate" means the rate of interest announced,  from  time  to
time, within Wells Fargo at its principal office in San Francisco as its "prime
rate," with the understanding  that  the  "prime  rate" is one of Wells Fargo's
prime rates (not necessarily the lowest of such rates)  and serves as the basis
upon which effective rates of interest are calculated for  those  loans  making
reference  thereto  and  is  evidenced  by  the  recording  thereof  after  its
announcement in such internal publications as Wells Fargo may designate.

            "Prime  Rate  Loan"  means  the  portion of the Advances that bears
interest at a rate determined by reference to the Prime Rate.

            "Projections" means Parent's forecasted  (a)  balance  sheets,  (b)
profit  and  loss  statements,  and (c) cash flow statements, all prepared on a
basis consistent with Parent's historical  financial  statements, together with
appropriate  supporting  details and a statement of underlying  assumptions  in
form and substance reasonably acceptable to Agent.
                                   30
<PAGE>

            "Pro Rata Share" means, as of any date of determination:

            (a)  with respect  to  a  U.S.  Lender's  obligation  to make U.S.
      Advances  and  receive payments of principal, interest, fees, costs,  and
      expenses with respect  thereto,  (i)  prior  to the U.S. Commitment being
      terminated or reduced to zero, the percentage  obtained  by  dividing (y)
      such  Lender's U.S. Commitment, by (z) the aggregate U.S. Commitments  of
      all U.S.  Lenders,  and  (ii)  from  and  after  the  time  that the U.S.
      Commitments  have  been  terminated  or  reduced  to zero, the percentage
      obtained by dividing (y) the aggregate outstanding  principal  amount  of
      such  U.S.  Lender's  U.S.  Advances  by  (z)  the  aggregate outstanding
      principal amount of all U.S. Advances,

            (b)  with respect to a U.S. Lender's obligation  to participate in
      Credit  Instruments,  to  reimburse  the Issuing Lender with  respect  to
      Credit Instruments, and to receive payments of fees with respect thereto,
      (i) prior to the U.S. Commitment being terminated or reduced to zero, the
      percentage obtained by dividing (y) such Lender's U.S. Commitment, by (z)
      the aggregate U.S. Commitments of all  U.S.  Lenders,  and  (ii) from and
      after the time that the U.S. Commitment has been terminated or reduced to
      zero,  the  percentage obtained by dividing (y) the aggregate outstanding
      principal  amount   of  such  Lender's  Advances  by  (z)  the  aggregate
      outstanding principal amount of all Advances,

            (c)  with respect  to  a  Canadian  Lender's  obligation  to  make
      Canadian  Advances  and  receive  payments  of principal, interest, fees,
      costs,  and  expenses with respect thereto, (i)  prior  to  the  Canadian
      Commitments being  terminated or reduced to zero, the percentage obtained
      by dividing (y) such  Canadian  Lender's  Canadian Commitment, by (z) the
      aggregate Canadian Commitments of all Canadian Lenders, and (ii) from and
      after  the time that the Canadian Commitments  have  been  terminated  or
      reduced  to  zero,  the percentage obtained by dividing (y) the aggregate
      outstanding principal  amount of such Canadian Lender's Canadian Advances
      by  (z)  the  aggregate outstanding  principal  amount  of  all  Canadian
      Advances

            (d)  with  respect  to all other matters as to a particular Lender
      (including the indemnification  obligations  arising under Section 16.7),
      the percentage obtained by dividing (i) such Lender's  Commitment by (ii)
      the  aggregate  amount of Commitments of all Lenders; provided,  however,
      that in the event  the  Commitments  have  been  terminated or reduced to
      zero, Pro Rata Share under this clause shall be the  percentage  obtained
      by  dividing  (A)  the  outstanding  principal  amount  of  such Lender's
      Advances  plus  such  Lender's  ratable portion of the Risk Participation
      Liability with respect to outstanding  Credit  Instruments,  by  (B)  the
      outstanding principal amount of all Advances plus the aggregate amount of
      the  Risk  Participation  Liability  with  respect  to outstanding Credit
      Instruments.

            "Post Closing Letter" means that certain letter,  dated  as  of the
date  hereof,  by  and  among  the  Borrowers and the Agent with respect to the
delivery of certain documents to the  Agent  after the Closing Date (as amended
or otherwise modified and in effect from time to time).

            "Purchase Money Indebtedness" means  Indebtedness  (other  than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of,  or  within  20  days  after,  the  acquisition of any fixed assets for the
                                   31
<PAGE>

purpose of financing all or any part of the  acquisition cost thereof, together
with any refinancings thereof under Section 7.1(e).

            "Qualified Import Letter of Credit"  means  a Letter of Credit that
(a)  is  issued  to  facilitate  the  purchase by a U.S. Borrower  of  Eligible
Inventory, (b) is in form and substance  acceptable to Agent, and (c) is issued
to  support  an  Underlying Letter of Credit  that  only  is  drawable  by  the
beneficiary thereof by the presentation of, among other documents, a negotiable
document of title  that  (x)  is  in  the  name of Agent, a U.S. Borrower or an
Approved Customs Broker and has not been consigned  to  any third parties other
than  to  the  Agent,  a  U.S. Borrower or an Approved Customs  Broker  (either
directly or by means of endorsements),  and  (y)  was  issued by the carrier or
consolidator respecting the subject Inventory.

            "Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower or a Subsidiary of any Borrower and
the improvements thereto.

            "Record" means information that is inscribed  on  a tangible medium
or  which  is  stored  in  an electronic or other medium and is retrievable  in
perceivable form.

            "Remedial Action"  means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor,  assess,  evaluate,  or  in any way address
Hazardous  Materials  in  the  indoor  or outdoor environment, (b)  prevent  or
minimize a release or threatened release  of Hazardous Materials so they do not
migrate or endanger or threaten to endanger  public  health  or  welfare or the
indoor   or   outdoor   environment,  (c)  perform  any  pre-remedial  studies,
investigations, or post-remedial  operation  and maintenance activities, or (d)
conduct any other actions authorized by 42 USC {section}9601.

            "Replacement Lender" has the meaning set forth in Section 15.2.

            "Report" has the meaning set forth in Section 16.17.

            "Required Lenders" means, at any time,  Lenders whose aggregate Pro
Rata Shares (calculated under clause (d) of the definition  of Pro Rata Shares)
equal or exceed 51%.

            "Reserves"  means  such  reserves  as  Agent,  from  time  to  time
determines  in  its  Permitted  Discretion  as  being  appropriate  to  reflect
impediments   to  Lender  Group's  ability  to  realize  upon  the  Collateral,
including,  without   limitation,  Bank  Product  Reserves,  Canadian  Priority
Payables and Inventory Reserves.

            "Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by  the  Board of Governors of the Federal Reserve System
(or  any  successor  Governmental  Authority)   for   determining  the  reserve
requirements  (including  any  basic,  supplemental,  marginal,   or  emergency
reserves) that are in effect on such date with respect to eurocurrency  funding
(currently  referred  to as "eurocurrency liabilities") of that Lender, but  so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
                                   32
<PAGE>

            "Revolver Usage"  means  the  U.S.  Revolver Usage and the Canadian
Revolver Usage.

            "Risk Participation Liability" means,  (i)  as  to  each  Letter of
Credit,  all reimbursement obligations of U.S. Borrowers to the Issuing  Lender
with respect  to  an L/C Undertaking, consisting of (a) the amount available to
be drawn or which may  become  available to be drawn, (b) all amounts that have
been paid by the Issuing Lender  to  the  Underlying  Issuer  to the extent not
reimbursed by U.S. Borrowers, whether by the making of an Advance or otherwise,
and  (c)  all  accrued  and  unpaid  interest, fees, and expenses payable  with
respect  thereto; and (ii) as to each Bankers'  Acceptance,  all  reimbursement
obligations   of   U.S.  Borrowers  to  Agent  with  respect  to  the  Bankers'
Acceptances, consisting of (a) the Acceptance Face Amount, (b) all amounts that
have been paid by Agent to the extent not reimbursed by U.S. Borrowers, whether
by the making of an  Advance  or  otherwise,  and  (c)  all  accrued and unpaid
interest, fees, and expenses payable with respect thereto.

            "S&P" means Standard & Poor's Rating Group, or its successor.

            "SEC"  means  the United States Securities and Exchange  Commission
and any successor thereto.

            "Seasonal Period" means the period commencing on October 15 through
and including December 15 of each Fiscal Year.

            "Securities Account"  means  a "securities account" as that term is
defined in the Code.

            "Settlement" has the meaning set forth in Section 2.2(f)(i).

            "Settlement Date" has the meaning set forth in Section 2.2(f)(i).

            "Solvent" means, with respect  to  any Person on a particular date,
that, at fair valuations, the sum of such Person's  assets  is greater than all
of such Person's debts.

            "Specified Collateral" means Accounts, Inventory  and  any proceeds
of the foregoing.

            "Stock"   means   all   shares,   options,   warrants,   interests,
participations, or other equivalents (regardless of how designated) of  or in a
Person,  whether  voting or nonvoting, including common stock, preferred stock,
or any other "equity  security"  (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).

            "Subsidiary" of a Person  means a corporation, partnership, limited
liability company, or other entity in which  that Person directly or indirectly
owns or controls the shares of Stock having ordinary  voting  power  to elect a
majority  of  the board of directors (or appoint other comparable managers)  of
such corporation, partnership, limited liability company, or other entity.
                                   33
<PAGE>

            "Swing  Lender"  means  WFRF  in  its  capacity as the Swing Lender
hereunder.

            "Swing Loan(s)" has the meaning set forth in Section 2.2.A.(d)(i).

            "Synthetic  Lease"  means  any lease of goods  or  other  property,
whether real or personal, which is treated as an operating lease under GAAP and
as a loan or financing for United States income tax purposes.

            "Taxes" has the meaning set forth in Section 16.11.

            "Underlying Issuer" means a  third  Person which is the beneficiary
of an L/C Undertaking and which has issued a letter of credit at the request of
the Issuing Lender for the benefit of Borrowers,  and in the case of a proposed
Qualified Import Letter of Credit, has agreed, in writing, to hold documents of
title as agent for Agent.

            "Underlying Letter of Credit" means a letter  of  credit  that  has
been issued by an Underlying Issuer.

            "Unused Line Fee" has the meaning set forth in Section 2.10(a).

            "U.S. Advances" has the meaning set forth in Section 2.1(a)(i).

            "U.S.  Availability" means as of any date of determination, if such
date is a Business Day,  and  determined  at  the  close  of  business  on  the
immediately  preceding Business Day, the amount determined by Agent at any time
in its Permitted Discretion equal to (x) the lesser of (i) the Maximum Revolver
Amount minus the  Canadian  Revolver  Usage,  and (ii) the U.S. Borrowing Base,
minus (y) the U.S. Revolver Usage (in each case, determined after giving effect
to all sublimits and Reserves then applicable hereunder).

            "U.S. Borrowers" means Borrowers other than Bombay Canada.

            "U.S. Borrowing Base" means, as of  any  date  of determination, an
amount equal to:
            (a)  the lesser of (i) 85% of the Net Retail Liquidation  Value of
      Eligible Inventory or (ii) 75% of the Cost of Eligible Inventory owned by
      a U.S. Borrower; provided, however, that  during the Seasonal Period, the
      advance  rate  shall  be  the lesser of 90% of the Net Retail Liquidation
      Value of Eligible Inventory  owned by a U.S. Borrower and 80% of the Cost
      of Eligible Inventory owned by a U.S. Borrower, plus

            (b)  85% of the face amount of Eligible Credit Card Receivables of
      a U.S. Borrower, plus

            (c)  85% of the face amount  of  Eligible  Accounts  of Wholesale,
      plus

            (d)  during  the  Adjusted Seasonal Period, the Adjusted  Seasonal
      Period Amount minus

            (e)  the aggregate  of  such Reserves as may have been established
      by Agent.
                                   34
<PAGE>

            "U.S. Commitments" means with respect to each U.S. Lender, its U.S.
Commitment, and, with respect to all U.S.  Lenders,  their U.S. Commitments, in
each case as such Dollar amounts are set forth beside  such  U.S. Lender's name
under the applicable heading on Schedule C-1 (as such may be adjusted  pursuant
to  an  Accordion  Activation) or in the Assignment and Acceptance pursuant  to
which such U.S. Lender  became  a  U.S. Lender hereunder in accordance with the
provisions of Section 14.1

            "U.S. Lenders" means Lenders  which  make  U.S.  Advances  to  U.S.
Borrowers pursuant to each Lender's U.S. Commitment.

            "U.S.  Revolver  Usage" means, as of any date of determination, the
sum of (a) the then extant amount  of  outstanding  U.S. Advances, plus (b) the
then extant amount of the Letter of Credit Usage, plus  (c) the Acceptance Face
Amount.

            "Voidable Transfer" has the meaning set forth in Section 17.7.

            "Wells  Fargo"  means  Wells  Fargo Bank, National  Association,  a
national banking association.

            "WFRF" means Wells Fargo Retail Finance, LLC.

            "Wholesale"  means  Bailey  Street   Trading   Company  and  Bombay
International, Inc.

      1.2.  ACCOUNTING  TERMS.   All accounting terms not specifically  defined
herein shall be construed in accordance with GAAP applied on a consistent basis
by the accounting entity to which  they  refer.   When  used  herein,  the term
"financial statements" shall include the notes and schedules thereto.  Whenever
the  term  "Borrowers"  or  the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries  on a consolidated  basis  unless  the  context  clearly  requires
otherwise.  Unless  otherwise  expressly  provided  herein  or  unless Required
Lenders  otherwise  consent, all financial statements and reports furnished  to
Agent or any Lender hereunder shall be prepared, all financial computations and
determinations pursuant hereto shall be made, and all terms of an accounting or
financial nature shall be construed, in accordance with GAAP.

      1.3.  CODE.  Any  terms  used  in  this Agreement that are defined in the
Code shall be construed and defined as set  forth from time to time in the Code
unless otherwise defined herein, with the term  "instrument" being that defined
under Article 9 of the Code.

      1.4.  CONSTRUCTION.  Unless the context of  this  Agreement  or any other
Loan Document clearly requires otherwise, references to the plural include  the
singular, references to the singular include the plural, the terms "including",
"include"  and  "includes"  are  not  limiting."  The words "hereof," "herein,"
"hereby," "hereunder," and similar terms  in  this  Agreement or any other Loan
Document refer to this Agreement or such other Loan Document,  as  the case may
be,  as a whole and not to any particular provision of this Agreement  or  such
other  Loan  Document,  as  the  case  may  be.   Section,  subsection, clause,
schedule, and exhibit references herein are to this Agreement  unless otherwise
specified.  Any reference in this Agreement or in the other Loan  Documents  to
any   agreement,   instrument,  or  document  shall  include  all  alterations,
                                   35
<PAGE>

amendments,  changes,   extensions,   modifications,   renewals,  replacements,
substitutions,  joinders, and supplements, thereto and thereof,  as  applicable
(subject  to  any  restrictions   on  such  alterations,  amendments,  changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein).  Any  reference  herein to the repayment in full
or satisfaction in full of the Obligations shall  mean the repayment in full in
cash  (or  cash  collateralized in accordance with the  terms  hereof)  of  all
Obligations other  than  contingent  indemnification  Obligations that, at such
time,  are  allowed  by  the applicable member of the Lender  Group  to  remain
outstanding and are not required  to  be repaid or cash collateralized pursuant
to the provisions of this Agreement.  Any  reference herein to any Person shall
be construed to include such Person's successors  and assigns.  Any requirement
of a writing contained herein or in the other Loan Documents shall be satisfied
by the transmission of a Record and any Record transmitted  shall  constitute a
representation  and  warranty  as  to  the  accuracy  and  completeness  of the
information contained therein.  This Agreement and the other Loan Documents may
use  several  different limitations, tests or measurements to regulate the same
or similar matters.  All such limitations, tests and measurements are, however,
cumulative and  are to be performed in accordance with the terms thereof.  Text
which is shown in  italics (except for parenthesized italicized text), shown in
BOLD, shown IN ALL CAPITAL  LETTERS,  or  in  any combination of the foregoing,
shall be deemed to be conspicuous.  The words "may not" are prohibitive and not
permissive.   Any  reference to a Person's "knowledge"  (or  words  of  similar
import) are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent  investigation  with  respect  to  the  subject of such
"knowledge"  (whether or not such investigation has actually been  undertaken).
To the extent  that  this Agreement refers to ratings by S&P and Moody's and to
the extent that a rating  from one of such Persons ceases to be available, then
the rating by whichever of  S&P  or  Moody's continues to be available shall be
used as the sole rating for purposes of this Agreement.

      1.5.  SCHEDULES AND EXHIBITS.  All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.

2.    LOAN AND TERMS OF PAYMENT.

      2.1.  REVOLVER ADVANCES.

      2.1.A U.S. REVOLVER ADVANCES.

            (a)   Subject to the terms  and  conditions  of this Agreement, and
      during  the term of this Agreement, each U.S. Lender  agrees  (severally,
      not jointly  or jointly and severally) to make advances ("U.S. Advances")
      to U.S. Borrowers  in an amount at any one time outstanding not to exceed
      such U.S. Lender's Pro Rata Share of an amount equal to the lesser of (A)
      the  Maximum Revolver  Amount  less  Revolver  Usage,  or  (B)  the  U.S.
      Borrowing Base less U.S. Revolver Usage;

            (b)   Anything   to   the   contrary   in   this   Section   2.1.A.
      notwithstanding, Agent shall have the right without declaring an Event of
      Default,  to reduce its inventory advance rates or establish Reserves  in
      such amounts, and with respect to such matters, as Agent in its Permitted
      Discretion  shall  deem  necessary or appropriate, against U.S. Borrowing
      Base, including Reserves with respect to (i) sums that U.S. Borrowers are
                                   36
<PAGE>
      required to pay (such as taxes,  assessments,  insurance premiums, or, in
      the  case  of leased assets, rents or other amounts  payable  under  such
      leases) and  has failed to pay under any Section of this Agreement or any
      other Loan Document, (ii) amounts as determined by Agent in its Permitted
      Discretion based  on  noncompliance  with  the  covenants  set  forth  in
      Sections 6 and 7 (without duplication as to the Canadian Borrowing Base),
      and  (iii)  Bank  Products then provided or outstanding (based upon Wells
      Fargo's  or  its  Affiliate's  reasonable  determination  of  the  credit
      exposure in respect of then extant Bank Products), and (iv) amounts owing
      by U.S. Borrowers or  their  Subsidiaries  to  any  Person  to the extent
      secured  by  a Lien on, or trust over, any of the Collateral (other  than
      any  existing  Permitted   Lien  set  forth  on  Schedule  P-1  which  is
      specifically identified thereon as entitled to have priority over Agent's
      Liens), which Lien or trust,  in the Permitted Discretion of Agent likely
      would have a priority superior  to Agent's Liens (such as Liens or trusts
      in favor of landlords, warehousemen,  carriers,  mechanics,  materialmen,
      laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales,
      or other taxes where given priority under applicable law) in and  to such
      item of the Collateral.

            (c)   Amounts borrowed pursuant to this Section 2.1.A may be repaid
      and, subject to the terms and conditions of this Agreement, reborrowed at
      any time during the term of this Agreement.

      2.1.B CANADIAN REVOLVER ADVANCES.

            (a)   Subject  to  the terms and conditions of this Agreement,  and
      during  the  term  of this Agreement,  Canadian  Lenders  agree  to  make
      advances ("Canadian Advances") to Bombay Canada in an amount equal to (x)
      the lesser of (A) the  Maximum  Canadian  Revolver  Amount,  or  (B)  the
      Canadian  Borrowing  Base less Canadian Revolver Usage or (C) the Maximum
      Revolver  Amount  minus  Revolver  Usage;  provided,  that  (1)  Canadian
      Advances pursuant to  this  clause  (a)  shall  only  be made by Canadian
      Lenders   at   such   times   as  U.S.  Availability  is  equal  to   $0.
      Notwithstanding anything herein  to  the contrary, Borrowers may not make
      any payments on account of U.S. Advances until Bombay Canada's Obligation
      to Canadian Lenders have been paid in full in immediately available funds
      and there shall not exist any outstanding Canadian Advances.

            (b)   Anything   to   the   contrary   in   this   Section   2.1.B.
      notwithstanding, Agent shall have the right without declaring an Event of
      Default, to reduce its inventory advance rates  or  establish Reserves in
      such amounts, and with respect to such matters, as Agent in its Permitted
      Discretion  shall  deem  necessary or appropriate, against  the  Canadian
      Borrowing Base, including  Reserves  with respect to (i) sums that Bombay
      Canada  is  required  to  pay  (such  as  taxes,  assessments,  insurance
      premiums,  or,  in  the case of leased assets,  rents  or  other  amounts
      payable under such leases)  and  has  failed  to pay under any Section of
      this Agreement or any other Loan Document, (ii) as determined by Agent in
      its Permitted Discretion based on noncompliance  with  the  covenants set
      forth  in Sections 6 and 7 (without duplication as to the U.S.  Borrowing
      Base), (iii) Bank Products then provided or outstanding (based upon Wells
      Fargo's  or  its  Affiliate's  reasonable  determination  of  the  credit
      exposure in respect of then extant Bank Products), (iv) Canadian Priority
      Payables,  and  (v)  amounts  owing by Bombay Canada to any Person to the
      extent secured by a Lien on, or  trust over, any of the Collateral (other
                                   37
<PAGE>

      than any existing Permitted Lien set  forth  on  Schedule  P-1  which  is
      specifically identified thereon as entitled to have priority over Agent's
      Liens),  which Lien or trust, in the Permitted Discretion of Agent likely
      would have  a priority superior to Agent's Liens (such as Liens or trusts
      in favor of landlords,  warehousemen,  carriers,  mechanics, materialmen,
      laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales,
      or other taxes where given priority under applicable  law) in and to such
      item of the Collateral.

            (c)   Amounts  borrowed  pursuant  to  this Section 2.1.B.  may  be
      repaid and, subject to the terms and conditions  of this Agreement and if
      U.S.  Availability is equal to $0, reborrowed during  the  term  of  this
      Agreement.

      2.2.  BORROWING PROCEDURES AND SETTLEMENTS.

      2.2.A U.S. PROCEDURES AND SETTLEMENTS.

            (a)   PROCEDURE  FOR  BORROWING.   Each  Borrowing of U.S. Advances
      shall be made by an irrevocable written request  by  an Authorized Person
      of the Administrative Borrower delivered to Agent (which  notice  must be
      received  by  Agent no later than 1:00 p.m. (New York, New York time)  on
      the Business Day that is the requested Funding Date with respect to Prime
      Rate Loans and  subject  to  Section  2.12(b)  with respect to LIBOR Rate
      Loans, specifying (i) the amount of such Borrowing  of U.S. Advances, and
      (ii)  the  requested  Funding  Date, which shall be a Business  Day.   At
      Agent's  election,  in  lieu of delivering  the  above-described  written
      request, any Authorized Person  may  give Agent telephonic notice of such
      request  by  the required time.  In such  circumstances,  U.S.  Borrowers
      agree that any such telephonic notice will be confirmed in writing within
      24 hours of the giving of such notice and failure to provide such written
      confirmation shall not affect the validity of the request.

            (b)   AGENT'S  ELECTION.  Promptly after receipt of a request for a
      Borrowing of U.S. Advances  pursuant  to  Section  2.2.A.(a), Agent shall
      elect,  in  its  discretion,  (i) to have the terms of Section  2.2.A.(c)
      apply to such requested Borrowing  of  U.S.  Advances, or (ii) to request
      Swing  Lender  to  make a Swing Loan pursuant to  the  terms  of  Section
      2.2.A.(d) in the amount  of  the  requested  Borrowing  of U.S. Advances;
      provided, however, Swing Loans at any one time outstanding may not exceed
      $15,000,000; provided, further, that if (1) Swing Lender  declines in its
      sole discretion to make a Swing Loan pursuant to Section 2.2.A.(d), Agent
      shall  elect  to  have  the  terms  of  Section  2.2.A.(c) apply to  such
      requested  Borrowing  of  U.S. Advances, and (2) if a  notice  requesting
      LIBOR Rate Loan has been timely delivered pursuant to Section 2.12(b) and
      which is otherwise in accordance  with  Section  2.12(b), Agent shall not
      have the option to request Swing Lender to make such  Borrowing  of  U.S.
      Advances as a Swing Line Loan.

            (c)   MAKING OF LOANS.

                  (i)   In  the  event that Agent shall elect to have the terms
            of this Section 2.2(c)  apply  to  a  requested  Borrowing  of U.S.
            Advances  as  described  in  Section 2.2.A.(b), then promptly after
            receipt of a request for a Borrowing  of  U.S. Advances pursuant to
            Section 2.2.A.(a), Agent shall notify the U.S.  Lenders,  not later
                                   38
<PAGE>
            than  2:00  p.m.  (New  York,  New  York  time) on the Funding Date
            applicable thereto, by telecopy, telephone,  or  other similar form
            of transmission, of the requested Borrowing of U.S. Advances.  Each
            U.S.  Lender shall make the amount of such U.S. Lender's  Pro  Rata
            Share  of   the  requested  U.S.  Advance  available  to  Agent  in
            immediately available  funds,  to  Agent's  Account, not later than
            3:00 p.m. (New York, New York time) on the Funding  Date applicable
            thereto.   After  Agent's  receipt  of  the  proceeds of such  U.S.
            Advances, upon satisfaction of the applicable  conditions precedent
            set  forth  in  Section  3  hereof, Agent shall make  the  proceeds
            thereof  available to Administrative  Borrower  on  the  applicable
            Funding Date  by  transferring immediately available funds equal to
            such  proceeds  received  by  Agent  to  Administrative  Borrower's
            Designated  Account;   provided,  however,  that,  subject  to  the
            provisions of Section 2.2.A.(a),  Agent  shall not request any U.S.
            Lender  to make, and no U.S. Lender shall have  the  obligation  to
            make, any  U.S.  Advance  if Agent shall have actual knowledge that
            (1) one or more of the applicable conditions precedent set forth in
            Section 3 will not be satisfied  on  the requested Funding Date for
            the  Borrowing  of U.S. Advances unless  such  condition  has  been
            waived, or (2) the  requested  Borrowing  of  U.S.  Advances  would
            result  in  U.S.  Availability  being  less than $0 on such Funding
            Date.

                  (ii)  Unless Agent receives notice  from  a U.S. Lender on or
            prior to the Closing Date or, with respect to any Borrowing of U.S.
            Advances after the Closing Date, prior to 3:00 p.m.  (New York, New
            York  time)  on  the date of such Borrowing of U.S. Advances,  that
            such U.S. Lender will  not  make  available  as  and  when required
            hereunder to Agent for the account of U.S. Borrowers the  amount of
            that  U.S.  Lender's  Pro  Rata  Share  of  the  Borrowing  of U.S.
            Advances,  Agent may assume that each U.S. Lender has made or  will
            make such amount  available to Agent in immediately available funds
            on the Funding Date  and  Agent may (but shall not be so required),
            in reliance upon such assumption,  make available to U.S. Borrowers
            on such date a corresponding amount.  If and to the extent any U.S.
            Lender shall not have made its full  amount  available  to Agent in
            immediately  available  funds  and Agent in such circumstances  has
            made available to U.S. Borrowers  such  amount,  that  U.S.  Lender
            shall  on  the  Business  Day following such Funding Date make such
            amount available to Agent, together with interest at the Defaulting
            Lender Rate for each day during such period.  A notice submitted by
            Agent to any U.S. Lender with  respect  to amounts owing under this
            subsection  shall be conclusive, absent manifest  error.   If  such
            amount is so made available, such payment to Agent shall constitute
            such U.S. Lender's  U.S.  Advance  on the date of Borrowing of U.S.
            Advances for all purposes of this Agreement.  If such amount is not
            made available to Agent on the Business  Day  following the Funding
            Date, Agent will notify Administrative Borrower  of such failure to
            fund  and,  upon  demand  by Agent, U.S. Borrowers shall  pay  such
            amount to Agent for Agent's account, together with interest thereon
            for each day elapsed since  the  date  of  such  Borrowing  of U.S.
            Advances, at a rate per annum equal to the interest rate applicable
            at  the time to the U.S. Advances composing such Borrowing of  U.S.
            Advances.   The failure of any U.S. Lender to make any U.S. Advance
            on any Funding  Date shall not relieve any other U.S. Lender of any
                                   39
<PAGE>
            obligation hereunder  to  make a U.S. Advance on such Funding Date,
            but no U.S. Lender shall be  responsible  for  the  failure  of any
            other U.S. Lender to make the U.S. Advance to be made by such other
            U.S. Lender on any Funding Date.

            (d)   MAKING OF SWING LOANS.

                  (i)   In  the  event  Agent  shall elect, with the consent of
            Swing Lender, as a U.S. Lender, to have  the  terms of this Section
            2.2.A.(d)  apply to a requested Borrowing as described  in  Section
            2.2.A.(b), Swing  Lender  as  a  U.S.  Lender  shall make such U.S.
            Advance in the amount of such Borrowing (any such U.S. Advance made
            solely  by  Swing  Lender  as  a  Lender  pursuant to this  Section
            2.2.A.(d)  being  referred  to  as  a "Swing Loan"  and  such  U.S.
            Advances being referred to collectively as "Swing Loans") available
            to  U.S.  Borrowers  on  the  Funding Date  applicable  thereto  by
            transferring   immediately  available   funds   to   Administrative
            Borrower's Designated  Account.  Each Swing Loan shall be deemed to
            be a U.S. Advance hereunder  and  shall be subject to all the terms
            and conditions applicable to other  U.S.  Advances,  except that no
            such Swing Loan shall be eligible to be a LIBOR Rate Loan  and  all
            payments  on  any  Swing Loan shall be payable to Swing Lender as a
            U.S. Lender solely for  its own account (and for the account of the
            holder of any participation  interest  with  respect  to such Swing
            Loan).   Subject  to the provisions of Section 2.2(g), Agent  shall
            not request Swing Lender as a U.S. Lender to make, and Swing Lender
            as a U.S. Lender shall not make, any Swing Loan if Agent has actual
            knowledge  that (i)  one  or  more  of  the  applicable  conditions
            precedent set  forth  in  Section  3  will  not be satisfied on the
            requested  Funding  Date for the applicable Borrowing  unless  such
            condition has been waived,  or  (ii)  the requested Borrowing would
            result in U.S. Availability being equal to $0 on such Funding Date.
            Swing Lender as a U.S. Lender shall not  otherwise  be  required to
            determine whether the applicable conditions precedent set  forth in
            Section  3  have  been  satisfied  on  the  Funding Date applicable
            thereto prior to making, in its sole discretion, any Swing Loan.

                  (ii)  The  Swing  Loans shall be secured  by  Agent's  Liens,
            constitute Advances and Obligations hereunder, and bear interest at
            the rate applicable from  time  to  time to Advances that are Prime
            Rate Loans.

            (e)   AGENT ADVANCES.

                  (i)   Agent hereby is authorized  by  U.S.  Borrowers and the
            U.S.  Lenders,  from  time to time in Agent's sole discretion,  (1)
            after the occurrence and  during the continuance of a Default or an
            Event  of  Default, or (2) at  any  time  that  any  of  the  other
            applicable conditions  precedent  set  forth  in Section 3 have not
            been  satisfied, to make Advances to U.S. Borrowers  on  behalf  of
            Lenders  that Agent, in its Permitted Discretion deems necessary or
            desirable (A) to preserve or protect the Collateral, or any portion
            thereof,  (B)  to  enhance  the  likelihood  of  repayment  of  the
            Obligations  (other  than  the Bank Product Obligations), or (C) to
            pay any other amount chargeable  to  U.S. Borrowers pursuant to the
            terms of this Agreement, including Lender  Group  Expenses  and the
            costs,  fees,  and  expenses  described  in  Section 10 (any of the
                                     40
<PAGE>

            Advances described in this Section 2.2.A.(e) shall  be  referred to
            as "Agent Advances").  Each Agent Advance shall be deemed  to  be a
            U.S.  Advance  hereunder  and shall be subject to all the terms and
            conditions applicable to other  U.S.  Advances, except that no such
            Agent Advance shall be eligible to be a  LIBOR  Rate  Loan  and all
            payments  thereon  shall  be  payable  to  Agent solely for its own
            account  (and  for the account of the holder of  any  participation
            interest with respect to such Agent Advance).

                  (ii)  Agent  Advances  shall  be  repayable  on  demand,  and
            secured by Agent's Liens granted to Agent under the Loan Documents,
            shall constitute Advances and Obligations hereunder, and shall bear
            interest  at the rate applicable from time to time to Advances that
            are Prime Rate Loans.

            (f)   SETTLEMENT.   It  is  agreed  that  each U.S. Lender's funded
      portion of the U.S. Advances is intended by the U.S. Lenders to equal, at
      all  times,  such  U.S. Lender's Pro Rata Share of the  outstanding  U.S.
      Advances.  Such agreement  notwithstanding,  Agent, Swing Lender, and the
      other Lenders agree (which agreement shall not  be  for the benefit of or
      enforceable   by  U.S.  Borrowers)  that  in  order  to  facilitate   the
      administration of this Agreement and the other Loan Documents, settlement
      among them as to  the  U.S. Advances, the Swing Loans, and Agent Advances
      shall take place on a periodic  basis  in  accordance  with the following
      provisions:

                  (i)   Agent shall request settlement ("Settlement")  with the
            U.S. Lenders on a periodic basis contemplated to be weekly, or on a
            more  frequent  basis  if so determined by Agent, (1) on behalf  of
            Swing Lender, with respect  to each outstanding Swing Loan, (2) for
            itself, with respect to each Agent Advance, and (3) with respect to
            U.S.  Borrowers' or their Subsidiaries'  Collections  received  (if
            applicable),  as to each by notifying the U.S. Lenders by telecopy,
            telephone, or other similar form of transmission, of such requested
            Settlement, no  later  than  2:00 p.m. (New York, New York time) on
            the Business Day immediately prior  to  the  date of such requested
            Settlement  (the  date  of  such  requested  Settlement  being  the
            "Settlement Date").  Such notice of a Settlement Date shall include
            a  summary  statement of the amount of outstanding  U.S.  Advances,
            Swing Loans,  and  Agent  Advances  for  the period since the prior
            Settlement  Date.   Subject to the terms and  conditions  contained
            herein  (including Section  2.2.C.(a)):  (y)  if  a  U.S.  Lender's
            balance of  the  U.S.  Advances  (including  Swing  Loans and Agent
            Advances)  exceeds  such U.S. Lender's Pro Rata Share of  the  U.S.
            Advances  (including Swing  Loans  and  Agent  Advances)  as  of  a
            Settlement Date, then Agent shall, by no later than 12:00 p.m. (New
            York,  New  York   time)   on  the  Settlement  Date,  transfer  in
                                   41
<PAGE>
            immediately available funds  to the account of such U.S. Lender (as
            such U.S. Lender may designate), an amount such that each such U.S.
            Lender  shall,  upon  receipt  of  such  amount,  have  as  of  the
            Settlement Date, its Pro Rata Share of the U.S. Advances (including
            Swing Loans and Agent Advances), and (z) if a U.S. Lender's balance
            of the U.S. Advances (including  Swing Loans and Agent Advances) is
            less than such U.S. Lender's Pro Rata  Share  of  the U.S. Advances
            (including Swing Loans and Agent Advances) as of a Settlement Date,
            such U.S. Lender shall no later than 12:00 p.m. (New York, New York
            time)  on  the  Settlement  Date transfer in immediately  available
            funds to Agent's Account, an amount such that each such U.S. Lender
            shall, upon transfer of such  amount,  have  as  of  the Settlement
            Date,  its  Pro  Rata  Share of the U.S. Advances (including  Swing
            Loans and Agent Advances).   Such  amounts  made available to Agent
            under  clause (z) of the immediately preceding  sentence  shall  be
            applied  against  the amounts of the applicable Swing Loan or Agent
            Advances and, together with the portion of such Swing Loan or Agent
            Advances representing  Swing Lender's Pro Rata Share thereof, shall
            constitute U.S. Advances  of such U.S. Lenders.  If any such amount
            is not made available to Agent by any U.S. Lender on the Settlement
            Date applicable thereto to the extent required by the terms hereof,
            Agent shall be entitled to  recover  for its account such amount on
            demand from such U.S. Lender together  with interest thereon at the
            Defaulting Lender Rate.

                  (ii)  In determining whether a U.S.  Lender's  balance of the
            U.S. Advances, Swing Loans, and Agent Advances is less  than, equal
            to, or greater than such U.S. Lender's Pro Rata Share of  the  U.S.
            Advances,  Swing Loans, and Agent Advances as of a Settlement Date,
            Agent shall,  as  part  of  the  relevant Settlement, apply to such
            balance the portion of payments actually  received in good funds by
            Agent with respect to principal, interest and  fees payable by U.S.
            Borrowers and allocable to the U.S. Lenders hereunder, and proceeds
            of Collateral.  To the extent that a net amount is owed to any such
            U.S.  Lender  after  such  application,  such net amount  shall  be
            distributed  by  Agent to that U.S. Lender as  part  of  such  next
            Settlement.

                  (iii) Between Settlement Dates, Agent, to the extent no Agent
            Advances or Swing  Loans  are  outstanding,  may  pay over to Swing
            Lender any payments received by Agent, that in accordance  with the
            terms  of  this Agreement would be applied to the reduction of  the
            U.S. Advances,  for application to Swing Lender's Pro Rata Share of
            the  U.S.  Advances  constituting  Swing  Loans.   If,  as  of  any
            Settlement Date,  repayments or Collections (if applicable) of U.S.
            Borrowers or their Subsidiaries received since the then immediately
            preceding Settlement  Date  have been applied to Swing Lender's Pro
            Rata Share of the U.S. Advances  other  than  to  Swing  Loans,  as
            provided  for  in  the previous sentence, Swing Lender shall pay to
            Agent for the accounts  of the U.S. Lenders, and Agent shall pay to
            the U.S. Lenders, to be applied to the outstanding U.S. Advances of
            such U.S. Lenders, an amount such that each U.S. Lender shall, upon
            receipt of such amount, have,  as  of such Settlement Date, its Pro
            Rata  Share  of  the  U.S.  Advances.  During  the  period  between
            Settlement Dates, Swing Lender  with  respect to Swing Loans, Agent
            with respect to Agent Advances, and each  U.S.  Lender  (subject to
            the  effect of letter agreements between Agent and individual  U.S.
            Lenders)  with  respect to the U.S. Advances other than Swing Loans
            and Agent Advances, shall be entitled to interest at the applicable
            rate or rates payable  under  this Agreement on the daily amount of
            funds employed by Swing Lender,  Agent,  or  the  U.S.  Lenders, as
            applicable.
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<PAGE>

            (g)   OPTIONAL   OVERADVANCES.   Any  contrary  provision  of  this
      Agreement notwithstanding,  the  U.S.  Lenders  hereby authorize Agent or
      Swing  Lender, as applicable, and Agent or Swing Lender,  as  applicable,
      may, but  is  not  obligated to, knowingly and intentionally, continue to
      make  U.S.  Advances  (including   Swing   Loans)   to   U.S.   Borrowers
      notwithstanding  that  an Overadvance exists or thereby would be created,
      so long as (i) after giving effect to such U.S. Advances (including Swing
      Loans), the then extant amount of the U.S. Revolver Usage does not exceed
      the U.S. Borrowing Base  by  more  than  five  percent  (5%)  of the then
      available  U.S.  Borrowing  Base,  (ii) after giving effect to such  U.S.
      Advances, (including Swing Loans) the  outstanding  U.S.  Revolver  Usage
      (except  for  and  excluding  amounts  charged  to  the  Loan Account for
      interest,  fees,  or  Lender  Group  Expenses) does not exceed  the  U.S.
      Commitments, and (iii) at the time of the making of any such U.S. Advance
      (including any Swing Loan), Agent does  not  believe, in good faith, that
      the Overadvance created by such U.S. Advance will be outstanding for more
      than 45 days.  The foregoing provisions are for  the exclusive benefit of
      Agent,  Swing Lender, and U.S. Lenders and are not  intended  to  benefit
      U.S. Borrowers  in  any  way.   The  U.S.  Advances  and  Swing Loans, as
      applicable,  that  are  made  pursuant  to  this Section 2.2(g) shall  be
      subject to the same terms and conditions as any  other  U.S.  Advance  or
      Swing Loan, as applicable, except that they shall not be eligible for the
      LIBOR  Option  and  the  rate of interest applicable thereto shall be the
      rate  applicable  to  U.S. Advances  that  are  Prime  Rate  Loans  under
      Section 2.5(d) hereof without  regard  to  the  presence  or absence of a
      Default or Event of Default.

                        A.    In the event Agent obtains actual knowledge  that
                  the  U.S. Revolver Usage exceeds the amounts permitted by the
                  preceding  paragraph,  regardless of the amount of, or reason
                  for, such excess, Agent  shall notify U.S. Lenders as soon as
                  practicable (and prior to  making  any  (or  any  additional)
                  intentional  Overadvances  (except for and excluding  amounts
                  charged to the Loan Account  for  interest,  fees,  or Lender
                  Group  Expenses)  unless  Agent  determines that prior notice
                  would  result  in  imminent  harm to the  Collateral  or  its
                  value), and U.S. Lenders shall,  together with Agent, jointly
                  determine the terms of arrangements that shall be implemented
                  with  U.S.  Borrowers   and  intended  to  reduce,  within  a
                  reasonable time, the outstanding principal amount of the U.S.
                  Advances to U.S. Borrowers to  an  amount  permitted  by  the
                  preceding  paragraph.   In the event Agent or any U.S. Lender
                  disagrees over the terms  of  reduction  or  repayment of any
                  Overadvance,  the  terms  of  reduction or repayment  thereof
                  shall be implemented according  to  the  determination of the
                  Required Lenders.

                        B.    Each  U.S.  Lender shall be obligated  to  settle
                  with Agent as provided in Section 2.2.A.(f) for the amount of
                  such   Lender's   Pro  Rata  Share   of   any   unintentional
                  Overadvances by Agent  reported  to  such  U.S.  Lender,  any
                  intentional Overadvances made as permitted under this Section
                  2.2.A.(g),  and  any Overadvances resulting from the charging
                  to  the Loan Account  of  interest,  fees,  or  Lender  Group
                  Expenses.
                                   43
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            (h)   ACCORDION  OPTION.   Unless  a Default or an Event of Default
      has occurred and is then continuing, so long  as Borrowers shall not have
      elected  to permanently reduce the Commitments hereunder  and  except  as
      otherwise  provided herein, Administrative Borrower may make a maximum of
      1 request that  the  Accordion  Lenders  increase  their U.S. Commitments
      hereunder (such increase, the "Accordion Activation"); provided, that (i)
      Administrative Borrower shall have made such request  subsequent  to  the
      Closing  Date but prior to September 15, 2007, (ii) in no event shall the
      U.S. Commitments  of  the Accordion Lenders be increased pursuant to this
      Section 2.2.A.(h) by an  amount  which  exceeds,  in  the  aggregate, the
      Accordion Amount, (iii) in no event shall the Commitment of  all  Lenders
      be  increased  under  this  Section  2.2.A.(h)  so  as  to exceed, in the
      aggregate,  the  Maximum  Revolver  Amount,  (iv) in no event  shall  the
      Commitments of all U.S. Lenders be increased under this Section 2.2.A.(h)
      so  as to exceed $157,000,000 (v) no Default or  Event  of  Default  will
      occur  as  a result of such Accordion Activation, and (vi) U.S. Borrowers
      shall pay Agent  (for  the  ratable  benefit  of  the  Accordion Lenders,
      subject to any letter agreement between Agent and Accordion  Lenders), an
      Accordion Activation Fee pursuant to the terms of the Fee Letter.  Upon a
      request by Administrative Borrower hereunder, each Accordion Lender shall
      increase  its  U.S.  Commitment  by  an  amount  equal  to  its Accordion
      Commitment.   The amount of each Accordion Lender's Accordion  Commitment
      is set forth opposite  its  name  on  Schedule  C-1 annexed hereto.  Each
      Accordion  Lender  increasing  its Commitment pursuant  to  this  Section
      2.2.A.(h) shall execute a Confirmation  of  Increase in Commitment in the
      form  of  Exhibit  C-2 attached hereto (a "Confirmation  of  Increase  in
      Commitment").  On the effective date of the Accordion Activation effected
      in accordance with this  Section  2.2.A.(h),  Schedule C-1 annexed hereto
      shall  be  deemed  to  be  amended  to  reflect  (a) the  name,  address,
      Commitment, and Pro Rata Share of each U.S. Lender,  and  (B) the Maximum
      Revolver  Amount  and  U.S.  Commitments  as  increased by such Accordion
      Activation.

      2.2.B CANADIAN BORROWING PROCEDURES AND SETTLEMENTS.

            (a)   PROCEDURE FOR BORROWING.  Each Borrowing of Canadian Advances
      shall be made by an irrevocable written request  by  an Authorized Person
      of Bombay Canada delivered to Canadian Agent, with a copy to Agent (which
      notice must be received by Canadian Agent and Agent no  later  than  1:00
      p.m.  (New York, New York time) on the Business Day that is the requested
      Funding  Date  with  respect  to  Prime Rate Loans and subject to Section
      2.12(b) with respect to LIBOR Rate  Loans,  specifying  (i) the amount of
      such Borrowing of Canadian Advances, and (ii) the requested Funding Date,
      which shall be a Business Day.  At Canadian Agent's election,  in lieu of
      delivering the above-described written request, any Authorized Person  of
      Bombay  Canada  may give Canadian Agent telephonic notice of such request
      by the required time.   In  such circumstances, Bombay Canada agrees that
      any such telephonic notice will be confirmed in writing to Canadian Agent
      and Agent within 24 hours of  the  giving  of  such notice and failure to
      provide such written confirmation shall not affect  the  validity  of the
      request.

            (b)   AGENT'S ELECTION.  Promptly after receipt of a request for  a
      Borrowing  of  Canadian  Advances pursuant to Section 2.2.B.(a), Canadian
      Agent shall elect, in its  discretion,  (i) to  have the terms of Section
      2.2.B.(c) apply to such requested Borrowing, or (ii)  to request Canadian
      Agent as a Canadian Lender to make a Canadian Swing Loan  pursuant to the
                                   44
<PAGE>

      terms  of  Section  2.2.B.(d)  in  the amount of the requested Borrowing;
      provided,  further,  that if (1) Canadian  Agent  declines  in  its  sole
      discretion to make a Canadian  Swing  Loan pursuant to Section 2.2.B.(d),
      Canadian Agent shall elect to have the  terms  of Section 2.2.B.(c) apply
      to such requested Borrowing, and (2) if a notice  requesting  LIBOR  Rate
      Loan  has been timely delivered pursuant to Section 2.12(b) and otherwise
      in accordance  with  Section  2.12(b),  Canadian Agent shall not have the
      option as a Canadian Lender to make such  Borrowing  as  a Canadian Swing
      Loan.

            (c)   MAKING OF LOANS.

                  (i)   In  the event that Canadian Agent shall elect  to  have
            the terms of this  Section 2.2.B.(c) apply to a requested Borrowing
            of Canadian Advances  as described in Section 2.2(b), then promptly
            after receipt of a request  for  a  Borrowing  pursuant  to Section
            2.2(a),  Canadian  Agent  shall notify Canadian Lenders, not  later
            than  2:00 p.m. (New York, New  York  time)  on  the  Funding  Date
            applicable  thereto,  by telecopy, telephone, or other similar form
            of transmission, of the  requested  Borrowing of Canadian Advances.
            Each  Canadian  Lender  shall  make  the amount  of  such  Canadian
            Lender's  Pro  Rata Share of the requested  Borrowing  of  Canadian
            Advances available  to  Canadian  Agent  in  immediately  available
            funds,  as  specified  by Canadian Agent, not later than 3:00  p.m.
            (New York, New York time)  on  the Funding Date applicable thereto.
            After Canadian Agent's receipt of  the  proceeds  of  such Canadian
            Advances, upon satisfaction of the applicable conditions  precedent
            set  forth  in  Section  3  hereof,  Canadian  Agent shall make the
            proceeds  thereof  available  to  Bombay  Canada on the  applicable
            Funding Date by transferring immediately available  funds  equal to
            such  proceeds  received  by  Canadian  Agent  to  Bombay  Canada's
            Designated   Account;  provided,  however,  that,  subject  to  the
            provisions of  Section 2.2(g), Canadian Agent shall not request any
            Canadian Lender  to  make,  and  no  Canadian Lender shall have the
            obligation to make, any Canadian Advance  if  Canadian  Agent shall
            have  actual  knowledge  that  (1)  one  or  more of the applicable
            conditions precedent set forth in Section 2.2.B.(a)  and  Section 3
            will  not  be  satisfied  on  the  requested  Funding  Date for the
            applicable Borrowing of Canadian Advances unless such condition has
            been  waived,  or (2) the requested Borrowing of Canadian  Advances
            would result in  Canadian  Availability  being  equal to $0 on such
            Funding Date.

                  (ii)  Unless  Canadian  Agent  receives  notice  of  Canadian
            Advances from a Canadian Lender on or prior to the Closing Date or,
            with  respect  to  any  Borrowing  of Canadian Advances  after  the
            Closing Date, prior to 3:00 p.m. (New  York,  New York time) on the
            date  of  such Borrowing of Canadian Advances, that  such  Canadian
            Lender will  not  make  available as and when required hereunder to
            Canadian Agent for the account  of Bombay Canada the amount of that
            Canadian  Lender's Pro Rata Share  of  the  Borrowing  of  Canadian
            Advances, Canadian  Agent  may assume that each Canadian Lender has
            made  or  will make such amount  available  to  Canadian  Agent  in
            immediately  available funds on the Funding Date and Canadian Agent
            may  (but  shall  not  be  so  required),  in  reliance  upon  such
            assumption,  make  available  to  Bombay  Canada  on  such  date  a
                                   45
<PAGE>

            corresponding  amount.   If  and  to the extent any Canadian Lender
            shall not have made its full amount  available to Canadian Agent in
            immediately   available   funds   and  Canadian   Agent   in   such
            circumstances has made available to Bombay Canada such amount, that
            Canadian Lender shall on the Business  Day  following  such Funding
            Date  make  such amount available to Canadian Agent, together  with
            interest at the  Defaulting  Lender  Rate  for each day during such
            period.   A  notice  submitted by Canadian Agent  to  any  Canadian
            Lender with respect to amounts owing under this subsection shall be
            conclusive, absent manifest  error.   If  such  amount  is  so made
            available,  such  payment  to  Canadian Agent shall constitute such
            Canadian Lender's Canadian Advance  on  the  date  of  Borrowing of
            Canadian  Advances  for  all  purposes of this Agreement.  If  such
            amount is not made available to  Canadian Agent on the Business Day
            following  the  Funding Date, Canadian  Agent  will  notify  Bombay
            Canada of such failure  to fund and, upon demand by Canadian Agent,
            Bombay Canada shall pay such  amount to Canadian Agent for Canadian
            Agent's  account,  together with  interest  thereon  for  each  day
            elapsed since the date of such Borrowing of Canadian Advances, at a
            rate per annum equal to the interest rate applicable at the time to
            the Canadian Advances composing such Borrowing.  The failure of any
            Canadian Lender to make  any  Canadian Advances on any Funding Date
            shall  not  relieve any other Canadian  Lender  of  any  obligation
            hereunder to  make  a Canadian Advance on such Funding Date, but no
            Canadian Lender shall  be  responsible for the failure of any other
            Canadian Lender to make the  Canadian  Advance  to  be made by such
            other Lender on any Funding Date.

            (d)   MAKING OF CANADIAN SWING LOANS.

                  (i)   In the event Canadian Agent shall elect,  as a Canadian
            Lender,  to  have  the terms of this Section 2.2.B.(d) apply  to  a
            requested Borrowing  of  Canadian  Advances as described in Section
            2.2.B.(b),  Canadian Agent as a Canadian  Lender  shall  make  such
            Canadian Advance in the amount of such Borrowing (any such Canadian
            Advance made solely by Canadian Agent as a Canadian Lender pursuant
            to this Section  2.2.B.(d)  being  referred to as a "Canadian Swing
            Loan" and such Canadian Advances being  referred to collectively as
            "Canadian Swing Loans") available to Bombay  Canada  on the Funding
            Date applicable thereto by transferring immediately available funds
            to  Bombay Canada's Designated Account.  Each Canadian  Swing  Loan
            shall  be  deemed  to  be a Canadian Advance hereunder and shall be
            subject  to  all  the terms  and  conditions  applicable  to  other
            Canadian Advances, except that no such Canadian Swing Loan shall be
            eligible to be a LIBOR  Rate  Loan and all payments on any Canadian
            Swing Loan shall be payable to  Canadian Agent as a Canadian Lender
            solely for its own account (and for  the  account  of the holder of
            any  participation  interest  with  respect to such Canadian  Swing
            Loan).  Canadian Agent shall not make  any  Canadian  Swing Loan if
            Canadian  Agent  has actual knowledge that (i) one or more  of  the
            applicable conditions  precedent set forth in Section 2.2.B.(a) and
            Section 3 will not be satisfied  on  the requested Funding Date for
            the applicable Borrowing unless such condition  has been waived, or
            (ii) the requested Borrowing would result in Canadian  Availability
            being  equal  to  $0  on  such Funding Date.  Canadian Agent  as  a
                                   46
<PAGE>

            Canadian  Lender  shall  not otherwise  be  required  to  determine
            whether the applicable conditions  precedent set forth in Section 3
            have been satisfied on the Funding Date applicable thereto prior to
            making, in its sole discretion, any Canadian Swing Loan.

                  (ii)  The Canadian Swing Loans  shall  be  secured by Agent's
            Liens, constitute Canadian Advances and Obligations  hereunder, and
            bear interest at the rate applicable from time to time  to Canadian
            Advances that are Prime Rate Loans.

            (e)   SETTLEMENT.  It is agreed that each Canadian Lender's  funded
      portion  of the Canadian Advances is intended by the Canadian Lenders  to
      equal, at  all  times,  such  Canadian  Lender's  Pro  Rata  Share of the
      outstanding Canadian Advances.  Such agreement notwithstanding,  Canadian
      Agent  and  Canadian  Lenders  and  Agent  and other Lenders agree (which
      agreement shall not be for the benefit of or  enforceable  by  Borrowers)
      that in order to facilitate the administration of this Agreement  and the
      other  Loan  Documents,  settlement  among  Canadian  Agent  and Canadian
      Lenders  as  to the Canadian Advances and the Canadian Swing Loans  shall
      take  place  on  a  periodic  basis  in  accordance  with  the  following
      provisions:

                  (i)   Canadian   Agent  shall  request  Settlement  with  the
            Canadian Lenders on a periodic  basis contemplated to be weekly, or
            on a more frequent basis if so determined by Canadian Agent, (1) on
            behalf of Canadian Agent, with respect to each outstanding Canadian
            Swing Loan, (2) with respect to Bombay  Canada or its Subsidiaries'
            Collections received (if applicable), as  to  each by notifying the
            Canadian Lenders by telecopy, telephone, or other  similar  form of
            transmission, of such requested Settlement, no later than 2:00 p.m.
            (New  York, New York time) on the requested Settlement Date.   Such
            notice  of  a  Settlement Date shall include a summary statement of
            the amount of outstanding  Canadian  Advances  and  Canadian  Swing
            Loans  for the period since the prior Settlement Date.  Subject  to
            the  terms  and  conditions  contained  herein  (including  Section
            2.2.C.(a)):  (y)  if  a  Canadian  Lender's balance of the Canadian
            Advances  (including Canadian Swing Loans)  exceeds  such  Canadian
            Lender's  Pro  Rata  Share  of  the  Canadian  Advances  (including
            Canadian Swing  Loans) as of a Settlement Date, then Canadian Agent
            shall, by no later than 12:00 p.m. (New York, New York time) on the
            Settlement Date,  transfer  in  immediately  available funds to the
            account  of  such  Canadian  Lender  (as such Canadian  Lender  may
            designate), an amount such that each such  Canadian  Lender  shall,
            upon  receipt  of  such amount, have as of the Settlement Date, its
            Pro Rata Share of the  Canadian  Advances (including Canadian Swing
            Loans),  and (z) if a Canadian Lender's  balance  of  the  Canadian
            Advances  (including  Canadian  Swing  Loans)  is  less  than  such
            Canadian  Lender's   Pro   Rata  Share  of  the  Canadian  Advances
            (including Canadian Swing Loans)  as  of  a  Settlement  Date, such
            Canadian Lender shall no later than 12:00 p.m. (New York,  New York
            time)  on  the  Settlement  Date  transfer in immediately available
            funds as specified by Canadian Agent, an amount such that each such
            Canadian Lender shall, upon transfer of such amount, have as of the
            Settlement  Date,  its  Pro Rata Share  of  the  Canadian  Advances
            (including Canadian Swing  Loans).   Such amounts made available to
                                   47
<PAGE>
            Canadian  Agent  under  clause  (z)  of the  immediately  preceding
            sentence shall be applied against the  amounts  of  the  applicable
            Canadian Swing Loan and, together with the portion of such Canadian
            Swing  Loan  representing  Canadian Agent's Pro Rata Share thereof,
            shall constitute Canadian Advances  of  such  Canadian Lenders.  If
            any  such  amount is not made available to Canadian  Agent  by  any
            Canadian Lender  on  the  Settlement Date applicable thereto to the
            extent  required  by the terms  hereof,  Canadian  Agent  shall  be
            entitled to recover for its account such amount on demand from such
            Canadian Lender together  with  interest  thereon at the Defaulting
            Lender Rate.

                  (ii)  In determining whether a Canadian  Lender's  balance of
            the Canadian Advances and Canadian Swing Loans is less than,  equal
            to,  or  greater  than such Canadian Lender's Pro Rata Share of the
            Canadian Advances and  Canadian  Swing  Loans,  as  of a Settlement
            Date,  Canadian  Agent  shall,  as part of the relevant Settlement,
            apply to such balance the portion  of payments actually received in
            good funds by Canadian Agent with respect  to  principal,  interest
            and  fees  payable  by  Bombay Canada and allocable to the Canadian
            Lenders hereunder, and proceeds  of Collateral.  To the extent that
            a  net  amount  is  owed  to any such Canadian  Lender  after  such
            application, such net amount shall be distributed by Canadian Agent
            to that Canadian Lender as part of such next Settlement.

                  (iii) Between Settlement Dates, Canadian Agent, to the extent
            no Canadian Swing Loans are outstanding, may pay over to itself any
            payments received by it, that  in accordance with the terms of this
            Agreement  would  be  applied  to the  reduction  of  the  Canadian
            Advances, for application to Canadian Agent's Pro Rata Share of the
            Canadian Advances constituting Canadian Swing Loans.  If, as of any
            Settlement  Date,  repayments  or Collections  (if  applicable)  of
            Bombay  Canada  or  its  Subsidiaries   received   since  the  then
            immediately preceding Settlement Date have been applied to Canadian
            Agent's  Pro  Rata  Share  of the Canadian Advances other  than  to
            Canadian Swing Loans, as provided  for  in  the  previous sentence,
            Canadian Agent shall pay to Canadian Lenders, to be  applied to the
            outstanding Canadian Advances of such Canadian Lenders,  an  amount
            such  that each Canadian Lender shall, upon receipt of such amount,
            have, as  of  such  Settlement  Date,  its  Pro  Rata  Share of the
            Canadian  Advances.   During  the period between Settlement  Dates,
            Canadian  Agent with respect to  Canadian  Swing  Loans,  and  each
            Canadian Lender (subject to the effect of letter agreements between
            Canadian Agent and individual Lenders) with respect to the Canadian
            Advances other  than  Canadian  Swing  Loans,  shall be entitled to
            interest  at  the  applicable  rate  or  rates payable  under  this
            Agreement on the daily amount of funds employed  by Canadian Agent,
            or the Canadian Lenders, as applicable.

            (f)   SEPARATE  OBLIGATIONS OF BOMBAY CANADA.  Notwithstanding  any
      provision to the contrary  in  any  Loan Document, (i) all Obligations of
      Bombay  Canada under this Agreement and  the  other  Loan  Documents  are
      separate and individual Obligations of Bombay Canada from the Obligations
      of the U.S.  Borrowers, (ii) Bombay Canada shall not have any liabilities
                                   48
<PAGE>

      in respect of  U.S.  Advances  made  by  the  U.S.  Lenders  to  the U.S.
      Borrowers or in respect or any other Obligations of the U.S. Borrowers to
      Agent or Lenders arising from or related to U.S. Advances, and (iii)  the
      assets  of  Bombay  Canada  shall  not  serve  at  any  time, directly or
      indirectly,   as  security  for  the  payment  and  performance  of   the
      Obligations of the U.S. Borrowers under the Loan Documents.

      2.2.C DEFAULTING LENDER; NOTATIONS; FAILURE TO PERFORM; NOTES; ADDITIONAL
      ADVANCES

            (a)   DEFAULTING  LENDER.  Agent or Canadian Agent (as the case may
      be)  shall not be obligated  to  transfer  to  a  Defaulting  Lender  any
      payments  made by either U.S. Borrowers or Bombay Canada (as the case may
      be), to Agent  or  Canadian Agent (as the case may be) for the Defaulting
      Lender's benefit, and,  in the absence of such transfer to the Defaulting
      Lender, Agent or Canadian  Agent  (as the case may be) shall transfer any
      such payments to each other non-Defaulting Lender (either U.S. Lenders or
      Canadian Lenders, as the case may be)  ratably  in  accordance with their
      Commitments (but only to the extent that such Defaulting Lender's Advance
      was funded by the other U.S. Lenders or Canadian Lenders, as the case may
      be) or, if so directed by Administrative Borrower or  Bombay  Canada  (as
      the  case  may be) and if no Default or Event of Default had occurred and
      is continuing (and to the extent such Defaulting Lender's Advance was not
      funded by the  other  U.S.  Lenders  or Canadian Lenders, as the case may
      be), retain the same to be re-advanced to either U.S. Borrowers or Bombay
      Canada,  as  the  case  may be, as if such  Defaulting  Lender  had  made
      Advances to applicable Borrowers.   Subject  to  the  foregoing, Agent or
      Canadian  Agent  (as  the  case  may  be) may hold and, in its  Permitted
      Discretion, re-lend to the applicable Borrowers  for  the account of such
      Defaulting Lender the amount of all such payments received  and  retained
      by  Agent or Canadian Agent (as the case may be) for the account of  such
      Defaulting  Lender.   Solely  for the purposes of voting or consenting to
      matters with respect to the Loan  Documents, such Defaulting Lender shall
      be deemed not to be a "Lender" and  such  Lender's  Commitment  shall  be
      deemed  to  be zero.  This Section shall remain effective with respect to
      such Lender until  (x)  the  Obligations  under this Agreement shall have
      been declared or shall have become immediately  due  and payable, (y) the
      non-Defaulting Lenders, Agent, Canadian Agent and Administrative Borrower
      or Bombay Canada  shall have waived such Defaulting Lender's  default  in
      writing,  or  (z)  the  Defaulting Lender makes its Pro Rata Share of the
      applicable Advance and pays  to  Agent or Canadian Agent (as the case may
      be)  all amounts owing by Defaulting  Lender  in  respect  thereof.   The
      operation of this Section shall not be construed to increase or otherwise
      affect the Commitment of any Lender, to relieve or excuse the performance
      by such  Defaulting  Lender  or  any  other  Lender  of  its  duties  and
      obligations  hereunder,  or  to  relieve  or  excuse  the  performance by
      Borrowers  of  their duties and obligations hereunder to Agent,  Canadian
      Agent or to Lenders  other than such Defaulting Lender.  Any such failure
      to fund by any Defaulting  Lender  shall  constitute a material breach by
      such Defaulting Lender of this Agreement and shall entitle Administrative
      Borrower  or  Bombay Canada (as the case may  be)  at  its  option,  upon
      written notice to Agent, to arrange for a substitute Lender to assume the
      Commitment of such  Defaulting  Lender,  such  substitute  Lender  to  be
      reasonably  acceptable  to  Agent or Canadian Agent (as the case may be).
                                   49
<PAGE>

      In connection with the arrangement  of  such  a  substitute  Lender,  the
      Defaulting Lender shall have no right to refuse to be replaced hereunder,
      and  agrees  to  execute  and  deliver a completed form of Assignment and
      Acceptance in favor of the substitute Lender (and agrees that it shall be
      deemed to have executed and delivered such document if it fails to do so)
      subject only to being repaid its  share  of  the  outstanding Obligations
      (other than Bank Product Obligations, but including  an assumption of its
      Pro Rata Share of the Risk Participation Liability) without  any  premium
      or  penalty  of  any  kind  whatsoever;  provided  however, that any such
      assumption  of  the  Commitment of such Defaulting Lender  shall  not  be
      deemed to constitute a  waiver of any of the Lender Groups' or Borrowers'
      rights or remedies against  any  such Defaulting Lender arising out of or
      in relation to such failure to fund.

            (b)   NOTATION.  Agent shall  record  on  its  books  the principal
      amount  of  the Advances owing to each Lender, including the Swing  Loans
      owing to Swing  Lender,  and  Agent  Advances  owing  to  Agent,  and the
      interests  therein  of  each  Lender,  from time to time and such records
      shall, absent manifest error, conclusively  be presumed to be correct and
      accurate.  Canadian Agent shall record on its  books the principal amount
      of  the Canadian Advances owing to each Canadian  Lender,  including  the
      Canadian  Swing  Loans owing to Canadian Agent, as a Canadian Lender, and
      the interests therein of each Canadian Lender, from time to time and such
      records shall, absent  manifest  error,  conclusively  be  presumed to be
      correct  and  accurate. In addition, each Lender is authorized,  at  such
      Lender's option,  to  note  the  date  and  amount  of  each  payment  or
      prepayment  of  principal  of  such  Lender's  Advances  in its books and
      records,  including  computer  records.   In  the  event of any  conflict
      between the accounts or records maintained by any Lender and the accounts
      and records maintained by Agent or Canadian Agent, as the case may be, in
      respect  of  such matters the account and records of Agent  and  Canadian
      Agent, as the  case  may  be,  shall  control  in the absence of manifest
      error.

            (c)   LENDERS' FAILURE TO PERFORM.  All U.S.  Advances  (other than
      Swing   Loans   and   Agent   Advances)   shall   be   made   by  Lenders
      contemporaneously  and in accordance with their Pro Rata Shares  of  U.S.
      Advances.  All Canadian  Advances  shall  be made by the Canadian Lenders
      contemporaneously  and  in  accordance  with their  Pro  Rata  Shares  of
      Canadian  Advances.   It  is  understood that  (i)  no  Lender  shall  be
      responsible for any failure by any other Lender to perform its obligation
      to make any Advance (or other extension  of  credit) hereunder, nor shall
      any Commitment of any Lender be increased or decreased as a result of any
      failure  by  any other Lender to perform its obligations  hereunder,  and
      (ii) no failure  by any Lender to perform its obligations hereunder shall
      excuse any other Lender from its obligations hereunder.

            (d)   NOTES.   Each  U.S. Borrower shall execute and deliver on the
      Closing Date (or such other  date  on  which  a  U.S. Lender may become a
      party hereto in accordance with Section 14.1 or an  Accordion  Lender  in
      accordance  with  Section  2.1(h)) to Agent for each U.S. Lender which so
      requests a Note to evidence  that  U.S.  Lender's  U.S.  Advances, in the
      principal  amount  of  that  U.S.  Lender's  U.S.  Commitment  and   with
      appropriate  insertions.   Bombay Canada shall execute and deliver on the
      Closing Date (or such other  date on which a Canadian Lender may become a
      party hereto in accordance with  Section 14.1) to Canadian Agent for each
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      Canadian  Lender which so requests  a  Note  to  evidence  that  Canadian
      Lender's Canadian  Advances,  in  the  principal  amount of that Canadian
      Lender's Canadian Commitment and with appropriate insertions.

            (e)   ADDITIONAL  ADVANCES.  Lenders shall have  no  obligation  to
      make additional Advances hereunder to the extent such additional Advances
      would cause the Revolver Usage to exceed the Maximum Revolver Amount.

      2.3.  PAYMENTS AND REDUCTIONS.

            (a)   PAYMENTS BY BORROWERS.

                  (i)   Except  as  otherwise  expressly  provided  herein, all
            payments by U.S. Borrowers shall be made to Agent's Account for the
            account of Agent or U.S. Lenders and all payments by Bombay  Canada
            shall  be  made  to the account specified by Canadian Agent for the
            account of Canadian  Lenders  and in each case, such payments shall
            be made in immediately available  funds,  no  later  than 1:00 p.m.
            (New  York,  New  York  time)  on  the date specified herein.   Any
            payment received by Agent or Canadian  Agent,  as  the case may be,
            later than 1:00 p.m. (New York, New York time), shall  be deemed to
            have been received on the following Business Day and any applicable
            interest  or  fee  shall  continue  to  accrue until such following
            Business Day.

                  (ii)  Unless  Agent  receives  notice   from   Administrative
            Borrower  or  Canadian  Agent  receives notice from Bombay  Canada,
            prior  to the date on which any payment  is  due  to  Lenders  that
            Borrowers  will not make such payment in full as and when required,
            Agent or Canadian  Agent  (as  the  case  may  be)  may assume that
            Borrowers have made (or will make) such payment in full to Agent or
            Canadian  Agent  on  such date in immediately available  funds  and
            Agent or Canadian Agent  may  (but  shall  not  be so required), in
            reliance upon such assumption, distribute to each  Lender  on  such
            due  date  an  amount equal to the amount then due such Lender.  If
            and to the extent  Borrowers  do  not  make such payment in full to
            Agent or Canadian Agent, as applicable,  on the date when due, each
            Lender  severally  shall  repay  to  Agent  or Canadian  Agent,  as
            applicable,  on  demand  such amount distributed  to  such  Lender,
            together with interest thereon  at  the  Defaulting Lender Rate for
            each day from the date such amount is distributed  to  such  Lender
            until the date repaid.

            (b)   APPORTIONMENT AND APPLICATION OF PAYMENTS.

                  (i)   Except as otherwise provided with respect to Defaulting
            Lenders  and  subject  to  Section  2.1.B., aggregate principal and
            interest  payments  shall  be  apportioned  ratably  among  Lenders
            (according to the unpaid principal  balance  of  the Obligations to
            which  such  payments relate held by each Lender) and  payments  of
            fees and expenses (other than fees or expenses that are for Agent's
            separate account,  after  giving  effect  to  any letter agreements
            between Agent and individual Lenders) shall be  apportioned ratably
            among Lenders having a Pro Rata Share of the type  of Commitment or
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            Obligation to which a particular fee relates.  Subject  to  Section
            2.1.B.,  all  payments  shall  be  remitted  to  Agent and all such
            payments,  and (other than payments received while  no  Default  or
            Event of Default has occurred and is continuing and which relate to
            the payment  of  principal  or  interest of specific Obligations or
            which relate to the payment of specific  fees), and all proceeds of
            Accounts or other Collateral received by Agent, shall be applied as
            follows:

                        A.    first, to pay any Lender  Group Expenses then due
                  to Agent under the Loan Documents, until paid in full,

                        B.    second,  to pay any fees then  due  to  Agent  or
                  Canadian Agent (for their  separate  accounts,  after  giving
                  effect  to  any  letter  agreements between Agent or Canadian
                  Agent and the individual Lenders)  under  the Loan Documents,
                  until paid in full,

                        C.    third, to pay the principal of all Canadian Swing
                  Loans, until paid in full,

                        D.    fourth, ratably to pay interest due in respect of
                  the Canadian Advances, until paid in full,

                        E.    fifth,  to  pay  the  principal of  all  Canadian
                  Advances, until paid in full,

                        F.    sixth, to pay any fees  then due to any or all of
                  Lenders (after giving effect to any letter agreements between
                  Agent and individual Lenders) under the  Loan Documents, on a
                  ratable basis, until paid in full,

                        G.    seventh, to pay interest due in  respect  of  all
                  Agent Advances, until paid in full,

                        H.    eighth, ratably to pay interest due in respect of
                  the  U.S. Advances (other than Agent Advances), until paid in
                  full,

                        I.    ninth,  to  pay the principal of all Swing Loans,
                  until paid in full,

                        J.    tenth,  to  pay   the   principal  of  all  Agent
                  Advances, until paid in full,

                        K.    eleventh, to pay any Lender  Group  Expenses then
                  due to Lenders under the Loan Documents, on a ratable  basis,
                  until paid in full,

                        L.    twelfth,  so  long  as no Cash Dominion Event has
                  occurred and is continuing, and at  Agent's  election  (which
                  election  Agent  agrees  will  not  be made if an Overadvance
                  would be created thereby), to pay amounts  then due and owing
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                  by Administrative Borrower or its Subsidiaries  in respect of
                  Bank Products, until paid in full,

                        M.    thirteenth, so long as no Cash Dominion Event has
                  occurred and is continuing, to pay the principal  of all U.S.
                  Advances, until paid in full,

                        N.    fourteenth, if a Cash Dominion Event has occurred
                  and  is continuing, ratably (i) to pay the principal  of  all
                  U.S. Advances,  until paid in full, (ii) to Agent, to be held
                  by Agent, for the  ratable  benefit  of  Issuing  Lender  and
                  Lenders,  as  cash  collateral in an amount up to 103% of the
                  then extant Letter of  Credit Usage until paid in full, (iii)
                  to Agent, to be held by  Agent,  for  the  ratable benefit of
                  Issuing Lender, as cash collateral in an amount up to 103% of
                  the then extant Acceptance Face Amount until  paid  in  full,
                  and  (iv)  to  Agent, to be held by Agent, for the benefit of
                  the Bank Product  Providers,  as cash collateral in an amount
                  up  to  the  amount of the Bank Product  Reserve  established
                  prior to the occurrence  of, and not in contemplation of, the
                  subject Event of Default until  Administrative Borrower's and
                  its Subsidiaries' obligations in  respect  of the then extant
                  Bank Products have been paid in full or the  cash  collateral
                  amount has been exhausted,

                        O.    fifteenth, if a Cash Dominion Event has  occurred
                  and  is  continuing,  to pay any other Obligations (including
                  the provision of amounts  to  Agent, to be held by Agent, for
                  the benefit of the Bank Product Providers, as cash collateral
                  in  an amount up to the amount determined  by  Agent  in  its
                  Permitted  Discretion  as  the  amount  necessary  to  secure
                  Administrative  Borrower's  and its Subsidiaries' obligations
                  in respect of the then extant Bank Products), and

                        P.    sixteenth,  to Borrowers  (to  be  wired  to  the
                  Designated Account) or such  other  Person  entitled  thereto
                  under applicable law.

                  (ii)  Agent or Canadian Agent, as applicable, promptly  shall
            distribute   to  each  Lender,  pursuant  to  the  applicable  wire
            instructions received from each Lender in writing, such funds as it
            may be entitled  to  receive,  subject  to  a  Settlement  delay as
            provided in Section 2.2(f).

                  (iii) In  each  instance, so long as no Event of Default  has
            occurred and is continuing, this Section 2.3(b) shall not be deemed
            to apply to any payment  by  Borrowers specified by Borrowers to be
            for the payment of specific Obligations  then  due  and payable (or
            prepayable) under any provision of this Agreement.

                  (iv)  For purposes of Article II of this Agreement,  "paid in
            full"  means  payment of all amounts owing under the Loan Documents
            according to the  terms thereof, including loan fees, service fees,
            professional fees,  interest  (and  specifically including interest
            accrued  after  the  commencement  of any  Insolvency  Proceeding),
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<PAGE>

            default interest, interest on interest, and expense reimbursements,
            whether or not the same would be or  is  allowed  or  disallowed in
            whole or in part in any Insolvency Proceeding.

                  (v)   In the event of a direct conflict between the  priority
            provisions  of  this Section 2.3 and other provisions contained  in
            any other Loan Document,  it is the intention of the parties hereto
            that such priority provisions  in  such  documents  shall  be  read
            together  and  construed,  to the fullest extent possible, to be in
            concert  with  each  other.   In   the   event   of   any   actual,
            irreconcilable  conflict that cannot be resolved as aforesaid,  the
            terms and provisions of this Section 2.3 shall control and govern.

      2.4.  OVERADVANCES.  If,  at  any  time  or for any reason, the amount of
Obligations  of U.S. Borrowers (other than Bank Product  Obligations)  owed  by
U.S. Borrowers  to  the U.S. Lenders pursuant to Section 2.1 or Section 2.11 is
greater than either the  Dollar  or percentage limitations set forth in Section
2.1  or  Section  2.11,  as  applicable   (an  "Overadvance"),  U.S.  Borrowers
immediately shall pay to Agent in cash, the amount of such excess, which amount
shall  be  used  by  Agent  to  reduce the Obligations  of  U.S.  Borrowers  in
accordance with the priorities set  forth  in Section 2.1.B.(a) and 2.3(b).  If
at any time or for any reason the amount of  Obligations  owed by Bombay Canada
to  the  Canadian Lenders results in an Overadvance, Bombay Canada  immediately
shall pay  to  Canadian  Agent  in cash the amount of such excess, which amount
shall be used by Canadian Agent to  reduce  the  Obligations in accordance with
the priorities set forth in Section 2.1.B.(a) and  2.3(b).   In  addition, U.S.
Borrowers hereby promise to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full to the Lender Group  as  and when
due  and payable under the terms of this Agreement and the other Loan Documents
and Bombay  Canada hereby promises to pay the Obligations (including principal,
interest, fees,  costs  and  expenses)  in  connection  with and arising out of
Canadian Advances in Dollars in full to Canadian Agent and  Canadian Lenders as
when  due  and  payable  under the terms of this Agreement and the  other  Loan
Documents.

      2.5.  INTEREST RATES,  LETTER  OF  CREDIT  FEE,  BANKERS' ACCEPTANCE FEE,
RATES, PAYMENTS, AND CALCULATIONS.

            (a)   INTEREST RATES.  Except as provided in  clause (d) below, all
      Obligations  (except  for  undrawn  Letters  of Credit, undrawn  Bankers'
      Acceptances and Bank Product Obligations) that  have  been charged to the
      applicable Loan Account pursuant to the terms hereof shall  bear interest
      on the Daily Balance thereof as follows (i) if the relevant Obligation is
      an  Advance  that  is  a  LIBOR  Rate  Loan,  during each Interest Period
      applicable thereto, at a per annum rate equal to  the LIBOR Rate plus the
      Applicable  Margin  for  LIBOR  Rate  Loans,  and  (ii) if  the  relevant
      Obligation is an Advance that is a Prime Rate Loan,  during each Interest
      Period applicable thereto, at a per annum rate equal to  the  Prime  Rate
      plus the Applicable Margin (if any) for Prime Rate Loans.

            (b)   LETTER  OF  CREDIT  FEE.  U.S. Borrowers shall pay Agent (for
      the ratable benefit of Lenders with  a  U.S.  Commitment,  subject to any
      letter  agreement  between  Agent  and  individual Lenders), a Letter  of
      Credit fee (in addition to the charges, commissions,  fees, and costs set
      forth in Section 2.11(e)) which shall accrue at a per annum rate equal to
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<PAGE>

      the  Applicable Margin times the Daily Balance of the undrawn  amount  of
      all outstanding Letters of Credit.

            (c)   BANKERS' ACCEPTANCE FEE.  U.S. Borrowers shall pay Agent (for
      the ratable  benefit  of Lenders, subject to any letter agreement between
      Agent  and individual Lenders),  a  Bankers'  Acceptance  fee  (including
      customary  issuance  fees  of Issuing Lender) which shall accrue at a per
      annum  rate  equal to the Bankers'  Acceptance  Discount  Rate  plus  the
      Applicable Margin for Bankers' Acceptances times the Daily Balance of the
      Acceptance Face Amount.

            (d)   DEFAULT   RATE.    Upon   the   occurrence   and  during  the
      continuation of an Event of Default (and at the election of  Agent or the
      Required Lenders and the provision of notice to Administrative Borrower),

                  (i)   all Obligations (except for undrawn Letters  of  Credit
            and except for Bank Product Obligations) that have been charged  to
            the applicable Loan Account pursuant to the terms hereof shall bear
            interest  on the Daily Balance thereof at a per annum rate equal to
            2 percentage  points  above the per annum rate otherwise applicable
            hereunder,

                  (ii)  the Letter  of  Credit  fee provided for above shall be
            increased to 2 percentage points above the per annum rate otherwise
            applicable hereunder, and

                  (iii) the Bankers' Acceptance fee provided for above shall be
            increased to 2 percentage points above the per annum rate otherwise
            applicable hereunder, and

            (e)   PAYMENT.  Interest on (i) LIBOR  Rate  Loans  and  Prime Rate
      Loans  shall  be payable on each Interest Payment Date, (ii) the Bankers'
      Acceptance fee  shall be payable on the date of discount of each Bankers'
      Acceptance, and (iii)  Letter  of  Credit fees and all other fees payable
      hereunder shall be due and payable,  in arrears, on the first day of each
      month at any time that Obligations or  Commitments are outstanding.  U.S.
      Borrowers  hereby authorize Agent, from time  to  time,  to  charge  such
      interest and  fees, all Lender Group Expenses (as and when incurred), the
      charges, commissions,  fees,  and  costs provided for in Section 2.11 (as
      and when accrued or incurred), and all other payments as and when due and
      payable under any Loan Document (including any amounts due and payable to
      the Bank Product Providers in respect  of  Bank Products up to the amount
      of the then extant Bank Product Reserve) to U.S. Borrowers' Loan Account,
      which amounts thereafter shall constitute Advances  hereunder  and  shall
      accrue  interest  at  the rate then applicable to Advances hereunder that
      are  Prime Rate Loans hereunder,  and  Bombay  Canada  hereby  authorizes
      Canadian  Agent, from time to time, to charge such interest and fees, all
      Lender Group  Expenses  (as and when incurred), the charges, commissions,
      fees, and costs provided  for  herein  (as  and when accrued or incurred)
      attributable to Bombay Canada or the credit facility  made  available  to
      it,  and  all  other  payments as and when due and payable under any Loan
      Document to Bombay Canada's  Loan Account, which amounts thereafter shall
      constitute Canadian Advances hereunder  and  shall accrue interest at the
      rate then applicable to Canadian Advances hereunder  that  are Prime Rate
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<PAGE>

      Loans  hereunder,  provided  however,  that  prior to the occurrence  and
      continuation of a Cash Dominion Event, Borrowers  may  elect  to pay such
      interest, fees and expenses set forth on the statement provided  by Agent
      or Canadian Agent, as the case may be, pursuant to Section 2.9, to  Agent
      or Canadian Agent, as the case may be, directly in lieu of such interest,
      fees  or  Lender  Group  Expenses  being  charged to the applicable  Loan
      Account.  Any interest not paid when due shall  be  compounded  by  being
      charged  to  the  applicable Loan Account and shall thereafter constitute
      U.S. Advances or Canadian  Advances  hereunder,  as  applicable and shall
      accrue interest at the rate then applicable to Advances  that  are  Prime
      Rate Loans hereunder.

            (f)   COMPUTATION.  All interest and fees chargeable under the Loan
      Documents shall be computed on the basis of a 360 day year for the actual
      number of days elapsed.  In the event the Prime Rate is changed from time
      to  time  hereafter, the rates of interest hereunder based upon the Prime
      Rate automatically  and immediately shall be increased or decreased by an
      amount equal to such change in the Prime Rate.

            (g)   INTENT TO  LIMIT  CHARGES TO MAXIMUM LAWFUL RATE.  The Lender
      Group  and  Borrowers  intend  to  contract  in  strict  compliance  with
      applicable usury law from time to time in effect.  In furtherance thereof
      each Lender stipulates and agrees that  none  of the terms and provisions
      contained  in  the  Loan Documents shall ever be construed  to  create  a
      contract to pay, for the use, forbearance or detention of money, interest
      in excess of the maximum  amount  of  interest permitted to be charged by
      applicable Law from time to time in effect.   No Borrower nor any present
      or  future  guarantors,  endorsers, or other Persons  hereafter  becoming
      liable for payment of any  Obligation  shall  ever be liable for unearned
      interest  thereon or shall ever be required to pay  interest  thereon  in
      excess of the  maximum  amount  that  may  be  lawfully  contracted  for,
      charged,  or  received  under applicable Law from time to time in effect,
      and  the  provisions  of  this  section  shall  control  over  all  other
      provisions of the Loan Documents  which  may  be  in conflict or apparent
      conflict herewith.  The Lender Group expressly disavows  any intention to
      contract for, charge, or collect excessive unearned interest  or  finance
      charges  in the event the maturity of any Obligation is accelerated.   If
      (a) the maturity of any Obligation is accelerated for any reason, (b) any
      Obligation  is  prepaid  and  as  a result any amounts held to constitute
      interest  are  determined to be in excess  of  the  legal  maximum  under
      applicable Law,  or  (c)  any Lender or any other holder of any or all of
      the Obligations shall otherwise  collect  moneys  which are determined to
      constitute interest which would otherwise increase the interest on any or
      all  of the Obligations to an amount in excess of that  permitted  to  be
      charged  by  applicable  Law  then in effect, then all sums determined to
      constitute interest in excess of such legal limit shall, without penalty,
      be  promptly applied to reduce the  then  outstanding  principal  of  the
      related  Obligations  or,  at  such Lender's or holder's option, promptly
      returned to Borrower or the other  payor thereof upon such determination.
      In determining whether or not the interest  paid  or  payable,  under any
      specific   circumstance,  exceeds  the  maximum  amount  permitted  under
      applicable Law,  the  Lender Group shall to the greatest extent permitted
      under applicable Law, (i)  characterize  any  non-principal payment as an
      expense, fee or premium rather than as interest,  (ii)  exclude voluntary
      prepayments  and  the  effects  thereof,  and  (iii)  amortize,  prorate,
      allocate, and spread the total amount of interest throughout  the  entire
      contemplated  term  of  the  instruments  evidencing  the  Obligations in
                                   56
<PAGE>

      accordance with the amounts outstanding from time to time thereunder  and
      the  maximum  legal  rate  of  interest from time to time in effect under
      applicable Law in order to lawfully  contract for, charge, or receive the
      maximum amount of interest permitted under  applicable  Law.   As used in
      this section the term "applicable Law" means the Laws of the State of New
      York  or  the Laws of the United States of America, whichever Laws  allow
      the greater interest, as such Laws now exist or may be changed or amended
      or come into effect in the future.

            (h)   INTEREST  ACT  DISCLOSURE.   For purposes of the Interest Act
      (Canada), (i) whenever any interest or fee  under  this  Agreement or any
      Note  is  calculated using a rate based on a year of 360 days,  the  rate
      determined  pursuant  to  such  calculation,  when expressed as an annual
      rate, is equivalent to (x) the applicable rate  based  on  a  year of 360
      days, (y) multiplied by the actual number of days in the calendar year in
      which  the  period  for  which  such  interest  or  fee  is  payable  (or
      compounded)  ends,  and  (z) divided by 360, (ii) the principle of deemed
      reinvestment  of  interest  does   not  apply  to  any  interest  or  fee
      calculation under this Agreement and  any  Note,  and  (iii) the rates of
      interest  stipulated  in this Agreement and any Note are intended  to  be
      nominal rates and not effective rates or yields.

      2.6.  CASH MANAGEMENT.

            (a)   U.S.  Borrowers   shall   (i)  establish  and  maintain  cash
      management services of a type and on terms  satisfactory  to Agent at one
      or  more  of  the banks (a "Cash Management Bank") set forth on  Schedule
      7.20 (ii) promptly, and in any event no later than the first Business Day
      after  the date  of  receipt  thereof,  cause  all  Collections  of  U.S.
      Borrowers  or cash proceeds of Accounts of U.S. Borrowers to be deposited
      only into local  depository  accounts ("Local Accounts") or concentration
      depository  accounts  ("Concentration   Accounts"),  each  set  forth  on
      Schedule  7.20  and  (iii) direct all Cash Management  Banks  with  Local
      Accounts to (A) so long  as  no  Cash  Dominion Event has occurred and is
      continuing, cause all Collections of U.S.  Borrowers in an amount greater
      than $50,000 to be transferred no less frequently  than  twice each week,
      to  and  only  to, a Concentration Account or an Agent Account,  and  (B)
      after the occurrence  and during the continuance of a Cash Dominion Event
      cause all Collections of U.S. Borrowers in an amount greater than $10,000
      then held in each such Local Account to be transferred no less frequently
      than once each day to,  and  only  to, a Concentration Account or Agent's
      Account.  If, notwithstanding the provisions  of  this Section 2.6, after
      the occurrence and during the continuance of a Cash  Dominion  Event, any
      U.S. Borrower receives or otherwise has dominion over or control  of  any
      Collections,  such U.S. Borrower shall hold such Collections in trust for
      Agent  and  shall  not  commingle  such  Collections  with  any  of  U.S.
      Borrowers' other funds or deposit such Collections in any account of U.S.
      Borrowers except as instructed by Agent.

            (b)   U.S.   Borrowers   shall   establish   and  maintain  Control
      Agreements with Agent and each Cash Management Bank  with respect to each
      Concentration Account.  Each such Control Agreement shall  provide, among
      other things, that after the occurrence and during the continuance  of  a
      Cash Dominion Event, (i) upon notice from Agent, the Cash Management Bank
      will comply with instructions of Agent directing the disposition of funds
                                   57
<PAGE>

      in  the  Concentration Account without further consent by U.S. Borrowers,
      (ii) the Cash  Management  Bank  has no rights of setoff or recoupment or
      any other claim against the applicable  Concentration Account, other than
      for payment of its service fees and other charges directly related to the
      administration of such Concentration Account  and  for returned checks or
      other items of payment, and (iii) it immediately will  forward  by  daily
      sweep all amounts in the applicable Concentration Accounts to the Agent's
      Account.

            (c)   U.S.  Borrowers  shall  establish  and  maintain  Credit Card
      Agreements  with Agent and each Credit Card Processor.  Each such  Credit
      Card Agreement  shall  provide, among other things, that each such Credit
      Card Processor shall transfer  all  proceeds  due  with respect to credit
      card  charges for sales (net of expenses and chargebacks  of  the  Credit
      Card Issuer  or  Credit  Card Processor) by U.S. Borrowers received by it
      (or  other  amounts  payable  by  such  Credit  Card  Processor)  into  a
      designated Concentration  Account on a daily basis.  U.S. Borrowers shall
      not attempt to change any direction  or  designation  set  forth  in  the
      Credit  Card  Agreements  regarding  payment of charges without the prior
      written consent of Agent.

            (d)   So  long  as  no Cash Dominion  Event  has  occurred  and  is
      continuing, Administrative  Borrower  may  amend  Schedule 7.20 to add or
      replace  a  Cash Management Bank or Deposit Account;  provided,  however,
      that (i) such  prospective  Cash Management Bank shall be satisfactory to
      Agent and Agent shall have consented in writing in advance to the opening
      of such Deposit Account with  the  prospective  Cash Management Bank, and
      (ii) prior to the time of the opening of any Concentration  Account, U.S.
      Borrowers  and such prospective Cash Management Bank shall have  executed
      and delivered  to  Agent  a  Control Agreement in accordance with Section
      2.6(b) above.  U.S. Borrowers  shall  close any of their Deposit Accounts
      (and establish replacement cash management  accounts  in  accordance with
      the  foregoing  sentence)  promptly  and in any event within 30  days  of
      notice from Agent that the creditworthiness  of  any Cash Management Bank
      is no longer acceptable in Agent's reasonable judgment, or as promptly as
      practicable and in any event within 60 days of notice from Agent that the
      operating  performance,  funds  transfer, or availability  procedures  or
      performance of the Cash Management  Bank  with  respect  to Concentration
      Accounts or Agent's liability under any Control Agreement  with such Cash
      Management  Bank is no longer acceptable in Agent's reasonable  judgment.
      If, notwithstanding  the  provisions  of  this  Section  2.6,  after  the
      occurrence  and  during  the  continuance  of  a Cash Dominion Event, any
      Borrower  receives  or  otherwise has dominion over  or  control  of  any
      Collections, such Borrower shall hold such Collections in trust for Agent
      and shall not commingle such  Collections  with  any  of Borrowers' other
      funds or deposit such Collections in any account of Borrowers  except  as
      instructed by Agent.

            (e)   After  the  occurrence  and  during the continuance of a Cash
      Dominion Event, the Deposit Accounts shall  be  cash collateral accounts,
      with  all  cash,  checks and similar items of payment  in  such  accounts
      securing payment of  the  Obligations,  and in which Borrowers are hereby
      deemed to have granted a Lien on each Deposit Account to Agent.

      2.7.  CREDITING PAYMENTS; FLOAT CHARGE.
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            (a)   The receipt of any payment item  by  Agent or Canadian Agent,
      as the case may be (whether from transfers to Agent or Canadian Agent (as
      the  case may be) by the Cash Management Banks pursuant  to  the  Control
      Agreements  or  otherwise  shall  not  be considered a payment on account
      unless  such  payment item is a wire transfer  of  immediately  available
      federal funds made  to  the  Agent's  Account  or an account specified by
      Canadian Agent (as the case may be) or unless and until such payment item
      is honored when presented for payment.  Should any  payment  item  not be
      honored when presented for payment, then Borrowers shall be deemed not to
      have  made  such  payment  and  interest shall be calculated accordingly.
      Anything to the contrary contained  herein  notwithstanding,  any payment
      item shall be deemed received by Agent or Canadian Agent (as the  case my
      be)  only  if  it  is  received  into  the  Agent's Account or an account
      specified by Canadian Agent (as the case may  be) on a Business Day on or
      before  1:00  p.m. (New York, New York time).  If  any  payment  item  is
      received into the  Agent's  Account  or  an account specified by Canadian
      Agent (as the case may be) on a non-Business  Day or after 1:00 p.m. (New
      York, New York time) on a Business Day, it shall  be  deemed to have been
      received  by  Agent  or  Canadian Agent (as the case may be)  as  of  the
      opening of business on the immediately following Business Day.

            (b)   After the occurrence  and  during  the  continuance of a Cash
      Dominion Event, Agent or Canadian Agent (as the case  may  be)  shall  be
      entitled to charge Borrowers for 1 Business Day of `clearance' or `float'
      at  the rate then applicable under Section 2.5 to Advances that are Prime
      Rate  Loans  on  all Collections that are received by Borrowers and their
      Subsidiaries (regardless  of  whether  forwarded  by  the Cash Management
      Banks  to  Agent  or  otherwise).  This across the board 1  Business  Day
      clearance or float charge  on  all  Collections  of  Borrowers  and their
      Subsidiaries  is  acknowledged  by  the parties to constitute an integral
      aspect  of the pricing of the financing  of  Borrowers  and  shall  apply
      irrespective  of  whether  or  not  there  are  any  outstanding monetary
      Obligations;  the  effect  of  such clearance or float charge  being  the
      equivalent  of  charging  interest   on   such  Collections  through  the
      completion of a period ending 1 Business Day  after  the receipt thereof.
      The  parties  acknowledge  and  agree  that the economic benefit  of  the
      foregoing  provisions of this Section 2.7  shall  be  for  the  exclusive
      benefit of Agent.

      2.8.  DESIGNATED  ACCOUNT.   Agent  and  Canadian Agent are authorized to
make  the  Advances  and  Issuing  Lender is authorized  to  issue  the  Credit
Instruments under this Agreement based  upon  telephonic  or other instructions
received  from any Authorized Person, or without instructions  if  pursuant  to
Section 2.5(d).   Agent shall be entitled to rely, and shall be fully protected
in relying upon, any  Credit  Instrument,  draft,  writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram,  telegram,  telecopy, telex
or teletype message, statement, order or other document believed  by  it  to be
genuine  and  correct  and  to  have been signed, sent or made by an Authorized
Person.  Canadian Agent shall be entitled to rely, and shall be fully protected
in relying upon, any draft, writing,  resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram,  telecopy,  telex  or teletype message,
statement, order or other document believed by it to be genuine and correct and
to  have  been signed, sent or made by an Authorized Person of  Bombay  Canada.
Administrative Borrower agrees to establish and maintain the Designated Account
with the Designated  Account  Bank for the purpose of receiving the proceeds of
the Advances requested by Borrowers  and  made  by  Agent or Lenders hereunder.

<PAGE>                             59

Unless  otherwise  agreed  by Agent and Administrative Borrower,  any  Advance,
Agent Advance, or Swing Loans  requested by U.S. Borrowers and made by Agent or
Lenders hereunder shall be made  to  the  Designated  Account.   Bombay  Canada
agrees  to  establish  and  maintain the Designated Account with the Designated
Account Bank for the purpose of receiving the proceeds of the Canadian Advances
requested by Bombay Canada and  made  by  Canadian  Agent  or  Canadian Lenders
hereunder.   Unless otherwise agreed by Canadian Agent and Bombay  Canada,  any
Canadian Advance or Canadian Swing Loans requested by Bombay Canada and made by
Canadian Agent  or  Canadian  Lenders hereunder shall be made to the Designated
Account.

      2.9.  MAINTENANCE OF LOAN  ACCOUNT;  STATEMENTS  OF  OBLIGATIONS.   Agent
shall  maintain  an  account  on  its  books  in the name of U.S. Borrowers and
Canadian Agent shall maintain an account on its  books  in  the  name of Bombay
Canada  (in  either  case  and as applicable, the "Loan Account") on which  the
applicable  Borrowers  will be  charged  with  the  Advances  (including  Agent
Advances and Swing Loans)  made  by  Agent,  Canadian  Agent,  Swing Lender, or
Lenders  to  applicable  Borrowers  or  for applicable Borrowers' account,  the
Credit Instruments issued by Issuing Lender  for  U.S.  Borrowers' account, and
with all other payment Obligations hereunder or under the  other Loan Documents
(except  for Bank Product Obligations), including, accrued interest,  fees  and
expenses,  and Lender Group Expenses.  In accordance with Sections 2.6 and 2.7,
the applicable  Loan  Account  will  be  credited with all payments received by
Agent from Borrowers or for Borrowers' account,  including all amounts received
in  the  Agent's  Account from any Cash Management Bank.   In  accordance  with
Sections 2.6 and 2.7,  the  applicable  Loan  Account will be credited with all
payments received by Canadian Agent from Bombay  Canada  or for Bombay Canada's
account,  including all amounts received in the Canadian Agent's  Account  from
any Cash Management  Bank.  Agent and Canadian Agent, as the case may be, shall
render statements regarding  the  applicable  Loan  Account  to  Administrative
Borrower and Bombay Canada, as the case may be, including principal,  interest,
fees,  and  including  an  itemization of all charges and expenses constituting
Lender Group Expenses owing,  and such statements, absent manifest error, shall
be conclusively presumed to be  correct  and accurate and constitute an account
stated between Borrowers and the Lender Group  unless,  within  30  days  after
receipt  thereof  by  Administrative Borrower or Bombay Canada, as the case may
be, Administrative Borrower or Bombay Canada, as the case may be, shall deliver
to Agent or Canadian Agent,  as  the  case  may  be,  written objection thereto
describing the error or errors contained in any such statements.

      2.10. FEES.   U.S. Borrowers shall pay to Agent the  following  fees  and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement  is  terminated  thereafter) and shall be apportioned
among Lenders in accordance with the terms of  letter  agreements between Agent
and individual Lenders:

            (a)   UNUSED LINE FEE.  On the first day of  each  month during the
      term of this Agreement, an unused line fee (the "Unused Line Fee") in the
      amount  equal  to  0.250%  per annum times the result of (A) the  Maximum
      Revolver Amount, less (B) the average Daily Balance of the Revolver Usage
      during the immediately preceding month;

            (b)   FEE LETTER FEES.  As and when due and payable under the terms
      of the Fee Letter, the fees set forth in the Fee Letter.
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      2.11. CREDIT INSTRUMENTS.

            (a)   Subject to the terms  and  conditions  of this Agreement, the
      Issuing Lender agrees to issue letters of credit for  the account of U.S.
      Borrowers  (each,  an  "L/C")  or to purchase participations  or  execute
      indemnities or reimbursement obligations  (each such undertaking, an "L/C
      Undertaking") with respect to letters of credit  issued  by an Underlying
      Issuer (as of the Closing Date, the prospective Underlying  Issuer  is to
      be  Wells  Fargo)  for  the  account  of  U.S. Borrowers.  To request the
      issuance of an L/C or an L/C Undertaking (or  the  amendment, renewal, or
      extension  of  an  outstanding  L/C  or L/C Undertaking),  Administrative
      Borrower  shall  hand  deliver or telecopy  (or  transmit  by  electronic
      communication, if arrangements  for  doing  so  have been approved by the
      Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of
      the  requested  date  of issuance, amendment, renewal,  or  extension)  a
      notice  requesting  the  issuance  of  an  L/C  or  L/C  Undertaking,  or
      identifying  the  L/C or L/C  Undertaking  to  be  amended,  renewed,  or
      extended, the date  of  issuance,  amendment,  renewal, or extension, the
      date on which such L/C or L/C Undertaking is to  expire,  the  amount  of
      such  L/C  or  L/C  Undertaking,  the name and address of the beneficiary
      thereof (or of the Underlying Letter  of Credit, as applicable), and such
      other information as shall be necessary  to  prepare,  amend,  renew,  or
      extend  such L/C or L/C Undertaking.  If requested by the Issuing Lender,
      the applicable  U.S.  Borrower  also  shall  be  an  applicant  under the
      application with respect to any Underlying Letter of Credit that is to be
      the  subject  of  an  L/C Undertaking.  The Issuing Lender shall have  no
      obligation to issue a Letter  of  Credit  if  any  of the following would
      result after giving effect to the requested Letter of Credit:

                  (i)   the Letter of Credit Usage would exceed  (x)  the  U.S.
            Borrowing  Base  minus  (y)  the  sum  of the then extant amount of
            outstanding  U.S.  Advances plus the then  extant  Acceptance  Face
            Amount, or

                  (ii)  the  Letter  of  Credit  Usage  plus  the  then  extant
            Acceptance Face Amount would exceed $60,000,000, or

                  (iii) the Letter  of  Credit  Usage  would exceed the Maximum
            Revolver Amount less the then extant amount of outstanding Advances
            plus the then extant Acceptance Face Amount.

            (b)   Promptly following receipt of a notice  of  L/C  Disbursement
      pursuant to Section 2.11(a), each U.S. Lender agrees to fund its Pro Rata
      Share of the U.S. Advance deemed made pursuant to Section 2.11(g)  on the
      same  terms  and  conditions  as  if the applicable U.S. Borrower or U.S.
      Borrowers had requested such U.S. Advance and Agent shall promptly pay to
      Issuing Lender the amounts so received  by  it  from  the applicable U.S.
      Lenders.   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 Issuing Lender or the U.S. Lenders, the Issuing
      Lender shall be deemed to have granted to each U.S. Lender, and each U.S.
      Lender shall be deemed to have  purchased, a participation in each Letter
      of  Credit,  in  an amount equal to  its  Pro  Rata  Share  of  the  Risk
      Participation Liability  of  such  Letter  of  Credit, and each such U.S.
      Lender  agrees to pay to Agent, for the account of  the  Issuing  Lender,
      such U.S.  Lender's  Pro  Rata  Share of any payments made by the Issuing
                                   61
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      Lender under such Letter of Credit.   In consideration and in furtherance
      of the foregoing, each U.S. Lender hereby  absolutely and unconditionally
      agrees to pay to Agent, for the account of the  Issuing Lender, such U.S.
      Lender's Pro Rata Share of each L/C Disbursement  made on account of U.S.
      Borrowers by the Issuing Lender and not reimbursed by the applicable U.S.
      Borrower or U.S. Borrowers on the date due as provided  in  clause (a) of
      this Section, or of any reimbursement payment required to be  refunded to
      any  U.S.  Borrower  for  any reason.  Each U.S. Lender acknowledges  and
      agrees that its obligation  to  deliver  to Agent, for the account of the
      Issuing Lender, an amount equal to its respective  Pro Rata Share of each
      L/C  Disbursement  made by the Issuing Lender pursuant  to  this  Section
      2.11(b) shall be absolute  and unconditional and such remittance shall be
      made  notwithstanding the occurrence  or  continuation  of  an  Event  of
      Default  or  Default or the failure to satisfy any condition set forth in
      Section 3 hereof.   If  any  such Lender fails to make available to Agent
      the amount of such Lender's Pro  Rata  Share  of each L/C Disbursement on
      account of U.S. Borrowers made by the Issuing Lender  in  respect of such
      Letter of Credit as provided in this Section, such U.S. Lender  shall  be
      deemed  to  be  a  Defaulting  Lender  and  Agent (for the account of the
      Issuing Lender) shall be entitled to recover  such  amount on demand from
      such U.S. Lender together with interest thereon at the  Defaulting Lender
      Rate until paid in full.

            (c)   Subject  to  the  terms  and  conditions  set forth  in  this
      Agreement  and  the  execution  by  the  applicable U.S. Borrower  of  an
      Acceptance  Agreement  in  Agent's  customary   form   (the   "Acceptance
      Agreement")  and  a  certification  by  U.S.  Borrowers that the bankers'
      acceptances relate to goods in transit, upon the  written  request of the
      applicable  U.S.  Borrowers,  the Issuing Lender, on behalf of  the  U.S.
      Lenders, and in reliance upon the  agreement of U.S. Lenders set forth in
      Section 2.11(d) hereof and upon the  representations  and  warranties  of
      U.S.  Borrowers  contained herein, agrees, in its individual capacity, to
      discount Eligible  Drafts  for  the  account  of U.S. Borrowers (all such
      accepted and discounted Eligible Drafts whether  heretofore  or hereafter
      issued  being  referred  to  individually as a "Banker's Acceptance"  and
      collectively as the "Bankers'  Acceptances"); provided, however, that any
      Bankers' Acceptance issued shall  provide  for a maturity date not longer
      than 180 days provided that in no event shall such maturity extend beyond
      the  Maturity  Date  unless,  prior to the time  of  such  issuance,  the
      applicable U.S. Borrowers have  delivered  to Agent cash collateral in an
      amount equal to 103% of the face amount of such  Bankers' Acceptance; and
      provided, further, that, after giving effect to such request, (i) the sum
      of  the  Letters  of  Credit Usage plus the then extant  Acceptance  Face
      Amount shall not exceed  $60,000,000,  (ii) U.S. Revolver Usage shall not
      exceed the lesser of (A) the U.S. Borrowing  Base,  and  (B)  the Maximum
      Revolver Amount minus Canadian Advances; and provided, further,  that the
      Issuing  Lender shall not accept an Eligible Draft if the face amount  of
      all outstanding  drafts  accepted  by the Issuing Lender which are of the
      type described in paragraph 7 of Section  13  of  the Federal Reserve Act
      (12  USC {section}372), as amended from time to time,  or  any  successor
      statute, would cause the Issuing Lender to violate any limitation imposed
      upon it under said paragraph or would cause the Issuing Lender to violate
      such limitation if all such drafts were sold by the Issuing Lender in the
      secondary market.  To expedite the acceptance and discounting of Eligible
      Drafts,  the applicable U.S. Borrower shall provide to the Issuing Lender
      fully executed drafts, which shall be blank as to dates and amounts.  The
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<PAGE>

      applicable  U.S.  Borrowers  may request the Issuing Lender to accept and
      discount an Eligible Draft by  submitting  to  the  Issuing  Lender by no
      later than 12:00 noon (New York, New York time) or the proposed  date  of
      acceptance  and  discounting  a  bankers'  acceptance  application in the
      Issuing  Lender's  customary form, completed to the satisfaction  of  the
      Issuing Lender and accompanied  by  such  documents as may be required by
      the  Issuing  Lender  to establish that the drafts  to  be  accepted  and
      discounted will (if accepted and endorsed by a member bank of the Federal
      Reserve System) be eligible  for  discount  by such Federal Reserve Bank.
      The Issuing Lender shall make available to the  applicable  U.S. Borrower
      at   the  time  of  acceptance  of  each  Eligible  Draft  and  upon  the
      satisfaction  of  the conditions set forth in Section 3.1 and Section 3.3
      hereof, an amount equal  to  the  discounted value of such Eligible Draft
      based on: (x) the stated maturity date  of  such  Eligible Draft, (y) the
      face  amount  of  such  Eligible  Draft, and (z) the Bankers'  Acceptance
      Discount Rate.

            (d)   Upon receipt of such bankers'  acceptance  application, Agent
      shall  notify  each  U.S.  Lender  of its Pro Rata Share of the  Bankers'
      Acceptance  on  account of U.S. Borrowers.   Subject  to  the  terms  and
      conditions hereof,  each  U.S.  Lender  severally  agrees  that  it shall
      participate  in any Bankers' Acceptances upon notification by Agent  that
      it has received  an  application  for  acceptance  and  discounting of an
      Eligible Draft in form and substance satisfactory to the  Issuing Lender.
      Agent  agrees  to  furnish each U.S. Lender with a copy of each  Bankers'
      Acceptance promptly  after  issuance.   Each U.S. Lender severally agrees
      that it shall be absolutely liable, without  regard  to the occurrence of
      any  Default  or  Event  of  Default  or  any  other condition  precedent
      whatsoever to the extent of such U.S. Lender's Pro Rata Share of the Risk
      Participation Liability, to reimburse Agent on demand  for  the amount of
      each  draft paid by the Pro Rata Share under each Bankers' Acceptance  on
      account  of U.S. Borrowers to the extent such amount is not reimbursed by
      U.S. Borrowers  pursuant  to  Section  2.11(f)  hereof.  If any such U.S.
      Lender fails to make available to Agent the amount  of such U.S. Lender's
      Pro Rata Share under any Bankers' Acceptance on account  of U.S. Borrower
      as  provided  in  this  Section,  such  U.S.  Lender  shall  be deemed  a
      Defaulting Lender and Agent (for the account of Issuing Lender)  shall be
      entitled  to recover such amount on demand from such U.S. Lender together
      with interest thereon at the Defaulting Lender Rate until paid in full.

            (e)   Each  such  payment made by a U.S. Lender shall be treated as
      the purchase by such U.S.  Lender  of  a  participating  interest  in the
      applicable   U.S.  Borrowers'  reimbursement  obligations  under  Section
      2.11(f) hereof in an amount equal to such payment.

            (f)   Each  U.S. Borrower hereby agrees to indemnify, save, defend,
      and hold the Lender  Group  harmless  from  any  loss,  cost, expense, or
      liability,  and  reasonable attorneys fees incurred by the  Lender  Group
      arising out of or  in  connection  with any Credit Instrument.  Each U.S.
      Borrower agrees to be bound by the Underlying  Issuer's  regulations  and
      interpretations of any Underlying Letter of Credit or by Issuing Lender's
      interpretations  of  any  L/C  or  Bankers'  Acceptance issued by Issuing
      Lender  to  or  for  such  U.S.  Borrower's  account,  even  though  this
      interpretation may be different from such Borrower's  own,  and each U.S.
      Borrower understands and agrees that the Lender Group shall not be liable
      for any error, negligence, or mistake, whether of omission or  commission
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      (except,  as  to any member of the Lender Group, to the extent caused  by
      its gross negligence or willful misconduct), in following U.S. Borrowers'
      instructions  or   those  contained  in  any  Credit  Instrument  or  any
      modifications, amendments,  or  supplements  thereto.  Each U.S. Borrower
      understands  that  the  L/C Undertakings may require  Issuing  Lender  to
      indemnify the Underlying  Issuer for certain costs or liabilities arising
      out of claims by U.S. Borrowers  against  such  Underlying  Issuer.  Each
      U.S.  Borrower  hereby  agrees  to indemnify, save, defend, and hold  the
      Lender Group harmless with respect  to any loss, cost, expense (including
      reasonable attorneys fees), or liability  incurred  by  the  Lender Group
      under   any   Credit  Instrument  as  a  result  of  the  Lender  Group's
      indemnification of any Underlying Issuer or Issuing Lender.

      THE  FOREGOING  INDEMNIFICATIONS   SHALL   APPLY   WHETHER  OR  NOT  SUCH
      LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT  OWED,  IN WHOLE OR
      IN  PART,  UNDER  ANY  CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED,  IN
      WHOLE OR IN PART BY ANY  NEGLIGENT  ACT  OR  OMISSION  OF ANY KIND BY ANY
      MEMBER OF THE LENDER GROUP,

      provided only that no member of the Lender Group shall be  entitled under
      this section to receive indemnification for that portion, if  any, of any
      liabilities  and  costs which is proximately caused by its own individual
      gross  negligence  or  willful  misconduct,  as  determined  in  a  final
      judgment.

            (g)   U.S. Borrowers  and  the  Lender  Group acknowledge and agree
      that  certain  Underlying  Letters  of Credit may be  issued  to  support
      letters of credit that already are outstanding  as  of  the Closing Date.
      Each Letter of Credit (and corresponding Underlying Letter of Credit) and
      each Bankers' Acceptance shall be in form and substance acceptable to the
      Issuing  Lender (in the exercise of its Permitted Discretion),  including
      the requirement  that  the  amounts payable thereunder must be payable in
      Dollars.  If Issuing Lender is  obligated to advance funds under a Letter
      of  Credit or a Bankers' Acceptance,  U.S.  Borrowers  immediately  shall
      reimburse  such  L/C  Disbursement  to  Issuing Lender or Acceptance Face
      Amount, as applicable, by paying to Agent  an  amount  equal  to such L/C
      Disbursement or Acceptance Face Amount.  All such payments shall  be made
      no  later than 1:00 p.m. (New York, New York time) on the date that  such
      L/C Disbursement  is  made or demand for payment is made under a Bankers'
      Acceptance, if Administrative  Borrower  shall  have  received written or
      telephonic  notice  of such L/C Disbursement or Banker's  Acceptance,  as
      applicable, prior to  1:00  p.m. (New York, New York time), on such date,
      or, if such notice has not been received by Administrative Borrower prior
      to such time on such date, then  not  later than 1:00 p.m. (New York, New
      York time), on (i) the Business Day that Administrative Borrower receives
      such notice, if such notice is received prior to 1:00 p.m. (New York, New
      York  time),  on  the  date  of receipt, and,  in  the  absence  of  such
      reimbursement,  the  L/C Disbursement  or  payment  under  such  Bankers'
      Acceptance, as applicable,  immediately and automatically shall be deemed
                                   64
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      to be an Advance to the applicable U.S. Borrower hereunder subject to the
      provisions of Section 2.1.B.  and, thereafter, shall bear interest at the
      applicable rate for such Letter  of  Credit  or  Banker's  Acceptance, as
      applicable.   To  the  extent  an  L/C  Disbursement  or payment under  a
      Bankers' Acceptance, as applicable, is deemed to be an Advance hereunder,
      a  U.S.  Borrower's  obligation  to  reimburse  such L/C Disbursement  or
      payment under a Bankers' Acceptance, as applicable,  shall  be discharged
      and  replaced by the resulting U.S. Advance.  Promptly following  receipt
      by Agent  of  any  payment  from the applicable U.S. Borrower pursuant to
      this paragraph, Agent shall distribute such payment to the Issuing Lender
      to the extent that the applicable  Lenders have made payments pursuant to
      Section 2.11(f) to reimburse the Issuing  Lender,  as applicable, then to
      such U.S. Lenders and the Issuing Lender as their interest may appear.

            (h)   Each  U.S.  Borrower  hereby  authorizes  and   directs   any
      Underlying  Issuer  to  deliver  to  the  Issuing Lender all instruments,
      documents, and other writings and property  received  by  such Underlying
      Issuer  pursuant  to such Underlying Letter of Credit and to  accept  and
      rely upon the Issuing  Lender's  instructions with respect to all matters
      arising  in connection with such Underlying  Letter  of  Credit  and  the
      related application.

            (i)   Any and all charges, commissions, fees, and costs incurred by
      the Issuing  Lender  relating to Credit Instruments shall be Lender Group
      Expenses  for  purposes  of  this  Agreement  and  immediately  shall  be
      reimbursable by  U.S.  Borrowers  to Agent for the account of the Issuing
      Lender; it being acknowledged and agreed  by each U.S. Borrower that, (i)
      the issuance fee imposed by the prospective  Underlying  Issuer  is  one-
      eighth  of one percent per annum times the face amount of each Underlying
      Letter of  Credit,  (ii) the Issuing Lender may charge customary issuance
      fees with respect to  the issuance of any Credit Instrument hereunder and
      (iii) the Underlying Issuer or the Issuing Lender also imposes a schedule
      of charges for amendments,  extensions,  drawings,  and renewals; in each
      case  it  being  agreed that U.S. Borrowers as to each Credit  Instrument
      shall not be subject  to  charges  both  of  the  Issuing Lender plus the
      Underlying Issuer.

            (j)   If by reason of (i) any change after the Closing Date  in any
      applicable  law,  treaty,  rule,  or  regulation  or any  change  in  the
      interpretation or application thereof by any Governmental  Authority,  or
      (ii)  compliance  by  the  Underlying  Issuer,  the Issuing Lender or the
      Lender Group with any direction, request, or requirement (irrespective of
      whether  having  the  force  of  law)  of any Governmental  Authority  or
      monetary authority including, Regulation  D  of the Federal Reserve Board
      as from time to time in effect (and any successor thereto):

                  (i)   any  reserve,  deposit, or similar  requirement  is  or
            shall be imposed or modified  in  respect  of any Credit Instrument
            issued hereunder, or

                  (ii)  there  shall be imposed on the Underlying  Issuer,  the
            Issuing Lender or the  Lender  Group  any other condition regarding
            any  Underlying Letter of Credit or any  Credit  Instrument  issued
            pursuant hereto;

and the result of  the  foregoing  is  to increase, directly or indirectly, the
cost to the Lender Group of issuing, making,  guarantying,  or  maintaining any
Credit Instrument or to reduce the amount receivable in respect thereof  by the
Lender  Group,  then,  and  in  any  such case, Agent may, at any time within a
reasonable period after the additional  cost is incurred or the amount received
is reduced, notify Administrative Borrower, and U.S. Borrowers shall pay within
1 Business Day after demand such amounts  as  Agent may specify to be necessary
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to compensate the Lender Group for such additional  cost  or  reduced  receipt,
together  with  interest  on  such  amount  from  the date of such demand until
payment  in  full  thereof  at the rate then applicable  to  Prime  Rate  Loans
hereunder.  The determination  by  Agent  of  any  amount  due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable  error, be
final and conclusive and binding on all of the parties hereto.

            (k)   Each  U.S.  Borrower acknowledges and agrees that certain  of
      the Qualified Import Letters  of  Credit may provide for the presentation
      of time drafts to the Underlying Issuer.  If an Underlying Issuer accepts
      such a time draft that is presented under an Underlying Letter of Credit,
      it is acknowledged and agreed that  (i) the Letter of Credit will require
      the Issuing Lender to reimburse the Underlying Issuer for amounts paid on
      account of such time draft on or after  the  maturity  date thereof, (ii)
      the  pricing  provisions hereof (including Sections 2.5(b)  and  2.12(e))
      shall continue to apply, until payment of such time draft on or after the
      maturity date thereof,  as  if the Underlying Letter of Credit were still
      outstanding, and (iii) on the  date on which Issuing Lender makes payment
      to the Underlying Issuer of the  amounts  paid  on  account  of such time
      draft,  the Borrowers immediately shall reimburse such amount to  Issuing
      Lender and such amount shall constitute an L/C Disbursement hereunder.

      2.12. LIBOR OPTION.

            (a)   INTEREST  AND  INTEREST  PAYMENT  DATES.   In  lieu of having
      interest  charged at the rate based upon the Prime Rate, Borrowers  shall
      have the option (the "LIBOR Option") to have interest on all or a portion
      of the Advances  be  charged  at  a rate of interest based upon the LIBOR
      Rate.  Interest on LIBOR Rate Loans  shall  be payable on the earliest of
      (i) the Interest Payment Date applicable to LIBOR  Rate  Loans,  (ii) the
      occurrence  of  an  Event of Default in consequence of which the Required
      Lenders  or  Agent on behalf  thereof  have  elected  to  accelerate  the
      maturity of all  or  any portion of the Obligations, or (iii) termination
      of this Agreement pursuant  to the terms hereof.  On the last day of each
      applicable  Interest Period, unless  Administrative  Borrower  or  Bombay
      Canada, as the  case may be, properly has exercised the LIBOR Option with
      respect thereto,  the  interest  rate  applicable to such LIBOR Rate Loan
      automatically shall convert to the rate  of  interest  then applicable to
      Prime Rate Loans of the same type hereunder.  At any time  that  an Event
      of Default has occurred and is continuing, Borrowers no longer shall have
      the  option to request that Advances bear interest at the LIBOR Rate  and
      Agent  or  Canadian  Agent  (as  the case may be) shall have the right to
      convert the interest rate on all outstanding  LIBOR  Rate  Loans  with an
      initial Interest Period greater than 3 months to the rate then applicable
      to Prime Rate Loans hereunder.

            (b)   LIBOR ELECTION.

                  (i)   Administrative  Borrower  with respect to U.S. Advances
            or Bombay Canada with respect to Canadian  Advances,  may,  at  any
            time  and  from  time  to  time, so long as no Event of Default has
            occurred and is continuing,  elect  to exercise the LIBOR Option by
            notifying Agent or Canadian Agent, as  the  case  may  be, prior to
            1:00 p.m. (New York, New York time) at least 2 Business  Days prior
            to  the  commencement  of  the proposed Interest Period (the "LIBOR
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            Deadline").  Notice of Administrative Borrower's or Bombay Canada's
            election  of  the LIBOR Option  for  a  permitted  portion  of  the
            Advances and an  Interest  Period pursuant to this Section shall be
            made by delivery to Agent with  respect to US. Advances or Canadian
            Agent with respect to Canadian Advances  of a LIBOR Notice received
            by  Agent  with  respect to U.S. Advances or  Canadian  Agent  with
            respect to Canadian  Advances  before  the  LIBOR  Deadline,  or by
            telephonic notice received by Agent, before the LIBOR Deadline  (to
            be  confirmed  by  delivery  to Agent of a LIBOR Notice received by
            Agent or the Canadian Agent, as the case may be, prior to 5:00 p.m.
            (New York, New York time) on the  same  day).   Promptly  upon  its
            receipt  of each such LIBOR Notice, Agent or Canadian Agent, as the
            case may be,  shall  provide a copy thereof to each Lender having a
            Commitment.

                  (ii)  Each LIBOR  Notice  shall be irrevocable and binding on
            Borrowers.  In connection with each  LIBOR Rate Loan, each Borrower
            shall indemnify, defend, and hold Agent,  the  Canadian  Agent  and
            Lenders  harmless  against  any  loss, cost, or expense incurred by
            Agent, the Canadian Agent or any Lender  as  a  result  of  (a) the
            payment  of any principal of any LIBOR Rate 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 LIBOR
            Rate  Loan  other  than  on  the  last day of the  Interest  Period
            applicable thereto, or (c) the failure to borrow, convert, continue
            or prepay any LIBOR Rate Loan on the  date  specified  in any LIBOR
            Notice delivered pursuant hereto (such losses, costs, and expenses,
            collectively,  "Funding  Losses").   Funding  Losses  shall,   with
            respect  to  Agent, Canadian Agent, Canadian Lenders or any Lender,
            be deemed to equal  the  amount determined by Agent, Canadian Agent
            or such Lender to be the excess,  if  any,  of  (i)  the  amount of
            interest  that  would have accrued on the principal amount of  such
            LIBOR Rate Loan had such event not occurred, at the LIBOR Rate that
            would have been applicable thereto, 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
            therefor), minus (ii) the amount of interest  that  would accrue on
            such  principal amount for such period at the interest  rate  which
            Agent, Canadian Agent or such Lender would be offered were it to be
            offered,  at  the commencement of such period, Dollar deposits of a
            comparable amount  and  period  in  the London interbank market.  A
            certificate  of Agent, Canadian Agent  or  a  Lender  delivered  to
            Administrative  Borrower  setting  forth any amount or amounts that
            Agent,  Canadian  Agent  or  such Lender  is  entitled  to  receive
            pursuant to this Section 2.12  shall  be conclusive absent manifest
            error.

                  (iii) Borrowers shall have not more  than  5 LIBOR Rate Loans
            in effect at any given time.  Borrowers only may exercise the LIBOR
            Option  for  LIBOR Rate Loans of at least $1,000,000  and  integral
            multiples of $1,000,000 in excess thereof.

            (c)   PREPAYMENTS  OF  LIBOR  RATE  LOANS.   (i) U.S. Borrowers may
      prepay  LIBOR Rate Loans at any time and (ii) Bombay  Canada  may  prepay
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      LIBOR Rate Loans at any time with respect to Canadian Advances; provided,
      however,  that in the event that LIBOR Rate Loans are prepaid on any date
      that is not  the  last  day  of  the  Interest Period applicable thereto,
      including as a result of any mandatory prepayment (whether or not through
      the required application by Agent of proceeds  of  Borrowers'  and  their
      Subsidiaries'   Collections   in  accordance  with  Section  2.4(b)),  if
      applicable or for any other reason,  including  early  termination of the
      term  of  this  Agreement  or acceleration of all or any portion  of  the
      Obligations pursuant to the  terms  hereof,  (A) each U.S. Borrower shall
      indemnify, defend, and hold Agent and Lenders and their Participants, and
      (B) Bombay Canada shall indemnify, defend, and  hold  Canadian  Agent and
      Canadian  Lenders  and  their Participants, harmless against any and  all
      Funding Losses in accordance with clause (b) above.

            (d)   SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.

                  (i)   The LIBOR  Rate  may  be  adjusted by Agent or Canadian
            Agent,  as  the  case  may be, with respect  to  any  Lender  on  a
            prospective basis to take  into account any additional or increased
            costs to such Lender of maintaining  or  obtaining  any  eurodollar
            deposits  or  increased  costs  due  to  changes  in applicable law
            occurring  subsequent  to  the commencement of the then  applicable
            Interest Period, including changes  in  tax laws (except changes of
            general applicability in corporate income  tax laws) and changes in
            the reserve requirements imposed by the Board  of  Governors of the
            Federal  Reserve System (or any successor), excluding  the  Reserve
            Percentage,  which additional or increased costs would increase the
            cost of funding  loans  bearing interest at the LIBOR Rate.  In any
            such event, the affected  Lender shall give Administrative Borrower
            or Bombay Canada, as the case  may be, and Agent or Canadian Agent,
            as the case may be, notice of such  a  determination and adjustment
            and Agent or Canadian Agent, as the case  may  be,  promptly  shall
            transmit  the notice to each other Lender and, upon its receipt  of
            the notice  from  the  affected  Lender, Administrative Borrower or
            Bombay Canada, as the case may be,  may, by notice to such affected
            Lender  (y)  require  such  Lender  to  furnish  to  Administrative
            Borrower or Bombay Canada, as the case may  be, a statement setting
            forth the basis for adjusting such LIBOR Rate  and  the  method for
            determining  the amount of such adjustment, or (z) repay the  LIBOR
            Rate Loans with  respect to which such adjustment is made (together
            with any amounts due under clause (b)(ii) above).

                  (ii)  In the  event  that  any change in market conditions or
            any law, regulation, treaty, or directive, or any change therein or
            in the interpretation of application  thereof,  shall  at  any time
            after  the  date  hereof,  in the reasonable opinion of any Lender,
            make it unlawful or impractical for such Lender to fund or maintain
            LIBOR Advances or to continue  such  funding  or maintaining, or to
            determine or charge interest rates at the LIBOR  Rate,  such Lender
            shall  give  notice  of  such  changed  circumstances  to Agent  or
            Canadian Agent, as the case may be, and Administrative Borrower  or
            Bombay  Canada, as the case may be, and Agent or Canadian Agent, as
            the case  may  be, promptly shall transmit the notice to each other
            Lender and (y) in  the  case of any LIBOR Rate Loans of such Lender
            that are outstanding, the  date  specified  in such Lender's notice
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            shall be deemed to be the last day of the Interest  Period  of such
            LIBOR  Rate  Loans,  and interest upon the LIBOR Rate Loans of such
            Lender thereafter shall accrue interest at the rate then applicable
            to Prime Rate Loans, and  (z)  applicable  Borrowers  shall  not be
            entitled  to  elect  the  LIBOR Option until such Lender determines
            that it would no longer be  unlawful or impractical to do so.  Each
            U.S. Lender at such time having  as  its  lending  office an office
            outside  the  United  States  agrees  to use reasonable efforts  to
            designate a different lending office if such designation will avoid
            the need for such a notice of changed circumstances  and would not,
            in  the  good  faith  judgment  of  such U.S. Lender, otherwise  be
            disadvantageous to such U.S. Lender.   Each Canadian Lender at such
            time  having  as  its lending office an office  outside  of  Canada
            agrees to use reasonable  efforts  to designate a different lending
            office if such designation will avoid the need for such a notice of
            changed circumstances and would not,  in the good faith judgment of
            such Canadian Lender, otherwise be disadvantageous to such Canadian
            Lender.

            (e)   NO REQUIREMENT OF MATCHED FUNDING.   Anything to the contrary
      contained herein notwithstanding, neither Agent, Canadian  Agent, nor any
      Lender,  nor any of their Participants, is required actually  to  acquire
      eurodollar  deposits to fund or otherwise match fund any Obligation as to
      which interest accrues at the LIBOR Rate.  The provisions of this Section
      shall apply as  if  each  Lender or its Participants had match funded any
      Obligation  as  to which interest  is  accruing  at  the  LIBOR  Rate  by
      acquiring eurodollar  deposits  for each Interest Period in the amount of
      the LIBOR Rate Loans.

      2.13. CAPITAL  REQUIREMENTS.  If,  after  the  date  hereof,  any  Lender
determines that (i) the  adoption  of or change in any law, rule, regulation or
guideline regarding capital requirements  for  banks or bank holding companies,
or any change in the interpretation or application  thereof by any Governmental
Authority charged with the administration thereof, or  (ii)  compliance by such
Lender  or  its  parent  bank  holding company with any guideline,  request  or
directive of any such entity regarding  capital adequacy (whether or not having
the force of law), has the effect of reducing  the  return  on such Lender's or
such  holding  company's capital as a consequence of such Lender's  Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but  for  such  adoption,  change,  or  compliance  (taking  into
consideration  such  Lender's  or such holding company's then existing policies
with respect to capital adequacy  and  assuming  the  full  utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof.  Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction  of  return  of  capital  as  and when such reduction is  determined,
payable within 90 days after presentation  by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender's calculation thereof
and  the assumptions upon which such calculation  was  based  (which  statement
shall  be  deemed  true  and  correct  absent manifest error).  Notwithstanding
anything to the contrary in this Section,  Borrower  will  not  be  required to
compensate any Lender pursuant to this Section for any reduction incurred  more
than  180  days  before  such Lender notified Borrower of the change in law (or
other circumstance) giving rise to such reduction.  In determining such amount,
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such  Lender may use any reasonable  averaging  and  attribution  methods.   In
determining  such  amount,  such  Lender  may  use any reasonable averaging and
attribution methods.

      2.14. JOINT AND SEVERAL LIABILITY OF U.S. BORROWERS.

            (a)   Each U.S. Borrower is accepting  joint  and several liability
      hereunder  and  under  the other Loan Documents in consideration  of  the
      financial accommodations  to  be provided by Agent and Lenders under this
      Agreement,  for the mutual benefit,  directly  and  indirectly,  of  each
      Borrower  (including   Bombay   Canada)   and  in  consideration  of  the
      undertakings of the other Borrowers to accept joint and several liability
      for the Obligations.

            (b)   Each U.S. Borrower, jointly and severally, hereby irrevocably
      and unconditionally accepts, not merely as  a  surety  but  also as a co-
      debtor,  joint and several liability with the other U.S. Borrowers,  with
      respect to  the  payment  and  performance  of  all  of  the  Obligations
      (including,  without  limitation,  any  Obligations  arising  under  this
      Section  2.14),  it  being  the  intention of U.S. Borrowers that all the
      Obligations (including those of Bombay  Canada)  shall  be  the joint and
      several obligations of U.S. Borrowers without preferences or  distinction
      among them.

            (c)   If and to the extent that any of Borrowers shall fail to make
      any payment with respect to any of the Obligations as and when  due or to
      perform any of the Obligations in accordance with the terms thereof, then
      in each such event, the other Persons composing U.S. Borrowers will  make
      such payment with respect to, or perform, such Obligation.

            (d)   The  Obligations  of  U.S.  Borrowers under the provisions of
      this  Section  2.14  constitute  the  absolute  and  unconditional,  full
      recourse Obligations of each U.S. Borrower  enforceable against each such
      Borrower to the full extent of its properties and assets, irrespective of
      the validity, regularity or enforceability of this Agreement or any other
      circumstances whatsoever.

            (e)   Except  as otherwise expressly provided  in  this  Agreement,
      each U.S. Borrower hereby  waives  notice  of acceptance of its joint and
      several  liability,  as  applicable,  notice  of   any  Advances,  Credit
      Instruments  issued under or pursuant to this Agreement,  notice  of  the
      occurrence of  any  Default,  Event  of Default, or of any demand for any
      payment under this Agreement, notice of  any  action at any time taken or
      omitted by Agent, Canadian Agent or Lenders under or in respect of any of
      the Obligations, any requirement of diligence or to mitigate damages, any
      and  al suretyship defenses and, generally, to the  extent  permitted  by
      applicable  law, all demands, notices and other formalities of every kind
      in connection  with  this Agreement (except as otherwise provided in this
      Agreement).  Each U.S.  Borrower hereby assents to, and waives notice of,
      any extension or postponement  of  the time for the payment of any of the
      Obligations, the acceptance of any payment of any of the Obligations, the
      acceptance of any partial payment thereon,  any  waiver, consent or other
      action or acquiescence by Agent, Canadian Agent or Lenders at any time or
      times in respect of any default by any Person composing  Borrowers in the
      performance or satisfaction of any term, covenant, condition or provision
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      of  this  Agreement, any and all other indulgences whatsoever  by  Agent,
      Canadian Agent  or  Lenders in respect of any of the Obligations, and the
      taking, addition, substitution  or  release,  in whole or in part, at any
      time  or  times,  of  any  security  for  any of the Obligations  or  the
      addition, substitution or release, in whole  or  in  part,  of any Person
      composing  Borrowers.  Without limiting the generality of the  foregoing,
      each U.S. Borrower  assents  to  any  other  action or delay in acting or
      failure to act on the part of any of Agent, Canadian  Agent or any Lender
      with respect to the failure by any Person composing Borrowers  to  comply
      with  any  of  its respective Obligations, including, without limitation,
      any failure strictly  or  diligently to assert any right or to pursue any
      remedy or to comply fully with applicable laws or regulations thereunder,
      which might, but for the provisions  of  this Section 2.14 afford grounds
      for terminating, discharging or relieving  any U.S. Borrower, in whole or
      in part, from any of its Obligations under this  Section  2.14,  it being
      the  intention  of  U.S. Borrower that, so long as any of the Obligations
      hereunder remain unsatisfied, the Obligations of such U.S. Borrower under
      this Section 2.14 shall  not be discharged except by performance and then
      only to the extent of such  performance.   The  Obligations  of each U.S.
      Borrower  under  this  Section 2.14  shall  not be diminished or rendered
      unenforceable   by   any   winding   up,   reorganization,   arrangement,
      liquidation, reconstruction or similar proceeding  with  respect  to  any
      Borrower or any Agent or Lender.  The joint and several liability of U.S.
      Borrowers   hereunder   shall   continue   in   full   force  and  effect
      notwithstanding any absorption, merger, amalgamation or  any other change
      whatsoever in the name, constitution or place of formation of any of U.S.
      Borrowers or any Agent or Lender.

            (f)   Each U.S. Borrower represents and warrants to Agent, Canadian
      Agent  and  Lenders  that  such  Borrower  is currently informed  of  the
      financial condition of Borrowers and of all  other  circumstances which a
      diligent inquiry would reveal and which bear upon the  risk of nonpayment
      of the Obligations.  Each U.S. Borrower further represents  and  warrants
      to  Agent,  Canadian  Agent  and  Lenders that such Borrower has read and
      understands the terms and conditions  of  the  Loan Documents.  Each U.S.
      Borrower  hereby  covenants  that  such Borrower will  continue  to  keep
      informed of Borrowers' financial condition,  the  financial  condition of
      other guarantors, if any, and of all other circumstances which  bear upon
      the risk of nonpayment or nonperformance of the Obligations.

            (g)   The provisions of this Section 2.14 are made for the  benefit
      of  Agent,  Canadian  Agent,  Lenders and their respective successors and
      assigns, and may be enforced by  it or them from time to time against any
      or all U.S. Borrowers as often as occasion therefor may arise and without
      requirement on the part of any such  Agent,  Lender,  successor or assign
      first to marshal any of its or their claims or to exercise  any of its or
      their  rights  against any of the other U.S. Borrowers or to exhaust  any
      remedies available to it or them against any of the other Borrowers or to
      resort to any other  source  or  means of obtaining payment of any of the
      Obligations hereunder or to elect  any  other  remedy.  The provisions of
      this  Section 2.14 shall remain in effect until all  of  the  Obligations
      shall have  been  paid  in  full or otherwise fully satisfied.  If at any
      time, any payment, or any part  thereof,  made  in  respect of any of the
      Obligations, is rescinded or must otherwise be restored  or  returned  by
      any  Agent,  Canadian  Agent or Lender upon the insolvency, bankruptcy or
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<PAGE>

      reorganization of any of  Borrowers, or otherwise, the provisions of this
      Section 2.14 will forthwith  be  reinstated  in  effect,  as  though such
      payment had not been made.

            (h)   Each U.S. Borrower hereby agrees that it will not enforce any
      of  its  rights  of  contribution  or subrogation against Borrowers  with
      respect to any liability incurred by  it  hereunder  or  under any of the
      other Loan Documents, any payments made by it to Agent, Canadian Agent or
      Lenders with respect to any of the Obligations or any collateral security
      therefor until such time as all of the Obligations have been paid in full
      in  cash.   Any  claim  which  any  Borrower  may have against any  other
      Borrower  with respect to any payments to any Agent,  Canadian  Agent  or
      Lender hereunder  or  under any other Loan Documents are hereby expressly
      made subordinate and junior in right of payment, without limitation as to
      any increases in the Obligations  arising hereunder or thereunder, to the
      prior payment in full in cash of the Obligations and, in the event of any
      insolvency,  bankruptcy,  receivership,  liquidation,  reorganization  or
      other similar proceeding under  the  laws of any jurisdiction relating to
      any Borrower, its debts or its assets,  whether voluntary or involuntary,
      all such Obligations shall be paid in full  in cash before any payment or
      distribution  of  any  character, whether in cash,  securities  or  other
      property, shall be made to any other Borrower therefor.

            (i)   Each U.S. Borrower  hereby  agrees that, after the occurrence
      and  during  the continuance of any Default  or  Event  of  Default,  the
      payment of any  amounts due with respect to the indebtedness owing by any
      Borrower to any other  Borrower  is  hereby  subordinated  to  the  prior
      payment  in full in cash of the Obligations.  Each Borrower hereby agrees
      that after  the  occurrence  and during the continuance of any Default or
      Event of Default, such Borrower  will  not  demand,  sue for or otherwise
      attempt to collect any indebtedness of any other Borrower  owing  to such
      Borrower until the Obligations shall have been paid in full in cash.  If,
      notwithstanding  the  foregoing  sentence,  such  Borrower shall collect,
      enforce  or  receive  any  amounts in respect of such indebtedness,  such
      amounts shall be collected,  enforced  and  received  by such Borrower as
      trustee for Agent, and such Borrower shall deliver any  such  amounts  to
      Agent  for  application  to  the  Obligations  in accordance with Section
      2.3(b).

      2.15. JUDGMENT CURRENCY; CONTRACTUAL CURRENCY.

            (a)   If,  for  the  purpose  of  obtaining or  enforcing  judgment
      against  any  Borrower  in  any  court in any  jurisdiction,  it  becomes
      necessary to convert into any other  currency  (such other currency being
      hereinafter in this Section 2.15 referred to as  the "Judgment Currency")
      an  amount due under any Loan Document in any currency  (the  "Obligation
      Currency") other than the Judgment Currency, the conversion shall be made
      at the  rate  of  exchange  prevailing  on  the  Business Day immediately
      preceding (i) the date of actual payment of the amount  due,  in the case
      of any proceeding in the courts of any jurisdiction that will give effect
      to such conversion being made on such date, or (ii) the date on which the
      judgment  is  given, in the case of any proceeding in the courts  of  any
      other jurisdiction  (the  applicable  date as of which such conversion is
      made pursuant to this Section 2.15 being  hereinafter  referred to as the
      "Judgment Conversion Date").
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            (b)   If,  in  the  case  of  any  proceeding in the court  of  any
      jurisdiction referred to in Section 2.15,  there  is a change in the rate
      of exchange prevailing between the Judgment Conversion  Date and the date
      of  actual  receipt for value of the amount due, the applicable  Borrower
      shall pay such  additional  amount (if any, but in any event not a lesser
      amount) as may be necessary to  ensure  that the amount actually received
      in  the  Judgment  Currency,  when converted  at  the  rate  of  exchange
      prevailing  on  the date of payment,  will  produce  the  amount  of  the
      Obligation Currency  which  could  have been purchased with the amount of
      the Judgment Currency stipulated in the judgment or judicial order at the
      rate of exchange prevailing on the Judgment  Conversion Date.  Any amount
      due from a Borrower under this Section 2.15(b) shall be due as a separate
      debt and shall not be affected by judgment being  obtained  for any other
      amounts due under or in respect of any of the Loan Documents.

            (c)   The  term "rate of exchange" in this Section 2.15  means  the
      rate of exchange at  which  Agent would, on the relevant date at or about
      12:00 p.m. (New York, New York  time),  be  able  to  sell the Obligation
      Currency against the Judgment Currency to prime banks.

            (d)   Any amount received or recovered by any Agent, Canadian Agent
      or Lender in respect of any sum expressed to be due to  them (whether for
      itself or as trustee for any other person) from any Borrower  under  this
      Agreement  or  under  any of the other Loan Documents in a currency other
      than the currency (the  "Contractual  Currency")  in which such sum is so
      expressed to be due (whether as a result of, or from  the enforcement of,
      any  judgment  or  order of a court or tribunal of any jurisdiction,  the
      winding-up of a Borrower  or otherwise) shall only constitute a discharge
      of such Borrower to the extent  of the amount of the contractual currency
      that such Agent, Canadian Agent or Lender is able, in accordance with its
      usual practice, to purchase with  the  amount of the currency so received
      or recovered on the date of receipt or recovery  (or, if later, the first
      date  on  which  such  purchase is practicable).  If the  amount  of  the
      Contractual  Currency so  purchased  is  less  than  the  amount  of  the
      Contractual  Currency  so  expressed  to  be  due,  such  Borrower  shall
      indemnify such Agent and Canadian Lender against any loss sustained by it
      as a result, including  the  cost  of making any such purchase other than
      losses resulting from the gross negligence  or  willful misconduct of the
      Person seeking such indemnification.

3.    CONDITIONS; TERM OF AGREEMENT.

      3.1.  CONDITIONS  PRECEDENT  TO  THE INITIAL EXTENSION  OF  CREDIT.   The
obligation of the Lender Group (or any member  thereof)  to  make  the  initial
Advance  (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment,  to  the satisfaction of Agent in its Permitted Discretion,
of each of the conditions precedent set forth below:

            (a)   the Closing Date shall occur on or before September 29, 2004;

            (b)   Agent shall have received appropriate financing statements on
      Form UCC-1 and PPSA  registration statements duly filed in such office or
      offices as may be necessary  or,  in  the  opinion of Agent, desirable to
      perfect  Agent's  Liens in and to the Collateral  and  Agent  shall  have
                                   73
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      received searches reflecting  the filing of all such financing statements
      and PPSA registration statements and otherwise satisfactory to Agent;

            (c)   Agent shall have received each of the following documents, in
      form and substance satisfactory  to  Agent  in  its Permitted Discretion,
      duly executed, and each such document shall be in full force and effect:

                  (i)   this Agreement,

                  (ii)  the Canadian Security Documents,

                  (iii) the Guaranty,

                  (iv)  the Control Agreements,

                  (v)   the Credit Card Agreements,

                  (vi)  the Disbursement Letter,

                  (vii) the Due Diligence Letter,

                  (viii)the Fee Letter,

                  (ix)  the Notes,

                  (x)   the  Pay-Off  Letter,  together  with  UCC  termination
            statements and other documentation evidencing  the  termination  by
            Existing Lenders of their Liens in and to the properties and assets
            of Borrowers and their Subsidiaries,

                  (xi)  the  Eligible  Drafts  as  required pursuant to Section
            2.11(c), and

                  (xii) additional documents required to be determined;

            (d)   Agent shall have received a certificate from the Secretary of
      each Borrower attesting to the resolutions of  such  Borrower's  Board of
      Directors  authorizing  its execution, delivery, and performance of  this
      Agreement and the other Loan  Documents to which such Borrower is a party
      and authorizing specific officers of such Borrower to execute the same;

            (e)   Agent shall have received copies of each Borrower's Governing
      Documents, as amended, modified,  or  supplemented  to  the Closing Date,
      certified by the Secretary of such Borrower;

            (f)   Agent  shall  have  received  a  certificate  of status  with
      respect to each Borrower, dated within 10 days of the Closing  Date, such
      certificate  to  be issued by the appropriate officer of the jurisdiction
      of organization of  such  Borrower, which certificate shall indicate that
      such Borrower is in good standing in such jurisdiction;
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            (g)   Agent shall have received certificates of status with respect
      to each Borrower, each dated  within  30  days  of the Closing Date, such
      certificates to be issued by the appropriate officer of the jurisdictions
      (other than the jurisdiction of organization of such  Borrower)  in which
      its  failure to be duly qualified or licensed would constitute a Material
      Adverse  Change,  which certificates shall indicate that such Borrower is
      in good standing in such jurisdictions;

            (h)   Agent  shall   have  received  a  certificate  of  insurance,
      together with the endorsements  thereto,  as are required by Section 6.7,
      the form and substance of which shall be satisfactory to Agent;

            (i)   Agent shall have received Collateral  Access  Agreements with
      respect  to  each  warehouse,  distribution  center, fulfillment  center,
      contract  warehouse or other real property (other  than  a  retail  store
      location) leased by a Borrower;

            (j)   Agent  shall  have  received opinions from each of Borrowers'
      U.S. and Canadian counsel in form and substance satisfactory to Agent;

            (k)   Borrowers shall have  received  a  Borrowing Base Certificate
      demonstrating Availability in an amount no less  than  $10,000,000  after
      giving  effect  to  the  initial  extensions  of credit hereunder and the
      payment of all fees and expenses required to be  paid by Borrowers on the
      Closing Date under this Agreement or the other Loan Documents;

            (l)   Agent   shall  have  completed  its  business,   legal,   and
      collateral due diligence,  including (i) a collateral audit and review of
      Borrowers'   books   and   records   and   verification   of   Borrowers'
      representations and warranties  to the Lender Group, the results of which
      shall be satisfactory to Agent, and  (ii)  an  inspection  of each of the
      locations  selected  by  Agent  where  Borrowers' and their Subsidiaries'
      Inventory  is  located, the results of which  shall  be  satisfactory  to
      Agent;

            (m)   Agent  shall  have  received  an  appraisal of the Net Retail
      Liquidation Value and Net Liquidation Percentage applicable to Borrowers'
      and  their  Subsidiaries'  Inventory,  the  results  of  which  shall  be
      satisfactory to Agent;

            (n)   Agent shall have received Borrowers'  Closing  Date  Business
      Plan;

            (o)   Borrowers  shall have paid all Lender Group Expenses incurred
      in connection with the transactions evidenced by this Agreement;

            (p)   [Reserved];

            (q)   Agent shall  have  received  evidence satisfactory in Agent's
      Permitted  Discretion  that  Borrowers have received  all  consents,  all
      licenses,  approvals  or  evidence  of  other  actions  required  by  any
      Governmental Authority in connection  with  the execution and delivery by
      Borrowers  or  their Subsidiaries of this Agreement  or  any  other  Loan
      Document or with the consummation of the transactions contemplated hereby
      and thereby; and
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            (r)   all  other documents and legal matters in connection with the
      transactions contemplated  by  this  Agreement shall have been delivered,
      executed, or recorded and shall be in  form and substance satisfactory to
      Agent.

      3.2.  RESERVED.

      3.3.  CONDITIONS PRECEDENT TO ALL EXTENSIONS  OF  CREDIT.  The obligation
of the Lender Group (or any member thereof) to make any Advances  hereunder  at
any  time  (or  to  extend  any other credit hereunder) shall be subject to the
following conditions precedent:

            (a)   the  representations   and   warranties   contained  in  this
      Agreement and the other Loan Documents shall be true and  correct  in all
      material  respects on and as of the date of such extension of credit,  as
      though made  on  and  as  of  such  date  (except to the extent that such
      representations and warranties relate solely to an earlier date);

            (b)   no Default or Event of Default  shall  have  occurred  and be
      continuing  on  the  date  of  such extension of credit, nor shall either
      result from the making thereof;

            (c)   no injunction, writ, restraining order, or other order of any
      nature restricting or prohibiting,  directly or indirectly, the extending
      of  such  credit  shall have been issued  and  remain  in  force  by  any
      Governmental Authority against any Borrower, Agent, any Lender, or any of
      their Affiliates;

            (d)   Agent shall  have  received  the  most  recent Borrowing Base
      Certificate required to be delivered to Agent in accordance  with Section
      6.2; and

            (e)   no Material Adverse Change shall have occurred.

      3.4.  TERM.  This Agreement shall become effective upon the execution and
delivery  hereof  by  Borrowers,  Agent,  Canadian Agent and Lenders and  shall
continue in full force and effect for a term  ending on the Maturity Date.  The
foregoing notwithstanding, the Lender Group, upon  the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and  during the continuation
of an Event of Default.

      3.5.  EFFECT  OF  TERMINATION.   On  the  date  of  termination  of  this
Agreement, all Obligations (including contingent reimbursement  obligations  of
U.S.  Borrowers  with  respect  to  any  outstanding  Credit  Instruments,  and
including  all  Bank  Products  Obligations)  immediately  shall become due and
payable  without  notice  or  demand  (including (a) either (i) U.S.  Borrowers
providing cash collateral to be held by  Agent for the benefit of those Lenders
with a Commitment in an amount equal to 103%  of  the  then  extant  Letter  of
Credit  Usage  and Acceptance Face Amount, or (ii) causing the original Letters
of Credit to be  returned  to  the  Issuing  Lender and the cancellation of any
Bankers'  Acceptances,  and  (b)  providing  cash  collateral   (in  an  amount
determined  by  Agent as sufficient to satisfy the reasonably estimated  credit
exposure) to be held  by  Agent  for  the benefit of the Bank Product Providers
with respect to the then extant Bank Products  Obligations).  No termination of
this  Agreement,  however,  shall  relieve  or  discharge  Borrowers  or  their
Subsidiaries of their duties, Obligations, or covenants  hereunder  and Agent's
Liens in the Collateral shall remain in effect until all Obligations  have been
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<PAGE>

paid in full and fully discharged and the Lender Group's obligations to provide
additional credit hereunder have been terminated.  When this Agreement has been
terminated  and  all  of  the  Obligations  have  been  paid  in full and fully
discharged  and  the  Lender  Group's obligations to provide additional  credit
under  the Loan Documents have been  terminated  irrevocably,  Agent  will,  at
Borrowers'  sole  expense,  execute and deliver any UCC termination statements,
lien releases, mortgage releases,  re-assignments  of trademarks, discharges of
security interests, and other similar discharge or release  documents  (and, if
applicable, in recordable form) as are reasonably necessary to release,  as  of
record,  Agent's  Liens  and  all  notices  of  security  interests  and  liens
previously filed by Agent with respect to the Obligations.

      3.6.  EARLY TERMINATION BY BORROWERS.  Borrowers have the option, at  any
time  upon  5  Business Days prior written notice by Administrative Borrower to
Agent,  to  (a) so  long  as  no  Accordion  Activation  shall  have  occurred,
permanently reduce  the  Commitment  in  the  minimum amount of $25,000,000 and
integral  multiples of $25,000,000 in excess thereof  provided,  that  (i)  the
Commitment  shall not be permanently reduced to an amount less than $75,000,000
and (b) terminate  this  Agreement by paying to Agent, in cash, the Obligations
(including (x) either (i)  U.S.  Borrowers providing cash collateral to be held
by Agent for the benefit of those  Lenders with a Commitment in an amount equal
to 103% of the then extant Letter of Credit Usage and Acceptance Face Amount or
(ii) causing the original Letters of  Credit  to  be  returned  to  the Issuing
Lender and the cancellation of any Bankers' Acceptances, and (y) providing cash
collateral  (in  an  amount  determined  by Agent as sufficient to satisfy  the
reasonably estimated credit exposure) to be  held  by  Agent for the benefit of
the  Bank  Product  Providers  with  respect to the then extant  Bank  Products
Obligations),  in  full.  If Administrative  Borrower  has  sent  a  notice  of
termination pursuant  to  the  provisions of this Section, then the Commitments
shall terminate and Borrowers shall  be  obligated  to  repay  the  Obligations
(including (a) either (i) U.S. Borrowers providing cash collateral to  be  held
by  Agent for the benefit of those Lenders with a Commitment in an amount equal
to 103%  of  the then extant Letter of Credit Usage and Acceptance Face Amount,
or (ii) causing  the  original  Letters of Credit to be returned to the Issuing
Lender and the cancellation of any Bankers' Acceptances, and (b) providing cash
collateral (in an amount determined  by  Agent  as  sufficient  to  satisfy the
reasonably  estimated  credit exposure) to be held by Agent for the benefit  of
the Bank Product Providers  with  respect  to  the  then  extant  Bank Products
Obligations), in full on the date set forth as the date of termination  of this
Agreement in such notice.

4.    CREATION OF SECURITY INTEREST.

      4.1.  GRANT  OF  SECURITY INTEREST.  Each U.S. Borrower hereby grants  to
Agent, for the benefit of  the  Lender  Group and the Bank Product Providers, a
continuing security interest in all of its  right,  title,  and interest in all
currently  existing and hereafter acquired or arising Collateral  in  order  to
secure prompt  repayment  of  any and all of the Obligations in accordance with
the terms and conditions of the  Loan  Documents  and in order to secure prompt
performance by U.S. Borrowers of each of their covenants  and  duties under the
Loan  Documents.   Agent's Liens in and to the Collateral shall attach  to  all
Collateral without further  act  on  the  part  of  Agent  or  U.S.  Borrowers.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding,  except  for  Permitted  Dispositions or any other disposition
permitted  under  Section  7.5,  Borrowers  and   their  Subsidiaries  have  no
authority,  express  or  implied,  to dispose of any item  or  portion  of  the
Collateral (it being understood, with respect to any such Permitted Disposition
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<PAGE>

of  Collateral, Agent's Liens in and  to  such  Collateral  shall  be  released
automatically upon consummation of such Permitted Disposition, and the proceeds
and products of such Permitted Disposition shall be subject to Agent's Liens).

      4.2.  OTHER  COLLATERAL.  Each U.S. Borrower agrees to take the following
actions at any time  and  solely  if  proceeds  or  products  of  the Specified
Collateral constitutes any of the following:

            (a)   In  the  event  that  any Collateral, including proceeds,  is
      evidenced by or consists of Negotiable  Collateral,  and  if  and  to the
      extent  that  Agent  determines  that  perfection  or priority of Agent's
      security  interest  is  dependent  on  or  enhanced  by  possession,  the
      applicable  U.S. Borrower, immediately upon the request of  Agent,  shall
      endorse and deliver  physical possession of such Negotiable Collateral to
      Agent accompanied by such  instruments  of  transfer  or  assignment duly
      executed in blank as Agent may from time to time specify.

            (b)   If   any   U.S.  Borrower  shall,  acquire  any  certificated
      securities, such Borrower shall forthwith endorse, assign and deliver the
      same to Agent, accompanied  by such instruments of transfer or assignment
      duly executed in blank as Agent  may  from  time to time specify.  If any
      securities   now  or  hereafter  acquired  by  any  U.S.   Borrower   are
      uncertificated  and  are  issued  to  such  U.S.  Borrower or its nominee
      directly  by  the  issuer thereof, such U.S. Borrower  shall  immediately
      notify Agent thereof and, at Agent's request and option, either (a) cause
      the issuer to enter  into  a  Control  Agreement,  or  (b) pursuant to an
      agreement in form and substance satisfactory to Agent, arrange  for Agent
      to  become  the  registered  owner of the securities.  If any securities,
      whether certificated or uncertificated,  or other Investment Property now
      or hereafter acquired by any U.S. Borrower are held by such U.S. Borrower
      or   its   nominee  through  a  securities  intermediary   or   commodity
      intermediary,  such  U.S. Borrower shall immediately notify Agent thereof
      and, at Agent's request  and  option,  either  (i)  cause such securities
      intermediary or (as the case may be) commodity intermediary to enter into
      a  Control  Agreement,  or  (ii)  pursuant to an agreement  in  form  and
      substance satisfactory to Agent, in the case of financial assets or other
      Investment Property held through a  securities  intermediary, arrange for
      Agent to become the entitlement holder with respect  to  such  Investment
      Property, with such U.S. Borrower being permitted, only with the  consent
      of  Agent,  to  exercise  rights  to withdraw or otherwise deal with such
      Investment Property.  The provisions of this paragraph shall not apply to
      any financial assets credited to a  securities account for which Agent is
      the securities intermediary.

            (c)   If  any  Borrowers acquire  an  interest  in  any  electronic
      chattel paper or any "transferable  record,"  as  that term is defined in
      Section 201 of the federal Electronic Signatures in  Global  and National
      Commerce  Act,  or  in {section}16 of the Uniform Electronic Transactions
      Act  as  in effect in any  relevant  jurisdiction,  such  Borrower  shall
      promptly notify  Agent  thereof  and, at the request and option of Agent,
      shall take such action as Agent may  reasonably  request to vest in Agent
      control,  under  {section}9-105 of the Code, of such  electronic  chattel
      paper or control under  Section  201 of the federal Electronic Signatures
      in Global and National Commerce Act  or,  as the case may be, {section}16
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      of the Uniform Electronic Transactions Act,  as  so  in  effect  in  such
      jurisdiction, of such transferable record.

      4.3.  COLLECTION   OF   ACCOUNTS,  GENERAL  INTANGIBLES,  AND  NEGOTIABLE
COLLATERAL.  At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's  designee  may (a) notify Account Debtors of
U.S. Borrowers that U.S. Borrowers' Accounts, have  been  assigned  to Agent or
that  Agent  has  a  security  interest therein, or (b) collect U.S. Borrowers'
Accounts  directly  and  charge  the  collection  costs  and  expenses  to  the
applicable Loan Account.  Subject  to  Section  2.6,  each U.S. Borrower agrees
that it will hold in trust for the Lender Group, as the Lender Group's trustee,
any  of  its  or  its  Subsidiaries'  Collections  that  it  receives   without
commingling  the  same  with other funds of U.S. Borrowers and immediately will
deliver such Collections  to  Agent or a Cash Management Bank in their original
form as received by such U.S. Borrower  or  its Subsidiaries, together with any
necessary endorsements or assignments.

      4.4.  AUTHORIZATION TO FILE FINANCING STATEMENTS.

            (a)   Each Borrower hereby irrevocably authorizes Agent at any time
      and  from  time  to  time  to  file  in any filing  office  in  any  Code
      jurisdiction any initial financing statements and amendments thereto that
      (a)  indicate  the  Collateral  and  (b) provide  any  other  information
      required by part 5 of Article 9 of the  Code  or  such other jurisdiction
      for  the  sufficiency  or  filing  office  acceptance  of  any  financing
      statement   or   amendment,  including  whether  such  Borrower   is   an
      organization,  the   type   of   organization   and   any  organizational
      identification number issued to such Borrower.  Each Borrower  agrees  to
      furnish  any  such  information  to  Agent  promptly  upon request.  Each
      Borrower also ratifies its authorization for Agent to have  filed  in any
      Code  jurisdiction  any  like  initial financing statements or amendments
      thereto if filed prior to the date hereof.

            (b)   Each U.S. Borrower further  agrees, upon the request of Agent
      and at Agent's option, to take any and all  other  actions  as  Agent may
      determine  in its Permitted Discretion to be necessary or useful for  the
      attachment, perfection and first priority of, and the ability of Agent to
      enforce, Agent's  Lien  in  any  and all of the Collateral, including (a)
      executing, delivering and, where appropriate, filing financing statements
      and amendments relating thereto under  the  Code,  to the extent, if any,
      that such Borrower's signature thereon is required therefor,  (b) causing
      Agent's name to be noted as secured party on any certificate of title for
      a  titled  good if such notation is a condition to attachment, perfection
      or priority of, or ability of Agent to enforce, Agent's security interest
      in such Collateral,  (c)  complying  with  any  provision of any statute,
      regulation  or  treaty  of  the  United  States as to any  Collateral  if
      compliance with such provision is a condition  to  attachment, perfection
      or priority of, or ability of Agent to enforce, Agent's security interest
      in  such  Collateral,  (d) obtaining governmental and other  third  party
      waivers, consents and approvals,  in  form  and substance satisfactory to
      Agent,  including any consent of any licensor,  lessor  or  other  person
      obligated  on  Collateral,  (e)  obtaining  waivers  from  mortgagees and
      landlords in form and substance satisfactory to Agent, and (f) taking all
      actions under any earlier versions of the Code or under any other law, as
      determined by Agent in its Permitted Discretion to be applicable  in  any
      relevant Code or other jurisdiction, including any foreign jurisdiction.
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      4.5.  POWER  OF  ATTORNEY.   Each U.S. Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and  any  of  Agent's  officers, employees, or
agents designated by Agent) as such U.S. Borrower's true  and  lawful attorney,
with power to (a) if such U.S. Borrower refuses to, or fails timely  to execute
and  deliver  any  of the documents described in Section 4.4, sign the name  of
such U.S. Borrower on any of the documents described in Section 4.4, (b) at any
time that an Event of  Default  has  occurred and is continuing, sign such U.S.
Borrower's name on any invoice or bill  of  lading  relating to the Collateral,
drafts  against  Account  Debtors,  or  notices to Account  Debtors,  (c)  send
requests for verification of U.S. Borrowers'  or  their Subsidiaries' Accounts,
(d) after the occurrence of and during the continuation of an Event of Default,
endorse such U.S. Borrower's name on any of its payment items (including all of
its Collections) that may come into the Lender Group's  possession,  (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under such U.S. Borrower's policies of insurance and make all
determinations  and  decisions with respect to such policies of insurance,  and
(f) at any time that an Event of Default has occurred and is continuing, settle
and  adjust  disputes  and   claims   respecting   U.S.   Borrowers'  or  their
Subsidiaries'  Accounts,  chattel  paper,  or General Intangibles  constituting
Collateral directly with Account Debtors or  other  Persons obligated on any of
the  Collateral,  for  amounts  and  upon  terms that Agent  determines  to  be
reasonable, and Agent may cause to be executed  and delivered any documents and
releases that Agent determines to be necessary.   The  appointment  of Agent as
each U.S. Borrower's attorney, and each and every one of its rights and powers,
being  coupled  with  an  interest, is irrevocable until all of the Obligations
have  been fully and finally  repaid  and  performed  and  the  Lender  Group's
obligations to extend credit hereunder are terminated.

      4.6.  RIGHT TO INSPECT; INVENTORIES, APPRAISALS AND AUDITS, ENVIRONMENTAL
ASSESSMENTS.   Agent  (through  any  of  its respective officers, employees, or
agents) shall have the right, from time to  time  hereafter  (which shall be at
reasonable times following reasonable notice to Administrative  Borrower, prior
to  the  occurrence  of and during the continuation of an Event of Default)  to
inspect the Books and  make copies or abstracts thereof and to check, test, and
appraise the Collateral  in  order  to verify Borrowers' financial condition or
the amount, quality, value, condition  of, or any other matter relating to, the
Collateral.  Without limiting the generality of the foregoing:

            (a)   At Borrowers' expense,  an  Approved Inventory Servicer shall
      conduct  physical  inventories  at,  at least  95%  of  Borrowers'  store
      locations 1 time per Fiscal Year, and  at each of Borrowers' distribution
      centers  at  least 1 time per Fiscal Year  at  such  times  as  shall  be
      determined by  Borrowers  with notice to Agent.  Agent, at the expense of
      Borrowers, may participate  in  and/or observe each physical count and/or
      inventory of so much of the Collateral  as consists of Inventory which is
      undertaken  on  behalf of Borrowers at each  of  Borrowers'  distribution
      centers and at not  more  than  10%  of  Borrowers' store locations.  The
      Administrative  Borrower  shall  provide  Agent   with   the  preliminary
      Inventory  levels  at each of each Borrower's stores within  15  Business
      Days following the completion  of  such  inventory.   The  Administrative
      Borrower, within 45 days following the completion of each such  inventory
      in the aggregate, shall provide Agent with an aggregate reconciliation of
      the  results  of such inventory and shall post such results to Borrowers'
      stock ledger and  general ledger, as applicable.  Agent, in its Permitted
      Discretion, if a Cash  Dominion  Event  exists,  may,  and  shall  at the
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      Required Lender's direction, cause 1 additional inventory per Fiscal Year
      to be taken (at the expense of  Borrowers).

            (b)   At Borrowers' expense, upon the request of Agent from time to
      time, Borrowers will obtain and deliver to Agent, or, if Agent so elects,
      will   cooperate  with  Agent  in  Agent's  obtaining,  a  report  of  an
      independent  collateral  auditor  satisfactory  to  Agent  (which  may be
      affiliated  with  one  of Lenders) with respect to the Books and Accounts
      and Inventory components  included in the Aggregate Borrowing Base, which
      report shall indicate whether  or  not  the  information set forth in the
      Borrowing  Base  Certificate  most  recently delivered  is  accurate  and
      complete in all material respects based upon a review by such auditors of
      the Accounts (including verification  with  respect to the amount, aging,
      identity and credit of the respective account  debtors  and  the  billing
      practices  of Borrowers) and Inventory (including verification as to  the
      value, location  and  respective types); provided, however, that prior to
      the occurrence of a Cash Dominion Event, Borrowers shall not be obligated
      to pay for more than 2  commercial  finance exams in any 12 month period,
      provided, further, that prior to the occurrence of a Cash Dominion Event,
      Borrowers shall be obligated to pay for  any commercial finance exams (i)
      conducted in connection with Borrowers request  to  add Eligible Accounts
      of  Wholesale, Accounts with respect to private label  credit  cards,  or
      Accounts  with  respect  to  Permitted Acquisitions to the U.S. Borrowing
      Base, and (ii) in the event that  the  Canadian Revolver Usage is greater
      than  $0  for  60  days.   Without  in any way  limiting  Agent's  rights
      hereunder so long as there has not occurred  a  Cash Dominion Event as of
      the Closing Date, it is Agent's expectations not  to  require more than 1
      commercial finance exam per calendar year.

            (c)   Agent may from time to time, if a Cash Dominion Event exists,
      obtain  inventory  appraisals  conducted  by  such  appraisers   as   are
      satisfactory  to Agent or conduct inventory appraisals (in all events, at
      Borrowers' expense).  If Agent determines that there have been changes in
      markdowns, inventory mix and composition, accounting methods or any other
      factors affecting the value of the Collateral, Agent may in its Permitted
      Discretion have  the  Inventory  reappraised  by  a  qualified  appraisal
      company  selected  by Agent from time to time after the Closing Date  for
      the  purpose of redetermining  the  Net  Liquidation  Percentage  of  the
      Eligible   Inventory   portion  of  the  Collateral  and,  as  a  result,
      redetermining the Aggregate  Borrowing Base; provided however, that prior
      to  the  occurrence of a Cash Dominion  Event,  Borrowers  shall  not  be
      obligated  to  pay  for  more  than  2  appraisals in any 12 month period
      provided, further, that prior to the occurrence of a Cash Dominion Event,
      Borrowers  shall  be obligated to pay for any  inventory  appraisals  (i)
      conducted in connection  with  Borrowers  request  to  add Inventory with
      respect   to   Permitted   Acquisitions  to  the  U.S.  Borrowing   Base,
      (ii) Inventory at a port of entry in a State of the United States or from
      a third party location to a  location set forth on Schedule E-1 and (iii)
      in the event that the Canadian  Revolver  Usage is greater than $0 for 60
      days.  Without in any way limiting Agent's  rights  hereunder, so long as
      there has not occurred a Cash Dominion Event, as of the  Closing Date, it
      is Agent's expectation not to require more than 1 appraisal  per calendar
      year.
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      4.7.  CONTROL  AGREEMENTS.   Following the occurrence of a Cash  Dominion
Event,  Borrowers  agree  that  they  will  not,  and  will  not  permit  their
Subsidiaries  to, transfer assets out of  any  of  their  Deposit  Accounts  or
Securities Accounts.   Following  the  occurrence  of  a  Cash  Dominion Event,
Borrowers agree that they will and will cause their Subsidiaries to take any or
all  reasonable steps that Agent requests in order for Agent to obtain  control
in accordance  with  Sections  9-104,  9-105, 9-106, and 9-107 of the Code with
respect  to  any  of  its  or  their  Securities  Accounts,  Deposit  Accounts,
electronic chattel paper, Investment Property, and letter-of-credit rights.  No
arrangement contemplated hereby or by any  Control  Agreement in respect of any
Deposit  Accounts, Securities Accounts or other Investment  Property  shall  be
modified by  Borrowers  without the prior written consent of Agent.  Subject to
Section 2.6, upon the occurrence  and  during  the  continuance of a Default or
Event  of  Default,  Agent  may notify any bank or securities  intermediary  to
liquidate the applicable Deposit  Account  or Securities Account or any related
Investment Property maintained or held thereby  and  remit the proceeds thereof
to the Agent's Account.

      4.8.  GRANT OF NON-EXCLUSIVE LICENSE.  For the purpose  of enabling Agent
to  exercise Agent's rights and remedies under Section 9.1 (including,  without
limitation,  in order to take possession of, hold, preserve, process, assemble,
prepare for sale, market for sale, sell or otherwise dispose of the Collateral)
at such time as Agent shall be lawfully entitled to exercise Agent's rights and
remedies under  Section 9.1, each U.S. Borrower hereby (i) grants to Agent, for
the benefit of Agent  and  the  other  Lenders,  a royalty free, non-exclusive,
irrevocable license, such license being with respect to Agent's exercise of the
Agent's rights and remedies under Section 9.1 including, without limitation, in
connection with any completion of the manufacture  of  Inventory or any sale or
other  disposition  of  Inventory (a) to use, apply, and affix  any  trademark,
trade name, logo, or the  like  in which any U.S. Borrower now or hereafter has
rights, (b) to use, license or sublicense  any  intellectual property, computer
software now owned, held or hereafter acquired by such U.S. Borrower, including
in such license access to all media such and to the  extent to which any of the
licensed items may be recorded or stored and to all computer  software programs
such and to the extent used for the compilation or print out thereof,  provided
that Agent's use of the property described in subclauses (a) and (b) above will
comply  with all applicable law, and (c) to use any and all furniture, fixtures
and equipment contained in any  premises owned or occupied by any U.S. Borrower
in connection  with  the  exercise of Agent's rights and remedies under Section
9.1, and (ii) without  limiting  the  provisions  of  Section 9.1(f), agrees to
provide Agent and/or its agents with access to, and the  right to use, any such
premises owned or occupied by any U.S. Borrower.

5.    REPRESENTATIONS AND WARRANTIES.

      In  order to induce the Lender Group to enter into this  Agreement,  each
Borrower makes the following representations and warranties to the Lender Group
(as to itself only) which shall be true, correct, and complete, in all material
respects, as  of  the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance  (or  other  extension  of  credit)  made thereafter, as
though  made  on  and  as  of  the date of such Advance (or other extension  of
credit) (except to the extent that  such  representations and warranties relate
solely  to  an  earlier  date) and such representations  and  warranties  shall
survive the execution and delivery of this Agreement:
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      5.1.  NO ENCUMBRANCES.  Each Borrower (a) has good and valid title to its
personal property assets and  good  and  marketable  title  to  its  owned Real
Property  (subject  to  exceptions  that  do  not, in the aggregate, materially
impair the use of the personal property and Real Property of Borrowers taken as
a whole), and in the case of the Collateral, free and clear of Liens except for
Permitted  Liens.   All  other  information  set  forth   on   the   Perfection
Certificates pertaining to the Collateral is accurate and complete.  There  has
been  no  change  in  any  of  such  information  since  the  date on which the
Perfection Certificates were signed by Borrowers except as otherwise  permitted
under this Agreement.

      5.2.  ACCOUNTS.   The  Eligible  Accounts  are bona fide existing payment
obligations of Account Debtors created by the sale and delivery of Inventory or
the rendition of services to such Account Debtors  in  the  ordinary  course of
Borrowers'  business,  owed  to Borrowers without any known defenses, disputes,
offsets,  counterclaims,  or rights  of  return  or  cancellation  (other  than
contingent  customer rights  of  return  arising  in  the  ordinary  course  of
business).  As to each Account that is identified by Administrative Borrower as
an Eligible Credit Card Receivable in a Borrowing Base Certificate submitted to
Agent, such Account  is  not excluded as ineligible by virtue of one or more of
the excluding criteria set  forth  in  the  definition  of Eligible Credit Card
Receivable.

      5.3.  ELIGIBLE  INVENTORY.   All  Eligible  Inventory  is   of  good  and
merchantable  quality,  free from known defects (other than saleable  clearance
goods  arising  in  the  ordinary  course  of  business  consistent  with  past
practice).  As to each item  of  Inventory that is identified by Administrative
Borrower as Eligible Inventory in  a  Borrowing  Base  Certificate submitted to
Agent, such Inventory is not excluded as ineligible by virtue of one or more of
the excluding criteria set forth in the definition of Eligible Inventory.

      5.4.  LOCATION  OF INVENTORY.  The Eligible Inventory  of  Borrowers  and
their Subsidiaries are not stored with a bailee, warehouseman, or similar party
and are located only at,  or  in-transit  between,  the locations identified on
Schedule 5.4 (as such Schedule may be updated pursuant  to Section 6.8).  Other
than  with  respect  to  Eligible  In-Transit  Inventory, all of  the  Eligible
Inventory of Borrowers and their Subsidiaries is  used or held for use in their
business and is fit for such purposes.

      5.5.  INVENTORY  RECORDS.   Each  Borrower  keeps  correct  and  accurate
records itemizing and describing the type, quality, and quantity of its and its
Subsidiaries' Inventory and the book value thereof.

      5.6.  JURISDICTION OF INCORPORATION; LOCATION  OF CHIEF EXECUTIVE OFFICE;
FEIN; ORGANIZATIONAL ID NUMBER.

            (a)   The jurisdiction of organization of each Borrower and each of
      its Subsidiaries is set forth on Schedule 5.6.

            (b)   The chief executive office of each Borrower  and  each of its
      Subsidiaries is located at the address indicated on Schedule 5.6 (as such
      Schedule may be updated pursuant to Section 6.8).
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<PAGE>

            (c)   Each  Borrower's  and  each  of  its  Subsidiaries' FEIN  and
      organizational identification number, if any, are identified  on Schedule
      5.6.

            (d)   Each  Borrower has previously delivered to Agent a Perfection
      Certificate.  Each Borrower represents and warrants to Lender Group that:
      (i) such Borrower's  exact legal name is that indicated on the applicable
      Perfection Certificate  and  on  the  signature  page  hereof;  (ii) such
      Borrower  is  an  organization  of  the  type,  and  is  organized in the
      jurisdiction,  set forth in the applicable Perfection Certificate;  (iii)
      the  applicable  Perfection   Certificate   accurately  sets  forth  such
      Borrower's organizational identification number or accurately states that
      such  Borrower  has  none;  (iv)  the  applicable Perfection  Certificate
      accurately sets forth such Borrower's place  of business or, if more than
      one,  its  chief  executive  office, as well as such  Borrower's  mailing
      address,  if  different; (v) all  other  information  set  forth  on  the
      applicable Perfection Certificate pertaining to such Borrower is accurate
      and complete as  of the date hereof; and (vi) there has been no change in
      any of such information since the date on which the applicable Perfection
      Certificate was signed by such Borrower.

      5.7.  DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

            (a)   Each Borrower  is (a) duly organized and existing and in good
      standing under the laws of the  jurisdiction  of its organization and (b)
      has all requisite corporate (or the equivalent  company) power to own its
      property  and  conduct  its business as now conducted  and  as  presently
      contemplated and (c) qualified  to  do  business in any state or province
      where  the failure to be so qualified reasonably  could  be  expected  to
      cause a Material Adverse Change.

            (b)   Set forth on Schedule 5.7(b) (as such Schedule may be updated
      with  the   written  consent  of  Agent),  is  a  complete  and  accurate
      description of  the  authorized capital Stock of each Borrower, by class,
      and, as of the Closing  Date,  a  description  of the number of shares of
      each such class that are issued and outstanding.  Other than as described
      on Schedule 5.7(b) and except for employee and director stock options and
      deferred director units there are no subscriptions, options, warrants, or
      calls relating to any shares of each Borrower's  capital Stock, including
      any  right  of conversion or exchange under any outstanding  security  or
      other instrument.   No  Borrower is subject to any obligation (contingent
      or otherwise) to repurchase  or otherwise acquire or retire any shares of
      its capital Stock or any security  convertible  into  or exchangeable for
      any of its capital Stock.

            (c)   Set forth on Schedule 5.7(c) (as such Schedule may be updated
      with  the written consent of Agent), is a complete and accurate  list  of
      each Borrower's  direct  and  indirect  Subsidiaries,  showing:  (i)  the
      jurisdiction  of  their  organization;  (ii) the number of shares of each
      class  of  common  and  preferred  Stock  authorized  for  each  of  such
      Subsidiaries; and (iii) the number and the  percentage of the outstanding
      shares of each such class owned directly or indirectly  by the applicable
      Borrower.   All of the outstanding capital Stock of each such  Subsidiary
      has been validly issued and is fully paid and non-assessable.
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<PAGE>

            (d)   Except  as  set  forth  on  Schedule  5.7(c),  there  are  no
      subscriptions,  options, warrants, or calls relating to any shares of any
      Borrower's Subsidiaries' capital Stock, including any right of conversion
      or exchange under  any  outstanding  security  or  other  instrument.  No
      Borrower  or  any  of  its  respective  Subsidiaries  is  subject to  any
      obligation (contingent or otherwise) to repurchase or otherwise   acquire
      or retire any shares of any Borrower's Subsidiaries' capital Stock or any
      security convertible into or exchangeable for any such capital Stock.

      5.8.  DUE AUTHORIZATION; NO CONFLICT.

            (a)   As to each Borrower, the execution, delivery, and performance
      by such Borrower of this Agreement and the other Loan Documents to  which
      it  is  a  party and the transactions contemplated hereby and thereby are
      within the corporate  (or  the equivalent) authority of such Borrower and
      have been duly authorized by  all  necessary  action  on the part of such
      Borrower.

            (b)   As to each Borrower, the execution, delivery, and performance
      by such Borrower of this Agreement and the other Loan Documents  to which
      it  is  a party do not and will not (i) violate any provision of federal,
      state, or  local,  statute,  law,  rule  or  regulation applicable to any
      Borrower  or any order, judgment, decree, writ,  injunction,  license  or
      permit of any  court  or  other  Governmental  Authority  binding  on any
      Borrower  unless such violation could not reasonably be expected to cause
      a Material  Adverse  Change,  (ii) violate any provision of the Governing
      Documents  of any Borrower or require  any  approval  of  any  Borrower's
      interest  holder,   (iii) conflict  with,  result  in  a  breach  of,  or
      constitute (with due notice or lapse of time or both) a default under any
      material contractual  obligation  of  any  Borrower unless such violation
      could not reasonably be expected to cause a  Material  Adverse  Change or
      the  termination of such contract, (iv) result in or require the creation
      or imposition of any Lien of any nature whatsoever upon any properties or
      assets  of any Borrower, other than Permitted Liens unless the imposition
      of such Lien could not reasonably be expected to cause a Material Adverse
      Change, or  (v) require  any  approval  of  any Person under any material
      contractual obligation of any Borrower, other  than consents or approvals
      that  have been obtained and that are still in force  and  effect  unless
      such consent  could not reasonably be expected to have a Material Adverse
      Change.

            (c)   Other  than  the  filing of Uniform Commercial Code financing
      statements, PPSA registration statements  and  registrations  in  Quebec,
      Canada, the execution, delivery, and performance by each Borrower of this
      Agreement and the other Loan Documents to which such Borrower is a  party
      do  not  and will not require any registration with, consent, or approval
      of, or notice to, or other action with or by, any Governmental Authority,
      other than  consents  or  approvals  that have been obtained and that are
      still in force and effect.

            (d)   As  to  each Borrower, this  Agreement  and  the  other  Loan
      Documents to which such  Borrower  is  a  party,  and all other documents
      contemplated  hereby  and thereby, when executed and  delivered  by  such
      Borrower  will be the legally  valid  and  binding  obligations  of  such
      Borrower, enforceable  against  such  Borrower  in  accordance with their
                                   85
<PAGE>
      respective  terms,  except  as  enforcement may be limited  by  equitable
      principles or by bankruptcy, insolvency,  reorganization,  moratorium, or
      similar laws relating to or limiting creditors' rights generally.

            (e)   Agent's  Liens  are  validly  created,  perfected  and  first
      priority Liens, subject only to Permitted Liens.

      5.9.  LITIGATION.

            (a)   Other  than  those  matters  disclosed  on  Schedule  5.9 and
      immaterial matters where the amount in controversy is less than $250,000,
      there are no actions, suits, or proceedings or investigations pending or,
      to  the best knowledge of Borrowers, threatened against Borrowers or  any
      of their  Subsidiaries,  as  applicable,  except for (a) matters that are
      fully covered by insurance (subject to customary  deductibles),  and  (b)
      matters  arising after the Closing Date, reasonably could not be expected
      to result in a Material Adverse Change.

            (b)   There  are  no  actions, suits, proceedings or investigations
      pending  or,  to  the best knowledge  of  Borrowers,  threatened  against
      Borrowers or any of  their Subsidiaries, as applicable, that question the
      validity or enforceability  of  this Agreement or any other Loan Document
      or any action taken or to be taken by Borrowers in connection therewith.

      5.10. NO MATERIAL ADVERSE CHANGE.   All  financial statements relating to
Borrowers and their Subsidiaries that have been  delivered  by Borrowers to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and  being subject to
year-end  audit  adjustments)  and  present  fairly  in  all material respects,
Borrowers' and their Subsidiaries' financial condition as  of  the date thereof
and  results  of operations for the period then ended.  There has  not  been  a
Material Adverse  Change with respect to Borrowers and their Subsidiaries since
the date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.

      5.11. FRAUDULENT TRANSFER.

            (a)   Each  Borrower  and  each Subsidiary of a Borrower taken as a
      whole are Solvent.

            (b)   No transfer of property  is being made by any Borrower or any
      Subsidiary  of a Borrower and no obligation  is  being  incurred  by  any
      Borrower  or  any  Subsidiary  of  a  Borrower  in  connection  with  the
      transactions contemplated  by  this Agreement or the other Loan Documents
      with the intent to hinder, delay,  or  defraud  either  present or future
      creditors of Borrowers or their Subsidiaries.

      5.12. EMPLOYEE  BENEFITS.  None of Borrowers, any of their  Subsidiaries,
or any of their ERISA Affiliates maintains or contributes to any Benefit Plan.

      5.13. ENVIRONMENTAL  CONDITION.  Except as set forth on Schedule 5.13 and
except for other matters that  could  not reasonably be expected to result in a
Material Adverse Change, (a) to Borrowers'  knowledge,  none  of  Borrowers' or
their Subsidiaries' properties or assets has ever been used by Borrowers, their
                                   86
<PAGE>

Subsidiaries,  or  by  previous owners or operators in the disposal of,  or  to
produce, store, handle,  treat, release, or transport, any Hazardous Materials,
where such production, storage,  handling,  treatment, release or transport was
in violation of applicable Environmental Law, (b) to Borrowers' knowledge, none
of  Borrowers'  nor  their  Subsidiaries' owned Real  Property  has  ever  been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials  disposal  site, (c) none of Borrowers nor any
of  their  Subsidiaries have received notice that  a  Lien  arising  under  any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by  Borrowers or their Subsidiaries, and (d) none of Borrowers nor any
of their Subsidiaries  have  received a summons, citation, notice, or directive
from  the Environmental Protection  Agency  or  any  other  federal,  state  or
provincial  governmental  agency  concerning  any  action  or  omission  by any
Borrower  or  any  Subsidiary  of  a  Borrower  resulting  in  the releasing or
disposing  of  Hazardous  Materials  into the environment in violation  of  any
applicable Environmental Law.

      5.14. BROKERAGE FEES.  Borrowers and their Subsidiaries have not utilized
the services of any broker or finder in  connection  with  obtaining  financing
from  the  Lender  Group  under  this Agreement and no brokerage commission  or
finders  fee  is  payable by Borrowers  or  their  Subsidiaries  in  connection
herewith.

      5.15. INTELLECTUAL  PROPERTY.   Each  Borrower  and  each Subsidiary of a
Borrower  owns, or holds licenses in, all trademarks, trade names,  copyrights,
patents, patent  rights,  and licenses that are necessary to the conduct of its
business of such Persons as currently conducted, except where the failure to do
so, in the aggregate, would not result in a Material Adverse Change.

      5.16. LEASES.  Except  where  the  failure  to  do  so  would not cause a
Material  Adverse Change, Borrowers and their Subsidiaries enjoy  peaceful  and
undisturbed possession under all leases (including Capitalized Leases) material
to their business  and  to  which  they  are  a  party  or under which they are
operating.  Except to the extent that such default would  not  cause a Material
Adverse  Change,  each of such leases is valid and subsisting and  no  material
default by any Borrower or any of its Subsidiaries exists under such lease.

      5.17. DEPOSIT ACCOUNTS.  Set forth on Schedule 5.17 (as such Schedule may
be updated from time  to  time  by  Administrative  Borrower, except during the
continuance  of  a  Cash  Dominion  Event)  are  all  of Borrowers'  and  their
Subsidiaries' Deposit Accounts and Securities Accounts, including, with respect
to  each  bank  or  securities intermediary (i) the name and  address  of  such
Person, and (ii) the  account  numbers  of  the  Deposit Accounts or Securities
Accounts maintained with such Person.

      5.18. COMPLETE DISCLOSURE.  All factual information  (taken  as  a whole)
furnished  by  or  on  behalf of Borrowers or their Subsidiaries in writing  to
Agent or any Lender (including  all  information  contained  in  the  Schedules
hereto  or  in the other Loan Documents) for purposes of or in connection  with
this Agreement, the other Loan Documents or any transaction contemplated herein
or therein is,  and  all  other  such  factual  information  (taken as a whole)
hereafter  furnished  by  or  on  behalf of Borrowers or their Subsidiaries  in
writing to Agent or any Lender will  be,  true  and  accurate  in  all material
respects on the date as of which such information is dated or certified and not
incomplete  by  omitting  to  state any fact necessary to make such information
(taken as a whole) not misleading in any material respect (other than industry-
                                   87
<PAGE>

wide risks normally associated  with  the  types  of  businesses  conducted  by
Borrowers  and  their  Subsidiaries) at such time in light of the circumstances
under  which  such  information   was  provided.   On  the  Closing  Date,  the
Projections represent, and as of the  date  on  which any other Projections are
delivered to Agent, such additional Projections represent Borrowers' good faith
reasonable estimate of their and their Subsidiaries' future performance for the
periods covered thereby it being understood that  such Projections as to future
events are not to be viewed as facts and that actual  results during the period
or period covered by Projections may differ from the projected  results  and no
assurance can be given that the projections will be realized.

      5.19. CREDIT  CARD RECEIPTS.  Schedule 5.19 sets forth each of Borrowers'
Credit Card Issuers,  Credit  Card  Processors  and  all  arrangements to which
Borrowers are a party with respect to the payment to Borrowers  of the proceeds
of all credit card charges for sales by Borrowers.

      5.20. HOLDING COMPANY AND INVESTMENT COMPANY ACTS.  Neither  any Borrower
nor any of their Subsidiaries is a "holding company", or a "subsidiary company"
of a "holding company, or an "affiliate" of a "holding company", as  such terms
are  defined  in the Public Utility Holding Company Act of 1935; nor is  it  an
"investment company",  or  an "affiliated company" or a "principal underwriter"
of an "investment company", as such terms are defined in the Investment Company
Act of 1940.

      5.21. ABSENCE OF FINANCING  STATEMENTS,  ETC.   Except  with  respect  to
Permitted  Liens,  there is no financing statement, security agreement, chattel
mortgage, real estate  mortgage  or  other  document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future Lien on any Collateral.

      5.22. CERTAIN  TRANSACTIONS.   None  of  the   officers,   directors,  or
employees of any Borrower or any of their Subsidiaries is presently  a party to
any transaction with any Borrower or any of their Subsidiaries (other  than for
services  as  employees,  officers  and  directors),  including  any  contract,
agreement or other arrangement providing for the furnishing of services  to  or
by,  providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge  of Borrowers, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

      5.23. REGULATIONS  U AND X.  No portion of any Advance is to be used, and
no portion of any Letter of  Credit  is  to  be  obtained,  for  the purpose of
purchasing  or carrying any "margin security" or "margin stock" as  such  terms
are used in Regulations  U  and  X  of  the  Board  of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224.

      5.24. LABOR RELATIONS.  No Borrower has been or  is  presently a party to
any collective bargaining or other labor contract.  No event  has  occurred  or
circumstance  exists which is likely to provide the basis for any work stoppage
or other labor  dispute.  Borrowers have complied in all material respects with
all applicable laws,  decrees,  orders,  judgments,  statutes,  laws, rules and
regulations    relating    to   employment,   equal   employment   opportunity,
nondiscrimination, immigration,  wages, hours, benefits, collective bargaining,
the  payment of social security and  similar  taxes,  occupational  safety  and
health,  and  plant  closing including all applicable provisions of the federal
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Fair Labor Standards Act,  as  amended.  There is not presently pending and, to
Borrowers' knowledge, there is not threatened any of the following:

            (a)   Any strike, slowdown, picketing, or work stoppage.

            (b)   Any proceeding against or affecting Borrowers relating to the
      alleged  violation  of  any  applicable  law,  decree,  order,  judgment,
      statute, law, rule or regulation  pertaining to labor relations or before
      National  Labor  Relations  Board,  the   Equal   Employment  Opportunity
      Commission, or any comparable governmental body, organizational activity,
      or  other  labor  or  employment dispute against or affecting  Borrowers,
      which,  if determined adversely  to  Borrowers  would  cause  a  Material
      Adverse Change.

            (c)   Any lockout of any employees by Borrowers (and no such action
      is contemplated by Borrowers).

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

      5.25. INDEBTEDNESS.   Set  forth  on Schedule 5.25 is a true and complete
list of all Indebtedness of each Borrower  outstanding immediately prior to the
Closing Date that is to remain outstanding after  the  Closing  Date  and  such
Schedule   accurately   reflects   the   aggregate  principal  amount  of  such
Indebtedness.

      5.26. PAYMENT  OF  TAXES.   All  tax returns,  reports  and  declarations
required to be filed by Borrowers by any  jurisdiction  to which any of them is
subject have been timely filed, except where the failure  to  so file could not
reasonably be expected to have a Material Adverse Change.  All  taxes and other
governmental  assessments  and  charges  upon  Borrowers  or  their properties,
assets, income and franchises (including real property taxes and payroll taxes)
but  not  subject  of  a Permitted Protest have been paid prior to  delinquency
except where the failure  to  so pay could not reasonably be expected to have a
Material Adverse Change.  Borrowers  have  set  aside on their books provisions
reasonably adequate for the payment of all taxes  for periods subsequent to the
periods to which such returns, reports or declarations  apply.   There  are  no
unpaid  taxes  in any material amount claimed to be due by the taxing authority
of any jurisdiction, and none of the officers of any Borrower know of any basis
for any such claim.   Borrowers  do  not  intend  to treat the Advances, Credit
Instruments  and/or  related  transactions  hereunder as  being  a  "reportable
transaction" (within the meaning of Treasury Regulation Section 1.6011-4).

      5.27. FOREIGN ASSETS CONTROL REGULATIONS, ETC.  None of the requesting or
borrowing of the Advances, the requesting or  issuance, extension or renewal of
any Credit Instrument or the use of the proceeds  of  any  thereof will violate
the  Trading  With the Enemy Act (50 USC {section}1 et seq., as  amended)  (the
"Trading With the  Enemy Act") or any of the foreign assets control regulations
of the United States  Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended) (the "Foreign Assets Control Regulations") or any enabling legislation
or executive order relating  thereto  (which  for  the avoidance of doubt shall
include, but shall not be limited to (a) Executive Order 13224 of September 21,
2001 Blocking Property and Prohibiting Transactions  With  Persons  Who Commit,
Threaten  to  Commit,  or  Support  Terrorism (66 Fed. Reg. 49079 (2001))  (the
"Executive Order") and (b) the Uniting  and  Strengthening America by Providing
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Appropriate  Tools Required to Intercept and Obstruct  Terrorism  Act  of  2001
(Public  Law 107-56)).   Furthermore,  none  of  Borrowers  nor  any  of  their
Subsidiaries  or  other  Affiliates (a) is or will become a "blocked person" as
described in the Executive Order, the Trading With the Enemy Act or the Foreign
Assets Control Regulations  or  (b)  engages  or will engage in any dealings or
transactions, or be otherwise associated, with any such "blocked person".

6.    AFFIRMATIVE COVENANTS.

      Each Borrower covenants and agrees that,  until termination of all of the
Commitments and payment in full of the Obligations,  Borrowers  shall and shall
cause each of their respective Subsidiaries to do all of the following:

      6.1.  ACCOUNTING  SYSTEM.   Maintain a system of accounting that  enables
Borrowers to produce financial statements  in accordance with GAAP and maintain
records pertaining to the Collateral that contain  information  as from time to
time  reasonably  may  be  requested  by Agent.  Borrowers also shall  keep  an
inventory reporting system that shows all  additions,  sales,  claims, returns,
and  allowances  with  respect  to the Inventory.  Borrowers shall further  (a)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence  and  amortization  of its properties and
the properties of its Subsidiaries, contingencies and other reserves and (b) at
all times engage independent certified public accountants satisfactory to Agent
as  the  independent  certified  public  accountants  of  the  Parent  and  its
Subsidiaries  and  will  not  permit  more  than 90 days to elapse between  the
cessation  of  such  firm's  (or  any  successor  firm's)   engagement  as  the
independent certified public accountants of the Parent and its Subsidiaries and
the appointment in such capacity of a successor firm registered with the Public
Company Accounting Oversight Board.

      6.2.  COLLATERAL REPORTING.  Provide Agent (and if so requested by Agent,
with copies for each Lender) with the documents set forth on  Schedule  6.2  in
accordance with the delivery schedule set forth thereon.

      6.3.  FINANCIAL  STATEMENTS,  REPORTS,  CERTIFICATES.   Deliver to Agent,
with copies to each Lender:

            (a)   as soon as available, but in any event within  45  days after
      the  end  of  each of the first 11 Fiscal Periods during each of Parent's
      Fiscal Years,

                  (i)   a  company  prepared consolidated balance sheet, income
            statement, and statement  of  cash  flow  covering Parent's and its
            Subsidiaries' operations during such period,

                  (ii)  a certificate signed by the chief  financial officer of
            Parent to the effect that:

                        A.    the financial statements delivered hereunder have
                  been prepared in accordance with GAAP (except for the lack of
                  footnotes  and  being subject to year-end audit  adjustments)
                  and fairly present  in  all  material  respects the financial
                  condition of Parent and its Subsidiaries,
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                        B.    the representations and warranties  of  Borrowers
                  contained in this Agreement and the other Loan Documents  are
                  true  and  correct  in all material respects on and as of the
                  date of such certificate,  as  though  made on and as of such
                  date  (except  to  the  extent that such representations  and
                  warranties relate solely to an earlier date), and

                        C.    there does not  exist any condition or event that
                  constitutes a Default or Event  of Default (or, to the extent
                  of any non-compliance, describing  such  non-compliance as to
                  which he or she may have knowledge and what  action Borrowers
                  have  taken,  are  taking,  or  propose to take with  respect
                  thereto), and

                  (iii) for each month that is the  date  on  which a financial
            covenant in Section 7.21 is to be tested, a Compliance  Certificate
            demonstrating, in reasonable detail, compliance at the end  of such
            period with the financial covenant contained in Section 7.21,

            (b)   As  soon  as available, but in any event within 90 days after
      the  end  of  each  of  Parent's  Fiscal  Years,  consolidated  financial
      statements of Parent and  its  Subsidiaries  for  each  such Fiscal Year,
      audited by independent certified public accountants reasonably acceptable
      to  Agent  and  certified  by  such accountants to have been prepared  in
      accordance with GAAP (such audited  financial  statements  to  include  a
      balance  sheet,  income  statement,  and  statement  of cash flow and, if
      prepared, such accountants' letter to management),

            (c)   as soon as available, but in any event within  90  days after
      the   end  of  each  of  Parent's  Fiscal  Years,  copies  of  Borrowers'
      Projections,  in form and substance (including as to scope and underlying
      assumptions) satisfactory  to  Agent,  in  its  sole  discretion, for the
      forthcoming  Fiscal  Year,  on a month by month basis, certified  by  the
      chief financial officer of Parent  as  being  such  officer's  good faith
      reasonable  estimate  of  the  financial  performance  of  Parent and its
      Subsidiaries during the period covered thereby, it being understood  that
      such  Projections  as  to future events are not to be viewed as facts and
      that  actual  results  during  the  period  or  periods  covered  by  any
      Projections may differ from the projected results and no assurance can be
      given that the Projections will be realized,

            (d)   if and when filed by any Borrower,

                  (i)   Form 10-Q  quarterly reports, Form 10-K annual reports,
            and Form 8-K current reports,

                  (ii)  any other filings made by any Borrower with the SEC,

                  (iii) upon request  by  Agent,  in  its Permitted Discretion,
            copies of Borrowers' federal income tax returns, and any amendments
            thereto, filed with the Internal Revenue Service, and
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                  (iv)  any other information that is provided by Parent to its
            shareholders generally,

            (provided, that for purposes of this clause (d), any information to
      be delivered hereunder shall be deemed to have been delivered when posted
      on the Parent's website or otherwise made available on the website of the
      SEC),

            (e)   as soon as a Borrower has knowledge of any event or condition
      that  constitutes  a  Default  or  an  Event of Default,  notice  thereof
      together with a reasonably detailed description  thereof  and a statement
      of  the  curative  action  that  Borrowers  propose to take with  respect
      thereto,

            (f)   promptly after the commencement thereof,  but  in  any  event
      within 10 Business Days after the service of process with respect thereto
      on  any  Borrower or any Subsidiary of a Borrower, notice of all actions,
      suits,  or  proceedings  brought  by  or  against  any  Borrower  or  any
      Subsidiary  of  a  Borrower  before  any Governmental Authority which, if
      determined  adversely to such Borrower  or  such  Subsidiary,  reasonably
      could be expected to result in a Material Adverse Change, and

            (g)   upon  the  request  of Agent in its Permitted Discretion, any
      other report reasonably requested  relating to the financial condition of
      Borrowers or their Subsidiaries, provided  that such reports shall not be
      overly burdensome for any Borrower to prepare.

      In  addition  to the financial statements referred  to  above,  Borrowers
agree to deliver financial  statements  prepared  on  both  a  consolidated and
consolidating  basis,  provided  that (a) only Parent's consolidated  financial
statements shall be audited, (b) consolidating  financial  statements  shall be
prepared without footnotes, and (c) Borrowers shall only be required to deliver
balance  sheets  and income statements on a consolidating basis.  Parent agrees
to cooperate with  Agent  to  allow  Agent  to  consult  with  its  independent
certified  public accountants if Agent reasonably requests the right to  do  so
(and Agent shall notify Parent as to the timing of such consultation and permit
Parent to be  present thereat or to otherwise participate therein) and that, in
such connection,  their independent certified public accountants are authorized
to  communicate  with   Agent  and  to  release  to  Agent  whatever  financial
information concerning Borrowers  or  their  Subsidiaries that Agent reasonably
may request.

      6.4.  RETURNS.  Account for returns of inventory and customer credits and
record the effects thereof on the general ledger  on  the  same  basis  and  in
accordance  with  the usual and customary practices of the applicable Borrower,
as they exist at the  time  of  the  execution  and  delivery of this Agreement
except where failure to do so could not reasonably be  expected  to result in a
Material Adverse Change..

      6.5.  MAINTENANCE OF PROPERTIES.

            (a)   At all times preserve and keep in full force and  effect each
      Borrower's   valid  existence  and  good  standing  and  any  rights  and
      franchises material to Borrowers' business,
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            (b)   Maintain  and  preserve  all  of  their  properties which are
      necessary  or  useful  in  the proper conduct to their business  in  good
      working order and condition, ordinary wear and tear excepted,

            (c)   Cause   to  be  made   all   necessary   repairs,   renewals,
      replacements,  betterments  and  improvements  thereof,  all  as  in  the
      judgment of Borrowers may be necessary so that the business carried on in
      connection therewith  may be properly and advantageously conducted at all
      times,

            (d)   Continue  to   engage  in  the  businesses  of  selling  home
      furnishings at the retail and  wholesale  level,  and related businesses,
      and

            (e)   Comply  at all times with the provisions  of  all  leases  to
      which it is a party as  lessee,  so  as to prevent any loss or forfeiture
      thereof or thereunder;

provided  that  nothing  in  this  Section  6.5  shall  prevent  Borrower  from
discontinuing the operation and maintenance of any  of its properties or any of
those of its Subsidiaries if such discontinuance is,  in  the  judgment of such
Borrower, desirable in the conduct of its or their business and  that do not in
the aggregate cause a Material Adverse Change.

      6.6.  TAXES.  Cause all assessments and taxes, whether real, personal, or
otherwise,  due  or  payable  by,  or  imposed,  levied,  or  assessed  against
Borrowers, their Subsidiaries, or any of their respective assets to be paid  in
full,  before  delinquency or before the expiration of any extension period, as
well as all claims  for labor materials or supplies that if unpaid might by law
become a Lien or charge  upon  its  property,  except  to  the  extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrowers  will  and  will  cause their Subsidiaries to make timely payment  or
deposit  of  all  tax  payments and  withholding  taxes  required  of  them  by
applicable laws, including  those  laws  concerning  F.I.C.A.,  F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish  Agent with proof satisfactory to Agent indicating that the  applicable
Borrower or Subsidiary of a Borrower has made such payments or deposits.

      6.7.  INSURANCE.   At  Borrowers'  expense, maintain insurance respecting
their and their Subsidiaries' assets wherever  located, covering loss or damage
by fire, theft, explosion, and other hazards and  risks and also shall maintain
business interruption, public liability, and product  liability  insurance,  as
well as insurance against larceny, embezzlement, and criminal misappropriation,
all  as  ordinarily are insured against by other Persons engaged in the same or
similar business.   All  such  policies  of  insurance shall be in such amounts
which are customary for Persons engaged in the  same  or  similar  business and
with nationally recognized insurance companies.  Borrowers shall deliver copies
of  all  such  policies  to  Agent  with  a  satisfactory lender's loss payable
endorsement  naming Agent as loss payee (with respect  to  the  Collateral)  or
additional  insured,   as  appropriate.   Each  such  policy  of  insurance  or
endorsement shall contain  a clause requiring the insurer to give not less than
30 days prior written notice  to  Agent  in  the  event  of cancellation of the
policy for any reason whatsoever.

      6.8.  LOCATION  OF  INVENTORY.   Keep Borrowers' and their  Subsidiaries'
Inventory (other than Eligible In-Transit  Inventory)  only  at  the  locations
identified  on  Schedule  5.4  and  their  chief  executive offices only at the
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locations   identified   on   Schedule   5.6;  provided,  however,   that   (a)
Administrative Borrower may amend Schedule 5.4 and Schedule 5.6 so long as such
amendment occurs by written notice to Agent  not less than 30 days prior to the
date  on  which such Inventory is moved to such  new  location  or  such  chief
executive office  is  relocated,  so  long  as  such new location is within the
United States or Canada (other than Eligible In-Transit Inventory), and so long
as, at the time of such written notification, the  applicable Borrower provides
any financing statements or other documents necessary  to  perfect and continue
Agent's  Liens on such assets and also provides a Collateral  Access  Agreement
with respect  thereto  if  such  location  is a warehouse, distribution center,
fulfillment center, contract warehouse or other  real  property  (other  than a
retail  store  location)  leased  by  a  Borrower,  and (b) Borrowers and their
Subsidiaries may keep Inventory during the period from  September 1 to December
31 of each year at warehouses leased by such Persons or in a fulfillment center
or contract warehouse, in each case without a Collateral  Access  Agreement, in
an aggregate amount not to exceed 5% of the Cost of Eligible Inventory.

      6.9.  COMPLIANCE  WITH  LAWS.   Comply  with  the  requirements  of   all
applicable  laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws,  rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change.

      6.10. LEASES.  Pay when due all rents and other amounts payable under any
leases to which any  Borrower  or any Subsidiary of a Borrower is a party or by
which any Borrower's or any Subsidiary  of  a  Borrower's properties and assets
are  bound, unless such payments are the subject  of  a  Permitted  Protest  or
unless  nonpayment  of  such  rents  and  other  amounts individually or in the
aggregate  could not reasonably be expected to result  in  a  Material  Adverse
Change.

      6.11. EXISTENCE.  At all times preserve and keep in full force and effect
each Borrower's  and  each  Subsidiary of a Borrower's valid existence and good
standing and any rights and franchises  material  to their businesses except as
otherwise permitted pursuant to Section 7.4.

      6.12. ENVIRONMENTAL.  Except for such Environmental  Liens,  failures  to
comply,  releases,  Environmental  Actions,  notices, citations or orders which
individually or in the aggregate could not reasonably  be expected to result in
a Material Adverse Change (a) keep any property either owned or operated by any
Borrower  or  any Subsidiary of a Borrower free of any Environmental  Liens  or
post bonds or other  financial assurances sufficient to satisfy the obligations
or liability evidenced  by  such  Environmental  Liens,  (b)  comply  with  all
applicable  Environmental  Laws  and  provide  to  Agent  documentation of such
compliance which Agent reasonably requests, (c) promptly notify  Agent  of  any
release  of  a  Hazardous  Material  of  any  reportable  quantity from or onto
property owned or operated by any Borrower or any Subsidiary  of a Borrower and
take any Remedial Actions required to abate said release or otherwise  to  come
into compliance with applicable Environmental Law, and (d) promptly, but in any
event  within  5 days of its receipt thereof, provide Agent with written notice
of any of the following:   (i) notice that an Environmental Lien has been filed
against any of the real or personal  property of any Borrower or any Subsidiary
of a Borrower, (ii) commencement of any  Environmental Action or notice that an
Environmental Action will be filed against  any Borrower or any Subsidiary of a
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Borrower, and (iii) notice of a violation, citation,  or  other  administrative
order  which  reasonably  could  be  expected  to  result in a Material Adverse
Change.

      6.13. DISCLOSURE UPDATES.  Promptly and in no event later than 5 Business
Days  after  obtaining  knowledge  thereof,  notify  Agent   if   any   written
information,  exhibit,  or  report  furnished to the Lender Group contained any
untrue statement of a material fact or  omitted  to  state  any  material  fact
necessary  to  make  the  statements  contained  therein  not misleading in any
material respect (other than industry-wide risks normally associated  with  the
types  of businesses conducted by Borrowers and their Subsidiaries) in light of
the circumstances  in  which  made;  provided  that  Projections  and Schedules
furnished  to  the  Lender  Group  shall  be  deemed to be updated as and  when
delivered  pursuant  to  the  terms  hereof.   The foregoing  to  the  contrary
notwithstanding, any notification pursuant to the  foregoing provision will not
cure or remedy the effect of the prior untrue statement  of  a material fact or
omission of any material fact nor shall any such notification  have  the affect
of amending or modifying this Agreement or any of the Schedules hereto.

      6.14. FORMATION OF DOMESTIC SUBSIDIARIES.  At the time that any  Borrower
forms  any  direct  or  indirect Domestic Subsidiary or acquires any direct  or
indirect Domestic Subsidiary  after  the  Closing Date, such Borrower shall (a)
cause such new Subsidiary to provide to Agent  a  joinder  to  this  Agreement,
allonges  to Notes, and other security documents, as well as appropriate  UCC-1
financing statements all in form and substance satisfactory to Agent (including
being sufficient  to  grant  Agent  a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly  formed  or  acquired  Subsidiary  in
scope  similar  to  the collateral granted hereunder), and (b) provide to Agent
all other documentation, including one or more opinions of counsel satisfactory
to Agent, which in its opinion is appropriate with respect to the execution and
delivery of the applicable  documentation  referred  to  above.   Any document,
agreement, or instrument executed or issued pursuant to this Section 6.14 shall
be a Loan Document.

      6.15. ADDITIONAL  COLLATERAL COVENANTS.  Except for Permitted  Liens,  be
the owners of the Collateral  free  from any right or claim of any other person
or any Lien, and shall defend the same  against  all  claims and demands of all
Persons at any time claiming the same or any interests therein adverse to Agent
or  any  Lender.   Borrowers  may  grant  such allowances, discounts  or  other
adjustments to Borrowers' Account Debtors as  Borrowers  may reasonably deem to
accord with sound business practice pursuant to past practices.

      6.16. INVESTMENT PROCEEDS, ETC.  The proceeds of any  funds  received  by
any   Borrower   whether  or  not  from  ordinary  course  business  operations
(including, without  limitation,  tax  refunds,  damage awards, or insurance or
condemnation  proceeds)  with  respect  to the Collateral  shall  be  deposited
directly into Agent's Account to be applied  on  account  of the Obligations in
accordance  with Section 2.3(b) if a Cash Dominion Event has  occurred  and  is
continuing.

      6.17. IMMEDIATE NOTICE TO AGENT.

            (a)   The  Administrative Borrower shall provide Agent with written
      notice promptly upon the occurrence of any of the following events, which
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<PAGE>
      written notice shall  state  with  reasonable particularity the facts and
      circumstances of the event for which such notice is being given:

                  (i)   Any change in the Authorized Persons;

                  (ii)  The completion of  any  physical  count  of  all  or  a
            material  portion  of Borrowers' Inventory (together with a copy of
            the results thereof certified by the Administrative Borrower);

                  (iii) Any cessation  by  Borrowers of their making payment to
            its creditors generally as Borrowers' debts become due;

                  (iv)  Any failure by Borrowers  to pay rent on a timely basis
            at 20% or more of any of Borrowers' locations, and as and when such
            rent payment is due;

                  (v)   Any Material Adverse Change;

                  (vi)  The occurrence of any Default or Event of Default;

                  (vii) Any discharge by Parent of  its independent accountants
            or  any withdrawal or resignation by such  independent  accountants
            from their acting in such capacity;

                  (viii)If  any  Borrower  receives  notice of or any action is
            taken in respect of a claimed default (whether  or not constituting
            a default) under the Credit Card Agreements;

                  (ix)  Any  judgment  not  covered  by  insurance   final   or
            otherwise  against  any  Borrower  or any of its Subsidiaries in an
            amount in excess of $1,000,000;

                  (x)   Any setoff, claims, withholdings  or  other defenses to
            which any of the Collateral, or Agent's rights with  respect to the
            Collateral, are subject; or

                  (xi)  The obtaining of an organization identification  number
            by  any  Borrower  which  did  not  have  one  on the Closing Date,
            together with such number.

            (b)   The Administrative Borrower shall:

                  (i)   Provide Agent, when so distributed,  with copies of any
            materials   distributed   to   the  shareholders  of  any  Borrower
            (provided, that for purposes of  this  clause (i), any materials to
            be delivered hereunder shall be deemed to  have been delivered when
            posted on the Parent's website or otherwise  made  available on the
            website of the SEC);

                  (ii)  Add  Agent  as  an  addressee  on  all  mailing   lists
            maintained by or for Borrowers;
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                  (iii) At  the reasonable request of Agent, from time to time,
            provide Agent with  copies  of all requested advertising (including
            copies  of  all  print  advertising  and  duplicate  tapes  of  all
            requested video and radio advertising);

                  (iv)  Provide  Agent,  following  review  by  the  Audit  and
            Finance Committee of the  Parent's  Board of Directors, with a copy
            of  any  management  letter  or  similar  communications  from  any
            accountant of Borrowers; and

                  (v)   Provide   Agent  with  details  of  all   credit   card
            arrangements to which Borrowers  or  any  of  their Subsidiaries is
            from  time  to  time  a party, including details relating  to  such
            Borrower's  or  such Subsidiary's  compliance  with  the  terms  of
            payment to the applicable  Agent's  Account  of the proceeds of all
            credit card charges for sales by such Borrower or such Subsidiary.

                  (vi)  The Administrative Borrower shall  provide  Agent  with
            (a) prior written notice of any entity's becoming or ceasing to  be
            a Subsidiary and (b) prompt written notice of any entity's becoming
            or ceasing to be an Affiliate (other than a Subsidiary).

      6.18. INACTIVE  SUBSIDIARIES.   The Parent shall not permit BMAJ, Inc. to
engage in any trade or business or own  any assets or incur any Indebtedness to
any Person.

      6.19. FURTHER ASSURANCES.  Cooperate  with  Lenders and Agent and execute
such  further instruments and documents as Lenders or  Agent  shall  reasonably
request  to  carry  out  to their satisfaction the transactions contemplated by
this Agreement and the other Loan Documents.

7.    NEGATIVE COVENANTS.

      Each Borrower covenants  and agrees that, until termination of all of the
Commitments and final payment in  full  of  the Obligations, Borrowers will not
and  will not permit any of their respective Subsidiaries  to  do  any  of  the
following:

      7.1.  INDEBTEDNESS.   Create,  incur, assume, suffer to exist, guarantee,
or otherwise become or remain, directly  or  indirectly, liable with respect to
any Indebtedness, except:

            (a)   Indebtedness evidenced by this  Agreement  and the other Loan
      Documents,  together  with Indebtedness owed to Underlying  Issuers  with
      respect to Underlying Letters  of  Credit  and any other Obligations that
      constitute Indebtedness;

            (b)   Indebtedness set forth on Schedule 5.25;

            (c)   Permitted Purchase Money Indebtedness;

            (d)   refinancings,   renewals,  or  extensions   of   Indebtedness
      permitted under clauses (b) and  (c) of this Section 7.1 (and continuance
      or renewal of any Permitted Liens  associated  therewith) so long as: (i)
      the terms and conditions of such refinancings, renewals, or extensions do
      not, in Agent's Permitted Discretion, materially  impair the prospects of
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      repayment of the Obligations by Borrowers or materially impair Borrowers'
      creditworthiness, (ii) such refinancings, renewals,  or extensions do not
      result in an increase in the then extant principal amount of, or interest
      rate  with  respect  to,  the  Indebtedness  so refinanced,  renewed,  or
      extended or add one or more Borrowers as liable  with  respect thereto if
      such  additional Borrowers were not liable with respect to  the  original
      Indebtedness,  (iii)  such  refinancings,  renewals, or extensions do not
      result  in  a  shortening  of  the  average  weighted   maturity  of  the
      Indebtedness so refinanced, renewed, or extended, nor are  they  on terms
      or conditions, that, taken as a whole, are materially more burdensome  or
      restrictive  to the applicable Borrower, (iv) if the Indebtedness that is
      refinanced, renewed,  or extended was subordinated in right of payment to
      the  Obligations, then the  terms  and  conditions  of  the  refinancing,
      renewal,  or  extension Indebtedness must include subordination terms and
      conditions that  are  at  least as favorable to the Lender Group as those
      that   were  applicable  to  the   refinanced,   renewed,   or   extended
      Indebtedness,  and  (v)  the Indebtedness that is refinanced, renewed, or
      extended is not recourse to  any  Person that is liable on account of the
      Obligations other than those Persons which were obligated with respect to
      the Indebtedness that was refinanced, renewed, or extended;

            (e)   Permitted Office Building  Indebtedness and all refinancings,
      renewals,  or  extensions  thereof (and continuance  or  renewal  or  any
      Permitted Liens associated therewith);

            (f)   endorsement  of  instruments   or  other  payment  items  for
      deposit;

            (g)   Indebtedness composing Permitted Investments;

            (h)   Indebtedness of a Borrower to another Borrower;

            (i)   Indebtedness of a Borrower or a  Subsidiary  of a Borrower in
      respect of hedge agreements entered into by such Person with  the purpose
      and effect of fixing interest rates on a principal amount of Indebtedness
      of  such  Person  that  is accruing interest at a variable rate, provided
      that each such contract is  with a counterparty or has a guarantor of the
      obligation of the counterparty  who  at the time the contract is made has
      long-term obligations rated A or Aa3 or  better, respectively, by S&P and
      Moody's; and

            (j)   other   unsecured  Indebtedness  of   Borrowers   and   their
      Subsidiaries,  in  an  aggregate   amount  not  to  exceed  at  any  time
      $2,000,000.

      7.2.  LIENS.  Create, incur, assume,  or  suffer  to  exist,  directly or
indirectly,  any  Lien  on  or with respect to any of its assets, of any  kind,
whether now owned or hereafter  acquired,  or  any income or profits therefrom,
except for Permitted Liens (including Liens that  are replacements of Permitted
Liens to the extent that the original Indebtedness  is  refinanced, renewed, or
extended under Section 7.1(d) or (e) and so long as the replacement  Liens only
encumber  those  assets  that  secured  the  refinanced,  renewed,  or extended
Indebtedness).
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      7.3.  RESTRICTIONS ON NEGATIVE PLEDGES AND UPSTREAM LIMITATION.

            (a)   Enter  into  or  permit to exist any arrangement or agreement
      (excluding this Agreement and the other Loan Documents) which directly or
      indirectly  prohibits  any Borrower  or  any  of  its  Subsidiaries  from
      creating, assuming or incurring any Lien upon its properties, revenues or
      assets  or  those of any of  their  Subsidiaries  whether  now  owned  or
      hereafter acquired; or

            (b)   Enter  into any agreement, contract or arrangement (excluding
      this Agreement and the  other  Loan Documents) restricting the ability of
      any Subsidiary of any Borrowers to pay or make dividends or distributions
      in cash or kind to Borrowers, to  make  loans, advances or other payments
      of whatsoever nature to Borrowers, or to  make transfers or distributions
      of all or any part of its assets to Borrowers;

in each case other than (i) restrictions on specific  assets  which  assets are
the  subject  of  Permitted  Purchase  Money  Indebtedness  or Permitted Office
Building Indebtedness, (ii) customary anti-assignment provisions  contained  in
leases  and  licensing  agreements  entered  into  by  such  Borrower  or  such
Subsidiary  in  the  ordinary  course  of  its  business  and  (iii)  customary
restrictions  contained in asset sale agreements limiting the transfer of  such
assets pending the closing of such sale.

      7.4.  RESTRICTIONS  ON FUNDAMENTAL CHANGES.  (a) Enter into any merger or
consolidation, (b) liquidate,  wind  up,  or  dissolve  itself  (or  suffer any
liquidation  or  dissolution),  or  (c)  convey,  sell, lease, license, assign,
transfer,  or  otherwise  dispose  of,  in  one  transaction  or  a  series  of
transactions, all or any substantial part of its assets, except:

            (i)   any Borrower may be merged with  or into another Borrower, or
      be liquidated, wound up or dissolved, or all or any part of its business,
      property  or  assets  may  be  conveyed,  sold,  leased,  transferred  or
      otherwise disposed of, in one transaction or a series of transactions, to
      any Borrower; provided that (i) at the time of any  such  event, no Event
      of Default shall exist or shall result from such event and  (ii)  in  the
      case  of  such  a  event, a Borrower shall be the continuing or surviving
      Person;

            (ii)  (A) any  Domestic Subsidiary of a Borrower may be merged with
      or into another Domestic  Subsidiary  of  a  Borrower,  or be liquidated,
      wound  up or dissolved, or all or any part of its business,  property  or
      assets may  be  conveyed, sold, leased, transferred or otherwise disposed
      of, in one transaction  or  a  series  of  transactions,  to any Domestic
      Subsidiary of a Borrower, provided that at the time of any  such event no
      Event of Default shall exist or shall result from such event, and (B) any
      Domestic Subsidiary of a Borrower may be merged with and into a Borrower,
      or  be  liquidated,  wound  up  or  dissolved, or all or any part of  its
      business, property or assets may be conveyed,  sold,  leased, transferred
      or otherwise disposed of, in one transaction or a series of transactions,
      to  any  Borrower;  provided that (i) at the time of any such  event,  no
      Event of Default shall  exist  or  shall  result  from such event, (ii) a
      Borrower  shall  be  the continuing or surviving Person,  and  (iii)  the
      Borrowers shall have obtained the Agent's prior written consent;
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            (iii) in connection  with  (1)  sales  or  closures  of  stores  or
      distribution   centers   in  the  normal  course  of  business,  and  (2)
      dispositions of Inventory  and other assets located at such locations (or
      used  in  connection  with  the   operation  thereof)  and  related  non-
      depreciated  leasehold  interests  related   thereto,  in  each  case  on
      reasonable  terms  consistent  with  such  Person's   usual  practice  in
      connection  with  such sales or closures; provided that the  proceeds  of
      such sales and dispositions  of  Inventory  closures are used to repay or
      prepay the Obligations pursuant to Section 2.3;

            (iv)  the sale, in one transaction or a  series of transactions, of
      the Bombay Office Complex;

            (v)   dispositions permitted by Section 7.5; and

            (vi)  any other disposition of assets in any  Fiscal  Year for full
      and  fair  consideration  as  long  as the value of such assets does  not
      exceed $1,000,000.

      7.5.  DISPOSAL  OF  ASSETS;  SALE AND LEASEBACK.   Other  than  Permitted
Dispositions, and dispositions permitted  by  Section 7.4, convey, sell, lease,
license, assign, transfer, or otherwise dispose  of  any  of  the assets of any
Borrower  or any Subsidiary of a Borrower.  Borrowers will not,  and  will  not
permit any  of  their  Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby Borrowers  or  any  Subsidiary  of  Borrowers shall sell or
transfer  any property owned by it in order then or thereafter  to  lease  such
property or  lease other property that Borrowers or any Subsidiary of Borrowers
intends to use for substantially the same purpose as the property being sold or
transferred other  than (a) sale leaseback transactions(in one transaction or a
series of transactions)  in  respect of the Bombay Office Complex and (b) other
sale leaseback transactions not  to  exceed  $2,500,000 in the aggregate at any
time.

      7.6.  CHANGE  NAME.   Change  any  Borrower's  or  any  Subsidiary  of  a
Borrower's   name,  FEIN,  organizational  identification   number,   type   of
organization, jurisdiction of organization or other legal structure or relocate
any Borrower's  or  any  Subsidiary of a Borrower's chief executive office to a
new location, without the consent of the Agent (not to be unreasonably withheld
so long as, at the time of  such  request  for  consent,  such Borrower or such
Subsidiary provides any financing statements necessary to perfect  and continue
perfected  Agent's  Liens  or  any  constitutive documents resulting from  such
change); provided, however, that a Borrower or any Subsidiary of a Borrower may
change its name or chief executive office  location upon at least 30 days prior
written notice by Administrative Borrower to  Agent  of such change and so long
as, at the time of such written notification, such Borrower  or such Subsidiary
provides  any financing statements necessary to perfect and continue  perfected
Agent's Liens.

      7.7.  [RESERVED.]

      7.8.  PREPAYMENTS   AND   AMENDMENTS.    Except   in  connection  with  a
refinancing permitted by Section 7.1(d),

            (a)   prepay, redeem, defease, purchase, or otherwise  acquire  any
      Indebtedness  of any Borrower or any Subsidiary of a Borrower, other than
      the Obligations in accordance with this Agreement, or
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            (b)   directly  or  indirectly,  amend, modify, alter, increase, or
      change  any  of  the terms or conditions of  any  agreement,  instrument,
      document,  indenture,   or   other   writing  evidencing   or  concerning
      Indebtedness permitted under Section 7.1(b) or (c).

      7.9.  CONSIGNMENTS.  Consign any of their  Inventory or sell any of their
Inventory  on  bill  and  hold,  sale  or return, sale on  approval,  or  other
conditional terms of sale, except for (a)  consignments  of  Inventory  not  to
exceed  the  aggregate Cost amount of $1,000,000 at any time, and (b) rights of
purchasers to  return  Inventory  pursuant  to  a  Borrower's  or  any  of  its
Subsidiary's return policy.

      7.10. DISTRIBUTIONS.  Other than distributions or declaration and payment
of  dividends  by  a  Borrower  to  another  Borrower, make any distribution or
declare  or pay any dividends (in cash or other  property,  other  than  common
Stock or options  or  rights  with  respect  to  Common Stock) on, or purchase,
acquire, redeem, or retire any of any Borrower's Stock,  of  any class, whether
now  or  hereafter  outstanding;  provided,  however,  that  (a) Borrowers  may
purchase,  acquire, redeem or retire any of Borrowers' Stock or  may  pay  cash
dividends on  any Borrowers' stock so long as (i) at the time of such purchase,
acquisition redemption, retirement, payment and after giving effect thereto, no
Default or Event  of  Default  shall  have  occurred and be continuing and (ii)
immediately after giving effect thereto, Availability  shall  be at least equal
to $25,000,000 and the Administrative Borrower shall have delivered  to Agent a
Compliance   Certificate   and   Projections   evidencing  the  maintenance  of
Availability  of  at  least $25,000,000 for the 2 Fiscal  Quarters  then  ended
immediately prior to such  purchase,  acquisition,  redemption or retirement of
any Borrower's Stock and (b) Borrowers may make distributions  or  declare  and
pay  any  dividends  on  and  may  purchase,  acquire,  redeem,  or  retire any
Borrower's  Stock in a substantially contemporaneous exchange for common  Stock
or other common equity interests of such Borrower (including as a result of new
issuances of common Stock or common equity interests).

      7.11. ACCOUNTING  METHODS.   Modify  or change their Fiscal Year or their
method of accounting (other than as may be required to conform to GAAP).

      7.12. INVESTMENTS, ACQUISITIONS.  Except  for  Permitted  Investments and
Permitted Acquisitions, directly or indirectly, make or acquire any Investment,
or  incur  any  liabilities  (including  contingent  obligations)  for  or   in
connection  with  any Investment; provided, however, that such Investments will
be considered Investments  permitted  by  this Section 7.12 only if all actions
have been taken to the satisfaction of Agent  to  provide  to  Agent,  for  the
benefit  of  Lenders and Agent, a first priority perfected security interest in
all of such Investments free of all Liens other than Permitted Liens.

      7.13. TRANSACTIONS  WITH  AFFILIATES.  Engage in any transaction with any
Affiliate  (other than for services  as  employees,  officers  and  directors),
including any  contract,  agreement  or  other  arrangement  providing  for the
furnishing  of  services  to  or  by,  providing for rental of real or personal
property  to or from, or otherwise requiring  payments  to  or  from  any  such
Affiliate or,  to  the  knowledge  of  Borrowers, any corporation, partnership,
trust or other entity in which any such Affiliate has a substantial interest or
is an officer, director, trustee or partner,  on  terms  more favorable to such
Person than would have been obtainable on an arm's-length basis in the ordinary
course  of  business  except  (a)  reasonable  and  customary  fees  and  other
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consideration  paid  to  members  of the board of directors of Parent  and  (b)
compensation and benefit arrangements  for  officers  and  other  employees  of
Borrowers  and  their  Subsidiaries  entered  into  in  the  ordinary course of
business and (c) transactions among Parent and its wholly-owned Subsidiaries in
the ordinary course of business consistent with past practices.  Each Affiliate
of Borrowers is listed on Schedule 7.13 (as such Schedule may  be  updated from
time to time).

      7.14. SUSPENSION.   Suspend or go out of a substantial portion  of  their
business.

      7.15. USE OF PROCEEDS.   Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date,  (i)  to  repay  in  full  the  outstanding
principal,  accrued  interest,  and accrued fees and expenses owing to Existing
Lenders, and (ii) to pay transactional  fees,  costs,  and expenses incurred in
connection with this Agreement, the other Loan Documents,  and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent  with the terms
and conditions hereof, for its lawful and permitted purposes.

      7.16. INVENTORY WITH BAILEES.  Unless Agent has granted its prior written
consent  and  Borrowers  have  delivered to Agent a Bailee Acknowledgment  with
respect to the applicable Inventory,  no  Inventory  shall  at  any time now or
hereafter be stored with a bailee, warehouseman, or similar party  (other  than
Inventory located at retail locations).

      7.17. STORE  OPENINGS  AND CLOSINGS.  Open or close any location at which
Borrowers maintain, offer for  sale  or  store  any  of  the  Collateral unless
Borrowers  have provided Agent at least 30 days' prior written notice  of  such
opening or closing  and  (i)  in  the  case  of  any such opening, such opening
results in no more than a 24 store difference in the  projected  store openings
set  forth  in  the  Projections or (ii) in the case of any such closing,  such
closing results in no  more  than  a 24 store difference in the projected store
openings set forth in the Projections.

      7.18. SECURITIES ACCOUNTS.  Establish  or maintain any Securities Account
unless  Agent  shall  have  received a Control Agreement  in  respect  of  such
Securities Account subject to the provisions of Section 2.6.  No Borrower shall
transfer assets out of any Securities Account; provided, however, that, so long
as no Cash Dominion Event has  occurred  and  is  continuing  or  would  result
therefrom,  Borrowers  may  use  such  assets (and the proceeds thereof) to the
extent not prohibited by this Agreement.

      7.19. EMPLOYEE BENEFIT PLANS.

            (a)   Engage in any "prohibited  transaction" within the meaning of
      {section}406 of ERISA or {section}4975 of the Code which could reasonably
      be expected to result in a Material Adverse Change; or

            (b)   permit any Guaranteed Pension  Plan  to incur an "accumulated
      funding  deficiency", as such term is defined in {section}302  of  ERISA,
      whether or not such deficiency is or may be waived; or

            (c)   fail  to  contribute  to  any  Guaranteed  Pension Plan to an
      extent which, or terminate any Guaranteed Pension Plan in a manner which,
      could result in the imposition of a lien or encumbrance  on the assets of
      any Borrowers or any of their Subsidiaries pursuant to {section}302(f) or
      {section}4068 of ERISA; or
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            (d)   amend any Guaranteed Pension Plan in circumstances  requiring
      the   posting   of   security   pursuant  to  {section}307  of  ERISA  or
      {section}401(a)(29) of the Code; or

            (e)   permit or take any action which would result in the aggregate
      benefit liabilities (with the meaning  of  {section}4001 of ERISA) of all
      Guaranteed Pension Plans exceeding the value  of  the aggregate assets of
      such  Plans,  disregarding for this purpose the benefit  liabilities  and
      assets of any such  Plan with assets in excess of benefit liabilities, by
      more than the amount set forth in Section 5.15.

      7.20. DEPOSIT ACCOUNTS, CREDIT CARD AGREEMENTS, ETC.  (a)Establish    any
bank  accounts,  credit  card  clearinghouse  or  processors,  other than those
Deposit  Accounts,  Credit  Card Agreements and other accounts, all  listed  on
Schedule 7.20, without Agent's  prior  written consent, (b) violate directly or
indirectly any Control Agreement, Bank Product  Agreement, or other bank agency
or lock box agreement in favor of Agent for the benefit  of  the  Lender  Group
with  respect  to  such  account,  (c) deposit into any of the payroll accounts
listed on Schedule 7.20 any amounts  in  excess  of  amounts  necessary  to pay
current  payroll obligations from such accounts or (d) change any direction  or
designation relating to any Credit Card Processor.

      7.21. MINIMUM  AVAILABILITY.   Borrowers shall have at all times Adjusted
Availability  of  at  least  equal  to  the   Minimum   Adjusted   Availability
Requirement.

8.    EVENTS OF DEFAULT.

      Any  one  or  more  of the following events shall constitute an event  of
default (each, an "Event of Default") under this Agreement:

      8.1   Any Borrower shall  fail  to  pay  (a)  when due any installment of
principal  whether at the stated date of maturity or any  accelerated  date  of
maturity or  at  any  other date fixed for payment of the Obligations, (b) when
due any accounts payable  to  the  Issuing Lender constituting reimbursement of
Obligations, and (c) any interest (including  any  interest  which, but for the
provisions  of the Bankruptcy Code, would have accrued on such  amounts),  fees
and charges due  the  Lender  Group, reimbursement of Lender Group Expenses, or
other amounts constituting Obligations  not  set forth in the preceding clauses
(a) or (b) herein (i) so long as clause (b) of  the definition of Cash Dominion
Event shall not have occurred, within 5 days after  the date due, and (ii) when
the same shall be due and payable at any time that clause (b) of the definition
of Cash Dominion Event shall have occurred.

      8.2   (a)   Any Borrower shall fail to comply with  any  of its covenants
contained in Section 6, or 7; (b) any Borrower or any of its Subsidiaries shall
fail to perform any term, covenant or agreement contained herein  or  in any of
the other Loan Documents (other than those specified elsewhere in this  Section
8)  for  20  days  after  written  notice  of  such  failure  has been given to
Administrative Borrower by Agent; and (c) any representation or warranty of any
Borrower or any of its Subsidiaries in this Agreement or any of  the other Loan
Documents  or  any  Record  or  in  any  other document or instrument delivered
pursuant to or in connection with this Agreement shall prove to have been false
in any material respect upon the date when  made or deemed to have been made or
repeated.
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      8.3   If any material portion of any Borrower's  or  any  Subsidiary of a
Borrower's assets is attached, seized, subjected to a writ or distress warrant,
levied upon, or comes into the possession of any third Person and  the  same is
not discharged for 30 days or more;

      8.4   If  an  Insolvency  Proceeding  is commenced by any Borrower or any
Subsidiary of a Borrower;

      8.5   If an Insolvency Proceeding is commenced  against  any  Borrower or
any  Subsidiary of a Borrower, and any of the following events occur:   (a) the
applicable Borrower or Subsidiary consents to the institution of the Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely  controverted;  provided, however, that, during the pendency of such
period, each member of the Lender Group shall be relieved of its obligations to
extend credit hereunder, (c) the  petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar  days  of  the  date of the filing thereof;
provided, however, that, during the pendency of such period, each member of the
Lender  Group shall be relieved of its obligation to extend  credit  hereunder,
(d) a trustee,  custodian, liquidator, monitor, receiver or receiver manager is
appointed  to take  possession  of  all  or  any  substantial  portion  of  the
properties or  assets  of,  or to operate all or any substantial portion of the
business of, any Borrower or  any Subsidiary of a Borrower, or (e) an order for
relief shall have been entered therein;

      8.6   If any Borrower or  any  Subsidiary  of  a  Borrower  is  enjoined,
restrained,  or  in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;

      8.7   If a notice  of  Lien,  levy, or assessment is filed of record with
respect  to  any  Borrower's  or  any  of  its   Subsidiaries'  assets  by  any
Governmental Authority, or if any taxes or debts owing at any time hereafter to
any one or more of such entities becomes a Lien, whether  choate  or otherwise,
upon any Borrower's or any of its Subsidiaries' assets and the same is not paid
on the payment date thereof.

      8.8   If any Borrower or any Subsidiary suffers the entry against it of a
final judgment for the payment of money in excess of $1,000,000 (not covered by
insurance),  and  such  judgment  is unstayed and undischarged for a period  of
thirty consecutive days after the date of entry thereof;

      8.9   If  there is a default in  any  material  agreement  to  which  any
Borrower or any Subsidiary  of  a Borrower is a party relative to such Person's
Indebtedness involving an aggregate  amount  of  $10,000,000, or more, and such
default (a) occurs at the final maturity of the obligations  thereunder, or (b)
results  in  a  right  by  the  other  party  thereto, irrespective of  whether
exercised,  to  accelerate  the  maturity  of  the  applicable   Borrower's  or
Subsidiary's obligations thereunder, or to terminate such agreement;

      8.10  If any Borrower or any Subsidiary of a Borrower makes  any  payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted  by  the  terms  of  the  subordination provisions applicable to such
Indebtedness;
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      8.11  If  any  of  the Loan Documents  shall  be  cancelled,  terminated,
revoked  or  rescinded  or Agent's  Liens  in  a  substantial  portion  of  the
Collateral shall cease to  be  perfected,  or  shall cease to have the priority
contemplated by the Loan Documents, in each case  otherwise  than in accordance
with the terms thereof or with the express prior written agreement,  consent or
approval  of  Lenders,  or any action at law, suit or in equity or other  legal
proceeding to cancel, revoke  or  rescind  any  of  the Loan Documents shall be
commenced  by  or  on behalf of any Borrower or any of its  Subsidiaries  party
thereto or any of their  respective  stockholders,  or  any  court or any other
governmental or regulatory authority or agency of competent jurisdiction  shall
make a determination that, or issue a judgment, order, decree or ruling to  the
effect  that,  any  one  or  more  of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;

      8.12  Any Borrower or any ERISA  Affiliate  incurs  any  liability to the
PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate
amount exceeding $1,000,000, or any Borrower or any ERISA Affiliate is assessed
withdrawal  liability  pursuant  to  Title IV of ERISA by a Multiemployer  Plan
requiring  aggregate  annual  payments exceeding  $1,000,000,  or  any  of  the
following occurs with respect to  a  Guaranteed  Pension  Plan:  (i)  an  ERISA
Reportable  Event, or a failure to make a required installment or other payment
(within the meaning  of  {section}302(f)(1)  of  ERISA),  provided  that  Agent
determines in its Permitted Discretion that such event (A) could be expected to
result  in liability of any Borrower or any of its Subsidiaries to the PBGC  or
such Guaranteed  Pension  Plan  in an aggregate amount exceeding $1,000,000 and
(B) could constitute grounds for  the  termination  of  such Guaranteed Pension
Plan by the PBGC, for the appointment by the appropriate United States District
Court  of  a  trustee to administer such Guaranteed Pension  Plan  or  for  the
imposition of a  lien  in  favor  of  such Guaranteed Pension Plan; or (ii) the
appointment by a United States District  Court  of a trustee to administer such
Guaranteed Pension Plan; or (iii) the institution by the PBGC of proceedings to
terminate such Guaranteed Pension Plan;

      8.13  RESERVED;

      8.14  Any Borrower or any of its Subsidiaries  shall  be  indicted  for a
state  or  federal  crime, or any civil or criminal action shall otherwise have
been brought or threatened  against  any Borrower or any of its Subsidiaries, a
punishment for which in any such case  could  include  the  forfeiture  of  any
assets  of such Borrower or such Subsidiary included in the Aggregate Borrowing
Base or any  assets  of  such  Borrower  or such Subsidiary not included in the
Aggregate  Borrowing  Base  but  having  a  fair  market  value  in  excess  of
$5,000,000;

      8.15  A Change of Control shall occur; or

      8.16  There is a Material Adverse Change.

9.    THE LENDER GROUP'S RIGHTS AND REMEDIES.

      9.1.  RIGHTS  AND  REMEDIES.   Upon  the  occurrence,   and   during  the
continuation,  of an Event of Default, Agent may, and upon instruction  of  the
Required Lenders  (at  their  election but without notice of their election and
without presentment, demand, protest  or other notice of any kind, all of which
are hereby expressly waived by Borrowers)  Agent  shall  exercise  any  of  the
                                  105
<PAGE>

rights  and  remedies of a secured party under the Code or Canadian law and any
other rights and  remedies  provided  for  in  this Agreement or any other Loan
Document or otherwise available to it at law or  in  equity  on  behalf  of the
Lender  Group  and  Agent  may or, acting upon the instructions of the Required
Lenders, shall do the same on  behalf  of  the  Lender  Group,  such rights and
remedies to include the following, all of which are authorized by Borrowers:

            (a)   Declare all Obligations, whether evidenced by this Agreement,
      by  any  of the other Loan Documents, or otherwise, immediately  due  and
      payable, provided  that  in  the  event  of  any  Event  of Default under
      Sections  8.4 or 8.5, all such amounts shall become immediately  due  and
      payable automatically and without any requirement of notice from Agent or
      any Lender;

            (b)   Cease  advancing  money  or  extending  credit  to or for the
      benefit  of  Borrowers  under  this  Agreement,  under  any  of  the Loan
      Documents, or under any other agreement between Borrowers and the  Lender
      Group,  provided that in the event of any Event of Default under Sections
      8.4 or 8.5,  any  unused  portion of the credit hereunder shall forthwith
      terminate and each Lender shall be relieved of all further obligations to
      make Advances to Borrowers  and  the  Issuing Lender shall be relieved of
      all further obligations to issue, extend or renew Credit Instruments;

            (c)   Terminate this Agreement and  any of the other Loan Documents
      as to any future liability or obligation of the Lender Group, but without
      affecting any of Agent's Liens in the Collateral  and  without  affecting
      the Obligations, provided that in the event of any Event of Default under
      Sections  8.4  or  8.5,  any unused portion of the credit hereunder shall
      forthwith terminate and each  Lender  shall  be  relieved  of all further
      obligations to make Advances to Borrowers and the Issuing Lender shall be
      relieved  of  all  further  obligations to issue, extend or renew  Credit
      Instruments;

            (d)   Notify Account Debtors  and  other  Persons  obligated on the
      Collateral  to  make payment or otherwise render performance  to  or  for
      Agent,  and,  to  the  extent  permitted  under  the  Code,  enforce  the
      obligations  of Account  Debtors  and  other  Persons  obligated  on  the
      Collateral and  exercise  the  rights  of  Borrowers with respect to such
      obligations and any property that may secure such obligations;

            (e)   Take any proceeds of the Collateral;

            (f)   Settle or adjust disputes and claims directly with Borrowers'
      Account  Debtors  for  amounts  and  upon  terms  which  Agent  considers
      advisable, and in such cases, Agent or Canadian Agent  (as  the  case may
      be)  will  credit  the  applicable Loan Account with only the net amounts
      received by Agent in payment  of  such  disputed Accounts after deducting
      all Lender Group Expenses incurred or expended in connection therewith;

            (g)   Cause Borrowers to hold all of  their  returned  Inventory in
      trust for the Lender Group and segregate all returned Inventory  from all
      other  assets  of Borrowers or in Borrowers' possession and conspicuously
      label said returned Inventory as the property of the Lender Group;
                                  106
<PAGE>

            (h)   Without  notice  to  or  demand  upon any Borrower, make such
      payments and do such acts as Agent considers necessary  or  reasonable to
      protect  its  security interests in the Collateral.  In addition  to  the
      rights granted pursuant to Section 4.8.  Each Borrower agrees to assemble
      the Collateral if Agent so requires, and to make the Collateral available
      to  Agent  at a place  that  Agent  may  designate  which  is  reasonably
      convenient to  both parties.  Each Borrower authorizes Agent to enter the
      premises where the Collateral is located, to take and maintain possession
      of the Collateral, or any part of it, to utilize its assets in accordance
      with Section 4.8  and  to  pay, purchase, contest, or compromise any Lien
      that in Agent's determination  appears  to conflict with Agent's Liens in
      and  to  the Collateral and to pay all expenses  incurred  in  connection
      therewith  and  to charge Borrowers' Loan Account therefor.  With respect
      to any of Borrowers'  owned  or  leased  premises,  each  Borrower hereby
      grants Agent a license to enter into possession of such premises  and  to
      occupy  the  same, without charge, in order to exercise any of the Lender
      Group's rights  or  remedies  provided  herein,  at  law,  in  equity, or
      otherwise;

            (i)   Without  notice  to any Borrower (such notice being expressly
      waived),  and without constituting  a  retention  of  any  collateral  in
      satisfaction  of  an obligation (within the meaning of the Code), set off
      and apply to the Obligations any and all (i) balances and deposits of any
      Borrower held by the  Lender Group (including any amounts received in the
      Deposit Accounts or Securities  Accounts  subject to Control Agreements),
      or  (ii)  Indebtedness at any time owing to or  for  the  credit  or  the
      account of any Borrower held by the Lender Group;

            (j)   Hold,  as  cash collateral, any and all balances and deposits
      of any Borrower held by the Lender Group, and any amounts received in the
      Deposit Accounts or Securities  Account subject to Control Agreements, to
      secure the full and final repayment of all of the Obligations;

            (k)   Ship,  reclaim, recover,  store,  finish,  maintain,  repair,
      prepare for sale, advertise  for  sale,  and sell (in the manner provided
      for  herein) the Collateral.  Each Borrower  hereby  grants  to  Agent  a
      license  or  other  right to use, without charge, such Borrower's labels,
      patents, copyrights,  trade  secrets,  trade  names,  trademarks, service
      marks, and advertising matter, or any property of a similar nature, as it
      pertains to the Collateral, in completing production of,  advertising for
      sale,  and  selling any Collateral and such Borrower's rights  under  all
      licenses and  all  franchise agreements shall inure to the Lender Group's
      benefit;

            (l)   Sell or  cause  to be sold, the Collateral at either a public
      or  private  sale,  or  both,  by   way  of  one  or  more  contracts  or
      transactions, for cash or on terms, in  such  manner  and  at such places
      (including  Borrowers'  premises)  as  Agent  determines  is commercially
      reasonable.   It is not necessary that the Collateral be present  at  any
      such sale;

            (m)   Agent  shall give notice of the disposition of the Collateral
      as follows:
                                  107
<PAGE>

                  (i)   Agent  shall  give  Administrative  Borrower  (for  the
            benefit of the applicable Borrower) a notice in writing of the time
            and place of public sale, or, if the sale is a private sale or some
            other  disposition  other  than  a public sale is to be made of the
            Collateral, the time on or after which  the  private  sale or other
            disposition is to be made; and

                  (ii)  The  notice  shall  be personally delivered or  mailed,
            postage prepaid, to Administrative  Borrower as provided in Section
            12, at least 10 days before the earliest  time  of  disposition set
            forth  in  the  notice;  no notice needs to be given prior  to  the
            disposition of any portion  of the Collateral that is perishable or
            threatens to decline speedily  in  value  or  that  is  of  a  type
            customarily sold on a recognized market;

                  (iii) Borrowers  hereby acknowledge that 5 days prior written
            notice  of  such  sale or sales  shall  be  reasonable  notice;  in
            addition Borrowers  waive  any  and  all rights that they have to a
            judicial hearing in advance of the enforcement  of  any  of Agent's
            rights  and  remedies  hereunder,  including its right if a Default
            exists to take immediate possession  of  Collateral and to exercise
            its rights and remedies with respect thereto;

            (n)   Agent,  on  behalf of the Lender Group  may  credit  bid  and
      purchase at any public sale;

            (o)   Agent may seek  the  appointment  of  a receiver or keeper to
      take  possession of all or any portion of the Collateral  or  to  operate
      same  and,  to  the  maximum  extent  permitted  by  law,  may  seek  the
      appointment of such a receiver without the requirement of prior notice or
      a hearing;

            (p)   Agent  shall  have the rights and remedies of a secured party
      under the Code and any additional  rights and remedies as may be provided
      to a secured party in any jurisdiction in which Collateral is located;

            (q)   The Lender Group shall have  all  other  rights  and remedies
      available to it at law or in equity pursuant to any other Loan  Documents
      and  whether  or  not Lenders shall have accelerated the maturity of  the
      Obligations pursuant to this Section 9.1, each Lender, if owed any amount
      with respect to the  Obligations,  may,  with  the  consent  of  Required
      Lenders  or  Agent but not otherwise, proceed to protect and enforce  its
      rights by suit in equity, action at law, or other appropriate proceeding,
      whether  for the  specific  performance  of  any  covenant  or  agreement
      contained  in  this  Agreement  and  the  other  Loan  Documents  or  any
      instrument   pursuant  to  which  the  Obligations  to  such  Lender  are
      evidenced, included  as  permitted by applicable law the obtaining of the
      ex parte appointment of a  receiver, and if such amount shall have become
      due, by declaration or otherwise,  proceed to enforce the payment thereof
      or any other legal or equitable right of such Lender; and

            (r)   Any  deficiency that exists  after  disposition  of  the  (i)
      Collateral as provided  above, will be paid immediately by U.S. Borrowers
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<PAGE>
      and (ii) Collateral of Bombay  Canada  as  provided  above,  will be paid
      immediately  by  Bombay  Canada.   Any  excess  will be returned, without
      interest  and  subject  to  the  rights  of third Persons,  by  Agent  to
      Administrative Borrower (for the benefit of the applicable U.S. Borrower)
      or Bombay Canada (for the benefit of Bombay Canada), as the case may be.

      9.2.  SECURITIES AND DEPOSITS.  Agent may  at  any  time,  at its option,
transfer  to  itself  or  any  nominee  any securities constituting Collateral,
receive any income thereon and hold such  income  as  additional  Collateral or
apply it to the Obligations.  Whether or not any Obligations are due, Agent may
demand, sue for, collect, or make any settlement or compromise which  it  deems
desirable with respect to the Collateral Obligations.

      9.3.  STANDARDS  FOR  EXERCISING RIGHTS AND REMEDIES.  To the extent that
applicable law imposes duties  on  Agent to exercise remedies in a commercially
reasonable manner, Borrowers acknowledge  and agree that it is not commercially
unreasonable  for  Agent  (a)  to  fail  to incur  expenses  reasonably  deemed
significant by Agent to prepare Collateral for disposition or otherwise to fail
to  complete  raw material or work in process  into  finished  goods  or  other
finished products  for  disposition, (b) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain  governmental  or  third  party  consents  for the
collection or disposition of Collateral to be collected or disposed of, (c)  to
fail  to  exercise collection remedies against Account Debtors or other persons
obligated on  Collateral  or  to  fail to remove Liens on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account Debtors
and  other persons obligated on Collateral  directly  or  through  the  use  of
collection   agencies  and  other  collection  specialists,  (e)  to  advertise
dispositions  of   Collateral   through   publications   or  media  of  general
circulation, whether or not the Collateral is of a specialized  nature,  (f) to
contact  other  persons,  whether or not in the same business as Borrowers, for
expressions of interest in  acquiring all or any portion of the Collateral, (g)
to hire one or more professional  auctioneers  to  assist in the disposition of
Collateral, whether or not the collateral is of a specialized  nature,  (h)  to
dispose  of Collateral by utilizing internet sites that provide for the auction
of assets  of  the types included in the Collateral or that have the reasonable
capability of doing  so,  or  that  match  buyers and sellers of assets, (i) to
dispose  of assets in wholesale rather than retail  markets,  (j)  to  disclaim
disposition  warranties,  (k)  to  purchase insurance or credit enhancements to
insure Agent against risks of loss,  collection or disposition of Collateral or
to provide to Agent a guaranteed return  from  the collection or disposition of
Collateral, or (l) to the extent deemed appropriate  by  Agent,  to  obtain the
services of brokers, investment bankers, consultants and other professionals to
assist Agent in the collection or disposition of any of the Collateral,  or (m)
conduct  going  out  of  business  sales and otherwise liquidate the inventory.
Borrowers acknowledge that the purpose  of  this Section 9.3 is to provide non-
exhaustive  indications of what actions or omissions  by  Agent  would  fulfill
Agent's duties  under  the  Code  or any other relevant jurisdiction in Agent's
exercise of remedies against the Collateral and that other actions or omissions
by Agent shall not be deemed to fail  to  fulfill such duties solely on account
of  not  being  indicated in this Section 9.3.   Without  limitation  upon  the
foregoing, nothing  contained  in this Section 9.3. shall be construed to grant
any rights to Borrowers or to impose  any  duties  on Agent that would not have
been granted or imposed by this Agreement or by applicable  law  in the absence
of this Section 9.3.
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<PAGE>

      9.4.  REMEDIES  CUMULATIVE.  The rights and remedies of the Lender  Group
under this Agreement, the  other Loan Documents, and all other agreements shall
be cumulative and may be exercised simultaneously.  The Lender Group shall have
all other rights and remedies  not  inconsistent herewith as provided under the
Code, by law, or in equity.  No exercise  by  the  Lender Group of one right or
remedy shall be deemed an election, and no waiver by  the  Lender  Group of any
Event  of Default shall be deemed a continuing waiver.  No delay by the  Lender
Group shall constitute a waiver, election, or acquiescence by it.

10.   TAXES AND EXPENSES.

      If  any  Borrower  fails  to  pay  (prior  to  delinquency  or within the
applicable  grace  period)  any  monies  (whether taxes, assessments, insurance
premiums,  or,  in the case of leased properties  or  assets,  rents  or  other
amounts payable under  such leases) due to third Persons (other than any monies
that are the subject of  a Permitted Protest), or fails to make any deposits or
furnish any required proof  of  payment  or  deposit, all as required under the
terms of this Agreement, then, Agent, in its sole  discretion and without prior
notice to any Borrower, may do any or all of the following:   (a)  make payment
of  the  same or any part thereof, (b) set up such reserves in Borrowers'  Loan
Account as  Agent deems necessary to protect the Lender Group from the exposure
created by such  failure,  or  (c)  in  the  case of the failure to comply with
Section  6.8  hereof,  obtain  and  maintain insurance  policies  of  the  type
described in Section 6.8 and take any  action  with respect to such policies as
Agent deems prudent.  Any such amounts paid by Agent  shall  constitute  Lender
Group  Expenses and any such payments shall not constitute an agreement by  the
Lender Group  to  make similar payments in the future or a waiver by the Lender
Group of any Event  of Default under this Agreement.  Agent need not inquire as
to, or contest the validity  of, any such expense, tax, or Lien and the receipt
of  the usual official notice for  the  payment  thereof  shall  be  conclusive
evidence that the same was validly due and owing.

11.   WAIVERS; INDEMNIFICATION.

      11.1. DEMAND; PROTEST; ETC.  Each Borrower waives demand, protest, notice
of protest,  notice  of  default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release,  compromise, settlement, extension, or renewal
of documents, instruments, chattel  paper,  and  guarantees at any time held by
the Lender Group on which any such Borrower may in any way be liable.

      11.2. THE LENDER GROUP'S LIABILITY FOR COLLATERAL.   Each Borrower hereby
agrees that:  (a) so long as the Lender Group complies with its obligations, if
any,  under  the  Code,  Agent  shall  not  in any way or manner be  liable  or
responsible  for:  (i) the safekeeping of the  Collateral,  (ii)  any  loss  or
damage thereto  occurring  or  arising in any manner or fashion from any cause,
(iii) any diminution in the value  thereof,  or  (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency,  or other Person, and (b) all
risk  of  loss,  damage, or destruction of the Collateral  shall  be  borne  by
Borrowers.  Each Borrower shall remain obligated and liable under each contract
or agreement comprised  in  the  Collateral  to  be  observed  or  performed by
Borrowers  thereunder.   Neither Agent nor any Lender shall have any obligation
or liability under any such  contract  or agreement by reason or arising out of
this Agreement or the receipt by Agent or any Lender of any payment relating to
any of the Collateral, not shall Agent or any Lender be obligated in any manner
to perform any of the obligations of Borrowers  under  or  pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency  of  any
payment  received  by Agent or any Lender in respect of the Collateral or as to
                                  110
<PAGE>

the sufficiency of any  performance  by  any  party  under any such contract or
agreement,  to  present or file any claim, to take any action  to  enforce  any
performance or to  collect  the  payment  of  any  amounts  which may have been
assigned  to Agent or to which Agent or any Lender may be entitled  to  at  any
time or times.  Agent's sole duty with respect to the custody, safe-keeping and
physical preservation of the Collateral in its possession, under {section}9-207
of the Code,  or  otherwise,  shall be to deal with such Collateral in the same
manner as Agent deals with similar property for its own account.

      11.3. INDEMNIFICATION.  Each  Borrower  shall pay, indemnify, defend, and
hold  the  Agent-Related  Persons,  the  Lender-Related   Persons,   and   each
Participant  (each,  an  "Indemnified  Person") harmless (to the fullest extent
permitted by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees and
disbursements  and other costs and expenses  actually  incurred  in  connection
therewith (as and  when  they  are incurred and irrespective of whether suit is
brought), at any time asserted against,  imposed  upon,  or  incurred by any of
them  (a)  in  connection  with or as a result of or related to the  execution,
delivery,   enforcement,  performance,   or   administration   (including   any
restructuring  or  workout  with  respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Borrowers' and their  Subsidiaries'  compliance with the terms of
the Loan Documents, (b) any actual or proposed use by  any  Borrower  or any of
its  Subsidiaries of the proceeds of any of the Advances or Credit Instruments,
(c) the reversal or withdrawal of any provisional credits granted by Agent upon
the transfer  of  funds  from  lock box, bank agency, concentration accounts or
otherwise under any cash management  arrangements  with  any  Borrower  or  any
Subsidiary  or  in connection with the provisional honoring of funds transfers,
checks or other items,  and  (d) with respect to any investigation, litigation,
or proceeding related to this Agreement, any other Loan Document, or the use of
the proceeds of the credit provided  hereunder  (irrespective  of  whether  any
Indemnified  Person  is  a  party  thereto),  or  any  act, omission, event, or
circumstance  in  any manner related thereto (all the foregoing,  collectively,
the "Indemnified Liabilities").  The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this Section
11.3 with respect to  any  Indemnified  Liability  that  a  court  of competent
jurisdiction  finally determines to have resulted from the gross negligence  or
willful misconduct  of such Indemnified Person.  If, and to the extent that the
obligations of Borrowers  under  this  Section  11.3  are unenforceable for any
reason,  each Borrower hereby agrees to make the maximum  contribution  to  the
payment  in  satisfaction  of  such  obligations  which  is  permissible  under
applicable law.  This provision shall survive the termination of this Agreement
and the repayment  of  the  Obligations.   If  any Indemnified Person makes any
payment  to  any  other  Indemnified  Person  with respect  to  an  Indemnified
Liability  as  to which Borrowers were required to  indemnify  the  Indemnified
Person receiving  such  payment,  the Indemnified Person making such payment is
entitled to be indemnified and reimbursed by Borrowers with respect thereto.

THE FOREGOING INDEMNIFICATIONS SHALL  APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED,  IN  WHOLE  OR  IN  PART, UNDER ANY
CLAIM  OR  THEORY  OF  STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART  BY  ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNIFIED PERSON,
                                  111
<PAGE>

provided only that no Indemnified  Person  shall be entitled under this section
to receive indemnification for that portion,  if  any,  of  any liabilities and
costs  which  is proximately caused by its own individual gross  negligence  or
willful misconduct, as determined in a final judgment.

12.   NOTICES.

      Unless otherwise  provided  in  this Agreement, all notices or demands by
Borrowers or Agent to the other relating  to  this  Agreement or any other Loan
Document  shall be in writing and (except for financial  statements  and  other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally  delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email  addresses  as Administrative  Borrower  or  Agent,  as  applicable,  may
designate to each other  in accordance herewith), or telefacsimile to Borrowers
in care of Administrative  Borrower  or  to  Agent,  as the case may be, at its
address set forth below:

      If to Administrative
      Borrower:               THE BOMBAY COMPANY, INC.
                              550 Bailey Avenue
                              Suite 700
                              Fort Worth, TX  76107
                              Attn:  Elaine D. Crowley
                              Fax No.  817-332-7066

      with copies to:         THOMPSON & KNIGHT LLP
                              1700 Pacific Ave, Suite 3300
                              Dallas, Texas 75201
                              Attn:  Fred W. Fulton, Esq.
                              Fax No.:  214-880-3155

      If to Agent:            WELLS FARGO RETAIL FINANCE, LLC
                              One Boston Place, 18th Floor
                              Boston, Massachusetts  02108
                              Attn:  Lynn S. Whitmore
                              Fax No.  617-722-9485

      with copies to:         BINGHAM MCCUTCHEN LLP
                              150 Federal Street
                              Boston, Massachusetts, MA 02110
                              Attn:  Robert A.J. Barry, Esq.
                              Fax No.  617-951-8736

      Agent and Borrowers may change the address at which  they  are to receive
notices  hereunder, by notice in writing in the foregoing manner given  to  the
other party.   All  notices or demands sent in accordance with this Section 12,
other than notices by  Agent  in connection with enforcement rights against the
Collateral under the provisions  of  the  Code, shall be deemed received on the
earlier of the date of actual receipt or 3  Business  Days  after  the  deposit
thereof  in the mail.  Each Borrower acknowledges and agrees that notices  sent
                                  112
<PAGE>

by the Lender  Group  in  connection  with  the  exercise of enforcement rights
against Collateral under the provisions of the Code  shall  be deemed sent when
deposited  in  the  mail or personally delivered, or, where permitted  by  law,
transmitted by telefacsimile or any other method set forth above.

13.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

            (a)   THE  VALIDITY  OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
      (UNLESS EXPRESSLY PROVIDED TO  THE  CONTRARY  IN ANOTHER LOAN DOCUMENT IN
      RESPECT  OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,  INTERPRETATION,
      AND ENFORCEMENT  HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO
      AND THERETO WITH RESPECT  TO  ALL MATTERS ARISING HEREUNDER OR THEREUNDER
      OR RELATED HERETO OR THERETO SHALL  BE DETERMINED UNDER, GOVERNED BY, AND
      CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING,
      WITHOUT LIMITATION, SECTIONS 5-1401 AND  5-1402  OF  THE NEW YORK GENERAL
      OBLIGATIONS LAW AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

            (b)   THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS  ARISING IN
      CONNECTION  WITH  THIS  AGREEMENT  AND THE OTHER LOAN DOCUMENTS SHALL  BE
      TRIED  AND  LITIGATED ONLY IN THE FEDERAL  COURTS  LOCATED  IN  NEW  YORK
      COUNTY, CITY  OF  NEW  YORK,  NEW  YORK, PROVIDED, HOWEVER, THAT ANY SUIT
      SEEKING ENFORCEMENT AGAINST ANY BORROWER COLLATERAL OR OTHER PROPERTY MAY
      BE BROUGHT, AT AGENT'S OPTION, IN THE  COURTS  OF  ANY JURISDICTION WHERE
      AGENT  ELECTS TO BRING SUCH ACTION OR WHERE SUCH BORROWER  COLLATERAL  OR
      OTHER PROPERTY  MAY  BE  FOUND.  BORROWERS AND THE LENDER GROUP WAIVE, TO
      THE EXTENT PERMITTED UNDER  APPLICABLE  LAW,  ANY  RIGHT EACH MAY HAVE TO
      ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT  TO VENUE TO THE
      EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(B).

            (c)   BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR  RESPECTIVE
      RIGHTS  TO  A  JURY  TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON  OR
      ARISING OUT OF ANY OF  THE  LOAN  DOCUMENTS  OR  ANY  OF THE TRANSACTIONS
      CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,  BREACH  OF
      DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  BORROWERS AND
      THE  LENDER  GROUP  REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
      KNOWINGLY  AND  VOLUNTARILY   WAIVES  ITS  JURY  TRIAL  RIGHTS  FOLLOWING
      CONSULTATION WITH LEGAL COUNSEL.   IN  THE EVENT OF LITIGATION, A COPY OF
      THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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            (d)   Except as prohibited by law,  each party hereto hereby waives
      any right it may have to claim or recover in  any  litigation referred to
      in   the   preceding   sentence  any  special,  exemplary,  punitive   or
      consequential damages or  any  damages  other  than,  or  in addition to,
      actual  damages.  Each party hereto (a) certifies that no representative,
      agent or attorney of any other party hereto has represented, expressly or
      otherwise,  that  such other party would not, in the event of litigation,
      seek to enforce the  foregoing  waivers  and  (b)  acknowledges that such
      other  party  has been induced to enter into this Credit  Agreement,  the
      other Loan Documents  to  which it is a party by, among other things, the
      waivers and certifications contained herein.

14.   ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

      14.1. ASSIGNMENTS AND PARTICIPATIONS.

            (a)   Any Lender may  assign  and delegate to one or more assignees
      (each an "Assignee") that are Eligible  Transferees  all,  or any ratable
      part of all, of the Obligations, the Commitments and the other rights and
      obligations of such Lender hereunder and under the other Loan  Documents,
      in a minimum amount of $10,000,000; provided, however, that Borrowers and
      Agent  may  continue  to  deal  solely  and directly with such Lender  in
      connection with the interest so assigned to an Assignee until (i) written
      notice of such assignment, together with payment instructions, addresses,
      and related information with respect to the  Assignee, have been given to
      Administrative  Borrower  and  Agent  by such Lender  and  the  Assignee,
      (ii) such  Lender  and  its  Assignee have  delivered  to  Administrative
      Borrower and Agent an Assignment  and  Acceptance, and (iii) the assignor
      Lender  or  Assignee has paid to Agent for  Agent's  separate  account  a
      processing fee in the amount of $7,500.  Anything contained herein to the
      contrary notwithstanding,  the  payment of any fees shall not be required
      and the Assignee need not be an Eligible Transferee if such assignment is
      in connection with any merger, consolidation,  sale,  transfer,  or other
      disposition  of  all  or  any substantial portion of the business or loan
      portfolio of the assigning Lender.

            (b)   From and after  the  date  that  Agent  notifies the assignor
      Lender (with a copy to Administrative Borrower) that  it  has received an
      executed  Assignment  and  Acceptance and payment of the above-referenced
      processing fee, (i) the Assignee  thereunder shall be a party hereto and,
      to the extent that rights and obligations hereunder have been assigned to
      it pursuant to such Assignment and  Acceptance, shall have the rights and
      obligations of a Lender under the Loan  Documents,  and (ii) the assignor
      Lender  shall,  to the extent that rights and obligations  hereunder  and
      under the other Loan  Documents have been assigned by it pursuant to such
      Assignment and Acceptance,  relinquish its rights (except with respect to
      Section 11.3 hereof) and be released  from  any  future obligations under
      this Agreement (and in the case of an Assignment and  Acceptance covering
      all  or  the  remaining  portion  of  an  assigning  Lender's rights  and
      obligations  under  this  Agreement  and  the other Loan Documents,  such
      Lender shall cease to be a party hereto and thereto), and such assignment
      shall  effect a novation between Borrowers and  the  Assignee;  provided,
      however, that nothing contained herein shall release any assigning Lender
      from  obligations   that  survive  the  termination  of  this  Agreement,
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      including  such assigning  Lender's  obligations  under  Section  16  and
      Section 17.8 of this Agreement.

            (c)   By executing and delivering an Assignment and Acceptance, the
      assigning Lender  thereunder  and  the Assignee thereunder confirm to and
      agree with each other and the other parties hereto as follows:  (1) other
      than as provided in such Assignment and Acceptance, such assigning Lender
      makes no representation or warranty  and  assumes  no responsibility with
      respect to any statements, warranties or representations  made  in  or in
      connection  with  this  Agreement  or  the execution, legality, validity,
      enforceability, genuineness, sufficiency  or  value  of this Agreement or
      any  other  Loan Document furnished pursuant hereto, (2)  such  assigning
      Lender makes  no representation or warranty and assumes no responsibility
      with respect to  the  financial condition of Borrowers or the performance
      or  observance by Borrowers  of  any  of  their  obligations  under  this
      Agreement  or any other Loan Document furnished pursuant hereto, (3) such
      Assignee confirms that it has received a copy of this Agreement, together
      with such other documents and information as it has deemed appropriate to
      make its own  credit  analysis and decision to enter into such Assignment
      and  Acceptance,  (4)  such  Assignee  will,  independently  and  without
      reliance upon Agent, such assigning Lender or any other Lender, and based
      on such documents and information  as  it  shall  deem appropriate at the
      time, continue to make its own credit decisions in  taking  or not taking
      action  under  this  Agreement, (5) such Assignee appoints and authorizes
      Agent  to take such actions  and  to  exercise  such  powers  under  this
      Agreement  as  are delegated to Agent, by the terms hereof, together with
      such powers as are  reasonably  incidental thereto, and (6) such Assignee
      agrees that it will perform all of  the obligations which by the terms of
      this Agreement are required to be performed by it as a Lender.

            (d)   Immediately upon Agent's  receipt  of the required processing
      fee  payment  and  the  fully  executed Assignment and  Acceptance,  this
      Agreement shall be deemed to be  amended  to  the extent, but only to the
      extent,  necessary  to  reflect  the  addition of the  Assignee  and  the
      resulting  adjustment  of  the  Commitments   arising   therefrom.    The
      Commitment  allocated  to  each Assignee shall reduce such Commitments of
      the assigning Lender pro tanto.

            (e)   Any Lender may at  any  time,  with  the  written  consent of
      Agent,  sell to one or more commercial banks, financial institutions,  or
      other  Persons   not   Affiliates   of   such  Lender  (a  "Participant")
      participating interests in its Obligations, the Commitment, and the other
      rights and interests of that Lender (the "Originating  Lender") hereunder
      and under the other Loan Documents (provided that no written  consent  of
      Agent  shall  be  required  in  connection  with  any  sale  of  any such
      participating interests by a Lender to an Eligible Transferee); provided,
      however, that (i) the Originating Lender shall remain a "Lender" for  all
      purposes  of  this  Agreement  and  the  other  Loan  Documents  and  the
      Participant  receiving the participating interest in the Obligations, the
      Commitments, and the other rights and interests of the Originating Lender
      hereunder shall  not  constitute  a "Lender" hereunder or under the other
      Loan  Documents  and  the Originating  Lender's  obligations  under  this
      Agreement  shall remain  unchanged,  (ii) the  Originating  Lender  shall
      remain solely  responsible  for  the  performance  of  such  obligations,
      (iii) Borrowers,  Agent,  and  Lenders shall continue to deal solely  and
      directly with the Originating Lender  in  connection with the Originating
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      Lender's rights and obligations under this  Agreement  and the other Loan
      Documents,  (iv) no  Lender  shall  transfer  or  grant any participating
      interest  under  which  the  Participant  has the right  to  approve  any
      amendment to, or any consent or waiver with respect to, this Agreement or
      any  other  Loan Document, except to the extent  such  amendment  to,  or
      consent or waiver  with  respect  to  this Agreement or of any other Loan
      Document  would (A) extend the final maturity  date  of  the  Obligations
      hereunder in  which  such  Participant  is  participating, (B) reduce the
      interest  rate  applicable  to the Obligations hereunder  in  which  such
      Participant is participating, (C) release all or substantially all of the
      Collateral or guaranties (except  to the extent expressly provided herein
      or in any of the Loan Documents) supporting  the Obligations hereunder in
      which such Participant is participating, (D) postpone  the payment of, or
      reduce  the  amount of, the interest or fees payable to such  Participant
      through such Lender,  or  (E) change the amount or due dates of scheduled
      principal repayments or prepayments  or  premiums;  and  (v)  all amounts
      payable by Borrowers hereunder shall be determined as if such Lender  had
      not  sold  such  participation; except that, if amounts outstanding under
      this Agreement are  due  and unpaid, or shall have been declared or shall
      have become due and payable  upon  the occurrence of an Event of Default,
      each Participant shall be deemed to  have the right of set-off in respect
      of its participating interest in amounts  owing  under  this Agreement to
      the same extent as if the amount of its participating interest were owing
      directly  to  it  as  a Lender under this Agreement.  The rights  of  any
      Participant only shall  be derivative through the Originating Lender with
      whom such Participant participates  and  no  Participant  shall  have any
      rights  under  this  Agreement  or the other Loan Documents or any direct
      rights  as to the other Lenders, Agent,  Borrowers,  the  Collections  of
      Borrowers  or their Subsidiaries, the Collateral, or otherwise in respect
      of the Obligations.   No  Participant shall have the right to participate
      directly in the making of decisions by Lenders among themselves.

            (f)   In connection with  any  such  assignment or participation or
      proposed assignment or participation, a Lender  may,  subject  to Section
      17.8,  disclose  all  documents and information which it now or hereafter
      may have relating to Borrowers or Borrowers' business.

            (g)   Any other provision  in  this  Agreement notwithstanding, any
      Lender may at any time create a security interest  in,  or pledge, all or
      any portion of its rights under and interest in this Agreement  to secure
      obligations  of such Lender, including without limitation (a) any  pledge
      or assignment  to secure obligations to any of the twelve Federal Reserve
      Banks organized  under  {section}4  of  the  Federal  Reserve Act, 12 USC
      {section}341 and (b) with respect to any Lender that is  a  Fund,  to any
      lender  or  any  trustee  for, or any other representative of, holders of
      obligations owed or securities  issued  by such Fund as security for such
      obligations or securities or any institutional custodian for such Fund or
      for such lender; provided that no such grant  shall  release  such Lender
      from  any  of  its  obligations  hereunder,  provide  any  voting  rights
      hereunder to the secured party thereof, substitute any such secured party
      for such Lender as a party hereto or affect any rights or obligations  of
      Borrowers  or Agent hereunder.  If any assignee Lender is an Affiliate of
      any Borrower,  then  any such assignee Lender shall have no right to vote
      as a Lender hereunder  or  under  any  of  the  other  Loan Documents for
      purposes of granting consents or waivers or for purposes  of  agreeing to
      amendments  or  other modifications to any of the Loan Documents  or  for
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<PAGE>

      purposes of making  requests  to  Agent  pursuant  to  Section 9, and the
      determination  of  the  Required Lenders shall for all purposes  of  this
      Agreement and the other Loan  Documents  be  made  without regard to such
      assignee  Lender's  interest in any of the Obligations.   If  any  Lender
      sells  a  participating   interest   in  any  of  the  Obligations  to  a
      Participant, and such Participant is a  Borrower  or  an  Affiliate  of a
      Borrower,  then such transferor Lender shall promptly notify Agent of the
      sale of such  participation.   A transferor Lender shall have no right to
      vote as a Lender hereunder or under  any  of the other Loan Documents for
      purposes of granting consents or waivers or  for  purposes of agreeing to
      amendments or modifications to any of the Loan Documents  or for purposes
      of  making  requests  to Agent pursuant to Section 10 to the extent  that
      such participation is beneficially  owned  by a Borrower or any Affiliate
      of a Borrower, and the determination of the  Required  Lenders  shall for
      all  purposes  of  this Credit Agreement and the other Loan Documents  be
      made without regard  to  the  interest  of  such transferor Lender in the
      Obligations to the extent of such participation.

      14.2. SUCCESSORS.  This Agreement shall bind  and inure to the benefit of
the  respective  successors  and  assigns  of  each of the  parties;  provided,
however, that Borrowers may not assign this Agreement  or  any rights or duties
hereunder without Lenders' prior written consent and any prohibited  assignment
shall be absolutely void ab initio.  No consent to assignment by Lenders  shall
release  any Borrower from its Obligations.  A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to  Section  14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no  consent  or  approval  by  any Borrower is required in
connection with any such assignment.

15.   AMENDMENTS; WAIVERS.

      15.1. AMENDMENTS AND WAIVERS.  No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent  with  respect to any
departure by Borrowers therefrom, shall be effective unless the same  shall  be
in  writing  and  signed  by  the  Required Lenders (or by Agent at the written
request of the Required Lenders) and  Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or  consent  shall be effective only in the
specific  instance  and  for the specific purpose for  which  given;  provided,
however, that no such waiver,  amendment,  or  consent shall, unless in writing
and signed by all of Lenders affected thereby and  Administrative  Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:

            (a)   increase or extend any Commitment of any Lender,

            (b)   postpone  or  delay any date fixed by this Agreement  or  any
      other Loan Document for any  payment  of  principal,  interest,  fees, or
      other amounts due hereunder or under any other Loan Document,

            (c)   reduce the principal of, or the rate of interest on, any loan
      or  other  extension  of  credit  hereunder,  or reduce any fees or other
      amounts payable hereunder or under any other Loan Document,
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<PAGE>

            (d)   change the percentage of the Commitments  that is required to
      take any action hereunder,

            (e)   amend  or  modify  this  Section  or  any  provision  of  the
      Agreement providing for consent or other action by all Lenders,

            (f)   release Collateral other than as permitted by Section 16.12,

            (g)   change  the  definition of "Required Lenders"  or  "Pro  Rata
      Share",

            (h)   contractually subordinate any of Agent's Liens,

            (i)   release any Borrower  from  any obligation for the payment of
      money owed to any Lender, or

            (j)   change  the definition of "Aggregate  Borrowing  Base"  "U.S.
      Borrowing  Base",  "Canadian   Borrowing  Base"  or  the  definitions  of
      "Eligible  Accounts",  "Eligible  Credit   Card  Receivables",  "Eligible
      Inventory",  "Maximum  Revolver  Amount"  or  any   component  definition
      contained in the foregoing terms, or change Section 2.1(b); or

            (k)   amend any of the provisions of Section 16.

and,  provided  further, however, that no amendment, waiver or  consent  shall,
unless in writing  and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties  of Agent, Issuing Lender, or Swing Lender, as applicable,
under   this  Agreement  or   any   other   Loan   Document.    The   foregoing
notwithstanding,  any amendment, modification, waiver, consent, termination, or
release of, or with  respect  to,  any provision of this Agreement or any other
Loan Document that relates only to the  relationship  of the Lender Group among
themselves,  and that does not affect the rights or obligations  of  Borrowers,
shall not require consent by or the agreement of Borrowers.

      15.2. REPLACEMENT  OF  HOLDOUT  LENDER.  If any action to be taken by the
Lender Group or Agent hereunder requires  the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("Holdout  Lender") fails to give its
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior  irrevocable  notice to the Holdout Lender, may permanently  replace  the
Holdout Lender with one  or  more  substitute  Lenders  (each,  a  "Replacement
Lender"),  and the Holdout Lender shall have no right to refuse to be  replaced
hereunder.   Such  notice  to  replace  the  Holdout  Lender  shall  specify an
effective  date  for  such  replacement, which date shall not be later than  15
Business Days after the date such notice is given.

      Prior to the effective  date  of such replacement, the Holdout Lender and
each Replacement Lender shall execute  and deliver an Assignment and Acceptance
Agreement, subject only to the Holdout Lender  being  repaid  its  share of the
outstanding Obligations (including an assumption of its Pro Rata Share  of  the
Risk  Participation  Liability)  without  any  premium  or  penalty of any kind
whatsoever.  If the Holdout Lender shall refuse or fail to execute  and deliver
any  such  Assignment  and  Acceptance  prior  to  the  effective  date of such
replacement, the Holdout Lender shall be deemed to have executed and  delivered
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such Assignment and Acceptance.  The replacement of any Holdout Lender shall be
made  in  accordance  with  the terms of Section 14.1.  Until such time as  the
Replacement  Lenders  shall  have   acquired   all   of  the  Obligations,  the
Commitments,  and  the  other  rights  and  obligations of the  Holdout  Lender
hereunder and under the other Loan Documents,  the  Holdout Lender shall remain
obligated  to  make  the Holdout Lender's Pro Rata Share  of  Advances  and  to
purchase a participation  in  each  Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit.

      15.3. NO WAIVERS; CUMULATIVE REMEDIES.  No failure by Agent or any Lender
to exercise any right, remedy, or option  under  this  Agreement  or, any other
Loan  Document,  or  delay by Agent or any Lender in exercising the same,  will
operate as a waiver thereof.   No  waiver  by  Agent  or  any  Lender  will  be
effective  unless  it  is  in writing, and then only to the extent specifically
stated.  No waiver by Agent  or  any  Lender  on  any  occasion shall affect or
diminish  Agent's  and  each  Lender's  rights  thereafter  to  require  strict
performance by Borrowers of any provision of this Agreement.   Agent's and each
Lender's  rights  under  this  Agreement and the other Loan Documents  will  be
cumulative and not exclusive of  any  other  right  or remedy that Agent or any
Lender may have.

16.   AGENT; THE LENDER GROUP.

      16.1. APPOINTMENT  AND  AUTHORIZATION  OF  AGENT.    Each  Lender  hereby
designates and appoints WFRF as its representative under this Agreement and the
other  Loan  Documents and each Lender hereby irrevocably authorizes  Agent  to
execute and deliver  each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and  to exercise such powers and perform such duties as are
expressly delegated to Agent  by  the terms of this Agreement or any other Loan
Document,  together with such powers  as  are  reasonably  incidental  thereto.
Agent agrees to act as such on the express conditions contained in this Section
16.  Each Lender  hereby designates Trans Canada Credit Corporation as Canadian
Agent under this Agreement.   The provisions of this Section 16 (other than the
proviso to Section 16.11(d)) are  solely  for  the  benefit  of Agent, Canadian
Agent and Lenders, and Borrowers and their Subsidiaries shall have no rights as
a  third  party  beneficiary  of  any of the provisions contained herein.   Any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document notwithstanding, Agent  and  Canadian  Agent  shall  not have any
duties or responsibilities, except those expressly set forth herein,  nor shall
Agent  or  Canadian  Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities  shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent or Canadian Agent; it being expressly
understood and agreed that the use of the word "Agent" is for convenience only,
that WFRF is merely the representative of Lenders, and only has the contractual
duties  set forth herein.  Except  as  expressly  otherwise  provided  in  this
Agreement,  Agent  or Canadian Agent shall have and may use its sole discretion
with respect to exercising  or  refraining  from  exercising  any discretionary
rights or taking or refraining from taking any actions that Agent  or  Canadian
Agent  expressly  is  entitled  to  take  or  assert  under or pursuant to this
Agreement and the other Loan Documents.  Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents that provides rights
or powers to Agent, Lenders agree that Agent or Canadian  Agent  shall have the
right  to  exercise  the following powers as long as this Agreement remains  in
effect:  (a) maintain,  in  accordance  with  its customary business practices,
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ledgers and records reflecting the status of the  Obligations,  the Collateral,
the Collections of Borrowers and their Subsidiaries, and related  matters,  (b)
execute  or  file  any  and  all  financing  or  similar statements or notices,
amendments,  renewals, supplements, documents, instruments,  proofs  of  claim,
notices and other  written  agreements  with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of  Lenders  as  provided  in  the  Loan
Documents,  (d)  exclusively  receive, apply, and distribute the Collections of
Borrowers and their Subsidiaries  as  provided  in the Loan Documents, (e) open
and maintain such bank accounts and cash management  accounts  as  Agent  deems
necessary  and  appropriate  in  accordance  with  the  Loan  Documents for the
foregoing  purposes  with  respect  to  the  Collateral and the Collections  of
Borrowers and their Subsidiaries, (f) perform,  exercise,  and  enforce any and
all  other  rights and remedies of the Lender Group with respect to  Borrowers,
the Obligations,  the  Collateral,  the  Collections  of  Borrowers  and  their
Subsidiaries,  or  otherwise  related  to  any  of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group  Expenses  as Agent may deem
necessary or appropriate for the performance and fulfillment of  its  functions
and powers pursuant to the Loan Documents.

      16.2. DELEGATION OF DUTIES.  Agent and Canadian Agent may execute  any of
its  duties  under  this  Agreement  or  any  other Loan Document by or through
agents,  employees or attorneys-in-fact and shall  be  entitled  to  advice  of
counsel concerning all matters pertaining to such duties.

      16.3. LIABILITY OF AGENT.  None of the Agent-Related Persons shall (i) be
liable for  any  action taken or omitted to be taken by any of them under or in
connection with this  Agreement  or any other Loan Document or the transactions
contemplated  hereby  (except  for  its   own   gross   negligence  or  willful
misconduct), or (ii) be responsible in any manner to any  of  Lenders  for  any
recital,  statement,  representation  or  warranty  made by any Borrower or any
Subsidiary or Affiliate of any Borrower, or any officer  or  director  thereof,
contained  in  this  Agreement  or  in  any  other  Loan  Document,  or  in any
certificate,  report,  statement  or other document referred to or provided for
in, or received by Agent or Canadian  Agent  under  or in connection with, this
Agreement  or  any  other  Loan  Document,  or  the  validity,   effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any  other Loan
Document,  or  for  any failure of any Borrower or any other party to any  Loan
Document to perform its  obligations hereunder or thereunder.  No Agent-Related
Person shall be under any  obligation  to any Lender to ascertain or to inquire
as to the observance or performance of any  of  the agreements contained in, or
conditions of, this Agreement or any other Loan Document,  or  to  inspect  the
Books  or  properties of Borrowers or the books or records or properties of any
of Borrowers' Subsidiaries or Affiliates.

      16.4. RELIANCE BY AGENT.

            (a)   Each  of  Agent and Canadian Agent shall be entitled to rely,
      and shall be fully protected  in  relying,  upon any writing, resolution,
      notice,  consent,  certificate, affidavit, letter,  telegram,  facsimile,
      telex or telephone message,  statement  or other document or conversation
      believed by it to be genuine and correct  and  to have been signed, sent,
      or made by the proper Person or Persons, and upon  advice  and statements
      of  legal  counsel  (including  counsel  to Borrowers or counsel  to  any
      Lender), independent accountants and other  experts  selected by Agent or
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      Canadian  Agent.   Each  of  Agent  and  Canadian  Agent shall  be  fully
      justified in failing or refusing to take any action  under this Agreement
      or  any  other Loan Document unless Agent or Canadian Agent  shall  first
      receive such advice or concurrence of Lenders as it deems appropriate and
      until such instructions are received, Agent and Canadian Agent shall act,
      or refrain  from  acting,  as  it  deems advisable.  If Agent or Canadian
      Agent  so  requests,  it shall first be  indemnified  to  its  reasonable
      satisfaction by Lenders  against  any  and all liability and expense that
      may be incurred by it by reason of taking  or continuing to take any such
      action.  Each of Agent and Canadian Agent shall  in  all  cases  be fully
      protected  in  acting, or in refraining from acting, under this Agreement
      or any other Loan Document in accordance with a request or consent of the
      requisite Lenders and such request and any action taken or failure to act
      pursuant thereto shall be binding upon all Lenders.

            (b)   For  purposes  of  determining compliance with the conditions
      set forth in Section 3.1, each Lender  that  has  executed this Agreement
      shall  be  deemed to have consented to, approved or accepted,  or  to  be
      satisfied with,  each document and matter either sent, or made available,
      by  Agent  or Canadian  Agent  to  such  Lender  for  consent,  approval,
      acceptance or satisfaction, or required thereunder to be to be consent to
      or approved  by  or  acceptable or satisfactory to such Lender, unless an
      officer of Agent or Canadian  Agent  active upon Borrowers' account shall
      have received notice from such Lender  not  less than 2 days prior to the
      Closing  Date  specifying  such  Lender's  objection   thereto  and  such
      objection  shall not have been withdrawn by notice to Agent  or  Canadian
      Agent to such effect on or prior to the Closing Date.

      16.5. NOTICE  OF  DEFAULT  OR  EVENT  OF  DEFAULT.   Neither of Agent nor
Canadian Agent shall be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default, except with respect to defaults in the payment
of  principal,  interest, fees, and expenses required to be paid  to  Agent  or
Canadian Agent for the account of Lenders and, except with respect to Events of
Default of which  Agent  or  Canadian  Agent has actual knowledge, unless Agent
shall have received written notice from  a  Lender  or  Administrative Borrower
referring to this Agreement, describing such Default or Event  of  Default, and
stating that such notice is a "notice of default."  Agent promptly will  notify
Lenders  of  its receipt of any such notice or of any Event of Default of which
Agent has actual  knowledge.   If  any  Lender  obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default.  Each Lender shall be solely  responsible  for giving
any notices to its Participants, if any.  Subject to Section 16.4, Agent  shall
take  such  action  with  respect to such Default or Event of Default as may be
requested by the Required Lenders  in  accordance  with  Section  9;  provided,
however,  that unless and until Agent has received any such request, Agent  may
(but shall  not  be obligated to) take such action, or refrain from taking such
action, with respect  to  such  Default  or  Event  of Default as it shall deem
advisable.

      16.6. CREDIT  DECISION.   Each  Lender  acknowledges  that  none  of  the
Agent-Related Persons has made any representation  or  warranty to it, and that
no act by Agent or Canadian Agent hereinafter taken, including  any  review  of
the  affairs of Borrowers and their Subsidiaries or Affiliates, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any
Lender.  Each Lender represents to Agent that it has, independently and without
reliance  upon  any  Agent-Related  Person  and  based  on  such  documents and
information  as  it  has  deemed  appropriate,  made  its own appraisal of  and
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investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrowers and any other Person party to
a  Loan  Document,  and  all applicable bank regulatory laws  relating  to  the
transactions contemplated  hereby, and made its own decision to enter into this
Agreement and to extend credit  to Borrowers.  Each Lender also represents that
it will, independently and without  reliance  upon any Agent-Related Person and
based on such documents and information as it shall  deem  appropriate  at  the
time,  continue  to  make  its own credit analysis, appraisals and decisions in
taking or not taking action  under this Agreement and the other Loan Documents,
and to make such investigations  as  it  deems necessary to inform itself as to
the business, prospects, operations, property,  financial  and  other condition
and  creditworthiness  of  Borrowers  and  any  other  Person  party to a  Loan
Document.   Except  for notices, reports, and other documents expressly  herein
required to be furnished  to Lenders by Agent, Agent shall not have any duty or
responsibility to provide any  Lender  with  any  credit  or  other information
concerning the business, prospects, operations, property, financial  and  other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.

      16.7. COSTS  AND  EXPENSES;  INDEMNIFICATION.   Agent  may  incur and pay
Lender  Group  Expenses  to  the  extent  Agent  reasonably deems necessary  or
appropriate for the performance and fulfillment of  its  functions, powers, and
obligations  pursuant to the Loan Documents, including court  costs,  attorneys
fees and expenses,  fees  and  expenses  of  financial  accountants,  advisors,
consultants,   and  appraisers,  costs  of  collection  by  outside  collection
agencies, auctioneer  fees  and  expenses,  and  costs  of  security  guards or
insurance  premiums  paid  to maintain the Collateral, whether or not Borrowers
are obligated to reimburse Agent  or  Lenders for such expenses pursuant to the
Loan Agreement or otherwise.  Agent is  authorized  and  directed to deduct and
retain  sufficient  amounts  from  the  Collections  of  Borrowers   and  their
Subsidiaries received by Agent to reimburse Agent for such out-of-pocket  costs
and expenses prior to the distribution of any amounts to Lenders.  In the event
Agent  is  not  reimbursed  for such costs and expenses from the Collections of
Borrowers and their Subsidiaries  received  by Agent, each Lender hereby agrees
that it is and shall be obligated to pay to or  reimburse  Agent for the amount
of  such  Lender's  Pro  Rata  Share thereof.  Whether or not the  transactions
contemplated hereby are consummated,  Lenders  shall  indemnify upon demand the
Agent-Related  Persons  (to  the  extent  not reimbursed by  or  on  behalf  of
Borrowers and without limiting the obligation of Borrowers to do so), according
to their Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided,  however, that no Lender shall be  liable  for  the  payment  to  any
Agent-Related  Person  of any portion of such Indemnified Liabilities resulting
solely from such Person's  gross negligence or willful misconduct nor shall any
Lender be liable for the obligations  of  any  Defaulting  Lender in failing to
make an Advance or other extension of credit hereunder.  Without  limitation of
the foregoing, each Lender shall reimburse Agent upon demand for such  Lender's
Pro  Rata  Share  of  any costs or out-of-pocket expenses (including attorneys,
accountants, advisors,  and consultants fees and expenses) incurred by Agent in
connection   with  the  preparation,   execution,   delivery,   administration,
modification,  amendment,  or  enforcement (whether through negotiations, legal
proceedings  or  otherwise)  of, or  legal  advice  in  respect  of  rights  or
responsibilities  under,  this Agreement,  any  other  Loan  Document,  or  any
document contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses  by or on behalf of Borrowers.  The undertaking in
this Section shall survive the  payment  of  all  Obligations hereunder and the
resignation or replacement of Agent.
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      16.8. AGENT IN INDIVIDUAL CAPACITY.  WFRF and  its  Affiliates  may  make
loans  to,  issue  letters  of credit for the account of, accept deposits from,
acquire equity interests in,  and  generally  engage  in  any  kind of banking,
trust, financial advisory, underwriting, or other business with  Borrowers  and
their  Subsidiaries  and  Affiliates  and  any  other  Person party to any Loan
Documents as though WFRF were not Agent or Canadian Agent  hereunder,  and,  in
each  case,  without  notice  to  or consent of the other members of the Lender
Group.  The other members of the Lender  Group  acknowledge  that,  pursuant to
such  activities,  WFRF  or  its  Affiliates  may receive information regarding
Borrowers or their Affiliates and any other Person  party to any Loan Documents
that is subject to confidentiality obligations in favor  of  Borrowers  or such
other  Person  and that prohibit the disclosure of such information to Lenders,
and Lenders acknowledge  that,  in  such circumstances (and in the absence of a
waiver of such confidentiality obligations,  which  waiver  Agent  will use its
reasonable best efforts to obtain), Agent shall not be under any obligation  to
provide  such  information  to  them.  The terms "Lender" and "Lenders" include
WFRF in its individual capacity.

      16.9. SUCCESSOR AGENT, CANADIAN AGENT.

            (a)   Agent may resign as Agent upon 45 days notice to Lenders.  If
      Agent resigns under this Agreement,  the Required Lenders shall appoint a
      successor Agent for Lenders.  If no successor Agent is appointed prior to
      the effective date of the resignation  of Agent, Agent may appoint, after
      consulting with Lenders, a successor Agent.   In any such event, upon the
      acceptance  of  its  appointment  as  successor  Agent   hereunder,  such
      successor  Agent shall succeed to all the rights, powers, and  duties  of
      the retiring  Agent  and the term "Agent" shall mean such successor Agent
      and the retiring Agent's  appointment,  powers, and duties as Agent shall
      be  terminated.   After  any retiring Agent's  resignation  hereunder  as
      Agent, the provisions of this Section 16 shall inure to its benefit as to
      any actions taken or omitted  to  be taken by it while it was Agent under
      this Agreement.  If no successor Agent  has accepted appointment as Agent
      by  the  date which is 45 days following a  retiring  Agent's  notice  of
      resignation,   the   retiring   Agent's  resignation  shall  nevertheless
      thereupon become effective and Lenders shall perform all of the duties of
      Agent hereunder until such time,  if  any, as Lenders appoint a successor
      Agent as provided for above.

            (b)   Canadian Agent may resign as  Canadian  Agent  upon  45  days
      notice  to  Lenders.  If Canadian Agent resigns under this Agreement, the
      Required Lenders  shall  appoint  a successor Canadian Agent for Lenders.
      If no successor Canadian Agent is appointed  prior  to the effective date
      of the resignation of Canadian Agent, Canadian Agent  may  appoint, after
      consulting with Lenders, a successor Canadian Agent.  In any  such event,
      upon  the  acceptance  of  its  appointment  as  successor Canadian Agent
      hereunder, such successor Canadian Agent shall succeed to all the rights,
      powers, and duties of the retiring Canadian Agent  and the term "Canadian
      Agent" shall mean such successor Canadian Agent and the retiring Canadian
      Agent's  appointment,  powers,  and  duties as Canadian  Agent  shall  be
      terminated.  After any retiring Canadian Agent's resignation hereunder as
      Canadian Agent, the provisions of this  Section  16  shall  inure  to its
      benefit as to any actions taken or omitted to be taken by it while it was
      Canadian Agent under this Agreement.  If no successor Canadian Agent  has
      accepted  appointment  as  Canadian  Agent  by  the date which is 45 days
      following a retiring Canadian Agent's notice of resignation, the retiring
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      Canadian   Agent's   resignation  shall  nevertheless  thereupon   become
      effective and the Canadian  Lenders  shall  perform  all of the duties of
      Canadian  Agent hereunder until such time, if any, as Lenders  appoint  a
      successor Canadian Agent as provided for above.

      16.10.LENDER  IN  INDIVIDUAL  CAPACITY.   Any  Lender  and its respective
Affiliates  may  make  loans  to, issue letters of credit for the  account  of,
accept deposits from, acquire equity  interests  in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and  any  other  Person  (other
than  the  Lender Group) party to any Loan Documents as though such Lender were
not a Lender hereunder without notice to or consent of the other members of the
Lender Group.  The other members of the Lender Group acknowledge that, pursuant
to such activities,  such  Lender  and  its  respective  Affiliates may receive
information regarding Borrowers or their Affiliates and any  other Person party
to any Loan Documents that is subject to confidentiality obligations  in  favor
of  Borrowers  or  such  other  Person and that prohibit the disclosure of such
information to Lenders, and Lenders  acknowledge  that,  in  such circumstances
(and  in  the  absence  of a waiver of such confidentiality obligations,  which
waiver such Lender will use its reasonable best efforts to obtain), such Lender
not shall be under any obligation  to  provide  such information to them.  With
respect  to the Swing Loans, Canadian Swing Loans  and  Agent  Advances,  Swing
Lender, and  Canadian  Agent  shall  have the same rights and powers under this
Agreement as any other Lender and may  exercise  the same as though it were not
the sub-agent of Agent.

      16.11.PAYMENTS TO, AND DISTRIBUTIONS BY, AGENT.

            (a)   A payment by Borrowers to Agent  or  Canadian Agent hereunder
      or any of the other Loan Documents for the account  of  any  Lender shall
      constitute  a  payment  to  such  Lender.  Agent or Canadian Agent agrees
      promptly to distribute to each Lender such Lender's  Pro  Rata  Share  of
      payments  received  by Agent or Canadian Agent for the account of Lenders
      except as otherwise expressly provided herein or in any of the other Loan
      Documents.

            (b)   If in the reasonable opinion of Agent the distribution of any
      amount received by it  in such capacity hereunder, under any of the other
      Loan Documents might involve  it in liability, it may refrain from making
      distribution  until  its  right to  make  distribution  shall  have  been
      adjudicated  by  a  court  of competent  jurisdiction.   If  a  court  of
      competent  jurisdiction  shall  adjudge  that  any  amount  received  and
      distributed by Agent or Canadian  Agent  is  to be repaid, each Person to
      whom any such distribution shall have been made  shall  either  repay  to
      Agent or Canadian Agent its proportionate share of the amount so adjudged
      to  be  repaid  or  shall  pay  over  the same in such manner and to such
      Persons as shall be determined by such court

      16.12.Duties in the Case of Enforcement.   In  case one or more Events of
Default have occurred and shall be continuing, and whether  or not acceleration
of the Obligations shall have occurred, Agent shall, if (a) so requested by the
Required  Lenders,  and  (b)  Lenders  have  provided to Agent such  additional
indemnities  and  assurances  against expenses and  liabilities  as  Agent  may
reasonably request, proceed to enforce the provisions of this Agreement and the
other Loan Documents authorizing  the  sale  or other disposition of all or any
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part of the Collateral and exercise all or any  such  other legal and equitable
and other rights or remedies as it may have in respect of such Collateral.  The
Required Lenders may direct Agent in writing as to the method and the extent of
any such sale or other disposition, Lenders hereby agreeing  to  indemnify  and
hold  Agent,  harmless  from all liabilities incurred in respect of all actions
taken or omitted in accordance  with  such directions, provided that Agent need
not comply with any such direction to the extent that Agent reasonably believes
Agent's  compliance  with  such  direction   to  be  unlawful  or  commercially
unreasonable in any applicable jurisdiction.

      THE  FOREGOING  INDEMNIFICATIONS  SHALL  APPLY   WHETHER   OR   NOT  SUCH
      LIABILITIES  AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE  OR
      IN PART, UNDER  ANY  CLAIM  OR  THEORY  OF STRICT LIABILITY OR CAUSED, IN
      WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,

      provided  only that Agent shall not be entitled  under  this  section  to
      receive indemnification  for that portion, if any, of any liabilities and
      costs which is proximately  caused by its own individual gross negligence
      or willful misconduct, as determined in a final judgment.

      16.13.AGENT MAY FILE PROOFS OF CLAIM.

            (a)   In  case of the pendency  of  any  receivership,  insolvency,
      liquidation,   bankruptcy,   reorganization,   arrangement,   adjustment,
      composition or other  judicial,  administrative or like proceeding or any
      assignment for the benefit of creditors  relative  to any Borrower or any
      of its Subsidiaries, Agent (irrespective of whether  the principal of any
      Advance, or Obligations with respect to the Credit Instruments shall then
      be due and payable as herein expressed or by declaration or otherwise and
      irrespective  of whether Agent shall have made any demand  on  Borrowers)
      shall be entitled  and  empowered,  by  intervention  in such proceeding,
      under any such assignment or otherwise:

                  (i)   to file and prove a claim for the whole  amount  of the
            principal and interest owing and unpaid in respect of the Advances,
            or  Obligations  in respect of the Credit Instruments and all other
            Obligations that are  owing  and  unpaid  and  to  file  such other
            documents  as  may  be necessary or advisable in order to have  the
            claims of the Lender  Group (including any claim for the reasonable
            compensation, expenses,  disbursements  and  advances of the Lender
            Group and their respective agents and counsel and all other amounts
            due the Lender Group under Sections 2.10, 2.11 and 11.3) allowed in
            such proceeding or under any such assignment; and

                  (ii)  to  collect and receive any monies  or  other  property
            payable or deliverable  on  any  such  claims and to distribute the
            same;

            (b)   Any  custodian,  receiver,  assignee,   trustee,  liquidator,
      sequestrator  or other similar official in any such proceeding  or  under
      any such assignment  is  hereby  authorized  by  each Lender to make such
      payments  to  Agent  and, in the event that Agent shall  consent  to  the
      making of such payments directly to Lenders, nevertheless to pay to Agent
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      any amount due for the  reasonable  compensation, expenses, disbursements
      and advances of Agent and its agents  and  counsel, and any other amounts
      due Agent under Sections 2.10, 2.11 and 11.3.

            (c)   Nothing contained herein shall authorize  Agent to consent to
      or  accept  or adopt on behalf of any Lender any plan of  reorganization,
      arrangement,  adjustment or composition affecting the Obligations owed to
      such Lender or  the rights of any Lender or to authorize Agent to vote in
      respect of the claim  of  any  Lender in any such proceeding or under any
      such assignment.

      16.14.WITHHOLDING TAXES.

            (a)   If any Lender is a "foreign person" within the meaning of the
      IRC  and such Lender claims exemption  from,  or  a  reduction  of,  U.S.
      withholding  tax  under  Sections  1441  or  1442 of the IRC, such Lender
      agrees with and in favor of Agent and Borrowers,  to deliver to Agent and
      Administrative Borrower:

                  (i)   if such Lender claims an exemption from withholding tax
            pursuant to its portfolio interest exception,  (A)  a  statement of
            Lender,  signed under penalty of perjury, that it is not  a  (I)  a
            "bank" as  described in Section 881(c)(3)(A) of the IRC, (II) a 10%
            shareholder   of   a   Borrower  (within  the  meaning  of  Section
            871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
            related to a Borrower within  the  meaning  of Section 864(d)(4) of
            the IRC, and (B) a properly completed and executed IRS Form W-8BEN,
            before the first payment of any interest under  this  Agreement and
            at  any  other time reasonably requested by Agent or Administrative
            Borrower;

                  (ii)  if such Lender claims an exemption from, or a reduction
            of, withholding  tax  under  a  United  States tax treaty, properly
            completed and executed IRS Form W-8BEN before  the first payment of
            any interest under this Agreement and at any other  time reasonably
            requested by Agent or Administrative Borrower;

                  (iii) if  such  Lender claims that interest paid  under  this
            Agreement is exempt from  United  States withholding tax because it
            is effectively connected with a United  States trade or business of
            such Lender, two properly completed and executed copies of IRS Form
            W-8ECI before the first payment of any interest  is  due under this
            Agreement  and at any other time reasonably requested by  Agent  or
            Administrative Borrower;

                  (iv)  such  other  form or forms as may be required under the
            IRC or other laws of the United  States as a condition to exemption
            from, or reduction of, United States withholding tax.

            Such  Lender  agrees promptly to notify  Agent  and  Administrative
      Borrower of any change  in  circumstances  which  would  modify or render
      invalid any claimed exemption or reduction.
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            (b)   If  any  Lender  claims  exemption  from,  or  reduction  of,
      withholding tax under a United States tax treaty by providing IRS Form W-
      8BEN  and  such  Lender  sells,  assigns, grants a participation  in,  or
      otherwise transfers all or part of  the  Obligations of Borrowers to such
      Lender, such Lender agrees to notify Agent  of  the  percentage amount in
      which it is no longer the beneficial owner of Obligations of Borrowers to
      such Lender.  To the extent of such percentage amount,  Agent  will treat
      such Lender's IRS Form W-8BEN as no longer valid.

            (c)   If  any  Lender  is entitled to a reduction in the applicable
      withholding tax, Agent may withhold  from  any  interest  payment to such
      Lender  an  amount  equivalent  to  the applicable withholding tax  after
      taking into account such reduction.   If the forms or other documentation
      required by subsection (a) of this Section  are  not  delivered to Agent,
      then  Agent  may  withhold from any interest payment to such  Lender  not
      providing such forms  or  other documentation an amount equivalent to the
      applicable withholding tax.

            (d)   If the IRS or any  other Governmental Authority of the United
      States or other jurisdiction asserts  a claim that Agent did not properly
      withhold  tax  from amounts paid to or for  the  account  of  any  Lender
      (because  the appropriate  form  was  not  delivered,  was  not  properly
      executed, or  because  such  Lender failed to notify Agent of a change in
      circumstances  which  rendered  the  exemption  from,  or  reduction  of,
      withholding tax ineffective, or for  any  other reason) such Lender shall
      indemnify  and  hold  Agent harmless for all amounts  paid,  directly  or
      indirectly,  by  Agent as  tax  or  otherwise,  including  penalties  and
      interest, and including  any  taxes  imposed  by  any jurisdiction on the
      amounts payable to Agent under this Section, together  with all costs and
      expenses  (including  attorneys  fees  and expenses).  The obligation  of
      Lenders  under  this  subsection  shall  survive   the   payment  of  all
      Obligations and the resignation or replacement of Agent.

            (e)   All payments made by Borrowers hereunder or under any Note or
      other Loan Document will be made without setoff, counterclaim,  or  other
      defense,  except  as  required by applicable law other than for Taxes (as
      defined below).  All such  payments  will  be made free and clear of, and
      without  deduction  or  withholding  for, any present  or  future  taxes,
      levies, imposts, duties, fees, assessments  or  other charges of whatever
      nature now or hereafter imposed by any jurisdiction  or  by any political
      subdivision or taxing authority thereof or therein with respect  to  such
      payments  (but  excluding,  any tax imposed by any jurisdiction or by any
      political subdivision or taxing authority thereof or therein (i) measured
      by or based on the net income  or net profits of a Lender, or (ii) to the
      extent  that such tax results from  a  change  in  the  circumstances  of
      Lender, including  a  change  in the residence, place of organization, or
      principal place of business of  Lender,  or  a  change  in  the branch or
      lending  office  of  Lender  participating in the transactions set  forth
      herein) and all interest, penalties  or  similar liabilities with respect
      thereto  (all  such non-excluded taxes, levies,  imposts,  duties,  fees,
      assessments or other  charges being referred to collectively as "Taxes").
      If any Taxes are so levied  or  imposed,  each Borrower agrees to pay the
      full  amount  of  such  Taxes,  and such additional  amounts  as  may  be
      necessary so that every payment of  all  amounts due under this Agreement
      or  under  any  Note,  including  any  amount  paid   pursuant   to  this
      Section 16.11(e) after withholding or deduction for or on account  of any
      Taxes,  will  not  be less than the amount provided for herein; provided,
      however, that Borrowers  shall  not  be  required  to  increase  any such
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      amounts  payable  to  Agent or any Lender (i) that is not organized under
      the laws of the United  States,  if  such Person fails to comply with the
      other requirements of this Section 16.11, or (ii) if the increase in such
      amount  payable  results  from  Agent's  or  such  Lender's  own  willful
      misconduct or gross negligence.  After a Lender  learns of the imposition
      of Taxes, such Lender will act in good faith to promptly notify Borrowers
      of  their  obligations  hereunder.  Borrowers will furnish  to  Agent  as
      promptly as possible after  the  date  the  payment  of any Taxes are due
      pursuant  to  applicable law certified copies of tax receipts  evidencing
      such payment by Borrowers.

            (f)   If  Borrowers  are  required  to  indemnify or pay additional
      amounts  to  or for the account of any Lender pursuant  to  this  Section
      16.14, then, such  Lender  may  take action so long as such action is not
      unlawful or impractical for such  Lender  and  such action (i) will avoid
      the  need for, or reduce the amount of, any such  additional  payment  by
      Borrowers,  and (ii) will not, in the good faith judgment of such Lender,
      otherwise be disadvantageous to such Lender.

      16.15.COLLATERAL MATTERS.

            (a)   Lenders hereby irrevocably authorize Agent, at its option and
      in its sole discretion,  to  release  any Lien on any Collateral (i) upon
      the termination of the Commitments and  payment  and satisfaction in full
      by Borrowers of all Obligations, (ii) constituting property being sold or
      disposed of if a release is required or desirable in connection therewith
      and  if  Administrative  Borrower certifies to Agent  that  the  sale  or
      disposition is permitted under Section 7.4 of this Agreement or the other
      Loan Documents (and Agent  may rely conclusively on any such certificate,
      without  further  inquiry),  (iii) constituting   property  in  which  no
      Borrower or its Subsidiaries owned any interest at  the time Agent's Lien
      was  granted  nor  at any time thereafter, or (iv) constituting  property
      leased to a Borrower  or  its Subsidiaries under a lease that has expired
      or is terminated in a transaction permitted under this Agreement.  Except
      as provided above, Agent will  not  execute  and deliver a release of any
      Lien on any Collateral without the prior written  authorization of (y) if
      the  release  is  of all or substantially all of the Collateral,  all  of
      Lenders, or (z) otherwise,  the  Required Lenders.  Upon request by Agent
      or Administrative Borrower at any  time,  Lenders will confirm in writing
      Agent's authority to release any such Liens  on particular types or items
      of Collateral pursuant to this Section 16.12; provided, however, that (1)
      Agent shall not be required to execute any document necessary to evidence
      such release on terms that, in Agent's opinion,  would  expose  Agent  to
      liability  or  create any obligation or entail any consequence other than
      the release of such  Lien  without recourse, representation, or warranty,
      and (2) such release shall not in any manner discharge, affect, or impair
      the Obligations or any Liens  (other than those expressly being released)
      upon (or obligations of Borrowers  in  respect of) all interests retained
      by Borrowers, including, the proceeds of  any  sale,  all  of which shall
      continue to constitute part of the Collateral.

            (b)   Agent shall have no obligation whatsoever to any  of  Lenders
      to assure that the Collateral exists or is owned by Borrowers or is cared
      for, protected, or insured or has been encumbered, or that Agent's  Liens
      have  been  properly  or  sufficiently  or  lawfully  created, perfected,
      protected, or enforced or are entitled to any particular  priority, or to
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      exercise  at all or in any particular manner or under any duty  of  care,
      disclosure  or  fidelity,  or  to continue exercising, any of the rights,
      authorities and powers granted or  available  to Agent pursuant to any of
      the Loan Documents, it being understood and agreed that in respect of the
      Collateral, or any act, omission, or event related  thereto,  subject  to
      the terms and conditions contained herein, Agent may act in any manner it
      may  deem  appropriate, in its sole discretion given Agent's own interest
      in the Collateral  in its capacity as one of Lenders and that Agent shall
      have no other duty or liability whatsoever to any Lender as to any of the
      foregoing, except as otherwise provided herein.

      16.16.RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.

            (a)   Each Lender  agrees  that  it  shall not, without the express
      written consent of Agent, and that it shall, to the extent it is lawfully
      entitled to do so, upon the written request of Agent, set off against the
      Obligations, any amounts owing by such Lender to Borrowers or any deposit
      accounts of Borrowers now or hereafter maintained with such Lender.  Each
      Lender further agrees that it shall not, unless specifically requested to
      do  so  in  writing  by  Agent, take or cause to  be  taken  any  action,
      including, the commencement  of  any  legal  or equitable proceedings, to
      foreclose any Lien on, or otherwise enforce any security interest in, any
      of the Collateral.

            (b)   If,  at any time or times any Lender  shall  receive  (i)  by
      payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or
      any payments with  respect  to  the  Obligations,  except  for  any  such
      proceeds  or  payments received by such Lender from Agent pursuant to the
      terms of this Agreement,  or  (ii) payments  from Agent in excess of such
      Lender's ratable portion of all such distributions  by Agent, such Lender
      promptly shall (1) turn the same over to Agent, in kind,  and  with  such
      endorsements  as  may  be  required to negotiate the same to Agent, or in
      immediately available funds,  as  applicable,  for  the  account  of  all
      Lenders  and  for  application  to the Obligations in accordance with the
      applicable  provisions  of  this  Agreement,  or  (2)  purchase,  without
      recourse or warranty, an undivided  interest  and  participation  in  the
      Obligations  owed  to  the  other  Lenders  so  that  such excess payment
      received  shall  be  applied ratably as among Lenders in accordance  with
      their Pro Rata Shares;  provided,  however,  that to the extent that such
      excess payment received by the purchasing party  is  thereafter recovered
      from it, those purchases of participations shall be rescinded in whole or
      in part, as applicable, and the applicable portion of  the purchase price
      paid  therefor  shall be returned to such purchasing party,  but  without
      interest except to  the  extent that such purchasing party is required to
      pay interest in connection with the recovery of the excess payment.

      16.17.AGENCY FOR PERFECTION.   Agent hereby appoints each other member of
the Lender Group as its agent (and each other member of the Lender Group hereby
accepts such appointment) for the purpose of perfecting Agent's Liens in assets
which, in accordance with Article 9 of  the  Code  can  be  perfected  only  by
possession  or  control.   Should  any  other member of the Lender Group obtain
possession or control of any such Collateral,  such  other member of the Lender
Group shall notify Agent thereof, and, promptly upon Agent's  request  therefor
shall  deliver  possession  or  control  of  such  Collateral  to  Agent  or in
accordance with Agent's instructions.
                                  129
<PAGE>

      16.18.PAYMENTS BY AGENT TO LENDERS.  All payments to be made by Agent  to
Lenders  shall  be  made  by  bank wire transfer of immediately available funds
pursuant to such wire transfer  instructions  as  each  party may designate for
itself by written notice to Agent.  Concurrently with each  such payment, Agent
or Canadian Agent shall identify whether such payment (or any  portion thereof)
represents principal, premium, or interest of the Obligations.

      16.19.CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS.   Each member
of  the  Lender Group authorizes and directs Agent to enter into this Agreement
and the other  Loan Documents.  Each member of the Lender Group agrees that any
action taken by  Agent  in  accordance  with the terms of this Agreement or the
other Loan Documents relating to the Collateral  and  the  exercise by Agent of
its  powers set forth therein or herein, together with such other  powers  that
are reasonably incidental thereto, shall be binding upon all Lenders.

      16.20.FIELD  AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS  AND  INFORMATION.   By  becoming  a  party  to  this
Agreement, each Lender:

            (a)   is  deemed  to have requested that Agent furnish such Lender,
      promptly after it becomes  available,  a  copy  of  each  field  audit or
      examination report (each a "Report" and collectively, "Reports") prepared
      by Agent, and Agent shall so furnish each Lender with such Reports,

            (b)   expressly  agrees  and  acknowledges that Agent does not  (i)
      make any representation or warranty as to the accuracy of any Report, and
      (ii) shall not be liable for any information contained in any Report,

            (c)   expressly agrees and acknowledges  that  the  Reports are not
      comprehensive   audits   or  examinations,  that  Agent  or  other  party
      performing  any  audit  or  examination   will   inspect   only  specific
      information  regarding  Borrowers  and will rely significantly  upon  the
      Books, as well as on representations of Borrowers' personnel,

            (d)   agrees to keep all Reports  and  other  material,  non-public
      information   regarding   Borrowers  and  their  Subsidiaries  and  their
      operations, assets, and existing  and  contemplated  business  plans in a
      confidential manner in accordance with Section 17.8, and

            (e)   without  limiting the generality of any other indemnification
      provision contained in this Agreement, agrees:  (i) to hold Agent and any
      such  other Lender preparing  a  Report  harmless  from  any  action  the
      indemnifying  Lender  may  take  or  fail  to  take or any conclusion the
      indemnifying Lender may reach or draw from any Report  in connection with
      any loans or other credit accommodations that the indemnifying Lender has
      made or may make to Borrowers, or the indemnifying Lender's participation
      in,  or  the  indemnifying  Lender's  purchase  of,  a loan or  loans  of
      Borrowers; and (ii) to pay and protect, and indemnify,  defend  and  hold
      Agent,  and  any  such  other Lender preparing a Report harmless from and
      against, the claims, actions,  proceedings, damages, costs, expenses, and
      other amounts (including, attorneys fees and costs) incurred by Agent and
                                  130
<PAGE>

      any such other Lender preparing a Report as the direct or indirect result
      of any third parties who might obtain  all  or part of any Report through
      the indemnifying Lender.

            In addition to the foregoing:  (x) any Lender may from time to time
      request of Agent in writing that Agent provide  to  such Lender a copy of
      any report or document provided by Borrowers to Agent  or  Canadian Agent
      (as  the  case  may  be) that has not been contemporaneously provided  by
      Borrowers to such Lender,  and, upon receipt of such request, Agent shall
      provide a copy of same to such  Lender,  (y)  to the extent that Agent or
      Canadian Agent (as the case may be) is entitled,  under  any provision of
      the  Loan  Documents,  to request additional reports or information  from
      Borrowers, any Lender may, from time to time, reasonably request Agent or
      Canadian Agent (as the case  may  be) to exercise such right as specified
      in such Lender's notice to Agent or  Canadian Agent (as the case may be),
      whereupon Agent or Canadian Agent (as  the  case  may  be) promptly shall
      request of Administrative Borrower or Bombay Canada (as  the case may be)
      the  additional  reports  or  information  reasonably specified  by  such
      Lender, and, upon receipt thereof from Administrative  Borrower or Bombay
      Canada (as the case may be), Agent or Canadian Agent (as the case may be)
      promptly shall provide a copy of same to such Lender, and  (z)  any  time
      that   Agent   or  Canadian  Agent  (as  the  case  may  be)  renders  to
      Administrative Borrower or Bombay Canada (as the case may be) a statement
      regarding the applicable  Loan  Account,  Agent or Canadian Agent (as the
      case may be) shall send a copy of such statement to each Lender.

      16.21.SEVERAL OBLIGATIONS; NO LIABILITY.  Notwithstanding that certain of
the Loan Documents now or hereafter may have been  or  will be executed only by
or  in  favor  of  Agent in its capacity as such, and not by  or  in  favor  of
Lenders, any and all  obligations  on  the  part  of Agent (if any) to make any
credit  available  hereunder  shall  constitute  the several  (and  not  joint)
obligations of the respective Lenders on a ratable  basis,  according  to their
respective  Commitments,  to  make  an amount of such credit not to exceed,  in
principal amount, at any one time outstanding,  the  amount of their respective
Commitments.   Nothing  contained  herein  shall  confer upon  any  Lender  any
interest in, or subject any Lender to any liability  for, or in respect of, the
business, assets, profits, losses, or liabilities of any  other  Lender.   Each
Lender  shall  be  solely  responsible  for  notifying  its Participants of any
matters relating to the Loan Documents to the extent any  such  notice  may  be
required,  and  no  Lender shall have any obligation, duty, or liability to any
Participant of any other Lender.  Except as provided in Section 16.7, no member
of the Lender Group shall  have  any liability for the acts or any other member
of the Lender Group.  No Lender shall  be  responsible  to  any Borrower or any
other Person for any failure by any other Lender to fulfill its  obligations to
make  credit  available  hereunder,  nor to advance for it or on its behalf  in
connection with its Commitment, nor to  take  any  other  action  on its behalf
hereunder or in connection with the financing contemplated herein.

      16.22.LEGAL REPRESENTATION OF AGENT.  In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents,  or  in
connection  with  future  legal representation relating to loan administration,
amendments,  modifications,   waivers,  or  enforcement  of  remedies,  Bingham
McCutchen LLP ("Bingham") only has represented and only shall represent WFRF in
its capacity as Agent and as a  Lender.   Each other Lender hereby acknowledges
that Bingham does not represent it in connection with any such matters.
                                  131
<PAGE>

      16.23.QUEBEC, CANADA - POWER OF ATTORNEY.  Without limiting the powers of
the  Agent  hereunder  or  under any other Loan  Document  and  to  the  extent
applicable, each of the Lenders  hereby  acknowledges  that  the  Agent  (or  a
collateral  agent  designated  by the Agent) shall, for the purposes of holding
any security granted by Bombay Canada on the property of Bombay Canada pursuant
to the laws of the Province of Quebec, be the holder of an irrevocable power of
attorney (fond{e'} de pouvoir) (within the meaning of Article 2692 of the Civil
Code of Quebec) for all present  and  future  Lenders and in particular for all
present and future holders of any bond issued by Bombay Canada to the Agent and
secured by a hypothec granted by Bombay Canada  pursuant  to  the  laws  of the
Province of Quebec.  Each of the Lenders hereby irrevocably constitutes, to the
extent necessary, the Agent (or such designated collateral agent) as the holder
of such irrevocable power of attorney (fond{e'} de pouvoir) (within the meaning
of  Article 2692 of the Civil Code of Quebec) in order to hold security granted
by Bombay  Canada  in the Province of Quebec.  Each Assignee shall be deemed to
have confirmed and ratified the constitution of the Agent as the holder of such
irrevocable power of  attorney  (fond{e'}  de  pouvoir)  by  execution  of  the
relevant  Assignment  and Acceptance. Notwithstanding the provisions of Section
32 of An Act respecting  the  Special  Powers of Legal Persons (Quebec), Bombay
Canada and the Lenders irrevocably agree  that the Agent may acquire and be the
holder of any bond issued by Bombay Canada and secured by a hypothec granted by
Bombay Canada pursuant to the laws of the Province  of  Quebec  at any time and
from  time  to  time.    Bombay  Canada hereby acknowledges that any such  bond
constitutes a title of indebtedness,  as  such  term is used in Article 2692 of
the Civil Code of Quebec.

17.   GENERAL PROVISIONS.

      17.1. EFFECTIVENESS.   This  Agreement  shall   be   binding  and  deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.

      17.2. SECTION HEADINGS.  Headings and numbers have been  set forth herein
for  convenience  only.   Unless  the  contrary  is  compelled  by the context,
everything contained in each Section applies equally to this entire Agreement.

      17.3. INTERPRETATION.   Neither  this  Agreement  nor any uncertainty  or
ambiguity  herein shall be construed or resolved against the  Lender  Group  or
Borrowers, whether  under  any  rule  of  construction  or  otherwise.   On the
contrary,  this  Agreement  has  been  reviewed  by  all  parties  and shall be
construed  and interpreted according to the ordinary meaning of the words  used
so as to accomplish fairly the purposes and intentions of all parties hereto.

      17.4. SEVERABILITY OF PROVISIONS.  Each provision of this Agreement shall
be severable  from  every  other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

      17.5. AMENDMENTS IN WRITING.   This  Agreement  only  can be amended by a
writing in accordance with Section 15.1.

      17.6. COUNTERPARTS;  TELEFACSIMILE  EXECUTION.   This  Agreement  may  be
executed  in  any number of counterparts and by different parties  on  separate
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<PAGE>

counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and  all  of  which, when taken together, shall constitute but one
and the same Agreement.  Delivery  of an executed counterpart of this Agreement
by telefacsimile shall be equally as  effective  as  delivery  of  an  original
executed  counterpart  of  this  Agreement.   Any  party delivering an executed
counterpart of this Agreement by telefacsimile also  shall  deliver an original
executed counterpart of this Agreement but the failure to deliver  an  original
executed counterpart shall not affect the validity, enforceability, and binding
effect  of  this  Agreement.   The  foregoing  shall  apply  to each other Loan
Document mutatis mutandis.

      17.7. REVIVAL  AND  REINSTATEMENT OF OBLIGATIONS.  If the  incurrence  or
payment of the Obligations  by any Borrower or the transfer to the Lender Group
of any property should for any  reason  subsequently  be declared to be void or
voidable  under  any  state  or  federal  law  relating  to creditors'  rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property  (collectively,  a "Voidable Transfer"), and if the  Lender  Group  is
required to repay or restore,  in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable  advice  of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable  costs,  expenses,  and
attorneys  fees of the Lender Group related thereto, the liability of Borrowers
automatically  shall  be  revived,  reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.

      17.8. CONFIDENTIALITY.  Agent and  Lenders  each  individually  (and  not
jointly  or  jointly and severally) agree that material, non-public information
regarding Borrowers  and  their  Subsidiaries,  their  operations,  assets, and
existing and contemplated business plans shall be treated by Agent and  Lenders
in  a  confidential manner, and shall not be disclosed by Agent and Lenders  to
Persons  who  are  not parties to this Agreement, except:  (a) to attorneys for
and other advisors, accountants, auditors, and consultants to any member of the
Lender Group who are advised about the confidentiality of such information, (b)
to Subsidiaries and Affiliates of any member of the Lender Group (including the
Bank Product Providers),  provided  that any such Subsidiary or Affiliate shall
have agreed to receive such information  hereunder subject to the terms of this
Section  17.8,  (c) as may be required by statute,  decision,  or  judicial  or
administrative order, rule, or regulation (with prompt notice to Administrative
Borrower so that  Borrowers  may  seek  a protective order or other appropriate
remedy and/or waive Agent's or any Lender's  compliance  with the provisions of
this  Section  17.8),  (d)  as  may  be agreed to in advance by  Administrative
Borrower or its Subsidiaries or as requested  or  required  by any Governmental
Authority pursuant to any subpoena or other legal process (with  prompt  notice
to  Administrative  Borrower  so  that Borrowers may seek a protective order or
other appropriate remedy and/or waive  Agent's  or any Lender's compliance with
the provisions of this Section 17.8), (e) as to any such information that is or
becomes generally available to the public (other than as a result of prohibited
disclosure by or on behalf of Agent or Lenders),  (f)  in  connection  with any
assignment,  prospective  assignment, sale, prospective sale, participation  or
prospective participations,  or  pledge  or  prospective pledge of any Lender's
interest  under this Agreement, provided that any  such  assignee,  prospective
assignee,   purchaser,    prospective   purchaser,   participant,   prospective
participant, pledgee, or prospective  pledgee  shall  have agreed in writing to
receive such information hereunder subject to the terms  of  this  Section, and
(g)  in connection with any litigation or other adversary proceeding  involving
parties  hereto  which  such litigation or adversary proceeding involves claims
                                  133
<PAGE>

related to the rights or  duties  of  such  parties under this Agreement or the
other Loan Documents; provided that the disclosing  party  shall  use  its best
efforts to ensure that such documents are filed under seal.  The provisions  of
this  Section  17.8  shall survive for 2 years after the payment in full of the
Obligations.  Anything  contained  herein  or in any other Loan Document to the
contrary notwithstanding, the obligations of  confidentiality  contained herein
and therein, as they relate to the transactions contemplated hereby,  shall not
apply   to  the  federal  tax  structure  or  federal  tax  treatment  of  such
transactions, and each party hereto (and any employee, representative, or agent
of any party hereto) may disclose to any and all Persons, without limitation of
any kind,  the  federal  tax  structure  and  federal  tax  treatment  of  such
transactions (including all written materials related to such tax structure and
tax  treatment).   The preceding sentence is intended to cause the transactions
contemplated hereby  to  not be treated as having been offered under conditions
of confidentiality for purposes  of  Section  1.6011-4(b)(3)  (or any successor
provision) of the Treasury Regulations promulgated under Section  6011  of  the
IRC,  and  shall  be  construed  in  a manner consistent with such purpose.  In
addition,  each  party  hereto acknowledges  that  it  has  no  proprietary  or
exclusive rights to the tax  structure  of the transactions contemplated hereby
or any tax matter or tax idea related thereto.

      17.9. INTEGRATION.  THIS WRITTEN AGREEMENT  AND  THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY  NOT  BE CONTRADICTED
BY  EVIDENCE  OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS  OF  THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

      17.10.PARENT  AS  AGENT  FOR BORROWERS.  Each Borrower hereby irrevocably
appoints Parent as the borrowing  agent  and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment  shall  remain  in full force
and  effect  unless  and  until Agent shall have received prior written  notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed  Administrative  Borrower.   Each  Borrower  hereby
irrevocably  appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances and Credit Instruments obtained
for the benefit  of  any  Borrower and all other notices and instructions under
this Agreement and (ii) to  take  such  action  as  the Administrative Borrower
deems appropriate on its behalf to obtain Advances and  Credit  Instruments and
to exercise such other powers as are reasonably incidental thereto to carry out
the purposes of this Agreement.  It is understood that the handling of the Loan
Account  and Collateral of Borrowers in a combined fashion, as more  fully  set
forth herein,  is  done  solely  as  an  accommodation to Borrowers in order to
utilize the collective borrowing powers of  Borrowers in the most efficient and
economical manner and at their request, and that  Lender  Group shall not incur
liability to any Borrower as a result hereof.  Each Borrower  expects to derive
benefit, directly or indirectly, from the handling of the Loan  Account and the
Collateral  in  a  combined  fashion  since  the  successful operation of  each
Borrower is dependent on the continued successful performance of the integrated
group.  To induce the Lender Group to do so, and in consideration thereof, each
Borrower hereby jointly and severally agrees to indemnify  each  member  of the
Lender Group and hold each member of the Lender Group harmless against any  and
all  liability,  expense,  loss  or claim of damage or injury, made against the
Lender Group by any Borrower or by  any  third party whosoever, arising from or
incurred by reason of (a) the handling of  the  Loan  Account and Collateral of
Borrowers  as  herein  provided,  (b)  the  Lender  Group's  relying   on   any
instructions  of  the Administrative Borrower, or (c) any other action taken by
                                  134
<PAGE>

the Lender Group hereunder  or  under  the  other  Loan  Documents, except that
Borrowers  will  have  no  liability  to the relevant Agent-Related  Person  or
Lender-Related Person under this Section  17.9  with  respect  to any liability
that has been finally determined by a court of competent jurisdiction  to  have
resulted  solely from the gross negligence or willful misconduct of such Agent-
Related Person or Lender-Related Person, as the case may be.

      17.10.A     USA  PATRIOT ACT.  Each Lender that is subject to the Act (as
      hereinafter defined)  and  Agent  (for  itself  and  not on behalf of any
      Lender)  hereby notifies Borrowers that pursuant to the  requirements  of
      the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
      26, 2001))  (the  "Act"),  it  is  required  to  obtain verify and record
      information  that  identified Borrowers, which information  includes  the
      name and address of  Borrowers and other information that will allow such
      Lender or Agent, as applicable,  to identify Borrowers in accordance with
      the Act.

                          [Signature page to follow.]

                                  135
<PAGE>

      IN WITNESS WHEREOF, the parties hereto  have  caused this Agreement to be
executed and delivered as of the date first above written.

                                    THE BOMBAY COMPANY, INC.

                                    By:     /S/ ELAINE D. CROWLEY
                                    Title:  SVP, CFO & Treasurer

                                    BBA HOLDINGS, INC.

                                    By:     /S/ BEVERLY K. STOOKEY
                                    Title:  President

                                    BAILEY STREET TRADING COMPANY

                                    By:     /S/ ELAINE D. CROWLEY
                                    Title:  Vice President

                                    BOMBAY INTERNATIONAL, INC.

                                    By:     /S/ ELAINE D. CROWLEY
                                    Title:  Vice President

                                    THE BOMBAY FURNITURE COMPANY OF CANADA INC.

                                    By:     /S/ ELAINE D. CROWLEY
                                    Title:  Vice President

<PAGE>

                                    WELLS FARGO RETAIL  FINANCE,  LLC, as Agent
                                    and as a U.S. Lender,

                                    By:     /S/ LYNN S. WHITMORE
                                    Title:  Vice President

<PAGE>

                                    TRANS   CANADA   CREDIT   CORPORATION,   as
                                    Canadian Agent and as Canadian Lender

                                    By:     /S/ STEVE OWENSON
                                    Title:  Treasurer

<PAGE/>

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